Hawker News

Tanker attacks in Strait of Hormuz surge to wartime high, Iran tries choking oil

cnbc.com

52 pointsby MilnerRoute40 comments

TitaRusell[13 comments hidden]
America can't win this war nor admit it can't win. It will likely take the PRC to end this conflict. Xi winning the Nobel Peace Prize next year? What is "holding all the cards" in Mandarin.
klipt[11 comments hidden]
Expensive oil means more people buying Chinese EVs and Chinese solar panels. Good for the environment and good for China. Why would China want cheap oil?
mostlysimilar[10 comments hidden]
Their economy relies on exports that just got a LOT more expensive to ship, and the US economy destructing would likely take theirs down with it.

https://www.youtube.com/watch?v=OETnuwwsv9U

jaggs[hidden]
Hmm...not really.
porkshoe[8 comments hidden]
The US only represents about 3% of China's GDP. If the US economy declined 10 or 20%, it'd be basically just noise to them.
prewett[3 comments hidden]
The US is 150% of China's GDP (in nominal numbers) [1]. AI claims that China's "purchasing power parity" GDP is $44t compared to $32t for the US. There is no way that the US, which has been the world's largest economy for decades, is 3% of China's GDP.

Exports to the US is about 20% of China's GDP [2].

Regardless of any of China's contingency plans, US exports are well above noise-levels.

[1] https://www.statista.com/statistics/268173/countries-with-th...

[2] https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?location...

raven12345[hidden]
I think he means exports to the US as a percentage of China's GDP is 3%
NewJazz[hidden]
Isn't [2] exports in general, not exports to the US specifically?
carefree-bob[4 comments hidden]
That's not how you would want to measure this, as it doesn't much matter whether a good is directly exported from China to the US, or whether it is routed through a third country like Vietnam, or used as an intermediate input to a different good which is then exported to the US, etc.

What you should take note of, is that China's trade surplus tracks the US trade deficit extremely closely, and this has been the case for the last 20 years.

Said another way, most nations in the world run roughly balanced trade. There is only one nation on earth that can sustain large and prolonged trade deficits. Only one. That is the US. So if you are a nation whose entire economic strategy rests on running large and sustained trade surpluses, then you are going to be exporting your surplus to the US, directly or indirectly, and only to the US.

Now in practice, some of that will be direct sales to the US, some will be indirect sales to the US, but at the end of the day, if you want to run a 1.2 trillion dollar trade surplus, then you have to hope to God that the US is willing to run at least a trillion dollar trade deficit, because no other country is going to do that for you, the entire rest of the world may be willing to accomodate a hundred billion or so, but for everything else, you will depend on the US, directly or indirectly, to absorb your surplus.

mindslight[3 comments hidden]
This is a good analysis, but coming full circle - having a trade surplus is not itself a vulnerability. Rather the actual vulnerability would be needing US dollars, to pay for imports (raw materials and whatever else they don't manufacture themselves). If China doesn't need more US dollars (because perhaps they are already holding plenty of treasuries), then they can simply prop up their internal economy with financial stimulus. And longstanding currency controls make it so they can manage this easily. Print yuan to buy that stream of goods that were previously being exported, and just bury them in a hole in the ground. Or more fruitfully, give that yuan away to their poor rural population to boost their standard of living, improving the country and shoring up support for the Party.
somenameforme[hidden]
I don't think things are so straight forward because everything is connected in ways that are sufficiently complex to defy any sort of straight forward thinking; when you change one thing, 10 other things change and in ways that will invariably end up with completely unexpected outcomes. For the most straight forward example - those things that are exported are not just buried, but end up being used in various processes. And China itself is also heavily dependent on imports, importing upwards of $3 trillion in goods and services. When your exports are no longer available, you may soon find that neither are your imports, and suddenly everything starts breaking.
carefree-bob[hidden]
The reason why you need the dollar is because of the balance of payments identity: changes to the capital account + current account = 0

So to run a current account surplus against the rest of the world of $100, you need to accumulate $100 of financial claims belonging to the rest of the world. There are complexities, for example I switched from "trade surplus" to "current account" because things like interest payments also need to be added in, but with these adjustments, you cannot run prolonged trade surpluses without storing your money in some other nation's jurisdiction.

Now the question is, which nation is willing to accomodate inflows of a trillion dollars a year? That's right, only a single nation is willing to do that. Most nations ban or severely restrict foreign capital inflows. Those that don't ban it, they don't have the necessary financial infrastructure to accomadate the scale of surpluses that China needs to run. This is why I laugh at all these reports of "China is dumping treasuries". China accumulated over a trillion dollars of dollar claims over the last year. That's in addition to what they already had. Why? Because who else would allow those levels of foreign capital inflows into their economy.

So once again, the US is the only nation willing and able to absorb these capital inflows.

Personally, I don't think this is sustainable, it's deindustrializing the US and is highly destabilizing, but since the liberalization of global capital flows launched by the Clinton administration, we have been doing this 30 year experiment in what happens when you let countries print money and use them to buy your bonds. The results have been, in my opinion, highly destabilizing, and it's not going to end well. But many of those who grew up in this period, think this is just how the world works and they can't imagine any other system, one in which capital inflows were highly restricted and as a result, no nation ran large trade surpluses against any other. Or they don't think about this at all and believe that China's hard work and industrial prowess is why they are able to run large trade surpluses, completely ignoring the whole money printing to buy US bonds that is happening in the background. When the US was the world's primary industrial power in the period 1870 - 1920, we ran current account deficits, not surpluses. What China is doing, industrializing while exporting capital -- that is truly unprecedented and possible only due to the combination of fiat non-convertible money combined with the US allowing unrestricted capital inflows. It's a truly bizarre state of affairs.

tonyedgecombe[hidden]
I doubt this will end whilst there is a Republican president in office. You have at least two more years of this to go.
codedokode[16 comments hidden]
I read today that US President temporarily lifted sanctions on Russia regarding diesel export. I hope it is just a part of a secret plan to persuade everyone that peace and trade is more profitable than war, and not US economy crumbling due to Russian sanctions against West. By the way, diesel in Russia is cheaper than in US, which means at least in diesel production Russian economy is more efficient (it makes more diesel per dollar spent).
porkshoe[7 comments hidden]
> I hope it is just a part of a secret plan to persuade everyone that peace and trade is more profitable than war

It's never 4d chess. it's just a guy desperately trying to get diesel prices to temporarily decline _without_ having to admit that he's a fucking idiot for having dragged America into Israel's war on Iran.

And even then, it's only because of the mid-terms. The GOP does not give a single solitary fuck about the sorts of people who notice and are hurt by gas prices. The GOP despises American workers.

codeddesign[6 comments hidden]
Change GOP to all DC politicians and I am in full agreement with you.

This is not GOP vs DNC. They are fully corrupted on both sides, and stopped representing their constituents a long time ago.

Neywiny[hidden]
https://www.reddit.com/r/GenZ/comments/1rrdlg1/i_see_a_lot_o...
jdlshore[3 comments hidden]
"Both sides" is bullshit. There's only one party that's exhibiting the level of corruption, narcissism, and warmongering that we're seeing today. It's Trump and Republicans that got us into this mess.
somenameforme[2 comments hidden]
The US has been in basically never-ending war, and warlike actions, for most of its existence, and especially since the end of WW2. This isn't partisan. The only thing that's particular unique in this scenario is that drones have made the typical pattern of assassinate leadership + bomb the country into oblivion as being rather less than effective. Well that and we have a leader who no longer even pretends it's about democracy, freedom, and protesting students or whatever. But it never was. Look at the destruction and chaos in the places we 'bring democracy to'. It's always been, and will always be, about power.
TitaRusell[hidden]
That's a dangerous game. If America no longer cares about freedom and democracy countries may very well choose to take their chances with Beijing.
BoggleOhYeah[hidden]
You mean the Democrats are the same as the party that has members and their families openly taking bribes from Russian oligarchs, gambling companies, etc, doling out pardons for political favors, enabling insider trading?
0dayz[8 comments hidden]
Everyone as in everyone in Russia considering they started the war?

And I'm curious which sanctions by Russia are crippling "the west"?

somenameforme[7 comments hidden]
He's obviously referring to the Western sanctions on Russia which have had a far more detrimental effect on the West, and Europe in particular, than on Russia. And Russia is in a winning position in the war. They're not going to stop without concessions, but the West has bet everything on a victory which means they'd rather see it continue to the last Ukrainian. That's also probably just fine with Ukraine's leader, who has gradually turned into a classical dictator - paranoia, constant reshufflings and all, who will be out of power, and perhaps worse, as soon as it ends.
realusername[5 comments hidden]
> sanctions on Russia which have had a far more detrimental effect on the West, and Europe in particular, than on Russia.

Considering we only see Russian bots talking about lifting sanctions nowadays and everybody else moved on to other subjects in Europe, it must have some effect of some sort, otherwise they wouldn't talk about it.

> And Russia is in a winning position in the war.

At best, even if they took the full country tomorrow, I don't think there's any way to save Russia from medium term collapse.

They would need a Marshall plan of somebody giving them 300 billions for free and I don't see that happening and who would do that.

> but the West has bet everything on a victory which means they'd rather see it continue to the last Ukrainian

You have it backwards, Ukraine and Europe want a victory so that Russia doesn't continue to kill to the last Ukrainian. (And for Europe more importantly, not being the next one in line).

That's what Russia's policy of destroying cities and killing civilians do.

rasz[2 comments hidden]
>somebody giving them 300 billions for free

Well, Iran was offered similar amount by certain somebody, so never say never

realusername[hidden]
I don't think Trump was ever going to pay for real personally
somenameforme[2 comments hidden]
Declare everybody that disagrees with you as a Russian bot and, lo and behold, apparently the only people that disagree with you are Russian bots. I think the German elections have been a rather more impartial poll on the views of people, to say nothing of the approval ratings of European leaders. Macron is at 16% and Merz has hit a truly impressive 10%. They've defined their leadership by their foreign policy, so what other conclusion can one draw?

And Russia is going to collapse after the war if somebody doesn't give them $300 billion, a small fraction of their GDP, and what Western media now claims they're annually spending on the war? How is that supposed to even make any sense? Similarly for a Ukrainian victory. The war in Ukraine has turned into a classic war of attrition with a small nation against a much larger one. The small nation is already having significant manpower issues, while the large one has yet to even turn to general mobilization. Again, how is a victory supposed to come out of this?

realusername[hidden]
> Declare everybody that disagrees with you as a Russian bot and, lo and behold, apparently the only people that disagree with you are Russian bots

No, I mean actual Russian bots, either paid far rights politicians or online paid accounts. That's the kind of people left talking about sanctions, everybody else moved on to other subjects a long time ago.

It used to be a hot debate in 2022 / 2023, we're way past that now and the public opinion moved on.

> Macron is at 16% and Merz has hit a truly impressive 10%. They've defined their leadership by their foreign policy, so what other conclusion can one draw?

No they haven't, as for France, which I know very well, almost nobody cares about foreign politics on election day.

What's making Macron unpopular is the local debt, ineffective spending, retirement policies, reaction to local events (such as student protests right now), voters don't really care about Russia.

> And Russia is going to collapse after the war if somebody doesn't give them $300 billion, a small fraction of their GDP

GDP isn't government budget. And I was making a low ball estimate yeah, maybe they need 800 billions, I don't know. What I do now is that they dug themselves into a very deep hole and Ukraine is a very poor country (especially now) which is never going to help them make that back.

> The small nation is already having significant manpower issues, while the large one has yet to even turn to general mobilization. Again, how is a victory supposed to come out of this?

I don't know a single war in history which ended because they had literally no men to throw at it.

Russia to me looks to be in a similar position as Germany in 1917, they still had men to throw at the war (and were even making territory gains!) but the country was collapsing due to the weight of the war, forcing them to stop.

0dayz[hidden]
How is it obvious when he wrote it in the opposite way?

What exports of tank components from Russia are detrimental to the west?

Since that is some of many things sanctioned?

How is Russia in a winning position?

You only give assertions without any actual explanation nor facts and is apparently obsessed with Ukraine's leader.