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Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 12
A world war would ruin everyone’s Macroeconomic day. Especially because the U.S. would lose.
https://www.nytimes.com/interactive/2025/12/08/opi...
OVERMATCHED
Why the U.S. Military Needs to Reinvent Itself
By The Editorial Board, The New York Times, 12/8/2025
President Xi Jinping of China has ordered his armed forces to be ready to seize Taiwan by 2027. Though the United States maintains a policy of strategic ambiguity on how it would respond to an invasion, Republican and Democratic presidents alike have said that America would defend the island nation. The Pentagon has produced a classified, multiyear assessment that shows how such a conflict would play out: the Overmatch brief….
Pete Hegseth, the secretary of defense, said last November that in the Pentagon’s war games against China, “we lose every time.” When a senior Biden national security official received the Overmatch brief in 2021, he turned pale as he realized that “every trick we had up our sleeve, the Chinese had redundancy after redundancy,” according to one official who was present.
The assessment shows something more worrying than the potential outcome of a war over Taiwan. It shows the Pentagon’s overreliance on expensive, vulnerable weapons as adversaries field cheap, technologically advanced ones….
China has installed malware in the computer networks that control power grids, communications systems and water supplies for American military bases. The advanced cyber campaign, carried out by the state-sponsored hacking group known as Volt Typhoon, threatens the military’s ability to move weapons and forces in the event of a crisis in the Pacific, and could affect civilians as well. America’s cybersecurity officials have struggled to find and remove the malware….[end quote]
This is a long article which shows how the U.S. military needs a paradigm shift to the modern world as well as rebuilding manufacturing of our traditional weapons such as Patriot missiles which we have given to Ukraine and Israel for defense.
The stability of the world depends upon U.S. military deterrence. Even if the U.S. military, defense contractors and Congress members with military manufacturing in their districts weren’t resistant to change there is no way that the U.S. could be ready to deter China from attacking Taiwan by 2027.
That’s a pretty short deadline.
Wendy
No. of Recommendations: 2
No. of Recommendations: 1
AdrianC wrote, "Wendy, was it you that recommended the book 2034?"
No. Thanks for mentioning it. I just placed a hold on the book at my local library.
Wendy
No. of Recommendations: 44
I concluded a 35 year DoD arc which ranged from being a high school intern, to three deployments with a joint special operations task force, to working in two White Houses (Bush and Obama), to 14 years in strategic intelligence. Got to travel to 6 continents (most of the time we were actually invited...).
I don't see us overmatched. 20 years in OEF and OIF hardened and vetted the troops - tactically, China is nowhere near as trained and lethal. Huge swaths of the Chinese armed forces aren't really professionalized. Now, if we did a force-on-force, all out battle, it wouldn't be pretty, but that is really not a likely scenario. We may be overmatched in the cyber/offensive cyber operations line of operations, but certainly not in blue water navy or nuclear triad.
All that said, projecting power is expensive and hard. They're incapable of a traditional invasion of the lower 48, not in any sustainable way, and vice-versa. If they're thinking of making a grab at Taiwan, I expect that during this regime. Our issues now are entirely self-inflicted, appointing a hack who isn't even qualified to be a Company Commander as SECDEF, and being distracted by nonsense, and wasting time on Venezuela, and effectively doing Russia's bidding.
No. of Recommendations: 3
Recently there was a scandal in the rocket ranks of the Chinese military that showed corruption with the rocket fuel being sold. The comment that struck me the most was that while xi was firing the corruption out of those ranks, was that the corruption culture was still there in the military. That Xi's firings wouldn't change that culture.
Then I remembered that some time back the Navy was plotting war games in the eastern Mediterranean, brought back a retired officer as the opponent, and he upset the game by taking everything he had and firing it all at once at an aircraft carrier, some got through and totally disabled it or sank it. Upset the game, and it seems promotions were endangered so they scrapped the game. But I paid attention, and it looks like so did everyone else.
One of the Chinese strategies in the Chinese sea is to fire so many missiles and rockets hopefully the defense is overwhelmed, some get through and sink or disable the ship. Found out recently Somalia(?) was moving to the overwhelming strategy.
They aren't ready even though they practice using cargo ships to land military equipment, but I'd be baffled on how to approach a strategy of overwhelming fire all at once. Can you make fake aircraft carriers to draw fire? I'm happy to let the Admirals approach that one.
No. of Recommendations: 1
We are going to be deep in a great depression. Won’t make a lick of difference. We won’t fight for more than a week. If we do not win in a week it is over.
Military intelligence is dead during this four year period.
Economic intelligence is dead as well.
If we win in a week by some reason known only to god, then the Chinese will cut off rare earths.
Meanwhile Wall St is saying la di da.
I was raised to think we are all holding up a system for the betterment of the country. At this point I won’t care. No one will care when the rich turn up bankrupt.
China can be corrupt to the core, but we can not. It breaks all good about our nation and our world the amount of corruptions we have right now.
The only reason we would win a war with China in a week is that China is so corrupt they might not know how to put the pieces together for an entire week.
BTW someone told me China had a power struggle a couple of years ago. Xi is only a figurehead for the military. For Xi to make this military declaration is only to support his overlords’ budget wishes.
We do it differently. Each admin declares we are not ready, more money please.
A press release here and there declaring China is about to go to war with us? Which military contractor put it out?
No. of Recommendations: 4
One of the Chinese strategies in the Chinese sea is to fire so many missiles and rockets hopefully the defense is overwhelmed, some get through and sink or disable the ship.
__________________________________________________
This strategy can be watched nightly as Russia fires about 125 drones/missiles but also hoards them for a weekly (+/-) attack with 500-760 at a single time.
While our training may be better, China has a vast depth of personnel and equipment. Back during the Korean War they made it clear that both their shorter logistic train and their superior manpower made the challenges of a decisive defeat (desired by the "China lobby" who was funded by the Nationalist government in exile (Taiwan).
The recently released U.S. National Security Strategy (NSS) prioritizes our interests in the Western Hemisphere and our recent actions show a disdain for small boats which break our laws (whatever they happen to be).
At the same time, it reads like a policy designed to separate us from the obligation to defend Western Europe against the potential aggression of Russia, in exchange for profitable business deals between our oligarchs and Russia's and suggests our European "allies" boost there defense spending if they want their interests protected.
It also says it prioritizes deterring a conflict over Taiwan by building military strength and demanding more from allies, emphasizing a "favorable conventional military balance" to counter China, stressing no unilateral status quo changes, and viewing Taiwan as vital for controlling the First Island Chain, a key strategy to restrict Chinese Pacific access, requiring allies like Japan & South Korea to boost their defense spending.
This seems to me like we are now assigning spheres of influence. The US will take what it wants in the Americas (presumably including Canada and Greenland), Russia can have what it wants in Ukraine and, some day, in Europe. I expect that China will be able to justify blowing up ships in the South China Sea which irk them by pointing to our precedent. At some point, it will not serve Japan's and Australia's interests to get into a war with China over Taiwan - and I suspect that the US would back off from a direct confrontation as well.
Wee are rapidly recasting the world (and our society, in ways) to the policies at the turn of the 20th century and I'm guessing that, in order to replicate the "Gilded Age", we will no longer be able to afford foreign adventures.
The next few years will possibly be the most transformative that the US has had in nearly a century - good, bad or ugly remains to be seen.
Jeff
PS: Two interesting war books:
The Coldest Winter: America and the Korean War, by David Halberstam
December 6: A Novel, by Martin Cruz Smith
No. of Recommendations: 7
Then I remembered that some time back the Navy was plotting war games in the eastern Mediterranean, brought back a retired officer as the opponent, and he upset the game by taking everything he had and firing it all at once at an aircraft carrier, some got through and totally disabled it or sank it.You might be thinking of Marine Corps General Van Riper. The exercise was "Millennium Challenge 2002". He played the enemy, with a considerably inferior force. Sank an entire US carrier group in the first two days of the exercise. He avoided US signals intercepts by using motorcycle messengers and light signals, instead of radios. His massive volley of cruise missiles "sank" 16 USN ships by saturating their defensive systems.
With some controversy, the game was restarted, and heavily scripted, to ensure a US "victory".
Millennium Challenge 2002https://en.wikipedia.org/wiki/Millennium_Challenge...The USN's reaction to Van Riper's success sounds like the management of some of the companies I worked for, where management was "always right", regardless of the facts on the ground.
Can you make fake aircraft carriers to draw fire?"Chaff": strips of aluminum that are shot into the air, to confuse the homing radar of the missile. In the Falklands, one RN ship saw an Exocet coming, and fired a cloud of chaff. The Exocet missed the ship, and fell into the sea when it ran out of fuel. After the Falklands, the Brits were experimenting with a round they called "Siren", after the Sirens in "The Odyssey", that transmit radar signals to lure the missiles toward them, decoying them away from the ship.
Steve
No. of Recommendations: 9
I don't see us overmatched. 20 years in OEF and OIF hardened and vetted the troops - tactically, China is nowhere near as trained and lethal. Huge swaths of the Chinese armed forces aren't really professionalized. Now, if we did a force-on-force, all out battle, it wouldn't be pretty, but that is really not a likely scenario. We may be overmatched in the cyber/offensive cyber operations line of operations, but certainly not in blue water navy or nuclear triad.
All that said, projecting power is expensive and hard.
If it comes to it, and there’s a polymarket option to bet on the outcome, I’m betting on China quick, even with odds. I see us as desperately overmatched. While the US may have some assets worth noting, I have two major concerns:
One is that aircraft carriers are no longer what we think they are, because they are now vulnerable to a cheap and simple weapon: the drone swarm. Anyone who thinks China can’t turn its (newly minted) industrial might to producing hundreds of thousand of drones almost overnight isn’t living in today’s world. (I remember how the US did so at the outset of WWII, overwhelming Germany & Japan with sheer numbers of planes, tanks, guns, etc.) In a swarm attack you may kill a lot of them but *inevitably* some are going to get through, and all your fancy $36 billion jets are going to end up at the bottom of the ocean.
China now has what we *used* to have, an astonishing ability to produce, and produce they will if they decide to. They won’t even have the problems that FDR did trying to prepare the country for war, for them it’s just by dictat, and it’s done.
But my biggest reason for the bet would be simply your last line: “projecting power is hard.” It can be done, obviously, we did it in World War II (at tremendous national cost) and we did it in Iraq, and in Vietnam and Afghanistan with less happy outcomes. As for Taiwan, let me take you on a tour of jolly old England, circa 1940. Germany was sure they would overwhelm the undermatched British Air Force, but they we deficient in critical element: distance.
England had, what I have seen described as “a force multiplier”: distance. Britain was fighting over its own territory. English pilots who were shot down could parachute down and go right back up. German pilots who were shot down ended up prisoners. More to the point, because of the distance between French airfields and the targets in Britain - and the characteristics of German aircraft, they had but 10 or 15 minutes of “dwell time” over the targets. (The aircraft were not designed for distance, but for speed for “lightning war.”) On some runs, the fighters couldn’t even escort the bombers all the way to the targets, which made the big lumbering warplanes highly susceptible.
Now consider that Taiwan is 90 miles from China - with its almost infinite resources of land, production, and fuel, and is 7,000 miles from the US. Recall that Taiwan is small, but not tiny: it’s roughly the size of Massachusetts, so there’s lots of ocean and beaches, but not enough resources to sustain the population or its industry without tons of shipping, which could easily be blockaded if China chose to go that route.
Anyway, 1) distance and 2) industry. Yeah, we are majorly overmatched. I’m not even talking about the Pentagon’s inability to develop a weapons system that works (or is appropriate to the threat). Yeah, polymarket. I’ll make a bunch even as my country goes down the chute.
No. of Recommendations: 12
You might be thinking of Marine Corps General Van Riper. The exercise was "Millennium Challenge 2002". He played the enemy, with a considerably inferior force. Sank an entire US carrier group in the first two days of the exercise. He avoided US signals intercepts by using motorcycle messengers and light signals, instead of radios. His massive volley of cruise missiles "sank" 16 USN ships by saturating their defensive systems.
I am remembering Captain Billy Mitchell’s long road to convincing the Generals that air power would be effective. He overflew ships and dropped flour sacks on them to show that bombing from the sky could be accurate. Nothing. Later he used actual bombs to sink German warships captured in WWI, and while the public reaction was incredible, the PTB ignored it because “it wasn’t in war.”
Or, as an AI summary says: “ His 1921 and 1923 demonstrations, which successfully sank captured German warships including the battleship Ostfriesland, were a huge success in the public eye and generated significant press. However, within the military hierarchy, the results were highly controversial and largely dismissed by Navy and Army brass”
Eventually he broke through, but it took almost forever.
Then there are the Admirals who didn’t like the idea of replacing battleships (on which they had grown up and been promoted) with those newfangled aircraft carriers, because, “big guns.” Oops.
And then there was Admiral Yarnell’s “attack on Pearl Harbor” war game in 1932, which predicted the Japanese attack almost a decade prior - and was so stunningly accurate right down to the time of the attack (Sunday morning, when attention would be at its lowest.) Dismissed out of hand by the big guys, who were still wed to their battleships and outdated thinking - and we cruised along for another decade until the real thing came along.
Yeah, and we’re still producing $35B jet fighters that can’t fly, when a bunch of $2000 drones could cripple an entire fleet in an hour. And we’re not “overmatched”. Sure.
No. of Recommendations: 1
"A world war would ruin everyone’s Macroeconomic day."
Let's toss something else into the mix:
https://www.unz.com/bhua/what-happens-if-japan-joi...Sanae Takaichi, the newly minted prime minister of Japan, addressed to the Japanese parliament in November that a conflict in Taiwan constituted a “survival-threatening situation” for Japan, implying Japan will directly and proactively involve itself in a fight with China.
The remark came shortly after the big meeting between President Xi and Trump in South Korea at the end of October to reset trade ties. The question of Taiwan was explicitly shelved by both during the meeting.
What Takaichi is asserting is that in a scenario where the secessionist government in Taiwan declares de jure independence and Beijing prepares for a military action, Japan could preemptively launch an attack on China without China first attacking Japanese forces or territories.
The phrase “survival threatening situation” is not a casual slip of tongue. It has a specific and deadly meaning in Japanese official lingo.
Imperial Japan invoked the same exact phrase to justify its aggressions prior to the 1931 invasion of Manchuria in Northeast China, and again prior to the 1941 attack on Pearl Harbor.https://www.japantimes.co.jp/news/2025/12/03/japan...Takaichi’s remarks came amid a long-running debate over Japan’s role in a potential emergency over Taiwan.
A decade ago, then-Prime Minister Shinzo Abe cited two specific scenarios as potential “survival-threatening situations”: a crisis in the Hormuz Strait — a crucial lane for energy import-dependent Japan — and an emergency on the Korean Peninsula.
Since then, though, government officials have shown greater caution in describing such situations.
Before Takaichi, no sitting prime minister to date had ever referred to a concrete scenario where an attack on Taiwan could constitute a “survival-threatening situation,” potentially allowing the deployment of the SDF, effectively giving the Japanese leader a degree of leeway when push comes to shove.
Over the last few weeks, Takaichi has admitted her remarks were off script and that she had no intention to cite a concrete scenario, reiterating that her government’s position is in line with those of her predecessors.
No. of Recommendations: 0
No. of Recommendations: 0
No. of Recommendations: 7
China can take Taiwan.
But what about a naval blockade of China?
Well, China has about 9,000 miles of coastline, which is a prodigious amount of territory to blockade. More to the point, they also have Russia, Afghanistan, North Korea, and 10 other countries on their borders, any of which would be only too happy to help break such an embargo.
When we blockaded Cuba it was 90 miles off our coast, we controlled the seas in the area, and it was a small-ish island with no other support than a superpower 10,000 miles away. Not a viable solution.
No. of Recommendations: 0
"Not a viable solution."
Difficult certainly. But with satellites and spies, we could determine which oil tankers & cargo ships with food are headed to China then turn them around.
Also the above combined with export embargo would aid in hampering China.
US & Canada make up 40% of imported foodstuffs.
And there is a possibility of the US influencing Bahrain, Qatar & Saudi Arabia to cut or stop oil exports to China. Some of the China oil could be diverted to other markets.
No. of Recommendations: 1
A few points to consider:
The longer the logistical past for a military forces supply train the more vulnerable and inefficient it is. Call it an inverse square law sort of thing. The US supply line to the South China Sea is substantially longer than China's. Add to that the ease of logistics by train vs. by ship across an ocean.
Japan clearly does not trust China to limit its land-grab to Taiwan. China's argument for ownership/occupation of Taiwan is well known. The Japanese fear of an invasion of Taiwan being an existential threat may turn out to be a self-fulfilling prophesy if they respond.
The "body language" signals being sent by the US administration may give both Russia, China and Israel "permission" within their spheres of influence in consideration of them letting the US do as it will in the western hemisphere (including Greenland and Canada).
Jeff
