Value Stock

May 26, 2022

Russia – there’s nothing there, and as for China the Emperor has no clothes

Wow, what a difference a few months can make. President Biden a few days ago while visiting Asia stated that the United States would defend Taiwan if China were to invade it. What happened immediately after the comments is just as interesting. The leader of Japan, which is a country that hasn’t seen military action since August of 1945 repeated the same mantra, Japan would defend Taiwan. The Chinese must have been taken aback by these statements and are still studying them. Militarily this doesn’t change a thing. Its 121 miles from the Chinese mainland across the sea of China to Taiwan. It was only 20 miles from Dunkirk to England, and Hitler couldn’t make that happen. If China put 100,000 men into an amphibious assault landing across that sea, I double a single man would make it to Taiwan alive. American missiles would ravage the boats in the water and China knows it.

The Ukraine war is proving something on a daily basis that we haven’t known in years, and that there is only one SUPERPOWER in the world and it’s the country between Canada and Mexico. The Chinese have to be terribly worried about this, and they must recalibrate their thoughts, and plans for the future. America’s weapons aided principally by England are devouring the Russian army. The swing card is can the army of Ukraine continue to do what they have been doing.

The United States should have NO fear of Russia or China – that argument or discussion is over. Ukraine changed everything. Russia’s army is a fake army. It can be massive, but it is a plodding army with outdated equipment, unmotivated men, poorly led with no basic understanding of what is called military doctrine or how to wage modern war between industrialized armies. This is now obvious and it never was before. There were hints of it when the Russians were forced out of Afghanistan by American weapons and Mujahedeen willpower. But the locals in Afghanistan were never an industrialized army, the Ukraine is and so is Russia.

Now what we are witnessing in China is a confrontation that blends American military power with America’s economic power, and China will be unable to confront both. The only issue for us is whether our leaders realize that the odds are now on our side. It is obvious that Japan is now ready to take on its proper role in Asia, which is to lead Asia as our ally, and we must do everything to encourage Japan in that adventure. Asia is now ready to step up and form a true alliance economically and militarily with the United States and Japan.

An Indo –Pacific economic alliance is being put together as we speak. It will include Japan, Australia, New Zealand, India, South Korea, Singapore, Malaysia, Indonesia, Vietnam, Brunei, Thailand, and the Philippines. We will lead this alliance, but Japan will rightfully be its first member. Such an alliance will have favorable trading status among its members and this alone will be extremely disadvantageous to the Chinese.

These countries are begging for economic growth. We foresee the United States and Japan setting up extraordinary factories in all of these countries and then using these new economic powerhouses to disenfranchise China and its targeted growth objectives. This is inevitable. China will fail because right now they have built their whole economy on being the low-cost producer in the world and exporting to everyone. These other countries with the support of Japan and America will now begin to take over China’s markets. Imagine a free and democratic India, stepping forward and truly building its economy.

Such an economic and military powerhouse that this alliance will make will dwarf anything that China is thinking about for the future. We see China being in trouble as we speak and this means that the President of China Xi Jinping is also in trouble. This is his plan, he is the dictator, so he’s the guy that China rises and falls. This is no different than Putin in Russia.

China must export to develop capital for its domestic needs. At the moment those exports are shrinking. This is obvious to the internal Chinese leadership hierarchy. They are at least five countries in Asia that want to take China’s place as major export producers and some of them have lower costs than China, so this will become inevitable. This is why America had to lose much of its internal manufacturing capacity to China. You can’t compare $2 per hour labor costs to manufacture an automobile to Detroit at $60 per hour, Japan at $16, and South Korea at $12 per hour. Now nobody wants Chinese cars at the moment, but you get the point.

What will happen is that America will grant many of the Asian countries much freer access to the American markets than China has and these countries will therefore become the low-cost producers of hundreds of thousands of goods, and products. Do you think Chinese brainpower has anything on India’s or Pakistan’s? Do any of us realize how many doctors in the United States practicing today come from India and Pakistan?  Once these half dozen countries have access to our markets and go into alliance with the USA, China will begin to fade as others become the low-cost producers. China’s internal markets are not ready to absorb the lack of buying that will come when their exports begin to fade.

All of these issues must be faced by China while a war is raging in Ukraine. China has to be terribly disappointed that they publicly embraced Russia and Putin during the Olympics. They backed the wrong horse. Putin had to tell them this will be over in days, and now it’s months. Putin appears to be impotent with a military force that is not ready for prime time and China was clueless along with the rest of us that this was the real state of affairs.

Russia believed and China bought into the notion that Ukraine would cave in when the invasion took place. NATO and American weapons saw to that plus the economic embargo that the West is putting on Russia. Germany and France have still not contributed their share and everybody knows it. China like Russia is becoming isolated from the world and they know it. Both countries thought they had a great alliance going until they sat know and realize that there is not much they can do for one another.

Now if you put this all together it is going to spell out something, and that is that America once again is becoming recognized as the only Superpower in the world. We have held this role since the 1950s and it really has never changed. Yes, Russia was one of the two dominant nuclear powers but it’s a country’s economic power that backs up the military power that allows a country to truly be dominant.

What will also happen in the next ten years is Poland will become a dominant power in Europe. They are aching to do it. You can see right now how they are taking over the transfer of all weapons into Ukraine and they are glad to do it. The Polish hate the Russians. They will never ever forget the Katyn Forest massacre during World War II, and they still want revenge. Economic revenge will do just nicely, and Poland has all the ingredients to pull it off. Watch for Poland’s emergence as a viable adversary to Russia and an ally to the United States.


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