China, the US and trade in a dog-eat-dog world

An agreement between the world’s two biggest economies would sideline the WTO

Edward Luce

Forget for a moment how many bushels of soyabeans China will promise to buy from American farmers. Leave aside China’s expected vow to stop its theft of US intellectual property. Such pledges will buoy the markets when Donald Trump and Xi Jinping finally unveil their deal.

The radical part is the way in which they have agreed to hold each other to account. Unlike trade deals signed under Mr Trump’s predecessors, this one calls for no third parties to be involved. Each country will be licensed to decide when the other is in breach. Having sought a reset with China, Mr Trump would be enshrining a diet of endless tit-for-tat. If ever there was a blueprint for bilateral instability, the coming US-China deal would qualify.

But that is only half the story. The other is what the compact will do to everyone else. When the world’s two largest economies agree to settle disputes between themselves, the World Trade Organization is instantly sidelined. As it is, the WTO no longer accepts new cases because the Trump administration is blocking a quorum on its appeals body. Now it will be relegated to a bystander.

One of the signature creations of America’s global leadership would be halfway towards irrelevance. This is not just the outcome of Mr Trump’s “America first” philosophy. It will be a co-production with China. Ironically, other countries could sue China at the WTO for its expected pledge to buy more US goods. That would breach the principles at the heart of the free trade system.

Do not expect the equity markets to worry about the deal’s pitfalls. Except when prices are falling, Mr Trump believes the stock market is always right. In this case, he will surely be rewarded. What follows is another matter.

Much as grazing herds in search of greener pastures ignore the scree slopes beyond, markets are often myopic. Almost regardless of its contents, a deal will trigger a relief rally. The spectre of a dangerous nosedive in US-China relations would have been averted. But it would come at the expense of future stability.

There are three reasons to worry about the deal’s impact on the global economy. The first is that it will deepen uncertainty. One of the key benefits of the WTO has been to enable trade disputes to be settled at arm’s length from political capitals. Countries may not like individual rulings. But they generally accept them because they know future decisions might go in their favour. Clear rules and a predictable process allow the private sector to take decisions with more certainty. It is hard to imagine having today’s sophisticated global supply chains — and the associated benefits of poverty reduction, lower consumer prices and skills transfer — without a stable trade regime. Mr Trump and Mr Xi are poised to undermine those arrangements.

Ironically, the US has won the vast majority of cases it has taken to the WTO. (Like most countries, the US loses most complaints against it.) Do not expect many in Washington to trumpet that fact.

There is a hardening bipartisan consensus in favour of a new cold war with China. Unlike the original one with the Soviet Union, in which trade between the two blocs was minimal, this is between deeply entwined giants. The coming deal’s enforcement mechanism will offer Democratic and Republican presidents an irresistible set of punitive tools to use against China. There will be no WTO to keep them honest. Nor will there be any natural breaks between trade policy and diplomacy. Mr Trump has cited US national security as grounds for tariffs on European and Canadian metal imports. Pretty much any Chinese economic activity can also be blocked on those grounds.

The second concern is that the trade deal will further weaponise the rule of law. Judicial hostage taking is becoming more frequent. After Canada detained Meng Wanzhou, a senior executive at Huawei, on a US arrest warrant, China arrested — and continues to detain — two Canadian nationals. Mr Trump then suggested he would drop Ms Meng’s case in exchange for Chinese trade concessions.

Some western executives tell me they have cut back on trips to China recently. Chinese executives are also said to be doing the same in reverse. Meanwhile, Chinese student enrolment at US universities is falling. When the rule of law is subject to political whim, the effect on business can be chilling.

The final worry is the deal’s impact on global politics. Westerners have long assumed that as China became more integrated with the global economy, it would move closer towards something resembling liberal democracy. It would be a troubling irony if China’s influence drew the rest of the world in the opposite direction. At face value, the looming trade deal will probably look like a victory for Mr Trump. Further reflection reveals how much damage the deal would do to the rules-based order that America created.

The best way to modify China’s behaviour would be to beef up global rules. Weakening international bodies such as the WTO, the World Bank and the UN sends the opposite signal. In a stable ecosystem, smaller species thrive. In a dog-eat-dog world, everything starts to look like dinner.

Turkish Proxies and Russian Forces Clash in Syria

While details of the attack on Russian forces remain scant, it could have serious implications for relations between Turkey, Russia and the United States.

By Xander Snyder


Fighters from the National Liberation Force, a coalition of Syrian rebels supported by Turkey, appear to have attacked Russian Special Forces stationed Syria’s Hama province. This is more than just the latest in the closing battles of the civil war in northwest Syria. The attack has broader implications for relations between Russia, Turkey and the United States.

Details remain scarce. But three sources have confirmed on the messaging service Telegram that the attack did, in fact, happen; that it took place on May 25 (though the story only made it to English-language news on May 31); and that the NLF – not some other rebel group – was responsible. In a May 27 post, Nors for Studies, an Arab-language research group, said an attack on Russian Special Forces had occurred. The Russian-language Conflict Intelligence Team said the attack had happened 7.5 kilometers (4.6 miles) from where Russian Special Forces are known to be operating, citing geolocation analysis published on social media that confirmed the nearby position of a Russian mortar team And the NLF itself claimed responsibility for the attack. Perhaps the one piece of corroborating information missing are any photos of the attack.



The attack comes as the Syrian army, with Russian air support, conducts a limited offensive in Syria’s northwest provinces. What’s notable about the NLF attack is that it targeted neither Syrian forces nor Russian-backed proxies but Russian forces themselves. The attack could mean a couple of things. It could be that Turkey, which has so far been largely effective in muzzling the NLF, is beginning to lose control of its Syrian proxies, and that one NLF contingent took action of its own. (This particular incident may represent only a small group that split off from the broader NLF organization.) It’s also possible that Turkey sanctioned the attacks, or at least didn’t stop them, in attempt to pressure Russia to force Damascus to back off from its offensive.

Though it’s difficult to tell which of these explanations is most likely, either would have consequences that extend far beyond Syria. If Turkey is losing control of some of its proxy groups in northwest Syria, it will be more difficult for Russia and Turkey to work together toward a resolution to the recent flare-ups. (The two signed a cease-fire last summer that resulted in a de-escalation zone and temporarily put to rest speculation about an impending Syrian offensive). Turkey has a number of interests in Idlib and Hama provinces, but perhaps the most immediate is preventing the mass influx of refugees over the border into Turkey that could result from a large-scale ground offensive. Turkey’s leverage with Russia is in maintaining its position as a power broker in the province. That’s something it has already struggled with; part of its deal with Russia was to quash the jihadist group Hayat Tahrir al-Sham, a commitment Turkey failed to meet.

However, most signs right now point to Russia and Turkey working closely together to establish another sort of cease-fire. The Russian news agency TASS reported on May 31 that the two were close to reaching some form of an agreement, and there have been a number of reports over the last week of Turkey busily resupplying its proxies in the northwest in order to repel Assad’s offensive. It’s hard to imagine that Turkey would be losing influence over any such groups if it’s increasing its arms supplies to them.

At the same time, Turkey is just weeks away from receiving Russian S-400 systems, an issue which, to Russia’s glee, has torn at the U.S.-Turkish relationship and even prompted the U.S. to bar Turkey’s receipt of F-35s, U.S. fighter jets that Turkey has been actively involved in developing since the jet’s inception. Ankara must know that allowing attacks on Russian service members would be a surefire way to scuttle the delivery of a weapons system that Turkey has risked its relationship with the U.S. to attain. Unless, of course, Turkey believes it has a dependable backup plan. U.S.-Turkish dialogue over alternatives to the S-400s has been ongoing (they even agreed to form a “study group” to try to work through the issue more formally), so it’s possible the two have reached some kind of an agreement that would free Turkey to more forcefully counter Russian ground forces. This would mean more bad news for Russia – beyond attacks on its ground forces – which had hoped that weakened U.S.-Turkish relations would hurt Turkey’s position in NATO.

If Turkey is willing to allow Russian forces to be attacked, then it might be willing to take bigger risks to defend its position in northwest Syria and ensure that a large-scale offensive doesn’t happen. For now, it seems as though Russia is still willing to negotiate on northwest Syria, which means it isn’t in a rush to push Turkey too firmly back into Washington’s camp.

Whatever the case may be, the attack is a reminder that, despite optimistic coverage of Turkey’s improving relationship with Russia, the two still have conflicting interests, including in Syria. Even if the two can cooperate on energy and weapons systems, they remain locked in a proxy war in northwest Syria. There’s a reason these two have gone to war countless times since the rise of the Russian Empire, and elements that led to that centurieslong competition are still relevant today.

All That’s Missing Is a Black Swan

By Jeff Thomas

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

- Ludwig von Mises

The Federal Reserve chart above only goes back to 1970, but its message is clear, nevertheless.

The velocity of money has dropped below that which was necessary to maintain a productive economy in 2009 and has never recovered.

The velocity of money can be defined as, “the rate at which money circulates or is exchanged in an economy in a given period.” It’s generally measured as a ratio of gross national product (GNP) to a country's total money supply.

No money turnover… no economy.

But, if that’s so – if the chart is correct and the money turnover is by far the lowest since 1970 - why did the economy recover after 2010 and why are we in a bull market? Surely, the quantitative easing programme initiated by the Fed corrected the problem and happy days are here again.

Well, actually, neither of those commonly-held assumptions is correct. Quantitative easing didn’t pump money back into the failing economy and, more to the point, it wasn’t intended to.

Most of the money that was created through quantitative easing never actually hit the streets.

To back up a bit, in 1999, the Fed, then under Alan Greenspan, convinced the US government, then under President Bill Clinton, to repeal the Glass Steagall Act, an act created in 1933 to assure that banks would never again recklessly create loans to the public that could never be repaid. Mr. Greenspan argued that the Great Depression was long over and there would not be a reoccurrence but that, if the Clinton Administration would repeal Glass Steagall, it would usher in an era of investment of borrowed money that would create the greatest surge in business since World War II.

And he was correct in his argument. The repeal ushered in a period of reckless loans that accomplished two things – it allowed the Clinton Administration to end on a positive note – one in which the economy appeared to be vibrant. However, it also created a mammoth debt bubble.

As is always true, the creation of massive debt is like a shot of economic heroin in an economy.

The euphoria is very real. Unfortunately, so is the withdrawal. This withdrawal kicked in with the real estate crash of 2007.

The Fed (which, if you remember, had created the bubble) recommended that, although the bankers had benefitted enormously through the creation of the debt, they were now in trouble.

Rather than have them pay for their misdeeds, the Fed Chairman put forward the concept of quantitative easing (QE). Through QE, the government would pump money into the banks to bail them out. Therefore the banks benefitted hugely from the reckless loans, then benefitted hugely again, through the debt-funded QE.

The pretense was that QE would be used to pay off bad loans, re-energising the economy. And, interestingly, enough money was pumped into the banks through QE1, 2 and 3 to literally write off every mortgage in the country. Had that been done, those cleared of debt would indeed have had the ability to re-invest in the economy.

But that isn’t what happened. Very little of the money that was created actually hit the street. It was simply gobbled up by the banks.

A by-product of the crash is that it brought on the Greater Depression. Real income has not increased since 2007, but inflation has. Although the US government claims inflation to be at 1.52%, it’s actually far higher – over 5%.

Likewise, unemployment is claimed to be at 3.8%, yet the real unemployment rate (as calculated by John Williams’ Shadowstats) is over 21%.

By any of these measures, the US is unquestionably in a depression.

But, hang on, what about the markets? The stock market is booming. Yes, quite so. It has become the norm for companies to buy back their own stocks. Although, this is economically dangerous, it does temporarily inflate the apparent value of the stocks and politicians do point to the stock market boom as proof of their sound fiscal management.

And, of course, there’s the bond market. It’s at an all-time high.

But bonds are debt, plain and simple. And a bond is merely a promise to pay the lender back with interest on a future date. The more bonds in the market, the more debt.

And so, we see a boom in markets that’s a false-reading. It was created entirely through debt and that debt is now in a bubble of historic proportions.

All of the other indicators (if we use the correct figures, not the ones the government has helpfully ginned up) confirm that the US is decidedly in a depression.

But, if that’s so, why doesn’t it feel like a depression?

Well, the answer to that is, once again, the economic heroin. At this point, the regular injections of heroin are massive enough to provide a euphoric high. The only problem is that, when the heroin runs out, the withdrawal will be one for the record books.

Global debt has reached $100 trillion, up from $13 trillion in 1990. Debt now represents 57% of global financial assets. At $18.4 trillion, the US has the largest treasury debt in the world, close to 40% of the total.


What goes up must come down. And, if there remains any doubt as to whether, this time around, the Keynesian tooth fairies have some sort of pixie dust that will make the problem go away, we need only have a look at the chart above, which was produced by the Fed itself.

In the real world of Main Street, the velocity of money has declined dramatically since 2009 and has tanked in 2017, unable to recover.

Conditions overall could not be worse for a crash more massive than any the US has ever seen in its 243 year history.

At present, all that’s holding up the house of cards is the mistaken faith that the average citizen has that the false numbers are correct – that his country is bumping along nicely. When he figures out that that was a lie, it’s game over.

All that’s required to eliminate the notion and to send the economy into a tailspin is a black swan event.

Will it be the dumping of treasuries back into the US system, as is now on the increase? Will it be the full implementation of CIPS, the Chinese interbank payment system? Will it be the elimination of the dollar as the petrodollar, as is now underway?

Any one of these and perhaps another dozen other black swans are waiting in the wings. All that’s needed is for one of the swans to walk onto the world stage.

America’s False Narrative on China

Washington has been loose with facts, analysis, and conclusions about China, and the American public has been far too gullible in its acceptance of this false narrative. The point is not to deny China’s role in promoting economic tensions, but to stress the need for objectivity and honesty in assigning blame – especially with so much at stake in the current conflict.

Stephen S. Roach


NEW HAVEN – In a rare moment of bipartisan agreement, America’s Republicans and Democrats are now on the same page on one key issue: Blaming China for all that ails the United States. China bashing has never had broader appeal.

This fixation on China as an existential threat to the cherished American Dream is having serious consequences. It has led to tit-for-tat tariffs, escalating security threats, warnings of a new cold war, and even whispers of a military clash between the rising power and the incumbent global hegemon.

With a trade deal apparently imminent, it’s tempting to conclude that all this will pass. That may be wishful thinking. Sino-American trust is now in tatters. The likelihood of a superficial deal won’t change that. A new era of mutual suspicion, tension, and conflict is a very real possibility.

But what if the US chattering class has it all wrong and the China bashing is more an outgrowth of domestic problems than a response to a genuine external threat? In fact, there are strong grounds to believe that an insecure US – afflicted with macroeconomic imbalances of its own making and fearful of the consequences of its own retreat from global leadership – has embraced a false narrative on China.

Consider trade. In 2018, the US had a $419 billion merchandise trade deficit with China, fully 48% of the massive overall trade gap of $879 billion. This is the lightening rod in the debate, the culprit behind what US President Donald Trump calls the “carnage” of job losses and wage pressures.

But what Trump – and most other US politicians – won’t admit is that the US ran trade deficits with 102 countries in 2018. This reflects a profound shortfall of domestic saving, owing in large part to the reckless budget deficits approved by none other than Congress and the president. Nor is there any recognition of supply-chain distortions – arising from inputs made in other countries but assembled and shipped from China – that are estimated to overstate the US-China trade imbalance by as much as 35-40%. Never mind basic macroeconomics and new efficiencies from global production platforms that benefit US consumers. Apparently, it is much easier to vilify China as the major obstacle to making America great again.

Next, consider intellectual property theft. It is now accepted “truth” that China is stealing hundreds of billions of dollars of US intellectual property each year, driving a stake into the heart of America’s innovative prowess. According to the accepted source of this claim, the so-called IP Commission, in 2017 IP theft cost the US economy between $225 and $600 billion.

Leaving aside the ridiculously broad range of such an estimate, the figures rest on flimsy evidence derived from dubious “proxy modeling” that attempts to value stolen trade secrets via nefarious activities such as narcotics trafficking, corruption, occupational fraud, and illicit financial flows. The Chinese piece of this alleged theft comes from US Customs and Border Patrol data, which reported $1.35 billion in seizures of total counterfeit and pirated goods back in 2015. Equally dubious models extrapolate this tiny sum into an aggregate guesstimate for the US and impute 87% of the total to China (52% to the mainland and 35% to Hong Kong).

Then there is the red herring emphasized in the Section 301 report published by the US Trade Representative (USTR) in March 2018, which provides the foundational justification for tariffs levied on China: forced technology transfer between US companies and their Chinese joint venture (JV) partners. The key word is “forced,” which implies that innocent US companies that enter willingly into contractual agreements with Chinese counterparts are coerced into surrendering their proprietary technologies in order to do business in the country.

To be sure, JVs obviously entail a sharing of people, business strategies, operating platforms, and product designs. But the charge is coercion, which is inseparable from the presumption that sophisticated US multinationals are dumb enough to turn over core proprietary technologies to their Chinese partners.

This is another shocking example of soft evidence for a hard allegation. Incredibly, the USTR actually admits in the Section 301 report (on page 19) that there is no hard evidence to confirm these “implicit practices.” Like the IP Commission, the USTR relies instead on proxy surveys from trade organizations like the US-China Business Council, whose respondents complain of some discomfort with China’s treatment of their technology.

The Washington narrative also paints a picture of China as a centrally planned behemoth sitting astride massive stated-owned enterprises (SOEs) that enjoy preferential credits, unfair subsidies, and incentives tied to high-profile industrial policies such as Made in China 2025 and Artificial Intelligence 2030. Never mind a large body of evidence that underscores the low-efficiency, low-return characteristics of China’s SOEs.

Nor is there any doubt that comparable industrial policies have long been practiced by Japan, Germany, France, and even the US. In February, Trump issued an executive order announcing the establishment of an AI Initiative, complete with a framework to develop an AI action plan within 120 days. China is hardly alone in elevating innovation to a national policy priority.

Finally, there is the time-worn issue of Chinese currency manipulation – the fear that China will deliberately depress the renminbi to gain unfair competitive advantage. Yet its broad trade-weighted currency has risen over 50% in real terms since late 2004. And China’s once-outsize current-account surplus has all but vanished. Still, the currency grievances of yesteryear live on, getting prominent attention in the current negotiations. This only compounds the false narrative.

All in all, Washington has been loose with facts, analysis, and conclusions, and the American public has been far too gullible in its acceptance of this false narrative. The point is not to deny China’s role in promoting economic tensions with the US, but to stress the need for objectivity and honesty in assigning blame – especially with so much at stake in the current conflict. Sadly, fixating on scapegoats is apparently much easier than taking a long, hard look in the mirror.

Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, is a senior fellow at Yale University's Jackson Institute of Global Affairs and a senior lecturer at Yale's School of Management. He is the author of Unbalanced: The Codependency of America and China.

sábado, junio 01, 2019



What Was Your First Time Like?

By Joel Bowman, Editorial Director, International Man

BUENOS AIRES, ARGENTINA – Everyone remembers their first time… in India.

It’s an eye-opening experience, to say the very least, at once tantalizing and terrifying.

The colors… the tastes… the smells.

And the people… all 1.3 billion of them – hustling… begging… dancing… cooking… worshipping… loving – in ways that are at once strange and fascinating, yet distantly familiar.

A real feast for the senses, the unaccustomed visitor can expect India to treat him to the full gamut of experiences.

Our own debut to the subcontinent occurred shortly after the Mumbai terrorist attacks, back in late 2008. We assumed the chaos on the streets was some kind of holdover from the incident, the way frenetic energy often buzzes around a city after such a momentous event.

Soon we discovered that’s just how Mumbai is… all the time. A giant, whirling, boiling cauldron of humanity, struggling and elbowing to the front of the line.

Of course, it’s nigh impossible to get a read on a place unless you really delve deep into its culture and history. We were only there for a month and a half… barely enough time to scratch the surface (though we did end up being interviewed for the Hindu Times AND played an extra on a Bollywood movie… tales for another time).

That’s why we were so intrigued to read Jayant Bhandari’s account of the current political, social and economic trajectory of the planet’s second most populous nation.

Having run companies both inside and outside India… having earned degrees from his home country and abroad… and bringing a lifetime of first-hand experience to the table, Jayant is uniquely positioned to comment on the situation there.

What you are about to read may shock you. Certainly you won’t find anything like it in the mainstream news.

Please enjoy Jayant’s insights, below…

The Decline of India

By Jayant Bhandari

As I write these words, the 2019 general election for the next federal government of India is underway. This comes five years after a significant break from the past occurred in Indian politics. Now, for the first time since independence, the ruling party and the Prime Minister have no connection with the British colonial past.

Narendra Modi, the Prime Minister, was born in 1950, three years after the British left.

It is perhaps no coincidence then that this cycle’s electioneering is by far of the lowest quality I have ever seen. Terrorists, criminals, mass-murderers, fanatics, conmen, and gang-rapists populate the field. Moreover, at least one-third of the current legislators have criminal proceedings against them, and this in a country where most crimes never get reported. Every face I see reminds me of Gollum (of The Lord of the Rings).

The voter is obsessed with his ideological preferences and processes everything through partisan lenses. If a rapist is from a feminist’s preferred party, she will refuse to see any fault in him. Not that India has had much to do with concepts like morality and reason. In earlier times, there was a certain kind of tolerance of different ideas. That tolerance is long gone.

Everywhere I look it is as if scavengers are feasting on carcasses.

In India, as elsewhere, institutions provide us with the basic ecology to conduct social transactions. If these institutions are formed on the basis of reason and morality, they encourage people to think, operate and transact without aggression or fraud.

Unfortunately, the rational institutions that the British left behind in India have continued to degrade since the time they left. Modi was a sudden and significant break from the British and also the start of an era of rapid degradation.

Termites have now hollowed out these institutions. There is a suffocating smell of rot everywhere. Class, vision, honor, pride, and self-respect are conspicuous by their absence, not just among politicians but particularly among the citizens. Now the underlying tribal culture is reasserting itself through the continued - and accelerating - degeneration of these political institutions.

According to the international organizations—the World Bank, the IMF, etc.—India is a vibrant democracy, and among the fastest growing economies in the world. I am not sure whether to trust my own senses or these well-staffed organizations with tens of billions of dollars in funding.

Every party is operating on a single economic policy: Who will offer the most goodies if elected.

Before he became the Prime Minister, Modi had suggested offering INR 1.5 million of free money to each individual, an amount that would have been 1,300% of GDP per capita. Rahul Gandhi, the main opposition candidate, is offering INR 71,000 to each poor family, and government jobs to many tens of millions.

India is more regressive today than it was before the so-called liberalization of 1991.

Unemployment has also shot up. Tens of millions were shown the illusion of success if they went to schools and colleges. These individuals are now knocking on doors, looking for whatever they can. It is not very difficult to find an Amazon delivery guy who is an engineer.

Recently, Indian Railways posted 90,000 job vacancies. 28 million candidates applied – a number comparable to the total workforce of the UK. But this is nothing unusual. Engineers, doctors, PhDs regularly apply for jobs that otherwise require no more than primary school education, including jobs that require dipping into pools of sewage to unblock drains (watch the Slumdog Millionaire movie to get a “flavor” of this).

In 2016, Modi implemented demonetization of 86% of Indian currency, which seriously harmed the economy. For a long time, the backbone of the Indian economy has been its informal sector. Without cash, this sector went into a coma. Then Modi implemented an extremely onerous internet-based value-added tax system, in which every receipt is reconciled.

There are now hundreds of regulations and circulars amending the tax system.

I know many otherwise educated people who have never used their ATM card. In the low-trust society of India, they cannot foresee not having a human on the other side before they collect their cash. With poor people, the difficulty is much bigger. They simply cannot comprehend how this whole system works.

I don’t use my card either, for it is not impossible for money to leave my account and then never arrive where I send it. Everyone who has used Indian banks suffers from this problem and takes it in its stride.

While economically, all parties are on the left, offering crumbs to the poor while stealing the public treasury, there is also a considerable religious divide. The party seen as the right-wing, BJP, favours Hindu nationalism and has contributed to significantly increasing fanaticism among Hindus. The left is made up of victim-card holders: Muslims, communists, and what are rightly called “pseudo-secular” (spineless non-Muslims who find faults in their own religions but then without any logical connection conclude with sympathy for Islam).

Modi, who belongs to the right-wing, BJP, realized that he was likely to lose elections, so on 26th February 2019, to get votes of the TV-watching zombies, who wanted to vicariously feel valorous, he decided to send fighter planes inside Pakistan to drop bombs, trying to enact what Israel or the US do.

As a result of the incursion, India claimed to have killed 250 terrorists who were in training at a camp inside Pakistan. All evidence so far shows that they likely missed their target. (It seems they did shoot down a helicopter with six people in it…except that it was India’s own.) Nine Indian fighter planes have fallen from the sky so far this year during training, for no good reason.

The good thing is that when a nuclear war happens between India and Pakistan, the bombs will likely fail to explode.

Average Indian IQ, depending on which statistics you look at, is between 76 and 82. Given that our political correctness no longer allows us to talk about IQ, the assumption among the IMF and the World Bank is that India will not only be the next China but much better, for India is a democracy.

China copied western technology. India (and Africa) failed—copying is not all that easy. Shops in India are ridden with basic things like Chinese plastic toys. Finding skilled people is a near impossibility. When you bring a plumber home, you should expect him to create three new problems for each one he claims to solve. Those who think India will ever take over the manufacturing that is leaving China are living a politically correct delusion.

Even India’s IT industry —which was never a force to reckon with and dealt mostly with low-level work, and employed no more than 0.3% of the population—is rapidly losing ground. Call centres, as the reader might lately have realised, is rapidly moving either back to the US or to the Philippines.

Nothing works in India.

As time marches on, institutions continue to fall apart, degenerating and decaying. The Constitution is today mere pieces of parchment, with only as much value as the comprehension of the judge allows for. He simply does not have a rational mindset, for which the British formed India’s institutions. 
As institutions succumb to rot and decay, India has proven incapable of even maintaining them, let alone creating new ones to deal with the many modern challenges facing the country.
India economic growth, which began in the early 1990s, came about not so much because of so-called liberalization, but because cheap telephony and internet “force-fed” technology into the country, as it did to the rest of the Third World. That benefit has now been used up.

Even then, most of the Third World growth came from China, now clearly a Second World country. If you exclude China from the Third World, its growth does not look too good.

By the end of WW2, Britain had realized that India and the rest of the Third World were not worth the effort. These societies had become too chaotic. And the few liberties that the British did extend to the locals were in turn used to fight against them, rather than to build upon the foundations and to use them as a springboard to improve their own lot.

The Third World, including India, was living lives of savagery and barbarianism, existing at the margin of Malthusian equilibrium.

In 1950, India’s population was 359 million. Today it is 1,369 million. In 2050 it is likely to be 1,659 million. But population explosion does not tell you the full horror of the reality. The most educated and smart Indians (who the readers of this article come across) typically emigrate to work for private companies abroad, and simply have fewer or no children. The underclass therefore continues to increase in number with abandon while the proportion of smart people continues to decline across the society. All this aided by the affirmative policy has rapidly made the Indian government increasingly braindead.

The Third World wallows in victimization. The Christian guilt and virtue-signaling by the leftists in the West have encouraged this. Alas, this disallows the Third World to engage in any meaningful self-reflection, letting them to sink more and more into the quagmire; a reversion back to the dark ages.

What will be the outcome of the ongoing elections in India? This is the wrong question. As the break with the British past has been completed, there really isn’t any better option available.

As institutions in India continue to fall apart, now faster than ever, it will soon start to go off the cliff. India faces a humanitarian disaster. When one thinks about the Third World, one must keep in mind that except for China, the future is grotesque. Five billion individuals live in the Third World. When that falls apart, for their institutions will eventually no longer be able to contain them, it will be a humanitarian disaster of the kind the world has never seen before. Ironically, the World Bank and the IMF look at the Third World as the future of humanity.

It is a future only the politically correct could imagine, but that India will suffer nonetheless.