Russia in quagmire; US job openings stay high; global wheat pressures ease; China's CPI inflation very low; air cargo volumes recover; Australia faces climate costs; UST 10yr 1.92%; oil and gold retreat; NZ$1 = 68.5 USc; TWI-5 = 73.4

Isn't all the money thrown at building houses borrowed? If you reduce the cash available to throw at something, surely prices go down as people just don't build as much. Not all new house building is necessary, some of it is just a speculative waste of resources. Batches/Holiday houses for example. At the extreme end, China's ghost cities..

There is a very high correlation between the Fed raising rates and the economy going into recession. Usually when economies are 'overheating' they intervene and recession follows.

Geotech is quite useful, have you ever seen "Massive engineering disasters"?

Nobody disagrees here. Quality infrastructure has been overlooked for far too many years in NZ and not just in the public domain. More focused capital spending from the Crown and enterprises can lift Kiwi wages faster than anything else.

But we've been in this unending spiral of consultants and bureaucrats spending years masquerading in front of drawing boards to achieve virtually zero. FFS our PPP projects are also meeting the same fate that large public-run projects often do.

Grant Robertson is sayng we need to tighten our belts?  What?  Surely not.  Robertson is the high priest of crazy spending.  Our grandchildren are doomed.

Ukraine is a lost cause now, its gone now in a matter of weeks. You cannot start firing anything from across the border into Ukraine without escalating the war. Putin knows he just needs to push troops to the Polish border. The damage is catastrophic they don't care if the flatten the place and every single civilian leaves. The Russians have been underestimated by the west, everyone thought that it could simply not happen in this day and age.

Russia is best left alone. As long as they stay within the limits of the old soviet union, it can fester on its own. The main problem going forward for the west is that is has massive energy reserves as well as rare metals and the west has become dependent on it. The USA is already paying a high price for the attempted sanctions on the energy side and the problem is Biden needs to keep the voters happy where as Putin doesn't care if you starve to death in the street. No prizes for guessing who is going to blink first.

About twenty years ago I got into a conversation with a recently retired US Navy Captain. He said that when détente etc, Gorbachev, Yeltsin saw the iron curtain lifted, it became quickly apparent that the soviets were not anywhere as well equipped or capable as we had been led to believe.It might not be all that dissimilar now. For instance in Syria, the Battle of Khasham, the US forces destroyed a Russian so called mercenary force, but nevertheless armed to full capacity, reasonably easily, that is no casualties on the American side. Suggests that there are chronic deficiencies that are now being exposed in Ukraine. 

Chinese wealth does not yet match the wealth in the west. And their economy shrunk as compared to America last year (when it had been expected to grow). The decoupling of East and West will reduce wealth on both sides, however, the West has a culture more conducive to technological advancement and innovation. They will plough money into new defence tech, renewables and attempt to rapidly wean themselves of Russian energy and Chinese factories. None of which is positive for China or Russia.



And now the Russia/Chinese threat will incentivise the West to become more united again. 

The history of communist authoritarian regimes is that when they withdraw into themselves, they eventually regress technologically. Communism is just not conducive to innovation. China endlessly likes to refer back to their glory days, but they are harking back to deep history. Deep history is great for stoking nationalism and isolationism but not so great for innovation. When the May 4th movement began, it was because Chinese intellectuals realised they were embarrassed to be so far behind the rest of the world. And came up with crack pot ideas about why the West had advanced faster than them, in a way that mostly flattered their sense of superiority and entitlement. They cherry picked which aspects of western values and systems they would engage with, but they did not choose democracy. Modern western democracy is flawed too obvs. All systems are, but western capitalist democracy has done more to lift sheer numbers of people out of poverty, gain education and extend life spans than any other system of governance in the history of mankind. Unfortunately, a lot fo that innovation was in using finite resources which will run out this century (at at the expense of other species and the climate). If the China/Russia alliance forces the West to rapidly innovate and pivot to renewables… who gets the last laugh? While Russia and China will still be heavily dependent on fossil fuels and without a culture more optimal for innovation, the West is likely to leap ahead of them technologically. AGAIN. 

When Britain was the worlds factory, when it led the industrial revolution, it spread Western property rights and value systems across the world. The capitalist and democratic system, encouraged innovation in all the countries that adopted (or already had) a similar legal, politcial and value system. Every country that followed Britain (or already had very similar values) rapidly began a population boom. More and more cultures mingled and shared ideas. And felt safe to invest capital within the safety of certain legal rights. It wasn’t always nice. But Empires don’t tend to be. Regardless, we pretty much always have them and they have pros and cons.   



So now China is the world’s factory. And in the decades since they took on this role have they spread their culture, legal system, politics and innovations across the globe? Like the Dutch, then the Brits and most recently the Americans did?  Have they leapt ahead to become the vanguard of global innovation? No. That isn’t to say that China isn’t successful or hasn’t made huge gains, but certain gains are limited by their politcial and ideological system IMO. And they are still butt hurt (as is Putin) that they do not have more soft power and global cache. But what is it exactly that qualifies a nation to feel like they ought to be treated as more of a big dog on the global stage? Is it population size? It is it because you were fancy and advanced 1000 years ago? No. Most cultural changes are a form of cultural evolution based on what works, along with how appealing your culture is to assimilate to. Neither Russia or China make their cultures appealing to assimilate to. Japan and South Korea still have more cultural soft power than China, despite significantly less wealth.

The Western world engages with China for merceneray profit based reasons, not because China has cultural cache that everyone wants to emulate. The world doesn’t experience Chinese culture and think… “ooh let me be more like that”. Have even China’s neighbours rushed to adopt Chinese culture and legal system? Nope. And if anything, countries that are butt hurt with the West, are still defined by a fight to prevent Westernisation and resorting often to religious extremism (like ISIS) in order to protect their sense of national pride and identify. But tell me, how do we think reverting back to medieval Islamic law would affect technological innovation? 

So as history shows us, it will require brute force violence and subjugation to force other countries to accept a new world order and Chinese or Russian dominance (because they have such poor soft power). Unless there is a global ideological shift (which is possible) then western culture still has vastly more cache.

Cultural cache is a huge factor. The Ancient Greeks were so innovative, so open to new ideas, that they still had massive amounts of cultural cache Millenia after their culture was gone. People were still advancing technology and ideas based on their language and thinking. A lot of the innovation in Ancient Greece came because they were open to ideas from other cultures. They encouraged debate (only for rich men obvs) and had proto-democracy. Rome were also only too glad to incorporate the ideas and tech of other cultures.

But what happened in the USSR? Patriotic delusionalism led to technological regression. And it will again eventually if they are headed back down that path. 

The greatest intellectuals, scientists and thinkers of the modern era don’t rush to attend Chinese or Russian universities or emigrate there to start new businesses. Naturally, Western capital has invested in China and Russia, but look how quickly it pulls out.

Innovation happens when your culture is at least somewhat welcoming to immigrants and new ideas. China is interested in its own ideas and the belief that its own culture and intellectuals are superior. Whereas Western culture will potentially adopt any idea if its viable and can be turned to a profit. It’s mercenary but ultimately leads to more innovation. 



Russia spent the last decade amassing foreign reserves and wealth assets then storing them in the West, and much of that wealth appears to have been confiscated. China would most certainly have noted. I’m not sure they expected that the West to do that to a G20 country.

It takes a long time and some would argue, major wars to reset a reserve currency. Neither Russia or China are even remotely near reserve currency status. So the West still very much has that leverage against them, for awhile yet, which both of them have just been reminded of. 

Not to mention that China’s population is expected to keep ageing and shrinking (which is also deflationary) and America is expected to keep growing (entirely because of immigration, which again, leads to more cultural innovation). 

I would not be so quick to assume the American empire is over. If China and Russia had waited another decade or so? Yeah, much more likely, but I just don’t think they had reached parity with the West yet. 

We’ll see I guess.