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We can profit off the two nutcases ruining our world — Xi and Putin. Here’s how.`

I bought a new “off the shelf” ThinkPad laptop.


Four and a half months.

Why so long?

China lockdowns, etc.

Dictators don’t age well. They get crazier.

As Lord Acton wrote 150 years ago: “Power corrupts. Absolute power corrupts absolutely.

Conscription in tzarist Russia was life. In 1793 it was reduced to 25 years.

Putin just conscripted 134,500 new into his army. He doesn’t train conscripts, doesn’t equip them and doesn’t pay them.

Mull on that number of 134,500. That’s a lot of cannon fodder for a country (Russia) that isn’t fighting a war. Is Putin planning a really big war as a ploy to stay in power?

Keep reading. This gets more interesting.

The world has two dictators. They’re both wrecking things in their own way. President Xi, with huge covid lockdown, unwillingness to buy Western vaccines, new strange rules on tech companies and outlawing child tutoring. And Putin with his Special Military Operation…

Both Xi and Putin are shooting to be lifelong presidents, so they can make lifelong mischief for us.

This is not your same old world. Zillions of new investment opportunities are popping up daily. Take manufacturing. It’s no longer cheap or reliable to build in China. But there are worker shortages here. I like Nvidia because of its focus on the factory of the future, with robotics and AI Don’t believe me? Watch this:

Ukraine has the best soil in the world. It used to be Europe’s breadbasket. No more. Farming land in the U.S., in Canada and Australia will be hugely attractive.

With Russian oil and gas cut, there’ll be huge opportunities for America exporting oil and frozen gas. And for new energy opportunities. My friend invested in a wind farm in Texas. He’s made enough money from the windfarm in recent months to more than make up for the losses on his tech stock portfolio.

It’s time to write the book on handsome investment opportunities which Xi and Putin are presenting us. I’ll take up opportunities in coming blogs.

Meantime. I’ve been reading widely on Xi and Putin. I present the two best, both from the Economist:

+ Dominic Lieven says empires eventually end amid blood and dishonour
The academic argues that Russia’s invasion of Ukraine is a case in point

Empires are great powers. Their demise is usually accompanied by geopolitical convulsions and wars. They are also multinational polities with peoples living cheek by jowl. Turning an empire into nation states with sharply defined sovereign peoples and borders seldom comes without great conflict. Russia’s invasion of Ukraine is a case in point.

In the 1880s the chief legal adviser to the Russian foreign ministry wrote that if the national principle—to every people its own state—was ever applied in the vast region then ruled by the Romanovs, Habsburgs and Ottomans the result would be mayhem. He was correct. It took two world wars, many lesser conflicts, genocide and ethnic cleansing on a vast scale to turn the imperial map of central and eastern Europe into the post-1945 national map. Much of the Middle East is still living with the consequences of the demise of the Ottoman empire and of the British and French empires that briefly filled part of the void the Ottomans left behind. European-style ethno-linguistic and democratic nation-states had great difficulty putting down roots in a world where allegiance was traditionally defined by local community, religion, dynasty and region.

The consequences of imperial collapse often take a generation or more to emerge. Bangladesh’s secession from Pakistan happened 24 years after the end of British India. Although the end of the British empire was managed better than most, post-imperial conflicts still rage today all the way from Ireland, across the Middle East (Cyprus, Iraq, Palestine) to Fiji. The worst of these is the confrontation between India and Pakistan over the disputed border region of Kashmir.

The most frightening example of the delayed impact of an empire’s collapse is interwar Germany. Like Russia in 1991, Germany in 1919 was on its knees but remained by far the most latently powerful country in the region. A combination of post-imperial resentment and regained power led it to challenge the territorial settlement agreed in the Treaty of Versailles, facilitating another world war. This is not to make comparisons between Adolf Hitler and Vladimir Putin. With or without Hitler, Germany would probably in time have challenged the post-war order in east-central Europe.

After 1945, the Soviet Union was the surviving empire. Now we are living with the consequences of its collapse. It was a miracle that this empire, with its bloodstained history and its massive security apparatus, disintegrated between 1985 and 1991 with barely a shot fired in its defence. The invasion of Ukraine is the belated revenge of the old Soviet security apparatus for what it sees as 30 years of humiliation, retreat and defeat.

From a Western perspective, the near-bloodless demise of Soviet communism was almost a fairy tale. It fed the belief—terrifyingly reminiscent of Europeans before 1914—that contemporary Western civilisation marked the end of history and the final triumph of liberal values. But for the Russians, the 1990s were anything but a fairy tale. The economy and political institutions disintegrated. Life expectancy plummeted. Some 25m ethnic Russians suddenly found themselves outside Russia’s borders. Russia was demoted from superpower to beggar. It is unsurprising that many Russians love Mr Putin (with much less provocation, Americans elected Donald Trump under the slogan “Make America great again”).

As always, the loss of Russia’s empire meant most to its elites. It deeply wounded their sense of status, self-esteem and world-historical significance. The loss of Ukraine specifically has hurt Russians more than that of the other Soviet republics. Possession of Ukraine has long been essential to Russia’s existence as a great empire; its secession in 1991 sealed the Soviet Union’s fate. Crimea’s loss hit Russians especially hard. The great naval base in Sevastopol was vital to Russian power in the Black Sea region and had a unique place in Russia’s historical memory (owed above all to the great sieges during the Crimean and second world wars).

Both because of its importance to Russia, and owing to internal divisions between the Russian-speaking east and the rest of the country, I always believed that an independent Ukraine could only survive if Russia’s relations with the West remained good. Ukraine could act as a bridge between the two. When Ukraine was forced to choose between Russia and the West—as happened definitively in 2014—disaster followed.

Mr Putin’s initial strategy has failed. He will probably now attempt to conquer all the Donbas region and the land bridge between it and Crimea. If this succeeds, Ukraine will never accept this new border as a basis for long-term peace. The brave war of independence against the invading Russian ogre will become a central—and unifying—core of the Ukrainian national myth. Even after Mr Putin departs, any future Russian government will find it hard to retreat from Donbas (let alone Crimea) and retain legitimacy. If other borderland wars, such as in Kashmir, in former empires are a guide, the Russo-Ukrainian conflict could last in a semi-frozen state for decades, threatening international stability and periodically bursting into renewed fighting. It might even escalate into nuclear confrontation.

Dominic Lieven’s new book is just out.

To buy it, click here.

Now let’s move to

China’s slowdown (from the Economist)

Over the past 20 years China has been the biggest and most reliable source of growth in the world economy. It contributed a quarter of the rise in global gdp over that period and expanded in 79 of 80 quarters. For most of the period since China opened up after Mao’s death, the Communist Party has taken a practical approach to making the country richer, mixing market reforms with state control. Now, however, China’s economy is in danger. The immediate issue is its zero-covid campaign, which has caused a slump and may condemn the economy to a stop-start pattern. That is compounding a bigger problem: President Xi Jinping’s ideological struggle to remake state capitalism. If it stays on this path China will grow more slowly and be less predictable, with big consequences for it and the world.

After nearly two months the lockdown of Shanghai is easing, but China is far from being covid-free, with fresh outbreaks in Beijing and Tianjin. More than 200m people have been living under restrictions and the economy is reeling. Retail sales in April were 11% lower than a year earlier and purchases of kfc, cars and Cartier are weak. Although some workers are living on factory floors, industrial output and export volumes have dipped. For the full year China may struggle to grow much faster than America for the first time since 1990, in the aftermath of the massacre near Tiananmen Square. For Mr Xi the timing is awful: after the 20th party congress later this year, he intends to be confirmed for a third term as president, breaking the recent norm that leaders bow out after two.

It is, however, Mr Xi who bears much responsibility for the twin blows to the economy. The first is his zero-covid policy, which has been enforced for 28 months. The party fears that opening up would lead to an exit wave that could kill millions. That may be true, but it has wasted precious time: 100m people over 60 are not triple-jabbed. It refuses to import more effective Western mrna vaccines. Instead the plan may be to push zero-covid into next year. China has backed out of hosting the Asian Cup, a football contest, in June 2023. There is talk of permanent testing stations and a standing army to swab nostrils for ever. Since Omicron is highly transmissible, more outbreaks and lockdowns are inevitable. But since the zero-covid policy is identified with Mr Xi, any criticism of it is viewed as sabotage.

That same ideological zeal is behind the second shock, a series of economic initiatives that form what Mr Xi calls his “new development concept”, which is meant to address “great changes unseen in a century”, such as the Sino-American split. The goals are rational: to tackle inequality, monopolies and debt, and to ensure that China dominates new technologies and is fortified against Western sanctions. Yet in all cases Mr Xi believes the party must take the lead, and implementation has been punitive and erratic. A blizzard of fines, new regulations and purges has caused the dynamic tech industry, which contributes 8% of gdp, to stagnate. And a savage but incomplete crackdown on the property sector, responsible for over a fifth of gdp, has led to a funding crunch—one reason why housing sales fell by 47% in April compared with a year earlier.

The government hopes a vast stimulus programme that is in the works will help it meet the official growth target of 5.5% for 2022 and calm nerves ahead of the congress. On May 19th Li Keqiang, the prime minister, urged officials to “act decisively” to restore growth, and the central bank cut mortgage rates. The party has tried to reassure terrified tech tycoons. A likely next step is a big bond-financed government infrastructure programme.

But more piles of debt and acres of concrete won’t obviate the need for draconian lockdowns or reduce the risks from Mr Xi’s economic model. It involves expanding the scope of the least productive part of the economy: the government-run one. China’s industrial policy has had formidable successes, for example building a dominant global position in advanced batteries. Mr Xi hopes that technology and a new cohort of state investment funds will make decision-making more agile. But don’t forget all the dismal failures, from rust-belt industries to microchips.

Meanwhile the incentives in the most productive part of the economy, the private sector, have been damaged. You can see that in the financial markets, which have seen large outflows. The cost of capital has risen: Chinese shares trade at a 45% discount to American ones, a near-record gap. The calculations of investors and entrepreneurs are changing. Some fear that the financial upside for any business will be capped by a party that is suspicious of private wealth and power. Venture capitalists say they have switched to betting on the biggest subsidies, not the best ideas. For the first time in 40 years no major sector of the economy is undergoing liberalising reforms. Without them, growth will suffer.

Mr Xi’s ideological economy has big implications for the world. Though stimulus could gin up demand, more lockdowns are likely, imperilling a global economy flirting with recession. In business, China’s size and sophistication make it impossible for multinationals to ignore. But more will rebalance supply chains away from China, as Apple is reportedly doing. Chinese champions may dominate some industries of the 2030s, but the West is likely to become a warier importer of Chinese products. In diplomacy, a less ambitious and independent private sector means China’s presence abroad will be more state-led and political. It may become more malign, but also less effective, as our special report on China and Africa explains.

The perils of one-man rule

And what of life inside a more insular China? While people vent online about lockdowns and lost jobs, this is unlikely to translate into unrest thanks to surveillance, propaganda and broad support for the party’s goals. Some technocrats disagree with the country’s leftward shift but lack the power and courage required to object to it. And to the extent it can be discerned from the black box of elite politics, there is no rival to Mr Xi, who is 68. Yet in the run-up to a party congress that may see him secure power until at least 2027, the shortcomings of one-man rule in the world’s second-largest economy are glaring.

Live and learn

The red flag on my postbox is to tell the postman there’s outgoing mail in the box.

It’s not for him to tell us there’s incoming mail. Which is what I thought!


Totally wonderful

A man is sitting in his local bar one night.  He notices the most exotic woman he has ever seen.

She looks like an alien. Her skin is pure green. She has 2 antennae protruding from the top of her head.

He sees that she has 6 fingers on each hand, and a 5-carat diamond ring on each of her 12 fingers.

The poor fellow realizes, with certainty, that he must make a move or he’ll regret it for the rest of his life.

He has another drink to elevate his courage and walks over to the alien.

“Hello. I hope I’m not intruding but I couldn’t help but notice you. You look exotic. I guess you’re not from around here. May I ask where you are from?“

I’m from a planet in a faraway galaxy.”

“Wow! I just knew it! Tell me, do all the women on your planet have green skin?”

“Yes, we all do.”

“Do all of the women on your planet have 2 antennae on the top of their head?”

“Yes, we all do.”

“Do all of the women on your planet have 6 fingers on each hand?”

“Yes, we all do.”

“Do all the women on your planet have a 5-carat diamond ring on each of their 12 fingers?

Woman: “Not the Goyim”

How to live forever

There are magnificent matches at the French Open, which is showing on  NBC Sports, Peacock Premium and the Tennis Channel. 

I played today at noon. It was very hot.

See you tomorrow. — Harry Newton