News Items covers four subjects: (1) World in Disarray, (2) Financialization of Everything, (3) Advances in Science and Technology, and (4) Electoral politics, foreign and domestic. Six days a week, not Sundays. Weekdays by ~6:45am ET. Saturdays: sometime in the morning, usually.
1. President Joe Biden yesterday said that the risk of nuclear “Armageddon” is at the highest level since the 1962 Cuban Missile Crisis, as Russian officials speak of the possibility of using tactical nuclear weapons after suffering massive setbacks in the eight-month invasion of Ukraine. Speaking at a fundraiser for the Democratic Senatorial Campaign Committee, Mr. Biden said Russian President Vladimir Putin was “a guy I know fairly well” and the Russian leader was “not joking when he talks about the use of tactical nuclear weapons or biological or chemical weapons.” Biden added, “We have not faced the prospect of Armageddon since Kennedy and the Cuban Missile Crisis.” He suggested the threat from Putin is real “because his military is — you might say — significantly underperforming.” U.S. officials for months have warned of the prospect that Russia could use weapons of mass destruction in Ukraine as it has faced a series of strategic setbacks on the battlefield, though Biden’s remarks marked the starkest warnings yet issued by the U.S. government about the nuclear stakes. (Source: washingtonpost.com)
Let us assume that Vladimir Putin, in some desperate last ditch maneuver, deploys a tactical nuclear weapon in Ukraine. We have no information on what the US or Nato will do in this case. Let us focus on another aspect in which we have a greater degree of confidence, and that will affect the decision making of governments at the time.
A nuclear strike in the heart of Europe would, in our view, produce the mother of all financial crises. No sane investors will continue to lend money to any European government at this point. Market interest rates would shoot through the roof. At those rates, euro area governments would be insolvent, and have to rely on illegal money printing to service their debt.
Now think this through the financial food chain. Would you keep paying millions for a townhouse in London? Or would you rather pay millions for a more remote cottages in the Hebrides? Western capitalism rests not only on cheap oil. It is rests critically on the certainty of a nuclear war not happening.
You may think that a financial crisis is the least of your problems when faced with a nuclear war. If you do, you could not be more wrong. Economics is absolutely essential in modern war. When Putin invaded, the west imposed economic sanctions, which have seriously impeded his own military supply chains. His war, and his subsequent decision to cut off the gas, is what is driving up energy prices and interest rates. The west is going to be hit by a recession. If he deploys a tactical nuclear weapons, the financial reaction will be so severe that economic life in Europe, as we know it, will come to an end.
We can think this scenario forward - a Nato hit against the Russian military, followed by a nuclear counter-attack. In this instance, we Europeans do have bigger problems than a financial crisis. Our scenario is only one of a one-off tactical nuclear strike on the territory of Ukraine.
We all understand the risks of Russian roulette. Even a financial economist would not play this game. But when it comes to nukes, quite a lot of people still live in a risk-neutral world when they are discussing risks.
One can still arrive at different conclusions from this observation. It does not imply appeasement. What it does imply is a more acute awareness of our strategic choices, and the consequences of the different scenarios. (Source: eurointelligence.com, 7 October 2022)
3. Walter Mead:
From Mr. Putin’s point of view, in a war in which almost everything is going wrong, nuclear blackmail is working. Why wouldn’t he double down on the one tactic that works?
The only way to deter any possible use of nuclear weapons is to make Mr. Putin believe that the consequences of such use will be ruinous for Russia as a state and for him as its ruler, and that the West won’t flinch when the time for action comes.
To make his threats credible, Mr. Biden needs, first, to make up his mind that he is prepared to stay the course. “The double-minded man is unstable in all his ways,” the Bible tells us. Facing down Mr. Putin in a nuclear standoff is not a course for a man who lacks conviction. Read the rest. (Source: wsj.com)
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