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China Preparing to Target U.S. Aircraft Carriers  |  Peak Oil News and Message Boards

China Preparing to Target U.S. Aircraft Carriers  |  Peak Oil News and Message Boards.

“Mutually Assured Destruction” guiding hypersonic missile policy in Washington & Beijing

China’s new hypersonic missile vehicle is primarily designed to target U.S. aircraft carriers, military expert Chen Hu told the state-run China Central Television (CCTV) in yet another admission of Beijing’s increasingly hostile geopolitical posturing.

The WU-14, a hypersonic glide vehicle which can penetrate missile defense systems by traveling at up to ten times the speed of sound, underwent its first test flight earlier this month.

Despite assurances by China’s defense ministry that the new vehicle was not aimed at any particular country, Chinese military expert Chen Hu told state media that the system, “can surely be used against US carriers in any region around the globe” and that it was “designed to strike large military targets including US aircraft carriers.”

Noting that the development of the vehicle was necessary in order to maintain the balance of power in East Asia, Chen said that its purpose is to prevent the United States from using its hypersonic weapons against China, adding that the Cold War-era doctrine of “mutually assured destruction” is guiding policy both in Washington and Beijing.

Last year, China reportedly sunk a mock U.S. aircraft carrier utilizing the DF-21D anti-ship missile, dubbed the “carrier killer,” during a wargame which took place in the Gobi Desert.

Bellicose rhetoric directed at the United States by China has intensified in recent months in light of heightened tensions over the disputed Senkaku Islands.

Last month, Beijing bragged that its first aircraft carrier combat task force, led by the inaugural Liaoning warship, matched anything the United States had to offer.

A lengthy editorial which appeared in Chinese state media last month explained how the Chinese military’s current reformation process was part of a move by President Xi Jinping to prepare the People’s Liberation Army for war in response to US aggression in the Asia Pacific, developments which have prompted “major changes” in China’s national security situation.

Beijing has also pontificated about China’s ability to attack US military bases in the Western Pacific, as well as releasing a map showing the locations of major U.S. cities and how they would be impacted by a nuclear strike launched from the PLA’s strategic submarine force.

Infowars.com

China Building Second Aircraft Carrier, Two More In The Pipeline | Zero Hedge

China Building Second Aircraft Carrier, Two More In The Pipeline | Zero Hedge.

For months, rumors have been floating that China is building a second aircrafit carrier. It is not a fact. Reuters cites Chinese and Hong Kong media reports that China is building its second aircraft carrier, which is expected to take six years. While it is constructing this one, China plans to build at least two more, as it aims to have four aircraft carriers in the near future.

As a reminder, the country’s first aircraft carrier, the Liaoning – a Soviet-era ship bought from Ukraine in 1998 and re-fitted in a Chinese shipyard – has long been a symbol of China’s naval build-up, and recently saw its maiden voyage in the South China Sea when in a clear demonstration of naval force, it crossed through the Taiwan straits. The Liaoning successfully executed more than 100 tests, including those of its combat systems, during drills in the disputed South China Sea last month. The exercises off the coast of Hainan Island marked not only the first time China had sent a carrier into the South China Sea but the first time it had maneuvered with the kind of strike group of escort ships U.S. carriers deploy, according to regional military officers and analysts.

However, since the Lioning was a retrofit and not China’s own creation, the country’s navy has been scrambling to get beyond the ridicule it can only “reverse engineer” its crowning ship. Hence the push for a second one.

From Reuters:

After two decades of double-digit increases in the military budget, China’s admirals plan to develop a full blue-water navy capable of defending growing economic interests as well as disputed territory in the South and East China Seas.

 

Successfully operating the 60,000-tonne Liaoning is the first step in what state media and some military experts believe will be the deployment of locally built carriers by 2020.

 

In comments carried on Chinese news websites, Wang Min, the Communist Party boss of the northeastern province of Liaoning, where the first carrier is based, said the second carrier was being built in the port city of Dalian.

 

Its construction would take about six years, and in future China would have a fleet of at least four carriers, Wang told members of the province’s legislature on Saturday, the reports added.

 

Dalian is the port where the existing carrier was re-fitted for use by the Chinese navy.

Of course, the parallels to the cold war build up of nuclear weapons between the US and the USSR are quite obvious making one wonder if the same strategy is in play once more, especially when one considers that the US itself is also building three Ford-class supercarriers, the CVN-78, 79 and 80.

Finally, as we showed before, here are leaked photos of the second aircraft carrier in construction from China Defense.

 

Finally for those curious about more than just China’s nascent aircraft carrier fleet, here are some additional maps from the most recent Congressional report on Chinese military developments:

Philippines seeks US ships to counter China – Asia-Pacific – Al Jazeera English

Philippines seeks US ships to counter China – Asia-Pacific – Al Jazeera English.

The Philippine armed forces says it needs at least six more frigates to effectively patrol its waters [AP]
The Philippines has said it wants to acquire two more navy ships from the US to boost its maritime protection amid military threats from China, according to the country’s military chief.

“Within the last year, we realised that there is a real threat out there in terms of securing, defending our territory,” armed forces chief of staff General Emmanuel Bautista told the Philippines’ ANC television on Wednesday.

There are Chinese fishing vessels in the West Philippine Sea as we speak.

General Emmanuel Bautista,armed forces chief of staff

The new acquisitions fall under the $40m in military assistance pledged by US Secretary of State John Kerry during his visit to the country in December 2013.

But Bautista said the country needs about six more frigates to effectively guard its coastline.

“In fact, we are bidding now for two frigates, hopefully we will be able to acquire them in (a) couple of years,” he said.

The Philippines is a long-time US military ally and has already received two refurbished ships in the past two years.

These boats now patrol the South China Sea where, in 2012, the flagship BRP Gregorio del Pilar, the first US acquisition, confronted Chinese ships on Scarborough Shoal, a small outcrop just off the coast of the country’s main island of Luzon.

The Chinese eventually gained control of the outcrop after Manila backed down. And the Filipino government sought UN arbitration to settle the dispute, a move which China rejected.

Ongoing dispute

The Philippines has been locked in an increasingly tense standoff with China involving disputed reefs and islands in an area Manila calls the West Philippine Sea.

Bautista said the Gregorio del Pilar, as well as another frigate that arrived last year, have been deployed to protect the country’s waters.

“There are Chinese fishing vessels in the West Philippine Sea as we speak,” he said, but declined to say where they were in the disputed waters.

China has claimed almost all of the South China Sea, including waters near the cost of its neighbours.

And it recently declared an “air defence identification zone” over the East China Sea, where it is engaged in a dispute with Japan.

Kerry has warned China against imposing a similar air defence identification zone over the South China Sea.

Last week China also announced a new fisheries law requiring foreign vessels to obtain permits for activities in most of the South China Sea, triggering outrage in Manila.

The Trends to Watch For in 2014: Charles Hugh Smith | Peak Prosperity

The Trends to Watch For in 2014: Charles Hugh Smith | Peak Prosperity.

At the beginning of this year (2013), I identified eight key dynamics that will play out over the next two to three years (2013-2015):

Trend #1:  Central Planning intervention in stock and bond markets will continue, despite diminishing returns on Central State/Bank intervention

Trend #2:  The omnipotence of the Federal Reserve will suffer a fatal erosion of confidence as recession voids Fed policy and pronouncements of “recovery”

Trend #3:  The Mainstream Media (MSM) will continue to lose credibility as it parrots Central Planners’ perception management

Trend #4:  The failure of what is effectively the “state religion,” Keynesianism, will leave policy makers in the Central State and Bank bereft of policy alternatives

Trend #5:  Economic Stagnation will fuel the rise of Permanent Adolescence

Trend #6:  Income, the foundation of real economic growth and wealth-distribution stability, will continue to stagnate

Trend #7:  Small business—the engine of growth—will continue to decline for structural reasons

Trend #8:  Territorial disputes will continue to be invoked to distract domestic audiences from domestic instability and inequality

I know it may strike some as “cheating” that my forecast is for these trends to be consequential within a three-year window rather than by a specific date, but note these are trends, not events, and trends tend not to matter until suddenly they do. This is the nature of Pareto Distributions, in which trends are inconsequential until they reach a critical mass of 4% of the populace, at which point the “vital few” exert outsized influence on 64% of the populace.

Let’s see how the trends developed in 2013:

Trend #1:  Intervention yielded outstanding returns on corporate profits and stocks, but diminishing returns on employment, household incomes for the bottom 80%, and growth, all of which are historically subpar:

Trend #2:  The Fed’s members are still regarded as heroic demigods who benignly manage the Earth’s economy. When (not if) the stock market rolls over in 2014-15, Fed omnipotence will suffer.

Trend #3:  This one is difficult to track, but anecdotal evidence (declining circulation of many mainstream print media, declining viewership in some cable news channels, etc.) may reflect rising disenchantment with the media’s coverage of key issues.

Trend #4:  I think it is quite clear that the Fed and its posse of experts have no alternatives to ZIRP (zero interest rate policy) and QE (quantitative easing).

Trend #5:  This one is difficult to monitor. If we use the percentage of young people still living at home and the rise of “selfies” (photos taken of oneself), then perhaps a case can be made that this trend is already visible.

Trend #6:  Median household income has edged up, but I suspect this is the result of higher incomes for the top 10% rather than widely distributed gains. Since the top 10% collect 51% of all income, it stands to reason that increases flowing to the top will boost median income even if the bottom 90% sees declines in income:

Trend #7:  The unintended consequences of the Affordable Care Act have yet to fully play out.

Trend #8:  China’s recent invocation of a “defense zone” that includes the Senkaku Islands suggests this trend is definitely in play.

I also listed eight outcomes:

Outcome #1:  The counterfeiting of risk-free assets will continue to be a primary policy of the Status Quo.

Outcome #2:  Risk will continue to be transferred en masse to the public.

Outcome #3:  Democracy in America is officially dysfunctional.

Outcome #4:  Incentives will continue to be structurally perverse, and the rule of law will continue to be bent by individuals, enterprises, and the government.

Outcome #5:  Health care (a.k.a. sick care) will continue to be an enormous drag on the economy as diminishing returns, fraud, complexity, and defensive medicine add costs without equivalent improvements in health.

Outcome #6:  The costs of complying with Obamacare will act as an inflection point in the decline of small business

Outcome #7:  The trend of the Status Quo “solving” perceived problems by adding layers of immense complexity to systems already suffering from marginal returns will continue.

Outcome #8:  The informal cash economy will continue expanding, as those who choose to opt out of the Status Quo and those who must opt out as a survival mechanism do so.

Without going into detail, I think a self-evident case can be made that each of these outcomes is already visible at the end of 2013.

Additional Trends to Watch in 2014

Since the trends listed above are still operant, these eight are additional rather than replacement trends:

Trend #1:  The Number One growth industry in the private sector will increasingly be lobbying the government for favors.  When the State selects the winners and losers throughout the economy, then companies are essentially forced to make their case for special dispensations via campaign contributions and unrelenting lobbying. Elected officials benefit from their centralized powers as the line of corporations anxiously pressing campaign cash on them lengthens in direct proportion to the expansion of State power.

This is the essence of what some call the Corporatocracy that effectively governs the U.S.A. and what I call the Neofeudal Cartel/State system, as the State and its chosen cartels dominate the economy and society in a fashion that can only be described as neofeudal.

Since organic growth from increases in wages and purchasing power are limited to the top 10%, the only sectors that can possibly gain growth from rising sales are Porsche dealerships and other luxury outlets that cater to the top 10%.  But since the number of households adding income is a thin 10 million out of 121 million households, moving more luxury goods offers little growth opportunities for the rest of the economy, which is stagnant at best.

As a result, lobbying the central State for favors is the default “growth industry.”

Trend #2:  The difference between anemic growth and recession will increasingly be semantic. This is another “How many angels can dance on the head of a pin?” debate in which Ivory Tower/State economists parse juiced or manipulated data to conclude the economy is “growing slowly” or slipping into negative growth; i.e., recession.

Experientially, if purchasing power and discretionary income (what’s left after paying taxes, rent, mortgages, food, utilities, etc.) are both declining for 90% of households, the “growth” in inventories, exports, and other factors that feed into gross domestic product (GDP) are not reflecting the economy we actually inhabit.

Trumpeting what amounts to signal noise as “steady growth” is adept perception management (i.e., propaganda), but if it doesn’t include increases in purchasing power and discretionary income for the bottom 90%, it’s a propaganda embarrassment, like the Fed official hyping the declining cost of tablet computers while someone in the audience shouts, I can’t eat an iPad!

Trend #3:  The decline in local government services will accelerate as rising pension/healthcare costs squeeze budgets.  Local governments (city, county, state) have avoided the politically combustible collision of rising pension/healthcare costs and angry taxpayers tired of service cuts by accounting trickery and jacking up fees and taxes. Crunch-time has also been put off by rising home values that pushed property tax revenues higher.

These solutions are running out of rope: Property values have topped out, and accounting trickery hasn’t solved the fiscal impossibility of maintaining services and meeting pension obligations in a stagnant economy. When push comes to shove, services must be cut, either by bankruptcy or by negotiation. Since the likelihood that taxes will drop is zero, taxpayers will get fewer services for their taxes.

Trend #4:  Middle-class income, purchasing power, and discretionary income will all continue to stagnate.  Unless you define “middle class” as those households earning $150,000 and up (9.1% of households)—and if you define the top 9% as “middle” class, your definition has lost all meaning—what’s left of the middle class will see real and discretionary income continue to stagnate. The causes of this decline in labor’s share of the economy are structural and cannot be remedied by lowering interest rates to zero or jacking up the stock market: Zero-interest rates have deprived households of income, and few in the bottom 90% own enough stock to affect their wealth. (Source: The Distribution of Household Income and the Middle Class)

Trend #5:  Junk fees will continue to replace legitimate taxes.  Fearful of blowback from ever-rising taxes, local governments have turned to junk fees as the preferred method of “revenue enhancement.”  These include sharply higher fees for recreation, parking tickets, permits, etc., and a multitude of add-ons to property taxes and other existing tax structures. Local authorities are counting on the taxpayers to sigh but do nothing as long as the fee increases are small enough to avoid triggering political resistance.

In our small California town, the city has raised the fees for trash pickup by more than 100% in recent years—ironically, their reason is that recycling (which they encourage) has reduced the amount of trash being collected.  This sort of nonsensical rationalization for radically higher fees will join the usual justifications; i.e.,We can no longer fill potholes and pave streets unless we raise your taxes.

How did they manage to perform these basic services 10 or 20 years ago with much smaller budgets? The answer: See Trend #3, skyrocketing pension and healthcare costs.

Trend #6:  The African oil exporting nations will move from the back burner to the front ranks of geopolitical flashpoints, joining the South China Sea, the Mid-East, and North Korea. I recently discussedThe Scramble for Africa’s Oil and the “resource curse” that is fueling the potential for conflict over Africa’s untapped oil wealth:

Trend #7:  Americans will continue to passively accept the rise of the Police/National Security State. This may eventually change, but for the next few years the existing motivations for passive acceptance of increasing centralization of power will continue to hold sway.

The first is complicity: The 49% of all Americans—156 million out of 317 million—who receive direct transfers/benefits from the Federal government see little reason to rock the boat or put their cash from the government at risk.  (Source)

The second reason is a rational fear of State power: fear of getting tear-gassed and arrested should you join a protest, for example, and a generalized fear of putting whatever you still have at risk by confronting a government given to secrecy and retribution against whistleblowers, protesters, etc.

Trend #8:  The Federal government will quietly absorb the rising losses from defaulting student loans rather than reveal the bankruptcy of the entire Higher Education/Student Loan Cartel.  There are myriad ways to quash the recognition that the Higher Education/Student Loan Cartel is failing to provide useful education while it burdens younger generations with $1+ trillion in high-interest debt: quietly forgive some defaulted loans, stop enforcing collection of defaulted loans, etc.  The Federal government doesn’t want to call attention to its management of this powder keg, as widespread recognition that the system is broken will unleash calls for a general debt amnesty that will blow the big-debt-for-worthless-degrees system wide apart.

In Part II: Outcomes to Bet On in 2014, we’ll forecast the most likely consequences of these trends. With such understanding comes the opportunity to position ourselves in front of them for protection and/or profit.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

 

Japan set to buy $240B worth of hi-tech weapons | StratRisks

Japan set to buy $240B worth of hi-tech weapons | StratRisks.

Source: NewsInfo

Japan set to buy $240B worth of hi-tech weapons

TOKYO—Japan announced on Tuesday that it would buy stealth fighters, drones and submarines as part of a splurge on military hardware that would beef up defense of far-flung islands amid a simmering territorial row with China.

The Cabinet of hawkish Prime Minister Shinzo Abe agreed to spend 24.7 trillion yen ($240 billion) between 2014 and 2019 in a strategic shift toward the south and west of the country—a 5-percent boost to the military budget over five years.

The shopping list is part of efforts by Abe to normalize the military in Japan, which has been officially pacifist since its defeat in World War II. Its well-equipped and highly professional services are limited to a narrowly defined self-defensive role.

Abe’s plan to upgrade Japan’s military capability comes with the establishment of a US-style National Security Council that is expected to concentrate greater power in the hands of a smaller number of senior politicians and bureaucrats.

Fears are growing in Japan over the rising power of China, with the two countries embroiled in a dispute over the sovereignty of a group of islands in the East China Sea, and the perennial menace posed by an unpredictable North Korea.

Joint defense force

New guidelines approved by the Cabinet on Tuesday said Tokyo would introduce a “dynamic joint defense force,” intended to help air, land and sea forces work together more effectively.

Abe said the shift would allow Japan’s military to better shoulder its responsibilities on the global stage, through what he has promoted as “proactive pacifism.”

“We hope to make further contributions to the peace and stability of the international community through proactive pacifism,” he said. “This shows with transparency our country’s diplomatic and defense policies.”

Spending will be raised to 24.7 trillion yen over five years from April 2014, up from the present 23.5 trillion yen over the five years to March 2014, but the figure could be trimmed by up to 700 billion yen if the defense ministry can find savings and efficiencies.

New hardware will include 3 drones, 52 amphibious vehicles, 17 Osprey hybrid choppers and 5 submarines—all designed to boost maritime surveillance and bolster defense of islands.

The spending will also encompass two destroyers equipped with the Aegis antimissile system and 28 new F-35 fighter jets, a stealth plane far superior to the F-15s that Japan currently has in service.

Analysts noted that much of this kit will replace obsolete equipment, but the shift in military priorities is evident.

“The guidelines underscore a clear shift of Japan’s major defense focus to the protection of its islands in the East China Sea,” said Hideshi Takesada, an expert on regional security at Takushoku University in Tokyo.

During the Cold War, Japan’s military was largely static, with the majority of resources in the north and east to guard against any invasion by Russia.

Changing dynamics

But changing dynamics and in particular the rise of China—where double-digit rises in defense spending are the annual norm—mean that Japan’s armed forces need to be located further south and to be able to deploy to the country’s many far-flung islands.

“The guidelines show Japan’s readiness for practical defense if China’s bluff turns to be real military action,” Takesada said.

Regional tensions were ratcheted up last month when China abruptly declared a new air defense identification zone over the East China Sea, including overdisputed Tokyo-controlled islands called Senkaku in Japanese and Diaoyu in Chinese.

Abe on Saturday denounced the declaration and demanded Beijing retract it immediately and unconditionally, after a summit with Southeast Asian leaders where a joint statement called for freedom of travel on the seas and in the air.

Beijing issued a sharp rebuke, singling out Abe for “slanderous remarks.”

The guidelines also call for Japan to boost its missile defense system to counter “a grave and imminent threat” from North Korea.

 

‘Pacifist’ Japan Launches “No Guts But All The War Spending Glory” Military Plan | Zero Hedge

‘Pacifist’ Japan Launches “No Guts But All The War Spending Glory” Military Plan | Zero Hedge.

We warned last week of the rising nationalism and concerns about Abe’s intentions and this evening the escalating tensions in the East China Sea are clear once again. In an effort to “normalize” an officially ‘pacifist’ policy, a hawkish Abe announced that Japan has tonight increased its military budget notably to buy drones, amphibious vehicles, submarines, and vertical take-off aircraft to boost defenses around the remote Senkaku islands. It seems the farce is getting more surreal as Japan also considers obtaining the means to counter ballistic missiles the point of launch. Why go to war and risk it all by printing and deficit spending your country into oblivion for a ‘purpose’ when you can do it without spilling a drop of blood?

Via AFP,

Japan said Tuesday it intends to boost military spending by five percent over the next five years, with a hardware splurge intended to beef up defence of far-flung territories amid a corrosive row with China.

The cabinet of hawkish Prime Minister Shinzo Abe agreed 24.7 trillion yen ($240 billion) would be spent between 2014 and 2019, including on drones, submarines, fighter jets and amphibious vehicles, in a strategic shift towards the south and west.

The shopping list is part of efforts by Abe to normalise the military in Japan, which has been officially pacifist since defeat in World War II. Its well-equipped and highly professional services are limited to a narrowly defined self-defensive role.

New defence guidelines approved by the cabinet on Tuesday said Tokyo will introduce a “dynamic joint defence force,” intended to help air, land and sea forces work together more effectively in the face of danger.

“China … is taking dangerous action that can draw unexpected contingencies,” said the guidelines.

Via Bloomberg,

The government will also consider obtaining the means to counter ballistic missiles at the point of launch, according to new security plans which set a total five-year budget of 24.67 trillion yen ($239 billion), up about 1 trillion yen on the previous five-year plan.

Japan will set up a marines-style force to deal with any island incursions, equipping it with 17 tiltrotor aircraft and 52 amphibious vehicles, as well as three surveillance drones, according to documents given to reporters in advance.

Of course, the populism garnered by such a move is worrisome as these two powers engage in a bigger and bigger pissing match; but it seems, as we warned here, that no matter the cost, there may be war. Bear in mind this move comes on top of passing the Secrecy bill last week.

The right to know has now been officially superseded by the right of the government to make sure you don’t know what they don’t want you to know. It might all seems like a bad joke, except for the Orwellian nature of the bill and a key Cabinet member expressing his admiration for the Nazis, “just as Germany needed a strong man like Hitler to revive defeated Germany, Japan needs people like Abe to dynamically induce change.”

We are sure the world (and the BoJ) will be more than happy to fund this latest Keynesian black hole.

 

China Slams Abe’s “Malicious Slander”; Warns Japan Is “Doomed To Failure” | Zero Hedge

China Slams Abe’s “Malicious Slander”; Warns Japan Is “Doomed To Failure” | Zero Hedge.

Events in the East China Sea since 2009 have thrust to the forefront the following frightening question: will China and Japan imminently go to war? Conventional answers in the affirmative point to the deep level of historical mistrust and a certain level of “unfinished business” in East Asian international politics, stemming from the heyday of Showa Japan’s imperialism across Asia. Those on the negative often point to the astronomical economic costs that would follow from a war that pinned the world’s first and third largest economies against its second in a fight over a few measly islands, undersea hydrocarbon reserves be damned.

I can’t pretend to arbitrate between these two camps but I find that far too many observers sympathize with the second camp based on rational impulse. Of course China and Japan wouldn’t fight a war! That’d ruin their economies! I sympathize with the Clausewtizean notion of war being a continuation of politics “by other means,” and the problems caused by information asymmetries (effectively handicapping rational decision-making), but the situation over the Senkaku/Diaoyu islands can result in war even if the top leaders in Tokyo and Beijing are eminently rational.

Political scientist James D. Fearon’s path-breaking article “Rationalist Explanations for War” provides a still-relevant schema that’s wonderfully applicable to the contemporary situation between China and Japan in the East China Sea. Fearon’s paper was initially relevant because it challenged the overly simplistic rationalist’s dogma: if war is so costly, then there has to be some sort of diplomatic solution that is preferable to all parties involved — barring information asymmetries and communication deficits, such an agreement should and will be signed.

Of course, this doesn’t correspond to reality where we know that many incredibly costly wars have been fought (from the first World War to the Iran-Iraq War). So, if wars are costly — as one over the Senkaku/Diaoyu islands is likely to be — why do they still occur? Well, the answer isn’t Japanese imperialism or because states just sometimes irrationally dislike each other (as the affirmative camp would argue). It’s more subtle.

Fearon’s “bargaining model” assumes a few dictums about state knowledge, behavior and expectations ex ante. I’ll cast the remainder of the model in terms of Japan and China since they’re our subjects of interest (and to avoid floating off into academic abstractions).

First, China and Japan both know that there is an actual probability distribution of the likely outcomes of the war. They don’t know what the actual distribution is, but they can estimate what is likely in terms of the costs and outcomes of going to war. For example, Japan can predict that it would suffer relatively low naval losses and would strengthen its administrative control of the islands; China could predict the same outcome, or it could interpret things in its favor. In essence, they acknowledge that war is predictable in its unpredictability.

Second, China and Japan want to limit risk or are neutral to risk, but definitely do not crave risk. War is fundamentally risky so this is tantamount to an acknowledgement that war is costlier than maintaining peace or negotiating an ex ante diplomatic solution.

The third assumption is a little dressed up in academic jargon: there can be no “issue indivisibility.” In plain English, this essentially means that whatever the states are fighting over (usually territory, but it could be a pot of gold) can be divided between them in an infinite number of ways on a line going from zero to one.Imagine that zero is Japan’s ideal preference (total Japanese control of the Senkakus and acknowledgement as such by China) and one is China’s ideal preference (total Chinese control of Diaoyu and acknowledgement by Japan). Fearon’s assumption requires that there exist points like 0.23 and 0.83 (and so forth) which set up some sort sharing between the warring parties. Even solutions, such as one proposed by Zheng Wang here at The Diplomat to establish a “peace zone,” could sit on this line.

If the third assumption sounds the shakiest to you that’s probably because it is. “Issue indivisibility” is a nasty problem and a subject of quite some research. It usually is at the heart of wars that seek to decide which state should control a territory such as a Holy City (the intractability of the Arab-Israeli conflict is said to be plagued by indivisible issues).

So, is the dispute over the Senkaku/Diaoyu fundamentally indivisible? Probably in the sense of splitting sovereignty over the islands, but probably not in the sense of some ex ante bargain similar to what Zheng proposed. Even if the set of solutions isn’t infinitely divisible, whatever finite solutions exist might not fall within whatever range of solutions either Japan or China is willing to tolerate — leading to war.

Fearon actually doesn’t buy the indivisibility-leading-to-war theory himself. He reasons that generally almost every issue is complex enough to be divisible to a degree acceptable by each party (undermining the infinite divisibility requirement), and that states can link issues and offer payments to offset any asymmetrical outcome. In the Senkaku/Diaoyu case, this would mean a solution could hinge upon Japan making a broader apology for its aggression against China in the 20th century or China taking a harsher stance on North Korea (both unlikely).

Relevant to the Air Defense Identification Zone is Fearon’s description of war arising between rational states due to incentives to misrepresent capabilities. China and Japan’s leaders know more about their country’s actual willingness to go to war than anyone else, and it benefits to signal strong resolve on the issue to extract more concessions in any potential deal.Japan announcing its willingness to shoot down Chinese drones earlier this year and its most recent defense plans are example of this, and China’s ADIZ is probably the archetype of such a signal. Instead of extracting a good deal, what such declarations can do is force rational hands to war over the Senkaku/Diaoyu islands.

Fearon’s final explanation — regarding commitment problems leading to war — is slightly ancillary to the core discussion about the Senkaku/Diaoyu islands given Japan’s constitutional restraints on the use of force (rendering preemptive, preventative, and offensive wars largely irrelevant in the Japanese case). Regardless, the point remains that even if the Senkaku/Diaoyu islands might seem like a terribly silly thing for the world’s second and third largest economies to go to war over, war can still be likely.

As I observe events in the East China Sea, I mostly recall Fearon’s warnings on certain types of signals leading to brinksmanship (the divisibility issue is far murkier). Both Japan and China don’t seem to be relenting on these sorts of deleterious signals. Additionally, given that Chinese and Japanese diplomats haven’t had high-level contact in fourteen months, even the more primitive rationalist’s explanation, that war occurs because a lack of communication leads to rational miscalculations, becomes plausible.

A reflection on the possible rational reasons for China and Japan to go to war over the Senkaku/Diaoyu islands highlights the seriousness of the ongoing brinksmanship in the East China Sea. If a war is fought over these long-contested islands, it will have an eminently rational explanation underlying all the historical mistrust and nationalism on the surface. War in the East China Sea is possible, despite the economic costs.

 

 

China Slams Abe’s “Malicious Slander”; Warns Japan Is “Doomed To Failure” | Zero Hedge

China Slams Abe’s “Malicious Slander”; Warns Japan Is “Doomed To Failure” | Zero Hedge.

Overnight rhetoric in Asia became increasingly heated when China’s Ministry of Foreign Affairs expressed “strong dissastisfaction” at the slanderous actions of Abe’s Japanese government over the Air Defense Identification Zone (ADIZ) and the “theft and embezzlement” of the Diaoyu Islands. “Japan’s attempt is doomed to failure,” China warned ominously and as we highlight below, a reflection on the possible rational reasons for China and Japan to go to war over the Senkaku/Diaoyu islands highlights the seriousness of the ongoing brinksmanship in the East China Sea. If a war is fought over these long-contested islands, it will have an eminently rational explanation underlying all the historical mistrust and nationalism on the surface. War in the East China Sea is possible, despite the economic costs.

The ‘triangle’ of doom in the East China Sea…

Via Google Translate,

Q: Japanese Prime Minister Shinzo Abe held in Japan recently – especially during the ASEAN summit, accusing China to unilaterally change the status of the East China Sea, East China Sea, said China’s air defense identification zone designation is improper for the high seas against the freedom of overflight, asked China to revoke the measure. What is your comment?

A: We have made some Japanese leaders use international slanderous remarks China expresses strong dissatisfaction.

Diaoyu Islands are China’s inherent territory. Japan over the Diaoyu Islands theft and embezzlement have always been illegal and invalid. Since last year, the Japanese deliberately provoked the Diaoyu Islands dispute, unilaterally change the status quo of the Diaoyu Islands issue is none other than the Japanese themselves. In this regard, the Chinese law to take the necessary measures to safeguard national sovereignty and territorial fully justified, blameless.

East China’s air defense identification zone designation is intended to protect national defense aviation security measures, consistent with international law and international practice, do not affect the countries of aircraft overflight freedoms enjoyed under international law. Deliberate on this issue in Japan to China to launch an attack, an attempt to tamper with the concept, the implementation of double standards, mislead international public opinion, Japan’s attempt is doomed to failure.

“Rationalist Explanations For War” In The East China Sea

Submitted by Ankit Panda of The Diplomat,

Events in the East China Sea since 2009 have thrust to the forefront the following frightening question: will China and Japan imminently go to war? Conventional answers in the affirmative point to the deep level of historical mistrust and a certain level of “unfinished business” in East Asian international politics, stemming from the heyday of Showa Japan’s imperialism across Asia. Those on the negative often point to the astronomical economic costs that would follow from a war that pinned the world’s first and third largest economies against its second in a fight over a few measly islands, undersea hydrocarbon reserves be damned.

I can’t pretend to arbitrate between these two camps but I find that far too many observers sympathize with the second camp based on rational impulse. Of course China and Japan wouldn’t fight a war! That’d ruin their economies! I sympathize with the Clausewtizean notion of war being a continuation of politics “by other means,” and the problems caused by information asymmetries (effectively handicapping rational decision-making), but the situation over the Senkaku/Diaoyu islands can result in war even if the top leaders in Tokyo and Beijing are eminently rational.

Political scientist James D. Fearon’s path-breaking article “Rationalist Explanations for War” provides a still-relevant schema that’s wonderfully applicable to the contemporary situation between China and Japan in the East China Sea. Fearon’s paper was initially relevant because it challenged the overly simplistic rationalist’s dogma: if war is so costly, then there has to be some sort of diplomatic solution that is preferable to all parties involved — barring information asymmetries and communication deficits, such an agreement should and will be signed.

Of course, this doesn’t correspond to reality where we know that many incredibly costly wars have been fought (from the first World War to the Iran-Iraq War). So, if wars are costly — as one over the Senkaku/Diaoyu islands is likely to be — why do they still occur? Well, the answer isn’t Japanese imperialism or because states just sometimes irrationally dislike each other (as the affirmative camp would argue). It’s more subtle.

Fearon’s “bargaining model” assumes a few dictums about state knowledge, behavior and expectations ex ante. I’ll cast the remainder of the model in terms of Japan and China since they’re our subjects of interest (and to avoid floating off into academic abstractions).

First, China and Japan both know that there is an actual probability distribution of the likely outcomes of the war. They don’t know what the actual distribution is, but they can estimate what is likely in terms of the costs and outcomes of going to war. For example, Japan can predict that it would suffer relatively low naval losses and would strengthen its administrative control of the islands; China could predict the same outcome, or it could interpret things in its favor. In essence, they acknowledge that war is predictable in its unpredictability.

Second, China and Japan want to limit risk or are neutral to risk, but definitely do not crave risk. War is fundamentally risky so this is tantamount to an acknowledgement that war is costlier than maintaining peace or negotiating an ex ante diplomatic solution.

The third assumption is a little dressed up in academic jargon: there can be no “issue indivisibility.” In plain English, this essentially means that whatever the states are fighting over (usually territory, but it could be a pot of gold) can be divided between them in an infinite number of ways on a line going from zero to one. Imagine that zero is Japan’s ideal preference (total Japanese control of the Senkakus and acknowledgement as such by China) and one is China’s ideal preference (total Chinese control of Diaoyu and acknowledgement by Japan). Fearon’s assumption requires that there exist points like 0.23 and 0.83 (and so forth) which set up some sort sharing between the warring parties. Even solutions, such as one proposed by Zheng Wang here at The Diplomat to establish a “peace zone,” could sit on this line.

If the third assumption sounds the shakiest to you that’s probably because it is. “Issue indivisibility” is a nasty problem and a subject of quite some research. It usually is at the heart of wars that seek to decide which state should control a territory such as a Holy City (the intractability of the Arab-Israeli conflict is said to be plagued by indivisible issues).

So, is the dispute over the Senkaku/Diaoyu fundamentally indivisible? Probably in the sense of splitting sovereignty over the islands, but probably not in the sense of some ex ante bargain similar to what Zheng proposed. Even if the set of solutions isn’t infinitely divisible, whatever finite solutions exist might not fall within whatever range of solutions either Japan or China is willing to tolerate — leading to war.

Fearon actually doesn’t buy the indivisibility-leading-to-war theory himself. He reasons that generally almost every issue is complex enough to be divisible to a degree acceptable by each party (undermining the infinite divisibility requirement), and that states can link issues and offer payments to offset any asymmetrical outcome. In the Senkaku/Diaoyu case, this would mean a solution could hinge upon Japan making a broader apology for its aggression against China in the 20th century or China taking a harsher stance on North Korea (both unlikely).

Relevant to the Air Defense Identification Zone is Fearon’s description of war arising between rational states due to incentives to misrepresent capabilities. China and Japan’s leaders know more about their country’s actual willingness to go to war than anyone else, and it benefits to signal strong resolve on the issue to extract more concessions in any potential deal. Japan announcing its willingness to shoot down Chinese drones earlier this year and its most recent defense plans are example of this, and China’s ADIZ is probably the archetype of such a signal. Instead of extracting a good deal, what such declarations can do is force rational hands to war over the Senkaku/Diaoyu islands.

Fearon’s final explanation — regarding commitment problems leading to war — is slightly ancillary to the core discussion about the Senkaku/Diaoyu islands given Japan’s constitutional restraints on the use of force (rendering preemptive, preventative, and offensive wars largely irrelevant in the Japanese case). Regardless, the point remains that even if the Senkaku/Diaoyu islands might seem like a terribly silly thing for the world’s second and third largest economies to go to war over, war can still be likely.

As I observe events in the East China Sea, I mostly recall Fearon’s warnings on certain types of signals leading to brinksmanship (the divisibility issue is far murkier). Both Japan and China don’t seem to be relenting on these sorts of deleterious signals. Additionally, given that Chinese and Japanese diplomats haven’t had high-level contact in fourteen months, even the more primitive rationalist’s explanation, that war occurs because a lack of communication leads to rational miscalculations, becomes plausible.

A reflection on the possible rational reasons for China and Japan to go to war over the Senkaku/Diaoyu islands highlights the seriousness of the ongoing brinksmanship in the East China Sea. If a war is fought over these long-contested islands, it will have an eminently rational explanation underlying all the historical mistrust and nationalism on the surface. War in the East China Sea is possible, despite the economic costs.

 

First Glimpse Of China’s Nuclear Submarine Fleet | Zero Hedge

First Glimpse Of China’s Nuclear Submarine Fleet | Zero Hedge. (source)

Following Japan’s scrambling of fighter jets for the 3rd day in a row, China has revealed that its first fleet of nuclear submarines has started sea patrols, in the latest sign of its military’s growing confidence which has raised concerns in the region. As The FT reports, Xinhua, China’s official news agency, released photographs of what appeared to be Xia-class vessels – China’s first generation of nuclear-armed submarines, which are several decades old – saying they were being “declassified” for the first time, adding with supremely colorful language that, the subs would “gallop to the depths of the ocean, serving as mysterious forces igniting the sound of thunder in the deep sea”, and be an “assassin’s mace that would make adversaries tremble”.

Via The FT,

While the submarines displayed on Sunday were the older generation of nuclear vessels that are part of China’s northern fleet – and not the more advanced Jin-class based at the southern Chinese island of Hainan – the display in the domestic media nonetheless reflects the Chinese military’s growing confidence.

It is still the first time that the Xia class has been discussed in such detail in China’s state-run media,” said Taylor Fravel, an expert on Chinese security at the Massachusetts Institute of Technology in the US. “As China’s military modernisation continues to advance, the PLA has become more willing to discuss its capabilities.”

In recent years, the People’s Liberation Army Navy has become increasingly active in the Pacific, particularly in staking Chinese claims to disputed maritime territory in the South China Sea.

Chinese ships and aircraft have also become more aggressive in challenging Japanese control of the Senkaku Islands – which China calls the Diaoyu – in the East China Sea.Japan has administered the uninhabited group for decades, but China and Taiwan both claim sovereignty.

http://www.youtube.com/watch?v=L1g_N6WsrRk

oftwominds-Charles Hugh Smith: The Grand Narrative: Legitimize the Authoritarian State

oftwominds-Charles Hugh Smith: The Grand Narrative: Legitimize the Authoritarian State. (source)

As the status quo crumbles, the state responds in the only way it knows: expand control and become increasingly authoritarian.

The Grand Narrative of the 21st century is the legitimization of the authoritarian state. The authoritarian state comes in many ideological flavors, but retains the commonalities of central control. It may label the system it controls communist, socialist or capitalist, but these distinctions are semantic: the authoritarian state controls the system, by one means or another.

Regardless of which version of the 9/11 story you believe or disbelieve, the reality is the same: the U.S. is engaged in an Orwellian global war without end, a war that doesn’t just justify monitoring every communication on the planet but actively requires monitoring every communication on the the planet.

The Federal Reserve has extended its control of the U.S. economy, transforming it into a wealth-skimming machine for the top 1/10th of 1% with access to the Fed’s credit creation. The Fed claims independence from the U.S. government, but this is also merely semantics: the Fed and U.S. Treasury are simply two facets of the authoritarian state.

We see the same narrative playing out around the world. In socialist France, the central state is extending its control over what little of the economy is still quasi-private; in nominally communist China, any weakening of the economy that can’t be papered over with bogus statistics is soon followed by nationalist propaganda hyping one red-button issue or another (Senkaku Islands, etc.) to distract the populace from the increasingly fragile “recovery” in China’s asset-bubble-dependent economy.

As the status quo crumbles, the state responds in the only way it knows: expand control and become increasingly authoritarian. This is of course a key dynamic in why things are falling apart: increasing central control only further distorts the mechanisms in the economy that seek equilibrium by self-correcting means.

Why is the authoritarian state illegitimate? Among the many reasons, we can start with three: the authoritarian state is the enemy, always and in all places, of individual liberty and free expression/the free press, and the authoritarian state is intrinsically a failed state, for the mechanisms of centralization and authoritarian control are ontologically destabilizing, regardless of the ideological flavor of the system the state controls.

 

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