End of year 2022 update

As 2022 is coming to a close (it flew by so quickly!), let's look back at my predictions for the year, and I will give you my opinion on what I think 2023 and beyond have in store for us.

Jan 2022 entry: https://would-that-be-interesting-to-you.blogspot.com/2022/01/what-to-expect-of-2022.html

Mid-year update: https://would-that-be-interesting-to-you.blogspot.com/2022/06/mid-2022-update.html

Covid-19

Despite the recently announced variants which have fueled a new wave of cases in Singapore, the world has moved past Covid and the stats are encouraging. 

The current death rate sits at about 0.36%, down from 0.44% in January 2022, but, more importantly, the total number of cases went from a 7-day average of 1,402,936 to 429,567 (70% reduction) for the same comparative periods, which is about the same as the seasonal flu. 

Now, pretending to know how a virus will mutate is not science, and certainly not what I will do here. We cannot become complacent; funding for continued research on adaptive treatments and future vaccines is necessary.

However, at this point, touch wood and hope that the pandemic is truly behind us.

Hong Kong

Not much to say. Hong Kong is dead. Carrie Lam and the CCP killed it. It is not going to get better because the fundamentals are not changing: a dictatorship cannot survive in the long run and it will revert Hong Kong's amazing economic and societal progresses of the past 70 years.

HSI: If you had invested any money on July 1st, 1997 (retrocession) and held it to now,
it would have not appreciated at all... That is, 0% ROI

Expect more institutional rot, increasing corruption, stagnating GDP, further brain drains, and general exodus. On the bright side? Property will be a lot more affordable in 5 years!

China:

Xi completed the building of his truth-proof echo-chamber as he surrounded himself with cronies with terrible leadership track records, but with the one quality Xi wants above all, loyalty (here, here, here, and here). 

The recent delay of release of GDP and other economic data is yet another sign of the deep troubles with the Chinese economy. The numbers finally came out. No surprise, they were good! That's great... if you are naive enough to trust them.

I believe that these figures can be trusted as much as last year's census data announcing population growth after a delay, and for the same reason: data ripples from local administrations to regional, and finally to national level, with some fudging along the way but without a central view at every step. Then, when the data rolls-up at the country-level and it is bad, additional time is required to further "massage" the data to make it palatable. 

The reality is that China's population has not reached 1.4 million people and it is already decreasing (India will officially pass it to become the most populous country in the world in 2023). Not only has China's real GDP not reached its growth target, but it has likely been between 0 and 2% for the first time in 45 years.

Housing, where most of Chinese's population's equity is stored, keeps going down. This is going to erode support even for the most nationalistic Chinese person.

When you have a deluded dictator happily thinking he can do no wrong, the principal danger is his reaction when reality hits that not only winds are turning, but his serfdom also starts to see through the propaganda and reveals that he is not so strong, that the country is not doing so well, and, as a leader, he is not all that he pretended to be. 

Typically (and Putin has made in infamous case of this in Ukraine), this means increased risk for our not so friendly dictator, to be using war to boost nationalism and support for his god-like leadership.

Obviously, I am talking about a potential invasion of Taiwan. Let us be clear that there is no scenario where Taiwan willingly accepts to be assimilated into CCP China.

As such, to answer the question as to whether Xi will launch an invasion, one must assess how distanced from reality dada Xi is, and how much power does he yield over the CCP.

The objective reality is:

• China's population is aging and sending youth, China's future, to a rhetorical war, would be the end of Xi
• Even the most optimistic scenario would see hundreds of thousands of China's precious boys die during the invasion
• Taiwan is an island. No invasion attempt can be made unannounced; a blitzkrieg is therefore impossible. Xi would not be deluded in thinking this would be anything but a protracted war
• A successful invasion would then require a multi-year occupation and reform. Millions of soldiers would be required
• There are no signs of military buildup in the short run.

There are some signs hinting that Xi might be more connected to reality and therefore less likely to start a war for Taiwan which would be even more foolish than Putin's for Ukraine:

• Xi is keenly aware that if what was supposed to be the second most powerful army in the world (Russia) got absolutely humiliated in Ukraine, the risk of humiliation over a Taiwan invasion would be even greater. Xi would never put himself in a situation where his legacy would be one of another 100 years of humiliation.
• Back in August, when U.S house speaker Nancy Pelosi visited Taiwan, Beijing scheduled unprecedented military exercises around the state island. However, it was revealed that, contrary to initial plans, "Chinese warships stayed at least 24 nautical miles away from Taiwan’s coast during recent military drills despite warnings from Beijing that they could come well within the island’s territorial waters,according to senior government officials in Taipei.". This was a definite tell that the whole exercise was meant to save face and appease Chinese nationalist and not a show of force that would risk starting WW3. Clearly, at the very least the Chinese military knew they needed to show restraint.
• With the past 2 years impacts of U.S sanctions on China in the tech sector, Xi was reminded that China is not able to live yet in isolationism from global-trade with the free-world. It might never be. And an invasion of Taiwan would certainly bring in drastic sanctions against China which its currently feeble economy could not withstand. 
• It would take a few years for China to prepare for an invasion and the signs would be obvious. At this point, despite the rhetoric, none have materialized...

There is unfortunately no negotiated way out of this as one cannot talk sense with emperor Xi.

The best approach to ensure peace is therefore to continue and accelerate building the Taiwan porcupine, militarily, and psychologically. That is, for the free world to provide Taiwan with so much defensive military equipment that it would be virtually impossible for China to take the island. And make that military buildup ostentatious so the Chinese population, military, and, most importantly, Xi, are keenly aware of the consequences (Taiwan porcupinification here, here).

If the Chinese population, aware of the ineluctability that a war with Taiwan would be long and that they would lose their boys, that losing face is a high probability, and that the Taiwanese population is quite content in being free, then unification through an invasion will never really be anything but Xi's pipe dream with no effective popular support.

U.S: Economy

The economy is still extraordinarily strong, with no unemployment (3.5%, which is frictional unemployment), GDP rebounded.

I think the scarecrow of a deep recession in 2023 is fomented by investment banks trying to prevent the feds from raising rates some more, as cheap money fuels investments, which has been lining their pockets for the past 15 years. They are reactive rather than looking at the fundamentals which is that inflation is there because of excess demand in an extraordinarily strong economy, limited by short-term external factors (war in Ukraine, Covid pent-up demand). As such, these IBs have been providing mostly biased opinions, over analysis, here, here, here. Now, when faced with reality of stocks being resilient, they turn their views 180 (here, here, here) 

Inflation:

While inflation is a concern, it seems that the Fed's intervention and other measures such as tapping the U.S oil reserves are showing results, with price indices going down from the peak in June. 

CPI

Some details on components of inflation coming down:

• 

  Gas prices. Gas price is falling fast

  

The action taken by the Fed to tame inflation:

Fed Funds Effective Rate

Federal Funds Target Rate

The current Fed target rate sits at 4% at of the end of November. The massive recent increases seem to have achieved their goals, with inflation peaking in June. 

It would seem to me that a final rate plateau of 5% with an announcement of a rate increase slowdown would send the appropriate signals to the markets.

It also is now evident that lowering the rates starting in August 2019 was a mistake, fueling inflation worldwide (other countries tend to take their cue from the U.S. Here, here). That was pushed heavily by none other than Trump himself.

"The Fed's Christopher Waller said recent data have made him "more comfortable" with a reduced 50-bp hike next month.

Colleague Mary Daly said 4.75%-5.25% was a "reasonable" range to get to before holding.

John Williams called restoring price stability "of paramount importance," urging officials to avoid incorporating financial risks.

The ECB may slow its tightening pace with a half point increase."

"Mr. Powell also made clear that the bigger risk to the economy was in not acting to tame inflation, noting that if the Fed over-corrects, it has the tools to walk that back. The bigger economic risk is “if we don’t get inflation under control because we don’t tighten enough.”

"Powell said is it would be appropriate to slow the pace of increases “as soon as the next meeting or the one after that. No decision has been made,” he said, while stressing that “we still have some ways” before rates were tight enough."

I think that the most beneficial impact of the higher Fed rates is going to be the cooling of the housing market (here, here, and here). Deflation of this bubble is a lot more desirable than a recession causing burst.

https://www.redfin.com/us-housing-market

Recession indicators:

Yield curve is deeply inverted. A strong leading indicator of recession.

The following indicators are not as reliable as the yield-curve inversion as indicators but when the signals they send align with the YC's, it strengthens the case for predicting a recession.

Global Purchasing Managers Index is trending down. The trend is an early indicator of recession. 

The Consumer Confidence Index is trending down. It is an early to concurrent indicator.

U.S unemployment is a late indicator. As such, it is not a predictor of recession but rather, would confirm one has occurred.

Overall, and everything else being equal, I have trouble seeing where a deep recession would come from in 2023:

• Crypto currencies are deflating, and that bubble is isolated from the real economy.
• Housing prices are easing slowly; no mortgage-backed derivatives to create a sudden break.
• Techs are deflating but this already has been discounted for and has had minimal impact on unemployment, no serious impact on the economy
• U.S personal saving rate is low and trending down, so it could not fuel consumption during an impending recession, but with the overnight rate at 5% once stabilized, the Fed will have ample room to cut rates to revive the economy should it need to.
• The Fed balance sheet unwinding could be headwind, but it started in June to little effect on the economy, and the Fed is in in full control of when it stopped, and it can easily be reversed.

Besides for the fact that the recession signals are there for 2023, it does seem like the U.S.  economy's fundamentals are strong and we are in for a "technical recession" rather than a true economic reset.

Unrelated but interesting: A little economic nugget that I thought was interesting as a contra-point to what some billionaires are screaming at the top of their lungs from their echo-chambers ; no, California is not going down the drain. Quite the contrary:  "California Poised to Overtake Germany as World’s No. 4 Economy. Contrary to popular belief, the Golden State has proven resilient, outperforming its US and global peers."

In Quebec

The Oct 3rd 2022 provincial elections 

1. Voter's turnout was low, but mostly unchanged, from 66.45% in 2018, to 66.15% on Oct 3rd, 2022. Note that this is about the same turnout as the historically high 2020 U.S presidential elections (66.8%) and the 2019 Canada General Elections (67%). It is also much higher than the 2022 Ontario provincial elections (43.53%)
2. CAQ saw an increase in voters' support (+9.5%), from 37.42% of eligible voters in 2018, to 40.98% in 2022. That translated into 21.6% more seats for the CAQ.
3. PLQ got a beating, with support going from 24.82% in 2018, to 14.37% in 2022 (-42%). That translated into 32% fewer seats for the PLQ.
4. QS' support stayed relatively stable (4% decrease), going from 16.1% in 2018, to 15.43% in 2022
5. While PQ's support decreased by 14%, from 17.06% of eligible voters in 2018, to 14.61% in 2022, its representation got hammered, going from 10 to 3 seats (-70%) in parliament. 
6. PCQ went from 1.46% of the popular vote in 2018, to 12.91% in 2022 (+784%). Yet, this did not translate into any seats for the Parti Conservateur du Québec.
7. Whoever was following survey aggregators sites like QC125.com, would have had no surprise as to who would win, be the official opposition party, and which party leader would be elected and which would not (see below charts). Survey results were all within a 10% margin of errors, and QC125.com accurately predicted the outcome of the 2022 elections. As such, back 6 months ago, my own predictions which were based on data from QC125 , were also quite accurate (more on this later). 

Official results from Elections Quebec

Ukraine invasion. The tide is turning again!

 

During the second week of July, Russia had a 'resting' break of their Ukraine invasion (here). Let us think about what it means:

• Putin does not care at all about the well-being of his troops (here, here, here, here, ); He obviously does not care about them getting some time to recover physically and mentally. Therefore, it means that the true reason is that the Russian army has exhausted its current ability to wage war.
• Replacement of Russia's military resources is being performed during this pause. However, old hardware is replacing disabled newer one (here)
• Thinking that it is strategy to "fool" the Ukrainian army and further attack while they least expect it is ridiculous as the past 150 days have shown that the Ukrainian do not rest. 
• This 'pause' is strongly correlated with the Ukrainian army using HIMARS to annihilate a large number of ammunition depots (here, here, here)

Analysis:

• While being massively over gunned, the Ukrainian army has performed extremely well and has shown to be extremely effective and ingenious at destroying Russian military capacity (here, here)
• The very few new longer-range HIMARS artillery pieces provided (8 as of mid-July 2022) have caused devastating blows to the Russian army (here, here, here)
• Russian's GLOCs are exposed and must be taken out by the HIMARS asap (see all GLOCs within 75km of front-line where HIMARS can hit them).
• Free-world-provided armement is vastly superior to whatever the Russian has.
• If the U.S. were to provide long-range missiles (300km) for the HIMARS, the reachable targets would be 'war-ending': the Kerch bridge, which is the primary GLOC for Russia to support Crimea. The military infrastructures and depots in Sevastopol which are enabling the Black Sea Fleet. All GLOCS East of Kharkiv. 
• Putin has demonstrated that he is all teeth, no bite; unable to disrupt any of the Free-World's GLOCs as he stated he would, conducting false flags operations that are failing miserably, empty escalation threats despite Free World's armement inflicting terrible cost to Russian military capacity.
• Still, no NATO "foot on the ground" is best strategy as it makes any attempt for Putin to sell an escalation of this military operation into a full-blown war impractical and improbable.  
• The elephant in the room: it is abundantly clear that not only can the free world turn the tide of the Russian invasion, but the effect of 8 HIMARS have proven that it would be easy to do so. Doubling the committed 20 HIMARS deliveries, to 40 to 50 HIMARS/M270, and providing the 300KM range (MGM-140 ATACMS) to get to the depots and high-value targets that are further out would be 'war-ending'. 
  Deprived of ammunition and fuel, the Russian artillery, tanks, and infantry would become useless despite their numbers. 
  Getting Ukraine 100 of the A10 Warthogs that the U.S army want to get rid of anyway, to clear the close and near front-line of artillery, tanks and infantry would lead to Ukraine victory by Christmas.
  I think that the fear in the U.S. administration is that if there were to be an obvious and sudden change of course in the war, Putin would then be using his propaganda machine to sell the idea that the West wants to invade, and he would then be able to convince Russians to support and join the fight. By having armement coming in at a slow drip, there's no punctual identifiable 'turning-point', and therefore, no justification for Putin's escalation. Just a grinding war (the boiling frog theory), until stalemate where Russia has exhausted all its resources. It could also be that the US want to see Ukraine "win" (aka stalemate) with the minimum number of US armement possible, which would make Putin's embarrassment greater and would then accelerate his destitution as the nationalist Russian supporters would blame the failures on him.
  But the death toll is going to be far greater, and there is no way that Ukraine will regain all the lost territory unless they are provided with significantly more Western weapons.

Mid-2022 update

We're now midway through 2022. Let's look back at my January predictions to see how I'm doing:
https://would-that-be-interesting-to-you.blogspot.com/2022/01/what-to-expect-of-2022.html

Most of my forecasts were bang-on. There was obviously the Putin war in Ukraine that came to change a few things but not all-in-all, quite happy with how everything held up.

Covid pandemic dies in 2022

No significant variant of interest despite the massive re-opening of the world. Now, that is more of an educated guess than a true prediction as there could have been another wave.

Glad it is mostly behind us.

In Hong Kong,

As stated, the terrible performance of Carrie Lam got her kicked-out of the opportunity of a second term by Beijing. As predicted, the free-press continues to be decimated (https://hongkongfp.com/2022/05/09/explainer-small-chinese-language-media-outlets-spring-up-as-hong-kongs-big-names-shut-down/)
My prediction of 0-2% GDP growth was confirmed by the HK government in May (https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3177651/hong-kong-downgrades-economic-forecast-2022-after) 

2022, the first of China's lost 10 years?

A bit early to call this one out. Let's see how far ahead we are into China's doom by the end of the year.

In Quebec...

We're still a couple of months away from the start of the electoral process but... everything I said will turn out true. 

In the U.S:

"Trump will NOT announce his run for the 2024 elections this year as doing so would limit his ability to use the funds he raises "on behalf of the Republican party" for personal purposes while he is dangling a potential bid. This is as close to a con as one can get without any legal implications! "

We actually know now that it is a bona fide scam ('Trump’s raising of $250m for fund that ‘did not exist’ suggests possible fraud').

"Rampant inflation of 2021 should abate in the second half of 2022 (probably set around 3.5-4.5%) as logistic issues are being resolved and buyers move from goods to services spending as Omicron recedes."

Ukraine war... move that to H1 2023

"For the world's sake, it would be good if Trump were found guilty of any of the number of crimes he is accused of in the first half of the year."

This is ever more pressing!

https://www.washingtonpost.com/politics/2022/06/16/how-americans-feel-about-jan-6-hearings-so-far/?utm_campaign=wp_the_5_minute_fix&utm_medium=email&utm_source=newsletter&wpisrc=nl_fix&carta-url=https%3A%2F%2Fs2.washingtonpost.com%2Fcar-ln-tr%2F371df10%2F62ab9e41cfe8a21601ad4764%2F5976ea0cae7e8a6816de1793%2F22%2F43%2F62ab9e41cfe8a21601ad4764&wp_cu=2c18d1ab03816d14233e4ffc04849e17%7C474B048FB04E772BE0530100007F76EB

A quarter of Republicans view the Jan. 6 attack as justified (and they are wrong)
https://www.washingtonpost.com/politics/2022/06/16/quarter-republicans-view-jan-6-attack-justified

As the January 6th committee's hearings proceed, I am unfortunately left with greater fear than I had back then, as I don't think anyone had any clue as to how close we were of a U.S coup, and how willing Trump was to conduct it.

And now, reality-denying conspiracy theorists within the GOP are winning the primaries.

Trump and his coup-sters need to go to jail. Any other scenario would leave the saddening feeling of unaccountability, and frailty of the US democracy. 

Various musings

"2022 might be the year of reckoning for Bitcoin and other virtual currencies. I would not mind. Until these digital currencies show what they are socially and economically useful; besides for speculation and to obfuscate criminal transactions, I will certainly abstain from investing my money there. It does not mean there is no money to be made; quite the opposite, there is tons of money to be made. BTW, drug lords make money too."

BAM!

Post Ukrainian victory

 Post Ukrainian victory

1. No Russian military ships allowed in Black Sea nor Sea of Azov
2. Russia exit Crimea
3. Ukraine immediately joins NATO
4. Arm Ukraine with Western tech rather than Russian tech
5. Marshall plan to rebuild Ukraine
6. Continue to strain Russia economically until Putin is forced out. 
7. Negotiate a denuclearized, democratic Russia which eventually could be a renewed partner to the free world

Ukraine, why tanks?

Cruise missiles are pounding Ukrainian cities, and an 8-mile-long column is moving from the North-West to Donbas. How are tanks, Javelins, and Stingers going to help? I don't get it.
The war has shifted from defense of Kyiv to attack of Russian positions in the East and South-East of Ukraine. The equipment that was once strategic no longer is.

As of today, April 14th, 2022, there's a quickly closing window to end this war in one fell swoop.
I am not a military expert and I do not know what is actually possible. But I know what conditions would be enough to end this war with a definitive Russian loss and early exit; Putin's humiliation.

1. Blast the 8-mile-long column to oblivion. Likely going to be achieved with missiles rather than short-distance Javelins.
2. Destroy the military airstrips, tank storage, and missile launchers in Crimea and Russia to the East.
   (Valuyki here. Soloti here, and here. Novoozerne, Kamensk-Shakhtinskiy)
3. Sink the frigates in the Black Sea. If they were able to sink the flagship with Neptunes anti-ship missiles (here, here, here) which are derived from old Russian tech, imagine what can be done with modern ones.
4. Level the military installations and fuel tanks in the port of Sevastopol.
5. Remember that Ukraine cannot win a traditional war (tanks and artillery). Therefore, it must avoid entering one.

This one big push will require immediate and targeted supply of an exceptionally large amount of offensive armements. 

But it will end of the war in Ukraine... provided that Putin has not reached the level of crazy where he would willingly start WW3...

The 2022 war in Ukraine - The watershed moment and the window of opportunity for a better world

 

The 2022 War in Ukraine

Who started it?

Putin, unequivocally. Not Ukraine indirectly. Not NATO indirectly. Not the U.S indirectly. Putin, by himself, as an act of ultimate vanity. An aging dictator with the God complex, longing for a legacy.

NATO membership is voluntary, and it is a defensive alliance (Article 5). NATO has never led an invasion of a country. Putin's argument of a danger at Russia's border can only be rooted in his deeper 'Imperial-Russia' nationalistic read of history where Russian land was unfairly 'lost' to foreign powers. Which is delusion.

John Mearsheimer makes the following case in The Economist:

"The trouble over Ukraine actually started at NATO’s Bucharest summit in April 2008, when George W. Bush’s administration pushed the alliance to announce that Ukraine and Georgia “will become members”. Russian leaders responded immediately with outrage, characterising this decision as an existential threat to Russia and vowing to thwart it. According to a respected Russian journalist, Mr Putin “flew into a rage” and warned that “if Ukraine joins NATO it will do so without Crimea and the eastern regions. It will simply fall apart.” America ignored Moscow’s red line, however, and pushed forward to make Ukraine a Western bulwark on Russia’s border. That strategy included two other elements: bringing Ukraine closer to the eu and making it a pro-American democracy."

The issue which such statement is that it forgets a simple fact; Ukrainian WANTED to be free and majorly voted for a progressive democrat. 

It is Putin who continues believing in a grand Russia that no longer exists and likely never will again. 

"For starters, the issue at hand is not what Western leaders say NATO’s purpose or intentions are; it is how Moscow sees NATO’s actions."

While this sentence correctly describes the issue, as an expression of a prescriptive position, it is nonsensical; akin to saying that your actions are my fault because I did not account for your irrationality, ambitions, feelings, and desires in the execution of actions affecting people and regions that are not under your authority.

I bit like the violent boyfriend who got dumped but feels he still has a say on how his ex lives her life...

Are we really facing equal propaganda from both sides and therefore, we can't really know what's going on?

That there is propaganda coming from the Russian and the Ukrainian/Western world's sides is undeniable. However, on the Russian side, the narrative is centrally controlled whereas it is impossible to enforce a single narrative within the free world unless it mostly reflects reality, as the free press competes for viewership. Being able to have a differentiated news offering is good for ratings. Combined with citizen journalism, which makes it difficult for a false narrative to survive for long as the main narrative.

A few examples of this: 

• Just a few weeks before the conflict, as Russian troops amassed along the Ukrainian border, the western world certainly was not exposed to a single narrative of certain and imminent Russian invasion ("No, Russia will not invade Ukraine", "an administration official, say Russia could begin the offensive 'as soon as early 2022'", "The truth is; no-one really knows what Valdimir Putin intends", Ben Hodges predicts end of February invasion, "I don’t know"). The Ukrainian government itself did not believe in an imminent invasion ("threat from Russia remains 'dangerous but ambiguous'", "dangerous, but not imminent").
• Most analysts in the free world predicted a swift victory of the Russian military ("...overrun Kiev in a matter of hours.", "Kyiv fall in days, leave 50,000 civilians dead", "Kyiv will likely fall within days, if not hours", "Ukraine’s military is no match for Russia's sophisticated hardware, and Kyiv would likely fall within days"). The superiority of the Russian army in terms of availability of resources was and still is undeniable. We have witnessed, however, that a war's outcome is not simply a factor of greater firepower. 

This war has been going on for over a month now and Russia has not captured nor even entered Kyiv. It would be foolish to think that it was Putin's plan all along to have a drawn-out war. There is no military strategy where this makes sense. Putin's blitzkrieg's failure confirmation came through indirectly through general Sergey Rudskoy comment that the Russian military would now "concentrate the main effort on the main goal: liberation of Donbass" and "The public, as well as certain experts, question what do we do around the blocked Urkainian cities. […] We did not plan to storm these cities from the start, in order to prevent destruction and minimize losses among personnel and civilians," he added. With numerous international journalists reporting the mass destruction and casualties in Ukraine, these are clear and demonstrable lies aimed at keeping the Russian population aligned the original propaganda claiming that the "special military effort" was to fight Nazism in Donbass.

The fact remains that the information the free world's population was exposed to has been and has evolved over time, as the situation did, while the population of Russia was only exposed to a loopy narrative of Nazism eradication, and a fabricated storyline meant to stoke Russian nationalism.

Why doesn't the West implement a no-fly zone or get some boots on the ground?

Biden and NATO in general have been clear that they do not want this regional war to escalate into a global conflict. First, because it would be costly for both sides.

A no-fly zone is a de facto declaration of war since it would require NATO member country's military to shoot down planes over and sometimes even before they enter the Ukrainian airspace, in Belarus and Russia. In the fog of war, things can escalate very quickly; what happens if Russia claims that NATO destroyed some planes over Russia and retaliates?

Furthermore, Russia did not achieve air superiority, and the Ukrainian army has been able to shoot down many Russian planes and helicopters, putting the risk-reward calculation of a NATO no-fly zone in question.

Finally, a no-fly zone would do nothing to prevent Russia to continue firing long range missiles from the Black Sea, Belarus, and from Russian land (about half of the approximate 1,400 missiles fired by Russia as of March 30th, 2022)
Any direct involvement of any number of NATO countries would lead to an even bloodier conflict that would rapidly spread. Putin, clearly being outgunned in an all-out war with NATO, would have qualm in using WMDs.

There is also another crucial factor that revealed itself just a few days after the Russian invasion started; the attack was going terribly wrong, and every day saw Putin's losing significant assets at little political and financial costs to NATO.

• As of March 26th, the Russian military is losing senior commanders at exceedingly fast pace: "at least 15 senior Russian commanders have been killed in the field, said Markiyan Lubkivsky, a spokesperson for the Ukraine Ministry of Defense. NATO officials estimated earlier this week that as many as 15,000 Russian troops have been killed in four weeks of war, a very high number."
  
  
• As of March 27, 2022, Oryx, the brainchild of Stijn Mitzer and Joost Oliemans, two independent military analysts devoted to investigating and sharing the ins and outs of conflict research using open-source intelligence, listed 1948 equipment losses for the Russian side, while the Ukrainian Army listed 4231. Provided that Oryx requires a picture of the lost piece of equipment, it is fair to say that the actual number is somewhere in between the two. In short, a complete military quagmire which puts in question whether the Russian army is still a first tier one.
  
  
• Just in sheer costs, Russia will not be able to sustain this war for much longer without diverting capital that would otherwise be required to service the Russian population. "Daily cost of Ukraine war likely to exceed $20B for Russia". Equipment alone is in the billions. Remember that the entire military budget of Russia in 2021 was around USD $65 billion (4.3% of GDP). When this is all over, Russia will have spent 2 to 5 times that amount in this war. The U.S. and NATO will not have spent more than a tenth of that amount. Even if the U.S, the U.K, Canada, France, Germany, Spain, Sweden, and Turkey spent the full amount of Russia's 2021 military budget on helping Ukraine, it would still constitute less than 0.2% of their combined GDPs. This economic asymmetry is going to be the ultimate bottleneck for Putin as the war drags on.  

There are very few incentives for the U.S and other NATO allies to escalate their support beyond providing defensive armements to the Ukrainian army as every day that goes by sees Putin dig deeper into the bog that he created for himself.

The U.S obviously did not plan nor even stoked this war in Ukraine. Similarly, it and NATO cannot be directly involved with it as it would be world-war III. However, Ukraine's resolve has revealed a silver-lining for the Western-world; Putin will never back down, and he will allow his army to slowly bleed to death in Ukraine. That is what autocrats do; they never admit defeat.

Any way the free world can find to support Ukraine's defense and exert maximum damage to Russia's military without entering a direct conflict will further reveal to the world that Putin has single-handedly annihilated the view of the Russian military as one of a superpower and would shame him in the eyes of his people.  

This sign of desperation would be an attempt at extending the conflict beyond Ukraine or using WMDs. Should it occur, NATO should immediately have a military response ready as it would mean that Putin has accepted his faith and wants to go in an apocalyptic blaze of folly.

What did Putin get wrong and how could he have gotten it so wrong?

• Putin was sold on the idea that toppling the Kyiv government would happen in a matter of hours, or days at-the-most, as the Ukrainian people and army would immediately surrender. We know that was the case because his troops ran out of fuel, food, water, after just a few days. Only within that frame of mind would an attacking force barely equal in numbers to the defending force would make sense. It obviously did not.
• Putin underestimated how fierce, motivated, and clever the Ukrainian resistance would be. He also underestimated Zelensky courage, resolve, and leadership.
• Putin just did not understand the extent in which a "clear majority of Ukrainians back the country’s European choice and support further Euro-Atlantic integration. This has been demonstrated at the ballot box in numerous elections since 2014 and is regularly confirmed in opinion polls that indicate overwhelming levels of support for EU and NATO membership. Meanwhile, Ukraine’s formerly powerful pro-Russian politicians have seen support plummet in recent years and can no longer win national elections.", instead believing that "most Ukrainians are eager to join the “Russian World” and are only prevented from doing so by the nationalist fanatics and Western agents who have seized power."
• The invaders were lacking the military intelligence, willingness to use it, or plain dismissed it. It is unlikely that the Russians were oblivious to the fact that the Ukrainian army had been trained and equipped by the West to make a blitzkrieg difficult (Javelins, Stingers, and these Bayraktar TB2 Turkish bomber drones that inflicted stunning damage both to the Russian equipment and moral)

Once the pattern followed by Putin became clear, the outcome and the why also became limpid. To the point that I could not understand how there was so much debate in the Western Newsmedia as to "how could Putin get everything so wrong?". 
Then, it struck me that my viewpoint and what I consider evident has been molded by the past 10 years of observing first-hand how a dictatorship operates, here in Hong Kong, and seing its playbook being applied item-by-item in Putin's actions.

Here is how a dictatorship operates and how it ultimately leads to failure:

• Elimination of neutralization of opponents 
• Concentration of power; decisions are not made based on the concerted knowledge of a group with competing goals but are limited to a small circle, or even a single individual
• No checks and balance. Unchallenged leaders will eventually make bad calls.
• Elimination of all sources of opposition (free press, separation of powers, rule-of-law, etc)
• Reliance on propaganda and force to align public opinion to the dictator's, leading to a broken feedback loop, further isolating the dictator from a necessary reality-check
• Eventually, it will always lead to the creation of a small but very tight echo chamber where the "supreme leader" is feared by his clique, leading to the creation of a reporting structure where only positive news is allowed. The only incentive for the apparatchik is to align, to gain privileges within the system and, at the highest levels, even to stay alive.
• Rewarding obedience as the most desirable political trait rather than merit fosters a culture of incompetence
• In turn, incompetence breeds corruption
• Invariably, the disconnect between what the dictator wants and what reality can allow results in cognitive dissonance which can only be resolved through popular acceptance of comforting lies via the promotion of emotion-driven propaganda. Usually through the use of fear, and the creation of an ultra-nationalist narrative where the enemies are always foreign, and heroic figures emerge to fight them (the dictator himself being the ultimate hero)
• The dictator creates a parallel reality for himself, and that self-delusion ensures that terrible decisions become the norm rather than the exception.
• In most instances in history, it leads to a failed-state and the dictator is ousted.

The idea supporting the autocrat's delusion is that he can control all and that he knows all. He builds himself a feedback loop exaggerating confirmation bias and distorting reality. For someone outside of the influence of the dictator, the situation seems incomprehensible.
But to the autocrat, the reverse is true.
That is akin to observing the actions of a cult from the outside in, as opposed to being a member... or the leader.

Beyond the fact that dictatorships have an expiry date, an advantage for the free world is that, as they lack the innovative power of a group of independent thinkers, dictators are also quite predictable, and so are their followers.

At one point, the dictator will make a move which will, due to the sheer outlandishness of the action, force a schism in the host society, and worldwide. On one side, the dictator-aligned, and the opponents on the other. The identification of this watershed moment is important in understanding how committed a dictator and its supporters (from all political creeds) are to his ideology, and how distanced from reality they have become (and therefore, how dangerous the situation is).
Often, those who were innocently supporting the lies have an epiphany, a moment of reckoning as these pivotal events draw an extremely clear line separating the for and against, the liberal and the autocrats, the truth and the lies, the right and the wrong. In Hong Kong, it was the National Security Law. Putin's invasion of Ukraine's made it impossible for anyone to defend him without buying into his whole deceitful narrative. With Donald Trump, it was the Big Lie surrounding the 2020 election...

How does Putin's complete failure in Ukraine change the world's geo-political landscape?

Where Putin has already lost regardless of the outcome of the war:

• His invasion of Ukraine has bolstered support for NATO, which had suffered an existential crisis under Trump's U.S presidency. Putin's actions managed to convince Finns to join NATO, which could happen very soon, with Sweden likely to follow. That would be a historic policy reversal for Finland. Georgia, which has wanted to join NATO for the longest time, will get a more attentive ear (here). Germany announced it was boosting its defense budget at an unprecedented rate, just a few days after the war started. Poland is accelerating purchase of air defense systems. Japan has sent equipment to Ukraine and is boosting its military.
  In the vernacular, that is quite an "own-goal" for Putin...
  
  
  
  
  
  
• The world has very distinctively aligned along the lines of democracy and dictatorship. Neutrality is no longer 'a thing'. And democracies have walked the walk, helping Ukraine financially and with military supplies, and sanctioning Russia...
  
  
• Putin has also managed the unwanted feat of undoing some of the damage he had done with his tempering of the American electoral process by galvanizing the American people against him and for Zelensky, across the political spectrum (another self-goal).
  
  
• While Asian nations have been worrying about China's imperialistic moves in the South-China sea for a while now and reacting accordingly, Putin's attack made the danger of dealing with a neighboring dictatorship even more concrete and imminent. This will accelerate various non-NATO alliances and initiatives, in light of China's rise. 
  
  
• The relentless destruction of Russian military assets since February 24th is going to leave a huge doubt as to A. Russia ability to win wars when the adversary is resilient and equipped with modern defensive equipment, and B. whether Russian military tech is any good.
  India, which buys 70% of its defense high-end arsenal from Russia, will certainly question whether what it gets is really up-to-par.
  China's own arsenal is highly derivative of Russia's, when not direct imports. China, which has never fought a war in modern times, is most likely reconsidering the usefulness, risks, and viability of its military partnership with Russia.
  


• Most multinational corporations got out of Russia because it was easy, because not doing so was going to cost them more in terms of branding and sales than staying the course. That's how of little consequence Russia's non-resource trade is on the world's stage. While this may not have a large economic impact, it could affect the social psyche of the Russian people which have progressively been used to "Western commercialism" over the past 30 years. A feeling of being behind the curve of progress will certainly cause public resentment. Who this resentment will be targeted at remains to be seen.
  
  
• The weak Russian GDP, which is at the same level as it was 12 years ago, will tank a further 7% to 15% in 2022. The Russian economy is collapsing. Putin has condemned Russians to a comparative regression of their lifestyles over at least the next 3 to 5 years.
  
  
• Russia is having trouble paying its sovereign debt, even though it is quite low by standard of the free world. Going forward, cost of borrowing will be much higher amid sanctions putting further strain on the Russian government's finances.
  
  
• Russia is already pivoting its gas exports from Europe to China. However, the Ukraine war will accelerate the movement for Europe to wean itself off Russian gas. With China being the only consumer, the latter will be able to negotiate prices down considerably compared to Australian imports.

As it is now clear that Russia will not be able to win the war over the entire Ukrainian territory, there are two possible outcomes:
1. Russia conquers Donbas
2. Ukraine wins the war and retakes Donbas.

Outcome 1: Russia conquers Donbas

Economically, the loss of Donbass would not be a significant blow to Ukraine. 

The loss would be political for Zelensky, and Putin would then be able to sell the invasion as having achieved its "goals" of "liberating Donbas". 
With Puting's popular support of late, it would probably be enough to deflect responsibility of the war to the "ennemies of Russia". 
A nationalistically re-invigorated Putin would spell disaster for the region with further armed conflicts down the line almost certain. 

Outcome 2: Ukraine wins the war and retakes Donbas

It would bring unqualifiable shame to the Russian people.

Putin, being the sole architect of that loss, would surely have to shoulder the blame and questions that rarely get asked of the winners such whether the invasion was justified and thoughtfully planned and executed, would emerge, and spell the leadership's demise. This is essential for post-Ukraine-war Russia; Russians will need to personify a loss of this magnitude, to find someone to blame. A decisive and clear loss in Ukraine will give them this outlet for their frustration and possibly avoid the decades of humiliation that would follow. That is the way out for Russia; blame Putin, reset the relations with the free-world where Russians can see more of the petro-dollars in their pockets, and move on. 

This definitive and quick Ukrainian win (within a few months) also needs to be solely achieved by the Ukrainians. Any other direct military involvement on the ground (or in the air) of foreign powers, would mitigate the necessary shame of a catastrophic loss. 

The Russian people need to have hat very clear, undeniable for the loss, that will make them come to the conclusion that their leader is the cause of defeat, not Russia's. 
And not only the military defeat, but also the consequences to Russia's economy and to the Russians' lifestyle.

It would be the only option offering a window of opportunity for true and much needed political reforms in Russia.

 
It may seem cold and inhuman to speak about numbers, but I believe it is unfortunately going to be what is necessary to take Putin down and end this war with the least amount of overall civilian casualties.

It is said that there are 30 Russian warships in the Black Sea. Should they all be sunk, it would be an undeniable, historical (the Black Sea fleet has existed since the 18th century!), and unforgivable loss (10% of the Russian navy, and truly embarrassing denial of supremacy in the Black Sea). 

Additionally, if 10% of the Russian armed forces were to perish (that's about 100,000 soldiers), no matter of propaganda could avoid Putin from having to pull out in shame. Obviously, all of these while minimizing casualties on the Ukrainian side.
Speed would therefore be of the essence, with a short-term goal of inflicting maximum damage to the invaders before they have time to fully regroup in the East.

This is a critical shift of strategy from one of defending urban areas, to a focused attack aimed at quickly inflicting maximum damage to the Russian military and force their early exit.

Therefore, these objectives should dictate the type of equipment that the West sends to Ukraine.

And then, what happens?

Whatever the outcome, I think that the next 10 years will prove globalisation doomsayers wrong; Putin's actions are going to change the nature of globalisation but not its long-term prevalence. 

Putin and Xi Jinping have shown the free world that an autocratic government's reform can be stopped by the vanity and ambitions of a single man, and therefore cannot be trusted in the long run. 

But the world cannot afford the standard of living it has been accustomed to without globalisation. Partnerships based on the cheapest contract will be weighed against national security and political risks, favoring new partnerships with multiple counterparts rather than strictly bilateral ones. 

That is why China has not officially endorsed Putin's narrative; the collateral risks to the Chinese trade of being associated with a tyrant is too great. Putin might have put China in an embarrassing position, bringing back to the fore China's own recent history of oppression and anti-western sentiments, which could no longer be ignored even by its staunchest supporters.

Xi Jinping's "no limit friendship" with Putin seems to actually have hit a limit quite quickly. While the CCP has no qualm committing a genocide in Xinjiang, officially endorsing one in another country is another matter altogether and would shatter China's doctored image as a peacemaker. Also, as its economy is still being battered by ill-conceived Covid measures, China is no going to force itself in a position that would alienate its principal trade partners, which Russia is not even close to being one of (and here). 
Dictators have no friends, they have business associates: when the going gets tough, these "associates" are nowhere to be found and will turn on the bully when he no longer is in a position of power.

Xi will also take note that the free world unanimously rallied behind Ukraine and against Putin. Billions have poured into Ukraine from the West. If Xi was not sure of the West's resolve, that should set him straight. That should make him pause and reconsider any invasion of Taiwan in that light.

The net result of Russia's collapse is that it will leave China isolated and therefore ideologically weaker. As Hitler's demise marked the end of the rise of fascism in Europe, Putin's could be rekindling the progressive democratic ideals, based on cooperation, still with one hegemon in the West but a multitude of nimble mid-size democratic powers trading in a more symbiotic fashion.

I believe that there will be areas of economic activity that will be less globalized than before; the realization that non-renewable energy are mostly in the hands of questionable and unpredictable regimes will be a strong drive for countries to achieve energy independence.

Advanced tech will be re-on-shored but everything that cannot be easily automated but is highly commoditized will remain offshore but will move to smaller (population-wise), friendlier nations.

I hope that this terrible event would also be the opportunity for the West to look at Africa differently. That its development, lead by Africans, could be the driver ensuring peace and wealth for the world over the next 200 years.

Time will tell if the Ukraine war was the watershed moment that brought the planet on the ineluctable, historical path to prosperity, freedom and democracy for all.