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.

What to expect of 2022

Time to reflect on 2021 and anticipate a bit of what 2022 will have in store. Obviously, with a focus on the items that I care particularly about.

Covid pandemic dies in 2022

• Provided we do not get some kind of nasty new variant that is at the same time virulent, quick spreading, evades vaccines' protection, and cannot be medicated, I think we will see the end of Covid as a pandemic as the virus will have run out of transmission vectors (people traveling) to infect.
  As per the chart below, we can observe that there has been a new variant taking over and creating a new wave about every 6 months. However, as we can see, the Omicron variant, while a lot more contagious, has also been a lot less virulent (South Africa vaccination rate is about 33% (1st dose) as of January 19th 2022.
  Same trend seems to be forming in the U.S of massive but short Omicron wave (and here), as well as in Canada and other countries (here, here).
  
  It is also what Noubar Afeyan, the co-founder of Moderna believes (He does have a lot of very interesting things to say in his 2022 annual letter/essay. Have a read). It is the belief of many (Euro WHO here, Fauci here)
  
  
• Ezekiel J. Emanuel, Michael Osterholm, David Michaels, Rick A. Bright, and Celine R. Gounder propose, in the Journal of the American Medical Association, a strategy "for the 'New Normal' of Life With COVID", here, here, and here, where "This 'new normal' will occur when total respiratory viral infections, hospitalizations, and deaths inclusive of those from COVID-19 are no higher than what typically occurred in the most severe influenza years before the current pandemic. Integral to achieving and sustaining this “new normal” are both faster development and more efficient deployment of vaccines and therapeutics." 
  
  
• '"With the increase of immunity in population -- and with Omicron, there will be a lot of natural immunity taking place on top of vaccination -- we will be fast moving towards a scenario that will be closer to endemicity," he added." - European Medicines Agency (EMA)
  
  

In summary, the Omicron wave may well be final one in this pandemic as it is so highly contagious that most everyone will catch it, including population in countries that cannot afford the vaccines, thereby building at least short term heard immunity in a very short period of time while not having catastrophic health incidences. This could mean that a new variant would not have the required time to emerge without being knocked-out by immune hosts or by a competing variant, enabling the world to prepare for the next variant and prevent it from going pandemic.

In Hong Kong, the extremely poor performance of Carrie Lam's government should be a reminder of why universal suffrage's built-in accountability is "a good thing" and usually leads to better governance:

• The lack of independent leadership in her administration's management of Covid in the later part of 2021 resulted in the inextricable situation Hong Kong is currently in.
  It follows a ludicrous Zero-Covid policy which will fail because
  1. It is by nature impossible to reach zero Covid cases in the long-run, the same way it is not possible to have no flu season in the long run. This is made further unlikely by China not agreeing on approval of superior vaccines, for political reasons, and
  2. Striking a deal for border re-opening with mainland China requires transparency of case reporting. Otherwise, undeclared Covid cases crossing the border to Hong Kong would result in constant containment policy stop-and-go. This required transparency is inexistent North of the Hong Kong border.
  As the Zero-Covid policy continues to push high-value expats out of the city and locals alike (and here), there will be increasing pressure on Lam's government to reverse her 'China alignment at all costs' attitude. Whether that materializes in 2022 or will the economy need to suffer more until she exits her zero-Covid delusion, time will tell. 
  
  
• It is quite revealing that Beijing's way of leveraging the NSL to quell dissent and force alignment by making any minor offense a NSL one finds an echo in Myanmar's military dictatorship imprisoning Aung San Suu Kyi for having walking talkies in her home and violating Covid protocols. This page from the well-known authoritarian playbook should leave no doubt to anyone as to where this is leading for Hong Kong's rule-of-law. The very pillars of democracy which were present in Hong Kong are being dismantled one by one, much faster than what I had forecasted. 
  
  
• I expect 2022 to see more non-Bejing-aligned press outlets to be targeted by the thought-police until the only remaining ones are topics other than political ones, for fear of retribution. Expect to see more articles about hiking, outings, and about your favorite Canto-pop stars...
  Free media outlets who believe that they can avoid the ire of the NSL Gestapo or the Beijing sycophants by covering politically sensitive subject indirectly by re-publishing international press agency's articles should be careful; the NSL will, for sure, get to a point where they will qualify this activity as 'foreign influence into local politics' and will come down hard on it. I believe we will see the first instance of this in 2022
  
  
• A combination of the Zero-Covid and Beijing's additional restrictions on foreign companies doing business in Hong Kong will result in Hong Kong 2022 GDP growth to be, at best 2%, most likely closer to 0. And that's just because it was starting the year from an exceptionally low base.
  
  

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

• For years, Chinese property developers have been overleveraging debt, building empty cities with the local and central government's blessing. And now they are defaulting en-masse (here, here, even the blue-chip ones there). 2022 is expected to see continued property price falls, and sharp drops in land sales. 
  With property accounting for 70% of Chinese people's assets, should the sector collapse, it would spell serious trouble for XI and the CCP, who are boasting to be master managers. It would also deal a major blow to the concept of the Chinese political system being an example to follow. The property slump is so bad that property agencies have to remake their businesses. I have little faith in Xi's push to reign-in developers via the big government's paw; that has never worked anywhere and there is no evidence it would in China.
  
  
• GDP headwinds could become permanent. Goldman Sach already predict an anemic 4.3% in 2022. Rate cuts are on the books, which can only blow the property asset bubble. Little ways out of this conundrum...
  
  
• Some analysts announce a 70% chance of stock compression: that is the canary in the coal mine.
  
  
• Xi is also cracking down on tech industries, the very part of the private sectors he needs to see flourish if there's any hope to China to escape middle-income trap (see here, and more here)
  
  
• Zero Covid policy is completely idiotic, having side effects on all sectors of the Chinese economy (here, here, and here) and on society in general, without delivering any meaningful results as the CCP refuses to admit that China does not have potent home-grown Covid vaccines.
  I write 'meaningful' results as the results the CCP will boast about are nothing but propaganda. The CCP lied at every management level at the pandemic's inception. Why would it be any different now?

"In fact, based on excess mortality calculations, The Economist estimates that the true number of Covid deaths in China is not 4,636 – but something like 1.7 million. 

That is, China’s cumulative death toll is likely at least double that of the United States. "

- Forbes

 

• The true nature of the outbreak can only be seen indirectly via reports comparing Omicron spread vs the Wuhan original.
  
  
• Investments bank turn bullish again on China (some do not) but that is no surprise; where there's risk, there are opportunities. However, I think that in the mid-term (2-5 years), firms and investors are going to get burnt as Xi will continue to lead its crackdown with his Neo-Mao doctrines, (also here, here, and here). The big fallacy here is that you can at the same time increase the market's role in resource allocation and have heavy control of the invisible hand.
  
  
• China neo-imperialism, also known as Belt and Roads is seing a backlash (here, here, here, here, and here) which will strain support for Xi and China in general.
   
• Finally, China is aging... fast! Even with the relaxation of the one child policy, the Chinese do not make babies. 
  "Births fell to 10.6 million in 2021, compared with 12 million the year before. That was fewer even than the number in 1961, when Mao’s Great Leap Forward resulted in widespread famine and death."
  
  And these are the official numbers. As with any number coming from the CCP, it is likely that the situation is far worse and underreported. More details on the impacts on China's GDP here. My bet is that China's population did not reach 1.4 billion, and it never will. History will show that Q1-2022 has seen India pass China to take the number 1 spot of most populous country in the world.  

In Quebec...

• Quebecers are going to re-elect La CAQ (the centrist, populist party founded by retired businessman Francois Legault) with a crushing majority. Legault's team would have to make serious mistakes between now and October 3rd not to get another 4 years term with a lot more seats than they got in 2018.
  
  
• CAQ will gain another 20 seats due to their management of the Covid pandemic, but also as they are now seen by the more "conservative" PQ and Liberals voters as a proven alternative to the old parties.
  
  
• Duhaime's Conservative party will get at most 5% of the popular vote if Covid-19 has abated by then and if the related social restriction measures are removed. Eric Duhaime has failed to make his party anything other than one of the whinos and the antivaxxes, with little substance otherwise. PCQ will get no seat. Duhaime will resign as the PCQ's leader and go back to being an opinion radio host. He will probably write a book about his experience during the Covid-19 years and as the leader of the PCQ. The book will sell less than 2000 copies.
  
  
• Little change for Quebec Solidaire which will remain the default option for the left-leaning electorate.
  
  
• Parti Quebecois will be decimated (less than 5 seats) for the following reasons:
• The identity nationalists (which are not to be confused with the separatists) have found a home with La CAQ via Legault's stance on 'laicite' (Bill 21). That will be a number of percentage points moving from PQ to CAQ
• Since PQ has all but abandoned the idea of pushing for Quebec's secession from Canada, its electors that were lightly right-leaning have migrated to CAQ. A portion of the lightly left-leaning electors will also move to CAQ, and some further on the left, will go to QS.
• PQ does not have a charismatic leader that could sway the electorate. Therefore, only the hardcore independentists will hang on to the party as it slowly fades to oblivion. 
  

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! 
  
  
• Senate will go back to the Republicans
  
  
• 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. Inflation was compounded by necessary yet inflationary Covid-related consumption assistance program, and its related price pressure should recede as these programs are phased out. In layman's term, the logistic systems were built for a set and predictably growing quantity of goods being bought. As people became unable to consume services (travel, restaurants, arts, sporting events, etc), they shifted to consumption of goods, very rapidly over the past year, even more so because they were being financially incentivized to do so by the governments, even when they lost their jobs (a lot of free time, and nothing to do). Cost of energy should also go down as national reserves are being used further and OPEP turns the tap.
  The last part of this inflation equation is labor cost; with the great resignation, will people come back to work to move the goods, work retail jobs, and all the other sectors that have seen labor cost increase significantly? That's a harder one. I think that, as businesses increase wages, they will.
  
  
  
  
  
  
  
  
• On the other hand, the U.S economy is doing gloriously. So much so that the Federal Reserve will need to tame the underlying inflation through earlier and faster interest-rate increases than previously expected. 
  
  
• The 2022 redistricting (and here) might not have such disastrous consequences as I initially feared. The reason seems strategic as Republicans, understanding that the Democrats are ideologically better aligned with the majority of Americans that they are, chose to redistrict for the long-term gains rather than making changes that would benefit them now but guarantee future losses (some believe it is actually worse but I believe long term fixes will be unavoidable and so lessen that impact in a 5 years horizon). 
  
  
• Still, mid-terms usually see the house shift party. There is no reason to think that it would be different this time.
  
  
• The infrastructure plan recently passed will yield its benefit 2024 and onwards so, nothing good to reap politically for the mid-terms.
  
  
• Dependency on China for computers parts and cheap products is a clear & present danger as the CCP's non-market driven, senseless, and politically motivated & controlling policies have ripple effects on the U.S (here). I would like to see Biden take bold steps in 2022 to decouple and establish a new "factory of the world". 
  
  
• 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 (The list is "yuge" !) in the first half of the year. I will have a more extensive bit about this in another post.
  

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 (here, and here), 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.
  
  
• Similarly, in my view, NFT is the bitcoin of the "art" world. I think we may see interest in NFT fade much faster than for digital currencies. But then again, people are willing to pay a lot of money for virtual apartments in the "metaverse". So, what do I know?

In closing, my own 2022 resolutions

• Continue to actively manage my investment portfolio; I achieved 14% growth in 2021 vs previous 3 years average of about 6%. I was too focused on work and other concerns before 2021 but I realized that I could no longer sit idle and watch my portfolio stall. Remember, you will never become rich sitting only on what your employer pays you !
  
  
• May told me I am an information addict. Made me reflect on whether that is true, and whether that can be a bad thing. Yes, and yes! I did spend at least 4 hours a day reading/watching news and other current affairs emails, papers, newsfeed, from all major media outlets. That was the first thing I was doing in the morning (6am) to the last I was doing before falling asleep (around 21:30/22:00). I did get to a point where it became a bit obsessive-compulsive.
  What I did cut from my information stream is the Quebec crazy conspiracy theory bubble... I was spending too much of my time on this (maybe 45 minutes to 1.5 hour a day). I stopped following and interacting with a LOT of the crazy people and their groups. I also got out of many groups on Facebook which are denouncing the crazies as, although entertaining, these guys were also taking a lot of my time.
  
  
• But why was I doing it in the first place? It is not a case of schadenfreude (taking pleasure in someone else's pain) but rather, a belief that in order to understand where things are going, you need to understand where things are coming from. And to understand the anti-vaxx community, you need to be exposed to the way they think and act; to enter their "information" bubble. 
  But nowadays, the anti-vaxx crowd in Quebec has become completely irrelevant, yields no social nor political power. I therefore assessed that there is no longer any knowledge to be acquired by listening to them and no social risks in them continuing to spread lies.
  Their protests have all but shrunk to a few hundred excited lunatics. The few remaining leaders have made a business (here, here, here, and here) of peddling fear of the vaccine, the "great reset", and other utterly debunked fallacies. The same way it is worthless to spend a minute debating or learning about flat earthers.
  
  
• Moderate hyper commitment and do it now attitude: as part of my professional life, I have to commit to everything I do in terms of time to delivery, quality, and quantity. That requires a very high level of effective time management and prioritization, and the pace of change dictates that there be no procrastination. It has work very well for me and I also use the same precepts in my private life. However, 2021 has made me realize that I need to 1. Leave more room for private life as work was taking too many hours of my days and 2. I have to slow down on the projects that I take for myself outside of work and stop having the same level of work commitments and 'do it now'. Otherwise, it creates tensions in my personal relationships due to unfulfilled and unnecessary expectations I may have of others, and/or of myself.