Weekend links 6/5/22-8/5/22

“Wargaming a Western Freeze of China’s Foreign Reserves,” the Atlantic Council published a summary report on April 29 of what could ensue from any attempt to steal China’s foreign exchange reserves, as Russia’s have been stolen. Its author was Atlantic Council senior fellow Hung Tran, a former banker whose career includes serving as Deputy Director of the IMF and Executive Managing Director at the financiers’ cartel, the International Institute of Finance.
The scale of any operation against China is far bigger than that against Russia, Tran notes. The exact composition of Chinese $3.2 trillion in foreign reserves is a state secret, but at least $1.1 trillion is in U.S. Treasury securities, and $490 billion in other equities, plus a goodly amount held in euros, yen, and pounds sterling subject also to freezing. In addition, Chinese companies hold some $145 billion of foreign direct investment (FDI) in the U.S., and about $83 billion in the European Union.
What countermeasures might China take that would impact Western economies?
Foreigners have $1.9 trillion in direct investment in China, and China might nationalize the hefty portion of that owned by the Western sanctioning countries. It could also freeze the $1.2 trillion-plus of Chinese domestic stocks and bonds owned by foreign investors. Then there is the $2.7 trillion in external debt held by Chinese companies, most of it in U.S. dollars and euros, which China could stop servicing, using the same argument as Russia: that it is willing and able to pay, but is prevented from doing so by U.S. government actions. “A pause in servicing China’s external debt would inflict substantial losses on Western investors—largely through investment funds and pension funds,” Tran writes.
His tally of the monetarist impact? China has $3.4 trillion of “identifiable international assets” that could be seized, but it holds up to $5.8 trillion in international liabilities, largely from Western countries, which it could seize.
Tran only considers the physical-economic impact of an attempt to decouple China from the world economy from the standpoint of trade: China would be hurt by a cut-off of international trade, but 18.6% of U.S. imports, and 22.4% of EU imports come from China: including critical goods such as pharmaceuticals and chemicals to make pharmaceutical products, not to mention their significant exports to China.
“In short, in a scenario of Western sanctions coupled with Chinese counter measures, both sides will suffer substantial damages. This could lead to a situation of economic MAD—or mutually assured destruction—reinforcing the more catastrophic nuclear MAD,” Tran concluded drily. “These considerations would set the parameters of the geopolitical rivalry and conflict between China and the West. This will likely intensify in the foreseeable future to encompass all areas of relationship between the two sides, but hopefully will stop short of economic or military wars!”

Clowns to the left of me clowns to the right….

I’ve heard this one before

Which EZFKA start up will latch onto this first?