I was with you right up until this:

“There is something odd about the conventions governing this war where NATO giving Ukraine weapons to fire at Russia is considered fair game but NATO forces actually firing the weapons ourselves would be a potential trigger for nuclear war.”

What’s odd? This is literally how proxy wars have worked since the days of the Roman Republic, if not before.

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I assume that Putin is hoping to rerun his play with Syria:

commit atrocities and cause famine in third world;

create waves of desperate refugees flooding western democracies;

fund white supremacist/nativist candidates in the democracies;

see his puppets propelled to electoral victory by resentment of refugees and white supremacist hysteria;

watch his puppets relax sanctions and grant him territorial gains.

It's not crazy, it's just immoral. And with Murdoch, Le Pen, Farage, AfD, Trump, and lots of others working in concert, it has a good shot at succeeding.

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I could be wrong but what little I’ve read (and Occam’s Razor) suggests that the one thing that really scares Chinese people (and, consequently, their leaders) is food shortages.

There are plenty of Chinese people alive today who remember starving (and their contemporaries starving to death) during the Great Leap Forward.

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Jun 6, 2022Liked by Milan Singh

Matt mentioned it briefly but pay attention to fertilizer. Last year fertilizer prices rose by 80% and this year 40%. Russia is the main exporter of fertilizer and without fertilizer, farming yields are significantly lower. If developing countries are struggling to afford fertilizer, that can have devasting consquences in the coming years as farming yields decrease, forcing them to import more food, hurting the value of the currency, making it hardier to afford fertilizer.

One of the reason why Sri Lanka is in such desperate straits was because last year the government could afford to the import price for fertilizer and so stopped providing it to Sri Lankan farmers. As a result, their rice production cratered, leading to worse foreign exchange crisis.

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My hope from all this is that the world does its level best to improve agricultural productivity and put aside silly ideas about organic farming, as Sri Lanka has learnt the hard way. Just as Believing The Science was wise with Covid vaccines, it is wise with GMO crops. Or perhaps Monsanto actually puts microchips in them?

Oh yeah, this bit:

"High wheat prices push up the value of the dollar, improve our terms of trade, and have some offsetting disinflationary benefits in terms of making exports cheaper."

A strong US dollar makes US imports cheaper and exports more expensive.

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Russia is able to replenish the Black Sea fleet to an extent. They have internal littoral routes to transfer some ships to Black Sea ports without turkeys blessing.

Breaking the blockade will also require more than sinking surface ships. The blockade is enforced through mines, and subs. All that they must do is restrict merchant shipping by making it uninsurable. As a result breaking the blockade will require some kind of fleet of allied ships even if they are not allied warships. Someone will need to make a government level decision to buy or collateralize some ships and send their crews into danger.

Finally, folks in the west should pause from time to time and look inward. Many of us are desperately trying to get back to a status quo ex ante that no longer exists and in fact has not existed for some time. Matt keeps jokingly saying putin should have read his post about not invading. In fact Russia seems to have been better prepared for the invasion to go very poorly than I thought. They may be in this for the long haul and it’s worth looking at things like the grain shortage and chinas huge stockpile as long run gambits and not a strange attempt to force the US to end sanctions. As Matt writes it doesn’t make much sense from that respective so why do we keep framing it that way? Bc mentally we are grasping for return to status quo so we project that mirror image onto our adversary.

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Shout out to Matt Klein’s The Overshoot, which provides the Oil and Wheat stats in this article, https://theovershoot.co/

It’s one of the more expensive substack subscriptions at $18/month, but it is absolutely worth it. I’ve seen it recommended by numerous people I respect including Jason Furman, Adam Tooze, Joe Weisenthal, and Paul Krugman. Those endorsements convinced me to subscribe and the Overshoot has provided me with a lot of detailed and novel data analysis of economic issues facing our world.

I’d particularly recommend the recent article on the abnormalities in US economic data that suggests our recent GDP decline is likely a data collection or analysis issue due to the abnormality of our current situation. https://theovershoot.co/p/us-economic-data-arent-adding-up

And one of the core theses of Klein’s work is that the US economy had been understimulated since at least the 2008 Global Financial Crisis. I.e., we had an undershoot. The Overshoot name is a call for us to make up for those mistakes as explained in several public (i.e., free) articles, including:

* Let's Overshoot, https://theovershoot.co/p/lets-overshoot

* Inequality, Interest Rates, Aging, and the Role of Central Banks, https://theovershoot.co/p/inequality-interest-rates-aging-and

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Jun 6, 2022Liked by Milan Singh

This sucks, man.

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Jun 6, 2022·edited Jun 6, 2022

So- Milan indicated that unfortunately an official poll of SB readers is not coming any time soon, but gave his unofficially blessing for an unofficial one made by readers (of readers and for readers!). The idea is to create an anonymous poll to get a sense of where subscribers are from (US state or country abroad) , party alignment (American) and political ideology (say political compass quadrant), 2020 vote and 2022 vote plans and also poll on a few key issues. So -any suggestions for a handful of interesting and illuminating issue questions for the poll (and how to phrase them)?

EDIT: Looking for issues that could be polled in multiple choice format (as done by Pew etc.) to maximize response rate.

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It doesn’t seem like a huge mystery why a country with a billion people that is the world’s largest cereal importer and suffered both the first- and second-deadliest famines in human history, the most recent being in living memory, would stockpile huge amounts of grain. I suspect a food shortage is on the short list of things most likely to kill millions of people and topple the government, it’s quite logical for them to take significant steps to avoid it.

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One easy one would be to end the ethanol mandate and, if there are any I suspect there are, subsidies to "biodiesel." Neither of these would pass an NPV test using a reasonable price of net carbon emissions anyway. [I welcome correction on this point if anyone knows I am wrong about biodiesel.]

The investments in infrastructure integrating Ukraine with the West will be needed anyway, so get started with the "reconstruction" now.

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I don’t think western powers could convince Chinese leadership to sell down any significant amount of its wheat reserves as they see it as a critical strategic asset. As shown in this article, China is a major wheat importer. Hence their massive reserves serve as a buffer against global crises and trade wars.

It’s possible some African and Middle Eastern nations might be able to make major geopolitical concessions to China in return for desperately needed food. E.g., granting China the right to military bases and ports within their countries. That’s understandable in the short-term, but presents more problems for global security and peace in the long term.

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Turkey is working with Russia in an attempt to reopen Ukrainian grain shipments, although its questionable whether Russia is operating in good faith. From a Bloomberg article published today, “Ukraine Cautious as Turkey, Russia Push Black Sea Grain Deal”. [1]

> Turkey and Russia have reached a tentative deal to restart shipments of Ukraine’s agricultural products from a key Black Sea port, but Kyiv remains skeptical of the proposed pact, according to people familiar with the discussions.

> Turkish President Recep Tayyip Erdogan’s government has offered military help to clear mines off the coast of Odesa and escort grain ships but Ukraine has yet to endorse the plan, worried that removing defenses could leave the vital port open to Russian attack, the people said, speaking on condition of anonymity to discuss matters that aren’t yet public. Turkey hopes that a United Nations endorsement of the proposal could allay security concerns, the people said.

> The Russo-Turkish plan would allow for removal of mines near Odesa and guarantee safe passage for ships out of the Black Sea, under the auspices of the UN, the people said. Turkey, which has sought for months to mediate in the conflict, aims to set up a center in Istanbul to monitor and coordinate the shipments. Ukraine hasn’t participated directly in the talks, according to an official there.

[1] https://www.bloomberg.com/news/articles/2022-06-06/ukraine-cautious-as-turkey-russia-push-black-sea-grain-deal

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Basic food supplies is one of the areas where reliance on international free trade has some really major pitfalls.

In this case, it has led to a lot of the overpopulated and poorer third world countries being screwed, and given our geopolitical rival a weapon to use against the west.

The US is a major agricultural exporter, so it would suck for us, but we should really try to push other countries to be self-sufficient instead of getting them addicted to our cheap corn/soybeans/etc

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Also do you think Putin is trying to cause another European refugee crisis by creating an international food crisis? That last did help pro Russian right wing parties so it wouldn't be the craziest idea.

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Food would be plentiful and inexpensive if we grew crops for humans instead of for animals. Animal agriculture is food production in reverse: 50% to 90% of the food value/calories is lost by feeding it to animals. Animal agriculture may be the most wasteful thing in the world.

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