Russell Napier: "America, China, and the Death of the International Monetary Non-System"

 From American Affairs Journal, Volume VIII, Number 4/ Winter 2024:

Something changed in America in the 1990s. The U.S. federal funds rate began a decline from above 5 percent to reach the effective zero bound by 2009. U.S. ten-year Treasury yields declined from above 6 percent to levels not even recorded during the Great Depression. Credit to the U.S. nonfinancial corporate sector rose from 56 percent of GDP to a new all-time high of 87 percent, and U.S. Government debt rose from 60 percent of GDP to a recent high of 106 percent, very near the peak level recorded during World War II.¹ The valuation of U.S. equities rose from a cyclically adjusted price-to-earnings ratio (CAPE) of 15x to the current level of 34x, having reached a new all-time high of 44x in 2000.² U.S. tangible investment declined from 7 percent of GDP to as low as just 1 percent of GDP, a level only previously recorded in the Great Depression and briefly in the hiatus of investment after World War II.³ The nature and scale of these adjustments are strongly suggestive of a structural change, rather than merely the rotations of any business cycle.

The key structural change that led to these distortions was the creation of a new international monetary system in 1994, when China devalued its exchange rate and, through prolonged and extensive ex­change rate management, imposed an international monetary order on the world. This international monetary system is now collapsing under the weight of its own debt and the geopolitical tensions that it played a key role in creating.

The Non-System

In previous eras, we had an international monetary system that could have been named by any financier or businessperson and by many members of the public. Whether that system was called the gold stand­ard, the Bretton Woods system, or something else, its name confirmed its existence. Most people took time to understand the system’s opera­tion and its consequences for credit, money, asset prices, and the economy.

Today, we have an international monetary system that does not have a name. Just because something does not have a name does not mean that it does not exist, yet the lack of a name has obscured the profound impact that this system has had on distorting credit, money, asset prices, and the economy. Paul Volcker, who spent many years at the U.S. Treasury coping with the breakdown of the Bretton Woods system, referred to our current international monetary system as the “non-system.” It is a non-system to the extent that its terms and conditions were never agreed upon by all the parties involved, but instead it was born from choices made by a few, most notably China, that the other parties accepted and adjusted to. The extremes of interest rates, debt levels, asset price valuation, and investment in tangible assets in the United States are just part of that global adjustment to the new international monetary system that grew from China’s unilateral decision to manage its exchange rate beginning in 1994. This system would never have been agreed to in any negotiation, as it was a system replete with distortions that would lead to dangerously large imbalances with dangerous political ramifications. Indeed, briefly, in the wake of the Asian Financial Crisis in 1998, there was a seeming realization that the international monetary system needed to be negotiated and reformed. Speaking at the meeting of the World Bank and the IMF in Washington, D.C., on October 6, 1998, President Clinton warned of the likely consequences should an “international financial architecture” not be agreed to as part of greater globalization:

Creating a global, financial architecture for the 21st century; promoting national economic reform; making certain that social protections are in place; encouraging democracy and democratic participation in international institutions—these are ambitious goals. But as the links among our nations grow ever tighter we must act together to address problems that will otherwise set back all our aspirations. If we’re going to have a truly global marketplace, with global flows of capital, we have no choice but to find ways to build a truly international financial architecture to sup­port it—a system that is open, stable and prosperous.

To meet these challenges, I have asked the finance ministers and central bankers of the world’s leading economies and the world’s most important emerging economies to recommend the next steps. There is no task more urgent for the future of our people. For at stake is more than the spread of free markets, more than the integration of the global economy. The forces behind the global economy are also those that deepen liberty, the free flow of ideas and information, open borders and easy travel, the rule of law, fair and even-handed enforcement, protection for consumers, a skilled and educated work force. Each of these things matters not only to the wealth of nations, but to the health of nations.

If citizens tire of waiting for democracy and free markets to deliver a better life for themselves and their children, there is a risk that democracy and free markets, instead of continuing to thrive together, will shrivel together.⁴

Nothing was done. We are now living with the imbalances that followed this failure to move away from the Chinese-imposed system, and we will have to create a new international monetary system that can unwind those imbalances while sustaining, hopefully, both democracy and free markets. Given the current breakdown in relations between China and the West, it is most likely that we are moving toward the establishment of two global monetary systems, much as we did in our last Cold War. The separation of China from the current international monetary system will be, given the country’s integration into the global trading regime and its large holding of reserve assets, much more im­pactful than the exclusion of an already isolated Soviet economy in the aftermath of World War II. As President Clinton stated in 1998, there is more than money at stake as we develop this new system, and there is a risk that “democracy and free markets, instead of continuing to thrive together, will shrivel together.”

Unstable Arrangements

The crucial distortion imposed by China’s decision in 1994 was a decoupling of developed world growth rates from interest rates, the discount rates used in asset valuations, which many assumed to be a new normal. When interest rates appear to be permanently depressed relative to growth rates, asset valuations rise, leverage increases, and investors are incentivized to pursue gain through rising asset prices rather than through investment in new productive capacity. The decoupling of growth and interest rates was driven by the People’s Bank of China’s (PBOC) appearance as a non-price-sensitive buyer of U.S. Treasury securities, and indirectly by the role China’s excessive fixed-asset investment played in reducing global inflation and hence interest rates....

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"Singapore Recovers Billions of Dollars in Money Laundering Case"

From the Organized Crime and Corruption Reporting Project, November 21: 

Assets worth nearly $2.03 billion have been surrendered in Singapore’s largest money laundering case, as 17 suspects remain out of reach of authorities. 

Singapore’s police said 15 foreign nationals have surrendered assets worth about S$1.85 billion (US$1.37 billion) in the city-state’s largest money laundering case. Despite surrendering the assets, the suspects remain at large, outside the city.

The 15 fugitives, part of a group of 17 suspects, have agreed to surrender their assets and have been barred from returning to Singapore, according to police.

OCCRP has previously reported some of these fugitives, including Su Binghai and Su Fuxiang, businessmen who evaded police capture in Singapore, along with Su Shuiming, Su Shuijun, and Chen Mulin, who bought out entire floors of the same luxury skyscraper in Dubai overlooking the iconic Burj Khalifa, cumulatively worth tens of millions of dollars.

The money laundering case, involving more than S$3 billion (US$2.23 billion), surfaced in August 2023 when 10 foreign nationals were arrested in multiple raids. More than 400 police officers carried out islandwide operations, arresting nine men and one woman linked to organized crime, including scams and online gambling....

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"Randomness and Reality"

We are fans of randomness and its study. Taleb in the market? Not really.

From Delancey Place, November 20:

Today's selection--from Fooled by Randomness by Nassim Nicholas Taleb. 

Randomness comes to Wall Street:

“Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently, like a revolver that would have hundreds, even thousands, of chambers instead of six. After a few dozen tries, one forgets about the existence of a bullet, under a numbing false sense of security. The point is dubbed in this book the black swan problem, which we cover in Chapter 7, as it is linked to the problem of induction, a problem that has kept a few thinkers awake at night. It is also related to a problem called denigration of history, as gamblers, investors, and decision-makers feel that the sorts of things that happen to others would not necessarily happen to them. 

“Second, unlike a well-defined, precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality. Very rarely is the generator visible to the naked eye. One is thus capable of unwittingly playing Russian roulette—and calling it by some alternative ‘low risk’ name. We see the wealth being generated, never the processor, a matter that makes people lose sight of their risks, and never consider the losers. The game seems terribly easy and we play along carelessly. Even scientists with all their sophistication in calculating probabilities cannot deliver any meaningful answer about the odds, since knowledge of these depends on our witnessing the barrel of reality—of which we generally know nothing. 

“Finally, there is an ingratitude factor in warning people about something abstract (by definition anything that did not happen is abstract). Say you engage in a business of protecting investors from rare events by constructing packages that shield them from their sting (something I have done on occasion). Say that nothing happens during the period. Some investors will complain about your spending their money; some will even try to make you feel sorry: ‘You wasted my money on insurance last year; the factory did not burn, it was a stupid expense. You should only insure for events that happen.’ One investor came to see me fully expecting me to be apologetic (it did not work). But the world is not that homogeneous: There are some (though very few) who will call you to express their gratitude and thank you for having protected them from the events that did not take place. 

“The degree of resistance to randomness in one's life is an abstract idea, part of its logic counterintuitive, and, to confuse matters, its realizations nonobservable. But I have been increasingly devoted to it—for a collection of personal reasons I will leave for later. Clearly my way of judging matters is probabilistic in nature; it relies on the notion of what could have probably happened, and requires a certain mental attitude with respect to one's observations. I do not recommend engaging an accountant in a discussion about such probabilistic considerations. For an accountant a number is a number. If she or he were interested in probability she or he would have gotten involved in more introspective professions—and would be inclined to make a costly mistake on your tax return....

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On randomness:

• Randomness: "A Drunkard’s Walk in Manhattan"
• "...Believe the seemingly impossible — that you can win at a number guessing game with absolutely no information".
• Uncertainty and RandomnessThe Case For Using Random Benchmarks In Portfolio Analysis
• "Detox democracy through representation by random selection"
• The Joy of Randomness: Central Bank Strategy, Management Technique and Stock Selection
• Profiting From Random Strategies
• Can Information Rise From Randomness?
• Should You Just Give Up And Trade Stocks Randomly?
• Joys of Noise: Technologies that Rely on Randomness
• Think a coin toss has a 50-50 chance? Think again.
• Attention Managers, You Can Improve Corporate Efficiency by Randomly Promoting Employees

That last piece of research was awarded Harvard's own Ig Nobel prize in 2010. 

Ya see, ya got your complex systems and ya got your chaotic systems and then ya got your complex-chaotic systems like weather or the economy or the stock market and when you endeavor at those levels of sophistication you realize:...

There may be issues.

And on Taleb:
August 2015
Nassim "Black Swan" Taleb-Advised Fund Made a Billion From the Volatility On Monday
We are not impressed.
If it takes you six years of buying out-of-the-money puts for your 20% day to arrive, your annualized gain suffers.
More below....
****
....We've been tracking Mr. Taleb for quite a while and the general summation is an ad I was going to write for him:

"Here at The PseudoProfound Group, we believe..."

See for example this 2013 re-post of a snip from 2009's "Taleb Makes Hyperinflation Bet and Why You Might Want to Be Skeptical":

Climateer Line of the Day: The Humble Mr. Taleb Edition

I was reminded of something Nassim Taleb said a few years ago:

CNNMoney: Did your personal portfolio benefit or suffer from the subprime crisis?

Taleb: I prefer not to answer that, as I am trying to avoid talking about my nonintellectual activities. 

And  now I can't stop laughing. ...

In 2010 it was "Oh Berkshire Hathaway Fans: "'Black Swan' Author Nassim Taleb: Warren Buffett May Just Be Lucky" (BRK.B; BRK.A)"

How to keep your name in the headlines by making a sophomore statistical point (sample size, error bars, confidence levels)....

That Hyperinflation post has some amusing analysis of Taleb's prior fund, Empirica Kurtosis LLC. Here' one bit:

...So after the fund starting grinding out losses, Nassim started calling his fund a 'hedge', not a fund, later, a 'laboratory'. Now he says about the fund:"Our aim was not to make money,'' Taleb says.... 

...But he makes sure any article that mentions his fund notes he made 60% in 2000. The only record of his total fund was a WSJ article on him in 2007, which notes he lost money in 2001 and 2002, made single digits in 2003 and 2004. That averages out to around 12%, and as the risk free rate was about 4% over that period, and the volatility was probably around 17% on a monthly basis, thats a Sharpe of 0.47. Not so good. And that's with his unaudited returns, so it's probably biased high (people have a tendency to round unaudited results upward significantly)...

See also "More on Nassim "Black Swan" Taleb as a Money Manager"

2013's "Brian Eno Answers Nassim Taleb" begins with:

Mr. Eno is an autodidactic polymath.
Mr. Taleb is a comedian:
Climateer Line of the Day: The Modesty of Nassim Taleb Edition

And many more. 

Volvo Also Cut An Ad

Via one of the marketing peeps at McDonald's. He seems to know stuff about social media and stuff.

Volvo posted a 3 min and 46 second ad on Instagram, shot by Hoyte Van Hoytema, the cinematographer of Interstellar and Oppenheimer.

It goes against every single rule you can think about as a social lead. Length. Format. Over-produced.

Every comment under the ad said it… pic.twitter.com/wkmghuP4ye

— Guillaume Huin (@HuinGuillaume) November 21, 2024

"Earth endured over one million years of rain in the 'Carnian Pluvial Event'" (plus one heck of a picnic basket)

So much for breaking out the new picnic basket.

From earth.com, March 7, 2024:

A period known as the Carnian Pluvial Event, which occurred about 232 million years ago, marked a dramatic turn in Earth’s climate history. 

In an extraordinary shift, the planet transitioned from arid conditions to a prolonged phase of intense rainfall that lasted between one and two million years.

A world dominated by rain
This significant event was initially identified through the examination of peculiar sediment layers in ancient rocks during the late 20th century, and has since captivated the scientific community.

The evidence, found in diverse geographical locations from the Eastern Alps to the UK, points towards a world that was dominated by wet conditions, fundamentally altering the course of life on Earth.

Unusual sediment layers
The story began to unfold in the 1970s and 80s when geologists stumbled upon unusual sediment layers embedded within ancient rocks.

In the Eastern Alps, researchers found evidence of siliciclastic sedimentation – a deposit typically associated with water – within carbonate rocks. 

Similarly, in the UK, geologist and forensic scientist Alastair Ruffell investigated a layer of gray rock deposited within the region’s characteristic red stone.

The dawn of the dinosaurs
The findings indicated a sudden and prolonged increase in precipitation that coincided with the dawn of the age of the dinosaurs – a time when these prehistoric giants began to diversify and flourish.

This correlation hinted at the possibility that the wet conditions could have been a catalyst for the evolutionary success of dinosaurs and other terrestrial fauna, marking a pivotal moment in Earth’s biological history....

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Bringing to mind some prior posts:

Imagine That: Earliest Surviving Secular Song Is An English Guy Talking About The Weather

I grew up being told Sumer Is Icumen In was the earliest surviving but this one is a decade or two older, as the post points out.
Adios cuckoo, hello English guy griping* about the cold and wind....

*World's Oldest Weather Report Found in Egypt: It Was Raining, People Were Crabby

And for that cancelled pre-dino picnic:
October 5, 2016
“Hey Boo Boo, let's go get us a ($46,000) pic-a-nic basket”
Combining nostalgia for a certain lifestyle that existed into the 1950's* with the indolent frivolity of the tiny treasure surprises in some of the Fabergé Imperial Eggs.
Or something.

From Bloomberg:

Rolls-Royce Made a Picnic Basket That Costs $46,000

• Key Details: An attractive leather-and-wood box filled with many of the tools you'll need for a fancy picnic, including place settings for four, two small carafes for liquor, crystal glasses, and tins for food. 
• Competitors: Many high-end department stores and fashion brands make picnic baskets, such as the Fortnum & Mason St. James hamper (£550/$706) or Williams-Sonoma's wicker basket, at much more reasonable price points. Aston Martin has even made one (£1,950) that's less expensive than Rolls-Royce's.
• Price: $46,000.
• Why's It Worth It? That's a trick question—because to you or me, it's not. But this picnic hamper doesn't exist in a vacuum; it was made as an upgrade to a particular car, the Phantom coupe, which costs more than $400,000. It's something that makes that very extraordinary car even more unique, and for some people, that alone is worth the eye-popping price tag.

Rolls-Royce drivers love anything that makes their car singular or special. This fall, up to 50 recent buyers will have the opportunity to test out an addition to the Rolls list of luxury offerings.

In honor of the last 50 Phantom coupes that the brand will ever make, it is also making 50 high-end picnic hampers that fit perfectly in the back. (The trunk of a Phantom, as you may know, opens downward, transforming into the perfect padded platform for a posh tailgate.) If you buy one, the marque will supply custom-made leather straps to keep it locked firmly in place.

The price tag on the Rolls-Royce Limited Edition Picnic Hamper is $46,000, which may seem almost ludicrously steep—because it is. But Rolls isn’t making it for everyday picnicking. The point is to offer a special upgrade to a particular Rolls-Royce car, one for which you’ve probably already paid upwards of $400,000. And this kind of distinction is what owners really drool over.

Chances are, you won’t even be lugging the hamper around a field yourself. (It weighs more than 40 pounds). That’s what your driver is for.

So what goes into this pricey leather box, with its hand-carved walnut and mill-finish aluminum? There are four place settings and tidy little containers for your food. The plates have real platinum accents, and the crystal glassware and liquor decanters are hand-etched....MORE

HT: Matt Levine@Bloomberg 

Rolls-Royce, obviously "smarter than the av-er-age bear!"

*I was going to make the cut-off for the lifestyle 1939 but realized Betjeman didn't publish A Subaltern's Love Song, which definitely caught the vibe, until '41:

Miss J. Hunter Dunn, Miss J. Hunter Dunn,
Furnish'd and burnish'd by Aldershot sun...

Although the car in the poem is a Hillman, and I'm thinking of a pre-war MG TA Midget, this beauty of a pique-nique basket, which sold as lot 66 at Bonham's Paris sale in 2012 for just €8,125 would have looked right at home in a Roller:

Panier à pique-nique ancien pour six personnes par G W Scott & Sons - 1910

 

Earlier today:

Electric Vehicles—"Tested: 2024 Rolls-Royce Spectre Is Both Absurd and Sublime"

"How The Kennedy Assassination Affected Some Stock Prices"

From the San Francisco Chronicle via SFGate, November 18, 1996:

One of the first questions any murder investigator asks is cui bono -- who benefits.

In the case of the John F. Kennedy assassination, whose 33rd anniversary falls on Friday, new answers have come from a recent economic study called "Friends in High Places: The Wealth Effects of JFK's Assassination on the Assets of LBJ's Supporters."

The study, by Claremont-McKenna College economist William Brown Jr., was published this year in Public Choice, a leading social science journal.

Brown measured the impact of Kennedy's death on stock prices of major firms connected to Vice President Lyndon Johnson. His goal was to gauge the power of special interests -- in this case, those in Johnson's orbit -- to influence national policy for their own gain.

He wasn't trying to point the finger at any group for the murder itself, just trying to determine its economic consequences.

Brown looked at 63 firms, grouped into four portfolios: companies headquartered in Texas, aerospace contractors, domestic oil companies and firms closely tied to Brown and Root, a huge Texas construction firm.

All those business groups were major financial backers of Johnson and stood to profit by his move into the White House.

Historians note, for example, that the brothers George and Herman Brown, owners of Brown and Root, bankrolled Johnson's first congressional campaign in 1937, in return for which Johnson used his influence to swing a $27 million federal dam project their way.

In later years, Brown and Root officials pumped hundreds of thousands of dollars into Johnson's campaigns, while growing rich on federal contracts.

Brown the economist (and no relation to Brown and Root) found that between November 22, 1963, the day of the assassination, and November 26, the first day the stock market reopened, the value of the 63 Johnson-related firms jumped 0.85 percent more than the rest of the market.

Firms connected with Brown and Root did even better, increasing in value an average of 1.64 percent.

Aerospace firms saw their value rise three-quarters of a percent more than the market right after the assassination.

And no wonder: Business Week, in its last pre-assassination issue, reported that "a major cut in defense spending is in the works." Johnson, more hawkish than Kennedy, eventually reversed that cut with a major escalation of the Vietnam War.

Of all defense firms, perhaps none had a greater stake in the sudden transfer of power from Kennedy to Johnson than General Dynamics, whose main aircraft plant was located in Fort Worth, Texas.

Its stock climbed from $23.75 on November 22 to $25.13 on November 26, and by February 1964 was up over $30, a jump of around 30 percent in three months.

Shortly before the assassination, General Dynamics was the subject of a major influence peddling investigation by the Senate Government Operations Committee.

The investigation centered around the Pentagon's controversial award of a $7 billion contract in 1962 to General Dynamics for the TFX fighter-bomber, later known as the F-111. It was the largest aerospace contract of its time and rescued the firm from a deep financial hole.

An Air Force financial analyst said General Dynamics' bid was up to $400 million more expensive than the rival bid from Boeing. In addition, Defense Department memos suggested that Boeing's design was "operationally superior."

The Senate investigation turned up the fact that one of the key participants in the selection of General Dynamics was Deputy Defense Secretary Roswell Gilpatrick, who was the firm's special counsel before joining the administration in 1961.

Another key player in the selection was Navy Secretary Fred Korth, who had been president of the Continental National Bank of Fort Worth, a major holder of General Dynamics deposits. Before joining the administration, Korth used his political influence in Washington to promote General Dynamics contracts.

The Senate investigating committee held hearings on the growing TFX scandal on November 20, only two days before the assassination. It planned to return the following week to hear testimony from Korth. But no more hearings were held after Johnson took power.

On November 22, in a separate inquiry into government corruption, another Senate committee heard testimony about an alleged $100,000 cash payoff to Vice President Johnson in connection with the TFX contract. That investigation also went nowhere after the assassination, notes Peter Dale Scott, a professor emeritus at the University of California at Berkeley, in his 1993 book "Deep Politics and the Death of JFK."

Only fringe conspiracy theorists would conclude from these facts that General Dynamics, Brown and Root or the "military-industrial complex" more generally, had Kennedy killed. They may have preferred Lyndon Johnson, but there's no evidence they wanted Kennedy dead.

But the facts speak tellingly about how accidents of history can affect great fortunes.

A postscript for assassination buffs: No individual stood to lose more from the TFX scandal than Chicago investor Henry Crown, who owned 20 percent of General Dynamics. His personal attorney, Albert Jenner, became a senior staff attorney on the Warren Commission, in charge of investigating the possibility of a conspiracy.

In later years, Jenner also represented Chicago labor racketeer Allen Dorfman. Dorfman's stepfather Paul, a leading figure in the Chicago mob, ran the Waste Handlers Union in Chicago in 1939 with Jack Ruby, Lee Harvey Oswald's future killer.

Both Dorfmans hated the Kennedy family. Robert Kennedy had hauled them before a Senate crime panel in the late 1950s, where they took the Fifth Amendment.

Allen Dorfman was murdered, gangland-style, in 1983 in the company of another friend of Ruby, Irwin Weiner. Attorney Jenner obtained Weiner's acquittal in a 1975 federal labor racketeering case after the government's leading witness was shotgunned to death....

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There's more to the story but we'll leave it at this for now.

 

"UK army chief: We’re ready to fight Putin in Eastern Europe"

Really?

From Politico.eu, November 21:

Rob Magowan told MPs the British Army ‘would fight tonight’ if asked amid rising tensions with Russia. 

Britain's armed forces would be ready to fight their Russian counterparts "tonight" if Vladimir Putin invades another Eastern European nation, a top U.K. military chief said Thursday.

"If the British Army was asked to fight tonight, it would fight tonight," Rob Magowan, the deputy chief of the British defense staff, told the House of Commons defense committee. "I don't think anybody in this room should be under any illusion that if the Russians invaded Eastern Europe tonight, then we would meet them in that fight."

The striking comments came as MPs asked Magowan Thursday how many British brigades could get to NATO's eastern flank in the event of a major escalation by Russia....

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Maybe he's right. The last time the countries* went all a-belli the Russian navy and army ended up barred from the Black Sea, despite incidents like:

Half a league, half a league,

Half a league onward,

All in the valley of Death

   Rode the six hundred.

“Forward, the Light Brigade!

Charge for the guns!” he said.

Into the valley of Death

   Rode the six hundred....

—Alfred Lord Tennyson

*It was actually a proto-NATO vs. Russia: Ottomans, Britain, France, Sardinia.

Electric Vehicles—"Tested: 2024 Rolls-Royce Spectre Is Both Absurd and Sublime"

From Car&Driver, November 7:

Rolls-Royce glides confidently into the EV era.

On paper, the 2024 Rolls-Royce Spectre sounds like a rehashing of The Simpsons' Canyonero jingle. It's an electric coupe that's longer than some trucks, but it only seats four people. It's heavier than some of the largest gas cars, the doors are on backward, and it costs as much as a house. Yet, spec-sheet absurdity gives way to a uniquely satisfying driving experience. Over the road, the Spectre is proof positive that Rolls-Royce will have no problems adapting as the automotive world electrifies; if anything, near-silent battery-electric propulsion was made for this sort of application.

Pictures don't really convey the Spectre's sheer presence. Devoid of complex angles, every side is this massive bulwark of clean, shiny sheetmetal invariably leading your eyes frontward to the massive chrome grille and the Spirit of Ecstasy riding atop it. In addition to looking imposing, it positively swallows up space in the lane. The Spectre's 126.4-inch wheelbase is just over two inches shorter than a Ford Ranger's, but at 215.6 inches long overall, the Roller stretches some five inches longer than that mid-size truck. And we all know EVs are heavy, but for some context, the 6443-pound Spectre comes in about 600 pounds heavier than a BMW X7. Sheesh.

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Canyonero, performed by Hank Williams, Jr. , lyrics:

Can you name the truck with four wheel drive,
smells like a steak and seats thirty-five..

Canyonero! Canyonero!

Well, it goes real slow with the hammer down,
It's the country-fried truck endorsed by a clown!

Canyonero! (Yah!) Canyonero!
[Krusty:] Hey Hey

The Federal Highway commission has ruled the
Canyonero unsafe for highway or city driving.

Canyonero!

12 yards long, 2 lanes wide,
65 tons of American Pride!

Canyonero! Canyonero!....

"'Not trivial': EV sales could drop nearly 30% if Trump repeals tax credit"

From Yahoo Finance, November 21:

Auto industry execs, fasten your seatbelts. If President-elect Donald Trump and his team repeal the $7,500 federal tax credit for EVs, as reported, the fallout will be massive.

The Biden administration’s signature climate law, the Inflation Reduction Act, introduced the $7,500 EV tax credit for consumer vehicles and numerous others for commercial EVs and battery production, among other things.

Since the law’s inception in 2022, EV sales have taken off. In 2023, the first full year of the credit, EV sales jumped 46% year over year to 1.19 million, compared to 813,000 in 2022, according to Cox’s Kelly Blue Book.

Last month in a new report dubbed “The Effects of ‘Buy American’: Electric Vehicles and the Inflation Reduction Act, researchers Joseph Shapiro, Hunt Allcott, and Felix Tintelnot quantified the tax credit effect.

After constructing a model and running a simulation, the report found that EV sales in the US would drop 27% if the federal EV tax credit were removed, compared to a scenario with the EV tax credit in place. The report found this would lead to EV registrations falling to 867,000 EVs from 1.184 million with the tax credit in place — or 317,000 fewer EVs.

Bloomberg News was first to highlight the results of this report.

“This specific scenario is take summer of 2023, take all the conditions — supply, demand, and take away the EV tax credits — how would sales fall?” Joseph Shapiro, UC Berkeley associate professor of economics and co-author of the report, told Yahoo Finance.

With EV sales growing nearly 40% year over year last year, losing the EV tax credit is a "substantial change," Shapiro said. "It's a rapidly growing market and relatively new technology, but [loss of the EV tax credit] is not trivial. I mean, $7,500 is not trivial,” Shapiro added.

But there are caveats here. Shapiro notes that while a 27% decrease is substantial, relative to what sales would be otherwise, it may not be that big of a deal. EV sales increased over 40% year on year in 2023, meaning sales could be at a “flatline” if the tax credit were repealed.

That being said, sales for this year are only trending up 10% year over year through Q3, according to Kelley Blue Book, indicating a significant impact, assuming sales trend at the same level in Q4....

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"Container Shipping Industry Sees Exponential Profit Surge Driven by Red Sea Situation"

From gCaptain, November 20: 

The container shipping industry has experienced a remarkable turnaround in the third quarter of 2024, with total net income soaring to $26.8 billion, marking a staggering 164% increase from the previous quarter, according to renowned industry analyst John McCown.

The impressive growth trend, which began in the first quarter of 2024, has been primarily fueled by capacity tightening in the Red Sea region and strong global demand.

In his Q3 financials report, McCown reports that compared to the same quarter last year, net income skyrocketed by 856%, representing a $24.0 billion increase. This dramatic upswing follows a period of declining earnings that lasted for six consecutive quarters after the industry’s peak earnings of $63.1 billion in Q2 2022....

 Credit: John McCown

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Hmmm, someone should maybe look into money flows from Copenhagen or Marseilles or Geneva to Yemen.

The largest container shipping companies as of 2024 are

Mediterranean Shipping Company (MSC)

APM-Maersk 

 CMA CGM 

— https://www.marineinsight.com/know-more/10-largest-container-shipping-companies-in-the-world/

"Corporate China seeks dollars as trade tensions rise"

From Reuters via the Japan Times, November 22:

Chinese firms are squirreling away even more dollars, pricing contracts in yuan and opening import lines to mitigate currency risks as trade tensions threaten to roil foreign exchange rates.

The trend shows exporters are preparing for a long-term shift in trade toward Asia, Latin America and Africa, and safeguarding against potential currency fluctuations such as those seen during U.S. President-elect Donald Trump's first term.

Knife-edge margins are also adding to companies' anxieties, with spot markets already pushing the dollar about 2% higher on the Chinese currency in the weeks since the U.S. presidential election on Nov. 5.

"There's an obvious spike in willingness to hold dollars offshore," said David Jiang, founder of risk management consultancy Qian Jing.

A business in eastern Jiangsu province, which earns $300 million in annual exports, wants help to protect 5% margins from currency risks as it must also navigate Trump's threat of imposing 60% tariffs on Chinese goods, he said.

For now, most firms are holding on to their dollar earnings from exports and keeping them offshore, if possible. Onshore foreign-currency deposits swelled 6.6% to $836.5 billion over the 12 months to end-October, central bank data showed.

Analysts' average forecast is for the yuan to fall to 7.30 per dollar by the end of next year from around 7.24 per dollar currently.

"The interest rate differential between the United States and China is wide and that will continue to persist for a prolonged period ... holding dollar assets is natural for Chinese exporters," said Liu Yang, general manager of the financial market business department at minerals exporter Zheshang Development Group....

....MUCH MORE

As we've pointed out over the years China is torn in two directions over currency moves.

Here's the July 2024 iteration:

One of the reasons China has to be cautious about rate moves is the very real risk of capital flight. A slow-motion devaluation of the yuan has a couple negative effects: 1) Converting your currency into jade or whatever and sending it off to Uncle Liu in Tibet starts to look more attractive despite the risks and 2) A weaker yuan makes it much more expensive to purchase dollars to service and repay dollar-denominated debts.

At one time those debts, both corporate and various levels of governmental were estimated at $3 trillion* meaning a 10% depreciation adds $300 billion to the eventual cost.

Here's five years of USDCNY via TradingView. Up is weaker i.e. more yuan to buy a buck:

 

And November 11:

....Skipping up to China, one of the quoted analysts is looking for the yuan to weaken to 7.30 - 7.35 to the USD. Here's the cross rate for the past month, apparently something happened on November 5:

TradingView

 

"Masters of the Machine: The A.I. Leaders With Power, Influence, Capital and Vision"

From Observer, November

The future of artificial intelligence isn’t just being built in research labs—it’s being shaped by a small circle of power players who control the capital, strategy and vision of the industry’s biggest breakthroughs. From tech executives to investors and policy architects, these leaders are determining what A.I. becomes, what it prioritizes and how it impacts society. Meet the movers who are deciding the direction of the world’s most transformative technology.

The most powerful people in A.I. wield unparalleled influence over the future of the industry for one simple reason: money drives innovation. Unlike other sectors where progress can be piecemeal or self-sustaining, A.I. requires massive financial investment for research, computing power and the assembly of top-tier talent. This capital doesn’t just fund ideas—it dictates which ideas get to exist in the first place.

These power brokers—venture capitalists, tech titans, institutional investors and policymakers—decide which A.I. projects get the resources to move from a garage experiment to a world-changing product. They determine who has the financial runway to attract the best minds, access the latest hardware and afford the astronomical costs of scaling models that can gobble up millions of dollars in GPU hours just to train. Their decisions shape which innovations become mainstream and which remain stuck in the lab, no matter how groundbreaking they might be.

Even more crucially, controlling capital means setting the priorities and ethics of the field. Investors aren’t just picking winners and losers; they’re defining what “winning” looks like. By choosing to fund certain projects over others, they implicitly endorse particular applications, risks and philosophies about what A.I. should—and shouldn’t—do. When the industry’s most prominent backers pour billions into autonomous weapons, mass surveillance or unregulated A.I. models, they signal to the world that these are the avenues worth pursuing. Conversely, if they back startups focused on human-centric, ethical A.I. or technologies that enhance rather than replace human labor, they set a very different precedent for what the future holds.

The stakes are monumental because the flow of capital influences not only what products get built but also the rules governing them. Investors like Andreessen Horowitz, SoftBank, and even the VC arms of companies like Microsoft and Google have a vested interest in ensuring favorable regulatory conditions, meaning they can shape policy debates and public perceptions just as effectively as any lobbyist. The result is an industry roadmap that’s dictated less by technical feasibility and more by financial might.

In short, the people steering capital don’t just grease the wheels of A.I. innovation—they hold the keys to the car, the map and even the road itself. They’re deciding which risks to take, which ethical dilemmas to confront or ignore, and which futures are worth pursuing, making them the ultimate gatekeepers of A.I.’s trajectory.

A.I. Power List: Criteria Breakdown

The criteria defined below (risk, impact, speed and growth) are not just boxes to tick; they are the lens through which we view the tectonic shifts in A.I. over the last two years—a period marked by unprecedented investments, headline-grabbing acquisitions and bold, sometimes controversial, moves that will define the landscape for years to come.

RISK
Risk-takers are the ones who change the game. At Google, Eric Schmidt instituted a policy allowing employees to devote 20 percent of their time to any project they’d like. It was a risky move in the name of innovation that more narrow-minded leaders might dismiss as wasteful of resources or low ROI. But, as Schmidt tells Observer, “This helped foster a culture of creative thinking and interdisciplinarity at the company, generating some of our most successful initiatives. In the age of A.I., innovation will similarly come from taking risks and experimenting with bold, new ideas.”

Whether it’s a venture capitalist betting the farm on an unproven A.I. startup or a CEO pivoting an entire company’s strategy towards A.I., these individuals have made bold moves that could pay off spectacularly or lead to colossal failure. But it’s precisely this willingness to gamble that sets them apart from the cautious majority. Take, for instance, Tesla’s audacious push to integrate A.I. into autonomous driving, a move that could revolutionize transportation—or violently implode. The jury’s still out, but the risk is undeniable.

IMPACT
The individuals on this list have had a measurable influence on how A.I. is developed, deployed and regulated—impacting the future of policy, culture and the flow of capital across borders and industries. Think of the billions of dollars funneled into A.I. research and development. Consider the mergers and acquisitions that have shifted the balance of power in the tech industry. When Microsoft backed OpenAI with a multi-billion-dollar investment, it wasn’t just a vote of confidence in A.I.—it was a strategic move to dominate the next frontier of technology. Of course, these ideas and actions create titans of tech. More importantly, they define the next generation of leaders in culture and policy.

From the start, Congresswoman Yvette Clarke has championed the need for inclusive and equitable A.I. policies that benefit all communities, particularly those historically marginalized. She’s tirelessly pushed for comprehensive legislation that addresses the social and economic impacts of A.I. to ensure that such advancements do not exacerbate existing inequalities.

“The only way ahead is to establish comprehensive policies prioritizing the rights and privacy rights of all Americans,” Clarke tells Observer. “Digital environments do not take away our civil liberties, and substantial regulation is necessary to ensure they never do. Moving forward, all discussions on A.I. must focus on pursuing responsible advancement.”

SPEED
In A.I., speed is everything. The pace at which these leaders move—whether by starting earlier than their competitors or accelerating faster than the rest—sets them apart. Well before ChatGPT became a punchline for late-adopters, traditionalists and critics, Jeff McMillan tapped OpenAI to create a personal assistant for Morgan Stanley’s advisors to chat with, tapping into a large portion of its collective knowledge. Under McMillan’s leadership, the investment bank is leveraging data and organizational AGI to create a massive competitive advantage.

“A.I. innovation requires a deep curiosity about the world and how it works and the creativity to imagine new possibilities and solutions,” McMillan tells Observer. “Being open-minded is crucial. This means being receptive to new ideas, perspectives and techniques.” 

Technology is defined by its breakneck pace; today’s innovation is tomorrow’s standard. Like McMillan, the leaders on our list have consistently been ahead of the curve, setting trends rather than following them. Consider the recent wave of AI-driven startups that have secured record-breaking funding in mere weeks, capitalizing on the frenzy of investor interest in machine learning and automation. Mistral AI, not two years old, has soared to a $6 billion valuation. These leaders are moving so fast that they’re not just keeping up with the future but creating it.

GROWTH
The people on this list aren’t just influential now—they’re poised to continue their ascent. Multiple indicators indicate that these individuals are likely to keep pushing the envelope, advancing their industries and driving the A.I. narrative forward. 

“I was inspired by the idea that there could be a few simple principles, like the laws of physics, that would explain our intelligence and allow us to build intelligent machines,” Yoshua Bengio,  one of the most widely cited scientists in the world, tells Observer. Looking ahead, he adds, “I hope we will have solved the riddle of how to design A.I. that is safe from catastrophic misuse and loss of control.”

From the steady stream of innovations emerging from their labs to their growing influence over policy, culture and public perception, these Power Listers are far from reaching their peak. The recent surge in A.I. patents, the increasing number of A.I.-driven products hitting the market, and the escalating arms race for A.I. talent all point to a future where their influence will only grow.

Over the last two years, A.I. has evolved from a buzzword to a transformative force in nearly every sector. The people on this list aren’t just participants in the revolution—they lead it. They’re strategists, risk-takers and visionaries. These people are shaping the future, one bold move at a time. And in the fast-paced, high-stakes world of A.I., there’s no prize for second place.

The Most Important Players in A.I.....

 

....MUCH MORE (the players)

"Are We Accidentally Building A Planetary Brain?"

If so let's hope it is at minimum, somewhat intelligent.

From Noema, November 19:

From superorganisms to superintelligences, how studying crabs could reveal that we are unintentionally building an artificial world brain.

One Sunday in April 1930, actors in “little shiny pants” performed an extremely strange play in London titled, “Brain: A Play of the Whole Earth.”

A blurb summarizing the plot stated: “A Brain is constructed in the Sahara Desert — presently It grows larger than the Desert — out of pure mechanism, by the whole of the human race, It controls the whole activities and does all the thinking of the world.”

Written by obscure outsider Lionel Erskine Britton, a working-class intruder within London’s literary elite who had first worked in a factory at age 13, the play depicted the construction of an artificial superintelligence, in the form of a synthetic brain “creeping over the world.”

Humans in the play slowly lose all autonomy and come to function — in strict unison — like neurons making up one vast global ganglion. The play revolted most critics.

But Britton, an ardent socialist with Stalinist sympathies, openly celebrated this imagined future. While he was not alone in predicting something like it, others, by contrast, portrayed it as an oncoming catastrophe.

Whether they were cheered or chilled by the prospect, multiple forecasters imagined contemporary developments culminating in some kind of planet-sized brain that would perform executive function at an intercontinental scale, dictating affairs like a global frontal lobe.

This, after all, was not only an era of collectivism and roiling mass movements. It was also the moment when entomologists were first making popular the notion of a “superorganism.” Just as ants cooperate to forge an anthill — generating a whole far more potent than the sum of its parts — it became pertinent to ask whether globalizing humanity might — intentionally or not — be birthing a new form of planetary intelligence, fathoms more sovereign than any individual or national institution.

What follows is the story of how a century ago, forgotten voices foresaw the present dawning age of synthetic intelligence: envisaging futures wherein humans might cede their role as the apex cogitator and become subsumed within budding systems of nonhuman cunning.

More profoundly, their unease regarding the future of human sovereignty and solidarity rings even truer today. As our climate deteriorates and geopolitical stability crumbles, there have been renewed calls for planetary coordination and control, whether through geoengineering or governance.

We live in an era when pathogens and emissions make a mockery of national borders, when consequences cascade and harms are no longer solely local. Accordingly, disquieting questions arise again: Can liberty survive in an age of planetary risk? What might agency look like in the era of thinking machines?

Visions of a planet artificialized by intelligence are not new. Though the future will undoubtedly prove weirder than anyone yet imagines, revisiting some of the stranger tomorrows imagined throughout the past might help us better navigate the present.

The Evolution Of Individuality

In the 1980s, the biologists Eörs Szathmáry and John Maynard Smith began theorizing that evolution has, over the course of its history, undergone several “major  transitions.” Each of these involved innovations in what counts as “an individual.” For example, the shift from cells without nuclei to ones with them; later, from single-celled to multicellular organisms; and later still, from solitary hunters to cooperating groups. Each transition, he proposed, produced more potent and complicated forms of life from the fortuitous integration of simpler, uncoordinated entities into a newly coordinating whole.

This entailed sacrificing autonomy for the previously individual parts. No longer the protagonist, they now became a mere means for the reproduction of the wider whole. Where their predecessors could survive and reproduce on their own, such skills now are lost. But, of course, there are benefits to foregoing solitary life.

Look to the mitochondria living within almost all your cells. Their forerunners were once independent bacteria: rugged individuals. Now they operate obediently as intracellular powerhouses fueling and furthering the body politic. If the mitochondria could speak, would they regret their change?

Naked mole rats provide another example. They are eusocial, meaning they cooperate and divide labor. Compared to other rodents their size, they also have minuscule brains relative to their bodies. But, as colonies they exhibit impressive feats of intelligence. Their individual lobes have withered because the true protagonist is the “brain” of the colony.

“Evidence shows human brains today are smaller than those of our ancestors. 

Perhaps we are drifting the way of the mole rat?”

 

....MUCH MORE

"Elon Musk’s first order of business in Trump administration: Kill remote work"

This is going to be all-out war.

From Fortune Magazine, November 21: 

Donald Trump appointee Elon Musk unveiled his first blueprint to radically shrink the federal bureaucracy, which includes a strict return-to-office mandate. This, he says, would save taxpayers hundreds of billions of dollars a year, if not more.

Together with partner Vivek Ramaswamy, Musk is set to lead a task force he has called the “Department of Government Efficiency,” or DOGE, after his favorite cryptocurrency. The department has three main goals: eliminating regulations wherever possible; gutting a workforce no longer needed to enforce said red tape; and driving productivity to prevent needless waste.

“With a decisive electoral mandate and a 6–3 conservative majority on the Supreme Court, DOGE has a historic opportunity for structural reductions in the federal government,” the pair wrote in an op-ed for the Wall Street Journal published on Wednesday.

2 million workers whose salaries are paid by every American taxpayer
They’ll start by cracking down on remote and hybrid forms of work among government employees.

Those no longer willing or able to come into the office five days a week can find gainful employment in the private sector.

They won’t be missed, according to the pair. They’re counting on a wave of voluntary departures by bureaucrats to help them enact their plans.

According to a September congressional report, over 2 million Americans are gainfully employed by Uncle Sam. Importantly, this already excludes military personnel, the U.S. Postal Service, and most of the legislative and judicial branches.

“The number of federal employees to cut should be at least proportionate to the number of federal regulations that are nullified,” they argued. 

The ultimate goal is “mass headcount reductions across the federal bureaucracy,” according to the DOGE co-leads.

They didn’t provide specific numbers, but it would likely be modeled along Musk’s 80% cutback in Twitter’s workforce.

Contrary to prevailing opinion at the time, it did not prevent the social media company from maintaining service for users.

Musk and Ramaswamy target $2 trillion in federal cuts
Tesla and SpaceX CEO Musk has floated plans to cut $2 trillion from the federal budget, nearly a third of the $6.75 trillion fiscal total.

The proposal, unprecedented in scope, focuses on areas ripe for reform, according to Musk and biotech entrepreneur Ramaswamy.

Much of the federal budget—Social Security and other mandatory entitlements—would remain largely untouched owing to legal and political constraints, apart from efforts to address fraud.

Another $800 billion is earmarked for the Department of Defense, which recently failed its seventh consecutive audit, presenting opportunities for waste reduction.

However, their immediate goal is to slash the $500 billion in annual discretionary spending authorized by unelected bureaucrats rather than Congress.... 

....MUCH MORE

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it."

— Niccolo Machiavelli   

As noted in the introduction to October 20's "The Biden Administration Has Canceled Student Loans For More Than 1 Million In Government Jobs "

One way to divide a country by class is to observe who benefits and who pays for those benefits. In the U.S. it almost appears that we are elevating government workers to a Mandarin class with combined better pay, pensions, and workplace and tenure regulations than the people who pay their salaries. It is almost an unmentionable but very real caste system.

"Flour millers face supply crunch as wheat farmers tighten grip on stocks"

From Reuters, November 20:

• Summary

• Farmers in top exporting countries hold wheat for better prices
• Global wheat prices near four-year low amid bumper harvests
• Asian millers covered for 2 months' supply, Gulf for 45 days
• Russian farmers sell to earn high interest, but supply limited

SINGAPORE/CHICAGO, Nov 21 (Reuters) - Wheat growers in several exporting countries are reluctant to sell their crops with prices near four-year lows, traders, farmers and millers say, leaving flour makers with dwindling supplies and vulnerable to any potential upswing in prices.

 

Typically grain processors buy wheat three to four months in advance. But millers in Asia, including Indonesia, the world's No. 2 wheat importer, are currently covered for about two months, and in the Middle East, most grain processors only have up to 45 days of supplies, two millers and a trader said.

 

The limited supply held by flour makers reduces their buffer against any production shortfalls that would trigger a rally in world prices, with global reserves already projected to reach a nine-year low, and fuel food inflation.

 

Farmers are hoarding their crop as global wheat prices have slumped to their lowest since 2020 on solid output in Australia and Argentina and on improved growing conditions in major exporting regions including the U.S. and Black Sea region....

....MUCH MORE

"Battery unicorn Northvolt files for bankruptcy, upending Europe’s industrial plan"

From TechCrunch, November 21:

Beleaguered Swedish battery manufacturer Northvolt announced today that it was filing for bankruptcy in the U.S., striking a blow to Europe’s ambitions for homegrown lithium-ion batteries.

The company reportedly chose Chapter 11 in an effort to right its finances. 

Northvolt, which had soared for years on the back of strong fundraising and a string of announcements about new facilities, has stumbled of late. It laid off 1,600 employees, about 20% of its workforce, in September, and unloaded assets in November from its ill-fated purchase of Bay Area battery startup Cuberg....

....MUCH MORE

Earlier:
Batteries: Sweden's Northvolt Has Hired A Restructuring Expert

"The mafia’s latest bonanza: salmon heists"

Swim with the fishes indeed.

From The Economist, November 21:

Fish farming is big business in Chile. Stealing fish is, too 

WEARING HI-VIS jackets and heavy boots, the men in the CCTV footage almost look as though they are meant to be there—until one pulls out a gun. On March 20th at least ten men burst into a cold-storage facility in San Antonio, a port in central Chile, threatened its employees and made off in four lorries filled with salmon worth some 600m pesos ($616,000). Their plot was soon foiled. In April police recovered some of the fish in San Felipe, a nearby commune. And in August they arrested 11 people in connection with the heist. Officials behind the sting—dubbed Operación Santo Salmón (Operation Holy Salmon)—think the gang was planning to sell the goods during Lent, when Catholics forgo meat in favour of fish.

Robberies have become a big problem for Chile’s second-largest export business; salmon farming generated 6trn pesos in revenue and supported some 70,000 jobs in 2023. There were just two robberies in 2018, according to SalmonChile, which represents the country’s fish farmers. That number has since leapt sharply. Between 2019 and 2023 there were 158 salmon robberies, most of which targeted cargoes of fish being delivered by lorry. Many more are thought to go unreported.

The crime wave has battered the industry. SalmonChile puts losses since 2019 at more than 67bn pesos. Firms are spending more on insurance and tracking equipment. Lorry drivers are afraid, as the heists sometimes turn violent; two drivers were abducted during robberies earlier this year. Many firms are avoiding their usual delivery routes in the south. Some drivers have started wearing bulletproof vests. Ricardo García of Salmones Camanchaca, a fish-farming business, reckons that these additional expenses, combined with the losses, are costing the industry around 1% of its gross operating profits each year.

A couple of factors lie behind the recent rise in crime. Making off with a lorry-load of salmon—typically worth around 200m pesos—was always bound to be lucrative.....

....MORE

"Insane footage shows moment Russian ICBM slams into Ukraine in horror escalation"

The Russians did two things. 

1) they made sure the things work.

2) they showed the world the things work.

From the always measured and reserved Express, November 21: 

Reports say it was fired from Kapustin Yar test range in Russia's Astrakhan region and at the Yuzhmash defence plant in Dnipro.

Shocking footage has emerged showing what is believed to be the first use of an intercontinential ballistic missile (ICBM) in warfare by Russia.

Missiles were reportedly fired from Kapustin Yar test range in the Astrakhan region, hitting the Yuzhmash defence plant in Dnipro.

The dramatic video shows flashes lighting up the sky - believed to be six separate warheads of a R-26 Rubezh intercontinental ballistic missile.

Until now, the R-26 Rubezh had never been used since its conception in 2011. It was designed to carry nuclear weapons but is now seen as an outdated piece of equipment.

Though this was a conventional attack, it may have paved the way for a pontential nuclear strike by Vladimir Putin's forces....

....MUCH MORE including video. 

Also at The Express - BREAKING NEWS: Labour slammed over 'f***ing bonkers' £500m defence cuts as UK 'never closer' to WW3