John DeQ Briggs
As Dave Barry said in introducing his 2022 Year in Review: “The best thing we can say about 2022 is: It could have been worse.”
For example, we could have had nuclear Armageddon. This briefly appeared to be a possibility, at least according to the president, who broke the news in October at (Why not?) a Democratic Party fundraiser at the home of a wealthy donor in New York City. That must have been an exciting event! One moment everybody’s standing around chewing hors d’oeuvres, and the next moment WHOA WHAT DID HE JUST SAY?
The next day, after the news media ran a bunch of scary headlines, the White House Office of Explaining What the President Actually Meant explained that the president wasn’t suggesting that we were facing Armageddon per se, but was merely, as is his wont, emitting words, one of which happened to be “Armageddon,”
No year, and this has been especially true of recent years, should end without lifting a glass to Dave Barry and his ability to find humor in all things. The entire column is here.
2022 may have been mostly bad in many ways, but there were some significant silver linings in some of the dark clouds and I touch upon them in no special order other than as they occur to me.
Russia and Ukraine. The first war in Europe since 1937-38 is no small thing. In a sense it was not a surprise. Russia, under Putin, had been nibbling at the fringes of NATO for many years, including incursions into Estonia, Georgia, the seizing of Crimea, and incursions into the Donbas region in eastern Ukraine. Then came the Biden catastrophe in Afghanistan. I am not speaking of the incompetence of the execution of the withdrawal, but the decision to withdraw at all, and to abandon billions of dollars of weaponry, along with the most strategically important real estate in all of central Asia – Bagram Air Force Base. That event, as I wrote in these pages at the time, invited aggressive mischief on the part of Russia, China, and Iran, among others. And aggressive mischief is what we got.
It is not difficult to imagine, and I expect it is true, that Mr. Putin (and Xi Jinping in China too) had reasonably reached the conclusion that the west was a rotten structure preoccupied with national issues and lacking the resources or will to stand up against consistent but limited aggression in eastern Europe. Angle Merkel and other European leaders, not to mention Presidents Bush, Obama, and Trump, had all pre-appeased Mr. Putin consistently from the beginning of this century. Thus, when Putin’s large-scale invasion actually came, supported by his mini-me Alexander Lukashenko from Belarus, the political class in this country and elsewhere presumed that the invasion would take a matter of weeks, if not days.
At the outset, there was no sentiment to do very much, and certainly not to send any American money or troops to “die for the Donbas.” But what we saw on our television screens and our media, no matter what news silo we inhabited, was as extraordinary as it was unexpected. Inspired by the leadership of Mr. Zelensky and the heroics of the Ukrainian citizenry, we witnessed the relatively rapid unification of NATO; the renewed commitment of NATO members large and small to the founding principles of NATO; the expansion of NATO shortly to include Finland and Sweden; increases in military budgets throughout the NATO territories (and in Japan and South Korea too); and an overall strengthening in general of the NATO alliance. The support for Ukraine, although slow to develop, and almost certainly more limited than it should have been even today, nonetheless sent a strong message not only to Russia, but to China and to Iran that the West was no longer sleepwalking.
Indeed, the failure of the Russian military across the entire battle front exposed not the rot of the West, but the rot, corruption, and incompetence of the Russian military. It is Russia that proved to be the paper tiger, not the United States and the West. This is not to say that Russia cannot prevail in the end against Ukraine should the west continue to withhold more effective defensive weaponry that could reach into Russian staging areas inside of Russia itself. Even so, the world was in a different and better place because of the West’s response to Russia.
To be sure, the internal politics of the war and the national response to it has exposed some strange bedfellows, most notably the far right and the far left both aligning themselves with an anti-Ukraine message. Indeed, it has been shocking to watch people like Tucker Carlson and others on Fox News align themselves with Russia in this war. And as a commentary by Adrian Karatnycky published in the last few days by the Wall Street Journal revealed, Russia’s airwaves are no longer free of supporting US voices, with clips by Ukraine critics such as Tulsi Gabbard, Tucker Carlson, and Representative Marjorie Taylor Greene. But more surprising are the appearances of various establishment figures, including Columbia University economist Jeffrey Sachs; the National Interest’s former national security correspondent, Mark Episkopos; and Dimitri Simes, until recently President of the Center for the National Interest. All three of these men appear on the programs of what the Wall Street Journal commentary calls Russia’s most odious state propagandist, Vladimir Solovyov, and generally support not just Russia but the rationale advanced by Russian Nationalists for the “special military operation” in Ukraine.
China. Having mishandled Covid by avoiding any vaccinations and engaging in massive lockdowns for nearly three years now, Xi Jinping has throttled the Chinese economy in the midst of the largest military buildup the world was ever seen. And in the face of a powerless United States and Europe, China simply took over Hong Kong with barely a peep from the West, just as it expects eventually to take over Taiwan. China has also been overtly supporting the Russian war against Ukraine, although as Russia has proved itself incompetent and Ukraine has proved itself highly competent and heroic, the Chinese support has become increasingly muted.
To back up just a bit, it was on the eve of having himself proclaimed Emperor for life, so to speak, Xi Jinping was gifted by President Biden with the Afghanistan withdrawal, thus signaling a lack of will on the part of the United States to maintain or exercise power in Asia. For several weeks, right up until the beginning of Russia’s humiliation at the hands of Ukraine, China seemed poised follow the lead of Russia and simply take over Taiwan straightaway. One suspects that the American and western response to the Russian invasion of Ukraine preempted such Chinese adventurism, at least for now.
Yet President Biden and the entire domestic foreign policy establishment maintain our incoherent “One China” policy, a policy that itself suggests a US willingness to see the People’s Republic of China take over the Republic of China, even by force eventually. But for now, the silver lining is the China is in economic trouble; the United States and its major corporations have “discovered” the perils of a supply chain dominated by a dictatorship as to which companies, and indeed nations, have little or no negotiating power, and whose government has interests that are materially adverse to those of the United States.
In short, China is finally being recognized as a longer term and more challenging threat to the United States and the West than Russia or any other country. One senses that the foreign policy establishment and the political classes have finally recognized that seeking to bring China and Russia into the international order through economic integration might have been in certain respects a fool’s errand.
The Mid-Term Elections and the Aftermath.
My last column took on the subject pretty extensively, so I will be shorter than usual. The bad news is that the Republicans supposedly “took control” of the House of Representatives by a minuscule margin of four seats. But the good news is that the center of the bell curve in this country rejected the crazies on the right overwhelmingly and with laser like precision.
Suburban voters, independent voters, moderate Republican voters, said no to Trump and most of his acolytes and dependents. Trump is now a certifiable loser in many dimensions including but not limited to: the 2020 election; his potentially treasonous involvement in the January 6, 2021 assault on the Capital; the Republican loss of the Senate in 2020; the Republican loss of the Senate in 2022; the near-Republican loss of the House of Representatives and 2022; his theft of documents from the White House and transport of them to Mar-a-Lago; his dinner with Kanye West and Mick Fuentes, both raging antisemites; and his legal woes piling up like sand in the desert.
Right up until the midterm elections, much of the GOP feared his ability to mobilize his base against them in primaries. But the electoral catastrophes (for Republicans) of 2020 and 2022 have perhaps finally caused the GOP to wake up to the real-world consequences of being in bed with Donald Trump. As my mother said long ago, and yours maybe did too: if you lie down with dogs, you get up with fleas. With any luck, the GOP will take less than a generation or two to recover from Donald Trump. The left should not take too much comfort in the public exposure of Republican incompetence and nihilism. Should the Democratic Party persist in its strong tilt to progressive radicalism in all facets of business regulation and in the regulation of personal conduct, the Democratic party will have its own problem of comparable and perhaps even greater magnitude.
As to the four-day drama relating to the election of Kevin McCarthy has Speaker of the House, suffice it to say that what he gave away in negotiations with the crazies of the radical right makes the House Speakership itself powerless and almost ceremonial. Still and all, these are interesting times for watchers of politics and policy. The Democrats are very good at governing, but govern through policies that are anathema to many people and to many segments of the economy. Democratic economic policies and behavioral policies are nothing if not autocratic and antidemocratic. These policies have trickled down not just to the universities, but to corporate America and they are dangerous. Absent a strong Republican President, the Republican party seems all but incapable of actual governance, and seems to revel more naturally in performance politics designed to gain reelection but not designed to advance any useful national policies. As a matter of prurient interest, it might be interesting to watch all of the investigations that the Republican House has in mind, but it is hard to imagine that those investigations (with a thimble full of exceptions) will do much to advance the national interest.
In the end, Kevin McCarthy will prove to be no Nancy Pelosi. He will not be able to command the fealty of his thin majority to achieve material legislative success the way Ms. Pelosi was. Like her or not, it is Ms. Pelosi will go down in history is one of the most accomplished people ever to hold the job of House Speaker, whereas Mr. McCarthy will be unremembered by history other than being an historical footnote by virtue of going through some 15 or more ballots to procure the job. George Santos, who invented an entire fictional persona to win a Republican congressional seat on Long Island, is likely to be more remembered by history then Kevin McCarthy.
Iran and China (again). One of the most amazing events of 2022 was observing the people of China and Iran rises up against their leaders in circumstances that will bring about the execution of many of them. These Chinese and Iranians have demonstrated the type of large-scale bravery that we do not see in this country anymore. The bravery of these dissidents is comparable to the bravery we have been privileged to witness on the part of the citizens of Ukraine. They may not succeed in the end, but to watch them yearning for a measure of freedom and liberty against the State machinery of China and the theocratic machinery of Iran.
I cannot help but take note of the fact that so many in this country seem to be engaged in various flavors of loathing. Yet many citizens throughout the rest of the world look to the United States as a symbol of freedom and liberty for which they are willing to die. But here in America, this kind of national loathing, class loathing, race loathing, gender loathing, self-loathing, and other loathing is quite capable of destroying irreparably the fabric of the country. We are in urgent need of a leader capable of understanding all of this and gaining a leadership position through actions in the national interest rather than through actions in the interest of one or two factions of the nation.
Power and Energy – Fusion. I am probably burying the lede here, but perhaps the most important event of the last 500 years may have gotten lost in the shuffle of all of the news and events. I am speaking of the successful nuclear fusion experiment at Livermore Labs in California. That experiment proved that for a fraction of a second bombarding a single hydrogen isotope with more than 190 laser beams produced more energy from hydrogen fusion that it consumed. This is the very reaction that powers the sun and the hydrogen bomb and yet energy produced by nuclear fusion is clean, so inexpensive that it need hardly be metered, and capable of transforming the world even more than the transformation of the world that occurred when steam engines and carbon fuels provided the power to replace animals and humans as sources of power. Ever since World War II scientists have been exploring nuclear fusion as an energy source. It is long been said in the industry that: “Fusion is the energy of the future… And always will be.” Maybe that line will no longer be a joke.
It may take many decades to commercialize the technique but at some point, perhaps even during this very century, it will come into existence and transform life on this planet in ways that cannot truly be be imagined.
Power and Energy – Carbon fuels and electricity. I bought an electric vehicle three years ago; I sold three weeks ago; it had 8000 miles on it; it was a wonderful car. Yet it opened my eyes to the absolute recklessness of national policies here and elsewhere basically mandating electric vehicles; subsidizing electric vehicles; and all but prohibiting gasoline- or diesel-powered vehicles. During my three years of owning an electric vehicle I came to realize several things. First of all, one cannot drive a long distance with confidence. The maximum range is something like 270 miles. In very cold weather it is half of that. The super charging stations one finds here and there take 30 minutes or so to be charge the battery but only up to 80%.
But more important than mere inconvenience is the reality that the electric grid in this country has nothing close to the capacity to charge all of the electric vehicles that the Biden administration is effectively mandating over the next decade. It would take trillions of dollars of public or private investment to re-create a far more robust electric grid. The cost of doing this would include an unknown but extraordinary environmental cost. Moreover, some of the raw materials required to buildout the grid, to make electric cars, and to make batteries, are in short supply at the moment and are supplied in many cases by countries using child labor to extract the raw materials.
The political forces behind electric vehicles are for the most part naïve and engaging in performance politics and virtue signaling more than sensible economic or industrial policy. Those forces also ignore that electricity is created in this country almost exclusively by carbon fuels, so there is a kind of bait and switch feature to the EV sing-along chorus. Nuclear fusion will change all this in the long run, but for now, the administration’s policies are selling a slow-motion disaster.
Tesla, which makes the overwhelming majority of electric vehicles sold in this country, has its own proprietary charging network which, by all accounts, is far superior to the not very robust charging network available through all other producers. I do not provide financial or investment advice, but I personally would not hesitate to invest in Tesla or Elon Musk in general (Twitter notwithstanding), or in the producers focusing on plug-in hybrids that use a technology not unlike the Prius that permits batteries to be charged while driving, but I would sell short and bet against those gasoline car producers who are betting the farm on electric vehicles and getting largely out of the production of gasoline powered vehicles. The recent comments of Toyota’s CEO are congruent with this view.
It is well beyond the scope of this article to take on the bone headed policies of the Biden administration with regard to carbon fuels in general. Suffice it for the moment simply to say that it should be unlawful to use millions of gallons of the country’s emergency strategic oil reserve for the purpose of temporarily bringing down the price of gasoline on the eve of an important election. The emergency oil reserve of this nation is not intended to be reserved for political emergencies, but for emergencies of a more urgent national character, such as war. It is also execrable that the administration’s policies with respect to oil and gas were themselves responsible for the enormous increase in price (not to mention triggering an inflation rate not seen in 50 years) that were then temporarily mitigated for political reasons through use of the strategic reserve. Carbon fuel prices are on the rise again, which should be a surprise to nobody who is paying attention.
The Economy and the Markets. I will be the first to admit that I do not understand what is going on with the equity and bond markets on the one hand, and the real economy on the other. On the one hand, my retirement assets are down since January 1, 2022 by around 23% or so, a slight improvement over last month. I refinanced a mortgage for 1.62% on December 27, 2021. Mortgage rates today are around 7%. Inflation is running at a little more than that on an annual basis.
Yet down on the ground, unemployment stands at proximally 3.5%, an historic low. Nearly half a million jobs were created during the month of December, 2022.
I am old enough to have lived through the 70s and early 80s when mortgage rates hit 18% or so and a 9% mortgage was a “good deal.” But this does not feel like the 1970s or early 1980s. I’m hoping that one of our readers will file a lengthy comment or send in an article explaining all of this with more comprehensibility than the financial writers for the New York Times for the Wall Street Journal can muster.
Bernie Madoff and Sam Bankman-Fried. Not much to say here except that I just watched the four-part Netflix series on Bernie Madoff, which is very good. His arrest in December of 2008 capped that awful financial collapse, one even worse than what we have seen this year. The Netflix series was timed almost perfectly to be a foil to the Sam Bankman-Fried conundrum. Madoff was a respected icon of Wall Street for decades. His life and downfall were Shakesperean in dimension inasmuch as he was turned in by his son, one of who committed suicide. The other died on cancer while Madoff was in jail. His wife was estranged from him most of the time he was in prison and several of those who ran the funds that fed him the Ponzi dollars also committed suicide or otherwise came to a tragic even if deserved end.
Sam Bankman-Fried, or SBF as he likes to call himself, is a 30-year-old little boy who had a net worth of $26 billion before it all disappeared into thin air leaving his [mostly very wealthy] investors holding the bag. Nobody seems yet to understand how this could have happened. In the same way that Bernie Madoff was a symbol of the excesses of his time, so is SBF a symbol of the regulatory and political dysfunction of his time. And the fact that he made (and lost) his billions on a technology (crypto- currency) that almost nobody understands seems also emblematic of our confusing digital era.