Autonomous drones: looks like I was right

 

A week ago I put up an article titled "Drone warfare developments - it's a scary future".  In it, I looked at autonomous AI-guided drones that found targets with a minimum of human input, then made the kill/no-kill decision on their own without a "man-in-the-loop" to make the final call.

It's happening already.

Three Ukrainian civilians were slaughtered by Russian drones that were guided by artificial intelligence, marking an ominous escalation in warfare’s robotic age.

Tetiana Bubynets, 19, a university student, and two others were blown to bits last month at a gas station in the city of Zaporizhzhia by a drone outfitted with an experimental artificial intelligence system that decides, without a human operator, where to strike, the New York Times reported.

The drone, which looked like a model airplane, was programmed to fly towards the gas station, but once it closed in, an AI system autonomously chose its target — most likely propane tanks —  based on its training to recognize such objects, experts and military officials told the paper.

“This is a risk for the whole world,” said Col. Serhiy Minaiev, the commander of Ukrainian air defenses in Zaporizhzhia.

“In a few years, we will be living in a ‘Terminator’ movie. It’s no joke. Machines are making decisions to strike.”

Debris recovered from the gas station and other strike sites around the city revealed that the drones were running on Nvidia minicomputers that determined where the drone would detonate, officials and experts said.

There's more at the link, including photographs of Russia's autonomous AI-guided drone.

What's particularly ominous about that report is that the drone deliberately targeted three civilians, who would not have been wearing uniform and would not have been in a military location.  Instead, they were at a "gas station", where "an AI system autonomously chose its target — most likely propane tanks —  based on its training to recognize such objects".  Those three civilian deaths can't be classed as "collateral damage", as so many official statements so often label such incidents.  They were deliberate damage, selected by the AI in accordance with its programming, because they happened to be convenient targets to spread terror and fear among the local populace.  Furthermore, the NVIDIA chips powering those Russian drones are officially not allowed to be exported to that country . . . but they got there anyway.  If governments can smuggle them through embargoes, so can non-governmental threat groups and criminals.  It's not all that difficult to do.

What's worse is that AI-driven drone technology, and the tactics to use it, are now spreading from Ukraine and Russia to the rest of the world.  For example, Finland is buying and using Ukrainian drone technology, and hiring battlefield-experienced Ukrainian experts to show them how to use it.

Finland is directly integrating Ukrainian battlefield data into its defense industrial base, with President Alexander Stubb emphasizing that Kyiv possesses unprecedented expertise in modern high-intensity warfare.

Speaking on the strategic value of frontline data, Stubb noted that Ukraine holds more real-world combat insights than the rest of Europe combined. Helsinki is now actively applying these hard-learned lessons across its defense sector, drawing critical data on the tactical deployment of drones, missile systems, unmanned ground vehicles (UGVs), and combat casualty care under modern fire conditions.

By systematically absorbing Ukraine’s operational data into Nordic defense manufacturing, Helsinki is rapidly adapting NATO’s northern flank to modern, sensor-saturated combat without having to learn those lessons through direct conflict.

Again, more at the link in the X thread - read the many comments from others.  Nor is Finland alone in such measures.  As mentioned last week, a US company is now supplying Ukraine with AI guidance systems for its drone hardware, making them much more deadly on the battlefield.  I've seen reports from at least a dozen countries talking about how they need to learn from Ukraine, and/or buy drone hardware and software from Ukraine, in order to ensure their own national security.  (One of them is Taiwan, which is arming itself to repel a threatened Chinese invasion.  Imagine what a cross-beach amphibious landing would suffer, in terms of both lives and matériel, if it were attacked by a hundred thousand or more autonomous drones before even one enemy soldier had set foot on shore!  Needless to say, China isn't terribly enthusiastic about this.)

It's time we all faced up to the reality of this threat - not just from nations, but from terrorists, and cross-border criminal enterprises such as drug cartels, and even from internal dissident groups such as ANTIFA, BLM and others.  Many of them are extremists, and won't hesitate to garner publicity for their cause by murdering their opponents, or anyone whom they perceive as an enemy.  Think how this might impact routine law enforcement activities.

• A drug cartel in Mexico might find it useful to send a few autonomous drones across the border to attack local, state and federal patrols, so they could sneak their illegal wares into the USA under cover of all the fuss as law enforcement tries to help its comrades.  They're already murdering their own police in Mexico, so why should they hesitate to do the same to ours?
• Rival gangs such as the Crips, the Bloods, the Mexican Mafia, etc. would probably not hesitate to use such weapons against each other (and possibly even against local law enforcement agencies) in their ongoing, never-ending fight to control urban territory for their criminal activities.
• Extremist political groups could use them to attack rival groups and/or individuals.  For example, Charlie Kirk was killed by a sniper while addressing a public gathering.  What if a future speaker could be killed by a high-explosive autonomous drone?  The "shooter" could launch it from several miles away, and be in little or no danger of detection or arrest.

Those are just a few possible examples, and they're all entirely feasible.  I think that in as little as three to five years from now, we're going to see attacks on civilian targets by autonomous drones in many countries, from who knows how many sources.  There's no guarantee that we, personally, might not become a victim of them.

Peter

Thought-provoking comments on trade/craft positions in industry

 

John Ringo, best-selling science fiction author, put up this post on X.com yesterday.  It made me think very hard about the current shortage of skilled professional craft/trade persons, which we've discussed in these pages on previous occasions.  Because some readers don't have access to X.com, I'm going to reproduce almost all of it here.  If you're on X, please feel free to read the many comments following his post, and reply to John there (and leave a comment here anyway!).

One very critical thing to know/remember about 'the trades' and 'why did we get rid of votech in HS?'

I'm a late boomer and not one to automatically blame everything on boomers, but... the boomers are a big reason.

Essentially, boomers filled nearly ALL of the trade positions that the US needed, even got laid off when manufacturing got outsourced, and there were lots and lots of people born between 1946 and 1964 who were doing plumbing, electrician, mechanic, etc jobs.

And they didn't retire. It used to be skilled union workers could retire after 20 years. The boomers didn't. My best friend is a NETA Level Four and has been doing ETT for 30 years. All the 'kids' who would have moved into his job couldn't... because he was doing it.

During the '90s there just WERE VERY FEW TRADE JOBS AVAILABLE in the United States. There was no reason for HS to keep votech when NOBODY COULD GET A JOB. There WEREN'T (many) plumber jobs, electrician jobs, machinists positions available for people entering the work force. They were all filled up by boomers.

(Example: Have a friend who works in the nuclear industry. Had to regularly certify this big complex part that was hand machined by one guy who had been doing it since 1976. THAT WAS WHEN CARTER WAS IN OFFICE! 'What happens when he retires?' 'We're not sure. There's nobody else on earth that has the skills.')

Now, as they are finally retiring, suddenly WE NEED VOTECH! WE NEED KIDS TO WORK IN TRADES! WE NEED KIDS TO MAN THE ASSEMBLY LINES! WHERE ARE THE WELDERS?! WHAT'S WRONG WITH KIDS THESE DAYS?! THEY'RE JUST LAZY AND WANT TO PLAY VIDEO GAMES/BE INFLUENCERS/PLAY ON THEIR PHONES ALL DAY!

The United States essentially eliminated skilled trade as a POSSIBLE job much less a STATUS VALUE job for at least one entire 25 year generation. We need x million new electricians in 2026. We needed about 5 in 1996. 'Sorry, kid, we're not hiring/training new electrician apprentices unless your dad is a master electrician. We just don't need that many.'

So, most of the training, HS votech, apprenticeships just went away.

It's gonna take time to fix that.

Food for thought indeed!  Please provide your own input on the subject in Comments.

Peter

Drone warfare developments - it's a scary future

 

Many of my readers doubtless took note of a report earlier this month about a US-Ukrainian military exercise earlier this year.

Ukrainian drone teams demolished a brigade of US Army tanks and armored vehicles during a live war game held this year—but the US soldiers were lucky enough to get “respawn” attempts while learning from the experience.

The semiannual military exercise, called Combined Resolve, gave the US military a firsthand taste of how modern drone warfare has evolved on the battlefields of Ukraine. The Ukrainian drone operators participating in the exercise were easily able to spot and destroy US armored vehicles by mimicking the actions of dropping bombs from above or moving close enough to simulate a kamikaze strike, according to US officials and a participant who spoke with The Wall Street Journal.

. . .

... by repeating the training scenario throughout the two-week exercise, US Army troops got better at figuring out how to disperse and hide from the drones while using countermeasures such as electronic warfare.

The US military is not alone in learning such lessons from battle-hardened Ukrainian drone operators.

Ukrainian drone teams also participated in a Swedish-led military exercise for NATO, called Aurora 26, that was also held in May. A mock mechanized assault by NATO tanks and infantry fighting vehicles allowed Ukrainian drones to take out dozens of the attacking armored vehicles, which eventually forced planners to reset the war game, The Kyiv Independent reported.

There's more at the link.

While trying to find out more, I came across this 45-minute video article from Deutsche Welle.  Itfeatures both a drone operator's perspective (a British soldier fighting for Ukraine) and drone casualties speaking of it from their point of view.  It also goes into how the technology is developing, and how China already has a commanding lead in the field.  As wars become more widespread, what will this mean for soldiers?  I recommend the report very highly if you aren't up to date with recent developments.

The technological advances referred to in the video report are already making headlines.  Earlier this month, we learned that US AI technology is now "enhancing" conventional Ukrainian drones.

In mid-July, the Ukrainian military began receiving Shrike drones made by the Ukrainian company SkyFall equipped with AI-powered autonomy hardware and software developed by the US company Auterion. The companies plan to deliver 50,000 drones equipped with Auterion’s Skynode S strike kits in the coming months.

That allows human operators to manually fly the Shrike first-person view (FPV) drones into a battlefield area, designate a target up to half a mile away, and then “flip the switch to turn it into fire-and-forget terminal guidance mode,” Lorenz Meier, co-founder and CEO of Auterion, told Ars.

The operator can abort a strike or choose a different target as long as they have a radio signal connection with the drone, Meier explained. But the drone can still automatically track and fly into targets without any human guidance, even if it loses its connection with the operator due to buildings or terrain blocking the signal or because of enemy jamming on the same radio frequencies.

To home in on targets, Auterion’s software relies solely on the visual information available from the Shrike drone’s main onboard camera. That means the Shrike drones can track and strike moving targets without any reliance on GPS—a crucial advantage on modern battlefields, where GPS jamming has also become common.

Again, more at the link.

When I think back on my own days in uniform, I can only be devoutly grateful that we didn't have to face such devices on African battlefields almost half a century ago.  I think my odds of surviving such combat would have been a whole lot lower if they'd been around!

The scary thing, to my mind, is that all this technology has already devolved to individual user level, in manufacturing as much as in operation.  A private person can buy just about all the drone propulsion and guidance technology used in military battlefield drones, and assemble his own versions.  A warhead isn't difficult to devise, given a little chemical knowledge and/or access to stolen military or commercial explosives.  What might happen if a well-organized terrorist outfit such as Al Qaeda or ISIS, or their various and sundry offshoots, were able to get hold of drone "swarming" technology and launch fifty or a hundred explosive drones against a major target?  I'm thinking sports stadiums, or government buildings, or even key targets such as the President when he's traveling by vehicle.  What if some of the drones could try to obstruct the takeoff or landing of the Presidential aircraft?  What if they did the same to a normal commercial flight, potentially causing hundreds of casualties and disrupting the entire air transport network for who knows how long?

I fear we haven't even begun to witness how dangerous such technology might be in the wrong hands.

Peter

A sobering look at automation, here and in China

 

Fedex is making news by employing robots to load and unload trailers.

FedEx says that trailer loading remains one of the most physically demanding and challenging workflows in parcel logistics, but has historically been difficult to automate using traditional solutions. However, the workflow is fundamental to FedEx operations since the company loads tens of thousands of trailers daily across its U.S. network.

Through its collaboration with Dexterity, FedEx said it is now establishing not only how physical AI performs in trailer loading operations, but also how the technology integrates into broader hub operations, including destination planning, trailer assignment, maintenance, and workforce processes.

Dexterity says its platform uses the company’s “Foresight” world model for physical AI to make real-time decisions in dynamic environments., and to control its dual-armed superhumanoid robot called “Mech,” that is designed for heavy industrial operations while remaining compact enough to operate inside trailers.

There's more at the link.

That is (or should be) yet another wake-up call to the trades unions representing US transport and cargo handling workers.  Slowly but surely, their members' jobs are being taken over by automation.  Amazon is already using a largely robotic workforce at many of its biggest and busiest customer service warehouses and hubs, and where Fedex goes, UPS and other shippers will go there too (if they haven't done so already).  I suspect most blue-collar workers have not given enough thought to what they'll do for a living if jobs like those are automated out from under them.

The bigger worry, to me, is the enormous gap between automation in first-world economies versus what's happening in China.  Consider this chart (click the image for a larger view):

The article accompanying that chart says, in part:

The data covers only physical industrial robots, not software or consumer technologies.

The chart shows that in 2011, China, the United States, Japan, Germany, and South Korea were all installing similar numbers of these robots. However, in the decade that followed, the paths of these countries diverged. By 2023, annual installations in China had risen to 276,000 robots, a twelvefold increase.

Over the same period, installations in the United States, Japan, Germany, and South Korea also increased, but much more slowly: none of them even doubled. The United States, which saw the second-largest rise, went from 21,000 new installations in 2011 to 38,000 in 2023.

These figures refer to new robots installed each year; that is, annual additions to the existing stock of robots. The IFR also publishes data on the total number of robots in operation, and by this measure, China also had the largest installed base, at around 1.76 million robots in 2023.

Again, more at the link.

The USA's total installed base of industrial robots was less than 400,000 units at the end of 2024.  At the same time, China had more than two million units in service.  The gap has only widened since then, and at a faster pace, too.

Those who say that we need to revive US manufacturing aren't looking hard enough at those numbers.  I don't believe it's possible any longer to rejuvenate US manufacturing in the traditional sense.  If we focus on technological sophistication, that's a different story:  but China's working on that just as hard as we are, if not more so.  Yes, I've read recent reports that China's economy is in trouble, and that they may be facing recession or depression:  but that doesn't take away from the immense technological lead they've built up in manufacturing.

This latest news from Fedex is a step forward for the company.  However, it's a drop in the bucket compared to what China is already doing.  American companies had better innovate a lot faster if they want to avoid being swept away by a Chinese-led tsunami in the business world.  That's not just a problem here, of course:  Europe is even worse off than we are.  Trouble is, I don't think enough of our private sector business leaders are paying it enough attention.  They're focused on their next quarterly results, not whether they'll still exist in a few years' time . . .

Let's give the last word to Dire Straits.

Peter

So much for advanced computer technology!

 

Many of us will know of Saturday Morning Breakfast Cereal, a long-standing comic strip by Zach Weinersmith.  Sometimes he can make me laugh out loud.  As an "old-school" computer operator, programmer and analyst, way back in my distant youth, I did so when I read this one.  Click the image to be taken to a larger version at the comic's Web page (which will also allow you to read the mouseover text attached to the original image).

While on the subject of computer technology, there's an interesting article about Steve Krug, one of the pioneers of Web design.  He thinks social media is the worst thing that's happened in the last forty years.

He lays out his ideal version of social media. Users wouldn't be able to have more than 100 followers, which would tamp down on virality. Short-form videos would also be more difficult to find — only available via search and subscriptions, not through a curated algorithm — and wouldn't be "spoon-fed to you in such large doses," he says. That's a level of friction that he'd enjoy.

"There could have been a really good life for social networking that could have been a benefit to society," Krug says. "It hasn't gone in that direction at all."

He's especially worried about kids. When he was young, there were only three TV stations. Still, his parents didn't let him sit in front of the television every day after school, so he went to run around with the neighborhood kids instead. It benefited him, he says.

"They're designed for addiction, because that's how they make money," Krug says of the social platforms.

There's more at the link.  Recommended reading.

Peter

Things are getting interesting in narco-Mexico...

 

According to a report in the Atlantic (paywalled, but an archived version is here), the politicians in Mexico who have for years - probably for generations - been bribed and/or cajoled and/or threatened by the drug cartels into turning a blind eye to their criminal activities, appear to be changing their tune.

(BIAS WARNING:  The Atlantic is notoriously anti-President Trump and routinely criticizes the policies and actions of his administration.  This article appears to be unusually positive, despite that reservation.)

... the governor of the strategically important border state of Baja California was just caught on tape offering to become an FBI informant. The remarkable thing here is that she would not be the first; the list of current and former Mexican officials and drug traffickers who have offered to cooperate with the U.S. government is now lengthy.

. . .

Since his second term began, Trump has periodically threatened military action inside Mexico, alluding to air strikes or operations that would “take out the cartels.” Mexican officials have repeatedly rejected the possibility. “There will be no invasion of Mexico,” President Claudia Sheinbaum said last year. But quietly, Mexican officials have discussed what it would mean if they were attacked by their neighbor and largest trading partner. Would it be a special-forces operation, like the one that seized former Venezuelan President Nicolás Maduro? A drone strike on a fentanyl lab? Some Mexican officials are reading books about the Mexican-American War, searching for historical precedent.

Because the threat of military intervention is so dramatic, not enough attention has been paid to a type of intervention that is already taking place, one that could pave the way for strikes. In a break with long-standing precedent, American prosecutors have used informants to pursue members of the Mexican government, apparently “moving up the food chain,” as one U.S. official described it to me ... Several former Mexican officials facing U.S. charges have turned themselves in, apparently agreeing to cooperate with authorities to reduce their sentences. Dozens of newly extradited drug traffickers, too, are believed to be cooperating. Their accounts appear to have allowed U.S. investigators to build cases against members of Sheinbaum’s Morena political party. At least four have been indicted. Many more have had their visas revoked.

It’s a high-risk escalation in the Trump administration’s fight against narco corruption—and possibly also a pretext for a unilateral attack. Trump could use evidence of the government’s links to organized crime in an attempt to justify using force in Mexico. This week, the Trump-appointed head of the Drug Enforcement Administration, Terry Cole, gave a speech describing “the deadly connection between cartel networks and the Mexican government.”

“They are one [and] the same,” he said.

. . .

Last week, the State Department designated two lesser-known drug cartels—the Juárez Cartel and Los Viagras—as “foreign terrorist ⁠organizations” and “specially designated global terrorists.” Some within the Trump administration believe that those designations would offer some kind of legal authority for an attack, though international-law experts largely differ ... The campaign against cartel leaders has been so successful that, even if the United States wanted to decapitate a drug-trafficking organization, it’s unclear whom they would target.

There's more at the link.

This has mostly been taking place "under the wire", so to speak.  We've known for years that the entire government structure of Mexico - local, regional and national - is corrupted by drug money from the cartels, who effectively run most of the country.  However, if the cartel leaders, and political leaders, are rendered ineffective (or imprisoned), what's going to happen to the social fabric of Mexico?  So much of it is cartel-corrupted (including almost every element of the police and armed forces, the emergency services, etc.) that ordinary citizens have learned to live without most of the social structure we take for granted.  If the replacement structures of the cartel are suddenly removed, will Mexico survive in its present form?

I think there are three possibilities.

1. Mexico will collapse into a "failed state", with widespread chaos and anarchy.  It will be almost impossible for business to function without paying massive bribes to local strongmen, but those strongmen will be at war with each other, so that an effective regional or national government simply won't be possible.
2. Mexico will limp along as it does at present.  The cartel structures will continue to use their financial wealth (very considerable, having amassed it over decades) to buy the cooperation of the civil authorities.  However, the competition between cartels to take over those resources will devolve into civil war in parts of the country, and will likely spill over into the southern United States.  I'd expect southern California, Arizona and New Mexico to become very dangerous areas, even more so than at present.  (I daresay Texas will probably cope better than they do, because Texas law enforcement authorities aren't handcuffed by liberal politicians who'll do everything in their power to restrict them.)
3. Mexico may break into several smaller nation-states, based on divisions that go back centuries.  Don't forget, "modern" Mexico was "created" out of a series of revolutions and civil wars that imposed unity out of the barrel of a gun, and killed anyone who argued with the concept.  With the number of guns in circulation there now, it'll be harder to impose authority in that way.

I could be completely wrong, of course.  Time will tell . . .

Peter

True dat

 

Healthranger observes that most people have no idea about how the world functions - or why it's that way.

While I am blessed to be able to interview some of the smartest people in the world, I remain aghast at the utter lack of knowledge among the "ignorant masses."

• Most people don't know a thing about food ingredients.
• They don't know where energy comes from.
• They don't know where their own organs are located in their own body.
• They don't know how mechanical things work, not even at a basic level (like combustion engines).
• They don't know basic first aid or emergency medicine for self-treatment.
• They are completely clueless when it comes to geography.
• They don't know what money is. (And they certainly don't understand compounding interest.)
• They don't know how computers work, or how storage devices function.

The average person is a walking biological shell of cognitive emptiness. And their lack of fundamental curiosity prevents them from ever making the effort to learn anything that matters.

But they are total experts in fashion, sports and celebrities, of course. They know all the latest trends pushed by shallow influencers, but they have zero knowledge of what's happening in the world and why their life is becoming more difficult by the day.

There's more at the link, and in the comments that follow.  Worthwhile reading.

I've noticed the same thing (although not among most of my readers, who wouldn't waste their time on my scribblings unless they shared my interest in when, where, who, how, why, etc.).  It really is frightening to listen to some of the terminal inanities spouted by some of our politicians (on both sides of the aisle - Republicans have idiots among their number, just as Democrats do).  That applies particularly to the Kumbaya school of international relations . . . "If we just leave Iran/Russia/China/North Korea/wherever alone, they'll leave us alone!  After all, everyone wants peace!"  Yeah.  Riiiiight.

What to do about it?  There's the rub.  I have no idea how to make people understand when they're not interested in understanding.  All one can do is "preach to the converted", sharing ideas and concerns with those who are prepared to think for themselves, and then take whatever steps are possible to protect ourselves from the ignorance of others.  On the other hand, that stores up troubles of its own.  Remember Aesop's fable about the ant and the grasshopper?  Jim Quinn updated it to reflect modern times.  I suspect his is more accurate than the original!

Peter

Brainwashed ideology runs headlong into common sense

 

I'm going to embed a video clip below.  It shows Gina Plata-Nino, the Director of SNAP Policy and Advocacy at the Food Research and Action Center, being questioned by Rep. Brandon Gill.  The topic of discussion is efforts to remove unhealthy food choices - in this particular case, sodas - from the list of items eligible to be bought using funds from the Supplemental Nutrition Assistance Program, or SNAP.

Ms. Plata-Nino is clearly left-wing and populist in her approach, defending peoples' right to use SNAP benefits in any way they please.  Notice how she avoids, evades and dodges any attempt to get her to admit that sugary sodas are in no way nutritional, and aren't really "food" as the SNAP program was originally intended to fund.  She literally can't be persuaded to acknowledge facts.  Instead, all she can do is repeat her pre-programmed talking points.

It's a bit like medical administrators and professionals who absolutely cannot admit that only biological women can become pregnant and give birth.  They daren't acknowledge that fact, because in doing so they would be forced to acknowledge that "trans" women are not, in fact, women at all - merely cosmetically adapted males.

Here's the video.  It's only about five minutes long, but I think it's worth watching.

That's what we're facing in every election in this country.  Districts dominated by people who use government benefits will listen to advocates and politicians like Ms. Plata-Nino, and vote in lockstep with those who promise them more benefits without cost to themselves.  Districts dominated by people whose taxes have to fund those benefits will be (legitimately) angry at how they're wasted, exploited and abused by the recipients.

Sadly, more and more districts are dominated by those who want something for nothing, and vote accordingly.  Many of those votes are, of course, illegitimate, as the widespread investigations into voter fraud and electoral register mismanagement are demonstrating.  Will that be enough to put things right?  Your guess is as good as mine . . .

Peter

When large-scale weather threatens large-scale consequences

 

I'm sure most of us have read news reports about the imminent return of the climate phenomenon known as El Nino, possibly in the form of a so-called "super" El Nino, far stronger than "normal" events of this kind.  There have been all sorts of alarmist forecasts about drought, flooding, and everything in between.  However, the big story may be the effect of this climate phenomenon on global commerce and industry, regardless of whether it's rainy or sunny.  TT Club, a "provider of mutual insurance and related risk management services to the international transport and logistics industry", examines the implications.

El Niño events are part of a naturally occurring climate cycle, but “super” events are characterised by exceptionally high sea surface temperature anomalies, which are far less frequent and significantly more disruptive. Current forecasts are suggesting that a very strong event is increasingly likely, with some indicating increases well above historical norms. The result is not a single point of failure, but rather a synchronised, multi-regional disruption that has potential to affect the interconnected global supply chain.

. . .

Perhaps the most concerning aspect of the current outlook is the convergence of climate and geopolitical risk factors. When overlaid with El Niño-induced climate shocks, the potential for cascading effects increases significantly.

For example: 

• Reduced fertiliser availability may exacerbate the impact of drought on crop yields
• Higher fuel costs may increase the cost of transporting goods
• Trade route disruptions may amplify delays caused by weather-related events
• This interconnected risk landscape highlights the need to view El Niño not as a standalone hazard, but as part of a broader system of interdependent risks.

. . .

The critical point for global businesses is that exposure is rarely limited to the location of the physical hazard. Organisations may face indirect impacts through suppliers, commodity markets, logistics networks, energy systems, insurance costs and customer demand.

Key global vulnerabilities include: 

• Food and commodity price inflation driven by crop losses or supply uncertainty
• Disruption to agricultural, industrial and consumer-goods supply chains
• Transport delays, port disruption and reduced reliability across maritime and inland logistics routes
• Energy market volatility linked to higher demand, reduced hydropower output and infrastructure stress
• Increased insurance, financing and working-capital pressures as businesses respond to greater uncertainty

For internationally exposed organisations, these second-order and third-order effects may prove just as significant as direct physical risks. The practical implication is that El Niño should be assessed not only by geography, but by dependency: where goods are sourced, how they are transported, which inputs are most constrained and where alternative capacity exists.

There's more at the link.

That's an often underestimated factor in many plans:  military, political, business, disaster, whatever.  A factor that is described in geographical terms - like El Nino, often termed the "southern oscillation" of weather patterns - can have effects far outside that geographical area.  I'm sure most US businesses on the East Coast aren't planning for any major disruption due to weather that might affect the West Coast of this country, but that's very short-sighted.  What about Europe, or Asia?  I'm sure many nations on those continents are dismissing El Nino as "someone else's problem", but if, as the article suggests, we define it by dependency on economic activity in the area where it occurs, that dependency reaches into every corner of global markets, both imports and exports.

Even on a small scale, in terms of personal planning for the next year or two, this bears thinking about.  For example:

• Is my employer (and hence my job) likely to be affected by El Nino, positively or negatively?  Could it determine whether or not I have a job at all this time next year?
• What about our household emergency planning?  Are we assuming that certain staple foods and basic necessities will always be both available and affordable, or might the advent of El Nino-related weather patterns affect that?
• Are we planning to travel anywhere over the next year or two?  Will airline flights be affected by El Nino?  Will they become more or less affordable?  What alternatives are there?

Just a few areas where we might all do well to consider what's going on in our atmosphere and our oceans at present.

Peter

So much for the New York City property market...

 

This news is several days old, but it only caught my eye yesterday.

Months before New York City approved a historic two-year rent freeze, Google co-founder Sergey Brin quietly exited a struggling real estate fund at a steep loss.

In December, Brin sold his stake back to A&E Real Estate, the fund's manager, for six cents on the dollar, according to documents obtained by Bloomberg.

The fund holds 5,900 rent-stabilized apartments, with Brin's stake being valued at roughly $79 million, a drop in the bucket when viewed next to his $280 billion net worth.

"A&E bought out one of our long-term investors, who was willing to accept six cents on the dollar on their original equity investment to divest itself from the New York City multifamily sector," a company representative told Bloomberg in a statement.

"The simple and deeply troubling fact for renters is that institutional capital – both equity investors and lenders – are fleeing New York City’s rent-stabilized apartment sector," the A&E representative continued, according to Bloomberg. "They understand New York is in a doom loop."

There's more at the link.

Think about that for a moment.  Working backwards from "Brin's stake being valued at roughly $79 million" at the sale price - i.e. at six cents on the dollar of his original investment - that means he originally invested about $1.3 billion in the real estate fund.  He's lost almost all of that money, thanks to New York City's cratering real estate market, undermined as it is by the socialist communist policies of newly-elected Mayor Mamdami.

If a man as economically savvy as Mr. Brin walks away from a $1.3 billion investment, writing it off as unrecoverable, what are smaller investors to think?  Can they afford to follow his example?  For that matter, can they afford not to follow his example?  Makes you think, doesn't it?

If I were unfortunate enough to live in or near New York City, or have money invested there, after hearing that news I'd be taking steps (rapid ones) to move myself and/or my money somewhere (anywhere!) else . . . before I lost all my investments, too.

Peter

Artificial intelligence and music: noteworthy?

 

I was struck by an article in RealClear Books & Culture, titled "A.I. Panic Hits Music City".  Here's an excerpt.

Suno is the AI music app sweeping the music world and raising serious questions about the future of the industry. By typing a few prompts into a text box, you—or rather, the algorithm—can generate professional-sounding songs. If you upload your own melodies or lyrics, it can create new versions of your original content. As one song after another plays in the pitch meeting, more of these AI-produced tracks appear, most carrying that same disorienting quality: songs that sound better than they actually are, polished to a high gloss by machine production.

As Barack Obama once said, you can put lipstick on a pig and it's still a pig. Likewise, you can have Michelangelo paint a mural on the ceiling of your uncle Ned's double-wide trailer, but that doesn't make it the Sistine Chapel. Whatever one thinks of the songs, one thing is certain: AI is alarmingly good at producing music at a quality level that, until now, required highly-paid professionals who had spent their lives honing their craft.

Songwriting, Nashville style, is a craft, and a slow-burning one at that. You spend years learning how to write a great bridge, how to make a hook land, how to fit your whole life into three minutes and fifteen seconds. I had heard friends in the business grumbling about what AI was doing to all of that. But I knew I had to find out firsthand. So I went home and fed my song into the machine.

Confronting AI for the first time as a musician can be harrowing. I'd recently watched a video posted by a local touring guitarist—the kind of sideman Nashville produces in abundance—who described receiving an AI guitar track from a client as a reference. The problem: the AI-performed track was so good, he wasn't sure he could match it. He felt there might be only five human beings in the world who could play it so well. This is coming from a professional in a city that represents perhaps the greatest concentration of musical talent in the world.

So it was with some dread that I picked a pop-country tune I'd written recently and uploaded it to Suno, instructing it to “Make a dark, soulful indie country cover of this song with a driving beat.” The platform can generate a complete song from scratch. Meaning, a person with zero talent and almost zero effort can make songs. People are currently creating more than 7 million songs per day on that platform alone, enough volume to surpass the entire Spotify catalog every two weeks. But the technology can also be used more subtly, to create faithful covers of work you've already recorded. It's like having your own band of professional musicians in a box, ready to take direction. That's what I chose to do: I uploaded my rough demo, along with my lyrics, asked it to make a faithful cover, and clicked "generate."

The results were all over the place. One early experiment produced something that sounded like a hit single. The AI singer was so soulful that I would have pulled over to Google him had I heard the track on the radio. But the same version had a hideous, wildly inappropriate drum sound that started firing in verse two, as if Christopher Walken had possessed the algorithm and started demanding more snare. Other versions produced strange discordant moments or went emotionally flat. Working effectively with AI in music isn't a single push of a button. It's an iterative process of trial and error. But after making many versions, I found two keepers.

. . .

There was only one problem: the AI singer had possibly sung my song better than I ever could. In a town full of great singers, I'm considered at least a good one. But the AI voice had everything—incredible control, emotional nuance, and a back-country drawl I'll never have as a Florida native ... Still, the AI offered something genuinely useful: production ideas I wouldn't have thought of myself. A minor chord in the bridge that improved the arrangement. Taking the final chorus up an octave for power and exuberance. A cool twist on the background vocals in the outro. Killer mandolin parts injecting energy into the choruses. These are the kinds of ideas I might have paid a top producer to provide. I was getting them for the price of a $15 subscription.

There's more at the link.

I haven't looked into AI in music in any depth, so this article came as a surprise to me.  Intrigued, I looked for AI country music on YouTube, and found innumerable examples.  Try this one for size.  The source blurb for the collection from which it's drawn notes:  "Made with AI. Sounds or visuals were altered or fully generated."

It's a good song, IMHO, and I enjoyed it . . . but I'm left feeling empty, because behind that powerful singing and memorable tune, behind those excellently-played instrumentals . . . there's nobody.  The inspiration it offers is artificial.

Would I feel different if I hadn't known it was AI music?  I don't know, but I think I would.  A song composed and performed by a human being connects heart-to-heart, I guess.  Synthetic songs can imitate that, and if they're as good as the one above, they can fool people, but . . . it just feels wrong.

What say you, friends?

Peter

Is the tank dead on today's battlefield? Two perspectives

 

During my military service, I was never involved with tanks (or any other armored vehicle), apart from hitching a ride on one now and again.  I also had a couple of Soviet-built tanks shooting at my position once upon a time, which was most unpleasant.  Fortunately they went away without doing too much damage.

Be that as it may, the advent of drone warfare has made many question whether the tank has a future or not.  That question has been asked before, of course, particularly when the first anti-tank missiles made their appearance in the 1950's.  Those early missiles might have been buggy, clumsy and not very accurate, but if they hit what they were aimed at, the results tended to be unpleasant for those inside.  (I can remember the first-generation French ENTAC missile, which was used by South Africa along with later-generation MILAN missiles.  The former was a bit of a dog.  The latter was very successful, and very useful.)

Two articles over the past week, both by British authors and focused around British and NATO equipment, have examined the issue anew.  First:  "On Nato’s border with Russia, I witnessed the death of tank warfare".

Last week Latvia's military chief warned that Moscow has gained an edge over Nato in drone warfare and could exploit Europe's slow rearmament drive and invade the Baltics by 2028.

Nato commanders now face a looming crisis: learning how to fight on a 21st-century battlefield dominated by AI-assisted drones that can rapidly spot and target tanks and military vehicles from the skies.

. . .

Traditionally, the frontlines were ruled by tanks. Acting as armoured juggernauts, they were able to punch through enemy defences with firepower.

And while military planners still believe tanks have a place in war, some have questioned whether they are able to hold ground as they did in the past.

. . .

Across Ukraine, drones account for more than 90 per cent of battlefield casualties, the vast majority being tanks and armoured vehicles.

The enormous task of overcoming this modern threat faces commanders from across Nato, as allied nations scramble to re-equip their militaries and stockpile weapons systems capable of defending against the inevitable drone onslaught that will dominate the wars of the future.

. . .

To combat the threat posed by Russia, Nato has set up the eastern flank deterrence line (EFDI), to defend its border from Finland to Romania.

It is like a modern-day Maginot Line, an ill-fated series of fortifications built by France in the 1930s but which failed to stop Nazi Germany from invading in the Second World War.

However, Nato chiefs are confident the EFDI will be able to hold, using AI-enabled targeting and autonomous systems to destroy assaulting troops and vehicles in a kill zone stretching hundreds of miles.

"We have changed our exercises to directly rehearse how we will fight," said Gen Christopher Donahue, the commander of US Army Europe & Africa.

. . .

Currently, the Army has around 6,000 drones in its arsenal. However, it is understood these could be depleted within a week in a war with Russia. Soldiers say the pace of drone delivery needs to increase, describing the kit as "absolute game-changers".

"We need to get them rolled out like now. I can't emphasise it enough," said Cpl John Mackenzie, 27, who was training in Finland.

There's more at the link.

Hamish de Bretton-Gordon, a former tank officer, has a different view.  His article is titled "The tank isn’t dead. It’s just changing."

In the drone-infested battlefields of Ukraine, and across Nato exercises increasingly dominated by unmanned systems, it is easy to conclude that the tank's days are numbered. The burnt-out wrecks of Russian armour scattered across the Donbass seem to provide compelling evidence.

Yet history urges caution. Since the first great tank battle at Cambrai in 1917, commentators, academics and journalists have repeatedly declared the death of the tank. Every time, they have been proven wrong.

. . .

Reducing our ability to conduct armoured manoeuvre warfare would undermine one of the fundamental pillars of land combat, a principle that has endured since the First World War and arguably much longer. An even greater error would be to procure digitally enabled platforms such as Challenger 3 and Ajax without fully funding the active protection systems and hard-kill defensive suites required for them to survive on a battlefield saturated with drones and autonomous weapons.

. . .

The [Strategic Defence Review] correctly recognises that warfare is changing. It estimates that 80 per cent of future battlefield lethality will come from drones and autonomous systems, with only 20 per cent delivered by traditional platforms such as Challenger 3, Ajax and attack helicopters.

The implication is clear: there will be far more unmanned systems and far fewer manned vehicles. The British Army's future force of 148 Challenger 3 tanks is in stark contrast to the nearly 700 main battle tanks in service when I joined the Army 37 years ago. Back then, drones did not exist.

The future battlefield will include robotic combat vehicles. Challenger 3 must therefore operate as the command node of a wider digital combat system, controlling a family of drones and autonomous platforms that enhance both its lethality and survivability.

. . .

Tanks have always been vulnerable when operating without infantry support. The lesson has not changed. Tanks must be protected by infantry. Today, they must also be protected by drones and defended against them.

Again, more at the link.

I suspect the real problem is going to be economics.  If a $24 million [Wikipedia's figure] Abrams M1A2 SEPv3 tank can be taken out by a few drones costing less than $5,000 each (possibly much less than that), what's the point of spending that $24 million on one tank instead of four or five thousand drones?  There is a point, of course, from a military perspective, but what's a politician going to think (and say)?  How can he justify the larger expense to his constituents when they're clamoring to save money on defense and spend it on entitlement programs?  That's the cold, hard reality of politics in almost every NATO country right now, and the USA is no exception.

The same arithmetic affects almost every branch of military expenditure right now.  For example, a friend served in an artillery battery with the US Marine Corps.  His M777 howitzer costs $3.7 million apiece (according to one source).  Medium- to long-range drones, accurate enough to hit their targets first time, every time, and even to fly into buildings to run down their exact target, cost about $10,000 apiece from Western manufacturers right now.  Thus, the cost of one M777 cannon, without ammunition, would instead buy up to 400 drones of equivalent terminal performance to an artillery shell, with their warheads built in.  Is it any wonder that the USMC (and many other armed forces around the world) are either considering, or already actively engaged in, reducing their artillery forces while increasing their drone forces?

I'm sure many of my readers have sufficient expertise and experience to weigh in.  What say you, friends?

Peter

An "angry bear" opines on the soaring stock market - and what may bring it down

 

We've met Jared Dillian before in these pages.  He's an investment adviser and analyst with a highly respected track record in the industry.  He's not a happy man these days.

You should never let your emotions get in the way of investing, but I am starting to get angry at this bull market ... You want my thoughts—I will give you my thoughts. But the one data point that you should know is that the stock market is now the most overvalued in history, more so than 2000 or even 1929.

. . .

My friend Helene Meisler tweeted recently that if you weren’t around for the dot-com bubble, now you know what it was like in the dot-com bubble. The difference being that so many more people own stocks this time around. It is estimated that 62% of Americans own stocks. If we have a 50% bear market, it’s going to be Mad Max Beyond Thunderdome. We are really going to be questioning the wisdom of plowing all our savings into the stock market via 401(k)s. Let’s hope that doesn’t come to pass because the consequences would be too terrible to contemplate, but knowing markets and karma, that is probably exactly what is going to happen.

. . .

I mean, the consensus view is that all this [AI] capex is going to go to waste, so maybe the out-of-consensus view is that it is actually needed. This is one of these situations in which I am glad I am 52 years old. The internet was also the future of the human race, but capitalism being what it is, there was overinvestment and malinvestment, and eventually supply caught up with demand, and everything crashed.

It looks like a tiny blip on a log chart (which is one reason why I hate log charts), but trust me, the crash was no fun. I lived through it and barely held on to my job. This time is no different. This time is never different! Whether it’s railroads, industrials/utilities, the Nifty Fifty, Japan, or any other bubble. The difference is that this one is bigger than all of them, and it looks like it’s not stopping.

. . .

Back when I was at Lehman in 2006, I’d drive out in the country and take pictures of all the housing developments under construction that were completely vacant and then send them out in my Bloomberg messages. Maybe I should take a road trip and take some pictures of all the data centers under construction that will be Spirit Halloween stores in a few years.

I ordinarily don’t like to write rants. I like to write reasoned, thoughtful pieces. But I’m currently on a plane to Minneapolis, and S&P futures, which opened lower (because oil was up), just ripped to new highs… again. It’s truly incredible that the market goes up every day. It will be equally incredible when it goes down every day because that is what it felt like in 2002. A bear market without end.

There's more at the link.

I'm afraid I agree with Mr. Dillian.  Stock market prices have been soaring into the stratosphere year after year, without any sound economic underpinnings.  It's all been a leap of faith.  "The Fed will provide!"  Well, what happens when the Fed can no longer provide?  What happens when the economic consequences of the Iran war begin to bite?  What happens when international market turmoil makes it clear that, despite all the positive punditry from paid opinion writers, the emperor has no clothes, and nothing is or can be guaranteed?

The very real dangers confronting any and all Western economies aren't limited to the Iran war.  Ambrose Evans-Pritchard focuses on China, and points out:

Europe's leaders are waking up to the terrifying danger that China could obliterate much of their industrial base within less than a decade, shattering the old political order and the EU project itself.

The Rhodium Group says the Chinese Communist Party is digging in its heels, doubling down on a strategy of systemic over-investment and over-reliance on exports that cannot be absorbed by the rest of the world, and certainly not a Europe already in semi-slump.

The original "Made in China 2025" plan a decade ago targeted a clutch of specific technologies. Beijing is now expanding this into an "industrial policy of everything": cars, machinery, chemicals, pharma, software, AI, you name it.

China is pursuing this ruthlessly, aiming to capture a larger share of global value added with vertical control of the entire lifecycle.

It is moving towards autarky in its home market while undercutting the West in its own market and in third countries – everywhere and in every product. It devours foreign technology without releasing its own. The Rhodium Group said the foundations of G7 manufacturing are under comprehensive threat.

The "China Shock 2.0" is bigger and more sophisticated than the original China Shock in the 1990s and early 2000s, which flooded the world with cheap goods and wiped out swathes of blue-collar manufacturing in the West.

America bore the brunt of the first shock. The pauperisation of the Midwest Rust Belt set the stage for Donald Trump.

This time China cannot dump its excess capacity on the US market so easily because of trade barriers. The tsunami is instead being displaced into the softer target of Europe. It is hitting with even greater intensity. China's trade surplus hit a record 1pc of global GDP last year. No country has ever reached such an imbalanced position in modern economic history.

Again, more at the link.

My wife and I aren't rich.  Right now, our savings - and some extra debt through a second mortgage - are funding medical care.  Assuming all ends up that ends well, we'll have to rebuild our savings, but I tell you right now, with the stock market as it is, we won't be putting one red cent into it.  I want a store of value that will retain its value in a stock market slump, and for me that means precious metals.  Even before that, I want to make sure we have enough of the essentials to survive a severe, prolonged economic downturn.  If you want a useful list that most of us can use, click over to Lawrence Person's Battleswarm Blog and see his helpful list from last November.  It makes a good start to review our preparations.

Want to invest in something that is likely to offer a reasonable return on investment in the short to medium term?  Look at domestic essentials that may be in short supply during a prolonged downturn, and lay in a supply of them as trading material.  Baby diapers.  Feminine hygiene essentials.  Soap.  Toothpaste.  Basic, essential canned food.  Flashlights and battery powered domestic and camping lanterns.  Think of what your family can't live without, and you've got the start of a useful investment list, right there.

Am I a pessimist?  I don't think so.  I'd rather call myself a realist.  Regular readers will know that I, and many others, have been uneasy about our economy for years, if not decades.  The numbers have been getting worse all that time, and now they're getting worse a lot faster.  Forewarned is forearmed.

I'll leave the last word to an astute observer.  Click the image to be taken to the original post on X.com, and read the more than 600 replies (so far).

Word.

Peter

A military procurement nightmare: Britain's Typhoon fighter and its successor

 

In a long and very detailed article, Lewis Page argues that "Britain’s next-generation fighter jet is a disaster in the making".  He goes into detail on the background to the present project, and the aircraft that have preceded it in Royal Air Force service.  It's far too long an article to reproduce here, so I've selected as an example just one cost comparison between the current front-line aircraft of the US and UK air forces.

The Eurofighter Typhoon, as flown by the RAF, is the most expensive tactical aircraft ever built by the human race. When the last Tranche 1 planes are gone next year (disposed of with half their lifetime hours unused) the RAF will possess 107 aircraft.

Recent statements reveal that the size of an RAF front-line squadron has fallen from 12 to “up to 10” jets. Officials have recently congratulated themselves that they typically have “65 to 70” Typhoons “available” nowadays for the seven RAF front-line Typhoon squadrons that exist on paper.

Some more Typhoons are in the training and test units but it’s clear that others, probably more than 20, are in a long-term un-flyable condition: in deep maintenance, with parts robbed from them to get others flying, or both.

Each of the 107 Typhoons, according to the National Audit Office, cost well over £215m to obtain in 2011 money, or around $355m (£264m) if we use contemporary exchange rates.

By comparison, the undisputed, most powerful fighter jet in the world is the US Air Force’s F-22 Raptor. Only 183 Raptors were made in the end, as opposed to the 600-plus Eurofighters so far.

But despite this much shorter production run and the fact that it is an entire generation more advanced than a Typhoon, the acquisition cost of one Raptor to the US taxpayer was somewhat lower than the cost of one Typhoon to the UK taxpayer. The Raptor throws into stark relief the almost unbelievably bad value for money offered by the Typhoon.

In short, the Typhoon was a procurement disaster.

There's much more at the link.  Highly recommended reading for aviation and military enthusiasts.

The article helps us understand why military hardware has become so expensive.  The deadweight of bureaucratic and political control interfered so much with the Typhoon's development, and the lack of vision among military leaders in making it a single-purpose rather than a multi-role aircraft, effectively doomed it to operational irrelevance for much of its service life.  Furthermore, the astronomical costs of not just each aircraft, but spare parts to keep it flying, wasted so much of the Royal Air Force budget that funds were not available for different types of aircraft, or urgently needed upgrades.  (For example, for the past two decades almost every major frontline strike fighter has had AESA radar, offering vastly improved performance over older types:  but the RAF's Typhoons are only now beginning to get one - and, at that, only enough to fit to less than half the fleet.  Without it, if they had had to fight against other modern fighters, they would have been at a huge disadvantage.)

I suppose we could draw parallels between Britain's fighters and the US Navy's ships.  The USN has had so many problems developing new designs that it's had to scrap almost all of them as being too complex and/or too expensive, after its "experts" had spent years gold-plating them and adding every feature they could think of.  It's now been forced to bodge together a "frigate" that is basically a slightly more heavily armed Coast Guard cutter, because the much more sophisticated Constellation class frigates have had to be abandoned due to their design becoming bogged down in excessive complexity.  Will something similar happen to Britain's proposed new fighter aircraft?  I think there's a very good chance that it will.

China is producing new aircraft and ship designs in multiples every year, and building them by the dozens.  One hopes that both Britain and the USA will wake up to reality and start moving faster . . . but if the politicians insist on sticking their oar in, that's not very likely.  Can Secretary of War Hegseth cut through the entrenched bureaucracy and layers of control that have bedeviled US military design?  That remains to be seen.

Peter

Technology restrictions: a strategic move that's falling short

 

Joseph Assad explains the conundrum.

There is a moment from my time living in Abu Dhabi that I have never forgotten. During a tense negotiation over a defense technology sale, talks had stalled — not over price, not over capability, but over American export control regulations that prevented us from delivering the full system the UAE needed. During a coffee break, a UAE Brigadier General pulled me aside and spoke to me in Arabic. Holding up a phone charging cable, he said quietly: "The U.S. wants to sell us this wire for $100. China will sell it to us for $20. We said we will pay the $100, but now your delegation says we must wait two years. We can have the Chinese wire tomorrow." 

He paused, then added with a resignation that still stings: "And when we say we will buy from China, the U.S. accuses us of betraying our friendship. What are we to do?"

That question deserves an honest answer from Washington. So far, it hasn't gotten one.

American export controls on semiconductors and related technologies were designed with a single adversary in mind: China. The logic was sound — deny Beijing access to advanced chips powering artificial intelligence, and you slow its military modernization and geopolitical ambitions ... [but] Overzealous and inflexible application of these controls has swept up trusted allies and strategic partners — particularly in the Gulf — leaving them locked out of American technology they are willing and able to buy.

. . .

China is responding to U.S. and allied export controls with a whole-of-nation effort to make itself independent of Western semiconductor technology. In 2019, the first Trump administration cut off Huawei's access to U.S. technology, a move that appeared to consign the company to irreversible decline. Instead, Huawei launched an effort to wean itself from reliance on U.S. technology — and by 2024, it had launched new products featuring advanced semiconductors and was developing 5G mobile network infrastructure.

There's more at the link.

It's a very real problem.  Mr. Assad suggests that the USA is moving in the right direction, trying to free up access to its latest technology in return for verified commitment from customer nations.  However, there will always be the problem of supplies filtering through from third parties.

I saw this at first hand in South Africa during the years of the mandatory UN arms embargo.  South Africa couldn't obtain major items, such as warships or fighters, from major powers, but still bought or made almost everything it needed.  Sophisticated nations such as Israel and Taiwan, and political allies such as Chile or Paraguay, could act as third party channels through whom much could be obtained.  Other nations such as West Germany and Portugal simply ordered more of some materials than they needed for their own armed forces and manufacturers, and sold the surplus to South African agents.  Romania, at the time behind Warsaw Pact lines, nevertheless defied its Communist principles (?) to sell carbon-fiber helicopter fuselage components through third parties to South Africa, which was able to obtain elsewhere (or make itself) the engines and avionics needed to build them into fully operational aircraft.  Thus, even though the whole world was technically obliged to restrict South Africa's access to high technology, it really wasn't that hard to bypass most of those restrictions.

(It helped that at the time, South Africa was the single largest producer of gold in the world.  Gold coins and bars make an untraceable and very acceptable medium of exchange when wanting to disguise the origin and/or destination of a shipment of high-tech gear.  Paperwork?  What paperwork?)

America's trade and technology war with China is simply running headlong into the same conundrum.  Despite restrictions, China was able to buy enough advanced US chips to study their design, and are now building their own equivalents - and apparently refusing to buy more from the USA, despite the lifting of the US technology embargo.  As for preventing other nations from buying Chinese technology, it all boils down to economics.  Charge too much, delay delivery enough, impose enough restrictions, and the customer will look somewhere else.  If someone's prepared to pay enough, or wants independence of supply strongly enough, there are always ways to get around restrictions.  Low-balling an opponent's price is another very popular way of gaining access to a market:  and, once gained, it can be maintained in all sorts of ways.

Peter

The lower the cost, the easier the proliferation

 

I was struck today by the title of an article:

10,000 Low-Cost Cruise Missiles In Three Years

Procurement Plan Laid Out By Pentagon

You can read the details for yourself at the link.  Of particular food for thought to me was this:  if "low-cost cruise missiles" are now a mainstream item, how long can it be before they become cheap enough - and easy enough - to be manufactured almost anywhere?  And, if and when that happens, how long will it take renegade religious or tribal groups (e.g. the Houthis in Yemen), or terrorist organizations (e.g. Hezbollah, ISIS, Al Qaeda, etc.) to start manufacturing their own equivalents?

It's not as hard as it sounds.  Remember Bruce Simpson?  More than two decades ago, he designed and built a low-cost cruise missile (LCCM) in his home garage, using off-the-shelf components bought from Internet retailers.  He wrote an article about how easy it was to do it, including the following excerpt:

... during the past decade, huge strides have been made in commercializing much of the technology on which the cruise missile is based and it is my firm belief that building a low-cost, autonomous, self-guided, air-breathing missile with a significant payload capability is now well within the reach of almost any person or small group of persons with the necessary knowledge and skills.

Targeting/Guidance

As mentioned above, one of the key components of a cruise missile's guidance system is a mil-spec satellite-based GPS system.

Today, compact, high quality, high accuracy GPS receivers are readily available for just a few hundred dollars. The inclusion of an easily used computer interface in many of these units makes them well suited for use in a low-cost cruise missile (LCCM).

While the GPS provides information necessary for tracking waypoints and identifying the final destination, smaller course corrections (for stability) can be provided by the solid-state gyro systems now readily available for use in model helicopters and aircraft.

Instantaneous measurement of altitude and groundspeed can be provided by a semi-forward looking radar and doppler radar units (possibly built around components such as these and these. This allows the LCCM to fly lower than would be possible if relying solely on GPS and offers a degree of contour-hugging even when the exact nature of the terrain is not available.

The gyroscopic and radar-based systems could also provide an inertial backup guidance facility in the event that the GPS system was lost, blocked or simply turned off when an attack by such LCCMs was imminent or underway.

Onboard Computing

As Moore's law continues to produce a rapid rise in the speed and fall in the cost of computer chips, we've already reached the point where obtaining sufficient number crunching capability is no longer difficult or expensive.

Single-board computer systems are another readily available off the shelf component that can be recruited for use in an LCCM. Even the sophisticated realitime operating systems necessary for supporting the type of software needed to interface the guidance/targeting systems to the control servos are just a download away.

. . .

The total component costs for an LCCM (less payload) could be as little as $6,000 for the smallest, simplest version, with a larger, more sophisticated design still requiring little more than $10,000 worth of parts and materials.

There's more at the link.

That technical data, and those prices, date back to May 2002 - twenty-four years ago this month.  In those intervening years, components have become much, much smaller and lighter, much more capable, and much cheaper.  They're still freely available as elements of radio-controlled models (aircraft, boats, vehicles, whatever).  Plastic sheeting, 3D printed components, and ultra-light structural elements are easy to buy and often just as easy to make yourself.  Heck, people have built and flown in ultralight aircraft made out of packaging cardboard!  I'd say it's likely the cost to home-build a LCCM today might well be less than $2,000, and at most $3,000.  Cargo delivery drones can be even cheaper:  for example, a drone capable of delivering 20-odd pounds at a range of 6+ miles costs only a little over $500 in quantity.  Longer range?  Heavier cargo capacity?  No problem.  A warhead would be extra, of course, but with the advent of powerful "home-brewed" explosives, a warhead strong enough to demolish the average house - but still small and light enough to be carried by a LCCM or light delivery drone - could probably be assembled in a domestic bathroom or kitchen.

So, if our armed forces are talking about buying thousands of low-cost cruise missiles, what are the odds that terrorist and/or extremist groups aren't planning on doing exactly the same thing?  How would we defend against such simple, terrifying weapons if a wave of them were launched into the average American city?  It could be done by driving a rented truck or trucks to a suitable launch site, a few miles from the target zone (e.g. a park or golf course, particularly at night, or putting them onto a boat a couple of miles offshore);  erecting a wire or wood frame to hold the missiles at an appropriate angle for launch, and aimed in the right direction;  and setting them off at the chosen time.  Unless the perpetrators were seen during the preparation phase, it's doubtful they'd be detected in time to stop them;  and once the missiles had been fired, they'd simply abandon the trucks and drive away in other inconspicuous vehicles.  For that matter, they may not care about getting away.  They may have a martyrdom mentality that would welcome a final shootout with the cops (on television, of course, for the whole world to see).

That scenario is entirely feasible and practical.  I think we've got a whole new threat to our security to consider.  What we can do about it (if anything) remains to be seen.

Peter

The economic consequences of the Iran war begin to make themselves felt

 

I hasten to note that the United States is likely to experience rather less severe economic consequences from the Iran war than most other parts of the world.  We produce much of our own raw material needs, and export a great deal to other nations.  First World nations and those with large financial reserves will still be able to get much of what they need, but Third World countries that can't afford higher prices are likely to be outbid for the available supply.  They're going to find themselves in a very difficult situation.

The problem is not just fuel, but also the raw materials made from (or using) fuel that are in turn used to manufacture the refined and/or manufactured products that the world wants to buy.  In two recent articles, Jay Martin sums up some of the problems.  First, he looks at fuel and related products.

The International Energy Agency has called [the closure of the Strait of Hormuz] the greatest global energy security threat in history.

The consequences are spreading like cracks in a windshield. Qatar’s Ras Laffan complex - the largest liquefied natural gas plant on Earth, responsible for supplying fuel to dozens of countries - has suffered extensive missile damage, knocking out 17% of Qatar’s LNG export capacity for up to five years.

Taiwan, which relies on LNG for 40% of its electricity, has an eleven-day emergency stockpile.

Australia has lowered its diesel quality standards and watched hundreds of petrol stations run dry.

Slovenia became the first EU state to introduce fuel rationing.

South Korea is enforcing a five-day vehicle rotation system.

Michael Haigh, the Global Head of Commodities Research at Société Générale - one of the largest banks in Europe - said last week that the final vessels carrying jet fuel to the UK were arriving, and that “there is no more after that.”

Let that sink in. No more jet fuel for the United Kingdom.

Dow Chemical - one of the world’s largest chemical companies, whose products end up in everything from food packaging to medical supplies - doubled its polyethylene price overnight.

Why does that matter?

Polyethylene is in your grocery bags, water bottles, food packaging, medical equipment, and much more. If you bought it at a store, there’s a good chance it touched polyethylene before it reached your hands.

Polyethylene is made from petroleum-based feedstocks, and when Hormuz closed, about 50% of the global polyethylene supply was affected.

They say that when the price of energy goes up, the price of everything goes up. You could say the same thing about polyethylene.

This is how a war in the Middle East shows up at your grocery store. Energy doesn’t stay in the energy sector. It flows through everything you buy, everything you eat, everything you build.

There's more at the link.  He goes on to discuss financial aspects of the crisis.

Second, he shows how supply chain problems "cascade" from Hormuz to the rest of the world.

The Strait of Hormuz is a narrow stretch of water between Iran and Oman through which roughly a fifth of the world’s oil, a third of its seaborne natural gas, and the refined fuels, fertilizers, and industrial chemicals that power factories and farms on four continents flow every single day.

What [observers] might miss, is the cascade.

How a fuel tanker that can’t leave the Persian Gulf becomes a factory that can’t run in Korea.

How a factory that can’t run in Korea becomes a product that doesn’t land on a shelf in Seattle.

How your iPhone alone pulls materials and components from five different continents.

. . .

The modern economy is not a collection of countries. It is a single machine. Every country is a gear inside it. And the first gears to jam are usually not the ones people are watching.

In this case, everyone is watching oil.

No one is watching sulphur.

Most people have no reason to think about sulphur. It does not show up in presidential speeches. It does not trend on Twitter. Nobody builds an investment thesis around yellow rocks sitting in a port warehouse.

But sulphur is one of those boring industrial inputs that quietly hold the world together.

You do not need sulphur because it is rare. You need it because modern industry runs on it. Sulphur is used to make sulphuric acid, one of the most important industrial chemicals on earth. Think of sulphuric acid as the solvent, cleaner, and processing agent that helps turn raw materials into usable products.

Farmers use it to make fertilizer. Miners use it to separate metals from rock. Manufacturers use it in everything from batteries to chemicals to refined fuels.

Every economy needs sulphur and the industrial chemicals it helps create. And China manufactures roughly 45 percent of the world’s industrial chemical supply.

China imports much of the sulphur it needs from the Persian Gulf, turns it into the industrial chemicals used in mining, agriculture, and manufacturing, and then sells them to the rest of the world.

That means when the Strait of Hormuz is threatened or closed, China’s access to a raw material it needs to produce the chemicals that the rest of the world depends on becomes compromised.

And when a country runs short of a critical industrial input, it does not behave like a polite global supplier. It acts in self-interest.

First, it protects its own farmers, because fertilizer is food security.

Then it protects its own factories, because factories are employment, exports, tax revenue, and national power.

Then it protects its own strategic industries - batteries, electronics, defence, infrastructure, and energy.

Whatever is left can be sold to the rest of the world.

That is where the cascade begins:

The war in Iran disrupts shipping through the Strait of Hormuz.

China runs short on sulphur.

Chinese chemical production falls.

Foreign buyers are pushed to the back of the line, as Beijing has less to share with the global economy.

Mining companies in Africa, South America, and Southeast Asia lose access to the chemicals they need to produce metals. And then the price of everything that depends on those metals starts to rise.

. . .

Chile, the world’s largest copper producer...

Indonesia, the world’s largest nickel producer…

Peru, the third-largest copper producer…

Zambia, Africa’s second-largest copper producer…

Every one of them runs on Chinese chemicals - and every one of them is seeing orders slowed, cancelled, or repriced.

That is what “one nation’s shortage is everybody’s problem” looks like in practice.

A war in the Persian Gulf becomes a sulphur shortage in China. A sulphur shortage in China becomes a chemical shortage in the Congo. A chemical shortage in the Congo becomes a copper and cobalt shortage everywhere. And a metals shortage everywhere means higher prices for the battery in your phone, the copper wiring behind the drywall in your house, and the data centers running your favourite AI tool.

That is the cascade.

And we are barely into it.

Again, more at the link.

This is a very real issue.  It will most certainly affect the USA, although, as I said earlier, possibly not so much as other countries.  Some states will fare worse than others.  To name just one example:

The arrival of the last oil tanker carrying crude from the Middle East to California this week has state lawmakers on edge, and an energy expert warning of a gas price “crisis” ... America’s war with Iran has closed off the Strait of Hormuz, and that tanker was the last to depart the region for California before war broke out. The state has no interstate gas pipelines and is heavily reliant on imports.

California will probably have no choice but to suspend its very restrictive fuel refining standards, because refineries in other states aren't set up to support them.  Furthermore, it'll have to buy diesel, gasoline, aviation fuel and any other fuel it needs from anyone who has it, because it has too few refineries to process its own fuel needs.  That fuel will have to be imported on tankers, because there are no interstate fuel pipelines to California:  but with literally hundreds of oil tankers locked up in the Persian Gulf, unable or unwilling to transit the Strait of Hormuz, enough tankers may not be available.  Even if they are, California will have to outbid other states (and foreign nations) who want US refinery output, which will lead to a concertina-like shortage in those states, who will in their turn outbid others, and so on, and so on.  Thus, a California gas problem will rapidly become a US-wide gas problem.  I'm pretty sure prices will go up significantly, and there may be shortages severe enough to require some form of (hopefully temporary) restriction on when, where and how much fuel one can buy.

That's just one example, from one state.  Do your own reading in the financial and industrial media, and you'll find many more.  Yet - we're probably living in the most fortunate nation in the world, in terms of our national ability to cope with an economic crisis of this magnitude.  Spare a thought for those who are less fortunate, particularly the Third World nations that are unlikely to be able to afford enough fuel for their needs, enough fertilizer for their farmers, and even enough food to feed their people.  If they buy food for their people, they won't have the fuel to distribute it.  If they don't buy fertilizer, their crops for the next growing season will be drastically diminished - meaning they'll have to find even more money (that they don't have) to import more food (that they can't grow) . . . and so on, and so on, ad nauseam.

Even if the Iran war is resolved tomorrow, it'll take three to four months at a minimum - more likely six months or even longer - to refill the oil and feedstock supply lines and resume full-scale production.  Don't expect any early relief from the stresses this will place on economies worldwide.

Peter