Geopolitics/Geoeconomics Thread - June 2015

[A_Gupta]

Here is the Chinese imbalance, and how it is pushing that imbalance onto the world.
https://youtu.be/tCGHT00pjto?si=BQ6L5_BPQL3nL0Xg


Basically, China needs to show growth, and the only viable avenue, given the CCP's unwillingness/inability to increase the consumption capacity of its own people, is exports. But the rich economies are cutting off access. So China is dumping on a massive scale to the Third World, reducing the profitability of its firms. In turn, the firms are squeezing the workers, making them work longer hours and with cutting wages. But the Third World has only so much consumption capacity and the Chinese people are reaching their limit of endurance.

[Jay]

Here is the Chinese imbalance, and how it is pushing that imbalance onto the world.

Basically, China needs to show growth, and the only viable avenue, given the CCP's unwillingness/inability to increase the consumption capacity of its own people, is exports. But the rich economies are cutting off access. So China is dumping on a massive scale to the Third World, reducing the profitability of its firms. In turn, the firms are squeezing the workers, making them work longer hours and with cutting wages. But the Third World has only so much consumption capacity and the Chinese people are reaching their limit of endurance.

China became the first country to hit a $1T trade surplus last year and this year they hit that number much faster, in November itself and is on track to hit $1.15T. China is also opening manufacturing in other nations because it's workforce is also moving up the ladder. It's internal consumption is also growing so its expanding on that side as well. All of this means it's internal contradictions might be less drastic than what the video says it is.

https://www.nytimes.com/2025/12/07/busi ... rplus.html

[drnayar]

Here is the Chinese imbalance, and how it is pushing that imbalance onto the world.

Basically, China needs to show growth, and the only viable avenue, given the CCP's unwillingness/inability to increase the consumption capacity of its own people, is exports. But the rich economies are cutting off access. So China is dumping on a massive scale to the Third World, reducing the profitability of its firms. In turn, the firms are squeezing the workers, making them work longer hours and with cutting wages. But the Third World has only so much consumption capacity and the Chinese people are reaching their limit of endurance.

China became the first country to hit a $1T trade surplus last year and this year they hit that number much faster, in November itself and is on track to hit $1.15T. China is also opening manufacturing in other nations because it's workforce is also moving up the ladder. It's internal consumption is also growing so its expanding on that side as well. All of this means it's internal contradictions might be less drastic than what the video says it is.

https://www.nytimes.com/2025/12/07/busi ... rplus.html

one third of the entire worlds manufacturing !

[drnayar]

The Bankruptcy of Britain: The Secret Bill for WWII

We are taught that Britain "won" World War II. Financially, they lost everything.

While the history books focus on the victory in 1945, they rarely mention the secret economic collapse that followed. On December 31, 2006—more than 60 years after the war ended—the British government quietly made a final wire transfer of $83 million to the United States.

This was the last installment of the Anglo-American Loan, a desperate $4.33 billion lifeline negotiated by John Maynard Keynes to save a bankrupt nation from starvation.

The "Special Relationship" wasn't free. The abrupt end of Lend-Lease, the forced convertibility of the Sterling, and the "dollar gap" destroyed the British Empire's financial dominance and ushered in decades of austerity.

In this video, we breakdown:

The "Financial Dunkirk": Why Britain was technically insolvent in 1945 (with debt over 200% of GDP).
The 2006 Secret: Why it took six decades for the UK to finally pay off its war debt to the US and Canada.
The Keynes Failure: How the legendary economist tried (and failed) to get a grant, settling for a loan with "strings attached" that crushed the Pound.
The End of Empire: How this specific debt forced Britain to liquidate its global assets and hand the "Reserve Currency" crown to the Dollar.


or how the wealth looted from India got transferred to the US from the UK

Now Ukraine is the latest in line to sign up for the American lend lease program


(0:28) The Empire was not just bleeding soldiers, it was bleeding to death financially. Winston Churchill, the man whose voice was rallying the free world, sat at his desk in the underground cabinet war rooms to write one of the most important letters of his life. (0:42) It was addressed to Franklin Delano Roosevelt, the President of the United States.
Churchill was a master of the English language, a man who could turn a phrase into a weapon, but in this letter, he had to perform a delicate and humiliating dance. (0:53) He had to tell the leader of the world, its richest neutral nation, the Great Britain, the banker of the 19th century, the workshop of the world, the empire that had defeated Napoleon was completely and utterly broke. (1:05) The letter was long and detailed.
It described the strategic situation, the U-boat peril in the Atlantic and the desperate need for destroyers and aircraft, but the sting was in the tail. (1:15) Churchill wrote that the moment was approaching when the British treasury would no longer be able to pay cash for the supplies it needed to survive. (1:21) He wrote that the British people would fight on the beaches and the landing grounds, but they could not fight without ammunition, and they could no longer afford to buy it.
It was a plea for survival. It was an admission of insolvency. (1:32) To understand how the wealthiest empire in history reached this point of destitution, we have to look at the ruthless economics of total war.
(1:40) When the war began in September 1939, Britain was still a financial titan. It held billions of dollars in gold reserves. It owned a massive portfolio of overseas investments.
(1:50) British citizens owned railroads in Argentina, copper mines in Chile, and vast industrial concerns in the United States. The city of London was the hub of global insurance and shipping. (2:00) But the war that Hitler launched was different from any war that had come before.
It was a war of machines. It consumed steel, oil, aluminium, and rubber at a rate that defied all pre-war calculations. (2:10) And crucially, Britain had to import almost everything.
The blockade of the European continent meant that Britain could no longer trade with its neighbours. (2:17) It had to look across the Atlantic to the United States for its survival. At this stage in the war, the United States was officially neutral.
(2:25) The American public was isolationist. They remembered the First World War when American boys had died in European mud, and they were determined not to get dragged into another foreign slaughter. (2:34) Congress had passed the Neutrality Acts, which were designed to keep America out of the war.
These acts contained a specific clause known as cash and carry. (2:41) The cash and carry law stated that belligerent nations like Britain could buy American supplies, but they had to pay for them in cash immediately, and they had to transport them on their own ships. (2:50) There would be no loans.
There would be no credit. The Americans were happy to sell the weapons of war, but they demanded gold on the barrel head before the crates left the dock in New York. (2:59) For the first year of the war, Britain drained its treasury to meet these demands.
They liquidated their gold reserves. (3:04) In a secret operation known as Operation Fish, the British government loaded the entire gold wealth of the nation onto battleships. (3:11) And fastliners and shifted across the dangerous Atlantic to vaults in Canada.
It was the largest movement of physical wealth in history. (3:18) Billions of dollars in gold bars and negotiable securities were sent into exile to pay the American bill collectors. (3:24) By late 1940, the gold was gone.
The liquid cash was gone. (3:28) The British purchasing commission in Washington, which was responsible for buying planes and tanks, had contracts sitting on its desks that it could not sign because the treasury officials in London told them there were no dollars left to honour them. (3:40) When Roosevelt received Churchill's letter, he understood the stakes.
He knew that if Britain fell, the United States would be next, but he also faced a political problem. (3:47) He could not simply give money to Britain. The American laws forbade it, and the American public would be outraged.
(3:52) He needed a way to help Britain that looked like a hard-headed business deal, not a charity handout. He needed to sell the war effort to the American taxpayer. (4:00) This is where the concept of lend lease was born.
Roosevelt explained it to the press with the folksy analogy. (4:05) He said that if your neighbour's house is on fire, you don't haggle with him over the price of a garden hose, you lend him the hose and he gives it back when the fire is out. (4:13) It sounded simple.
It sounded generous. It sounded like a neighbourly act of assistance. (4:17) But the reality of the negotiations that took place behind closed doors in Washington was entirely different.
(4:24) It was not a conversation between neighbours. It was a foreclosure, proceeding between a bank and a bankrupt client. (4:30) The man in charge of the American treasury was Henry Morgenthau Jr. He was a staunch anti-fascist, and he wanted to help Britain defeat Hitler.
(4:38) But he was also the guardian of the American taxpayer. (4:40) He believed that before the United States gave a single dime of aid, Britain must prove that it had stripped itself of every last asset it possessed. (4:48) He wanted to make sure that the British weren't hiding any money.
Morgenthau demanded a full audit of the British Empire. (4:54) He demanded to see the list of every asset owned by the British government and every asset owned by private British citizens anywhere in the world. (5:02) He wanted to know the value of every shell casing, every woollen sock, and every share of stock.
(5:06) The British negotiators led by Sir Frederick Phillips were stunned. They were being asked to open their books to a foreign power. (5:13) They were being treated not as an ally, fighting a common enemy, but as a failed company in receivership.
(5:18) Phillips tried to argue. He explained that Britain had already sold off its gold. (5:22) He explained that selling off long-term investments in the middle of a war would be a fire sale that they would get pennies on the dollar.
(5:28) He argued that stripping Britain of its overseas income would leave the country destitute after the war, unable to feed its population or rebuild its cities. (5:37) Morgenthau was unmoved. His instructions from the president were clear.
The United States would not provide aid until Britain had scraped the bottom of the barrel. (5:45) The logic was brutal. If Britain still had assets in the United States, why should the American taxpayer subsidise the war? (5:53) Why should a farmer in Iowa pay for a tank for the British Army if a British lord still owned a factory in New Jersey? (5:58) The most painful symbol of this forced liquidation was the case of the American Viscos Corporation.
(6:04) American Viscos was a massive industrial giant. It was the largest manufacturer of rayon and artificial silk in the United States. (6:11) It was owned by a British company Courtauld's.
It was a jewel in the crown of British overseas investment. (6:15) It was highly profitable, generating millions of dollars a year in dividends that flowed back to London, helping to balance the British trade deficit. (6:23) Morgenthau identified American Viscos as a target.
He told the British negotiators that they had to sell it. (6:29) He wanted the cash from the sale to be deposited in the U.S. Treasury to pay for the existing orders of weapons. (6:34) The British resisted.
They knew the company was worth over $100 million to sell it in a rush during a war would be financial suicide. (6:42) But Morgenthau held the leverage. The lend lease bill was making its way through Congress.
(6:48) The isolationists were attacking it, arguing that Britain was actually rich and was trying to trick America into paying its bills. (6:54) Morgenthau needed a sacrificial lamb. He needed to show Congress that Britain was bleeding.
(6:59) He gave the British an ultimatum. Sell American Viscos or lend lease will die in committee. (7:04) On Sunday, March 15, 1941, under immense pressure from Washington, the British government seized the American Viscos Corporation from its owners Courtauld's.
(7:13) They did not ask permission. It was a compulsory purchase order issued under emergency war powers. (7:18) The sale was handled by a group of American investment bankers.
(7:21) Because the sale was distressed, because everyone knew the British had to sell, the bankers drove a merciless bargain. (7:26) The company was sold for roughly $54 million. It was a theft.
The company was worth at least double that amount. (7:32) The British government had to reimburse Courtauld's and pounds back in London, adding to their own internal debt. (7:38) While the dollars from the sale went straight into the US treasury to pay for rifles and aircraft engines.
(7:44) The sale of American Viscos was a turning point. It was the moment the British elite realised the true price of the special relationship. (7:51) They were not partners.
They were a junior entity being stripped of their assets to pay for their survival. (7:56) The United States was absorbing the wealth of the British Empire, not by conquest, but by contract. (8:01) But it wasn't just industrial assets.
The liquidation extended to the geopolitical foundations of the Empire itself. (8:08) While the financial negotiators were arguing over stock prices, another deal was being cut involving the Royal Navy. (8:14) Britain was desperate for destroyers.
The German U-boats were sinking merchant ships faster than British shipyards could replace them. (8:20) The lifeline to North America was being cut. Churchill begged Roosevelt for 50 old destroyers.
(8:25) These were World War I era ships sitting in mothballs in American naval yards. (8:30) They were obsolete rusting and of little value to the modern US Navy. (8:34) Roosevelt agreed to give them to Britain, but again there was a price.
He did not give them for free. He traded them. (8:40) In exchange for 50 rusting ships, the United States demanded 99-year leases on a string of British naval and air bases across the Atlantic.
(8:48) From Newfoundland and Canada to the Bahamas, Jamaica, St. Lucia, Trinidad, and British Guiana. (8:53) Think about the scale of that trade. Britain gave the United States a strategic footprint that covered the entire Western Hemisphere.
(9:01) They handed over the keys to the Caribbean and the North Atlantic. They allowed the United States to build military bases on British sovereign territory bases (9:08) that would project American power for a century, all for 50 old ships that were barely seaworthy. (9:14) It was a geopolitical fire sale.
Britain was trading its long-term strategic assets for short-term tactical survival. (9:20) It was the act of a desperate nation hawking the family silver to buy food. (9:24) By the time the Lend-Lease Act was finally signed into law in March 1941, Britain had been stripped clean.
(9:30) The gold was gone. The US investments were being sold off. The bases released.
(9:35) The British Treasury was empty. The Lend-Lease Act was hailed in public as the Arsenal of Democracy. (9:41) It was presented as a noble act of solidarity, and in many ways it was.
It provided the tanks, the planes, the oil, and the food that kept Britain alive. (9:48) Without it, the Nazis would likely have starved the British Isles into submission. (9:52) But the financial terms of the arrangement laid the groundwork for a post-war world where Britain would be a debtor, and America would be the creditor.
(10:00) The aid was not a gift. It was a lease. The underlying assumption was that there would be a reckoning.
There would be a consideration. (10:07) The text of the Lend-Lease agreement contained a clause known as Article VII. (10:12) It was a small paragraph written in dense diplomatic language, but it contained a poison pill for the British Empire.
(10:17) It stated that in return for the aid, Britain would agree to dismantle its Imperial preference system after the war. (10:25) Imperial preference was the economic wall that held the British Empire together. (10:29) It was a system of tariffs that favoured trade between Britain and its colonies, Canada, Australia, India, South Africa.
(10:36) It meant that British goods were cheaper in empire markets than American goods. (10:40) It was the mechanism that allowed British industry to survive against more efficient American competition. (10:45) By signing Article VII, Britain was agreeing to tear down its own economic defences.
(10:50) They were agreeing to open up their empire to American exporters. They were signing the death warrant of their own trading block. (10:55) The British negotiators fought against Article VII.
They knew it meant the end of the empire as an economic unit, but they had no choice. (11:02) The German bombers were overhead. The U-boats were in the Atlantic.
The cash was gone? They signed. (11:07) As 1941 turned into 1942, and the United States officially entered the war after Pearl Harbour, the dynamics shifted again. (11:15) Now Britain and America were fighting side by side.
American soldiers poured into Britain. (11:20) The island became an immense aircraft carrier for the U.S. Army Air Force, but the financial disparity only grew. (11:26) American industry fuelled by government spending exploded in size and efficiency.
(11:30) The U.S. economy grew by huge percentages every year. (11:33) Britain's economy, meanwhile, was being distorted and cannibalised by the war effort. Britain stopped exporting.
(11:39) It converted every single factory to war production. It abandoned its markets in Latin America and Asia. (11:44) And who stepped into those markets? American companies.
While British factories were making spitfires, American factories were making spitfires (11:51) and refrigerators and radios and cars for the global market, the United States was fighting the war while simultaneously stealing Britain's commercial future. (11:59) By 1944, the transfer of wealth was absolute. The gold reserves of the world had moved from London to Fort Knox.
(12:07) The financial centre of gravity had shifted across the Atlantic, but the final humiliation was yet to come. (12:12) The British believed that their sacrifice would be honoured. They believed that because they had fought alone against Hitler for two years, (12:19) because they had bankrupted themselves to save the world, the Americans would treat them with generosity after the war.
(12:23) They believed that lend lease would continue for a transition period. They believed there would be a soft landing. They were wrong.
(12:30) They had forgotten the lesson of the viscose sale. They had forgotten that in the world of high finance, gratitude is not a currency. (12:37) The moment the war ended, the bill would come due, and the shock of that moment would break the back of what little remained of British power.
(12:43) The story of the price of victory is the story of how a nation can win a war militarily but lose it economically. (12:49) Britain had defeated Germany, but in doing so, it had defeated itself. (12:53) It had spent its past to secure its present, and in the process, it had sold its future to its ally.
(12:58) On the 15th of August 1945, the news flashed around the world. Japan had surrendered. World War II was over.
(13:05) In London, the crowds gathered outside Buckingham Palace, chanting, we want the king. (13:10) Bonfires were lit. Strangers hugged in the streets.
It was a moment of pure, unadulterated joy. (13:15) The tyranny of the Axis powers had been crushed. The British Empire had stood alone against the darkness, and it had prevailed.
(13:22) But across the Atlantic Ocean in Washington, D.C., there was no sentimentality. (13:26) There was only a cold, bureaucratic machine that had been waiting for this exact moment to switch gears. (13:31) Seven days after the victory celebrations began, President Harry Truman signed a piece of paper that would devastate the British economy more effectively than any German bomb.
(13:39) He signed the order to terminate lend lease. The cutoff was brutal and immediate. It was absolute.
(13:44) The order stated that as of that moment, all aid stopped. There was no transition period. There was no grace period.
(13:51) In the middle of the Atlantic Ocean, American liberty ships loaded with wheat and meat and tools bound for Liverpool were ordered to turn around and sail back to the United States. (13:59) The lifeline was severed. The British government was paralysed by shock.
They had assumed that the aid would continue to help them rebuild. (14:05) They had assumed that their economy, which had been completely distorted to fight a common war, would be given time to adjust to peace. (14:12) John Maynard Keynes, the legendary economist and advisor to the government, looked at the numbers and saw the abyss.
(14:18) Britain was importing half its food in almost all its raw materials. It was paying for them with lend lease dollars. Without those dollars, Britain was bankrupt.
(14:26) Not in a year, not in a month. But instantly, Keynes calculated that Britain faced a financial Dunkirk. (14:33) The country would have to default on its payments.
It would have to stop importing food. The rations which had been meagre during the war would have to be cut to starvation levels. (14:41) The industries would have no raw materials to work with.
There would be mass unemployment and social collapse. There was only one option. Britain had to beg.
(14:50) In September 1945, a dying John Maynard Keynes boarded a ship for Washington. He was sick, exhausted and suffering from a heart condition that would soon kill him. (14:58) He was the greatest economic mind of the century, but he was going to America, not as an intellectual, but as a supplicant.
(15:05) Keynes believed he had a moral case. He planned to walk into the U.S. Treasury and argue that Britain had fought the war for two years alone, while America remained neutral. (15:14) He would argue that Britain had sacrificed its entire economy to save Western civilisation.
Therefore, the United States should give Britain a gift, a grant. (15:21) Six billion dollars. Not alone, but a retroactive payment for the blood and treasure Britain had spent holding the line.
He called it justice. (15:30) But when he arrived in Washington, he found that justice was not a currency the Americans recognised. The mood had changed.
The war was over. (15:37) The American public was tired of paying for Europe. The politicians in Congress were suspicious of the new Labour government in Britain, which had just been elected on a platform of socialism and nationalising industries.
(15:47) They didn't want to use American capitalist tax dollars to fund a British socialist experiment. The American negotiators led by Fred Vincent were hard-faced men. They looked at Keynes with cold eyes.
(15:57) They told him bluntly there would be no gift, there would be no grant, there would only be alone, and it would be alone on commercial terms with interest. (16:05) Keynes was devastated. He argued.
He pleaded. He warned them that if they crushed Britain financially, they would destroy a vital ally against the rising threat of the Soviet Union. (16:15) But the Americans held all the cards.
They knew Britain had no other place to go. They offered a loan of 3.75 billion dollars. It was barely enough to survive.
(16:24) And it came with strings attached strings that were designed to strangle the last remnants of the British Empire's economic independence. (16:31) The most poisonous condition was sterling convertibility. The Americans demanded that within one year of receiving the loan Britain must make the pound sterling fully convertible.
(16:40) This meant that anyone in the world who held British pounds could walk into a bank and exchange them for US dollars. The Americans framed this as free trade. They said they wanted to open up the global markets.
(16:50) But in reality, it was a way to break the sterling area. During the war, Britain had forced its colonies and trading partners to accept payments and pounds, but had forbidden them from exchanging those pounds for dollars. (17:00) This forced countries like India, Australia, and Egypt to buy British goods because their money was only good in Britain.
It was a closed loop that protected British industry. (17:10) The Americans wanted to smash that loop. They knew that if the pound became convertible, everyone holding pounds would immediately sell them to buy dollars because everyone wanted American goods, not British ones.
(17:20) American cars were better. American fridges were better. American machines were better.
Keynes knew this condition was a death trap. (17:26) He knew that the moment convertibility was introduced, there would be a run on the pound that would drain the loan in weeks. He fought against it until his health broke.
(17:35) But the alternative was starvation. Reluctantly bitterly, the British Parliament voted to accept the loan. They described it as a financial Munich.
They were appeasing the Americans to survive. (17:45) The loan agreement was signed in July 1946. Keynes died just a few months later, his heart finally giving out under the stress of trying to save his country from its closest ally.
(17:54) But the tragedy was just beginning. The winter of 1947 was the coldest in living memory. (18:00) Blizzard's buried the country in snow.
Coal stockpiles froze. Power stations shut down. Factories closed.
(18:07) People shivered in unheated homes lighting candles because there was no electricity. (18:11) It was in this frozen dark atmosphere that the reality of the victory came home to the British people. They had won the war, but their standard of living was plummeting.
(18:18) Bread, which had never been rationed even during the darkest days of the U-boat blockade, was rationed in peacetime. The age of austerity had begun. (18:26) And then the clock struck on the American condition.
On July 15, 1947, per the terms of the loan Britain made the pound sterling fully convertible. (18:35) The result was exactly what Keynes had predicted. It was a financial massacre.
(18:38) The moment the window opened, the world rushed to sell pounds. Countries that had been stockpiling sterling for years unloaded it to get their hands on precious U.S. dollars. (18:48) The money from the American loan, which was supposed to last for years, began to evaporate.
In just one month, Britain lost hundreds of millions of dollars. (18:55) The haemorrhage was so violent that the government watched in horror as their reserves vanished. They were bleeding to death.
(19:02) After just five weeks on August 20, 1947, the British government was forced to suspend convertibility. They slammed the window shut. (19:10) They had to go to the U.S. Treasury and admit total failure.
They had burned through a huge portion of the loan for nothing. (19:16) The humiliation was total. The British Empire had tried to play by American rules and had been crushed.
(19:21) This financial weakness had immediate geopolitical consequences. This was the moment the baton of world power was officially dropped by London and picked up by Washington. (19:29) In February 1947, the British government sent a secret telegram to the U.S. State Department.
It was a message of resignation. (19:37) For a century, Britain had been the guardian of Greece and Turkey, keeping the Russians out of the Mediterranean. (19:42) But now, with the treasury empty, Britain could no longer afford to pay the soldiers or subsidise the Greek government.
(19:48) The telegram essentially said, we are broke. We are leaving. If you want to stop the Communists, you have to do it.
(19:54) This telegram triggered the Truman Doctrine. The United States stepped in to fill the vacuum. (20:00) It was the formal acknowledgement that Britain was no longer a superpower, capable of shaping global events.
(20:05) It was a regional power trying to keep the lights on. The economic misery dragged on. (20:10) In 1949, with the economy still stagnant and the reserves low, the government was forced to devalue the pound.
(20:16) Before the war, the pound had been worth $4.86. In 1949, it was slashed to $2.80. (20:23) Overnight, the British people became 30% poor relative to the rest of the world. (20:27) Imports became more expensive. The cost of living rose.
(20:32) It was a recognition that the British economy was no longer competitive. (20:35) But the final bill for the war wasn't just paid in the 1940s. (20:39) It was a mortgage that spanned generations, the Anglo-American loan of 1946.
(20:44) The money borrowed to keep Britain from starving after the victory was not a gift. (20:48) It was a commercial debt with interest. (20:49) Every year for six decades, the British Treasury wrote a check to the United States Treasury.
(20:54) Through the boom of the 50s, the gloom of the 70s, the Thatcher years, and the Blair years, the payments continued. (20:59) The final payment was made on December 29th, 2006. Think about that.
(21:04) 60 years after the guns fell silent, 60 years after the victory parades. (21:08) The British taxpayers were still paying for the privilege of having survived World War II. (21:13) The story of the price of victory is the ultimate debunking of the idea that wars have winners.
(21:17) In the modern era, total war is a negative sum game. (21:21) Germany lost the war and was destroyed. But Britain won the war and was bankrupted.
(21:25) The only true winner was the United States, the US economy doubled in size during the war. (21:30) Its industry was untouched by bombs. It held two-thirds of the world's gold.
(21:34) And through the mechanisms of land lease and the post-war loans, (21:36) it successfully dismantled the trading preferences of the British Empire, (21:40) opening up global markets for American goods. (21:43) The United States didn't conquer the British Empire with armies. It bought it.
(21:46) It acquired the assets, the bases, and the geopolitical influence (21:49) in a distressed asset sale managed by the US Treasury. (21:53) For the British people, the legacy of 1941 remained a scar on the national psyche. (21:58) It created a lingering sense of decline, a feeling that the best days were in the past.
(22:02) It fuelled the special relationship, which was always a polite euphemism for dependency. (22:07) When Winston Churchill wrote that letter to Roosevelt in December 1940, (22:10) he saved his country from Hitler. But he also signed the deed of sale.
(22:14) He traded the Empire for survival. It was a deal that had to be made. (22:19) There was no other choice.
But the cost was the future. (22:22) Britain emerged from the war as a moral giant, but an economic pygmy. (22:25) It had spent its inheritance to buy freedom for Europe.
(22:28) It was a noble sacrifice, perhaps the noblest in history. (22:31) But in the cold, hard light of economics, it was a liquidation. (22:35) The Empire didn't fall.
It was sold off piece by piece to pay the bill for doing the right thing.

[sanjaykumar]

Very interesting. Do the British know the reality of the special relationship.

And the irony is that Britain did not win the war. It is shameful that the podcast steals the Soviet victories for Churchill to pin on his chest. But that is not new.

[ramana]

A few points. Churchill was a half American.
I read the post war negotiations between Courtalds who invented rayon and the post war UK govt written in the memoirs of Sir Patrick Hastings*.
It was a sorry tale.
Thanks for the reminder.
Also Len Deighton writes that the British owed about Pounds 1.5 B to America after WWI. This led to a weak financial state during the inter war years.

*Whereas by Sir Patrick Hastings.

[ramana]

BTW Trump is offering to create Core-5 consisting of US, China, Russia, Japan and India
UCRJI sort of his own BRICS!
India should tell him to join BRICS

[sanjaykumar]

Interesting. He is openly saying time to update the security counsel.

[ramana]

Looks like UCRIJ a phononym of Oakridge!

[drnayar]

BTW Trump is offering to create Core-5 consisting of US, China, Russia, Japan and India
UCRJI sort of his own BRICS!
India should tell him to join BRICS

JUICR

[A_Gupta]

Here is the Chinese imbalance, and how it is pushing that imbalance onto the world.

Basically, China needs to show growth, and the only viable avenue, given the CCP's unwillingness/inability to increase the consumption capacity of its own people, is exports. But the rich economies are cutting off access. So China is dumping on a massive scale to the Third World, reducing the profitability of its firms. In turn, the firms are squeezing the workers, making them work longer hours and with cutting wages. But the Third World has only so much consumption capacity and the Chinese people are reaching their limit of endurance.

China became the first country to hit a $1T trade surplus last year and this year they hit that number much faster, in November itself and is on track to hit $1.15T. China is also opening manufacturing in other nations because it's workforce is also moving up the ladder. It's internal consumption is also growing so its expanding on that side as well. All of this means it's internal contradictions might be less drastic than what the video says it is.

https://www.nytimes.com/2025/12/07/busi ... rplus.html

Your cited article itself says: “Some Chinese economists nonetheless say China must someday accept a narrower trade surplus to help its long-suffering consumers.”

I leave you to figure out if that contradicts what my citations are saying.

[A_Gupta]

I also recommend
https://youtu.be/hoSNdzfydRU?si=ulUqJY2AWOclet8-


In this episode of Monetary Matters, Jack sits down with Michael Pettis, Senior Fellow at the Carnegie Endowment, to deconstruct the massive economic imbalances between China and the rest of the world.

For decades, the global economy has relied on a specific mechanism: China suppresses domestic consumption to subsidize manufacturing, and the US runs massive deficits to absorb that excess supply. Pettis argues this model has reached its limit. They discuss the concept of "economic involution," why China’s shift from real estate bubbles to manufacturing bubbles is dangerous for Europe and the US, and why the current tariff regimes are merely shifting trade routes rather than solving the problem. If you want to understand why the trade deficit keeps growing despite political intervention, and what a "Great Rebalancing" actually looks like, this is a must-listen. Recorded on November 24, 2025.

[A_Gupta]

And here is a Google AI summary, when asked about the Chinese trade surplus and consumer squeeze:

China's massive trade surplus, hitting $1 trillion in 2025, stems from strong global demand for its manufactured goods but highlights a domestic "consumer squeeze" with weak spending, a property slump, and cautious households, forcing reliance on exports and creating trade tensions with partners like the EU and US, who face competitive pressure and urge China to boost domestic consumption, says reports from Yahoo Finance, ABC News, and Barchart.com. This imbalance, intensified by US tariffs rerouting exports to other markets (Africa, Asia, Europe) and a weaker Yuan, pressures global industries and prompts calls for China to shift to domestic growth, according to analysis from The Week, CNN, and The Indian Express.

[Jay]

China became the first country to hit a $1T trade surplus last year and this year they hit that number much faster, in November itself and is on track to hit $1.15T. China is also opening manufacturing in other nations because it's workforce is also moving up the ladder. It's internal consumption is also growing so its expanding on that side as well. All of this means it's internal contradictions might be less drastic than what the video says it is.

https://www.nytimes.com/2025/12/07/busi ... rplus.html

Your cited article itself says: “Some Chinese economists nonetheless say China must someday accept a narrower trade surplus to help its long-suffering consumers.”

I leave you to figure out if that contradicts what my citations are saying.

I agree, but the key word here is "SOMEDAY". Since 2008 crisis, we have been reading these chinese economic contraction articles non stop. We all would love for that to happen, but the reality is China has grown stronger all these years and with euro and american contraction all around, china is only poised to grow stronger, at least in the near term. Rich economies are also not cutting off access entirely. With US retreating, countries like canada, UK, and other euro nations are rethinking about engaging with china in a pragmatic way. This thinking will prevail unless trump/maga influence is curbed out of US's policy book and I do not see that happening any time soon.

In the long run, only Bharath can challenge china's cancerous policy. After many a stumbling steps, we have slowly started walking down this path but we need to learn to run much sooner.