Stagflation? [Archive] - Debate Policy - Political Message Board

Kathianne

09-30-2023, 05:02 PM

This is really feeling like Jimmy Carter 3.0

https://www.cnbc.com/2023/09/29/stagflation-surging-oil-prices-fuel-fears-of-dreaded-phenomenon.html

Stagflation is ‘the big bogeyman out there’ — and many increasingly fear its returnPUBLISHED FRI, SEP 29 20237:33 AM EDTUPDATED FRI, SEP 29 20239:59 AM EDT
Sam Meredith

Oil prices surging to the brink of $100 per barrel and the specter of higher-for-longer inflation have reignited concern about stagflation risks.
“By early summer, investors looked increasingly confident that the global economy was escaping the plague of stagflation,” analysts at Generali Investments said in a research note published Thursday. “They are having a second thought – rightly so.”
The big bogeyman out there is stagflation: WE Family Offices CEOWATCH NOW

The big bogeyman out there is stagflation: WE Family Offices CEO
Just a few months ago, investors appeared relatively sanguine about the dreaded prospect of stagnant economic activity and rising inflation.

Oil prices surging to the brink of $100 per barrel and the specter of higher-for-longer inflation have renewed concern about stagflation risks, however.

“I think that the big bogeyman out there is stagflation, that we get into this spirit of high inflation and low growth,” Mel Lagomasino, CEO of WE Family Offices, told CNBC’s “Squawk Box” on Wednesday.

Lagomasino cited comments from Minneapolis Fed President Neel Kashkari, who said in an essay earlier this week that U.S. interest rates may have to go “meaningfully higher” to bring down stubbornly sticky inflation.

Kashkari reaffirmed this message when speaking to CNBC on Wednesday, saying that he was not sure if interest rates have been raised enough to successfully fight price growth.

“It looks like they might not just be higher for longer, they might be quite a bit higher for longer,” Lagomasino said, before adding that she believes a recession is “definitely” on the horizon.

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Kathianne

09-30-2023, 05:36 PM

Gunny, speaking of on topic:

https://www.wsj.com/articles/the-sorry-state-of-americas-submarine-fleet-japan-korea-alliance-taiwan-invasion-china-c29203bd?st=tbfey2ur9m3xe3v&reflink=desktopwebshare_permalink

The Sorry State of America’s Submarine FleetTo preserve its undersea advantage over China, the Navy should procure subs from Japan and South Korea.
By Seth Cropsey
Sept. 29, 2023 5:55 pm ET

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The guided-missile submarine USS Florida transits the Suez Canal in Egypt, April 7. PHOTO: U.S. NAVY CENTRAL COMMAND/VIA REUTERS
The U.S. submarine fleet is in a dire state. The U.S. doesn’t have the domestic infrastructure to repair and sustain its existing subs, much less expand the fleet. America needs to get creative to sustain its undersea advantage. The Navy should procure conventionally powered submarines from U.S. allies, namely Japan and South Korea. The moment is ripe, given the leadership of Rahm Emanuel, the U.S. ambassador to Japan, and a potential breakthrough in Japan-South Korea relations.

The U.S. faces a parlous Indo-Pacific position amid a shifting situation in the Taiwan Strait. A decade ago, the People’s Liberation Army was growing larger and more sophisticated but remained incapable of taking Taiwan. Today China has three aircraft carriers—two made domestically, one imported—and is building a fourth, its first true supercarrier. The PLA has a surface force larger than the U.S. Navy’s battle force—that is, the total number of combat ships in the U.S. Navy. It has eight guided-missile cruisers and dozens of destroyers and frigate warships—and its many shipyards aren’t idle. The PLA’s missiles generally out-range American ones even if its sensors are less sophisticated.

Asking if China is “ready” to take Taiwan misses the mark. China no longer lacks any crucial capabilities. China could invade Taiwan tomorrow and win, although its odds of success are between 30% and 40% if the U.S. resists. If the U.S. doesn’t join the fight, Chinese victory would be nearly certain. A below-half probability of victory should counsel caution in Beijing. But these odds are far greater than they were 10 or even five years ago. Rather than whether China is ready for a war, the correct question is: What circumstances might prompt China to wage a war, rather than expand its capabilities?

In the Sino-American military balance, America’s greatest advantage is its submarine fleet. Our 50 nuclear-powered attack submarines are heavily armed with torpedoes and missiles and soon will deploy unmanned underwater vehicles and more-advanced loitering munitions, a flying drone with a warhead that can wait some time before engaging a target. Our four nuclear-powered guided-missile submarines carry 154 cruise missiles each. Critically, China’s greatest weakness is undersea warfare. The PLA is building a fleet of antisubmarine surface-combatant vessels and procuring more maritime patrol aircraft.

China is expanding and improving a seabed sensor network to detect submarines within the First Island Chain. Significant gaps, however, will remain for at least another decade. This explains why the U.S. assumes that American attack submarines will play the greatest offensive role in an Indo-Pacific War, since they could stealthily disrupt a Chinese invasion of Taiwan and destroy the warships and ground-based targets critical to China’s reconnaissance-strike network. That would let heavy but vulnerable U.S. supercarriers and strategic bombers strike targets and avoid a Chinese counterattack.

The U.S. Navy’s submarine fleet, however, is in lamentable shape. Of the total U.S. fleet, about 40% of vessels are in maintenance and repair facilities at any given time. This puts the fleet at roughly 30 deployable boats at best, rather than the 40 to 45 expected at operating level. In addition, the Navy is retiring two submarines a year on average, but building only three every two years, leading to a net annual decline. U.S. production looks unable to reverse this. The issue isn’t yards—although another short-term maintenance yard would ease the stress on larger facilities—but parts. Submarines are extraordinarily complex, requiring components in a lengthy supply chain. It takes years to procure the specific undersea sensors, fire-control systems and other crucial internal parts for each boat.

The problem requires not only more spending but also greater creativity, since the fleet will shrink until the 2030s. As America’s undersea advantage narrows, a Chinese attack becomes more probable. If China can knock out an American yard through cyber means, sabotage or even direct assault, then U.S. backlogs will mushroom, cutting the submarine force to 10 or 20 boats and tilting the balance in China’s favor.

One short-term solution is procuring conventionally powered submarines, a step the U.S. hasn’t taken since the middle of the Cold War. In the long run, the U.S. needs nuclear-powered submarines, which can cruise from bases to combat zones and back without refueling. They are larger, enabling a greater weapons payload and, in the future, more unmanned systems. Over a submarine’s life cycle, nuclear power is cheaper than conventional power.

Conventionally powered boats—of smaller size, inferior range and lesser payloads—are easier to build than their nuclear cousins. If made properly, they also are quieter than nuclear boats. Modern battery-powered and diesel-electric subs can be almost silent.

A small nonnuclear fleet of between 12 and 24 boats wouldn’t provide the same combat capacity as even 10 Virginia-class nuclear-powered attack submarines, since these boats play a different role. But they are far cheaper, running between $500 million and $1 billion apiece, compared with $4 billion plus for a Virginia. Nonnuclear subs can be used directly in the region as surface and transport ship hunters. Deployed from the Philippines, Japan and South Korea, and potentially sustained from Guam with a larger submarine tender fleet, conventionally powered submarines would lighten the burden of the strained nuclear fleet. By the 2040s, production expansions will have allowed the U.S. to phase out these boats and replace them with nuclear-powered ones.

The U.S. lacks the domestic infrastructure to build conventionally powered boats. But its allies are world leaders in the technology. Japan’s Soryu-class submarine, a Mitsubishi-Kawasaki co-project, has a range of more than 6,000 miles. Japanese yards take about two years to build one of these boats and can start a new one every year. Korea’s KSS-III, a Hanwha-Hyundai product, slightly larger than the Japanese Soryu, can even launch ballistic missiles, broadening its mission profile. Korean yards can produce one ship in three years and typically start a hull every year. Both ships are on the export market.

To improve South Korean-Japanese relations, the U.S. recently conducted a summit that has opened the possibility of trilateral military cooperation. The summit was the fruit of months of diplomacy, primarily by Mr. Emanuel. The Biden administration should explore either a co-production arrangement or outright purchase of batches from each power with the goal of fielding a dozen such attack submarines by 2030.

The Biden administration has made diplomatic strides toward improving America’s position in the Indo-Pacific but has largely neglected military questions. It has a rare opportunity to shore up the military balance with diplomatic means.

Mr. Cropsey is the president of the Yorktown Institute. He served as a naval officer and as deputy undersecretary of the Navy and is author of “Mayday” and “Seablindness.”