The Morning Call notes some sad coincidences

This is not the note we intended to write today.  But as we sat yesterday, and read and thought and tried to write, various pieces of this puzzle just seemed to fall into place.  And it’s a weird puzzle.

As you read, please note that we’re not saying that any of this is part of a grand conspiracy.  Indeed, we don’t think that any of it was planned at all.  We might say it’s all an unhappy coincidence, except for the fact that it’s not that either.  It was inevitable, if inadvertent, simply by nature of the players involved, players that must be brought to heel, preferably you, us, and the capital markets more generally, but by other means (i.e. the government) if necessary.

The other thing to know about this note is that it is anything but “news.”  Nothing in here is new or unanticipated.  Many of the bits collected here are parts of stories we covered previously, and the rest are stories that were covered so comprehensively in the mainstream press that they didn’t really merit our comments.  It’s in putting them together, arranging them in a particular order that they amalgamate to expose a new and different tragedy.

First, as you all know by now, the United States has withdrawn its troops from Afghanistan, ending its twenty-year occupation of the central Asian nation.

Second, now that the Americans have left Afghanistan, the presumption among most experts is that the People’s Republic of China will fill the void and will exert its influence in the region and with the resurgent Taliban.  As The Financial Times noted on Tuesday:

The Taliban’s takeover in Afghanistan redraws Asia’s geopolitical map and hands China and Russia — two of America’s staunchest strategic rivals — an opportunity to project their power in the wake of Washington’s chaotic withdrawal, analysts in several countries said.

“China has benefited from the irresponsible behaviour of [the US], which has deeply undermined the international image of the US and the relationship between Washington and its allies,” said Zhu Yongbiao, a Chinese government adviser on central Asia and professor at Lanzhou University….

Senior Asian diplomats who declined to be identified said Beijing was willing to stump up hundreds of millions of dollars to finance the reconstruction of critical infrastructure in Afghanistan. Chinese investments in resource projects could potentially follow a restoration of order to Afghanistan’s economy, China experts said.

Third, among other things, the PRC intends to compensate the Taliban well for the right to exploit Afghanistan’s mineral wealth.  Ten years ago, China National Petroleum Corporation (CNPC) signed a $400 million deal giving it control of a good chunk of the nation’s oil resources.  And while CNPC abandoned a project in the Amu Darya Basin this week, it has other major projects in the country and will, presumably, be seeking to work with the new Afghani government to create other “mutually beneficial” opportunities.

Fourth, as the twenty-year war has been abandoned, many of the U.S. servicemen and women who served in Afghanistan feel as if their efforts and their sacrifices have also been abandoned.

U.S. troops who deployed to Afghanistan over the past two decades say the Taliban's rapid conquest of much of the country in the past week has left them stunned and dismayed.

"This one will hurt for a long time, man," said Sean Gustafson, a retired Army lieutenant colonel who deployed to the city of Herat in western Afghanistan from 2006 to 2007.

The capture of Herat by the Taliban on Thursday shocked Gustafson. On Friday, he forwarded to Stars and Stripes photos from 2007 of him and other troops building schools and handing out books to children.

Now, like other veterans of America's longest war, he can only watch from afar as the projects he worked on and the people he tried to help come under threats from the Taliban….

"A complete pullout is not only unnecessary, it is sabotage," said Army Staff Sgt. Seamus Fennessy, who fought in Ghazni province in 2010.

The withdrawal was "a betrayal of American and international forces who have expended so much in life and limb to prevent the resurgence of the Taliban," Fennessy said in a Facebook message….

The U.S. came close to "turning the tide" in Helmand province, Mills said in a phone call Thursday. He said Americans had constructed several pillars of stability in Helmand by shoring up the economy, establishing schools and providing security.

"It's sad to see that those pillars are being destroyed one at a time by the Taliban," Mills said. "To see it snatched away, of course it's hard."

Fifth, as we noted in the July 13 edition of this publication, those military personnel, like all federal government employees, have their retirement savings in something called the Thrift Savings Plan, which has about $735 billion in total assets, $442 billion (or roughly 60%) of which is managed by two outside asset management firms, State Street and…BlackRock.

Sixth, as we noted yesterday, one of the above asset management firms, BlackRock, is quite bullish on China these days.  We cited the following, from Monday’s Financial Times:

BlackRock’s research unit has said China should no longer be considered an emerging market and recommended investors boost their exposure to the country by as much as three times.

The New York-based investment house’s internal think-tank suggested the higher allocations to Chinese stocks and debt as the country’s capital markets have boomed in size and sophistication.

“China is under-represented in global investors’ portfolios but also, in our view, in global benchmarks,” Wei Li, chief investment strategist at the BlackRock Investment Institute (BII), said in an interview. “It has the second-largest equity market, the second-largest bond market. It should be represented more in portfolios.”…

“The spheres of influence between the two superpowers are moving apart. In the near term that can lead to market volatility. In the longer term, if you want to get China you have to go to China,” Li said….

And speaking of spheres of influence moving apart, we move on to our seventh and final point: as we noted in the March 25 edition of this publication, citing a section from The Dictatorship of Woke Capital, that same asset management firm, BlackRock, just happens to have some interesting holdings [emphasis added]:

At the end of the first quarter of 2020, BlackRock held more than 7 percent of all outstanding shares of PetroChina listed on the Hong Kong Exchange. PetroChina, of course, is the listed arm of the state-owned China National Petroleum Company. Not only is PetroChina notoriously un-green, but it also has a long history of social and political problems. In 2000, when the company brought its initial public offering (IPO) to the American market in conjunction with its American banker, Goldman Sachs, a broad coalition of interests on both the political Left and Right boycotted the offering.

Among other things, PetroChina’s parent company (China National Petroleum Company) was doing business with and thereby funding the regime of Omar al-Bashir in Sudan, which was then and remains a State Department–sanctioned state sponsor of terrorism. Additionally, al-Bashir’s regime was waging a civil war against the black and animist people of South Sudan and permitted the growth of the modern-day slave trade in Khartoum.

So…to summarize: The United States has left Afghanistan.  Many servicemen and women are upset and psychologically damaged by the destruction of what they fought hard to achieve and what many of their comrades in arms died to achieve.  The vacuum left by American withdrawal will be filled aggressively by the People’s Republic of China and will be filled (presumably) profitably by Chinese companies, including China National Petroleum Company, which has a long history of aiding and abetting murderous Islamist regimes.  As it works out, the world’s largest asset management firm, BlackRock, made a bold and counterintuitive call this week, encouraging investors to dump money into the PRC.  BlackRock is also the single largest shareholder of PetroChina, the listed arm of CNPC, and, at the same time, manages (along with another firm) more than half of the funds in the Thrift Savings Plan, which is the government’s retirement plan for federal employees, including the servicemen and women lamenting the destruction of the legacy they built with (literal) blood, sweat, and tears.

That’s just great, isn’t it?

To reiterate yet again, there is no conspiracy of any sort here.  This is just what happens when the largest asset management firm in the world happens to have its finger in every pie and happens to have no compulsion whatsoever about partnering with the Butchers of Beijing.

Nice job, everyone.


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