4 min read

More revenue than ever

Russia's government has more revenue than ever as oil continues to flow; what economic damage might be caused by a crisis in the Taiwan Strait; China stimulates a (tiny bit) of demand; and where are all the young tech founders?

1—More revenue than ever

Chart showing Russia's oil exports.
Russia's oil exports haven't really been affected by sanctions – for now.

The West's sanctions on Russia have certainly made the country poorer, but the government isn't hurting – at least from a revenue point of view. According to the WSJ:

"After buyers in the U.S., the European Union and their Pacific allies cut back their Russian oil imports, much of it went to nations in Asia that have declined to take sides in the conflict.

An unexpected market has been the Middle East. Exports of Russian fuel oil, a lightly refined version of crude, now go to Saudi Arabia and the United Arab Emirates, often stopping in Egypt en route.

The Russian oil is either burned in Saudi power stations or exported from Fujairah, a U.A.E. port and hot spot for blending Russian and Iranian oils to conceal their provenance. This is oil that before the war was shipped to U.S. refiners."

In other words, Russia is shipping oil to the Middle East, which is used locally, allowing Middle Eastern nations such as Saudi Arabia to sell their oil to Europe and the US instead.

There's plenty more in the WSJ article here (~7 minute read), including that Russia's current strategy is unlikely to work in the long-run "as Russian machinery ages and access to Western software is lost".

2—Cost of a crisis in the Taiwan Strait

What economic damage might be caused by a crisis in the Taiwan Strait? A new Mercatus policy brief attempted to pinpoint the major risks, from a US perspective:

"Trade and economic effects of a Chinese invasion of Taiwan could easily exceed those of Russia's invasion of Ukraine. The economies of China and Taiwan are much larger than those of Russia and Ukraine (China’s economy is about 10 times larger than Russia's, and Taiwan's is about 4 times larger than Ukraine's), and the exposure of the US economy to China and Taiwan is far greater, not only in trade volumes but also in the share of value the two countries add in US final demand. Taiwan also has an outsized role in the global advanced semiconductor chip industry, and disruptions to the supply of these chips or to US companies' digital communications with Taiwanese partners would unsettle the US tech sector and nearly every industry that uses advanced computer chips."

Using new data courtesy of "a database left unguarded at a Chinese internet protocol (IP) address", the authors map possible Chinese points of interest in Taiwan, along with the hundreds of sophisticated fibre-optic cables connecting the island to the rest of the world.

You can read the full policy brief here (~12 minute read).

3—China stimulates demand

Tweet showing China's demand stimulus.
At 0.03% of GDP it pales in comparison to recent supply-side stimulus.

4—No country for young men

Where have all the Silicon Valley prodigies gone? That was the question posed by Elaine Moore in the FT, who notes that "the tech sector seems to be missing its latest batch of 20-something founders":

"Perhaps the tech sector is no more immune from America's creeping gerontocracy than any other industry. Even in crypto, one of the most disruptive sectors to emerge in the past few years, the best-known founders are middle-aged. Changpeng Zhao, 44, created crypto platform Binance when he was in his late 30s. Coinbase chief executive Brian Armstrong is 39."

Moore notes that the median age in the US topped 38 in 2020, up from 28 in 1970, so the denominator might explain some of it. But she also wonders if investors "have grown less willing to hand large sums to inexperienced business creators":

"Elizabeth Holmes did irreparable damage to the idea that college dropouts should be celebrated for their inexperience. She left Stanford University in 2004 at the age of 19 to found biotech start-up Theranos. Her youth was offered up as one reason she was able to create a blood-testing company those who worked in the sector said was impossible. Of course, the naysayers were right. Earlier this year, Holmes was found guilty on four counts of fraud."

You can read Moore's full article here (~3 minute read), in which she worries that "something will be lost if tech does not replenish its supply of youthful success stories".

5—Further reading...

🚢 "Two American warships sailed through the Taiwan Strait, separating China and Taiwan, the first such operation since US House Speaker Nancy Pelosi visited Taipei early this month."

😷 From Bloomberg: "In China, where an alternate reality persists with the government intent on stamping out all Covid outbreaks, pandemic fortunes are still being made... [and] much of this success is owed to the Chinese government's 'Covid Zero' policy."

🌊 An eighth flood in Pakistan this year (it normally gets around four) has left "a third of the country – an area roughly the size of Britain – underwater".

🚀 It's already nearly 6 years late, so what's another few days? "NASA postponed its Artemis I launch Monday after issues emerged during countdown, delaying the debut of its towering rocket and its long-awaited mission to the moon."

⛑️ "As India's capital of New Delhi prepares for winter – and the accompanying season of acrid smog – the government is promoting a motorcycle helmet fitted with filters and a fan at the back that it says can remove 80% of pollutants."