DeepSeek: capitalism at its finest!

Trump is right that DeepSeek is a wakeup call.  For a very long time many on the capitalist side of the argument (including myself) have taken a degree of complacent comfort in the highly derivative nature of Chinese technology.  One of out BTL commenters even went so far as to say that reports of a Chinese stealth fighter couldn't possibly be true.  Of course, we've long noted the undeniable, gargantuan successes of China's mercantile strategy, but hey, that's how Japan, S.Korea and Taiwan joined the club. 

And now, DeepSeek!   Assuming it isn't a fake - and I think we may - it represents an all-time classic example of capitalism at its finest:  people with strong commercial motivation, creativity, and sufficient political freedom - highly qualified, but sufficient - to give rein to it;  and the innovations flow!

And of course in a frontier space like LLMs, random disruptions and breakthroughs are to be expected.  We just need to recognise that a western cultural backdrop is not the only fertile context.  

So 'wakeup call' is all we need to say.  Provided that those who hear it are not just the complacent, comatose denizens of Silicon Valley.  Now, what was it about that stealth fighter again?

ND

China, Korea, Russia, Ukraine: strategic mistakes all round

Start with Ukraine.  Zelenski's 'Victory Pan' of earlier this month is so off-beam, it simply serves to illustrate the impossibility of 'victory' by the standard of his stated war aims.  I won't waste space pointing out why.  Desperation stuff, ahead of the US election.

I fact, it's so off-beam, and he has often proved to be quite a subtle guy, I could even imagine that his real audience is internal - some truly unrealistic hard-liners.  Look guys, this is what it would take, right?  Now look carefully - do you seriously imagine any of this is going to happen??

Either that, or he's losing it (Heaven knows, he's been under monstrous pressure for a very long time) & it's a big mis-step.  Even the seasoned chess players in the Kremlin must initially have laughed out loud (- until they start thinking like I did above).

But then ...

... the North Korean thing**.  Could you imagine anything more calculated to swing the dial back the other way? - in several places around the world where it really matters.  And not just in political terms: Russia seriously doesn't want S.Korea becoming a material backer of Ukraine.  Or Japan.  More desperation stuff.

Why did China allow this to happen?  Is Xi really happy to have N.Korea as an outright proxy in such a tangible & risky way?  Or does he even have control on what Kim Wrong'Un does any more?  Have keen will China be to see Putin transfer missile technology to its rogue neighbour?  Even Lukashenko  is publicly breaking ranks on this one.

And how does this go down in Tehran?  The dimensions and angles are endless.

Trump will be in his element if he wins next month.  He just loves swirling, ambiguous situations, where his scope for crazy, unpredictable interventions is maximised.

ND

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** Every soldier there's ever been knows the feeling of being in a long line to get issued with ill-fitting kit in various shades of green.  It'll be "present you bare left arm for the needle" next.  Happy memories!

Oil and Troubled Geo-Political Waters

Iran, Russia, Ukraine, Turkey, Saudi, Syria - and back to Iran again

Up and Down

Initial reporting of the Iranian nuclear deal had it that the price of oil had dropped $2 on the news.  It wasn't true and in fact the price of Brent went up, slightly.  Brent has been range-bound, $100 - 120, for a long time now.  Not a tight range, but not headline-setting any more.

Russia, we gather, was one of the major players behind the Iran deal, and they certainly have no interest in a materially softer price of oil.  This DTel piece paints a pretty grim picture, and repeats the received wisdom that Russia needs an oil price of $110 to balance its budget (others have quoted a higher figure).  They remain uncomfortably stuck as a raw materials economy, despite their fervent longings to be a manufacturer: I've recorded here before that they have tried several times to sell gas and oil into the far eastern markets in packages with manufactured goods, 50:50 by value.  You can imagine where the Chinese have told them to stuff their useless trucks; and I read with amusement a couple of weeks ago that their new LNG export deal with South Korea works the other way around.  In this package, the Koreans will build the LNG ships for the Russians.  This is the sort of reality that has Putin tearing at what little hair he has.

But it's not all bad news for Russia.  They must relish the leading role they've taken with Syria and Iran (it's their back door, after all) - and what about the Ukraine !?  Their pulling out of EU accession negotiations must send the expansionist tendency in Brussels ranting up and down their luxurious corridors.  (I could wish the estimable Hatfield Girl was blogging just now; she writes interestingly on these matters.)  When will Turkey decide it's not worth the effort ?  That really would be a turning-point.

Who else is seriously long oil ?  Why, the Saudis, of course, who at the same time are none too chuffed about the Iran deal.  One particularly daft comment suggests that "Riyadh may try to 'rap America’s knuckles' by flooding markets with enough oil to puncture the US shale oil revolution. Production costs at the US Bakken shale field are around $80".  Yes, the USA is long oil as well: but I have a feeling that 'something' would happen long before the price fell that far.  There has long been the theoretical potential for a genuinely significant oil-price reversal: it is the truly epic quantities of oil reserves everyone knows are present in Iraq.  But somehow it never gets developed ...   

One also reads that the Iran deal is bad, bad news for the Syrian 'opposition'.  Assad-supporters Russia and the Iranians are now riding high and surely command at least several months of goodwill in the West  - so woe unto the enemies of Assad ?  Well maybe: but the perennial enemies of Iran are not appeased.

Sometimes, big-power diplomacy really does put the lid on a boiling pot. Remember North Korea ?  Ah yes, that's right, a few months ago they were threatening a first strike on Seoul and Seattle. It was headlines on every news channel for days and days.  And then suddenly ... nothing.  Oh, to have been a fly on the wall when the Chinese took Fat Boy to one side and read his fortune for him.

However.  When it comes to Iran, those perennial enemies probably have the means to keep the pot boiling for a while yet to come.  Price of oil on 31 December this year ?  Predictions in the comments, please.

ND