Overmatched: the U.S. military

Investment Analysis Clubs Macro Economic Trends and Risks
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A world war would ruin everyone’s Macroeconomic day. Especially because the U.S. would lose.

President Xi Jinping of China has ordered his armed forces to be ready to seize Taiwan by 2027. Though the United States maintains a policy of strategic ambiguity on how it would respond to an invasion, Republican and Democratic presidents alike have said that America would defend the island nation. The Pentagon has produced a classified, multiyear assessment that shows how such a conflict would play out: the Overmatch brief….

Pete Hegseth, the secretary of defense, said last November that in the Pentagon’s war games against China, “we lose every time.” When a senior Biden national security official received the Overmatch brief in 2021, he turned pale as he realized that “every trick we had up our sleeve, the Chinese had redundancy after redundancy,” according to one official who was present.

The assessment shows something more worrying than the potential outcome of a war over Taiwan. It shows the Pentagon’s overreliance on expensive, vulnerable weapons as adversaries field cheap, technologically advanced ones….

China has installed malware in the computer networks that control power grids, communications systems and water supplies for American military bases. The advanced cyber campaign, carried out by the state-sponsored hacking group known as Volt Typhoon, threatens the military’s ability to move weapons and forces in the event of a crisis in the Pacific, and could affect civilians as well. America’s cybersecurity officials have struggled to find and remove the malware….[end quote]

This is a long article which shows how the U.S. military needs a paradigm shift to the modern world as well as rebuilding manufacturing of our traditional weapons such as Patriot missiles which we have given to Ukraine and Israel for defense.

The stability of the world depends upon U.S. military deterrence. Even if the U.S. military, defense contractors and Congress members with military manufacturing in their districts weren’t resistant to change there is no way that the U.S. could be ready to deter China from attacking Taiwan by 2027.

That’s a pretty short deadline.

Wendy

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I think one of the major deterrents to an invasion of Taiwan is Taiwan Semi. Their factories would be destroyed in a war, and half of their output goes to the PRC. China would be hurt bigly if they invaded.

DB2

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One of the bigly reasons for the CHIPS and Science Act, too.

Pete

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Not if they can produce their own chips, which they are ramping up to do.

Some people thought Japan would never attack the US in 1940 because we supplied 80% of their fuel imports, and they would be hurt “bigly” if we shut them off entirely.

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I don’t think it is realistic or feasible for us to project a modern military force halfway around the world against another world power - who by contrast only has to project their power 100 miles from their mainland.

In other words, there is ZERO we can do, short of a nuclear war, to militarily keep China from claiming Taiwan. It would be foolish to try.

Anyone shocked, or “turned pale” by that revelation has no business being a national security professional (and yes, I am referring to a past Biden official).

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The outcome is a no brainer no matter technology, cheap or advanced. China has the home field advantage. Our supply lines would be too long going 1/2 way around the world while they are crossing the street.

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@JLC @Hawkwin I completely agree with you. The U.S. should not defend Taiwan from being resorbed into China for many reasons.

Wendy

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To clarify, that is not my position. My position is that to expect we will be able to stop them with military action is foolish.

That doesn’t mean we should not seek other means to deter it from happening. I do think there is a risk in military posturing that if it happens and we do nothing, we lose our ability to “threaten” effectively in the future. We have unfortunately had far too many “red lines” crossed in recent history and this would be yet one more.

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I am with Hawkwin. I believe we should provide strong support to Taiwan, and i believe that Taiwan would be able to devastate any attempted invasion short of China using nuclear weapons.

Big straits are tough problems for modern armies, with the history of the English Channel as a star example. The Taiwan Strait is much wider than the Channel, and the west Taiwan coast facing that Strait is made up of formidably steep hills, while attempting to swoop troops and landing vessels all the way around to the physically more vulnerable east Taiwan coast would provide the Taiwanese naval and air forces with tremendous opportunites to wreak havoc that is easily underestimated.

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Most probably. While China has the largest standing army in the world (such as it is in overall capability and ability), Taiwan has been preparing for an invasion for quite a while and would be an imposing enemy to the mainland Chinese government. They likely have a few surprises for such an action that would make re-taking the island very, very costly.

Pete

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There’s a Central European/Asian area that is currently serving as a test bed for many of the “new techniques n technologies”.

The West, US, EU, NATO, Scandinavian n Baltics are testing n testing.

China, NPRK, Iran n of course Russia are testing n testing.

These tests include cyber security n other online Internet satellite etc techs.

The US n West’s big problem is the stranglehold that the legacy arms have.
Authoritarian regimes can pivot easily n rapidly.
Democracies are much slower (committee after committee n studies n back scratchin) and prone to status quo {grift graft jobs n pork etc}.

PLTR, BBAI, Anduril, and others are all working to break the strangleholds.

NSA, CIA, DIA, DARPA, etc and the counterparts in NATO, EU, Scandinavian/Baltics, Israel, Japan, S Korea, Australia are all sweating with us.

Those countries have been coerced into jumpstarting their share of the costs.

I remember reading about US stealth, energy, drone tech 30 years ago.
Cyber security has been a thing ever since that grad student unknowingly unleashed the first worm.
I don’t think the US n West are as unprepared as some of the FUDsters want to portray.

If China n the BRICS, are indeed stockpiling physical gold, and on Q-day, plan to crash all banking, investing and finance… That’ll be interesting to live through.
I don’t expect an immediate dystopian apocalyptic “The Road” situation.
But, if China n the BRICS have the gold it might be life changing for everyone else?
There might be more than one way to stop trade.

:grin:
ralph

The Road. Pulitzer worthy abject human misery.

Cormac is a fellow Texan. He also wrote Pulitzer worthy abject human misery "The Border Trilogy: All The Pretty Horses, The Crossing, Cities of the Plain.
Set along the Texas Mexico border.

And the eponymous “No Country for Old Men”.

Rather than end on a downer:

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@rainphakir

A gorgeous exposition, and i adored your linked Life is a Highway, long time no listen/see, and your post came at a good time for me to see it and then think and reflect.

I am sorry, but I think you have no comprehension about how technologically and culturally advanced is Ukraine.

I have been obsessed with Ukraine for decades because the strongest and most successful gay rights counterattack agains Russian/Communist idiocy in the dying Soviet Union occurred there. I backed them with money and love, and have long had tight friends, starting with my giving money and emotional support to gay rights activists all the way back in the 1980’s.

What i learned from them then and know now profoundly (never shows up in the idiot current form of “the News”) is that Ukraine is an Advanced Tech friendly nation, culturally very different from Russia, and that this has been the case for a long long time. They WILL NOT SURRENDER.

Regarding advanced tech chops begin with
Antonov - Wikipedia

Ukraine will survive no matter what. They will not give up because they see this war as one of fundamental morality and survival, and I think they are correct. If you have doubts see these links (just for starters and undisputed) and then think about how you would react in their shoes?:

The crux questions are

  1. what is the war costing Ukraine, Russia, the EU, world economics and comity, all now bleeding
  2. when will it end on what terms
  3. what will be learned
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I agree completely that Ukraine is advanced. And that’s why Ukraine has successfully resisted.

I think too that it’s a laboratory for testing next gen technologies techniques n tactics.
Us’uns n them-uns are watching and learning. And tweaking our tech.

We (everybody, all sides) will not go into the next conflict completely unprepared.

MSM does not report widely on Ukraine success. MSM bias seems to me to be that Russia is “winning”.
Ukraine centric news YT n X present a rosy bias for Ukraine.
The truth is likely in between those biases.

IF Russian train n truck shipping, imports and exports are really being disrupted. That bodes well for Ukraine.

IF Russian oil infrastructure (pipelines, refineries, ships) is really significantly damaged, that bodes well for Ukraine.

IF a peace deal can be delayed until Russia succumbs to its failing (war) economy and is forced to “quit”…
Ukraine will win.

There’s a lot of UN members who are hating on Ukraine cause their cheap Russian oil supplies have been “sanctioned”.

I too have $ supported Ukraine.

Slava Ukraine.
:ukraine:
ralph

Can someone who is facil with polymarket tell us what the gamblers are predicting wrt Ukraine vs Russia?

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We are going to be deep in a great depression. Won’t make a lick of difference. We won’t fight for more than a week. If we do not win in a week it is over.

Military intelligence is dead during this four year period.

Economic intelligence is dead as well.

If we win in a week by some reason known only to god, then the Chinese will cut off rare earths.

Meanwhile Wall St is saying la di da.

I was raised to think we are all holding up a system for the betterment of the country. At this point I won’t care. No one will care when the rich turn up bankrupt.

China can be corrupt to the core, but we can not. It breaks all good about our nation and our world the amount of corruptions we have right now.

The only reason we would win a war with China in a week is that China is so corrupt they might not know how to put the pieces together for an entire week.

BTW someone told me China had a power struggle a couple of years ago. Xi is only a figurehead for the military. For Xi to make this military declaration is only to support his overlords’ budget wishes.

We do it differently. Each admin declares we are not ready, more money please.

A press release here and there declaring China is about to go to war with us? Which military contractor put it out?

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I think those of us in the west operate under an assumption that China will use external force to take Taiwan. I think it more likely that they use internal influence to accomplish their goals with very few missiles or shots fired. China plays a long game and I think they have seen that Russia’s success in Georgia is a much easier pill for the world to swallow than Russia’s success in Ukraine.

For those that don’t know, Russia invade Georgia years ago and claimed land - but has since been using internal political influence to accomplish their aims - all while slowly claiming more land. This silent invasion has been light years more effective that the invasion of Ukraine. In both cases, the amount of land seized is about 20%.

If Taiwan’s elected leaders become more favorable to China, who are we to tell them no? All it would take is the opposition party, the KMT, to win power.

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@Hawkwin it would truly be ironical if the KMT, arch-enemies of the Communists, become favorable to China’s takeover of Taiwan.

Wendy

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Let’s toss something else into the mix:

https://www.unz.com/bhua/what-happens-if-japan-joi…

Sanae Takaichi, the newly minted prime minister of Japan, addressed to the Japanese parliament in November that a conflict in Taiwan constituted a “survival-threatening situation” for Japan, implying Japan will directly and proactively involve itself in a fight with China.

The remark came shortly after the big meeting between President Xi and Trump in South Korea at the end of October to reset trade ties. The question of Taiwan was explicitly shelved by both during the meeting.

What Takaichi is asserting is that in a scenario where the secessionist government in Taiwan declares de jure independence and Beijing prepares for a military action, Japan could preemptively launch an attack on China without China first attacking Japanese forces or territories.

The phrase “survival threatening situation” is not a casual slip of tongue. It has a specific and deadly meaning in Japanese official lingo.

Imperial Japan invoked the same exact phrase to justify its aggressions prior to the 1931 invasion of Manchuria in Northeast China, and again prior to the 1941 attack on Pearl Harbor.

https://www.japantimes.co.jp/news/2025/12/03/japan…

Takaichi’s remarks came amid a long-running debate over Japan’s role in a potential emergency over Taiwan.

A decade ago, then-Prime Minister Shinzo Abe cited two specific scenarios as potential “survival-threatening situations”: a crisis in the Hormuz Strait — a crucial lane for energy import-dependent Japan — and an emergency on the Korean Peninsula.

Since then, though, government officials have shown greater caution in describing such situations.

Before Takaichi, no sitting prime minister to date had ever referred to a concrete scenario where an attack on Taiwan could constitute a “survival-threatening situation,” potentially allowing the deployment of the SDF, effectively giving the Japanese leader a degree of leeway when push comes to shove.

Over the last few weeks, Takaichi has admitted her remarks were off script and that she had no intention to cite a concrete scenario, reiterating that her government’s position is in line with those of her predecessors.

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Arch-enemies? Nah, just competitors for power. I have no doubt that they can be bought off. Most members of the party can remember what it felt like to have complete control and authoritarianism doesn’t really care about silly things like communism vs socialism vs. capitalism.

https://www.taipeitimes.com/News/editorials/archives/2025/12/05/2003848335#:~:text=As%20a%20member%20of%20KMT’s,parade%20in%20Beijing%20on%20Sept

As a member of KMT’s Central Standing Committee, the party’s top decisionmaking body, Ho’s accusation exposed a core contradiction of the KMT’s cross-strait policy. The KMT has long upheld the so called “one China,” with each side having its own interpretation of what “China” means stance, claiming that the ROC and the PRC coexist under a “one China” banner.

…

The KMT’s forced “one China” ambiguity is a deceptive political tactic to serve the party’s interests. On the one hand it caters to China’s whims to gain benefits in cross-strait interactions, while on the other it harms the credibility of those who uphold the independent sovereignty of Taiwan with its inconsistent “one China” claims, which includes the anachronistic — but self-flattering — territorial claim to both sides of the Strait.

*Our current romance with authoritarianism easily illustrates how we will tolerate increased socialism (government ownership of commerce, the new farm subsides) if it furthers our control.

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China can take Taiwan.
But what about a naval blockade of China?
China imports much of its food & oil.
https://www.visualcapitalist.com/chinas-crude-oil-imports-by-country/

Sankey-style graphic showing China's crude oil imports by country in 2024.
Sankey-style graphic showing China's crude oil imports by country in 2024.1200×1565 413 KB

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Why now?
I would say demographic reason. It is now or never.
https://www.visualcapitalist.com/charted-india-vs-china-working-age-populations-2024-2050/

India’s workforce grows as China’s shrinks. See how their working-age populations diverge from 2024–2050 using UN demographic projections.
India’s workforce grows as China’s shrinks. See how their working-age populations diverge from 2024–2050 using UN demographic projections.1200×1562 110 KB

NYTimes just released a video today.

That’s why it is imperative we change.
The US must reform not just its military, but also the political process for funding itand the industrial base that supports it.
For decades, our military has been built around the idea that more sophistication is better.
But today our reliance upon expensive and exquisite systems has become a vulnerability.
In war games,large ship like the USS Gerald R.Ford are often destroyed Still the Navy plans to build at nine additional Ford class carriers in the coming decades.
WOW the NYTime finally wakes up to the problem with the US procurement system.

America must embrace new and more nimble means of warfare.
This means simultaneously winning the war to build more autonomous weapons and leading world in controlling them.
Defense spending is routinely steered toward the five major defense contractors, who have become experts in navigating thousands of pages of regulations, but they are both slow and costly.
To jump start new technologies, the Pentagon must relax its byzantine rules for buying weapons and make bets on young companies that show promise to get results.
The 5 major defense contractors will either buy them up or these capitalistic Share Holder value corporate firms will screw the US government & taxpayer just just like the 5 majors do currently.
Congress needs to stop getting in the way.
Err, NYTimes don’t you realize they are bought by the corporate donations they receive?

We also have a work-force problem. In the next decade, the US will need to add 140,000
shipbuilders to its work force , and that just to meet the demand for submarine construction. We should intensify recruiting and training programs for manufacturing trades,
Err the US best and brightest set up the US education system to steer kids to university education and killed the trade school education in high schools. And set up the process of globalization and off-shoring manufacturing to foreign locales.

In long wars, the countries that can manufacture the most win.
Yeah we have learned this with our Ukraine adventure. Ramping up production of existing weapon munition takes years. US current artillery munition, javelin & missile production rate are inadequate. And by 2027 they will still be inadequate. And so we are going to add drone production on top of that. And how will that be paid for-debt or increase taxation. Oh silly me; of course national debt.
So if the 2027 Taiwan invasion comes to pass. We will fight, assuming we do engage, with what we have.

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