Sanctions Fever

Life goin' nowhere
Somebody help me
Somebody help me, yeah
--Bee Gees

Vladimir Putin attributes Europe's energy crisis and related probs to 'sanctions fever.' It is hard to disagree.

Watching a related special last nite on CNBC and host Brian Sullivan asked a guess whether he thought the West's sanctions on Russia were 'working.'

Perhaps he should have asked the millions around the world who face starvation and hypothermia due to these sanctions.

Sadly, this was predictable from the get go...

Euro Energy Bailout

Here I am in silence
It's a game I have to play
You and I in silence
With nothing else to say
--Information Society

On the back of yesterday's post, headlines this morning find euro bureaucrats committing to massive bailouts of consumers and producers as they face virtual margin calls as energy prices spiral higher.

These bailouts are forms of stimulus--subsidies that work against efforts to reign in higher prices.

Still wrapping my head around how this spills over to the US. The obvious consequence is an even strong USD vs the euro.

Frozen Policy

Hear the Salvation Army band
Down by the riverside
Bound to be a better ride
Than what you've got planned
--The Bangles

Europe seems headed toward a self-imposed depression. Sanctions against Russia, combined with previous 'green' policies, have exploded in the face of euro bureaucrats, leaving the EU facing a winter with insufficient heat, electricity, and gasoline.

Some gas and electric bills are already printing 5-10x year ago levels.

Policymakers appear to be doubling down by developing plans for rationing, price capping, and money printing.

Absent a quick policy about-face, it is difficult to see how the EU survives the next few months.

Blatant Lying

"Richard, it profits a man to give is soul for the whole world...but for Wales?"
--Sir Thomas More (A Man for All Seasons)

An administration bureaucrat looks straight into the camera and claims that it is "factually not true" that gasoline prices were rising prior to the Ukraine conflict.

These people will use any means when attempting to manage narratives. Blatant lying included.

Undercover Hero?

My beacon's been moved
Under moon and star
Where am I to go
Now that I've gone too far?
--Golden Earring

I enjoy reading Tom Luongo's work. Thought provoking--even when his general premise is wrongheaded. 

In this recent piece, for example, Luongo gives the Fed entirely too much credit, arguing that the central bank is essentially the 'good guy'--battling inflation wrought by irresponsible fiscal policies that sent money to people in boxes during CV19. 

He fails to mention the Fed's long history of bailing out markets (and policymakers) when markets break, or of the central bank's $9 trillion of balance sheet assets purchased with money created at the click of a mouse. Because, as Friedman observed, inflation is always a creature of monetary policy, arguing that the Fed is somehow not the Dr Frankenstein that created our present monster seems a bit naive.

However, Luongo does make an interesting point toward the end of his article. He notes (correctly) that the Davos/World Economic Forum crowd would like to put an end to commercial banking, and put all monetary power in the hands of central banks--perhaps even in a one world central bank with digital currency-producing capacity.

He then suggests that, in the United States (and perhaps elsewhere), the Fed represents the interests of those commercial banks. As such, the Fed is motivated to break the EU-centric Davos/WEF threat to US commercial banks by raising rates, pounding the euro, and perhaps even driving the EU toward dissolution.

There's lots of holes in that argument--including the Fed's 'institutional obligations' both domestic and abroad--but interesting to ponder the 'undercover hero' thesis nonetheless.

Zero Coherence

Maybe someday
Saved by zero
I'll be more together
--The Fixx

Earlier today the European Central Bank (ECB) raised its deposit rate 50 basis point to...zero. The ECB's deposit rate had been in negative territory since 2014, meaning that depositors essentially paid to keep their money in the central bank's vault.

This is also the first interest rate increase by the ECB since 2011.

Needless to say, monetary policy in Europe has been off the rails for quite some time.

To demonstrate that it hasn't suddenly been transformed into an institution with coherence, the ECB unleashed a blizzard of acronym-heavy programs, such as Transmissions Protection Mechanisms (TPI), designed to selectively buy bonds of struggling EU countries (e.g., Italy) to keep sovereign debt from imploding.

Thus, we have a central bank raising interest rates while continuing easy money policy using a quantitative easing (QE) transmission mechanism.

The ECB truly makes the Fed look smart.

Rationing and Rationalizing

First, I thought we were fighting for God. Then, I realized we were fighting for wealth and land. I was ashamed.
--Tiberias (Kingdom of Heaven)

Germany has begun rationing energy-related resources to compensate for their self-imposed sanctions with Russia. Am sure German citizens are being told to suck it up. 

Unfortunately we know that if goods do not cross borders, armies will.

How long will it be before people of G-7 countries, absent power and heat, look longingly at Russian resources and rationalize war to seize oil and gas for the 'greater good?'

War Fatigue

Armchair warriors often fail
And we've been poisoned by these fairy tales
--Don Henley

Governments wanting to engage in war with foreign entities must win consent of the citizenry to do so. If they view the war as illegitimate, the people have capacity to shut the war down via several avenues, including voting officials out of office, withholding funds for military resources, or even overthrowing the regime prosecuting illegitimate war.

Consequently, governments must convince people that their war is just. They must do so at the outset of the conflict, and then continue to do so. Because war requires ongoing sacrifice in order to fund the war effort, it is possible that enthusiasm for war will wane as people increasingly regret what they must forfeit as conflict drags on.

It appears that support for US involvement in the Ukraine conflict is already waning. Surveys suggest that the American public is increasingly wary of US efforts to harm Russia in manners that hurt the domestic economy.

That, of course, is precisely what sanctions do. Any effort to restrict production and trade with entities abroad damages standard of living at home.

As more Americans realize that sanctions are not unilateral, this administration loses its public grant of legitimacy for engaging the country in war.

Art of Hybrid War

"War is a continuation of politics by other means--von Clausewitz."
--Captain Frank Ramsey (Crimson Tide)

Interesting post that fades mainstream media claims that things are going poorly for Russia in Ukraine. The central claim is that Russia is slowly and deliberately tightening the vise around territory that is strategically meaningful. 

Moreover, by keeping the pace deliberate, Russia puts more pressure on Western economic systems that have essentially sanctioned themselves into positions of peril. That peril includes long-term damage to a dollar-denominated financial system.

Russia may be honing the art of hybrid war.

New Detente

Anatoli Grushkov: I will miss so very much talking to William.
Jack Ryan: Me too.
Anatoli Grushkov: Perhaps, from time to time, you and I could talk.
Jack Ryan: Yeah, I'd like that.
--The Sum of All Fears

Statesman Henry Kissinger urges the West to cease trying to inflict crushing military and economic defeat of Russia, and suggests that negotiations should begin to head off a more serious, irreversible conflict.

The 98 yr old architect of detente diplomacy posited that these negotiations should shoot for a return to the pre-war status quo. This would include Ukraine accepting a peace deal that ceded formal control of Crimea and also tolerated informal Russian influence in the eastern Donetsk region.

Predictably, Kissinger's recommendations set off the blue check crowd that generally seems dead set on global thermonuclear war. This mindset has been reinforced by a US administration that has failed to talks of any kind toward a negotiated peace.

We can be pretty sure that, if Henry Kissinger were still secretary of state, he would be in the middle of peace talks, seeking to broker a New Detente.

Status Quo Changing

"The status quo has changed, son."
--Patrick Gates (National Treasure)

Interesting piece by Louis Gave on the possible impact of the Ukraine conflict and associated sanctions on the USD's reserve currency status. He suggests that, in an age of fiat currencies, military superiority strengthens a nation's currency and has gone a long way toward solidifying the dollar's reserve currency status.

However, cheap military technologies such as the drones that have been deployed en force in Ukraine are changing the game of warfare--to the extent that they might substantially reduce the impact of conventional weaponry that the US holds a lock on. Should this come to pass, then Big Defense loses value alongside the US dollar's status.

In addition to the impact of the war on the ground, Gave suggests that the weaponization of finance as reflected by the blitzkrieg of war-related sanctions is tutoring the world about the risks of depending on the USD. Developed country bonds have been getting pounded while developing country bonds have been strong--quite the turn from the lessons of the Asian Contagion in the late 1990s. Lesson: Why hold US/EU bonds in this environment?

Moreover, sanctions have demonstrated that the US and its allies can run roughshod over property rights at their discretion. If the wealth of Russian oligarchs can be confiscated so abruptly, then why not the assets of any entity deemed to be an adversary of the US? Lesson: Why depend so highly on a financial system controlled by the US?

The status quo may indeed be changing.

Diplomatic Immunity

Arjen Rudd: Diplomatic immunity..!
Roger Murtaugh: Has just been revoked!
--Lethal Weapon 2

EU leaders are increasingly calling for diplomatic solutions to end the Ukraine conflict. The leaders of France, Germany, and Italy have all spoken directly with Putin.

Meanwhile the US continues to be MIA on the diplomatic front. Biden has not spoken with Putin since the war began. The secretary of state has not spoken with his Russian counterpart either.

Instead, the US has been subsidizing Ukraine's military.

The message behind this behavior is obvious. This administration is declaring diplomatic immunity. It favors war over peace.

Embargo Better

"You know how I'm always trying to save the planet? Here's my chance."
--David Levinson (Independence Day)

Intuitive thesis about the real reason behind the EU/NATO drive to embargo Russian oil. Build Back Better zealots will stop at nothing to reduce fossil fuel production and (especially) consumption. Regulation has morphed into more extreme measures such as pandemic lockdowns and even war--perhaps of the nuclear variety.

The Russian oil embargo fits right in. Heck, if these folks could enact a law that banned all fossil fuel tomorrow, they would surely do it.

It doesn't matter how many people are destroyed in the process. In the eyes of the BBB crowd, it's all in the interest of the greater good.

Disinformation Governance Board

Funny how I blind myself
I never knew
If I was sometimes played upon 
Afraid to lose
--Talk Talk

In what could hardly be a more overt validation of George Orwell's 1984 message, the federal government has created a 'Disinformation Governance Board" under the Department of Homeland Security. The objective is to 'police' what is deemed (by the overseers, of course) to be 'misinformation' or 'disinformation.'

The censorship drumbeat among progressives has reached a fevered pitch, pushed over the top by Elon Musk's buyout of Twitter (TWTR) announced last week.

How the establishment of such an agency is not a direct violation of the First Amendment is beyond me.

 At the same time, we should also note that this is not the first time the feds have sought to thwart free speech through formal structure. John Adams' Alien and Sedition Acts, Lincoln's muzzling of unfriendly press during the Civil War, Wilson's Committee on Public Information and Sedition Act of 1918, information shapers in FDR's 'brain trust,' et al.

To borrow Locke and Jefferson's term, this 'train of abuses' has been running in fits and starts since the ink was newly dry on the Bill of Rights. And in the most noteworthy authoritarian regimes in history...

I hope this is challenged in the courts. Meanwhile it will be interesting to see how much legitimacy this agency acquires from the people. 

Stated differently, widespread rejection of the Disinformation Governance Board by the citizenry could bury the censors and vault awareness of liberty to levels not seen in some time.

Inconvenient Covid Truth

Never had a doubt
In the beginning
Never a doubt
--Naked Eyes

Article discusses the inconvenience of Sweden's minimalist policies related to CV19. Inconvenient for statists, that is.

Media coverage has largely moved on from its previous 24-7 shock-and-awe corona campaign. As it has done so, the mainstream media has failed to admit that they were wrong on Sweden. 

Whereas pundits predicted that Sweden's laissez-faire approach constituted a death sentence for its citizens, the reality shows that Sweden's CV19 results were not noticeably different from other countries. More than 50 countries reported more deaths per capita.

It is increasingly clear from Sweden's results that political measures were of limited, or perhaps even negative, value in combating the virus.

Given the media's past record on self-accountability, we can be confident that it will not own up to its mistake in condemning Sweden's lack of CV19 intervention.

War Over Peace

Guy de Lusignan: Give me a war.
Reynald de Chatillon: That is what I do.
--Kingdom of Heaven

Evidence continues to suggest that the West condones war in Ukraine. This weekend an EU diplomat stated that, "This war will be one on the battlefield."

To which Russian foreign minister Sergey Lavrov responded that this hardly sounded like a diplomatic position.

He's right.

Add to that further news about NATO beefing arms up and down its eastern front and continued efforts to ship military resources to Ukraine--along with no leadership (especially US) to convene diplomatic talks and it is difficult not to conclude that the West supports war over peace in Ukraine.

Manufactured Chaos

"I want this country to know that we stand on the edge of oblivion! I want every man, woman, and child to understand how close we are to chaos! I want everyone to remember why they need us!
--Sutler (V for Vendetta)

Article questions whether Russia is truly the target of recent sanctions. The thought has crossed my mind as well.

If the West truly wanted to hurt Russia, then it would increase production of oil and flood the world with supply. Not only would this crush prices and cripple the Russian economy, but it would provide relief for consumers struggling with inflationary concerns.

But Western countries have not done so. In fact, they have acted in manners that squeeze oil prices higher.

Sanctions that restrict Russian food exports also make little sense. Because Russia is a net food exporter, restrictions on trade mean Russia has more food and its trading partners have less.

Consequently, the sweeping sanctions ostensibly meant to cripple the Russian economy are driving up prices in the West and increasing risk of shortages in economies already facing inflationary pressures not seen in generations.

On the other hand, higher prices and economic disruptions play into the hands of proponents of the Great Reset. The thinking is that higher oil prices will motivate more investment in green energy. And that economic turbulence will increase dependence on 'enlightened' one world government--while trimming some population deemed to be 'excess' in the process.

Because the Great Resetters believe that they assimilate power in times of crisis, they are endeavoring to create them. Elections, Covid, Ukraine. 

Manufactured chaos.

Ruble Round Trip

Call it morning driving through the sound of
In and out the valley
--Yes

After getting smoked on Western sanctions, the ruble has clawed all the way back to pre-invasion levels.

Lotta manipulation (both ways), so it's difficult to assess precisely what has driven recovery. That said, hard not to include these factors:

Russia's strong commodity position

Ineffectiveness of sanctions over time

Russian proclivity toward gold

One thing seems certain. Those engaging in financial system warfare vs Russia early on were not counting on a ruble round trip.

position in gold

Nazis and Russia Redux

"Everybody thinks they're gonna get a chance to punch some Nazi in the face at Normandy, but those days are over. They're long gone."
--Lt Chris Burnett (Behind Enemy Lines)

Interesting discussion of the brand of Nazism endemic to Ukraine. WWI divided many eastern European countries into small, non-viable entities. Western Ukraine became an imperial intersection for intolerant ideologies. 

The environment fostered the development of strong Ukraine nationalist groups that were further shaped by Nazi Germany during WWII. The Nazis were able to manipulate these groups toward Russian hate, thus creating a destabilizing force in the Ukrainian USSR during the war.

This anti-Russian mindset has persisted, making these groups attractive to Western interventionists interested in influencing politics in the region. The West has been manipulating Ukraine nationalist groups for some time to instigate regime change as well as violence against Russian-speaking citizens in eastern Ukraine. Subversive activity has picked up pace over the past several years, highlighted by the Maidan protests and government overthrow of 2014, and the civil war in eastern Ukraine since then.

What is important to note is that it has been the West, and the United States in particular, that has nurtured neo-Nazi factions of Ukraine.

The author notes that Western support of Nazi groups is not new. Alongside England, the United States government supported Hitler in the 1930s for balance of power reasons. Anglo America lent Hitler billions to build up Germany as a bulwark against Russia. 

History has since been rewritten to temper the enthusiasm that the Anglos held for Nazi Germany as a resource on the geopolitical chessboard.

So here we go again. The West is once more funding Nazi-groups, this time in Ukraine, for similar purposes of combating Russia. 

History is rhyming.

Escalators in Chief

Stephen Falken: General, are you prepared to destroy the enemy?
General Beringer: You betcha.
Stephen Falken: Do you think they know that?
General Beringer: I believe we've made that clear enough.
Stephen Falken: Then don't!
--WarGames

As Glenn Greenwald writes, it remains clear that the US government is avoiding neutrality and diplomacy in favor of hostile escalation of the Ukraine conflict. 

I was personally dumbstruck a couple days ago when reading that the secretary of state has not been in direct contact with his Russian counterparts since the middle of February. It is impossible to justify such inaction by any state that desires peace.

Then, on a visit to Poland this weekend, the president poured more gasoline on the fire. While visiting US troops in the region, he told them that they would soon see firsthand how Ukraine was pushing back against Russian troops. Subsequently, in a Warsaw appearance, the president called Putin a 'butcher' and during formal televised remarks said, "For God's sake, this man cannot remain in power."

The White House has since been in damage control mode trying to put out the conflagration resulting from the sequence of the president's inflaming statements.

As Greenwald quotes a former Greek foreign minister:

"A U.S. President who, during an atrocious war, does not mean what he says on matters of War and Peace, and must be corrected by his hyperventilating staff, is a clear and present danger to all."

Yet, the actions of these people suggest that this is precisely what they want. Hostile words and actions that continue to escalate the situation. No leadership through neutrality and diplomacy.

The president and his minions are bumbling through roles of Escalators in Chief.