Good afternoon my fellow Slope-a-Dopes. I’m sure you’re asking yourselves what the hell is he doing back here after having made such a fuss about his taking a leave of absence due to serious health concerns. Well, I’m currently laying in bed wired for sound with about 40 electrodes taped to my shaved chest, which are recording my every heart beat for further analysis, in order to determine the best course of action for this precarious cardiac Sacrcoidosis situation. And yes, I had agreed with my loved ones that I would not be involved in the markets nor be spending any time on da Slope while dealing with this beast of burden, however, once this Ukraine geopolitical / macro mayhem materialized, I quickly became utterly memorized by the Maiden manifestations and simply could not close down the macro sweat shop at such a crucial time. This moronic macro maven becme way too hot and bothered to stay quiet, and just had to sound off one last time. I will honor the promise I made to my GF and family, but it will have to wait until after Putin pisses all over POTUS. Enough about me, I have talked about all of this personal stuff way too much as it is, and I’m sure it’s beginning to nauseate you all.
So, what should we make of the current geopolitical storm clouds gathering? As I had anticipated, the fast moving situation developing on the ground in Ukraine is most certainly consequential and may even become a defining moment in world affairs. Many of you will likely consider my assessment way over the top, and it may very well be. However, unless things dramatically change before this header post goes up this afternoon, the macro sweat shop puts forth the following white paper with confidence………
First a little background, especially for those who have had better things to do with their time over the past two weeks then obsessing over yet another pissed-off people protest half way across the world. Although, I will say that in the days, months and even years ahead, this particular street manifestation may well turn out to be the one which launched the first salvo towards a much more tenuous world order for us all.
To get a comprehensive understanding of volatile human conflicts of this magnitude, it’s always a good idea to get a solid grasp as to precisely what set off the fireworks. In this case, the central square in Kiev, namely Maidan Nezalezhnosti, is ground zero, where the spark that lit the match was ignited.
In order to stay in the current moment, let’s not get thoroughly bogged down with a long drawn out expose covering the historical territorial integrity of Ukraine nor the multifaceted political intricacies of its governing officials. Although, an extensive in depth study of those important subjects would certainly add further insight into the developing situation, my specific intent in this abbreviated SOH format is to zoom in and view this principally from a current events lens. So, without getting stuck in the historical weeds, suffice it to say that during the past century through present day, Ukraine has either been wholly integrated as part of USSR, or, more recently (since the break up of the USSR) a newly independent nation state which still has very much remained under the Russian political boot and economic sphere of influence. So what has suddenly and violently changed this entrenched picture?
Enter the European Union. Ever since the break of the Soviet Union the Europeans have had their economic and political sights on the former eastern states of the extinguished empire. The Europeans made rapid and significant progress on that score, particularly in the early aftermath of the Soviet demise, as Russia required all hands on deck just to keep the mother ship from sinking into the Caspian Sea. Gorbachev followed by Yeltsin had their hands full desperately trying to right the sick ship of state. One by one, Eastern Germany, Poland, Czechoslovakia, the former Yugoslavia, Hungary, Bulgaria, Romania, Slovakia and Estonia were quickly turned westward as legitimate democracies were formed. It seemed the further west they were from the old soviet sphere of influence, the quicker they were absorbed. In fact, soon thereafter many of these newly formed independent states eagerly joined the European Union itself. Having promptly assimilated to their satisfaction many of the ex Soviet states to their immediate east, the Europeans were now prepared to set their sights even further eastward onto the next countries in line for European integration, and the important nation with the largest landmass in eastern Europe, was indeed Ukraine.
The first round of integration happened in rather short order as Russia had been simply missing in action and had zero say in the matter. Meanwhile back in the Kremlin ranch along came this cunning new cat named Vladimir. After a near decade of chaotic entropy and out right theft of formerly state owned assets from an inside cabal of shrewd oligarchs, an ex KGB colonel had methodically and sometimes nefariously worked his way through the ranks to the top job in Russia. His name was Putin and he promptly and very effectively went about rescuing, restoring and rejuvenating the sorry ship of state. Once he succeeded in resuscitated Russia internally, he quickly turned his attention to the former soviet republics directly on his eastern flank in order to bring them quietly back into the fold, in a sustained effort to reestablish an important part of Russia’s Eurasian economic sphere of influence. Putin always saw Ukraine as by far the most biggest prize and most important neighbor to influence in order to quickly strengthen Russia’s fading star. This is obviously crucial to what is going down today.
Without getting too bogged down with the fascinating story of Putin’s rise to power and how he single handily brought Russia back from the brink. The most crucial aspect to know on the way he operated is to understand the Putin system of governance. Basically the merger of the nation-state and large private business infrastructure, with absolute vertical top down control of the entire married mega complex and its functioning apparatus, by Russia’s controlling leadership which is ultimately him. This approach can be best exemplified by the behemoth Russian corporation Gazprom. In Putin’s mind, these huge corporate conglomerates are not only to be used to enrich their owners and shareholders, but possibly even more importantly to advance the state’s interests and global standing as well. Another crucial insight into the man, is he fundamentally believes from the bottom of his soul that the dissolution and chaotic break up of the Soviet Union was an epic and catastrophic mistake for the entire global geopolitical balance of the known world, which should have never ever taken place.
To use POTUS’s often used phrase, make no mistake. Putin emphatically desires and will do everything in his power to return Russia to its former glory, as well as its role as a super power which can and should influence future world order. In a nut shell, he is on a mission from God and has no intention of being thwarted in reaching what he considers to be the divine birthright of his beloved mother Russia. The excellent revealing documentary embedded below bares this out in spades. I highly suggest you watch it in its entirety if you want true insights into who the West is dealing with here.
Now that we have offered up the essential background leading up to the precarious present day predicament we find ourselves in, which can only be described as a good old fashion East vs. West cold war standoff, let’s review the current events with broad brush strokes. We all now know that Mr. Realpolitik Putin from the East has been using all the levers of economic and political power at his disposal to drive Ukraine further into the Russian sphere of influence. Furthermore, we also know that the West, through their own commercial interests and directives from Brussels along side USA well funded NGO’s to the tune of $ 5 billion, has been working equally hard to bring Ukraine into the European Union club of nations. This tug of war for Ukraine initiated outside its sovereign territory by substantial forces, may well explain the volatile destabilization we have witnessed inside its borders.
The most difficult part of this conflict to determine is where Ukraine itself really belongs, and how or if she can even get there. To best understand this question it is imperative to review yesterday’s transcript of the U.N. emergency session, in order to clearly and fully identify each side’s distinct and nearly polar opposite view on the complex matter. I will not give one take more weight than the other, as I just don’t know and not sure I can know. Judge for yourselves:
The United Nations Security Council has just finished meeting on Russia’s invasion of Ukraine. This summary of the proceedings is from The Interpreter. First, Samantha Power set out the U.S. position:
Now US Ambassador Samantha Power is speaking. Her demands are that Russia pull back from Ukraine, and international monitors are deployed to Crimea. Power wants to create an international mediation unit to end the crisis in Crimea.
The bottom line of Power, however, is that Russia has worked unilaterally, and this does not respect the sovereignty of Ukraine.
The Russian ambassador responded as follows:
* The EU, the UK, and the US incited the protests and fueled the revolt.
* Yanukovych signed a deal with the opposition politicians that would keep him in power until, at least, early elections in December.
* The “armed militants” broke this agreement by taking over government buildings, therefore:
* Yanukovych is the legitimate leader of Ukraine and the people in charge are radicals,
* “Kiev,” the catchphrase for these radicals ho are now running the country, is sending provocateurs to takeover government buildings in Crimea (interjection — there is literally no evidence that this is true). Therefore:
* The government of Crimea has asked Russia to send troops to restore order, and Russia has done so unilaterally because the West helped conspire to remove a democratically-elected government and put these radicals in charge.
* The bottom line: the international community needs to help remove the radicals and enforce the February 21st agreement (which, by the way, would require reinstating Yanukovych back as President).
* If this is not done, Russian troops will defend Crimea, and possibly attack Kiev to make it happen.
Barack Obama also spent an hour and a half on the telephone with Vladimir Putin, expressing his grave concern over the Russian invasion. The following is a readout from the White-house of The U.S. President’s call to President Putin:
President Obama spoke for 90 minutes this afternoon with President Putin of Russia about the situation in Ukraine. President Obama expressed his deep concern over Russia’s clear violation of Ukrainian sovereignty and territorial integrity, which is a breach of international law, including Russia’s obligations under the UN Charter, and of its 1997 military basing agreement with Ukraine, and which is inconsistent with the 1994 Budapest Memorandum and the Helsinki Final Act. The United States condemns Russia’s military intervention into Ukrainian territory.
The United States calls on Russia to de-escalate tensions by withdrawing its forces back to bases in Crimea and to refrain from any interference elsewhere in Ukraine. We have consistently said that we recognize Russia’s deep historic and cultural ties to Ukraine and the need to protect the rights of ethnic Russian and minority populations within Ukraine. The Ukrainian government has made clear its commitment to protect the rights of all Ukrainians and to abide by Ukraine’s international commitments, and we will continue to urge them to do so.
President Obama told President Putin that, if Russia has concerns about the treatment of ethnic Russian and minority populations in Ukraine, the appropriate way to address them is peacefully through direct engagement with the government of Ukraine and through the dispatch of international observers under the auspices of the United Nations Security Council or the Organization for Security and Cooperation in Europe (OSCE). As a member of both organizations, Russia would be able to participate. President Obama urged an immediate effort to initiate a dialogue between Russia and the Ukrainian government, with international facilitation, as appropriate. The United States is prepared to participate.
President Obama made clear that Russia’s continued violation of Ukraine’s sovereignty and territorial integrity would negatively impact Russia’s standing in the international community. In the coming hours and days, the United States will urgently consult with allies and partners in the UN Security Council, the North Atlantic Council, the Organization for Security and Cooperation in Europe, and with the signatories of the Budapest Memorandum. The United States will suspend upcoming participation in preparatory meetings for the G-8. Going forward, Russia’s continued violation of international law will lead to greater political and economic isolation.
The people of Ukraine have the right to determine their own future. President Obama has directed his Administration to continue working urgently with international partners to provide support for the Ukrainian government, including urgent technical and financial assistance. Going forward, we will continue consulting closely with allies and partners, the Ukrainian government and the International Monetary Fund, to provide the new government with significant assistance to secure financial stability, to support needed reforms, to allow Ukraine to conduct successful elections, and to support Ukraine as it pursues a democratic future.
In response to the concern shown by Barack Obama regarding possible plans of the use of Russian armed forces on the territory of Ukraine, Vladimir Putin drew attention to the provocative criminal acts by ultra-nationalist elements, which are in fact encouraged by the current authorities in Kiev.
The Russian President stressed the existence of real threats to the lives and health of Russian citizens and compatriots on Ukrainian territory. Vladimir Putin stressed that in the case of further spread of violence in the eastern regions of Ukraine and Crimea, Russia reserves the right to protect its interests and the Russian-speaking population.
Obviously both sides don’t see eye to eye on the matter at hand. FWIW, here is BDI’s take on what is really at stake here for both sides on a realpolitik hard core geopolitics fundamental level. Keeping in mind that Russia’s economy is very much integrated and supported by Ukraine’s economic output, especially in the agricultural department. If you take Ukraine out of the Russia economic sphere of influence you significantly weaken mother Russia. Why else do you think Putin made the power play to pull Ukraine away from the EU by offering up an even larger financial aid package than the EU had contemplated, which is precisely what escalated the initial protest in the streets
As for the West, continued Petrodollar world reserve currency and energy resource dominance is seen to be absolutely critical by the PTB that seem to run all things impprtant. Europe desperately needs cheaper energy to revive their flailing economies. Thus the West by destabilizing Ukraine has been attempting to weaken Russia’s stalled economy even further, so that they have fewer means of economic sustainability and are thus compelled to unload more of their oil / gas to the West which would put downward pressure on global market prices The last thing they want is a strong Russia which is economically self sustaining enough to curtail oil exports. Additionally, they want direct access to Ukraine’s gas pipelines, so that they can perhaps more advantageously direct other flows of energy from sources outside Russia through some of the existing pipeline networks. The West desperately needs cheaper oil. Putin flexing his energy muscle is a problem which must be addressed, and that is what is at play here…….
In conclusion, this stand off is not only about the territorial integrity and sovereignty of Ukraine, but is much more significant two each side. At the end of the day, it is about the West’s desired encroachment on the other major non western Nations in order to further extend its reach and expand its hegemony in both the critical areas of global monetary finance and energy resources. Putin is no dummy, and he most definitely realizes that a New World Order is trying to impose itself. Thus, either he fights here and now with both hands, or he faces fighting later with one hand tied behind his back after his Ukraine arm has been effectively amputated by the West. His resolve should be clear here, as it’s on like donkey Kong for him.
The only question remaining is will the West also view this as the defining moment in time to attempt to cripple Putin. And, will the wild card be the hard line nationalists and fanatical right wing party in Kiev that sets off the shit storm. In my view, the Crimea has already been annexed and is firmly in Putin grip now. His next move will be to grab the richer, industrial, and Russian speaking eastern part of Ukraine. All that remains to be seen is whether the West is ready to engage him in Kiev. My guess is Putin gets most of the prize he’s after, and the West saves face by placing some puppet master in Kiev that they claim is democratically supported by the people but still completely defers to Putin in the end. Or, God help us all, we move to the big mushroom fireworks show in the sky. A WW III fiasco, with Russia, China and all the other nations of the globe that are fed up with the West’s unlimited check book charade, on Putin’s side.
Needless to say, I’m looking for Gold to be up over $50 and the Futes to open lock limited down this evening.
All macro, no momo, no techno, and especially no trendo!
Blow me Barack!!!