Russia
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Ukraine set to declare martial law as tensions with Russia heat up. (26 Nov 2018) Ukraine has been in an undeclared state of war with Russia ever since the 2014 Russian invasion of Crimea. As tense as the situation has been over the past four years, the heat just got turned up. Over the weekend, Russia opened fire on and subsequently detained three Ukrainian vessels—two armored artillery ships and one tugboat—as the small convoy passed through the Kerch Strait. Since the invasion, Russia has claimed the waters around the strait; a claim which Kiev (rightfully so) has never recognized. With the sailors in custody, Ukrainian President Petro Poroshenko—a US ally—has asked parliament to declare martial law in the country, giving the military extended power for at least sixty days. Odds are, Putin will bow to pressure and release the sailors soon, but the simmering pot between the Black Sea and the Sea of Azov is getting closer to the boiling point. The VanEck Vectors Russia ETF (RSX $20.10) is off around 2% on the day and down 5.26% YTD.
You wouldn't know it by listening to the press, but Putin's approval numbers are falling sharply. (16 Aug 2018) Can we at least agree that the mainstream media is myopic (and that is being very generous) in their treatment of certain politicians at home versus certain dictatorial leaders overseas? Take Vladimir Putin. We have read story after story of how popular the Russian leader is within his home country, but is that really true? Yes, for a people who could once brag about Soviet military might, the national pride goes up every time he makes a move like his illegal annexation of Crimea—and so do his poll numbers, but that pride does not put meat on the family table or rubles (which are cheapened almost weekly) in the pockets of workers. In a recent issue of the Penn Wealth Report, we reported on Russia's daunting economic issues and that country's massive over-reliance on oil revenues, along with a growing level of discomfort among his citizens. According to the Levada Analytical Center, Putin's trust rating in the country has dropped from 60% in January to just 48% in June. And the numbers are a lot worse for his lapdogs, like Foreign Minister Sergei Lavrov. Domestic economic troubles are forcing tough moves at home, like raising the retirement age to 65 for men and 60 for women. That may not seem draconian in the Western world, but to someone living in a communist nanny state, it is appalling. Despite Putin's troubles, it is inconceivable that he would be removed from power. However, the domestic turmoil does mean that he will become even more dangerous on the world stage as he tries to deflect any personal criticism and distract his hungry masses.
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Containing the Russian Menace
(15 Jul 2018) Hillary Clinton's red reset button shows just how naive the US has been with respect to Russian aggression; that is changing (See article in The Penn Wealth Report by clicking button to right) |
Russian ruble getting hammered as latest round of US sanctions take effect
(11 Apr 2018) Looking for a government bond to buy but unhappy with the current 10-year Treasury yield of 2.768%? You could always pick up the Russian 10-year, currently yielding 7.6%. Russian capital markets have been in free-fall since President Trump imposed the latest round of US sanctions against the country for its support of Syria's chemical-weapon-yielding regime and the recent poisoning in the UK, with this round hitting Putin's closest business allies and the global companies they run. These are real sanctions with real impact, and they are rattling the Russian economy. The ruble appears on track for its worst week since 1999, already down 12% against the dollar through Wednesday morning. Russia's central bank was just forced to cancel a ruble-denominated government bond auction due to "unfavorable conditions." Higher oil prices are the one component working in Russia's favor right now.
(11 Apr 2018) Looking for a government bond to buy but unhappy with the current 10-year Treasury yield of 2.768%? You could always pick up the Russian 10-year, currently yielding 7.6%. Russian capital markets have been in free-fall since President Trump imposed the latest round of US sanctions against the country for its support of Syria's chemical-weapon-yielding regime and the recent poisoning in the UK, with this round hitting Putin's closest business allies and the global companies they run. These are real sanctions with real impact, and they are rattling the Russian economy. The ruble appears on track for its worst week since 1999, already down 12% against the dollar through Wednesday morning. Russia's central bank was just forced to cancel a ruble-denominated government bond auction due to "unfavorable conditions." Higher oil prices are the one component working in Russia's favor right now.
UK expels diplomats, freezes assets after spy poisoning
(15 Mar 2018) Did anyone really ever doubt that Putin's fingerprints were all over the crime? After all, he seems to have a lifelong love affair with poison. Following the attack on a former Russian spy and his daughter in a small town in England, Prime Minister Theresa May has announced the expulsion of 23 Russian diplomats and is leveling sanctions on UK-based assets of close associates of Putin. President Donald Trump has echoed the condemnation, pushing US/Russia relations back to their lowest point since the Cold War. There will never be any real negotiating with the Russian dictator, who calls for national elections only as a ruse. He has grand visions of reconstituting the Soviet Union; though he will fail, he will continue to wreak havoc along his path. And no giant red RESET button can change that.
(15 Mar 2018) Did anyone really ever doubt that Putin's fingerprints were all over the crime? After all, he seems to have a lifelong love affair with poison. Following the attack on a former Russian spy and his daughter in a small town in England, Prime Minister Theresa May has announced the expulsion of 23 Russian diplomats and is leveling sanctions on UK-based assets of close associates of Putin. President Donald Trump has echoed the condemnation, pushing US/Russia relations back to their lowest point since the Cold War. There will never be any real negotiating with the Russian dictator, who calls for national elections only as a ruse. He has grand visions of reconstituting the Soviet Union; though he will fail, he will continue to wreak havoc along his path. And no giant red RESET button can change that.
Russia suspended from 2018 Winter Olympics
(05 Dec 2017) In an enormous blow to a country which prides itself on its athletes' performance on the world stage, the International Olympic Committee has suspended the Russian Olympic Committee for the country's support of performance-enhancing drug usage. While Russian athletes will not be banned from attending the upcoming Winter Olympics in South Korea, the athletes will not be competing for Russia per se, and the Russian national anthem will not be played for medalists. Furthermore, they must compete in uniforms bearing the Olympic flag, with no Russian markings. Revenge is a dish best served cold—this is for your boycott of the 1980 Olympics in LA. Hardy har har.
(05 Dec 2017) In an enormous blow to a country which prides itself on its athletes' performance on the world stage, the International Olympic Committee has suspended the Russian Olympic Committee for the country's support of performance-enhancing drug usage. While Russian athletes will not be banned from attending the upcoming Winter Olympics in South Korea, the athletes will not be competing for Russia per se, and the Russian national anthem will not be played for medalists. Furthermore, they must compete in uniforms bearing the Olympic flag, with no Russian markings. Revenge is a dish best served cold—this is for your boycott of the 1980 Olympics in LA. Hardy har har.
US to restrict Russian military flights over American territories
(26 Sep 2017) In the waning days of the Cold War, when the Soviet Union’s collapse was imminent, a number of treaties to promote peace between the two former enemies came about. One was the Treaty on Open Skies, which allowed military observation flights over each other’s territories to verify military assets and troop strength in certain zones. In response to Russia’s violation of the spirit of that treaty, the US has announced that it will restrict flights over certain areas—such as Alaska and Hawaii—to force Russia back into compliance. US officials specifically cite Russia’s restrictions of American flights over Kaliningrad, a Baltic Sea city where it is believed that country is building up a cache of advanced weaponry.
(26 Sep 2017) In the waning days of the Cold War, when the Soviet Union’s collapse was imminent, a number of treaties to promote peace between the two former enemies came about. One was the Treaty on Open Skies, which allowed military observation flights over each other’s territories to verify military assets and troop strength in certain zones. In response to Russia’s violation of the spirit of that treaty, the US has announced that it will restrict flights over certain areas—such as Alaska and Hawaii—to force Russia back into compliance. US officials specifically cite Russia’s restrictions of American flights over Kaliningrad, a Baltic Sea city where it is believed that country is building up a cache of advanced weaponry.
(14 Feb 2017) Trump's national security advisor resigns over Russia call. It wasn't the fact that Lt. General Michael Flynn had a conversation with Russian ambassador Sergey Kislyak before inauguration day; rather, it was the fact that he was not truthful with what was discussed in that conversation. Flynn originally said that he did not discuss the sanctions imposed by the US on Russia (or the potential lifting of those sanctions) for that country's invasion of eastern Ukraine, and Vice President Mike Pence took to defending him based on his comments. Flynn, confronted with transcripts of the call, admitted that this was not the case. Additionally, it appears that he had more than one conversation with the ambassador. He apologized to the vice president and, either of his own volition or under pressure, resigned his new post.
Putin’s Muddled Mind Keeps Him from Seeing Russia’s Actual Relationship with China
(02 Sep 15) China’s big World War II victory parade on Thursday will boast a “who’s who” of global thugs that would make a Bond villain envious. Venezuela’s Nicolas Maduro will attend for two reasons: to escape a hostile opposition in his own starving country, and to solidify ties with the titular head of the worldwide communist movement: Xi Jinping. Pakistani President Hussain and Vietnamese President Truong Tan Sang will be there. Leaders of Laos, Thailand, and Cambodia will be there. Surprisingly, the pot-bellied North Korean dictator Kim Jong Un will skip the event (he seems to be miffed at China right now), but South Korean President Park will attend (too bad). The star attraction on the guest list is undoubtedly the emperor-in-training of Eastern Europe, Vlad Putin.
As the Chinese celebrate the end of World War II with a show of military might, Putin may be looking a bit green with envy in the dignitary stands. He has made it clear that he wants a military and economic alliance with the Communist Chinese that rivals the US/NATO relationship and the NAFTA accord, respectively, but he fails to comprehend his small role in ChinaLand.
While China still wants Russian gas, the latter is no longer in the top 15 list of Chinese trading partners. That is due, in large measure, to the drop in oil prices and China’s waning economy. As recently as last October, Putin was bragging about the $100 billion worth of trade Russia would transact with China in 2015. Then, the Chinese fabrications of its own economic condition began to bubble to the surface. Russian trade with China plummeted 30% in the first half of the year, to $30 billion. Suddenly, Putin is no longer mentioning the $100 billion figure for the year.
In reality, China doesn’t need Russia to any great degree. Furthermore, China’s image as an economic superpower has been greatly tarnished. Xi Jinping will be hurt in this foray, but Putin will end up bloodied. (Reprinted from the Journal of Wealth & Success, Vol. 3, Issue 35. Not a member?
Putin is Missing
(UPDATE Mo, 16 Mar 15) Vlad reappeared. Our best guess was that he was actually visiting his pregnant girlfriend. His mercurial nature appears to be worsening; more than 45,000 Russian troops began massive military exercises across the country on Monday.
(Su, 15 Mar 15) It’s a mystery, to be sure. First, on 27 Feb, Vladimir Putin’s biggest critic and largest internal threat, 55-year-old Boris Nemtsov, was gunned down not far from the Kremlin. Vlad feigned outrage, stating that the act was a “provocation.” Much of the feeble-minded press bought into his lies. Vladimir Putin did not pull the trigger, but he set up the hit, one way or another. One week later, the real intrigue began. On 05 March, six days after Nemtsov’s killing, Putin met with the Italian prime minister, and that is the last anyone has seen of him. That would have been suspicious enough, but then there was the bizarre state-run media story.
The Kremlin-controlled news ran a story about a successful meeting which occurred between Putin and the president of Kyrgyz. It may have been a bit more believable had the story not been reported in past tense, about a meeting that was to take place in a few days. The news station quickly announced that the story was a mistake, but how could a report of a meeting that had not yet taken place be written and aired?
The rumor mills went crazy. People began speculating about the missing Putin on social media, and the guesses range from a bad case of the flu, to an elongated visit to his pregnant mistress, Russian gymnast Alina Kabaeva, to a revenge killing of the 62-year-old dictatorial leader, to a palace coup.
Many have come to the conclusion that this is simply Putin playing the mastermind once again, fooling everyone and then popping back on the scene as if nothing happened. After all, we aretalking about a monster who had his wife locked away in a mental institution so he could pursue his adulterous affair with the gymnast, so nothing is off the table. But, with the Russian people severely hurting because of the economic chaos brought about by low oil and a corrupt regime, what would be the endgame of that scenario?
Vlad may well make that visit this Monday, and the press can re-run their pre-written script. But the idea of something more nefarious than taking ten days off to visit a pregnant lover is far more tantalizing. Perhaps not everyone in Russia cowers at the feet of the megalomaniacal dictator. Perhaps, dare we dream, the ruthless tyrant has assumed room temperature.
(Reprinted from next Sunday's Journal of Wealth & Success, Vol. 3, Issue 12.)
(OK, got it. Take me back to the Penn Wealth Hub!)
Russia must take half of its reserve fund to pay the bills.
(Fr, 27 Feb 15, 1500) One must wonder how much longer the Russian people will be able to sustain their love affair for papa Vladimir. In the latest emergency measure to keep its writhing economy afloat, Deputy Finance Minister Tatiana Nesterenko announced that the Kremlin would tap over $53 billion (more than half) from its reserve fund—rubles put away for a rainy day.
Vlad is also cutting salaries for Kremlin workers by 10%, and will consider letting the Communist Chinese take a majority stake in some of the country’s strategic oil and natural gas fields. That shows just how dire the situation is for Vlad, and how much he desperately wants to be best buds with the Chi-coms.
The treasury secretary said that there was about 6 trillion rubles ($100 billion or so) in the reserve fund at the start of the month, but that the account could fall to 1 trillion rubles by the end of the year. What is so amusing about this (not the fact that millions of Russians will face severe economic pain) is that Russia planned to have Europe over a barrel this winter for supporting sanctions against the country for its invasion of Crimea. What comes around typically goes around, but what an exceptionally rapid turn of events. It would be even more severe had the president allowed the Keystone XL Pipeline to be built.
Why Bed Buddies France and Germany Kept David Cameron and the UK out of the Terrible Russian Deal
(17 Feb 15) “Terrible” is how one UK government official described the deal. Germany’s Angela Merkel and France’s (uh oh, that can never be a good sign) Francois Hollande went to Minsk, Belarus to negotiate a “peace treaty” with the untrustworthy Putin of Russia. The purpose of the meeting was to cool the dictator’s hostilities in Ukraine. As could be expected, Putin won, the West lost, and the Merkel/Hollande cabal claimed “peace in our times.”
Here is the sad truth: The only reason Vlad the Impaler came to the table was because the president of the United States threatened to send defensive weapons to Ukraine. He figured he could stall—or stop—that action by feigning interest in peace. It categorically worked.
Listening to reports of a marathon negotiating session, reminiscent of Jimmy Carter “poring over maps of the Middle East spread out across the floor of the Oval Office,” we knew we were in trouble. European leaders get suckered in by the East when they are fully awake...let alone half asleep.
As for Ukraine’s part, Petro Poroshenko, the billionaire chocolate baron and current president, knows full well that Putin will not abide by the accord. In fact, the blood-red ink hadn’t dried on the agreement before Russian loyalists began killing more innocent Ukrainian civilians. But what is he to do? His economy is in shambles, and he is relying on the United States and Europe to provide the economic and military aid needed in a fight with an uber-bully.
Returning from their victory tour to Minsk, Merkel said “what we have on the table gives us great hope.” I used to have such high hopes for her. What she has on the table is carte blanche for the Russian-backed terrorists along the Eastern border of Ukraine to continue their killing spree.
Mother Russia’s people might be starving, thanks to Emperor Putin’s behavior and the precipitous drop in the price of oil, but as long as they don’t blame him, all is cool. After they have Ukraine, where is Putin’s next stop as he reconstitutes the Soviet Union? Rapidly descending socialist Greece.
(Reprinted from the Journal of Wealth & Success, Vol. 3, Issue 8.
Russian Buildup on Ukraine Border Makes Press Fret
Russian troops on Ukrainian soil. Agence France-Presse/Getty Images
(28 Mar 14) I can picture the hand-wringing going in a cubicle at the New York Times as a couple of international-beat "journalists" discuss matters in Russia. "Well, Mr. Putin said it's just exercises, Jerome. What do you think?" "I don't know, Julian, there's a puppy dog in one picture I saw, so I tend to believe him! Oh, how I hope it is not more than that. Well, let's grab another cup of chamomile and get to writing!"
Yes, these are exercises. Yes, Putin is playing the West. Yes, Russia will end up invading Ukraine. The immediate action for the United States to take is to announce construction of the Keystone Pipeline, supply Ukraine with weapons to make up for the ones we had them get rid of in the 1994 deal (leaving them defenseless), begin exporting natural gas to Europe so that they are no longer held hostage (and giving us billions of dollars in new revenue), and push to kick Russia off the UN Security Council.
Which of these actions will the United States actually move on? Odds are, not a one. Instead, we will get more Jimmy Carteresque hollow words, allowing our enemies to understand they have the upper hand and telling our allies that we are a has-been. The likes of Poland and Moldova have every right to be worried. America can no longer be trusted. At least Europe remains a constant--they have been ruled by a Neville Chamberlain attitude for nearly 100 years.
Putin called Obama today to discuss a "diplomatic solution" to the crisis. That means, even in his imperious state, Putin is worried about the effects of an economic war with the West. He has nothing to worry about--the West will talk tough, fold, and allow his unbridled aggression to continue. We've seen this movie before.
The International Olympic Committee Wins "Star Wars Bar Scene" of the Year Award
(07 Feb 14) I will admit being old enough to remember Jimmy Carter's boneheaded move to boycott the 1980 Summer Olympic Games in Moscow in protest of the Soviet invasion of Afghanistan. I also remember the comical excuses the Russians gave for boycotting the 1984 games in LA--crime was too rampant in the United States, and the Soviet athletes could not be subjected to the level of risk they would face in America.
Fast forward 30 years. Is there anything which carries more risk than to be a stray dog on the streets of Sochi? Russian troops are gunning them down ostensibly to reduce the threat to the athletes, but really to paint a prettier face on the shantytown that is Sochi. The "city" is a make-believe movie lot, ready to go up in flames like a tinder box. Toilets that don't work...rooms that are half-built...lights that don't turn on. This entire charade proves that the International Olympic Committee should be in line for a Nobel Peace Prize, which is now given out on the come and awarded to tyrants and political hacks. Just ask Al Gore.
Economic Slowdown Trimming Putin's Horns
(03 Sep 13) Vladimir Putin has always been and will always be an enemy of and a direct threat to the United States of America. A megalomaniac who grew up detesting the United States, his role within the KGB senior hierarchy allowed him to hone his skills as a master of subterfuge and manipulation. His hubris and his arrogance, however, have led to some dangerous miscalculations with respect to the strength of the Russian economy.
Stunningly, a whopping 70% of the Russian economy is energy-centric. Rising energy prices, fueled by activity in emerging markets such as China and India, have allowed Putin to maintain sky-high popularity ratings, as he has pumped trillions of rubles into infrastructure and military spending, and has raised the income levels of government workers substantially. Putin's master plan, however, may be coming to an abrupt halt, and he has his old enemy, the United States, to thank.
Russia is currently the world's largest energy exporter, holding the number one spot in oil production and the number two spot--behind the U.S.--in gas production. Unlike the U.S., however, Putin has pursued a scorched earth policy with respect to mining the land for every ounce of energy. At current levels, the country's great Ural Mountains/Siberian Plateau reserves are projected to run dry in twenty years. This is a far shorter span of time than is the case with known reserves in the U.S., Saudi Arabia, and the United Arab Emirates. Unfortunately for Russia, little energy, no pun intended, has been put into developing other sectors to drive the economy forward.
Gazprom, the world's largest gas producer (a number of different U.S. companies produce gas in this country), was valued at $360 billion a few years ago. Today, this puppet of the regime has a market value of just $94 billion. The Russian economy (as measured by GDP) was growing at an impressive 7% per year, largely on the back of this company, for most of the past decade. When the recession hit and the barrel price of crude dropped from the $140s to the $30s, the ruse began to crumble.
Gazprom has held a mob-like stranglehold on countries throughout the region. When Russia was battling Ukraine, the energy interest turned off its gas pipelines to the area, causing great hardship in the dead of winter. Run by Putin lackeys, Gazprom had been able to extort confiscatory rates from nations throughout Europe, as Russia provided the lion's share of energy to the region. As America began ramping up its energy production, due to new finds and advanced drilling developments, all of this began to change. With liquid natural gas (LNG) becoming a dominant energy source, the United States has been taking an ever-increasing percentage of market share from Russia.
Additionally, as American companies make the shift from coal to LNG, coal producers such as Peabody Energy in St. Louis suddenly find themselves in the enviable position of being major exporters. This new source for energy has emboldened the EU, which is drafting a formal complaint against Gazprom for market manipulation.
Word is that President Obama does not plan a one-on-one meeting with Putin while attending the G-20 summit this week, despite the fact that Russia is hosting the event. The move makes sense, but we fantasize about Obama ordering the airstrike on Syria at the precise time that the two men were meeting in St. Petersburg. For Putin, who likes to show off images of himself proving his manhood, that would be a slap in the face not soon forgotten.
(02 Sep 15) China’s big World War II victory parade on Thursday will boast a “who’s who” of global thugs that would make a Bond villain envious. Venezuela’s Nicolas Maduro will attend for two reasons: to escape a hostile opposition in his own starving country, and to solidify ties with the titular head of the worldwide communist movement: Xi Jinping. Pakistani President Hussain and Vietnamese President Truong Tan Sang will be there. Leaders of Laos, Thailand, and Cambodia will be there. Surprisingly, the pot-bellied North Korean dictator Kim Jong Un will skip the event (he seems to be miffed at China right now), but South Korean President Park will attend (too bad). The star attraction on the guest list is undoubtedly the emperor-in-training of Eastern Europe, Vlad Putin.
As the Chinese celebrate the end of World War II with a show of military might, Putin may be looking a bit green with envy in the dignitary stands. He has made it clear that he wants a military and economic alliance with the Communist Chinese that rivals the US/NATO relationship and the NAFTA accord, respectively, but he fails to comprehend his small role in ChinaLand.
While China still wants Russian gas, the latter is no longer in the top 15 list of Chinese trading partners. That is due, in large measure, to the drop in oil prices and China’s waning economy. As recently as last October, Putin was bragging about the $100 billion worth of trade Russia would transact with China in 2015. Then, the Chinese fabrications of its own economic condition began to bubble to the surface. Russian trade with China plummeted 30% in the first half of the year, to $30 billion. Suddenly, Putin is no longer mentioning the $100 billion figure for the year.
In reality, China doesn’t need Russia to any great degree. Furthermore, China’s image as an economic superpower has been greatly tarnished. Xi Jinping will be hurt in this foray, but Putin will end up bloodied. (Reprinted from the Journal of Wealth & Success, Vol. 3, Issue 35. Not a member?
Putin is Missing
(UPDATE Mo, 16 Mar 15) Vlad reappeared. Our best guess was that he was actually visiting his pregnant girlfriend. His mercurial nature appears to be worsening; more than 45,000 Russian troops began massive military exercises across the country on Monday.
(Su, 15 Mar 15) It’s a mystery, to be sure. First, on 27 Feb, Vladimir Putin’s biggest critic and largest internal threat, 55-year-old Boris Nemtsov, was gunned down not far from the Kremlin. Vlad feigned outrage, stating that the act was a “provocation.” Much of the feeble-minded press bought into his lies. Vladimir Putin did not pull the trigger, but he set up the hit, one way or another. One week later, the real intrigue began. On 05 March, six days after Nemtsov’s killing, Putin met with the Italian prime minister, and that is the last anyone has seen of him. That would have been suspicious enough, but then there was the bizarre state-run media story.
The Kremlin-controlled news ran a story about a successful meeting which occurred between Putin and the president of Kyrgyz. It may have been a bit more believable had the story not been reported in past tense, about a meeting that was to take place in a few days. The news station quickly announced that the story was a mistake, but how could a report of a meeting that had not yet taken place be written and aired?
The rumor mills went crazy. People began speculating about the missing Putin on social media, and the guesses range from a bad case of the flu, to an elongated visit to his pregnant mistress, Russian gymnast Alina Kabaeva, to a revenge killing of the 62-year-old dictatorial leader, to a palace coup.
Many have come to the conclusion that this is simply Putin playing the mastermind once again, fooling everyone and then popping back on the scene as if nothing happened. After all, we aretalking about a monster who had his wife locked away in a mental institution so he could pursue his adulterous affair with the gymnast, so nothing is off the table. But, with the Russian people severely hurting because of the economic chaos brought about by low oil and a corrupt regime, what would be the endgame of that scenario?
Vlad may well make that visit this Monday, and the press can re-run their pre-written script. But the idea of something more nefarious than taking ten days off to visit a pregnant lover is far more tantalizing. Perhaps not everyone in Russia cowers at the feet of the megalomaniacal dictator. Perhaps, dare we dream, the ruthless tyrant has assumed room temperature.
(Reprinted from next Sunday's Journal of Wealth & Success, Vol. 3, Issue 12.)
(OK, got it. Take me back to the Penn Wealth Hub!)
Russia must take half of its reserve fund to pay the bills.
(Fr, 27 Feb 15, 1500) One must wonder how much longer the Russian people will be able to sustain their love affair for papa Vladimir. In the latest emergency measure to keep its writhing economy afloat, Deputy Finance Minister Tatiana Nesterenko announced that the Kremlin would tap over $53 billion (more than half) from its reserve fund—rubles put away for a rainy day.
Vlad is also cutting salaries for Kremlin workers by 10%, and will consider letting the Communist Chinese take a majority stake in some of the country’s strategic oil and natural gas fields. That shows just how dire the situation is for Vlad, and how much he desperately wants to be best buds with the Chi-coms.
The treasury secretary said that there was about 6 trillion rubles ($100 billion or so) in the reserve fund at the start of the month, but that the account could fall to 1 trillion rubles by the end of the year. What is so amusing about this (not the fact that millions of Russians will face severe economic pain) is that Russia planned to have Europe over a barrel this winter for supporting sanctions against the country for its invasion of Crimea. What comes around typically goes around, but what an exceptionally rapid turn of events. It would be even more severe had the president allowed the Keystone XL Pipeline to be built.
Why Bed Buddies France and Germany Kept David Cameron and the UK out of the Terrible Russian Deal
(17 Feb 15) “Terrible” is how one UK government official described the deal. Germany’s Angela Merkel and France’s (uh oh, that can never be a good sign) Francois Hollande went to Minsk, Belarus to negotiate a “peace treaty” with the untrustworthy Putin of Russia. The purpose of the meeting was to cool the dictator’s hostilities in Ukraine. As could be expected, Putin won, the West lost, and the Merkel/Hollande cabal claimed “peace in our times.”
Here is the sad truth: The only reason Vlad the Impaler came to the table was because the president of the United States threatened to send defensive weapons to Ukraine. He figured he could stall—or stop—that action by feigning interest in peace. It categorically worked.
Listening to reports of a marathon negotiating session, reminiscent of Jimmy Carter “poring over maps of the Middle East spread out across the floor of the Oval Office,” we knew we were in trouble. European leaders get suckered in by the East when they are fully awake...let alone half asleep.
As for Ukraine’s part, Petro Poroshenko, the billionaire chocolate baron and current president, knows full well that Putin will not abide by the accord. In fact, the blood-red ink hadn’t dried on the agreement before Russian loyalists began killing more innocent Ukrainian civilians. But what is he to do? His economy is in shambles, and he is relying on the United States and Europe to provide the economic and military aid needed in a fight with an uber-bully.
Returning from their victory tour to Minsk, Merkel said “what we have on the table gives us great hope.” I used to have such high hopes for her. What she has on the table is carte blanche for the Russian-backed terrorists along the Eastern border of Ukraine to continue their killing spree.
Mother Russia’s people might be starving, thanks to Emperor Putin’s behavior and the precipitous drop in the price of oil, but as long as they don’t blame him, all is cool. After they have Ukraine, where is Putin’s next stop as he reconstitutes the Soviet Union? Rapidly descending socialist Greece.
(Reprinted from the Journal of Wealth & Success, Vol. 3, Issue 8.
Russian Buildup on Ukraine Border Makes Press Fret
Russian troops on Ukrainian soil. Agence France-Presse/Getty Images
(28 Mar 14) I can picture the hand-wringing going in a cubicle at the New York Times as a couple of international-beat "journalists" discuss matters in Russia. "Well, Mr. Putin said it's just exercises, Jerome. What do you think?" "I don't know, Julian, there's a puppy dog in one picture I saw, so I tend to believe him! Oh, how I hope it is not more than that. Well, let's grab another cup of chamomile and get to writing!"
Yes, these are exercises. Yes, Putin is playing the West. Yes, Russia will end up invading Ukraine. The immediate action for the United States to take is to announce construction of the Keystone Pipeline, supply Ukraine with weapons to make up for the ones we had them get rid of in the 1994 deal (leaving them defenseless), begin exporting natural gas to Europe so that they are no longer held hostage (and giving us billions of dollars in new revenue), and push to kick Russia off the UN Security Council.
Which of these actions will the United States actually move on? Odds are, not a one. Instead, we will get more Jimmy Carteresque hollow words, allowing our enemies to understand they have the upper hand and telling our allies that we are a has-been. The likes of Poland and Moldova have every right to be worried. America can no longer be trusted. At least Europe remains a constant--they have been ruled by a Neville Chamberlain attitude for nearly 100 years.
Putin called Obama today to discuss a "diplomatic solution" to the crisis. That means, even in his imperious state, Putin is worried about the effects of an economic war with the West. He has nothing to worry about--the West will talk tough, fold, and allow his unbridled aggression to continue. We've seen this movie before.
The International Olympic Committee Wins "Star Wars Bar Scene" of the Year Award
(07 Feb 14) I will admit being old enough to remember Jimmy Carter's boneheaded move to boycott the 1980 Summer Olympic Games in Moscow in protest of the Soviet invasion of Afghanistan. I also remember the comical excuses the Russians gave for boycotting the 1984 games in LA--crime was too rampant in the United States, and the Soviet athletes could not be subjected to the level of risk they would face in America.
Fast forward 30 years. Is there anything which carries more risk than to be a stray dog on the streets of Sochi? Russian troops are gunning them down ostensibly to reduce the threat to the athletes, but really to paint a prettier face on the shantytown that is Sochi. The "city" is a make-believe movie lot, ready to go up in flames like a tinder box. Toilets that don't work...rooms that are half-built...lights that don't turn on. This entire charade proves that the International Olympic Committee should be in line for a Nobel Peace Prize, which is now given out on the come and awarded to tyrants and political hacks. Just ask Al Gore.
Economic Slowdown Trimming Putin's Horns
(03 Sep 13) Vladimir Putin has always been and will always be an enemy of and a direct threat to the United States of America. A megalomaniac who grew up detesting the United States, his role within the KGB senior hierarchy allowed him to hone his skills as a master of subterfuge and manipulation. His hubris and his arrogance, however, have led to some dangerous miscalculations with respect to the strength of the Russian economy.
Stunningly, a whopping 70% of the Russian economy is energy-centric. Rising energy prices, fueled by activity in emerging markets such as China and India, have allowed Putin to maintain sky-high popularity ratings, as he has pumped trillions of rubles into infrastructure and military spending, and has raised the income levels of government workers substantially. Putin's master plan, however, may be coming to an abrupt halt, and he has his old enemy, the United States, to thank.
Russia is currently the world's largest energy exporter, holding the number one spot in oil production and the number two spot--behind the U.S.--in gas production. Unlike the U.S., however, Putin has pursued a scorched earth policy with respect to mining the land for every ounce of energy. At current levels, the country's great Ural Mountains/Siberian Plateau reserves are projected to run dry in twenty years. This is a far shorter span of time than is the case with known reserves in the U.S., Saudi Arabia, and the United Arab Emirates. Unfortunately for Russia, little energy, no pun intended, has been put into developing other sectors to drive the economy forward.
Gazprom, the world's largest gas producer (a number of different U.S. companies produce gas in this country), was valued at $360 billion a few years ago. Today, this puppet of the regime has a market value of just $94 billion. The Russian economy (as measured by GDP) was growing at an impressive 7% per year, largely on the back of this company, for most of the past decade. When the recession hit and the barrel price of crude dropped from the $140s to the $30s, the ruse began to crumble.
Gazprom has held a mob-like stranglehold on countries throughout the region. When Russia was battling Ukraine, the energy interest turned off its gas pipelines to the area, causing great hardship in the dead of winter. Run by Putin lackeys, Gazprom had been able to extort confiscatory rates from nations throughout Europe, as Russia provided the lion's share of energy to the region. As America began ramping up its energy production, due to new finds and advanced drilling developments, all of this began to change. With liquid natural gas (LNG) becoming a dominant energy source, the United States has been taking an ever-increasing percentage of market share from Russia.
Additionally, as American companies make the shift from coal to LNG, coal producers such as Peabody Energy in St. Louis suddenly find themselves in the enviable position of being major exporters. This new source for energy has emboldened the EU, which is drafting a formal complaint against Gazprom for market manipulation.
Word is that President Obama does not plan a one-on-one meeting with Putin while attending the G-20 summit this week, despite the fact that Russia is hosting the event. The move makes sense, but we fantasize about Obama ordering the airstrike on Syria at the precise time that the two men were meeting in St. Petersburg. For Putin, who likes to show off images of himself proving his manhood, that would be a slap in the face not soon forgotten.