Crisis Progress Report (3), by Robert Gore

French President François Hollande, German Chancellor Angela Merkel, Russian President Vladimir Putin, and Ukrainian President Petro Poroshenko, negotiated a cease-fire in Ukraine without the involvement of either President Obama or Secretary of State Kerry. The sour grapes coming from The Wall Street Journal Friday reveal the mindset of much of the US establishment. There were two front page articles: “Doubt Clouds Ukraine Truce” top center, and “Cease-Fire Hopes Exceed Expectations” just below. The tone of both, evident from the headlines, is undisguised skepticism. An editorial excoriated the agreement, and Merkel, Hollande, and Poroshenko, for giving away the store. The editorial said it “gives the Kremlin the benefits of establishing a de facto satrap without having to foot the costs of sustaining it or assume political responsibility.”

Let’s assume the Journal’s assessment is on point. Left unsaid was that Merkel and Hollande may well have reached a conclusion that escalating US and European involvement in the conflict by sending arms to the Ukrainian government was not in their interest. That reckoning would be driven by geography, history, and hard-headed calculation. If Russia is supplying arms and troops to east Ukraine’s ethnic Russian rebels, as the US has repeatedly asserted, sending arms to the Ukrainian government puts the US and allied European nations at war with Russia. However, even with armaments, Ukraine would be crushed by Russia if the Russians invaded in force. What then would be the response?

If the US and Europe escalated their involvement in Ukraine, they would be fighting Russia on its doorstep. That undeniable geographic advantage must give the Europeans pause, and then there is history. Ukraine has, for most of its history, either been part of Russia or within the Russian (or Soviet) orbit. The Journal’s use of the word “satrap” is ironic, because the present Ukrainian government is a satrap of the US and Europe. Virtually bankrupt, it is dependent on their financial aid and without their military aid it will, on current form, be unable to suppress the east Ukraine rebellion. Do the Europeans really want to go to war over a dependent, financially pressed government actively opposed by a significant part of its population, for a country vitally important to Russia? Military odds-makers would make Russia the favorite, even if the US joined in (the odds-makers have been successively marking down the US with each Middle Eastern fiasco). While the US has never fought Russia head-to-head, the French and Germans have, and those forays did not go well for them.

Merckel and Hollande might also have asked themselves: which is more advantageous, bringing Ukraine into the European orbit or a reasonably healthy political and commercial relationship with Russia? Hands down it’s the latter. Ukraine’s economy is a debt-laden basket case and Europe has enough of those. The Europeans have to be apprehensive about the Russian pivot towards China and the rest of Asia. The more that develops, the less Russia needs Europe. Notwithstanding American policymakers’ fervent hopes, Russia’s economy is hardly going down the tubes. It has abundant natural resources, including oil and natural gas, an educated population, low debt, and inefficient Soviet-legacy manufacturing and agriculture whose productivity could be dramatically improved.

The headline of the Journal editorial is “Putin’s Latest Victory.” Putin is the enemy and the US political elite wants to use Ukraine as a lever to dislodge him and install a government more tractable to its designs. This is a pipe dream on the order of the neocon fantasy of remaking the Middle East, and Merkel and Hollande just said “nein” and “non” respectively. If they keep the US from escalating the war in Ukraine (a long odds bet), it would redound to the benefit of both the US and Europe. However, remaking the Middle East and Russia to suit American interests are long-term goals of the bipartisan elite, faithfully trumpeted by its MSM propaganda arm. This is what passes for brains among those running the US, and it reinforces the message of “Buy Asia; Short the US and Europe,” (SLL, 2/3/15). They are dangerous in every sense of the word, posing a grave threat to the lives and remaining wealth of the American people.

Apparently the world’s smart money is grasping the potential of the Asian-Russian linkages US policy has done so much to promote. The Russian stock market hit bottom one month after the Ukrainian coup last year and so far is the world’s best performing market in 2015. The Chinese have pollution issues and massive piles of debt and malinvestment to work through, but their stock market has been on a tear. So has India’s. The Asia-Russia investment thesis has far more appeal than taking a flyer on the debt-saturated economies and central bank-manipulated bond and stock markets of the US and Europe.

The other crisis facing Europe—Greece—is even less amenable to resolution than Ukraine. In fact, it is unresolvable; there will be no happy ending. Greece is tolling the bell, loud and clear, for debt as a way of life in the western welfare states. Like most of the west, Greece has a pile it cannot pay. The only issue now is who bears the loss. Regardless of where it falls, Greeks will be looking at austerity and reduced living standards for many years to come, corresponding to the many years they lived beyond their means. They will not be alone.

In “Crisis Progress Report (2),” SLL advised keeping an eye on interest rates as the ultimate canary in the coal mine, the one variable of which governments and central banks cannot afford to lose control. Rates have continued to creep up and may take off if the Europeans cannot devise some market-pleasing (albeit cosmetic) solution to their Greek woes. The recognition that there are no painless solutions to bankruptcy—that ultimately many people get hurt—shall spread far beyond the borders of Greece. To paraphrase Thomas Jefferson, the tree of credit must be refreshed from time to time with the blood of creditors who accept inadequate compensation for the risks they bear.


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8 responses to “Crisis Progress Report (3), by Robert Gore

  1. Pingback: SLL: Crisis Report #3 | Western Rifle Shooters Association

  2. Mary, the Mother of Jesus speaks to the world:

    6. Satan’s Many Weapons
    Feb 9th, 2015
    In this war, what will be held back? Nothing. This is the final battle, the culmination of centuries. When total victory is in sight, no need to plan for tomorrow. Everything and everyone goes into the war. Everything will be drawn in, like wooden houses in an enormous fire.
    The focus is upon the Middle East, Russia, the Ukraine and Africa, but the sparks of the blaze have fallen also in Europe. With very few operatives, the terrorists have forced these nations to spend millions on security. This is money which they do not really have, money which they just print.
    Satan does not fight his war with just weapons. A building can be destroyed by fire or by a collapse. It really doesn’t matter, because the building is useless. The economic collapse of the West is closer than anyone believes. The structures already shake. The burden of debt grows. The price of fighting terrorism increases. Satan links all of his evils.
    He holds many different cards in his hands and he knows when and where to play them. His important ploy is surprise. He attacks whatever is not protected. He always has his enemies looking in the wrong direction.
    Where terrorism works, he uses that. Where economic instability works, he uses that. Where fear and confusion work, he uses that. Where poverty dominates people’s lives, he uses that. How many cards he holds and how well he knows to play them.
    Only heavenly wisdom understands him and only heavenly power can defeat him. That is why I must reveal Satan’s works. More and more battles will be lost until mankind learns to call upon heaven.

    7. The Day of Accounting
    Feb 10th, 2015
    The costs are high and resources are stretched beyond the breaking point. Yet, this is only the beginning. There will be more and more money dedicated to weapons and security, and new walls that are meant to protect but will also limit freedom. Satan builds his pressure and extends his power. It has become impossible for leaders to keep their eyes on every aspect. The power to govern correctly slips from their hands with too many issues to confront at once.
    These are the hidden problems which seep into a nation’s bloodstream and wear down the system. Who can take these into account? All just assume that a nation can absorb all of these burdens and not collapse.
    Satan has many approaches. He knows well the weak links, the parts that cannot handle the coming burdens. He knows that the economies of the West operate on money that does not exist. In the Middle East he uses the fires of terrorism to quicken his victory. In the West, he uses spending to arrive more quickly to the day of accounting.
    The days of accounting will soon come for the West. No country is an island. When the day of accounting arrives for one, it affects all. No country can divorce itself from the global economy.
    O West, Satan turns his eyes to your economies. His terrorism has cost you millions, but that is not his most powerful weapon. Nations have become tired of austerity programs. They have rejected leaders who took them on that path. They have chosen others who, like true politicians, have promised what they cannot deliver. A confrontation, a tremendous clash, will cause a splintering and attempts to patch things together. The great economic weakness of the West will take center stage.


  3. “Stock market has been on a tear…”
    Not so fast. I have been looking at the fundamentals in a few sectors and I am not liking what I am seeing. My take: Companies are being valued based on their `replacement value` metrics. If a company bought a production line components, say a motor for $200 in 2004, the company is being valued at the $450 replacement cost for that same motor now. That might look good on the balance sheet but the reality is the stockholder did not make a profit. They rode an inflation curve and as a consequence they are running as fast as they can just to stay in place. But their capital gain is a fiction.


  4. “While the US has never fought Russia head-to-head, the French and Germans have, and those forays did not go well for them.”

    The French under Napoleon were THE high-tech army of the world. killed by Russian General Winter commanding harsh-climate-capable locals. The French did okay during spring/summer, but overstayed their usable weather. Almost the same story for the 1940’s Germans.

    I have no doubt that 10th Mountain Div. Americans could make a go of cold weather fighting with the Russians on equal terms, but “equal terms” never happens. Against Russian-speaking locals, geographically close to Russia and far from anything American, the US can’t win. So why play?

    Do we get Ukrainian wheat or oil or gas? Beautiful tall Uke girls? Or, will they just take our money, hate us and kill us when not too risky?

    How ’bout them IS muzzies?


    • ““While the US has never fought Russia head-to-head, the French and Germans have, and those forays did not go well for them.”
      Check your history books my friend. The US HAS fought the Russians. During the Russian revolutionary period, 1918-1920. The 27 & 31st Infantry Divisions fought in the Siberian regions alongside White Russians.


  5. I stand corrected, but unlike France and Germany, the US has never conducted a general invasion which brought its government into an all out war against the Russian (or USSR) government.


    • Head to head, yes very true. Nor do I think we would fair well against the 20 extra Russian divisions no one accounts for called the Russian Winter. But again the US fought a 40 year proxy war against Russian efforts. We just don’t think of it as a war, or that the Russians were involved. Victory was never even declared tho the Soviets fell.

      On the Ukrainian situation. The current administration has put themselves in a serious pickle. They had made commitments to protect Ukrainian interests. They have to keep them. If they don’t, what is going to be going on in the Polish government’s mind? And if you want to fulfill those commitments the only clear way is thru Poland. And we have already screwed them once withdrawing the missile defense cooperation.

      A stable Ukrainian govt is in our interests but the current administration is playing checkers. Sigh.


  6. Reblogged this on The Right Site and commented:
    All bad news for the future…


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