Category Archives: Trade

These Charts Show Russia’s Invasion Choking World Of Natural Resources, by Tyler Durden

When it comes to natural resources, Russia has the world by the balls. From Tyler Durden at zerohedge.com:

For weeks, we’ve detailed how Russia’s invasion of Ukraine has sparked one of the most significant commodity shocks the world has ever experienced. It even supersedes changes to commodity markets in the 1970s and involves every commodity from grain to fertilizer to crude to metals.

In a series of charts (provided by Bloomberg), we will show just how the Ukrainian conflict and Western sanctions on Russia are choking the world’s supply of natural resources, driving up prices.

Russia is a top exporter of many commodities.

Here is the share of Russian exports for each region of the world. The U.S. and allies implementing bans on Russian crude and other commodity exports have disrupted global trade and unleashed supply constraint fears (here’s why banning Russian crude imports is risky).

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Washington’s Hawks Are About To Wreck Global Commerce, by David Stockman

If global commerce is wrecked, does that help or hurt the U.S.? There is a right answer. From David Stockman at antiwar.com:

We did get that right. At an intense seven-hour session in Rome, Biden’s national security advisor, Jake Sullivan, told the Chinese in no uncertain terms they are next in line for the sanctions hit parade:

Jake Sullivan told CNN the US had been “communicating directly, privately to Beijing that there will absolutely be consequences for large-scale sanctions evasion efforts or support to Russia to back-fill them” amid the Ukraine war.

For want of doubt, the rest of the US government has not been loath to reinforce Sullivan’s edict:

Officials of the United States and other countries have sought to emphasize in recent weeks that siding with Russia could carry consequences for trade flows, development of new technologies and expose China to secondary sanctions.

Chinese companies defying U.S. restrictions on exports to Russia may be cut off from American equipment and software they need to make their products, US Commerce Secretary Gina Raimondo said last week.

Just brilliant, that. The US desperately needs a resurgence of economic growth and especially export sales in order to cope with the $86 trillion of debt that the Fed’s easy money policies have foisted upon the combined public and private sectors in recent decades, but in its self-appointed role as global gendarme Washington insists on throwing spanners in the gears of private capitalism whenever and wherever possible.

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Doug Casey on What Happens Next in the Conflict With Russia

The Ukraine-Russia war will inflict more damage on the U.S. empire than it will on Russia. From Doug Casey at internationalman.com:

Russia

International Man: Prior to the Russian invasion of Ukraine, we discussed the rising tensions between the US and Russia over Ukraine.

What is your take on what has transpired since then?

Doug Casey: I think it makes sense first to recount the genesis of this war.

It started when an American-backed coup overthrew the Ukrainian government in 2014. A US-backed thug replaced a Russian-backed thug— nothing unusual, except that Ukraine shares a long border with Russia. The Russians viewed that much as the Americans would if the Russians had put a puppet government in Ottawa.

Next, the two Russian majority provinces in Ukraine, Donetsk and Luhansk (Donbas) seceded from Ukraine. Secession is usually the best way of solving a political problem between groups with radically differing religions, ethnicities, cultures, or what-have-you. It’s much better than staying “united,” with one group dominating the other. The Russians simultaneously took back Crimea, which Nikita Kruschev had arbitrarily transferred to the Ukrainian SSR from the Russian SSR in 1954.

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Bonfire of the Governments, Part One, by Robert Gore

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Expect chaos to continue making new highs.

When Machiavelli wrote The Prince he had Vladimir Putin in mind. The president of Russia has adroitly sought, maintained, and used power, the theme of Machiavelli’s masterpiece (see “The Black Belt Strategist,” Robert Gore. SLL, July 19, 2018). That he is an amoral snake is both true and laughable as a criticism coming from the amoral snakes who populate Western power structures. Nobody who slithers to the top of those pits is anything other than an amoral snake. Western snakes hate Putin because he’s repeatedly outsnaked them.

Call Putin a rattlesnake for he clearly rattled before Russia’s invasion of Ukraine. That he was ignored is a worrisome indication of the epistemological breakdown that grips the West. Its leaders are unable to grasp that Putin meant what he said because they rarely mean what they say. Facts are not facts and the truth is whatever narrative they’re promoting at the moment. It’s become axiomatic that power flows from control of the narrative.

Until it doesn’t. Power flows from understanding reality and making use of what it can offer. If narratives were power, Ukraine’s army would be in Moscow by now. We haven’t seen this kind of excessive excrement from governments and their media minions since . . . Covid. Narratives are for simple-minded sheep and the wolves who devour them.The propaganda is devoid of any mention of: the 2014 U.S.-sponsored coup against a democratically elected government; rampant corruption within the Ukrainian oligarchy; Ukranian payola to American political figures (e.g., the Bidens and Clintons); widespread neo-Nazi infestation of Ukraine’s military and government; their eight-year war on its Russian-heritage citizens in eastern Ukraine; the government’s willful failure to adhere to the Minsk accords that were meant to resolve that conflict, or the latest—U.S. supported bioresearch labs in Ukraine.

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Why Are Leftists And Elitists So Happy About Skyrocketing Gas Prices? By Brandon Smith

Higher gas prices will force people into electric cars they can be blamed on the Ukraine-Russia war, although gas prices had risen significantly since Biden’s inauguration, well before Russia invaded Ukraine. From Brandon Smith at alt-market.us:

There is a narrative being spread within leftist/socialist circles by media celebrities and White House cronies, and it is this: Paying high prices for oil and gas is actually a GOOD thing. But why is it a good thing to these people? How do they benefit?

Spoiler Alert: It has nothing to do with punishing Russia economically.

As I write this article crude prices have somewhat stabilized around $110-$115 a barrel, which translates to a little over $4 a gallon for gas across most of the country. I don’t expect this to last very long. My guess is that regular gasoline will end up in the $7 to $8 per gallon range before US shale oil roars back and balances out the market. I realize that this is a conservative estimate and perhaps a best case scenario. Gas could go much higher depending on speculation in oil markets as well as continued government interference from the Biden Administration.

The big secret is that gas prices were already going to inflate to epic highs, the Ukraine event is not a catalyst, it’s just adding a little petro to the house fire. The fact is, there are some people out there that are desperate for prices to go much higher regardless of what happens in Ukraine.

This past week, late night “comedian” and establishment shill Stephen Colbert declared that he was willing to pay as much as $15 a gallon for gas, because he owns a Tesla (this is the same guy that danced around with walking/talking syringes to promote experimental covid vaccines for pharmaceutical giant Pfizer). To understand elitist clowns like Colbert you have to realize that he is a rather new iteration of the old Operation Mockingbird propaganda model.

Let’s set aside the prospect that Colbert is a complete idiot who doesn’t seem to grasp that the electricity that charges his Tesla is most likely generated in part or in full by natural gas, oil or coal. The cost of charging up his car is going to inflate right along with normal energy prices. Instead, let’s consider the possibility that Colbert is simply regurgitating a narrative that was assigned to him, just as he has done in the past.

Decades ago, Americans were fed lies and misinformation primarily by the corporately controlled mainstream media because we used to care about what the MSM had to say. Today, almost no one cares about the MSM and their dismal audience numbers prove that. There are alternative media channels on YouTube and alt-news websites that crush CNN and MSNBC numbers. We dominate them. That said, there are still leftist outlets that get high traffic, and they are primarily comedy shows.

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The end of the age of globalisation, by Phil Mullan

The war will push the global economy in the opposite direction—towards more decentralization and autarky—than the globalists want. From Phil Mullan at spiked-online.com:

How Russia’s invasion of Ukraine could hasten the demise of the US-led economic order.

The economic consequences of Russia’s bloody and despicable assault on Ukraine are very much a secondary consideration to the immediate human and geopolitical implications. And since the various national responses to the conflict are still so fluid, it is far too early to be able to identify the war’s precise longer-term economic effects. Nevertheless, it is possible to tentatively suggest what could unfold on the international economic front.

At least in the short term, the direct and indirect disruptions to economic relations arising from the invasion will almost certainly damage prospects for economic growth and boost inflation far beyond the combatant countries. In particular, the relative toughening of sanctions will generate economic difficulties in many areas beyond Russia itself.

While the war is of huge importance geopolitically, it would, however, be misleading to overstate its economic effects, given all the other enormous economic challenges already in place. For example, the Financial Times claims that the war has ‘shattered hopes of a strong global economic recovery from coronavirus’. But this implies that a strong recovery was already on the cards. There has long been a prevalent complacency that ignores the fundamental atrophy afflicting most advanced industrialised countries. War or no war, the high debt and weak investment common to many Western economies are likely to mean a continuation of the sluggish growth of the past decade.

More broadly, the repercussions of the war are likely to reinforce existing economic trends towards autarky and regionalisation, rather than taking us in entirely new directions. Analysts at Goldman Sachs, for instance, suggest that the war is going to damage globalisation and reinforce de-globalisation forces. But this conventional counterposition of ‘de-globalisation’ to ‘globalisation’ does not help clarify what is happening. In practice, market capitalism has always operated both nationally and internationally at the same time. As a result, economic internationalisation (‘globalisation’) can easily co-exist with a heightened focus on national economic considerations (‘de-globalisation’).

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Putin’s Options, by James Rickards

Western sanctions on Russia will leave the West in worse shape than Russia. From James Rickards at dailyreckoning.com:

There’s no doubt that the financial sanctions put on Russia by the U.S., the U.K., EU members and others are the most severe ever imposed. The U.S. Treasury has announced 15 separate sanctions programs in recent days and no doubt more are on the way.

The targets of these sanctions include Russian banks, Russian stocks and bonds and various payment channels. Most significantly, the U.S. froze the accounts of the Central Bank of Russia. That’s the first time a major central bank’s assets have been frozen since the Cold War, and possibly ever.

Yet the financial attacks on Russia go far beyond official sanctions.

Numerous private companies including Microsoft, Exxon Mobil, Shell and some major airlines have ceased their business activities in Russia. Visa and Mastercard have stopped accepting credit card charges from Russia. Google and Apple have turned off the mobile payment apps on phones held by Russian citizens.

Shipping giant Maersk has stopped its vessels from unloading or taking cargo from Russian ports. Stock index funds are pushing Russian companies out of their indexes and the Norwegian sovereign wealth fund is divesting Russian stocks. The list of public and private embargoes and boycotts goes on.

The financial impact on Russia will be extreme. The Russian economy may be expected to collapse by 20% or more in the first half of 2022, an amount comparable to the economic collapses in the second quarter of 2020 during the first lockdown stage of the pandemic.

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By Enforcing Sanctions On Russia, SWIFT May Commit Suicide, by Michael Maharrey

Putin and company knew for a long time that Russia might one day be subject to cutoff from the SWIFT interbank clearing system. That day has come, and Russia’s workarounds appear to be sound. From Michael Maharrey at libertarianinstitute.org:

The government of the United States has intervened militarily in other countries for decades, against the council of founders like George Washington who advised America should “observe good faith and justice towards all nations; cultivate peace and harmony with all.”

But the U.S. doesn’t only project power across the globe through its massive military. It also weaponizes the U.S. dollar, using its economic dominance and its privilege as the issuer of the reserve currency as a carrot-stick tool of foreign policy.

The U.S. government showers billions of dollars in foreign aid to “friends.” On the other hand, “enemies” can find themselves locked out of SWIFT, the global financial system that the U.S. effectively controls using the dollar.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. The system enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar serves as the world reserve currency, SWIFT facilitates the international dollar system.

SWIFT and dollar dominance give the U.S. a great deal of leverage over other countries.

The U.S. has used the system as a stick before. In 2014 and 2015, the Obama administration blocked several Russian banks from SWIFT as relations between the two countries deteriorated. Under Trump, the U.S. threatened to lock China out of the dollar system if it failed to follow U.N. sanctions on North Korea. Treasury Secretary Steven Mnuchin threatened this economic nuclear option during a conference broadcast on CNBC.

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Weapons of Financial Destruction and the New World Disorder, by David C. Hendrickson

The U.S.’s weaponization of the financial system will make life difficult for Russia, but may backfire disastrously on the U.S. From David C. Hendrickson at theamericanconservative.com:

Biden didn’t have to take a blowtorch to the financial system in response to the Russian invasion of Ukraine. But he has done so.

The comprehensive sanctions the United States and the West have imposed on Russia take us into an entirely new world. The sanctions are multidimensional, but most important is the “freezing” of Russian foreign exchange reserves, what President Biden called Putin’s $630 billion war fund in his State of the Union. This action means that all previous economic contracts between Russia and the West are invalid. Biden’s figure was probablyoverstated by half, but the precise figure doesn’t matter. It’s the principle that counts.

The effective nullification of contracts is the Big Enchilada, an H-Bomb rather than an A-Bomb, a 50-megaton Weapon of Financial Destruction (WFD). Without bothering to announce it, the United States and its allies have thrown a wrench into the gears of important sectors of the world economy. They are badly underestimating the fallout. Remarkably, they did this against the backdrop of a worldwide crisis in supply chains. That is about to get a lot worse.

Among the cascading dominos: 30 percent of the world’s wheat exports are now cut off.  Russia’s exports of fertilizers—18 percent of the potash market, 20 percent of ammonia exports—are off market. Energy prices have exploded. A suddenly bipartisan United States has imposed a (mostly symbolic) ban on Russian oil imports. The Biden administration has insisted that it doesn’t want to diminish world oil and gas supplies but, grosso modo, the effect of its sanctions point strongly in that direction.

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Russian Judo Tears the West Apart, by Pepe Escobar

Sanctions on Russia could destroy the U.S.’s and Europe’s financial and energy markets. From Pepe Escobar at unz.com:

Washington’s ‘replacement strategy’ for sanctioned Russian oil and gas imports appears to be to cozy up to its oil-producing arch-enemies Iran and Venezuela. Photo Credit: The Cradle

The official Russian blacklist of hostile sanctioning nations includes the US, the EU, Canada and, in Asia, Japan, South Korea, Taiwan, and Singapore (the only one from Southeast Asia). Notice how that ‘international community’ keeps shrinking.

The Global South should be aware that no nations from West Asia, Latin America and Africa have joined Washington’s sanctions bandwagon.

Moscow has not even announced its own package of counter-sanctions. Yet an official decree “On Temporary Order of Obligations to Certain Foreign Creditors,” which allows Russian companies to settle their debts in rubles, provides a hint of what’s to come.

Russian counter-measures all revolve around this new presidential decree, signed last Saturday, which economist Yevgeny Yushchuk defines as a “nuclear retaliatory landmine.” .

It works like this: to pay for loans obtained from a sanctioning country exceeding 10 million rubles a month, a Russian company does not have to make a transfer. They ask for a Russian bank to open a correspondent account in rubles under the creditor’s name. Then the company transfers rubles to this account at the current exchange rate, and it’s all perfectly legal.

Payments in foreign currency only go through the Central Bank on a case-by-case basis. They must receive special permission from the Government Commission for the Control of Foreign Investment.

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