Friday, September 30, 2022

Something About The Future.

Michael Hudson sent me today the article, which appeared earlier at Naked Capitalism. I re-post this excellent piece with Michael Hudson's permission. It is a very important piece. 

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The Euro Without German Industry

The reaction to the sabotage of three of the four Nord Stream 1 and 2 pipelines in four places on Monday, September 26, has focused on speculations about who did it and whether NATO will make a serious attempt to discover the answer. Yet instead of panic, there has been a great sigh of diplomatic relief, even calm. Disabling these pipelines ends the uncertainty and worries on the part of US/NATO diplomats that nearly reached a crisis proportion the previous week, when large demonstrations took place in Germany calling for the sanctions to end and to commission Nord Stream 2 to resolve the energy shortage. 

The German public was coming to understand what it will mean if their steel companies, fertilizer companies, glass companies and toilet-paper companies were shutting down. These companies were forecasting that they would have to go out of business entirely – or shift operations to the United States – if Germany did not withdraw from the trade and currency sanctions against Russia and permit Russian gas and oil imports to resume, and presumably to fall back from their astronomical eight to tenfold price increase.

Yet State Department hawk Victoria Nuland already had stated in January that “one way or another Nord Stream 2 will not move forward” if Russia responded to the accelerating Ukrainian military attacks on the Russian-speaking eastern oblasts. President Biden backed up U.S. insistence on February 7, promising that “there will be no longer a Nord Stream 2. We will bring an end to it. … I promise you, we will be able to do it.”

Most observers simply assumed that these statements reflected the obvious fact that German politicians were fully in the US/NATO pocket. Germany’s politicians held fast turbines refusing to authorize Nord Stream 2, and Canada soon seized the Siemens dynamos needed to send gas through Nord Stream 1. That seemed to settle matters until German industry – and a rising number of voters – finally began to calculate just what blocking Russian gas would mean for Germany’s industrial firms, and hence domestic employment.

Germany’s willingness to self-impose an economic depression was wavering – although not its politicians or the EU bureaucracy. If policymakers were to put German business interests and living standards first, NATO’s common sanctions and New Cold War front would be broken. Italy and France might follow suit. That prospect made it urgent to take the anti-Russian sanctions out of the hands of democratic politics.

Despite being an act of violence, sabotaging the pipelines has restored calm to US/NATO diplomatic relations. There is no more uncertainty about whether Europe may break away from U.S. diplomacy by restoring mutual trade and investment with Russia. The threat of Europe breaking away from the US/NATO trade and financial sanctions against Russia has been solved, seemingly for the foreseeable future. Russia has announced that the gas pressure is falling in three of the four pipelines, and the infusion of salt water will irreversibly corrode the pipes. (Tagesspiegel, September 28.)

 Where do the euro and dollar go from here?

Looking at how this will reshape the relationship between the U.S. dollar and the euro, one can understand why the seemingly obvious consequences of Germany, Italy and other European economies severing trade ties with Russia have not been discussed openly. The solution is a German and indeed Europe-wide economic crash. The next decade will be a disaster. There may be recriminations against the price paid for letting Europe’s trade diplomacy be dictated by NATO, but there is nothing that Europe can do about it. Nobody (yet) expects it to join the Shanghai Cooperation Organization. What is expected is for its living standards to plunge.

German industrial exports and attraction of foreign investment inflows were major factors supporting the euro’s exchange rate. To Germany, the great attraction in moving from the deutsche mark to the euro was to avoid its export surplus pushing up the D-mark’s exchange rate and pricing German products out of world markets. Expanding the eurozone to include Greece, Italy, Portugal, Spain and other countries running balance-of-payments deficits prevented the euro from soaring. That protected the competitiveness of German industry.

After its introduction in 1999 at $1.12, the euro sank to $0.85 by July 2001, but recovered and indeed rose to $1.58 in April 2008. It has been drifting down steadily since then, and since February of this year the sanctions have driven the euro’s exchange rate below parity with the dollar, to $0.97 this week.

The major deficit problem has been rising prices for imported gas and oil, and products such as aluminum and fertilizer requiring heavy energy inputs for their production. And as the euro’s exchange rate declines against the dollar, the cost of carrying Europe’s US-dollar debt – the normal condition for affiliates of U.S. multinationals –rises, squeezing profits.

This is not the kind of depression in which “automatic stabilizers” can work to restore economic balance. Energy dependency is structural. To make matters worse, the eurozone’s economic rules limit its budget deficits to just 3% of GDP. This prevents its national governments supporting the economy by deficit spending. Higher energy and food prices – and dollar-debt service – will leave much less income to be spent on goods and services.

As a final kicker, pointed out by Pepe Escobar on September 28 that “Germany is contractually obligated to purchase at least 40 billion cubic meters of Russian gas a year until 2030. … Gazprom is legally entitled to get paid even without shipping gas. … Berlin does not get all the gas it needs but still needs to pay.” A long court battle can be expected before money will change hands. And Germany’s ultimate ability to pay will be steadily weakening.

It seems curious that the U.S. stock market soared over 500 points for the Dow Jones Industrial Average on Wednesday. Maybe the Plunge Protection Team was intervening to try and reassure the world that everything was going to be all right. But the stock market gave back most of these gains on Thursday as reality no longer could be brushed aside.

German industrial competition with United States is ending, helping the U.S. trade balance. But on capital account the euro’s depreciation will reduce the value of U.S. investments in Europe and the dollar-value of any profits they may still earn as the European economy shrinks. Reported global earnings by U.S. multinationals will fall.

 The effect of U.S. sanctions and the New Cold War outside of Europe

The ability of many countries to pay their foreign and domestic debts already was reaching the breaking point before the anti-Russian sanctions raised world energy and food prices. The sanctions-driven price increases have been compounded by the dollar’s rising exchange rate against nearly all currencies (ironically, except against the ruble, whose rate has soared instead of collapsing as U.S. strategists tried in vain to make happen). International raw materials are still priced mainly in dollars, so the dollar’s currency appreciation is further raising import prices for most countries.

The rising dollar also raises the local currency cost of servicing foreign debts denominated in dollars. Many European and Global South countries already have reached the limit of their ability to service their dollar-denominated debts, and are still coping with the impact of the Covid pandemic. Now that US/NATO sanctions have driven up world prices for gas, oil and grain – and with the dollar’s appreciation raising the cost of servicing dollar-denominated debts – these countries cannot afford to import the energy and food that they need to live if they have to pay their foreign debts. Something has to give.

On Tuesday, September 27, U.S. Secretary of State Antony Blinken shed crocodile tears and said that attacking Russian pipelines was “in no one’s interest.” But if that really were the case, no one would have attacked the gas lines. What Mr. Blinken really was saying was “Don’t ask Cui bono.” I don’t expect NATO investigators to go beyond accusing the usual suspects that U.S. officials automatically blame.

U.S. strategists must have a game plan for how to proceed from here. They will try to maintain a neoliberalized global economy for as long as they can. They will use the usual ploy for countries unable to pay their foreign debts: The IMF will lend them the money to pay – on the condition that they raise the foreign exchange to repay by privatizing what remains of their public domain, natural-resource patrimony and other assets, selling them to U.S. financial investors and their allies.

Will it work? Or will debtor countries band together and work out ways to restore the world of affordable oil and gas prices, fertilizer prices, grain and other food prices, metals and raw materials supplied by Russia, China and their allied Eurasian neighbors, without U.S. “conditionalities” such as have ended European prosperity?

An alternative to the U.S.-designed neoliberal order is the great worry for U.S. strategists. They cannot solve the problem as easily as sabotaging Nord Stream 1 and 2. Their solution probably will be the usual U.S. approach: military intervention and new color revolutions hoping to gain the same power over Global South and Eurasia that America’s diplomacy via NATO wielded over Germany and other European countries.

The fact that U.S. expectations for how anti-Russian sanctions would work out against Russia have been just the reverse of what actually has happened gives hope for the world’s future. The opposition and even contempt by U.S. diplomats toward other countries acting in their own economic interest deems it a waste of time (and indeed, to be unpatriotic) to contemplate how foreign countries might develop their own alternative to the U.S. plans. The assumption underlying this U.S. tunnel vision is that There Is No Alternative – and that if they don’t think about such a prospect, it will remain unthinkable.

But unless other countries work together to create an alternative to the IMF, World Bank, International Court, World Trade Organization and the numerous UN agencies now biased toward the U.S/NATO by U.S. diplomats and their proxies, the coming decades will see the U.S. economic strategy of financial and military dominance unfold along the lines that Washington has planned. The question is whether these countries can develop an alternative new economic order to protect themselves from a fate like that which Europe this year has imposed upon itself for the next decade. 

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Enjoy. I did.

MacGregor On Record.

He adds many of those necessary details which are worth more than just a non-stop stream of tactical minutiae which completely obscures an absolutely dire situation for Kiev regime and its sponsors. 

Again, terrorist acts against Nord Streams are de facto what Pepe Escobar defines as:

Germany and EU have been handed over a declaration of war

I doubt Europe has any healthy forces remaining at the political top to do anything about it--and don't give me Meloni's example, it is the whole other matter--and Europe IS going down in flames. Tomorrow Vladimir Putin will address the nation and it will be, likely, the most important geopolitical speech of this century so far and I am not being dramatic. We'll see. The delegations of all four new Russia's entities from Donetsk, Lugansk, Kherson and Zaporozhie oblasts are already in Moscow. Again, quoting Scott Ritter--Afghanistan on steroids is coming for the combined West and the war of all against all is on in the West. Welcome Bellum omnium contra omnes.

Damn, This Hurricane.

Andrei Raevsky posted a very sad message. 

This is really bad. I hope Saker's house is properly covered. Larry, on the other hand, got off relatively easy.

But there is no doubt that this Ian Hurricane just a wrecker. 

This is a horrible situation. But that is the threat southern Eastern Seaboard of the US lived under for many-many years. Sad.

Wednesday, September 28, 2022

This IS A Real Reporter...

 ... and a journalist. This is how one reports. People like Eva, like Graham and others--saving real journalism in general, and Western one in particular, one report at a time.  

Stay safe, Eva.

Desperate Times--Desperate Measures.

Saker nails it:

Reality is, the US was in the damage control mode for a long time now, and terrorism against pipelines is a clear sign of a desperation and is primarily reaction to decisive results of referenda. You just cannot spin anymore the fact that Russia returned to herself a territory one and a half times larger than that of the whole of Benelux, which also happens to be the producer of 80% of (former) Ukraine's GDP. You just cannot spin this with clogging media with useless and meaningless tactical minutiae of VSU "capturing" some village or town, or two, without any real prospects of holding those for long. So, you lash out in desperation, frustration and panic. And, of course, one needs to continue to spew BS. 

As I already pointed out--blowing the pipelines should not obscure the real situation:

The dynamics was obvious for a while. Russia is simply shutting EU off because EU is an open enemy of Russia, plus it stole Russian money. So, in overall economic terms it is not unexpected for Russia and necessary measures have been taken. Now EU will have to live without Russian gas and that means a final blow to Germany's, grossly overrated and overvalued, economy and it will also fail to produce any tangible benefits for the US economy, since the US economically right now is a complete mess. Interesting times we live in. Per pure geopolitical and military effect--wait for the developments in Ukraine and I believe it was Scott Ritter who described the outcome for the US in Ukraine as Afghanistan 1.0 but on steroids. I, honestly, expect nothing less, but something tells me that it will be more.

Monday, September 26, 2022

Larry Gives A Superb Treatment To...

... Kharkov situation two weeks ago and states:

Remember three weeks ago when Putin and the Russian military were on the ropes and the Ukrainian army was steamrolling through Kharkov? That was then and Urkaine’s promised victory failed to materialize. With the benefit of hindsight, it appears that Russia abandoned the strategically meaningless territory in the Kharkov Oblast of Ukraine and re-deployed forces to the Donbas, Zaporhyzhia and Kherson. Why? To be in position for the referendum–i.e., to defend the Ukraine oblasts that would be given the chance to vote whether or not to reunite with mother Russia. Putin’s subsequent announcement of the referenda, which began last Friday, was not a Hail Mary pass nor an act of desperation. The planning for this had been in the works for at least a month, maybe longer.

While Ukraine continued to throw its troops against the Russian lines and launched artillery strikes on civilian targets, it paid a terrible price in terms of human casualties and destroyed tanks and combat vehicles, and failed completely to disrupt the vote. There have been international observers monitoring the vote throughout the four oblasts. I wish at least one reporter would ask these observers when they were first contacted and asked to come to the Russian controlled territory and do the monitoring. That detail would provide some insight into the extent of the pre-planning for the referenda.

Exactly, now having a luxury of a hindsight we can definitely state that, indeed, the whole Kharkov "offensive", which have been drowned in blood of VSU, was a regrouping with the aim to reinforce the south to allow referenda to take place. Larry makes a superb observation and correctly concludes:

The collapsing economies in France, Germany and Italy also will compel those countries to spend more time trying to quiet growing domestic unrest. When you factor in the energy crisis and Ukrainian military setbacks as winter sets in, the foundation of NATO unity vis-a-vis Ukraine, is likely to crack.

This is a first rate analytical work. Read the whole thing at Larry's blog. 

And Why I Am Not Surprised.

In the middle of an amateurish pseudo-operational BS from Michael Koffman of CNA (so called Center for Naval Analysis) or some other Colonel from the US Army to New York Times--normal competent people do not consult this rag which lives out the remnants of its once solid reputation--we find, in a long and meandering BS piece about SMO, this admission:

I am not sure that be that Michael Koffman or whatever the name of the other Colonel is, who "shared" their military wisdom with NYT, are capable to grasp the way Russian Air Defense operates, they simply do not have any experience with that, not to mention the fact that the only thing US military does well is PR. It is impossible to explain to Koffman or any other political "scientist" abusing sinecures in the US "think-tanks" in and around D.C. how real integrated battlefield AD operates and why for it such targets as HIMARS projectiles are typical targets which are no different than, accidentally, genuinely hyper-sonic (M=5.3) Tochka U.  

I get it, Koffman and people in NYT have bills to pay and are "proud" in the most wrong way, can we call it an American "garrulous patriotism" as de Tocqueville defined in in his classic work, but Russian Air Defense operators are not impressed with HIMARS. What Koffman and others should worry about, of course, is the fact that always superior to the West in the combat use of her Air Defense complex, today Russia obtained an incredible combat experience which in terms of AD and ABM systems will only accelerate the widening of already very wide lead over anything West ever produced. In fact, as data (not from Ukrainian "sources") confirms, including videos, even TOR-M2s are now capable of shooting down such targets as Tochka-U. 

But then, of course, another American shitty rag which squandered the remnants of a reputation in the last few years, Time, when taking interview with VSU's Commander General Zaluzhny, quotes this from him:

Well, he merely confirms what I am writing about for years, corollary to Zaluzhny's statement, the US is, certainly, not well versed in the science of war, especially modern one, but what do I know. Zaluzhny's interview is not accidental--the Russians, who according to US military "experts" suffer huge losses, "lost initiative" and, in general, are about to surrender Moscow, in three days will add more than 100,000 square kilometers and more than 5.5 million people to Russia. I guess, if this is how the "loss of initiative" looks like, then we may only imagine how possession of thereof will look like. But there is a possible, more sinister, reason for this interview--Zelensky's useful life has expired and, in a view of increasingly active operations of Russian Army, the West will try to preserve whatever it can from its project in 404 not least in a feeble attempt to save own face. Zaluzhny can be this figure which could be moved to premier position in 404. I doubt it will make any difference, but desperate times--desperate measures, or... grasping for the last straw.

At this stage and with the results of referendum already pretty much known, UK Defense Ministry as represented by the Chief of General Staff Admiral Sir Tony Radakin met Russian Military Attache in London, Maxim Elovik, to "improve communications channels between British and Russian militaries to mitigate risks and escalation" (in Russian). Sure, considering who current British Prime Minister is--good idea. I am on record, I feel much safer when I know that Gerasimov and Milley are talking, than when Blinken tries to avoid Lavrov by all means possible. So, all in all, I am not surprised.

I Already Touched On It In My Video...

... today, but I will reiterate by posting these screenshots from today:

Or this:
Just a brief review of headlines tells you everything you need to know, because these are headlines of economic collapse, albeit for now reflected only in terms of finances and stock market which, although not a real economy, can serve as a digest to panic which grips the "elite", because for many of them it will mean more than just financial losses. The reason being of many people "on the top" facing some very unpleasant things like... like... hm being hunted down by some angry people (wink, wink)? 

But, of course, these are all only partial manifestations, because the whole West's "planning" continues to fly out the window since Western elites have no clue about anything:

Ah, poor-poor dears--this is what happens when you study "economics" and "political science" in all those prestigious "schools" in the modern West. The issue, of course, is much deeper and much more complicated than "growth", much of it merely by cooking books--the main subject taught at Ivy League economic departments--but it is the issue of geopolitical realignment which is wiping out the last myths of West's dominance and exposes its complete degeneration. 

At this moment I am still trying to process, because it is difficult to grasp in purely professional military terms, this BS about "response" to Russia "using nuclear weapons in Ukraine", because it is so beyond normality that it is difficult to put a finger on a particulars in this sheer insanity and desperation.  The only thing which comes close to this absurdity is, of course, fabled methods of defense by chicken lawyer from Futurama:
 
Which, in some weird way, reflects the thinking process of people in Washington and I want to immediately point out that I am not on the side of those who think that all this sheer insanity is deliberate. No, not at all, there is no plan, there never was, they are that stupid. As Mr. Helmholtz Smith points out at Larry's blog:

Crashing Russia will be easy. It doesn’t make anything – gas station masquerading as a country. rapidly aging and shrinking population – Weak Country with a Nuclear Arsenal – Russia’s Weak Strongman – Russia’s Strength Is Its Weakness. And lots more where those came from. As Hitler said, just one kick – stop buying their gas, they’ll hang Putin and come crawling back. Our rulers have been surrounded for years by people telling them this. Anyone who said that Russia has a big and very self-sufficient economy, that Putin is quite popular and at least half of his critics think he’s too soft, that money from gas sales to Europe are nice but there are lots of other customers, that you can’t be secure unless the other guy feels secure – what happened to them? You know the answer. They never got the chance to tell the bosses this and they never got in the door. And, when they did say these things – on the fringes far away from “trusted sources” and “fact checkers” – they were condemned as Putin apologists and their social media accounts were blocked. After all you can’t give a platform to disinformation when there’s so much real information from real experts like Martin Walker who told us in 2006 “But strategically, Russia’s real weaknesses are getting worse and its non-oil economy is lagging ever further behind its Indian and Chinese rivals.” Stupid or smart, the bosses were only told one thing by everyone who got to them and year after year they ignored all the counter evidence. That’s stupid. But it’s pleasing, especially to mediocre minds, to be told that you’ve got both might and right in your corner and your skillful management and nuanced understanding deserve another pay raise. For years, the same old stuff, over and over amplified and repeated – just one kick.

Or as Forrest Gump used to say--“Stupid is as stupid does.” Systemic collapse in progress, anyone?

Saturday, September 24, 2022

Not Really The News...

... if one asks me, because it was clear from the inception that the US will not give up fat juicy submarine construction contracts for AUKUS project:

Amid heightened tensions with China, the administration of US President Joe Biden is looking to expedite the production of nuclear-powered submarines for Australia by building “the first few” vessels on US soil, the Wall Street Journal reported on Friday. According to unnamed Western officials, the potential agreement on the matter seeks to provide Canberra with a number of nuclear subs by the mid-2030s, while also laying the groundwork for long-term production of the vessels in Australia itself. The move is reportedly being mulled by senior officials from the US, Australia, and UK. All three nations are members of AUKUS, a security pact that was announced in September 2021. Besides promoting “a free and open Indo-Pacific,” it also envisages providing Australia with conventionally-armed and nuclear-powered submarines, thus significantly boosting its naval capabilities.

It IS boosting of naval capabilities but, as WSJ reports in a classic chutzpah move:

Meanwhile, the proposal is said to have its own issues. The US would reportedly need to spend billions of dollars to expand submarine production capabilities on American soil, although Australia is supposedly expected to contribute to these efforts.

You see? Not only Australia will buy those subs, she will help to build shipbuilding capacity. They say 2030 is a the target date, we'll see about that, considering a horrendous economic dynamics in the Western world, but then again--who knows at this stage. In funny news, however, this stands out. As RIAFAN reports:

Translation: The Pentagon has developed a military strategy for the Armed Forces of Ukraine in the Zaporozhye region. The offensive plan would be “suicidal” for the Armed Forces of Ukraine, said Volodymyr Rogov, chairman of the “We are with Russia” movement. The strategy proposed by the United States involves forcing the Dnieper with the help of landings and pontoon crossings, the interlocutor told the Ukraina.ru portal. These attacks will result in thousands of deaths for Ukraine, which the Ukrainian military understands, Rogov believes. “But the military is well aware that this is suicide. Therefore, their army is already trying in every possible way to move away from this, ”he stressed.

That sounds about right, considering Pentagon's "stellar" operational experiences and seeing who represents it today in the public realm, ranging from BSer  admiral Kirby to people of Keane or Petraeus' military "qualities", it is totally conceivable to expect shit like that being viewed as a viable "strategy". Recall Bismark's quip (allegedly he stated that):

Never fight with Russian. On your every stratagem they answer unpredictable stupidity.

Should Bismark have been alive today and could observe the last 80 years of the development of "strategies", especially by NATO, he surely would have rephrased his quote and you all know how. In general, the VSU C2-ed by the US was busy last few months with what Douglas Macgregor terms as the "impaling of Ukraine reserves" on Russian troops. So, you get the picture. In the end, as I repeat this ad nauseam, one has to know what REAL war and operational planning against top notch opponent is--the experience Pentagon simply doesn't have. But that issue of the military school of thought and how it develops had many volumes written about by people who, unlike me, commanded real armies and army groups in strategic level operations or campaigns. 

Now with 300,000 Russians being mobilized, the picture of the larger objectives for Russia begins to emerge and this is a very bad news for NATO and its leader--the United States. The whole "rules based order", a euphemism for the American hegemony, is being disassembled as I type this. We may discuss here the actual meaning of the Shanghai Cooperation Organization, but there is very little doubt that the way United Nations operates today is indicative of a totally paralyzed structure corrupted by the West top-bottom and as such must be either reformed or completely abolished. But this is the task for real global shakers and movers led by Russia. Meanwhile, referenda in former Ukraine continue despite Kiev regime and its sponsors from D.C. and Brussels doing all they can to kill as many civilians as possible in the act of intimidation, but that is not having any effect on proceedings. 

In two days more than 45% of voters in LNR and 55% in DNR have voted and there are still three days left, Zaporozhie saw 35% attendance (in Russian). I am sure the work on establishing a permanent military infrastructure in newly emerging military district of Russia in new four subject is already in progress, and that means a solid second echelon and allocation of reserves when the time for Nikolaev and Odessa comes. This is your primer for Saturday. 

Friday, September 23, 2022

When It Was Worth It, Friday...

... I will make a video on that, if the West (not modern one--this one has to die) is even worth saving ... But one guy, his name was Ronnie Padavona, who later became known as Ronnie Jame Dio sang incredible songs....


On the other hand, how can you describe to modern generation what REAL singing is...

My Friday Sitrep...

... of sorts. We are witnessing history in the making.  

Graham Phillips, meanwhile, continues counting beautiful Donbass girls, LOL! 

And it is also very symbolic and peaceful.  

That What This Is All About:

Graham Phillips provides some snippets:

While Western MSM provide some copious amounts of BS. As Larry notes:

Western sources are circulating videos on social media of lines of cars trying to get out of Russia and lines of young men at the airports looking for a safehaven overseas. Is it true? Well, there are other videos of lines forming outside military recruitment offices in Russia.

Sure, what do you expect from them--they are shit-diggers and will never report real news. So, here it is, the voting has started and for those who still do not understand, I reiterate--Russia is about to get additional 100,000 + square kilometers of territory and 5 + million people, that also means that Russia MUST form in essence a new military district, the one which is bordering de facto NATO. People forget about it. Just keep this in mind. 

This is the line to military commissariat in Chechnya--all these guys are there to volunteer. Same pictures one can observe all over Russia. Just saying. 

Wednesday, September 21, 2022

Me With Some Comments Today.

My talking head. 

Looks like there will be "Medvedev's Map" Solution for... 404.

Do not forget also that by October 1 there will be more than 100,000 square kilometers and more than 5 million people added to Russia.