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Putin Unleashes Strategic Hell on the U.S.

Putin understands that a world awash in debt is one that cannot withstand the currency needed to repay that debt rising sharply.

Authored by Tom Luongo via The Strategic Culture Foundation:

I am an avid board game player. I’m not much for the classics like chess or go, preferring the more modern ones. But, regardless, as a person who appreciates the delicate balance between strategy and tactics, I have to say I am impressed with Russian President Vladimir Putin’s sense of timing.

Because if there was ever a moment where Putin and Russia could inflict maximum pain on the United States via its Achilles’ heel, the financial markets and its unquenchable thirst for debt, it was this month just as the coronavirus was reaching its shores.

Like I said, I’m a huge game player and I especially love games where there is a delicate balance between player power that has to be maintained while it’s not one’s turn. Attacks have to be thwarted just enough to stop the person from advancing but not so much that they can’t help you defend on the next player’s turn.

All of that in the service of keeping the game alive until you find the perfect moment to punch through and achieve victory. Having watched Putin play this game for the past eight years, I firmly believe there is no one in a position of power today who has a firmer grasp of this than him.

And I do believe this move to break OPEC+ and then watch Mohammed bin Salman break OPEC was Putin’s big judo-style reversal move. And by doing so in less than a week he has completely shut down the U.S. financial system.

On Friday March 6th, Russia told OPEC no. By Wednesday the 11th The Federal Reserve had already doubled its daily interventions into the repo markets to keep bank liquidity high.

By noon on the 12th the Fed announced $1.5 trillion in new repo facilities including three-month repo contracts. At one point during trading that day the entire U.S. Treasury market went bidless. There was no one out there making an offer for the most liquid, sought-after financial assets in the world.

Why? Prices were so high, no one wanted them.

Not only did we get a massive expansion of the repo interventions by the Fed, but it was for longer duration. This is a clear sign that the problem is nearly without an end. Repos longer than three days are in this context a rarity.

The Fed needing to add $1 trillion in three-month repos clearly means they understand that they are looking out to the end of the quarter as the next problem and beyond that.

It means, in short, the world financial markets have completely seized up.

And worse than that…. It didn’t work.

Stocks continued to slide, gold and other safe-haven assets were hit hard by a reversal of capital outflows from the U.S. In the first part of the aftermath of Putin’s decision the dollar got whacked as European and Japanese investors who had piled into U.S. stocks as a safe-haven sold those positions and brought the capital home.

That lasted a few days before Christine Lagarde put on her dog and pony show at the European Central Bank and told everyone she didn’t have any answers other than to expand asset purchases and continue doing what has failed in the past.

This touched off the next phase of the crisis, where the dollar begins to strengthen. And that is where we are now.

And Putin understands that a world awash in debt is one that cannot withstand the currency needed to repay that debt rising sharply.

That puts further pressure on his geopolitical rivals and forces them to focus on their domestic concerns rather than the ones overseas.

For years Putin has been begging the West to stop its insane belligerence in the Middle East and across Asia. He’s argued eloquently at the U.N. and in interviews that the unipolar moment is over and that the U.S. can only maintain its status as the world’s only super power for so long. Eventually the debt would undermine its strength and at the right moment would be revealed to be far weaker than it projected.

This doesn’t sit well with President Trump who believes in America’s exceptionalism. And will fight for his version of “America First’ to the last using every weapon at his disposal. The problem with this ‘never back down’ attitude is that it makes him very predictable.

Trump’s use of sanctions on Europe to stop the Nord Stream 2 pipeline was stupid and short-sighted. It ensured that Russia would be merciless in its response and only delay the project for a few months.

Trump was easy to counter here. Sign a deal with Ukraine, desperate for the money, and redirect the pipe-laying vessel back to the Baltic to finish the pipeline.

And with natural gas prices in Europe already in the gutter from oversupply and a mild winter, there isn’t much time or money lost in the end. Better to take the world oil price down well below U.S. production costs which ensure that Trump’s prized LNG stays off the European market as the myth of U.S. energy self-sufficiency vanishes in a puff of financial derivative smoke.

Now Trump is facing a market meltdown well beyond his capacity to fathom or respond to. While Russia is in the unique position to drive costs down for so many of the people while riding out the shock to the global system with its savings.

Because money flows to where the best returns on it come, high oil and gas prices stifle development of other industries. Lowering the oil price not only deflates all of the U.S.’s inflated financial weapons it also deflates some of the power of the petroleum industry domestically. This gives Putin the opportunity to continue remaking the Russian economy along less focused lines. Cheap oil and gas means lower return on investment in energy projects which, in turn, opens up available capital to be deployed in other areas of the economy.

Putin just told the world he’s not riding his country’s oil and gas resources like a cash cow but rather as an important part of a different economic strategy for Russia’s development.

It’s like watching someone playing the first half of a game implying one strategy and making a critical shift to a different one halfway through, taking advantage of their opponents’ carelessness.

It rarely works, but when it does the results can be spectacular. Game, Set, Match, Putin.

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Olivia Kroth
March 16, 2020

TASS: Russia managed to offset all losses from sanctions — Putin — Putin agreed that the losses were significant — MOSCOW, March 16. /TASS/. Russia has lost about $50 billion as a result of foreign sanctions, but it has managed to offset the losses by various means, including import substitution, Russian President Vladimir Putin said. “To hell with those sanctions,” Putin told TASS in an interview for the project entitled “20 Questions with Vladimir Putin”. “According to various estimates, we have lost 50 billion but we have earned the same amount.” He agreed that the losses were significant, but the… Read more »

Oh my
Oh my
Reply to  Olivia Kroth
March 16, 2020

I’m waiting for some political cartoonist to draw a caricature of Putin ramming a pipeline up Trump’s derriere. LOL

Macy's Day Parade
Macy's Day Parade
Reply to  Oh my
March 16, 2020

Those guys that make the baby Trump balloons would make good candidates, if they hadn’t been brainwashed with russophobia.

Olivia Kroth
Reply to  Oh my
March 16, 2020

Oh my, you won’t see such a caricature, because firstly, President Putin would never do such a vulgar thing, he is a gentleman. Secondly, he quite likes President Trump and has often said so.

Smoking Eagle
Smoking Eagle
Reply to  Olivia Kroth
March 16, 2020

Haha. But the cartoonists are often not very gentlemanly.

Olivia Kroth
Reply to  Smoking Eagle
March 17, 2020

That is true.

Smoking Eagle
Smoking Eagle
Reply to  Oh my
March 16, 2020

Maybe with one shoved in his mouth too to shut him up.

Black Picard
Reply to  Oh my
April 4, 2020

How about a caricature of a Russian Sarmat or S400 missile in the shape & colour of a NordStream-2 pipeline (with logo) crashing onto a US shale oil platform?

Black Picard
Reply to  Olivia Kroth
April 4, 2020

In August 2014, Russia launched counter-measures in retaliation for the sanctions taken by the European Union, the United States, Australia, Canada and Norway… …Furthermore, the import of live, chilled and frozen fish and crabs from the United States, the European Union, the EU, Australia, Canada and Norway has been restricted. — Canada under our former patriotic French-Canadian Prime Minister, Jean Chretien, would never have joined in this “Western” orgy of sanctions against Russia. Actually, Canada has far more in common with Russia than it does with our belligerent neighbour South of the border: A passion for Winter sports, an excellent… Read more »

Alejandro David Bolanos
March 16, 2020

Massive analysis. You would add the effect of Conoravirus19 on top all what you wrote.

Apparently China and Russia are the big winners after all.

BobValdez
BobValdez
Reply to  Alejandro David Bolanos
March 16, 2020

Rather tha calling Russia and China “winners”, I’d call the us the loser, big time.

JanetC
JanetC
March 16, 2020

We always thought that Trump played checkers while Putin played chess — now it seems that Trump doesn’t even know how to play checkers. Hopscotch maybe?

Smoking Eagle
Smoking Eagle
Reply to  JanetC
March 16, 2020

Too fat and head-heavy.

Spin the Bottle
Spin the Bottle
Reply to  JanetC
March 16, 2020

Blind man’s bluff.

Tjoe
Tjoe
March 16, 2020

We have an accumulating debt money system problem… unavoidable…and there is no such thing as national bankruptcy.

If you can find it, this book “The Truth in Money Book” makes great arguments from an engineers perspective, that finance people can never see, yet is so accurate and predictive of the US FED debt money system. Here is one used…. or find at a library….it’s info they don’t want you to have.

https://www.abebooks.com/servlet/BookDetailsPL?bi=22709700492&cm_mmc=ggl-_-COM_Shopp_Rare-_-naa-_-naa&gclid=EAIaIQobChMIv_Otm-mf6AIVh__jBx3wAAunEAkYAyABEgISevD_BwE

T W Huning
T W Huning
March 17, 2020

..a firmer grasp on this than HE (has).

T W Huning
T W Huning
March 17, 2020

Remove the sanctions, stupid. Remove the PNAC neoCONS, stupid. Leave the Middle East, stupid. Forget AIPAC.

Olivia Kroth
March 17, 2020

TASS: Many countries opt for Russian combat equipment despite sanctions — official — Some countries and concrete persons are running real risks opting to buy Russian equipment, the military official stated — MOSCOW, March 16. /TASS/. Many foreign countries choose to buy Russian combat equipment despite the sanction risks, chief of Russia’s Federal Service for Military Technical Cooperation Dmitry Shugayev said on Monday. “Russia as a reliable partner is in priority with many countries. Some countries and concrete persons are running real risks opting to buy our equipment. We value such partners because they prefer us,” he said in an… Read more »

Smoking Eagle
Smoking Eagle
Reply to  Olivia Kroth
March 17, 2020

It is risky buying US equipment. Take the ongoing failure of the F-35s. The US “persuades” countries to place orders for the thing. Part of the persuasion is job creation in the purchasing country – manufacturing parts for the thing, or even for another thing. If the country changes its mind about making the purchase, the US threatens the country with shutting down the manufacture of parts, resulting in unpopular job losses for that country’s government. Judging from what I’ve read about Russia, she doesn’t use this kind of coercion/blackmail on her partners, and so is deemed to be much… Read more »

Rick Oliver
Rick Oliver
March 17, 2020

Mr Vladimir Putin , the Maestro of Chess , cool as a cucumber , sting like hornet ! The world is your oyster , but we know you`re not going to go shouting to the rafters , jumping and waving your flag . We know you will remain humble , after all , there is still a lot to be done . You need to know that the groundswell of support is steadily growing and we can breathe a sigh of relief , especially with your anti missile defence systems doing their protection jobs .God bless Russia and her people… Read more »

Aatkutri Noydirja
Aatkutri Noydirja
March 17, 2020

Two main causes appeared in my vision for Americans fallen down into hell. One recently Christianity published an investigation report mentioned for 2000 years long they have had used fake Bible which Jews supplied them from Jerusalem. And apparently it established that Jews used them like as oilman bullock for two thousand years emerging Christianity in the hole of Jews pretended fake Bible trap. 2nd cause is also connected with the above first cause. While Christianity utilized just as Jews oilman bullock so claimed unleashing never be done by Putin, because there’s nobody in the world who can overtake Jews… Read more »

Zdrsv
Zdrsv
March 17, 2020

Sounds like a good plan Vladimirovich

Dan Kuhn
March 17, 2020

The key to all of this was in the preparation. Some months ago a person( I forget his name) in the US Tresury said this ” Russia has made itself immune to the US dominated financial system” Says it all.

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