How The Empire Might Strike Back

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

All those focusing on the West's lack of leverage are forgetting that the Empire retains multiple way of striking back.

Many observers have focused on the relative paucity of the West's diplomatic and military options in Ukraine. Others focus on Russia's sources of leverage: cutting off natural gas to western Ukraine and Europe and/or dumping its reserves of U.S. dollars: Putin Adviser Urges Dumping US Bonds In Reaction to Sanctions.

That applying such leverage could backfire on Russia receives less coverage. Does anyone doubt the Federal Reserve's ability to print $200 billion to buy the entire Russian holdings of Treasuries? What's another $200 billion on top of $4 trillion?

Recall that Russia holds those Treasuries/U.S. dollars as reserves for its own benefit. Dumping the dollars simply creates the need for an immediate replacement, especially as the ruble craters.

All those focusing on the West's lack of leverage are forgetting that the Empire retains multiple way of striking back. For example, bringing the costs of misadventure home to Russia's politically influential 1/10th of 1%.

A knowledgeable correspondent submitted these observations:

1. After Edward Snowden the entire "intelligence community" is looking for major payback. Here is a heavy weight added to Ukraine's side of the scales. This is leading edge satellite and electronic intelligence, plus a detailed order of battle on actual Russian forces available and their locations. NATO can also provide access to advanced command and control facilities and advanced battle planning cells. In addition to numbers and morale the Ukraine will be able to mass their forces at the right spots and ignore unthreatened areas.

2. Are you a heavy hitter 0.1%'er New Russian supporting Vladimir Putin? Your entire financial and personal history could soon appear on internet social media, too. In Russian.

US and British agencies have collected many millions of dirty selfies almost by accident. Imagine what they've collected on purpose against major intelligence targets. For instance, every member of the Russian Duma, the cabinet and all their top staffers.

3. Precision guided financial and visa sanctions applied throughout the entire western world. This is not the USSR in 1979 anymore. The entire upper strata of Russia's elite, including all of Putin's United Russia Party, are now extremely international. They and their extended families travel frequently to all the world class watering holes to sun, dine and shop. They have offshore bank accounts and credit cards (as witnessed in Cyprus). They own vacation homes in Spain, Miami, Italy, the Greek Aegean Islands et al. Their children by the tens of thousands attend western universities on student visas. They have massive investments in stock and real estate throughout the entire 'west'.

As a result, they are personally vulnerable to sanctions pressure in a way the Soviet nomenklatura never was. This Ukrainian adventure could carry uniquely painful and personal high price tags.

The media would not be alerted; the targets will simply start getting messages like this:

"Your passport and visa are invalid for entry. Please follow this officer..."
"I'm sorry ma'am, your credit card was declined."
"Invalid PIN number."
"User ID & Password are invalid. Please reenter correct user ID and password".

Massive materialism and corruption is the basis of Putin's elite domestic support. Once he can't deliver the goodies anymore they'll drop him.

The EU previewed this class of soft weapon when it began compiling blacklists of Ukrainian officials deemed responsible for the shootings on the Maidan in late February.

Consider the massive personal financial corruption on Yanukovych's part that was subsequently exposed. It seems likely the tailored sanctions threat played a major role in disaffecting his key political lieutenants and allies. That band of thieves also all had significant offshore assets at stake.

Yanukovych's government was a scale model of Putin's own political patronage and government system. It is more robust but has many of the same weaknesses.

Thank you, A.C. Discussions of modern warfare often revolve around asymmetric warfare in which the side with few conventional assets is able to leverage unconventional assets against a conventionally superior force. There are all sorts of asymmetric advantages that can be pressed home, and those targeting the wealthy will not be mentioned in speeches.

This is not to suggest this kind of asymmetric leverage is being applied or will be applied or should be applied; I am simply pointing out that it could be applied, and with very little fanfare or effort.

Others have referenced the same capabilities: U.S. has options for Russia’s declaration of war on Ukraine.

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fightthepower's picture

What a silly article!  Who gives a crap about any of that when you face the threat of the USA having 1st strike nuclear capability because they have missle defense on your borders. 

Dr. Richard Head's picture

I was giving it a Google, but had no luck.  It seems to me that the DOD has been trying to get missile defense systems into that area for a few decades, no?

johnQpublic's picture

seems to me, that if we plan to get asymmetric over there, perhaps some american computer whizzes need to get asymmetric here at home

 

bitchez

Aaaarghh's picture

WTF! OFF TOPIC HERE...I am so glad i am in the uk...

The israelis are going to share their desalination tech with california bods to ease drought......lets hope the tech removes radioisotopes huh, most of the food in the us will end up contaminated surley. Anyone know more about this?

Isotope's picture

Not likely. Economies are too fragile and connected today.

Oligarchs can't buy anything in London and luxury vacation spots around the world? Unfortunate that your city or island has an instant depression.

Rich Russians can't purchase, lease, or even buy a ride on a business jet? Sorry about all those aircraft your company had to park in the desert to rot away.

Tens of thousands of Russian kids can't attend college in the US? Too bad about that gaping hole in your school's budget for lack of those "cash on the barrelhead" students.

Unintended consequences are a bitch. But that's always the last thing the elite in the US government thinks about. Like the song writer said, "It's so easy to hurt others when you can't feel pain."

Edit: Do you think the FSB has no compromising pictures or information on US politicians? They practically invented that game.

SWRichmond's picture

Rumer has it that Snowden has names and addresses, personal phone numbers of Senators, Congresspersons, ATF/FBI/CIA/IRS, etc.

I am guessing the higher ups value their privacy more than the rest of us, the mundanes.

Manthong's picture

The Chinese market in the west is shrinking thanks to austerity, contracting consumerism and what’s left of the middle class furiously delevering.

The Chinese can build a 30 story hotel in two weeks.

How long do you think it will take them to install a half dozen pipelines headed east/southeast?

SilverRhino's picture

I can just imagine what the FSB has collected on Obama, ketchup boy and Idio-Biden.

Hillary would be easy to discredit.  Just pull up her KGB file and print it. 

 

 

Toolshed's picture

Good info, but I am not so sure about being glad to be in the UK. I would be much happier to be living with an undiscovered indigent tribe in the Amazon.

Aaaarghh's picture

totally with you there, looking to emigrate to rural nz asap!!!! UK is a dump-hole, its just further away from water borne radionuclides than calif.

yrbmegr's picture

Yes, and Ukraine has a long border with Russia.  And Ukraine is not a member of NATO.

Yet.

Toolshed's picture

I am pretty sure that Ukraine's nato membershit would last about 3 days at most.

yrbmegr's picture

I say we find out.  Recognize Russian conquest of Crimea and new government of Ukraine, and admit remainder of Ukraine to NATO.

TheReplacement's picture

Let's hold off on that for a while until they shake out their government - see if they are on the level or just the next wave of criminals. 

BorisTheBlade's picture

Now we are talking, ban Russian oligarchs from Western financial system and physical entrance into land of the free. Oh wait, what is considered money laundering and outright theft in so many emerging economies is finally recognised as such by the Imperial administration? I would be mildly impressed if that indeed happenned, which would spell end of dollar funeling back and forth with emerging economies and perhaps we would finally found out how much of the dollar reserve status is based upon money laundering schemes.

Herd Redirection Committee's picture

The idea that Western banks don't want the oil money from Russian oligarchs, hahahahahahhhhhaahaaa....

thunderchief's picture

I don't think the the west will be able to confiscate individual peoples money, unless like Cyprus, which effects all account holders.

To target Russians abroad would be like turning every passport holder into an enemy, very, very, very fascist.

Hold on, that kind of sounds like what the USA is gunning for.

ChanceIs's picture

We know what happened when the Cypriots (should I say IMF?) tried to bail in the Russian oligarchs.  The Russians didn't lose.  They took some quid pro quo, but didn't loose.  Probably came out ahead.

Now will you get some quid pro quo when Obama myRAs your IRA?  Don't hold your breath.

Hmmmm.  Come to think about it, Obama probably started myRA as a backup if his regime change in Ukraine failed (as it has) and he needed something other than the Fed to buy Putin's soon to be dumped bonds.

One of CHS's worst articles BTW.  This is stocks and flows.  Yes the Fed has $4 trillion in the pantry so what if it is required to put Putin's $200 billion in there to boot.  What about the flows?  As in...what if mom and pop think it is a good idea to run for the exit and the flow turns from a stream into a torrent?  Didn't George Soros do something like that to the British pound way back when?  He has no scruples about doing that to the US.  And then there are the algos.  Never discount the algos.

Memo to Charles Hugh Smith:  Chuck.  I know that you are a bright guy.  I read your stuff all the time.  But....unless you have been asleep, you would have noticed how much gold Russia has been buying.  You make the point that Russia has to turn that $200 billion into some other sort of reserve.  Like.....Dude....ummmmmmm.......like...what if they already have, and it be golden?

bsdetector's picture

Hold on a moment fightthepower, are you suggesting the events in Crimea could cause a nuclear war? That suggestion is silly. If any government official in the US, the EU or any other sovereign makes such a suggestion they should be tarred, feathered and then ostracized. 

Xploregon's picture

To say nothing about the potential impact of shorting borscht.

Levadiakos's picture

How 'bout we fire Elijah Cummings out of a cannon

Grosvenor Pkwy's picture

Truly a silly article! Just consider one aspect:

"US and British agencies have collected many millions of dirty selfies almost by accident. Imagine what they've collected on purpose against major intelligence targets. For instance, every member of the Russian Duma, the cabinet and all their top staffers."

These kind of tactics may work against the average American lower-middle-class husband, but are ridiculous when applied to upper-class foreigners.

First of all, porn is for chumps with no money, so forget that. These guys probably have a wife, a mistress, and a few servant girls taking care of their needs, and they're not going to get blackmailed over something so inconsequential. The wife knows everything, the mistress eats dinner with the family, and the servants help the wife with shopping and cleaning.

DeadFred's picture

The US missle defence on the borders won't stop the sub-launcehed missles. Four nukes detonated in the atmosphere on the corners of the country and one for each of the major naval bases and the only decision for Obama to make before the masses start to starve is whether to strike back and bring the whole world to ruin. Putin's big question before a first strike would be about whether the Kenyan guy would bring the pillars of the temple down around himself for the sake of a crippled country he secretly despises. The infrastructure of the US is very vulnerable to an EMP first strike and two months after the grid and every electronic device (banks, communications, cars and trucks, among others) Americans will be more concerned about where their next meal is coming from than who is top dog in the Ukraine. I haven't found any reliable estimates on how much food is stocked in the cities but I've heard it's about a month's supply.

TheReplacement's picture

The main concern would be truck and tractors...  no food.  Even if you have stockpiled to last a few weeks or months there will be no groceries the next year.  No refigeration either.  Medicines would run out fast, especially those that need to be kept cold.  Anyone relying on medication to stay alive would die.  Anyone relying on medication to keep them from being raving dangerous lunatics would become raving dangerous lunatics.  Addicts would have a bad trip.  Law and order would become a very local issue fast.  Justice would probably be inconsistent from locality to locality, if at all.  Fuel would be a problem for northern cities.  Southern cities would swelter without AC.  Just how many people died in Paris during heatwaves the past decade due to power outages and no AC?  Nuke plants, munitions factories and stores, and borders would be left unguarded.  Countries with large armies (Russia, China, and pals) would intervene in the name of humanitarianism but it would just be someone else building an empire.

At least we aren't French, which is nice.

disabledvet's picture

putting "Czar Bomba" on the table actually isn't a bad idea...UNFORTUNATELY WE HAVE SPETSNASZ INSTEAD.

In other words I take one look at the Russian General (was his name Zhukov?) securing the Games and then conducting the massive Russian military excercises and voila! "i have an Army of One"...and he simply flies off to Crimea and secures the bases HIMSELF....PERSONALLY. "No problema" and NO MEDIA COVERAGE.

Now we have "problema" however.
We're BEGINNING this conflict with "assymetrical warfare."
CRAZY.

Now we send in Marshall Zhukov "to clean up the mess"?
This man is a General...he doesn't just "go in."
This man has an entire STAFF gathered around him "feeding him information" and that is (if we go by the book here) "normally" how these things "go Forward."

That doesn't look like the case this time and "KGB Colonel Putin" will order his "Big Guns" for a major attack.

This is more than just "escalating quickly" but is a "moving target" as well.
Why a situation that was all hunky-dorry literally just a few weeks ago (hello...Olympics anyone?) has become "this" is...well, quite stunning actually.

There is one way to find out if President Putin really is crazy or not...and that's to race to Kiev and start providing for a defense of the City "asymmetrically at first" and quite possibly "in a highly formalized and ritualized way" thereafter.
Certainly the PEOPLE of Kiev are preparing said defense.
And "we just lit the candles" to honor their dead in an "emotional ceremony."

"You have orders" seems pretty obvious.

IridiumRebel's picture

"The more you tighten your grip, Tarkin, the more star systems will slip through your fingers."

-Leia to Grand Moff Willhuff Tarkin

ParkAveFlasher's picture

Tarkin - "Allow me to demonstrate the full power of this space station as I ... CHANGE ALL YOUR REBEL CREDIT CARD PIN CODES!!  HA HAAA!!"

I'm sure that breeders of miniature giraffes all over the gilded halls of Oligarchic Russia are quaking in their velvet slippers as we speak.

teslaberry's picture

say what you will but that miniature giraffe was one of the most excellent displays of a genius idea human beings have been actively pursuing for thousands of years: breeding animals smaller to domesticate them. 

 

ostriches, catlle, goats , etc...many an excellent small breed has been created, let alone, dwarf breeds , let alone pets---how many mini dogs and mini cats are out there"?

 

now a mini giraff. a mini elephant, a mini ---whale. 

 

can you imagine breeding a dwarf sperm already not much bigger than a donkey---- to a smaller size to fit in your fish tank? http://en.wikipedia.org/wiki/Dwarf_sperm_whale

never say never! if i were a russian oligarch, i'd have mini giraffes AND mini whales.

 

caustixoid's picture

speaking of tiny giraffes:

https://www.youtube.com/watch?v=rkB9OT2XVvA

Rich Russian Guy - "Opulence, I has it"

LawsofPhysics's picture

"What's another $200 billion on top of $4 trillion?" - Full faith and credit, that's what.  i. e. NO faith, NO credit motherfucker.

Vampyroteuthis infernalis's picture

The Fed might want interest rates to rise on Treasuries. There really is no excuse to buy more when real rates are negative.

LawsofPhysics's picture

It was that way prior to starting the direct monetization of 85 billion per month.  honestly I was surprised they kept buying then.

Toolshed's picture

"honestly I was surprised they kept buying then."

You and me both. The fed is crucifying a major voting block, as in the 55 yrs and up age group, for the benefit of the financial sector scum. I was equally surprised that AARP remained silent as they did so. I contacted the AARP, after they attempted to recruit me into thier useless org, about that topic and got a spew of nonsense about how that was not an important issue for retirees. LOL!!! Another non-profit on the .gov teat I guess. Readers should keep this in mind when they get that never ending flow of AARP spam.

BigJim's picture

 Recall that Russia holds those Treasuries/U.S. dollars as reserves for its own benefit. Dumping the dollars simply creates the need for an immediate replacement, especially as the ruble craters.

Janet: Hello? Who's this?

Vlad: It's me! Vlad!

Janet: Vlad? Oh, Vlad! Er... how are you, Vlad?

Vlad: I'm very well, thank you. More to the point... how are you, now that we sold $200B of treasuries and bought physical gold with it?

Janet: I think the main door will keep the zombie hordes out before we run out of hollowpoints. Thank goodness for the DHS!

Vlad: Gold, bitchez! 

SDShack's picture

The Fed now controls about 1/3 of the bond market, and has effectively kept ZIRP in place for 5+ years, with no real end in sight. The Fed has learned from their mistakes, especially the ECB and the EU, where the bond vigilantez caused all sorts of issues and were the only real threat to banker power. The only thing that makes sense is to continue to buy bonds at ZIRP to get to the 51% threshold. The bond vigilantez become powerless at that point. They can dump treasuries all they want, and the Fed will just buy them, or have their proxy's buy them... like Belgium. Will it work? Hell, I don't know. History has always shown that debt based fiat always fails eventually, so history is against them. But if you put yourself in the mind of a sociopath banker, when winning is all that matters, you come up with some crazy ass ideas. Buying all bonds is one of them that fits the mindset of a sociopath. Especially when you can do it at ZIRP, using printed fiat. That's why I keep saying, in their twisted mind, the Ponzi becomes perpetual in this environment. It's the only thing that makes sense because debt is the only thing they live for. It's been their MO for as long as there have been bankers. They will never reduce their balance sheet. They can only expand it to keep pace with the ever expanding debt. They do it, because they don't know anything else.

Toolshed's picture

"The Fed might want interest rates to rise on Treasuries."

Say what? What the hell are you smoking, and where can I get some?

 

"There really is no excuse to buy more when real rates are negative."

Ummmmmmm...........monetizing the national debt? Duh.

LawsofPhysics's picture

Yes, nothing more than taking title to real assets in exchange for keeping an insolvent government running a bit longer.  Not good.

Kirk2NCC1701's picture

Correct. +1.
As I've said numerous times in recent days: "Dumping" USTs and Bonds, without a significant sell-off already in process, is for financial morons.

But causing/starting such a trend, by demanding payment in Gold (as some ZHers have suggested), is another matter. It's pure genius and it's ballsy.

When the EU pays for black gold with yellow gold (the Russians already export the White gold, aka Platinum), then "Faith" in fiat Euros and Dollars gets rather shaky.

Game on, Bitchez!

Tracerfan's picture

Someone hasn't read the history of World War II.  Russia sees this as an existential issue.

Putin doesn't give a crap about this stuff, and he has the full support of the security services and armed forces. 

LawsofPhysics's picture

That too. The russians understand poverty and hard work.  They would be quite prepared to survive (and have been surviving just fine) in the absence of many things.  Having all the paper bullshit in the world blow-up will be no big deal to these people.  for all those unfunded liabilities in the west, not so much.

Bioscale's picture

Not only russians, the former Ostblock gives more sympathy to Russia than USA, France or UK. Officially the central and eastern europe belongs to NATO, the political talking heads have no choice, but the regular people do not like that much. Several generations have grown up with comunist propaganda everywhere and now they see it comming from the West..

LawsofPhysics's picture

Yes, most 'mericans have no long term memory or thinking (by design).  The Russians and Chinese most certainly do.

yrbmegr's picture

If Putin is trying to increase Russia's security, poking a stick in the eye of the West seems like a backwards way of doing it.  It might provoke a response that makes Russia less secure.

Dr. Richard Head's picture

I do seem to remember that the one that poked this bear first was teh US Government at their "support" of protestors in Kiev.  Then again, maybe that whole telephone conversation was simply edited and fake...

yrbmegr's picture

Supporting, even "supporting", protesters in Kiev is a far cry from invading a country.  Russia would not have been in any particular danger from a "pro-Western" government in Kiev.  The economics are too compelling for Ukraine.  Now, however, the West is galvanizing, after a fashion, to "contain" Russia.  That has happened once before, with the end result being a reduction in Russian status.  I think this is ultimately counterproductive for Putin.

the phantom's picture

God damn, you moron, God damn.--- Rustin Cole, True Detective

yrbmegr's picture

If only you would be clearer and more emphatic in your posts, I could understand you better.

Anusocracy's picture

And how many countries has the US invaded?

 

yrbmegr's picture

Yes, the US is hypocritical, but that does not change the security calculation.

Anusocracy's picture

And why did Russia make its move?

Was it because of someone "supporting" protesters in Ukraine, as has been done in dozens of other countries?

 The fucking problem is the US.