Obama Administration Prepares To Unleash Weapons Of Mass Wealth Effect Destruction On Russia

Tyler Durden's picture




 

As Senator Ron Johnson so appropriately blasted, "I'm not sure sanctions had any effect whatsoever other than, you know, the Russians have mocked them," and so it is that the Treasury's (little heard of) "Terrorism and Financial Intelligence" division is preparing to unleash its most deadly weapons yet - an arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies. It appears clear that while the US dropped speech-bombs and sanction-mines, proclaiming the disastrous economic significance of these efforts, Russian stocks soared (vastly outperforming the US) and the Ruble strengthened... and so - as undersecretary David Cohen tells the WSJ, "What we've done over the past 10 years is to create a new method of projecting U.S. power..." e.g. sell non-US stocks (thus buy US stocks).

 

While the US equity market has already become a monetary policy tool, it appears now it is a global geopolitical force for good too...

As The Wall Street Journal reports,

the Obama administration is trying to shore up international support for a growing arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies.

 

As the administration prepares for a possible next round of sanctions against Russia, it is increasingly relying on an obscure unit inside the Treasury Department—a group of sanctions architects and financial sleuths in the Office of Terrorism and Financial Intelligence—to play a leading role in U.S. foreign policy.

 

...

 

Founded to disrupt terrorist financing after the attacks of Sept. 11, 2001, the Treasury office now plays a central role in exerting pressure overseas as the American public has little appetite for military intervention.

"What we've done over the past 10 years is to create a new method of projecting U.S. power," Mr. Cohen said in an interview. "We do that in a way that is unique in the world."

His office includes an intelligence shop that scours bank reports and spy agencies' gleanings for financial patterns that could threaten U.S. security, making Treasury "the only finance ministry in the world with an in-house intelligence unit," Mr. Cohen said.

...

"We have become proficient at reducing collateral damage," Treasury Secretary Jacob Lew said in remarks to be delivered Monday at a conference hosted by the Center for Strategic and International Studies that is looking at the office's work in its first decade. "But we cannot escape the fact that when we deploy these methods, there will be those who will unintentionally pay a price."

 

But it seems not everyone is so excited about the threat of this obscure war-mongering from the US Treasury...

Some of the resistance Treasury faces comes from U.S. businesses that worry about the fallout. Meddling with an economy as big as Russia's, for instance, could trigger significant losses for U.S. businesses if their work is affected by the sanctions, or if Moscow decided to retaliate.

 

...

 

Leaders of several European countries, including Hungary, have opposed tough sanctions on Russia, a major energy supplier on the continent, and their reluctance weighs on the sanctions policy of the EU, which makes such decisions by consensus. German firms have complained openly about the prospect of losing business in Russia.

Still, despite the massive outperformance of Russian stocks (and the Ruble) since sanctions began, Obama is proclaiming his actions as a major factor in Putin's retreat...

Still, Mr. Obama last week credited the sanctions and other measures the international community took against Russia with serving as a key "counterweight" to Russian troops on the border with Ukraine, most of which are now believed to have moved away.

So perhaps that explains the shocking decoupling surge in US equities this week as bonds rallied , volatility rose, and Russia stocks leaked lower...

 

Welcome to the new order... where elites wage wars on the stock exchanges... while real blood flows on the streets

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Sun, 06/01/2014 - 23:06 | 4815849 LetThemEatRand
LetThemEatRand's picture

Love you, Tylers, and hate the bankers as much as you.  But take the graph back a little in time.  U.S. stocks are already in the stratosphere.  Russian stocks are bouncing from a big dip.

Sun, 06/01/2014 - 23:09 | 4815860 credittrader
credittrader's picture

The chart... which could just as easily be of the Ruble... stands as it is ppst sanctions performance... which the administration continues to claim has devastated them economically... The pre sanctions dip was EM crisis flow related... not preemptive sanctions... 

Sun, 06/01/2014 - 23:15 | 4815871 Harlequin001
Harlequin001's picture

Here comes Russia's 'pay us now for our gas and oil in gold' reply and the WTF moment for Obama...

Sun, 06/01/2014 - 23:32 | 4815908 BlindMonkey
BlindMonkey's picture

Does Germany have enough phyz to perform on deliveries if that were the case? I bet Russia would gladly take as many German CNC machines as Germany could ship in exchange.

Sun, 06/01/2014 - 23:40 | 4815918 dryam
dryam's picture

Weapons of mass wealth effect destruction from the most bankrupt country in the history of the world? 

Sun, 06/01/2014 - 23:58 | 4815941 SafelyGraze
SafelyGraze's picture

OT -

the us treasury department reminds you to believe in santa claus

https://www.youtube.com/watch?v=OKDikuf3EUE

"thank g-d he lives and lives forever"

ps -- buy savings bonds!

Mon, 06/02/2014 - 00:29 | 4815991 knukles
knukles's picture

Hey Joey, watch me pull an obscure unit out of my hat.

Mon, 06/02/2014 - 06:19 | 4816200 MeMadMax
MeMadMax's picture

So...

Who's the economic terrorist now?

 

Our gov'ment is!

Mon, 06/02/2014 - 07:28 | 4816251 ndotken
ndotken's picture

Without a doubt ... the most clueless Administration in history #morons #dumbasses #fucktards #idiots #titsonabull

Mon, 06/02/2014 - 10:21 | 4816686 -.-
-.-'s picture

...#titsonaboartoo

Mon, 06/02/2014 - 09:01 | 4816463 caShOnlY
caShOnlY's picture

Does Germany have enough phyz

Germany wouldn't need any phyz, all Russia would request from Germany are DeutchMarks. Game over, Europe.

Mon, 06/02/2014 - 09:56 | 4816584 astoriajoe
astoriajoe's picture

That would be funny if they took DM (either old or newly issued) over USD, or even Zimbabwe megabucks. 

Sun, 06/01/2014 - 23:33 | 4815910 CrashisOptimistic
CrashisOptimistic's picture

You guys are just going to have to accept that under no circumstances will Russia ever demand gold in return for oil.

It has no function in Russian society and there would be no point in it.  They may demand labor.  They may demand calories.  Gold is just an absurd hope.

As for financial manifestation of power projection, it would be useful to note that the French stock market continued to operate during Nazi occupation in WW II.  Generally speaking, prices were dictated by decree, and they had no point at all because Germany demanded most of the French agricultural harvest be sent to Germany.

See . . . THEY knew how to project power.  With food.  With starvation.  Not with gold.

Sun, 06/01/2014 - 23:49 | 4815927 dryam
dryam's picture

Gold is money.  You don't eat it & it doesn't power anything.  Money is a medium of exchange.  Oil can be sold for gold, and gold can then be traded for food, commodities, goods, etc.

Sure, if you look through the bastardized lens of the U.S. where money is printed out of thin air and the gold market is manipulated to suit your economic purposes, then yes, gold is useless as it just (supposedly) sits in Fort Knox, etc.  Just how long do you think the U.S. can keep bullshitting the world with their worthless IOU's?  Tick, tock, that day is coming.  You can only live in fantasy land for so long.

Mon, 06/02/2014 - 00:50 | 4816021 CrashisOptimistic
CrashisOptimistic's picture

Oh there's no question that Russia will relentlessly demand things of use to them rather than USDs.  Perhaps American labor to do toilet cleaning.  Things like that can be demanded, as the Germans demanded of the French.  They didn't rely on French gold to pay the bills of conquest.  They relied on French agriculture and French labor to build German armaments as payment for being conquered.

But you will never, the N word, never ever see a gold assay kit under every cash register in Russia or anywhere else to check for tungsten if an attempt is made to trade things of value like gasoline or food for it.  That will never happen.  Ever.

 

 

Mon, 06/02/2014 - 03:37 | 4816134 economics9698
economics9698's picture

Let’s make this simple.  Putin hates NWO (aka Rothschild, tribe, cockroaches) bankers.  NWO bankers hate Putin.  Putin knows the Achilles heel of fiat bankers is gold. What direction do you think he will go?

1. Gold.

2.  Play the fiat game.

Mon, 06/02/2014 - 17:24 | 4818090 Monty Burns
Monty Burns's picture

Let’s make this simple.  Putin hates NWO (aka Rothschild, tribe, cockroaches) bankers.

 

I'm not at all sure that this is correct.  The signals are very mixed.  It's premature to judge exactly where Putin stands on such issues, IMHO.

Mon, 06/02/2014 - 21:39 | 4818770 TheReplacement
TheReplacement's picture

That is Putin's strength - you don't know when he'll stand and when he'll back down.  Who expected the Russians to let eastern Ukraine go as far as it has and have moved troops away?

Mon, 06/02/2014 - 00:50 | 4816022 BrosephStiglitz
BrosephStiglitz's picture

I think you are right.  Russia will use gold for exchange amongst its allies, and to settle trade balances.  Mainly as a way to get off the petrodollar.

What they will ask the West for is for productive capital, or for productive assets.  Or they will enforce favorable trade terms and benefits for the oligarchs.

Mon, 06/02/2014 - 03:08 | 4816122 Non Passaran
Non Passaran's picture

Oh I get it now - Russia will ask to be paid in oil in exchange for natgas... Or something like that. Raw milk perhaps?
You sure make a lot of sense.
And gold is stored calories.

Mon, 06/02/2014 - 21:37 | 4818766 TheReplacement
TheReplacement's picture

If that is true then why is gold today worth more than $20/oz?  Shouldn't it be less?

Mon, 06/02/2014 - 06:31 | 4816203 Mabussur
Mabussur's picture

I don't think the germans would go for that given how suppressed the price of gold is.

Sun, 06/01/2014 - 23:13 | 4815867 SheepDog-One
SheepDog-One's picture

'U.S. American stawk indexes'?  Want to see that bloated pigs guts rupture and get a 50% haircut? Just let the China-Russia pals put $500 billion in bonds up for sale overnight,

Sun, 06/01/2014 - 23:34 | 4815911 CrashisOptimistic
CrashisOptimistic's picture

Pretty sure they are up for sale most nights, awaiting a good price.

Mon, 06/02/2014 - 00:18 | 4815973 algol_dog
algol_dog's picture

Who the fuck does the US think they are to try to pull of any king of financial sanctions, of the likes of this. Russia and China could change the whole paradigm by dumping their US bonds and destroying the whole financial underpinnings of US hegemony. Absolutely incredible to me. Complete idiocy or fools, don't know which. 

Mon, 06/02/2014 - 00:24 | 4815981 disabledvet
disabledvet's picture

The same Americans that convinced Putin he wanted Crimea?

Or is it "The Crimea"?

Or Ukraine?

Or "The Ukraine"?

Very confusing.
What was the story about again?

Mon, 06/02/2014 - 03:06 | 4816123 Gavrikon
Gavrikon's picture

Is it "The France?"  Or "The Germany?"

It is "Ukraine."  It used to be the "The Ukraine region of the Soviet Union."  It is "The Crimean Peninsula" or "Crimea."

Mon, 06/02/2014 - 21:08 | 4818696 perchprism
perchprism's picture

 

The final word must be from my RISK board, which has it as "The Ukraine".  

Mon, 06/02/2014 - 01:24 | 4816056 yogibear
yogibear's picture

Pretty much playing the Fed's game. The Fed can back-door buy treasuries from that mystery Belgium account. 

Trade Treasuries for paper gold. Far more than the COMEX can deliver. Everyone knows COMEX Gold has more paper than physical.

Failure on to deliver on gold will halt markets, It will call the BS on the naked shorts by the banksters.

One huge blow up of the commodity markets. The emperor has no clothes.  

Sun, 06/01/2014 - 23:16 | 4815876 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

U.S. stocks are already in the stratosphere.

Or, as Ozzy might say, flying high again. This is a good indicator of the degree to which gasoline huffing has become a problem on Wall Street.

Russian stocks are bouncing from a big dip.

Yes, Obama and his sanctions have given them a bounce.

Mon, 06/02/2014 - 00:04 | 4815953 Joe A
Joe A's picture

What goes up must come down and the higher they fly they harder they fall. And the stocks and the policy of financial mass destruction is supported by.....well printing money out of thin air.

Mon, 06/02/2014 - 00:07 | 4815959 Payne
Payne's picture

This takes extend and pretend to new levels.  As if we have any destructive weapons other than the dollar.

Sun, 06/01/2014 - 23:10 | 4815861 SheepDog-One
SheepDog-One's picture

Hit the turbo print button! That'll teach those durn Ruskies a lesson!

Mon, 06/02/2014 - 05:23 | 4816171 chrissjg
chrissjg's picture

hehehehehe :)

Sun, 06/01/2014 - 23:12 | 4815865 credittrader
credittrader's picture

Can't help but wonder what other 'adversaries' this division of the Treasury has used it's arsenal of taxpayer money against?...

Mon, 06/02/2014 - 06:09 | 4816191 Bemused Observer
Bemused Observer's picture

And if that has anything to do with the way things are NOW...

Sun, 06/01/2014 - 23:14 | 4815868 Spungo
Spungo's picture

Oh no! Not stock prices falling! That would cause the dividends to be slashed!!!

This is the same stupid backward logic driving the push for inflation. Good economies often see inflation, therefore printing tons of money should fix the economy. /facepalm. Stocks that are going down often lead to dividend cuts (usually caused by major recession), so us short selling the stocks should cause them to cut dividends!

Idiots. Idiots. Idiots. Why are we being ruled by idiots?

Mon, 06/02/2014 - 00:21 | 4815976 Which is worse ...
Which is worse - bankers or terrorists's picture

They aren't idiots. They are such idiots that they getting all of the wealth transferred to them. The idiots are the ones giving away the wealth without a fight.

Mon, 06/02/2014 - 21:43 | 4818776 TheReplacement
TheReplacement's picture

You there!  Pipe down now will you.  The children are trying to sleep.

Sun, 06/01/2014 - 23:21 | 4815872 Yen Cross
Yen Cross's picture

     My alphabet soup is getting cold. I could give a rats ass about any .gov agency.

  Collect all the names you want. You clowns can't even manage yourselves.

     Carney just showed the yield chasers where an oportunity was! (Micex)

  Visa and Mastercard have no intention of pulling out of the Russian market.

 
Visa, Mastercard vow to stay as Russia softens tone on rules | Reuters

Sun, 06/01/2014 - 23:18 | 4815878 Hulk
Hulk's picture

Its time to get serious with Putin, something way beyond financial sanctions, yes thats right.

ITS TIME TO PLACE PUTIN ON DOUBLE SECRET PROBATION !!!

Mon, 06/02/2014 - 07:09 | 4816230 Nexus789
Nexus789's picture

Time Obozo created a double, maybe tripple thick red line...Putin will be scared. 

Sun, 06/01/2014 - 23:18 | 4815880 socalbeach
socalbeach's picture

Obama admin making fools of themselves again by suggesting Putin's "retreat" has any significance.

.

Still, despite the massive outperformance of Russian stocks (and the Ruble) since sanctions began, Obama is proclaiming his actions as a major factor in Putin's retreat...

Still, Mr. Obama last week credited the sanctions and other measures the international community took against Russia with serving as a key "counterweight" to Russian troops on the border with Ukraine, most of which are now believed to have moved away.

Sun, 06/01/2014 - 23:43 | 4815924 Jack Burton
Jack Burton's picture

Russia has many good reasons not to be baited into intervention in East Ukraine. Obama's economic sanctions is not one of them. It would take time to craft a post outlining the reasons Russia is not being drawn in to this NATO trap.

You must look at Ukraine's economic situation at present and where it is headed. You must also look into American QE and taper policies. Russia needs to sit tight and wait, Kiev and Washington will not be sitting so pretty in six months. I'll try and post more on this some other time. But Russia is best served by letting Kiev rule their rump state and to stay involved in low scale civil war with the east. In time, economics will collapse Kiev into chaos. Every month that goes by puts the USA in a less strong economic and fiscal position to command world events.

Obama is a fucking fool, Putin is doing what a smart man would.

Mon, 06/02/2014 - 01:26 | 4816061 yogibear
yogibear's picture

"But Russia is best served by letting Kiev rule their rump state and to stay involved in low scale civil war with the east. In time, economics will collapse Kiev into chaos. Every month that goes by puts the USA in a less strong economic and fiscal position to command world events.

Obama is a fucking fool, Putin is doing what a smart man would."

Exactly.

 

Mon, 06/02/2014 - 03:42 | 4816138 DavidPierre
DavidPierre's picture

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.”

“The supreme art of war is to subdue the enemy without fighting.”

  Sun Tzu, The Art of War

Mon, 06/02/2014 - 07:01 | 4816225 tonyw
tonyw's picture

ukraine has been a basket case for 20 years and this has got worse not better over the last six months.

prices are increasing and wages and pensions are being cut, the general population will quickly become angry with the current ruling oligarchs.

Putin should continue to avoid being dragged into sending troops to ukraine even as they continue to shell towns.

 

Mon, 06/02/2014 - 13:51 | 4817415 Jack Burton
Jack Burton's picture

Indeed! Putin must allow Ukraine the freedom to self destruct. The planting season has been a disaster in some areas. The IMF demanded austerity will be downward pressure on all economic activity. The real economy is in the East. Kiev is split between Nationalists and right sector nazis. There is no real intelligent leader and even if there was one, he has nothing to work with. Putin must avois the NATO bait and stay out of the East. Feed enough supplies to the East to maintain their fighting strength to prevent a Kiev massacre of the cities. Other than that, wait six months, the Kiev winter will be hell on earth.

Sun, 06/01/2014 - 23:19 | 4815883 SheepDog-One
SheepDog-One's picture

Bullies, used to pushing everyone around.

It's sad to say, but I SO want to see this or whatever else blow up right in Jack Lews face!

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