On The Path To War

Tyler Durden's picture

Submitted by Chris Martenson of Peak Prosperity,

The US is clearly now pushing Russia towards war. But if you read the signs correctly, Russia has been preparing for exactly this outcome for many years.

Out of several reasons that US power brokers specifically -- but western power brokers more generally -- are deeply unhappy with Russia right now is that Russia is committing a cardinal sin: it is openly, brazenly calling for an end to dollar dominance and has moved aggressively with China to achieve that aim.

No oil-rich country that has tried to move away from the dollar in the past twenty years has managed to do so without being attacked by the US, suffering a regime change, or being ruined by sanctions. In some cases, all three.

Not only has Russia managed to secure a string of heavy-duty bilateral trade and currency swap agreements over the past year, but they've done so despite ever-increasing threats and responses from the US and its allies. And frighteningly, the equity markets in the West are completely ignoring the nested set of risks that accompany these moves and countermoves by two geopolitical heavyweights, which range from punishing trade wars (already underway), to electronic warfare, to an actual shooting war.  

Today's "Markets"Are Untethered From Reality

I put the word "markets" in quotes above because whatever it is that passes for an equity market these days, it bears little resemblance to that of times past.

The "markets" today are using the skimpiest of evidence to support their tendency to feast on fresh central bank liquidity by either levitating higher or failing to go down much on even the most horrendous of geopolitical, economic or environmental news.

As a prime example, in the pre-market on Friday, 8/7/14, beginning in the wee hours of the morning, the S&P futures ramped up 20 points off the lows by market open, and then poured on another 20 points in the cash market.

The reason given?  The possibility of calm in Ukraine:

Pre-market Dow reversal illustrates Ukraine sway over markets

Aug 8, 2014

 

In a sign of just how much stock market moves are being driven by geopolitical headlines from abroad, pre-market futures for the Dow flipped from sizable losses to modest gains after reports that Russia is moving to de-escalate the Ukraine crisis.

 

Increasingly, every tick of the tape on Wall Street is being driven by news flashes related to bad things happening overseas, including the Russian role in the 5-month-old crisis in Ukraine.

 

“We are in one of those moments where markets sway on war or no-war rumors,” says Gary Kaltbaum, president of Kaltbaum Capital Management.

 

The Dow, which is coming off a 75-point drop Thursday, knocking it down 4.5% from its July 16 record close, did an about face this morning, going from down 100 points in pre-market trading to up 42 points.

 

Wall Street is citing the following news reports for the rebound:

 

According to Bloomberg: “U.S. equity-index futures rebounded after RIA reported Russia is making efforts to de-escalate the Ukraine conflict. RIA cited Russian Security Council head Nikolai Patrushev.”

 

(“Russia will continue to make all efforts for a very fast de-escalation of tensions,” Nikolai Patrushev told RIA, a state-run Russian news agency.)

That is about as poor of an excuse for a major market reversal as any I have run across lately. They might as well have said that Cher is considering expanding her next tour by four cities as being the "reason". 

For starters, consider the source.  Was it Putin himself?  No. Instead, it was the very same guy that the EU had just added to their sanctions blacklist a few weeks ago:   

EU Blacklists Russia’s Federal Security Chief, Security Council Secretary

Jul 26, 2014

 

MOSCOW, July 26 (RIA Novosti) – The European Union has added key Russian officials to the blacklist, including Russian Federal Security Service chief Aleksander Bortnikov and Russian Security Council Secretary Nikolai Patrushev.

Did he say anything concrete, such as that meetings were going to be held and that constructive solutions were on the table that Russia might find agreeable?

No. All he parroted was the standard Russian talking point, which Putin himself has used many times, that Russia hopes for a rapid return of peace to Ukraine.

That's it...and so I have to ask: That's worth forty S&P points?

On the other side of the ledger, the one pointing to escalating tensions, we have a lot of very credible items that any sane person would easily think vastly outweigh a single talking-point sentence by a Security Council member.

For example, consider this:

Moscow’s food ban could cost EU $16bn, spark crisis in Europe

Aug 7, 2014

 

Russia’s ban on agricultural food imports could cost the European Union about $16 billion (12 billion euro) and drag the continent into the crisis, officials warn.

 

The Russian government signed a decree on Thursday which bans the import of beef, pork, poultry, meat, fish, fruits and vegetables, cheese, milk, and dairy products [for one year] from the EU, US, Australia, Canada, and Norway.

Now why would a country that's about to announce that it's going to seek a rapid return to peace in Ukraine on Friday, pass this particular and Draconian decree on Thursday? That just doesn't make sense. And of the two, if I get to choose between a year-long food ban and a single sentence by a Security Council member, I'm going to have to go with the idea that the food ban is telling us more about the actual state of things.

Such a ban will cause a lot of hardship in Russia. We can expect food price spikes for sure, and possibly even food shortages, too.  Therefore, it was not done lightly.

This food ban followed the cancelation of a Russian defense deal by Germany two days prior:

Germany Just Canceled a Defense Deal With Russia - Who’s Next?

Aug 6, 2014

 

As European countries try to balance their economic dependence on Russia with their desire to punish president Vladimir Putin for meddling in Ukraine, Germany has stepped ahead of the pack to poke the bear in the eye, canceling a €123 million ($165 million) defense deal with Moscow earlier this week.

 

In response, the Kremlin has said it will sue Rheinmetall, the German defense firm that was to supply parts for a military training facility for the Russian military. The deal, signed in 2012, was suspended by Berlin shortly after the annexation of Crimea in March; this week’s move permanently bars the delivery of the equipment. Last week the European Union banned all arms exports to Russia, but that only covers future deals.

The scuttled deal was simply for parts for a training facility, the sort of thing that might just as easily have been covered under normal import and export trade agreements. But since the facility was military in nature, it fell to the sanction sword.

And only a day prior to that, Putin called for an emergency meeting of the UN Security Council:

Russia Calls For Emergency UN Security Council Meeting As Troops Fortify On The Border

Aug 5, 2014

 

Russia called for an emergency meeting of the United Nations Security Council on Tuesday over what it called an urgent humanitarian situation in Ukraine, according to a report from the Russian news agency ITAR-TASS.

 

"We are convening an emergency meeting of the United Nations Security Council on the humanitarian situation in Ukraine," Russian Ambassador to the U.N. Vitaly Churkin was quoted as saying.

 

Earlier on Tuesday, the Russian Foreign Ministry said the U.N. and the International Committee of the Red Cross  expressed "readiness" to discuss its plan to deploy a "humanitarian mission" to Ukraine, which some consider to be a pretext for an invasion by Russian forces.

 

The White House has openly worried about what would be, for all intents and purposes, an invasion under the guise of a "peacekeeping" operation.

 

"We’ve seen a significant re-buildup of Russian forces along the border, potentially positioning Russia for a so-called humanitarian or peacekeeping intervention in Ukraine,"  deputy national security adviser Tony Blinken said last week.

Those quotes by US officials make it sound unreasonable for Russia to be considering a "so-called humanitarian intervention" into Ukraine.  And most in the West might agree with that assessment because the western press is virtually unanimous in its failure to cover the actual humanitarian crisis that is happening over there right now.

But other countries are not ignoring it. For instance, as reported by the Japanese press, we find that entire cities, packed with hundreds of thousands of civilians, are under constant bombardment by Kiev forces:

East Ukraine city dying under siege

Aug 5, 2014

 

ONETSK, Ukraine —

 

Residents say the eastern Ukrainian city of Luhansk is dying. The power grid was completely down Monday, the city government said, and fuel is running dry.

Store shelves are emptying fast, and those who haven’t managed to flee must drink untreated tap water. With little medicine left, doctors are sending patients home.

 

As Ukrainian government forces slowly tighten their ring around the city — one of two major pro-Russian rebel strongholds — traveling in and out has become a perilous undertaking.

 

In an impassioned statement released over the weekend, mayor Sergei Kravchenko described a situation that is becoming more unsustainable by the day.

 

“As a result of the blockade and ceaseless rocket attacks, the city is on the verge of a humanitarian catastrophe,” Kravchenko said. “Citizens are dying on the streets, in their courtyard and in their homes. Every new day brings only death and destruction.”

 

Luhansk, a city of more than 400,000 people at peacetime, now has seen its population dwindle as citizens flee violence and deprivation. Located about an hour’s drive from Russia, which Ukraine insists is supplying rebels with weapons and manpower, Luhansk is being fiercely fought over by all sides of the conflict.

What would the US, the UK, Germany or Japan do if several million of their native-tongued people living right along their border were under siege by a possibly illegitimate government force that had openly expressed its desire to kill as many of those people as it could?

I think we all know the answer to that: they'd already be in there with humanitarian and possibly also military support.  Heck, the US invaded an entire country 7,000 miles away under the pretext that Iraq might have WMD's that could someday, possibly, be used against American interests. And Iraq never once openly threatened the US.

But to top it all off, there was a second recent news item which was the most frightful bit of news that anybody in Europe could ever hope to hear. And if it happens, it will be an open act of war against Russia by Ukraine:

Ukraine Open to Halting Gas Flows in Russia Sanctions

Aug 8, 2014

 

Ukraine said it’s open to halting Russian gas supplies to Europe through the country as it plans sanctions on President Vladimir Putin’s government as part of its battle against pro-Russian separatists.

 

The list of possible sanctions includes a “complete or partial ban on the transit of all resources,” Prime Minister Arseniy Yatsenyuk told reporters in Kiev today in response to a question about halting gas flows.

 

Measures may also include a ban on Russian planes overflying Ukraine, he said, while defense-industry cooperation will be reduced. A draft law, which requires parliamentary approval, also proposes restrictions on ships entering Ukrainian waters.

Good grief!  If Ukraine halts the gas flows, Europe will be in big trouble and very quickly. I have to assume that EU ministers are reading the Ukraine leadership the riot act.

But this news is also a very strong sign of escalation, not de-escalation. And so the 'market' response to the statement by Russian Security Council Sec?retary Nikolai Patrushev is really grasping at straws. For my money the gap between the news events and the 'market' reaction is so huge that I have to wonder if there isn't a different explanation that makes more sense, such as a Plunge Protection Team intervention at a critical moment as US stock futures were headed over a cliff (which they seemed to be before the miracle reversal).

However, even if such interventions are occurring, they cannot change the tide. Something has been put in motion that cannot be easily undone, And Russia is furiously signing deals that are a far greater risk to the US than anything happening in some remote corner of eastern Europe.

In Part 2: The End of Dollar Dominance? we look at the reason that suddenly makes the US' reckless aggression towards Russia much more understandable: Russia is pivoting from West to East, and in the process, seeking to diminish the dollar's supreme regime as the world's reserve currency. When viewed through this lens, Russia's prodigious string of recent trade and energy deals with eastern nations suddenly looks very calculated, and the US' itchy nervousness in response makes more sense.

What are the implications if we are entering the Peak Dollar era? One we know for sure is: today's "markets" are vastly under-pricing, if not ignoring altogether, that risk.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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lasvegaspersona's picture

I think you have this wrong Chris, it is the euro that has been readying for the day the dollar dies.

Cattender's picture

Great Article! i agree 100% we are in deep shit as Americans right now..

Latina Lover's picture

Russians know their history.  Westerners, be they Germans, British, French etc are always trying to conquer Russia and steal their resources.  The USSA, being nothing more than another western bankster gangster state, is just following the script.

max2205's picture

It's not just geo PPT SUPPORT, ITS ANYTHNG

If someone farts the PPT buys a lot of Spx

It is sickening to real traders

The idiots making money could never make money in areal market.

LET IT RIDE?

AldousHuxley's picture

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

 

Old 1949 soviet cartoon.....same ole same ole story. war for control of oil.

Jack Burton's picture

Another of your many good posts Latina Lover. Russia in history is the nation the western powers most invades and tries to conquer. Russians know this, and they see it all happening again. What makes me sick is America claims to be attacking Russia in self defense, as if Russia was doing anything other than trying to be left alone. They have some small interests in Syria, but over all, they are acting in their borders. America is opposite, invading and attacking in dozens of nations at once.

Think for yourself's picture

Psychopathic Manipulation 101: Blame the victim

AldousHuxley's picture

Prussian Empire....the other white colonialists.

 

Meanwhile, Chinese going about their business of building empire in the east

Latina Lover's picture

Jack Burton, we no longer live in a democracy (the republic is long gone), instead in an empire. And like all Empires, we keep expanding until we hit our limits and then collapse.  For the average american, collapse will be initially painful, but will greatly benefit the average person in the long run. We can go back to being a nation of honest, decent hard working people, instead of a militarized police state.

August's picture

And until that time, Reverend Jeremiah Wright remains correct.

Government needs you to pay taxes's picture

I haven't seen the analysis of what % of the empire's population was lost to death/disease/starvation before it completely collapsed back to happy farmers.  Over/under at 50% for the next 'bubble'?

Manthong's picture

President on track to surpass Tiger on outings?

I remarked on this on many occasions..

F’n bammy is out to out-do Tiger.

Thank God he is the leader of the free world.. but not a leader of the rest.

29.5's picture

He's not golfing enough, considering how much shit he's helped fuck up.

Frankie Carbone's picture

Under. I will say 45 million, which is 15% of the population. That will be comprised of the most mindless of citizens, who being totally unprepared will be like a deer in the headlights of a freight train fast approaching them  on the tracks. 

Half of them will be done within 30 days. 

Sambo's picture

Cancer spreads before it eventually kills the host. All empires are nothing but cancer on this planet.

andrewp111's picture

The USA is just piddling around here. Covert intervention and skullduggery, but no serious invasion. Eventually, Russia will be invaded by real conquerors, and it will be ISIS that moves on Russia through Central Asia after they have taken the Middle East.

Grimaldus's picture

You are seeing the march of the bloody progressive criminals who have hijacked the FEDGOV.

The bloody neo-stalinist criminals are gearing up for much more death. Screaming progressives try to sate their blood lust killing millions of defenseless babies, the millions dead from progressive eco-murderers bringing back malaria, and destroying quality of life for all poor people with the progressive war on cheap energy but it is not enough, no progressives must continue the bloody path they crave.

Big government progressives=big government death. Power kills, motherfuckers. Witness Hillary Clinton's intentional murder of the ambassador to Libya and other Americans just to cover failed policy of arming the enemies of the United States, the murdering fellow travelers of totalitarian islam. Hillary says "what difference does it make?" What a cold blooded murdering bitch and she wants more blood, you can be sure.

Hillary is pissed off the USA is not killing more in Syria. Bloodthirsty off the fucking charts man.

Check the pile of corpses big government leftists claim in just the last hundred years:

http://hawaii.edu/powerkills/20TH.HTM

And they want more. Coming soon, Bill Ayers will make good on his plan to kill 25 million Americans.

Grimaldus

 

viedoklis_lv's picture

Leave your crocodile tears to some uneducated persons.

How many man, women, children (even babies) Russia send to die in Syberia?

Most of the children died in those train wagons - from starvation and/or cold.

That is one sick nation if it forgets those massive crimes or even celebrates them as glory.

 

 

Frankie Carbone's picture

Does your comment then justify unfettered US aggression right up to the Russian border? I'm puzzled because you can't be that stupid, can you? 

On that note, and along your line of thinking, what about the millions killed here in the US under the great American Land Grab? Or does time heal all genocidal crimes in your mind? "It was 150 years ago so that doesn't matter anymore"?

fel.temp.reparatio's picture

Old school Latvian bigotry aimed at the (former) Soviet Union. Move forward, if you're really "on the path - seeking truth and helping others", that is.

RafterManFMJ's picture

I suppose the lesson learned is, never get into the cattle car?

Latina Lover's picture

Relax viedoklis,

The USSA will happily fight against Russia to the last Ukrainian. Then we will start with the Polacks, Latvians etc since they are all surplus population.

tvdog's picture

Meanwhile, Latvia gets 100% of its gas from Russia. Until Russia turns off the valve.

hairInTheSoup's picture

& their territory, like china or india.

they never went to conqueer outside of their idea of their territory (the idea can be debated like tibet for example, the fact not : they never colonized outisde of what they think to be part of them)

you forgot spain in your list of colonisators/resources robber (inca/maya gold)

ebear's picture

Great Half-Article, don't you mean?

Or did you sign up for part 2?

Buckaroo Banzai's picture

That was the plan, although the plan won't work until they consolidate the EU debt. It's going to be a race to see if the euro zone collapses before they can do just that.

The other problem is, there simply aren't enough euros in existence to absorb all the worlds existing dollar wealth.

Winston Churchill's picture

Thats phantom dollar wealth. It can disappear with a keystroke, just  how

it was created.

Its phyz that matters now, productive assets, and raw materials.

The tertiary wealth is an illusion.Promises of wealth,made to be broken.

Same as it ever was.

KnuckleDragger-X's picture

Your assuming reality and they are busy sitting down with the mad hatter for tea.

Bossman1967's picture

See the markets have heard wolf to man times plus its all fed money cause we are crashing and tjey are hiding untill someone out there starts the war the USSA wants

gonetogalt's picture

Hey there, landscaping crew Bossman, how about using some spellcheck? You're too busy or self important to post a properly written opinion? Anyway, having nothing to say you could just STFU.

lasvegaspersona's picture

The euro does not need 'to absorb dollar debt'.

when currencies fail the debt become worthless....simple really. It has happened many times before. Did the Pound need to absorb the Reichsmark debt in 1924? Nope, those holding the Reichsmark just lost wealth. The same will happen as the dollar hyperinflates. The Euro will simply become an international medium of exchange. the store of value will become gold. The new currencies will still be fiat but not structure on debt instruments like the Fed is currently.

Global Observer's picture

Quite so. In fact it is quite silly to "absorb" debt denominated in another currency, which is the equivalent of one agreeing to be liable for someone else's debt. Sure, US debt is actually Western debt (since the entire West received the benefits of US debt held by outsiders), but the whole point about trashing the US$ and replacing it with the Euro, if they can, is to repudiate the current Western debt in order to make new debt in Euro. So the Euro absorbing the US$ debt is counter productive.

joe90's picture

1. What trashes the USD (and any currency) is the purchase of bad debt by the federal reserve (central bank).  Issuing "good money" for bad debt dilutes the quality of the currency all round.  So it's already been trashed, failing currency would simply be price discovery.

2. The creditor made whole "receives the benefits" not the "entire West" who had to work hard to earn and save.

3.  If the trade between any two countries is balanced, it matters not a jot what currency they trade in, beads are fine, the piles at the end of the year are the same.

4.  What matters is what is used to pay for oil, and what those that sell it buy.  If I need to buy oil I need USD.  Anyone selling oil buys US Debt at the point of a gun this backs the USD.  Chris does not mention this (I don't think).  The crime is selling your oil for other than USD/backing your currency with your own oil (Russia, Venezuala, Lybia etc.)

Frankie Carbone's picture

Issuing new money for good debt also dliutes the quality of the currency all around. Money should only be issued in proportion to economic growth, real growth, not debt. That's the theory. it's never happened in a fiat system which is why mankind has had so many of them. 

Sudden Debt's picture

Ha! The euro will be out before the dollar, you mark my words.
Who says Germany will still be in in the next 5 years?

Harbanger's picture

Since this is really a banker war I say the dollar wins the currency printing race and outlasts them all right up to the reset.

Spitzer's picture

King Euro

Down with the $eppo

Spitzer's picture

Sell your treasuries Putin.

Leonardo Fibonacci2's picture

Hussein Obama runs the world po-po state NWO

nicoacademia's picture

running the poorest nation in the world to be

Keyser's picture

That has always been the plan... The US is the military arm of the NWO trifecta, London, Rome and Washington... 

Gandulf's picture

The Pentagon enforces for the Banksters Cartel. The Cartel keeps the profits puts the costs on the US taxpayers tab. 

Bankrupt the nation, then buy it back for pennies on the dollar.

 

 

 

TheReplacement's picture

That's okay.  Yellen isn't really stopping the printers - they are running out of paper.  Once fully shutdown they will just reload all the trays, top off the toner cartridges, and get ready for the next round.  Bring it on China.

It will be painful but then again, it could hurt a lot too.

Gandulf's picture

She only has to enter a random number then hold the zero key down for a while and press enter.  Things didn't bugger up until they let banksters have keyboards

Karaio's picture

I liked the idea! 

Out of paper. 

Let's tattoo on the back of one billion Chinese they have $ 1, and it is worth gold! 

hehe.

Road Hazard's picture

Quote from the Breitbart link, "China appears ready to dump its $1.3 trillion in U.S. Treasury bonds to drive U.S. interest rates up and strengthen the dollar."

Huh? I was always tought that if China dumped our treasury bonds, the USD would fall off a cliff?!

Gandulf's picture

The Chinese are supporting the USD because of assets held in USD. The US is still their main market. 

The Chinese have being selling bonds slowly for a couple of years now to maintain value of their holdings.

They are watching the sanctions on Russia very closely and it must be causing a strategic rethink..

If they feel threatened militarily they will create financial Havoc.