Eastern Europe

"Since the very beginning of the establishment of the G7, it has been a rich-man's club that consists of Western major powers and aims to maintain the collective hegemony of the US-led West. Whether the G7 will become a geopolitical tool or a Cold War relic largely depends on European countries. Unlike the US, Europe shares a closer geopolitical and economic links with Russia. If the G7 becomes a platform for the confrontation between the West and Russia, it will undoubtedly be a disaster for Europe."

The serial bubbles of the 2000’s are nothing more than what was wrought of the 1920’s, in general. The monetary character of both is not coincidence, as the failures that bookend each of these ages induces the transformation: from monetary to fiscal and back to monetary again. That looks like progress and accountability, but in each it only leads to more extreme measures (relative to the last) to still achieve what Robert Owen and Karl Marx conceived more than a century and a half ago. That leads us to 2015 and what is certainly the ragged end of the eurodollar standard. The third socialist age was undone by August 2007, but that did not stop its proprietors of “eurodollar socialism” under the name “investor capitalism” from trying to rebuild and restore it to full capacity. The groundwork has already been laid, and it is exactly what you would expect given the history since 1907. There are no widespread details about a return to capitalism and sound money practices, only how to overcome the third installation of that timeless barrier thrown down in the collapse of each of the asset bubbles so far – value.

The Russian Defense Ministry is out condemning NATO plans to store heavy weapons in Eastern Europe, calling it "the most aggressive step by the Pentagon and NATO" since the Cold War and conjuring up memories of a bygone bipolarity.

The narrative being sold through the media is that Greece is to blame, that German taxpayers are on the hook for Greek debts (while they’re really on the hook for German banks’ losing wagers). And that is, no matter how you twist it, not the same story. It’s again just a narrative. Brussels is toxic - and so is the IMF - and Greece should leave as soon as possible, as should Italy, Spain, Portugal. We should all resist the spin-induced attempts to demonize Putin, Athens and China any further, and instead focus on the rotten apples in our own basket(s). In short, the propaganda we should be worried about is not Russia’s, it’s our own. And it comes from just about every news article we’re fed. We’re much less than six degrees removed from Orwell.

For the first time since the Cold War, the US is set to store heavy military equipment in Eastern Europe in a stepped up effort to deter 'Russian aggression.' While this marks a very meaningful escalation in the standoff between Moscow and the US, one former NATO commander was quick to point out that "nothing is as good as troops stationed full time on the ground."

"Ultimately I think to deal with Putin you need to deal from strength - he's a bully and ... you enable bad behavior when you're nuanced with a guy like that."

As Republican presidential hopefuls ramp up their campaigns, GOP candidates will likely point to Vladimir Putin as the embodiment of everything that’s wrong with Democrats’ foreign policy and Clinton’s famous “reset” button ceremony in Geneva provides the perfect opportunity for the GOP to tie the presumed Democratic nominee to a failed attempt at reconciliation with America’s Cold War nemesis.

The first step in any 12-step imperial-overstretch recovery program would involve accepting the fact that American power is limited and global rule an impossible fantasy. Accepted as well would have to be this obvious reality: like it or not, the U.S. shares the planet with a coterie of other major powers -- none as strong as we are, but none so weak as to be intimidated by the threat of U.S. military intervention. Having absorbed a more realistic assessment of American power, Washington would then have to focus on how exactly to cohabit with such powers -- Russia, China, and Iran among them -- and manage its differences with them without igniting yet more disastrous regional firestorms.  But for any of this to happen, American policymakers would first have to abandon the pretense that the United States remains the sole global superpower -- and that may be too bitter a pill for the present American psyche (and for the political aspirations of certain Republican candidates) to swallow. From such denialism, it’s already clear, will only come further ill-conceived military adventures abroad and, sooner or later, under far grimmer circumstances, an American reckoning with reality.

Just hours after being force to admit that they were hacked (by Russians apparently), an inspector general's report shows that The IRS has rather remarkably continued to pay refunds on hundreds of thousands of fraudulent tax returns in recent years, and sent dozens of checks to the same addresses, including in Eastern Europe and elsewhere. While some progress has been made, $2.3 billion of real US taxpayer's money was wrongfully refunded to fake US taxpayers... but with this new cyber-attack, we suspect that number will soar.

We need to wake up....and FAST!!!

"Global trade of goods and services has been in the doldrums [and] if predominantly structural, EM economies should not count on meaningful demand boosts coming from above-trend growth in DM. With Fed rate hikes looming, a jammed trade channel means less growth offsets to the anticipated tightening in financial conditions."

A day after Kiev chose hawkish US Senator John McCain to serve on President Poroshenko's advisory committee (spoiler alert: he had to decline), the US military rolls through Romania with a "simple message" for Vladimir Putin and Russia. Meanwhile, European officials hold hands and sing Michael Jackson and Lionel Richie's "We Are The World" at a NATO dinner. And yes, we have the video clips. 

Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).

John McCain may find himself 'back in the (former) USSR' more frequently as the Senator landed on Ukrainian President Poroshenko's list of advisers along with former Georgian President (and current fugitive) Miheil Saakashvili. This should give McCain an opportunity to realize his dream of turning the 'conflict' with Russia into a proper war that self-respecting hawks can be proud of.

He has previously advised to act as your own own central bank and buy physical precious metals as a hedge against currency depreciation and geopolitical crises. Faber believes that storing gold in Singapore is the safest way to own gold today.