West's contempt for truth is leading us to ruin
[Originally published at Alex Krainer's Substack] It is almost surreal to contemplate the changes that took place over the past 12 months. One year ago this week, Sir Tony Blair published an article on the pages of his very important Tony Blair Institute for Global Change. It was titled, “The Immediate Challenge in Ukraine: Maximum Pressure Combined With Structured Negotiation” (as opposed to just ordinary kind of negotiation for simpletons).
The Knight Companion of the Most Noble Order of the Garter opens his treatise with the statement, “Putin has badly miscalculated,” and drivels on about how the West "has impressively united to assemble a vast arsenal of sanctions which will over time collapse the Russian economy. ... in the end, this aggression may well herald the downfall of Putin." Sir Tony portrays the man himself as an anxious wreck, "detached from reality and with no one around him prepared to tell him the truth." In other words, an archetype of a megalomaniacal cartoon villain.
But it was Sir Tony, and many others like him, who have proven detached from reality. As Niccolo Machiavelli wrote in The Prince, "Men will not look at things as they really are, but as they wish them to be - and are ruined." Meanwhile, the truth was easily discernible for anyone who wanted to see things as they are. On 25 March last year, a month into the Ukraine war I wrote that, "If today's geopolitics were a tennis match, this would be a 6:0, 6:0 for Russia."
Two centuries of Russophobia formed the western mindset
The problem was that for decades, and especially since Vladimir Putin came to power in 2000, Western media relentlessly demonized him and treated Russia with utter contempt, disallowing almost any objective reporting. Sadly, many in the West happily swallowed the Russophobia hook, line and sinker, perfectly content to nod approvingly at nonsense like James Clapper's expert opinion that the Russians "are almost genetically driven to co-opt, penetrate, gain favor, whatever, which is a typical Russian technique." Did you know? There's a whole different genotype to those dastardly Russians, so very different from that of westerners who are genetically driven only to do thoroughly good and decent things.
Assured of their own superiority and righteousness, western leaders took on the subhuman Russians, and remain to this day undeterred in their willful blindness. Now that the wheels are coming off of the cart, some are acknowledging the impending defeat, but cling to moral superiority all the same: ya, allright, so maybe Putin is winning, but he's a thug! Seriously, I just heard that one a few days ago. Is that supposed to be some kind of a moral redemption? What if that’s also false? Either way, what is the result? It might be worse than just 6:0, 6:0 for Russia - it might be all that plus bankruptcy and a heart-attack on the court.
Unintended consequences and opposite outcomes
The current juncture in history must be among the most spectacular cases for how ruinous it can be to disregard truth and operate on the basis of a distorted version of reality. Russia’s economy did not, "over time collapse," as our valiant knight opined, and the ruble did not turn to rubble as Joe Biden predicted. West's impressive "arsenal of sanctions" was in fact an impressive own goal. In addition to losing their geopolitical gambit, western nations are now drowning in bad debt, forced into yet another round of costly bailouts of our financial systems. As FTX is receding in memory, more wreckages have piled up with Silvergate, Signature Bank, Silicon Valley Bank and First Republic Bank.
But it could be worse: a group of researchers from Northwestern University, Stanford and Columbia Business School found that if half of uninsured depositors across the U.S. banking system decided to withdraw their money in a crisis, 'almost 190 banks are at a potential risk of impairment, and that the assets of US banks are worth a staggering $2 trillion less than their accounts report. How much is $2 trillion? Give or take, it's $6,500 per man, woman and child in the U.S. or $16,250 per household. And that's just the US whose banking system is believed to be relatively sound compared to European banks. Then we have Credit Suisse, the zombie that required a $54 billion bailout to remain undead.
Focus on truth and beware of psyops!
I must add however, that the above study should be taken with caution. It makes for fearsome headlines, but I suspect anything coming out of Stanford as a potential psyop. For such an extensive study that must have taken months to complete, its timing is very suspect.
Be that as it may, truth seems to have the habit of emerging always as the pivotal issue. It should be the foundation in all decision making, but especially when we're facing risk and uncertainty. It feels surreal to even have to say this. Truth is one of the four principles of successful long-term investment management that define I-System Trend Following. The other three are: strategy, discipline, and patience. In fact, all four principles should apply to life in general.