EUROPEAN STRATEGIC COMPASS

8 April 2022

WIP Here is a negative review of a positive development

https://www.telegraph.co.uk/opinion/2022/04/06/ultra-remainers-mobilising-prepare-ground-rejoining-eu/?li_source=LI&li_medium=liftigniter-rhr

https://www.zerohedge.com/geopolitical/european-union-unveils-new-strategy-become-global-power

"European Union Unveils New Strategy to Become a Global Power

by Soeren Kern • April 3, 2022 at 5:00 am

The goal is "strategic autonomy" — the ability for the EU to act independently of, and as a counterweight to, the United States and the North Atlantic Treaty Organization — in matters of defense and security.

The key component of the Strategic Compass is the development of a so-called EU Rapid Deployment Capacity (RDC), a military force able to intervene in "non-permissive environments" anywhere in the world.

The RDC is to become fully operational by 2025 and commanded by an institution called the "EU Military Planning and Conduct Capability." (The term "capability" is a politically correct substitute for "headquarters," as in "military headquarters.")

The push for Europe to achieve strategic autonomy from the United States is being spearheaded by Macron, who, as part of his reelection campaign, apparently hopes to replace former German Chancellor Angela Merkel as the de facto leader of Europe.

The danger is that many of the pie-in-the-sky policy proposals in the Strategic Compass will divert and drain resources and finances from where they are actually needed: NATO.

A logical course of action would be for EU member states to honor past pledges to increase defense spending as part of their contribution to the transatlantic alliance. That, however, would fly in the face of the folie de grandeur — the delusions of grandeur — of European federalists who dream of transforming the EU into a geopolitical "great power." "

Gate stone Institute April 3rd

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ROTATOR CUFF AND CHARACTER

7 April 2022

Sunday, day 0

Tomorrow is Friday, day 5 after the operation on my shoulder, which was last Sunday. That op. put me into a light trauma, a kind of post traumatic shock syndrome someone said to me. 

Monday, day 1

So Monday I was quite disoriented. Some friends noticed this and rallied round, asking me questions about the experience and getting me to talk; for those here in CM, offering practical help as the shock of a six hour operation was one thing, but in practical terms, I've only got one arm! Just try to imagine that!!

Tuesday, day 2

But by Tuesday, when I left hospital, two days after the six hour op., my high spirits had returned. How a person deals with adversity tells you a lot about the strength of character of the person.

Wednesday, day 3

Yesterday Wednesday was OK too - I went out for a walk round the park. And again today.

I have a set of exercises to do four or five times a day at my room, to restore flexibility, but not overdoing it as the tendon has been freshly sewn back.

Thursday, day 4

And today Thursday is more normal still. The person who takes care of my room on a Wednesday morning, while I go for Thai massage two hours, has called daily with food and helped me wash and dress. Good practise for when I'm truly old and decrepid, you might think!!!

Friday, day 5

Then tomorrow, Friday, is the third day after I left hospital and the dressing that protects the wound must be changed every three days. So back to hospital - probably in the morning.

I write all this nonsense as a kind of therapy, away to stay attached to reality.

How to measure the strength of character of a person. Observe them:

-How do they deal with adversity? Do you analyse and draw lessons for yourself, or do you point the finger of blame?

-Faced with a headache of a problem, do you say "oh, I can't do it", or do you persevere till they find the solution?

-Do you stick stubbornly to your decisions, right or wrong, or do you review and are you able to learn from experience?

-Can you accept new thinking without becoming emotional or feeling challenged?

- Are you able to work with others and not feel "ruffled"?

Character is the most important quality a person possesses. It is more important than intelligence, reputation or beauty. What do you think about "character"?

I looked up the etymology of the word "character". It seems to come from the word for an engraving instrument, to carve...carve, carve and carve again. Interesting, eh?!

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PUTIN'S PLANS

1 April 2022

As to Russia's goals. 

Looking at a map, the trouble for Russia geographically, is that its western border opens smoothly onto the plains of Eastern Europe and there are those gateways that give access to invaders.

So a Russian leader would like to plug the gaps with neutral buffer states, all the way from from Estonia to Bulgaria included.

That's the dream. Perhaps from the Baltics, or Finland even, down to Ukraine and Moldovia. 

The minimum a Russian leader would want is what Biden referred to, in the first of his many gaffes, when he said it'd be ok a little bit in, can take the Donbas, that'd be OK. And I think everyone is agreed there's no giving back Crimea, that's gone for good.

(Reminds me of the bar girls here - "I only let them go little bit in and I don't let them stay for long".)

As to the means. 

Whatever the press says to give us foolhardy confidence, Putin's army is massive and the opposition is Ukrainian. Aswhere, outside Ukraine, he'd be up against NATO, which is the Anglo-Saxons - that's clearly now an impossible dream. 

So if I've got it right, he can realistically have Crimea and Eastern Ukraine / Basarabia: I think the two gateways in Moldovia are called that after the name of a former ruling family.

As to a strategy for getting that little lot. 

He knows by now that America will concede nothing, never, while they have a breath left in them. All empires fight to the death (except UK). 

Why not hold peace talks for tactical reasons, but meanwhile continue the groznyization, as this will accelerate the exodus of the local people. The Ukrainians hate Putin by now,  ethnic Russians or not. Remember, just before invading he moved out half a million ex-pat Russians back to Russia.

So he could flatten the country and empty it of people. That would definitely stop the war as there'd be noone left to fight, nor object to his occupation, no population to subdue, no problem holding what he's taken.

 ("I no give change. You can pay my taxi?".)

Then he could shunt back enough Russians, and maybe from Belarus too, to rebuild and replant.

Like that, he would have rubbed out the border on the map and little Russia would have rejoined its big brother.

As to risks.

So the only flies in the ointment are that this relies on the Russian army being strong enough to scare the shit out of the people and kill those who won't run away. 

Also, looking at the demographic table, Russia doesnt really have the youth to work the Russian economy, let alone shift millions to Ukraine. Hence Belarus, but it's probably got the same problem.

...maybe from China? It's demographics are worse.

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LESSONS FROM UKRAINE

30 March 2022

After a month of fighting, the flow of refugees and cities trashed, has the peace process now started? It seems so. Has the bombartment stopped? What will the troops do during the months of negotiation? It looks like we will get a "Minsk-3" that strangely ressembles what Zelensky's predecessor signed up for, but the Ukrainian govt didn't like because it gave some autonomy to the Russian East. Kiev preferred to lob missiles into Donbas and chase out the Russian expats.

After a month, and now a pause, we can collect our thoughts together.

The first thing to note. Remember German initial reluctance to confront Russia and Macron, who is still talking to Putin? But instead of this peaceful approach, the Angl-Saxon first response to the invasion was military, and the second was sanctions. There has not been listening, a search for peace, or a formal dispute resolution process. 

Biden announced yesterday that he wants to spend 778 billion on arms (for comparison, it was 280b in total in 2001). Germany 100 b. Europe upping to 2% its contribution to NATO.

  

Yet you could argue that NATO should have left in 1991 (and there wouldnt have been this war). 

You could argue this is a great boost to the American military-ind complex and arms industry, the most powerful lobby in America since the 1960s. 

And you could argue that this spending bears no relation to the threat. 

You could also argue that Europe's youth (includes Russian) is fighting and dying for Americans and for America's World Order.

Zelensky, the young president of Ukraine, has been nagging constantly to join the EU. And the ignorant media have supported the marytr. But how realistic is this, with an average wage of 3,000 USD (check) and a country overrun by oligarchs and corruption? It took Spain and Portugal 12 years of negotiation and subsidy to align their economies and values with others in the Union - the UK never really did, many questions are asked about the suitability of former soviet satellites. 

Just for starters, we know EU subsidies would go to oligarchs and outside interests and little on infrastructure projects.

Joining NATO, despite the undated Bucharest promise to Ukraine and Georgia in 2008 that they would one day be members, is out of the question and in particular, Russia would rather fire off its nukes than cede Crimea.

So the ideas of Ukraine joining EU and NATO are a waste of time, always were, and no need therefore for fighting for that. 

Second, sanctions are another disaster - for people everywhere and for the world's reserve currency.

The sanctions bring another major dislocation, but they also set Russia on a path of revenge. Remember Versailles, Potsdam and the collapse of Soviet Russia - Russia did not disappear off the map, it came back to redress the wrongs done to it, as it sees its history. We remember attempts at  change in Iraq, Afghanistan, Libya, Syria, Iran and even N Korea - epic American disasters. So hopefully Biden will correct his "senior moment" where the POTUS voiced a desire for regime change in Moscow.

Many countries in Asia, Africa and S America benefit from the American Order - they can trade in safety and exchange in a stable currency and have somewhere to stash the profits. 

An Order is a collection of rules, maintained by international institutions and policed currently by America. Long may it be so! 

But the fundamental mistake has been to want to go beyond trade and to export liberal-democratic values, usually by force, as above - most of the world outside the Anglo sphere is not very pluralistic, human rights is a luxury, freedom is far off the daily agenda, they are more authoritarian, and believe it or not the people themselves often prefer things this way - they want security and money and don't want to think too much.

Though I don't much like Europe's emperor-in-waiting, Macron is talking to Putin most days. He is listening to Putin's perhaps justified gripes. This is what Europe is about, these our our values, cooperation through negotiation, we have to live here, America is perfectly safe on the best slick of real estate in the world, an ocean away, and it is the most powerful country the world has ever seen. They are not us.

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IS UKRAINE IN RUSSIA?

28 March 2022

Putin thinks so.

In an unscripted speech in Poland this last week, Mr Biden said of Putin: “For God’s sake, this man cannot remain in power.”

Yes well, how embarrasing, in a senior moment, Biden forgot he was the POTUS and let slip America's true intention, regime change wherever converting the world's autocracies into democracies and oppression turns to human rights.

Or put it another way, eliminate the competition and stay on top, Master of the World, forever.

We all know this as we read between the propagandas. In any case, who wouldnt want to live in an enlightenment democracy? Of course we do.

Except that this one is in decline and all we can do is point out the mistakes, knowing we won't be heard, the lessons from all previous post-cold war epic American failures. Need I list them? Will this time be any different? Never mind the past failures, what are the lessons?

First is that these days, no invasion of a sovereign country ever works out. Perhaps that was Putin's fundamental mistake, thinking that Ukraine was in Russia. The determination of the people to resist is proof that nationalism is the strongest force in politics - "my country, right or wrong". No point in NATO rolling into Moscow, shock and awe, best another hearts and minds job, tie the russian people into Europe socially and culturally and prosperity, till they do the regime change.

Secondly, what really risks to knock America off its no.1 block is its indebtedness. Too much for a post here, but debt, QE, inequality, civil strife and woke ... it all comes from mismanaging the reserve currency and a lax attitude to surplus diversity.

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LANNA DANCE "FUSION"

27 April 2022

It was quite a challenging show. It started off easy, traditional Lanna dance, albeit in a scrap yard.

Then it started. First a series of motifs, numbered instructions such as "dance while eating", "while doing the housework" ...

I began to feel uncomfortable.

She started pulling clouds of sequins out of her bosom. And the stage was obscured in flutters of dollar bills.

I got the message, but heavier were to come.

She began machine-gunning her two sisters sitting peacefully on the coach. And thus began a long long dance, the three of them. They weren't sisters, it was her husband and child, the slow and painful break-up of a family, the mother eventually kicking out the husband, putting her daughter into the care of parents in the village, while she goes to seek work in the city, any work.

Difficult to understand the penultimate sequence, involving her and her freelance assistants.

Ultimately, all our dreams came true, as she took of her clothes for  a final burst of the most beautiful Lanna dance, she is a perfection of the art, and we are asked to vote our applause with a trinkle of money in the donation box. Bringing us nicely back to earth, to the start, we wake up.

All very clever, very arty, very true, very beautiful.

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HERE IS WHERE THE NEXT CRISIS WILL START

25 March 2022

After the last sub-prime crisis and 15 years of QE, Brexit dislocation from UK's main market, climate change and the Energy Transition away from fossil fuels, Covid and yet more very serious business disruption, now war in Europe with sanctions ejecting the world's only full-spectrum commodity and agri producer ... where will the next crisis come from? 

Many have savings in stock markets. There seems to be a growing problem in the credit markets. 

If you look at household and corporate debt, by region (US, Euroland and China), there are some serious hotspots in companies' debts in the US; Euroland and the UK are not great but OK;  though in China, both company debt to assets ratio, and profits to interest payments ratios, as well as household debt to household income, are all really worrisome with spreads (see below) averaging 12%.

The ratings agencies tell you the confidence you can have in a loanee. And central banks publish heat maps.

The yield on a bond or loan is made up of a fixed risk-free rate that everyone gets, unless a floating rate which is regularily reset, then add on a credit risk (the risk of the company defaulting) and a liquidity risk (the difficulty of selling the loan), according to the investment grade. It is the latter two that make up the credit spread, so zero for gilts and t-bonds, but increasing with decreasing loan quality or "investment grade".

"Investment grade" is BBB or above. Most funds have a policy that says only investment grade is permitted. Or you can buy high yield. Half the loans in a fund are in the bottom triple-B tranche, just above junk, reflecting the reality of corporate quality.

There is a real problem in leveraged floating loans. There is a real problem when these loans are bundled up. They will contain mostly triple B because that is the quality of most loans, but in a recession, these would be downgraded to junk ("high yield", if you prefer ha ha), obliging fund managers to sell  these bonds...

Seeing a recession, many will start heading for the exit, anticipating company downgrades by the rating agencies.

Companies will face higher rollover rates, increasing their costs ... so lowering their profits ... the company gets a downgrade ... so rollover rates go up again ... and the problem compounds across equity markets from bad to good companies. 

Share price follows expected earnings, at least in the short term. Earnings downgrades and we have a stock market crash as everyone heads for the exits.

So if analysts begin to anticipate a recession - the war, no, but inflation and higher lending rates, yes - then we'd be in this "downgrade cascade" and there is little or nothing central banks could do.

The next crisis could well be a stock market crash and it would start in the credit markets. . 

So it means we must at a minimum check debt levels of any companies we own and sell before a downgrade.

Questions: 

Cannot withdraw to cash because inflation will devalue your savings, so what do "safe" assets look like?

What is a reasonable ratio of debt/equity or a EBIT/interest payments? 

Will Value outperform Growth? 

What of unexciting stocks with safe balance sheets paying say a GT 4% divi?

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KALININGRAD

25 March 2022

We hear nothing of Kaliningrad (formerly Prussian Konigsberg). This "exclave" was included in the German Empire in 1871 and then as part of the WW2 settlement, Konigsberg was given to Russia and renamed.

In March 1999, Poland joined NATO and the Baltic States followed in 2004. This left K high and dry outside Russia, enclave turned exclave. The map shows this strange situation very clearly.

If you take a look at the map you'll notice three things of great strategic importance: 

- how K is on the Baltic sea, with Russia's ice-free naval base in Baltiysk and a helicopter force at the Chkalovsk naval air base

- how K connects to Belarus and thus Russia along the Suwalki Corridor

- and how K is the border between Poland and Lithuania.

Kaliningrad is on the Baltic Sea, as we've seen, meaning that if American or NATO forces become involved, Russia would plant mines along the small passable straits and passageways, closing off the corridor to the Baltic Sea and preventing NATO troop movements into Russia. 

The Suwałki Gap is of great strategic importance to Russia. If you take a look at the map again, you'll see that the Suwalki Gap is just 90 kilometers long and is the only way K can connect with Russia. 

Whoever controls it, commands access to the Baltic states. If Russia, it would cut off the Baltic States geographically from their NATO allies. So Russia and Belarus could quickly overrun the Baltics in any horizontal escalation of this present Ukraine war, leaving NATO no time to defend them.

(Horizontal: spread geographically. Vertical: spread through chem and bio to nuclear.)

This is similar to the importance that attaches to Crimea. There are nine such easy-access gateways that Russia must control. Enemies have invaded in the past through these gateways, most notably Napoleon and Hitler and Russia must control them for its security. This is most of the explanation for today's troubles.

So now today, Kaliningrad is heavily militarised, in response to NATO taking in the countries mentioned above. 

A very agreeable tour of Kaliningrad:

https://youtu.be/Y6M14rLIhV0

Kaliningrad could be where Putin retires to when this war is over. He keeps one of his yachts, the ''Graceful'' there too. It is there now, allegedly.....

Moscow has at least an entire division in Kaliningrad, 10,000-20,000 troops permanently stationed in the oblast.

America's plan would presumably be the color revolution (color, eh) idea again, although K's half million population is 85% ethnic Russian, repopulated after WW2. If prosperity is a stronger political force than nationalism, America could send in its advisors and NGOs to build up social and cultural ties between K's inhabitants and its NATO neighbours, give the people of K a strong desire to join the EU for prosperity and NATO for protection. But of course that could only happen once Russia is crippled and potential nuclear resistance overcome as a result of proceedings in the Ukraine theatre.

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ANOTHER EPIC AMERICAN DISASTER

 25 March 2022

                I have been pushing the peace line in these columns for a couple of years. Until, I would say, this week, 99% of comment has been from football-hooligan types and CSA has been treated to abuse and called a Russian troll.

Sense is starting to filter through. There are really only two arguments. One is the justice angle, as evidenced for example in this youtube.

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

The other is America's record as it has lost every engagement since the end of the cold war, plus it has also trashed its economy with debt, negative interest rates and 30 trillion dollars of money-printing.

Anyone with half a brain can see that NATO expansion and this Ukraine war - which means American world domination by brute force in the name of Democracy and Human Rights - is going to be another epic American disaster.

===

 Look at what is happening under our nose. NATO and America organise these colour revolutions. It was Ukraine's turn in 2004 and when that didn't work, a tougher revolution was organised in 2014.

Cities are being ground to rubble. This includes non-military public infrastructure as well as private residential.

This is Europe 21st century. And remember NATO - which is America essentially - stayed post 1991 because the Europeans couldnt be trusted not to restart fighting. 

Now today, we have fighting, and although Putin pulled the trigger 24 Feb 22, NATO and America started this.       

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DEALING WITH WESTERN PROPAGANDA

24 March 2022

https://youtu.be/11q9dir2Nts

"There is a faction that has a geopolitical strategy that is happy to drain Russia of power and if it comes at the expense of Ukraine, they're OK doing that". 

The "faction" is the blob, which returned, having got rid of Trump. Hilary Clinton is  making the same case as them, that's all. I notice that it is purely tactical / operational, the how-to of bleeding Russia dry - you never get into the why, except that Putin invaded a so-so sovereign country, true but that's the tail end of a story going back to the early 90s ... but it's enough to start with Maidan in 2014 (the second attempt, Orange Rev was 2004) and Donbas shelling and Crimea after the coup and even Syria in 2015.

It is all straight geo-political stuff on Putin's part. You just need a map and a bit of history to understand where a search for security takes Russia.

The late Zbigniew Brzezinski, former National Security Advisor to Jimmy Carter, in his 1997 book “The Grand Chessboard,” explained why Ukraine is essential to Russia:

“Without Ukraine, Russia ceases to be a Eurasian empire…. However, if Moscow regains control over Ukraine, with its 52 million people [☆] and major resources as well as its access to the Black Sea, Russia automatically again regains the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

Anyway, this video makes a good analysis except for not explaining Crimea as Sebastopol home to Russia's fleet, in the Azov Sea....being realistic, Russia would launch its nukes before giving that up and everyone knows this.

99% of public comment is uninformed. It is just like the spectators on the terraces, a heartbeat, literally, away from what's happening on the pitch. All gobbing the propaganda and cheering on the action. This is how a govt would get even The Woke to the front line in any future conflict  And it is fine if our existence is threatened. But as always in neocon wargames, you get the liberal justification (democracy and human rights) on the surface, while underneath it is grab the land and assets of your neighbours and balance-of-power politics.

But with a map, a bit of history, some demographics; and assuming states will always seek first security and dont know what their neighbours have in mind for them; with that you can get enough perspective for a reasonable rational analysis, avoid the emotions, avoid being someone who cheers at each batch of gov.t propaganda.

[☆Note: Since the 1990s, Ukraine's and Russia's populations have been declining due to high emigration rates, low birth rates, and high death rate from HIV, alcoholism, violence. What we are looking at is almost a case of native Indians that America is trying to finish off before taking over their lands.] 

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FRANCE WONT BE QUITTING RUSSIA

22 March 2022

https://en.m.wikipedia.org/wiki/Sabetta

15% of the world's natural gas and 80% of Russia's are found here. 

This is the Yamal LNG project, opened by Putin on 8 Dec 2017. It is an LNG plant, a port, a railway, an airport, and residential. It's a JV between Novatek, which Total owns 20%, China's CNPC another 20% so they wont be best pleased either, and the Russian govt.

There is also Artic-2, opened in 2018 with Macron attending.

TotalEnergies is the fourth largest company in the CAC40. This project is a huge part of their accounts. If they pull out, their share of this plant would be nationalised, it would fall into competitors' hands; and there'd be more troubles in the already highly-stressed energy market. Maybe this would bankrupt Total and you can guess the rest.

France's Macron talks regularily with Putin, enduring lengthy lectures on European history.

Isn't all this stupidity part of a wider plot to seize Russia and its commodities and extend the life of the debt-soaked American Order?

The reasons given are that European liberty is under attack and a sovereign nation has been invaded. Although Patrick Pouyanné, CEO, met Macron earlier this month and received encouragement not to quit Russia.

Engie, Renault, Safran, Leroy Merlin (Auchan), Bonduelle, Danone...they refuse to leave. The Fr unions support this. These companies are responsible for hundreds of thousands of jobs in Russia - what would happen to these workers and their families and the wider Russian society?

And how will Humpty be put back together after all this nonsense? Nationalising Western assets would be a pretext for war with Russia - that's the way wars work: you seize the land and assets of a competitor.

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