"It's a big club — and you ain't in it." (George Carlin.)Zero Hedge
Igor Kirillov pointed to a request from the Ukrainian company Motor Sich to the Turkish manufacturer of Bayraktar unmanned aerial vehicles, asking about the possibility to equip the UAV with systems and mechanisms for spraying aerosols...
TASS (Russian state media)MOSCOW, March 31. /TASS/. If gas buyers from unfriendly states refuse to pay for gas in rubles, Russia will view it as breach of contract, President Vladimir Putin said at the meeting on the situation in the aviation sector.
"If such [ruble] payments are not made, we will consider this to be the buyers’ failure to perform commitments with all ensuing implications," Putin said....
Sun Tzu, The Art of War:
I-18. All warfare is based on deception.III-18. Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
On point one, from what I can see from where I sit, US and Western strategists were sucked in by Russian deception, failing to see what Russia was actually doing. This continues. Maybe they do understand and are saying something else for deception, in this case information warfare, which the US and UK are winning hands down in the Western media, although at the cost of imposing censorship on alternative media.
On point two, as Andrei Martyanov observes, US leaders do not understand the Russians, and I would add, they do not understand the Chinese either. Scott Ritter shows this in the case of Russia. I say this about China as someone that studied under Chinese martial arts under Chinese masters for decades. This is revealed by surprise rather than anticipation.
This fault line became abundantly clear to me in the case of Vietnam, for example. The Americans repeated the mistakes of the French and like them were defeated by an apparently inferior force.
The Russian did make two mistakes, however, according to Scott Ritter. First, they underestimated the degree of Nazification of Ukraine in the eight years since Maidan in expecting that ordinary Ukrainians would be happy to be liberated from this menace. That turned out to only be true for the Russian sections in the East. This presents a problem with their major objective of de-Nazifying Ukraine. Now they will likely have to limit this to the hardcore that are fighting in the East.
The second mistake, according to Ritter, is purely political, that is, reducing civilian casualties. Usually, civilian casualties in war run about 1:1 for military and civilian. Russia aimed for much less (and hit their target on this), but at the cost of limiting military efficiency and effectiveness. Ritter points out that this is a "mistake" militarily, but politics supervenes over military objectives, since war is politics by other means (to paraphrase Carl von Clauswitz).
Ritter's conclusion is that Russia was indeed slowed down in its advance but it did not seriously disrupt the military plan or materially influence the facts on the ground that the Russian military is aiming to create for negotiations. This tying one hand behind the back militarily did not get in the way of degrading the Ukrainian military to the point that maneuver warfare is beyond their capability now strategically and logistically as a result of the superior Russian air power and artillery, including missiles.
Yesterday’s fiscal statement analysis replaced my usual Wednesday news and music blog post, so that appears today. I have hardly any time today anyway as the commitments associated with that statement are queuing up. So, today I want to reflect on the sanity in Japan and the ECB before some Duke. So we now have an experiment underway again. Most central banks are buckling under the pressure the financial markets are putting on them to raise interest rates. But the Bank of Japan, and to a lesser extent the ECB are not. We will see how that plays out. I think the Bank of Japan has its finger on the pulse and the other central banks are going down the wrong path....Bill Mitchell – billy blog
MOSCOW, March 30. /TASS/. Russian President Vladimir Putin informed German Chancellor Olaf Scholz regarding the decision to switch to payments for Russian gas in rubles, the Kremlin press service reported. The two leaders had a phone conversation on Wednesday.
"Vladimir Putin informed the Federal Chancellor on the subject of switching to payments for gas supplies in Russian rubles, in particular, for Germany. The change in the payment procedure is being introduced due to the fact that, in violation of international law, the foreign exchange reserves of the Bank of Russia were frozen by the EU member-states," the statement said.
Besides that, Putin and Scholz agreed that the transition to paying for Russian gas in rubles will discussed by experts from the two countries.…
This is what happens when you don't think things through before taking action.European leaders have grown quite fond of bandying about the notion of liberating their economies from their dependence on Russian oil and gas. Unfortunately, the numbers just don't make sense...
All this suggests is that the shift in international currency strength after the Ukraine war will not into some West-East bloc, as most argue, but instead towards a fragmentation of currency reserves; to quote the IMF: “if dollar dominance comes to an end (a scenario, not a prediction), then the greenback could be felled not by the dollar’s main rivals but by a broad group of alternative currencies”. That may have even worse consequences for world peace and for the smooth expansion of the world capitalist economy than a major split between west and east. Indeed, it implies almost an anarchic currency situation where the imperialist economies, particularly the US, could lose control over world currency markets.While the USD is still dominant and there is no rival on the immediate horizon, dollar dominance is ending in a somewhat surprising way that Michael Roberts views as detrimental to world trade.
Given that the war in Ukraine is the focus of a massive propaganda operation in the West, it’s telling that it’s fading a bit from attention, either by design or a need to regroup. While the business press still gives the war top billing due to the fact that energy supplies and pricing around the globe are very much in play, the level of discussion on Twitter in the last couple of days has dropped dramatically. Similarly, I don’t check into Daily Mail religiously, but not all that long ago, it crowded out celebrity coverage. By contrast, the last two days, the first conflict-related story, this on a TV host in Russia calling for regime change in the US, was well below the fold....Naked Capitalism
I have been slowly getting back into things, and been thinking about what to write next. Based on a conversation with Gabriel Mathy on Twitter, I just want to quickly discuss how term premia ought to be measured. I think I have mentioned this before, but I felt like running through the arguments briefly again. I then have a few other unrelated comments to fill out this article....Bond Economics
Last night (March 30, 2022), the Federal Treasurer released the annual ‘fiscal statement’ (aka ‘The Budget’), which revealed to everyone how cynical these exercises have become. The statement is normally released in May but the Federal government has to go to the polls then and they are so far behind the Opposition Labor Party in the opinion polling that they decided to bring forward the fiscal statement as a last ditch attempt to bribe the voters with pennies. I hope it doesn’t work. This is one of the most dishonest and incompetent governments we have ever had to deal with – and that is saying something given our history. While everyone is talking about the cash splash – it is offset by a range of cuts and dissipates in a few months anyway – just after the election. And the Government is once again revealing it has not foresight – to deal with the major challenges – climate, aged care, health care, higher education, social housing, etc. I can barely even write about the statement it is so bad....Bill Mitchell – billy blog
There’s an interesting review of Jagdish Bhagwati’s book Protectionism published in the year 1988 by Wynne Godley in the journal Economica, year 1993. Without going into the review, I wanted to highlight how Wynne Godley’s views were quite similar to Nicholas Kaldor’s and Godley proposals such as planned trade and international cooperation of a new kind:The Case for Concerted Action
Scott Ritter
@RealScottRitter
Twitter-@RealScottRitter1/ Big Arrow War—a primer. For all those scratching their heads in confusion, or dusting off their dress uniforms for the Ukrainian victory parade in Kiev, over the news about Russia’s “strategic shift”, you might want to re-familiarize yourself with basic military concepts.
2/ Maneuver warfare is a good place to start. Understand Russia started its “special military operation” with a severe manpower deficit—200,000 attackers to some 600,000 defenders (or more). Classic attritional conflict was never an option. Russian victory required maneuver.
3/ Maneuver war is more psychological than physical and focuses more on the operational than on the tactical level. Maneuver is relational movement—how you deploy and move your forces in relation to your opponent. Russian maneuver in the first phase of its operation support this.
4/ The Russians needed to shape the battlefield to their advantage. In order to do this, they needed to control how Ukraine employed it’s numerically superior forces, while distributing their own smaller combat power to best accomplish this objective.
5/ Strategically, to facilitate the ability to maneuver between the southern, central, and northern fronts, Russia needed to secure a land bridge between Crimea and Russia. The seizure of the coastal city of Mariupol was critical to this effort. Russia has accomplished this task.
6/ While this complex operation unfolded, Russia needed to keep Ukraine from maneuvering its numerically superior forces in a manner that disrupted the Mariupol operation. This entailed the use of several strategic supporting operations—feints, fixing operations, and deep attack.
7/ The concept of a feint is simple—a military force either is seen as preparing to attack a given location, or actually conducts an attack, for the purpose of deceiving an opponent into committing resources in response to the perceived or actual actions.
8/ The use of the feint played a major role in Desert Storm, where Marine Amphibious forces threatened the Kuwaiti coast, forcing Iraq to defend against an attack that never came, and where the 1st Cavalry Division actually attacked Wadi Al Batin to pin down the Republican Guard.
9/ The Russians made extensive use of the feint in Ukraine, with Amphibious forces off Odessa freezing Ukrainian forces there, and a major feint attack toward Kiev compelling Ukraine to reinforce their forces there. Ukraine was never able to reinforce their forces in the east.
10/ Fixing operations were also critical. Ukraine had assembled some 60,000-100,000 troops in the east, opposite Donbas. Russia carried out a broad fixing attack designed to keep these forces fully engaged and unable to maneuver in respect to other Russian operations.
11/ During Desert Storm, two Marine Divisions were ordered to carry out similar fixing attacks against Iraqi forces deployed along the Kuwaiti-Saudi border, tying down significant numbers of men and material that could not be used to counter the main US attack out west.
12/ The Russian fixing attack pinned the main Ukrainian concentration of forces in the east, and drove them away from Mariupol, which was invested and reduced. Supporting operations out of Crimea against Kherson expanded the Russian land bridge. This phase is now complete.
13/ Russia also engaged in a campaign of strategic deep attack designed to disrupt and destroy Ukrainian logistics, command & control, and air power and long-range fire support. Ukraine is running out of fuel and ammo, cannot coordinate maneuver, and has no meaningful Air Force.
14/ Russia is redeploying some of its premier units from where they had been engaged in feint operations in northern Kiev to where they can support the next phase of the operation, namely the liberation of the Donbas and the destruction of the main Ukrainian force in the east.
15/ This is classic maneuver warfare. Russia will now hold Ukraine in the north and south while its main forces, reinforced by the northern units, Marines, and forces freed up by the capture of Mariupol, seek to envelope and destroy 60,000 Ukrainian forces in the east.
16/ This is Big Arrow War at its finest, something Americans used to know but forgot in the deserts and mountains of Afghanistan and Iraq. It also explains how 200,000 Russians have been able to defeat 600,000 Ukrainians. Thus ends the primer on maneuver warfare, Russian style.
Mariupol sits on the strategic Sea of Azov at the tip of the Black Sea, and is the 'Mecca' of Europe's steel industry. Its conquest by Russia can pave the way for a Eurasian railroad and connectivity surge....The Cradle
Why might Putin have made this announcement? At least three key possible reasons come to mind, all related to well-known theoretical and empirical work in international monetary economics:vox.eu/CEPRThe combination of these three factors, and especially the final one, might potentially enhance the international role of the rouble.
- Market segmentation, arising from obstacles to the formation of a unique global market with a single price for a product (in this case, gas), allows monopolistically competitive firms (such as Gazprom in this case) to operate pricing-to-market strategies by choice of the currency of pricing in international transactions for each such segmented market.
- A shift of the exchange-rate risk from Gazprom as exporter to its importer counterparties in the ‘unfriendly’ countries, which could potentially result in rising energy costs if the rouble gains value in a medium-to-longer run.
- As a consequence, the move could boost demand for roubles in international forex markets, in particular by forcing the West to allow gas and oil buyers a way to purchase roubles under the current sanction regime, and thus – presumably – a way for Russia and its central bank to sell those roubles.
Yves here. Hope you’ll enjoy hearing Michael Hudson discuss how the war in Ukraine is really a great power confrontation, as Biden made clear, and why some of the moving forces in the US might not be unhappy with disruption.
This was linked to here at MNE several days ago at a different location, but it is still relevant if you missed it.
Naked CapitalismToday, I am reflecting on the evolution of the body of work known as Modern Monetary Theory (MMT) and responding to many E-mails I get seeking clarification about things and some that keep getting things wrong. Some of the things I write today might introduce some dissonance, which just means that those feeling that have not really got to the bottom of the matter before and thought they knew what isn’t. This blog post also forms part of my – MMT Provenance – series where I trace the development of MMT in historical terms – who said what, who were there, who weren’t etc. And it is good sometimes to reflect on your work to see where it has gone and to wonder why....Bill Mitchell – billy blog
Axios
- By focusing on deficit spending as a cause of inflation, administration officials are starting to parrot an argument Sen. Joe Manchin (D-W.Va.) made in rejecting Biden’s Build Back Better agenda: new programs that aren’t fully offset can drive up prices.
- The president also wants to assure Americans he'll increase defense spending in the face of new threats from Russia, and fund the police to keep Americans safe at home.
Inflation data continues to come in from various nations indicating an ongoing escalation in prices dominated by energy and cars (in the US), housing and transport (UK), housing and transport (Australia) and so on. The major question I always ask is this: What would you expect to happen after a major global pandemic that has lasted more than 2 years and is still not resolved and which has closed factories, ports, transport networks, made workers sick so they cannot work, choked shipping, kept people at home while governments have to varying extents maintained their income, shifted spending to home maintenance etc away from haircuts, and the rest of it. And then, add an uncompetitive cartel that manipulates supply to gouge profits (OPEC). And on top of all that have some bushfires and floods around the place. And to even top all of that have a character who thinks he is a Tsar invading a neighbour and creating havoc and destruction. What else would you expect? Oh, its all down to QE and fiscal deficits, I hear them say. Modern Monetary Theory (MMT) again – now we know those ideas are defunct. We told you so! And repeat. Interest rates have to rise. Repeat. At least the ECB seems to understand the situation more than most, which is something.
- Russian refiners cut processing rates of diesel fuel.
- Already tight diesel supply is getting even tighter.
- Vitol’s chief executive Hardy: diesel supply shortage could trigger rationing in Europe
The ongoing conflict in Ukraine poses threat to globalization and may create a major “division” in the world, Josep Borrell believesThat this is state as new thinking is incredible. Has Borrell been under a rock all the while this has been going on? Did he miss hearing about Putin and Xi announcing a strategic partnership in Beijing during the Olympics? It's a fait accompli, largely as a result of 1) US foreign policy statements about global hegemony, 2) NATO expansion eastward to Russia's borders, 3) US mounting in first-strike capability in Eastern Europe, and 4) Obama's pivot to Asia.
The Ukrainian crisis and the West’s reaction to could “push” Russia towards China, the EU’s foreign-policy chief Josep Borrell warned as he spoke during the opening session of the Doha Forum on Saturday.
Doing so could lead to creation of a major rift between the global north and south, the diplomat said, stressing that such a scenario should be avoided.
“One of the bad consequences of what’s happening is that we can push Russia to China, and we can create a division between the global south-east and the global north-west,” Borrell stated.…
Mike doing some projections this week on by how much or perhaps how fast the Fed can increase its policy rates while avoiding insolvency, ie a situation where their current interest income would be exceeded by their current interest payable:
You can see here current UST yields are less than the Fed’s overnight rates (inverted) out to 8 weeks … no bueno:
To be safe they may want to somehow pivot from the current perhaps implied policy of an acceleration in the increase in their policy rates to a policy of acceleration in their rate of asset/liability reduction… keep an eye out for this pivot…
Current MAGA breakdown of Ukraine situation with Bannon and Revolver News:
One month ago, Brent jumped above $100/bbl for the first time in eight years as Russia executed a full-scale invasion of Ukraine, and it became clear that western governments would impose sanctions. The oil market has been in triple digits for practically the entire time since.Zero Hedge
And, after a month of oil prices we have not seen in nearly a decade and weeks of record-high fuel prices, JPMorgan has published a research report (available to pro subs) which finds that high-frequency data suggest that consumers are beginning to react resulting in what the Fed has desperately wanted to achieve all along: commodity demand destruction....
It bears recalling that chairman of the Russia's Congressional energy committee, Pavel Zavalny, said in a press conference on Thursday - as we detailed earlier - that Russia is open to accepting different currencies for its exports, beginning with natural gas, depending on the buyer’s preferred method of payment, and also "hard money" like gold. However, the chairman said terms will depend on the importing country’s foreign relations status with Russia....It works two ways.
Following Putin’s announcement about selling gas for Rubles only to hostile nations, I decided to reach out to Michael Hudson and ask him (my level, primitive) questions. Here is our full email exchange:The Vineyard of the Saker
UnherdThe Russian's decision is accelerating the shift away from US-led dominance