On Friday, the market soared for some inexplicable reason or perhaps very explicable if one assumes the market is now exclusively populated by kneejerk-reacting idiots and busted vacuum tubes that don't even bother to read what is written below the headlines, when Russia confirmed the end of a military drill that previously had been scheduled publicly would end precisely on that day!
As we said "This is in no way a de-escalation - in fact, had Russia continued the exercise that would have been a clear provocation. But as usual Johnny 5 ignites momentum first, finds out he never actually read between the original lines, and asks questions never." Sadly, the "market" took this as news, or merely as justification, to send stocks soaring on upward Fed-facilitated momentum, and to halt what otherwise would have been the S&P's downward descent into the 1800s at this moment.
As we further said yesterday, it was only a matter of time before Russia announced yet another drill just to show to the west that it is by no means telegraphing any weakness through the timing of drills.
We were about 12 hours early, because later that same day, Itar-Tass reported that some 3,000 paratroopers will be airlifted in two districts of Russia’s north-western Pskov region as part of command and staff exercises of the 76th air assault division starting on Monday, Airborne Force spokeswoman, Major Irina Kruglova said. As a reminder, Pskov is located right next to the Baltics, bordering Estonia and Latvia, both of which have been on a rather belligerent diplomatic track with the Kremlin, and thus will likely result in a substantial escalation in Russia-Baltic tensions, not to mention Ukraine as well, now that Putin is no longer counter-un-de-escalating, again.
But back to the latest, greatest, and certainly not last drill, “over 3,000 personnel will be airlifted by 15 Il-76 planes,” the spokeswoman said.
The punchline: The mass landing of paratroopers in an unknown terrain will be held for the first time in military drills of this level, the spokeswoman said.
As long as the surprise terrain is not "Kiev"...
Bad jokes aside, the maneuvers will involve over 30 aircraft and helicopters, including Su-34 fighter-bombers, Ka-52, Mi-28, Mi-24 and Mi-8 helicopters. “The drills’ active phase will take place on August 14-15", the spokeswoman said.
The maneuvers will end with night and daylight firing from all of the division’s organic weapons, including Sprut self-propelled anti-tank guns and Nona-self-propelled mortar systems, as well as Strela-10 air defense missile systems.
So while markets certainly do not care today, when the drill is being announced, be certain sure to buy everything with both hands and feet on August 15, when the mass media announces the end of the drill which will be "spun" as yet another assured, guaranteed demonstration of Putin de-escalating military tensions in the region.
At least until the next week that is.
Credit to Zero Hedge
Any American influence left in Iraq should focus on rebuilding the credibility of national institutions.
– Editorial, The New York Times
Gosh, isn’t that what we spent eight years, 4,500 lives, and $1.7 trillion doing? And how did that work out? The Iraq war is just like the US financial system. The people in charge can’t imagine writing off their losses. Which, from the policy standpoint, leaves the USA pounding sand down so many rat holes that there may be no ground left to stand on anywhere. We’ll be lucky if our national life doesn’t soon resemble The Revenge of the Mole People.
The arc of this story points to at least one likely conclusion: the dreadful day that ISIS (shorthand for whatever they call themselves) overruns the US Green Zone in Baghdad. Won’t that be a nauseating spectacle? Perhaps just in time for the 2014 US elections. And what do you suppose the policy meeting will be like in the White House war room the day after?
Will anyone argue that the USA just take a break from further operations in the entire Middle East / North Africa region? My recommendation would be to stand back, do nothing, and see what happens — since everything we’ve done so far just leaves things and lives shattered. Let’s even say that ISIS ends up consolidating power in Iraq, Syria, and some other places. The whole region will get a very colorful demonstration of what it is like to live under an 11th century style psychopathic despotism, and then the people left after the orgy of beheading and crucifixion can decide if they like it. The experience might be clarifying.
In any case, what we’re witnessing in the Middle East — apparently unbeknownst to the newspapers and the cable news orgs — is what happens in extreme population overshoot: chaos, murder, economic collapse. The human population in this desolate corner of the world has expanded on the artificial nutriment of oil profits, which have allowed governments to keep feeding their people, and maintaining an artificial middle class to work in meaningless bureaucratic offices where, at best, they do nothing and, at worst, hassle their fellow citizens for bribes and payoffs.
There is not a nation on earth that is preparing intelligently for the end of oil — and by that I mean 1) the end of cheap, affordable oil, and 2) the permanent destabilization of existing oil supply lines. Both of these conditions should be visible now in the evolving geopolitical dynamic, but nobody is paying attention, for instance, in the hubbub over Ukraine. That feckless, unfortunate, and tragic would-be nation, prompted by EU and US puppeteers, just replied to the latest trade sanction salvo from Russia by declaring it would block the delivery of Russian gas to Europe through pipelines on its territory. I hope everybody west of Dnepropetrovsk is getting ready to burn the furniture come November. But that just shows how completely irrational the situation has become… and I stray from my point.
Which is that in the worst case that ISIS succeeds in establishing a sprawling caliphate, they will never be able to govern it successfully, only preside over an awesome episode of bloodletting and social collapse. This is especially true in what is now called Saudi Arabia, with its sclerotic ruling elite clinging to power. If and when the ISIS maniacs come rolling in on a cavalcade of You-Tube beheading videos, what are the chances that the technicians running the oil infrastructure there will stick around on the job? And could ISIS run all that machinery themselves? I wouldn’t count on it. And I wouldn’t count on global oil supply lines continuing to function in the way the world requires them to. If you’re looking for the near-future spark of World War Three, start there.
By the way, the US is no less idiotic than Ukraine. We’ve sold ourselves the story that shale oil will insulate us from all the woes and conflicts breaking out elsewhere in the world over the dissolving oil economy paradigm. The shale oil story is false. By my reckoning we have about a year left of the drive-to-Walmart-economy before the public broadly gets what trouble we’re in. The amazing thing is that the public might get to that realization even before its political leadership does. That dynamic leads straight to the previously unthinkable (not for 150 years, anyway) breakup of the United States.
Credit to Zero Hedge
This may get messy.
Following days of loud warnings by the West that Putin should not take any moves to send "humanitarian" aid into East Ukraine, due to western fears that this would be merely a pretext for invasion, Putin said on Monday that Russia will go ahead and send an aid convoy to eastern Ukraine anyway.
As was reported earlier, Ukraine announced that Russia has amassed 45,000 troops on its border, following by the now-daily NATO threat that there was a "high probability" that Moscow could intervene militarily in the country's east, so to many this is just the catalyst that the Kremlin could use to enter the civil war-ridden territory to support ethnic Russians, but ultimately to conduct yet another "Crimea." As a reminder, despite the constant grumblings by the West and certainly Kiev, there is zero probability that the annexed territory will be relinquished by Putin. As a further reminder, it was the emergence of local mysterious "peacekeepers" that made the annexation of Crimea a quick and painless transition, one in which not a shot was fired. The concern is that that was merely the appetizer with the shale-rich Donbass region serving as the main course.
According to Reuters, European Commission President Barroso "delivered a blunt message in a telephone call with Putin on Monday. "President Barroso warned against any unilateral military actions in Ukraine, under any pretext, including humanitarian," the Commission said in a statement."
The Kremlin, in its own account of the conversation, made clear that Moscow would indeed send help to largely Russian-speaking eastern Ukraine. We also doubt very much that Putin cared much if at all about any warnings uttered by the unelected Eurocrat.
"It was noted that the Russian side, in collaboration with representatives of the International Committee of the Red Cross, is sending an aid convoy to Ukraine," the Kremlin statement said, without saying when the convoy was going.
And now that Putin's mind is made up, Ukraine has no choice but to accept, albeit with its so-called conditions:
Ukrainian President Petro Poroshenko said he supported an aid mission but made clear it had to be an international effort under the aegis of the Red Cross, involving the European Union as well as Russia. Poroshenko said U.S. President Barack Obama had also backed the international plan when they spoke on the telephone on Monday.
The International Committee of the Red Cross made no immediate comment, although last weekend it issued a statement acknowledging receipt of an offer from Russian Foreign Minister Sergei Lavrov about organizing aid convoys.
Surely Russia will closely "heed" Ukraine's conditions.
To be sure, NATO is displeased. Quote its Secretary General Rasmussen: "We see the Russians developing the narrative and the pretext for such an operation under the guise of a humanitarian operation, and we see a military build-up that could be used to conduct such illegal military operations in Ukraine," he said.
And yet, Russia appears set to enter east Ukraine despite NATO objections.
It goes without saying that all it would take for a full blown escalation, one that not even the algo-driven market could ignore, would be a Russian casualty operating in Ukraine under a "humanitarian" umbrella, wether legitimate or due to a "false flag" attack, before the facade of artificial stability on Ukraine's east border crumbles and what was until now a civil war morps into a full-blown international conflict.
Update 1: the readout of the Obama-Poroshenko phone call:
The President spoke this morning with Ukrainian President Petro Poroshenko about the ongoing crisis in eastern Ukraine. President expressed his strong support for Ukraine’s sovereignty and territorial integrity. The two leaders agreed that any Russian intervention in Ukraine without the formal, express consent and authorization of the Ukraine government would be unacceptable and a violation of international law. President Poroshenko also noted the continued shelling of Ukraine’s territory from Russia. President Poroshenko updated the President on his engagement with the International Committee of the Red Cross (ICRC) on the effort to deliver multilateral humanitarian aid to the distressed populations in eastern Ukraine. The President noted the urgency of such humanitarian efforts and encouraged President Poroshenko to continue to exercise restraint and caution in military operations in order to avoid civilian casualties. In light of the ongoing violence and instability, the President and President Poroshenko agreed that all parties should prioritize diplomatic efforts toward finding a political resolution to the crisis.
Credit to zer Hedge
