A look in the long distance: who will have to pay for “Ukraine v2”?

I just wanted to mention here a topic which is not often discussed in the western press but which does pop-up with some regularity in the Russian press. Let’s set aside the current events and ask ourselves the following question:

Sooner or later there will be some kind of state in what used to be the Ukraine until 2014. The Crimea is gone forever to Russia, that is certain. A “People’s Republic of Donetsk” all alone like some kind of Lichtenstein but stuck between Russia and Banderastan is most unlikely. Even a “People’s Republic of the Donbass” or a “Novorossia” composed of the Donetsk and Lugansk regions would have a very hard time surviving as an independent state. I think that we can assume that the Donbass will either have to join Russia or, at the very least, the Eurasian Union (Rus, Kaz, Bel, Arm, etc.) or some kind of loose Ukrainian confederation. The latter is, of course, only possible if the USA gives up on its delusion of maintaining a neo-Nazi and russophobic Banderastan and accepts some kind of sovereign but civilized “Ukraine” in its place. Right now there are no signs that anybody in Washington is ready to accept that. But whatever the USA does or does not want, there is one thing which is sure: all the successor states of the original Ukraine will need HUGE amounts of foreign financial aid. We are not talking just about providing a few billions in loan guarantees to a clique of corrupt oligarchs, but about fully re-building a more or less modern country almost from scratch. This is a huge program which will take at least a decade and will require immense resources. It will have to be implemented in an highly volatile environment, with massive poverty and corruption, with violence prevalent and possibly with a serious terrorism problem. The political instability of such a environment is guaranteed. So in the light of this – if you were the EU or Russia – would you want to be responsible for more or less of that territory?

Think about it: whoever will end up “owning” (if not de-jure then de-facto) most of this new “Ukraine v2” will also own most of its problems. The EU plan in this regard is crystal clear: the EU wants to own it all and let Russia pay for it all. Unsurprisingly Russia does not agree. The Americans have it even better: they simply don’t ask this question, don’t think about this issue and have no plans to own anything if by “owning” we mean “paying for”. This is completely immature and plain silly. Denying this problem will not make it magically disappear.

Now here is the beauty of it all, at least seen from the Russian point of view:

Russia has already reunited the only part of the Ukraine it really “wanted”: Crimea. From a purely egoistic and self-centered point of view, Russia could built a huge wall all along its border with the Ukraine and declare “to hell with it all” and let all the other actors (Ukrainians, EU, US) deal with that. I am kidding, of course, but as a thought-experiment, this is a useful one. Ask yourself: what would happen if Russia did exactly that. Let’s assume that Russian public opinion would not be up in arms against such a decision (in reality it would!) and let’s just also assume that the (imaginary) “United People’s Republic of Donetsk and Luganks” would be fine with that (it’s only a though experiment – so indulge me in some unrealistic speculations here, okay?). Let’s even assume that Kharkov, Odessa, Zaporozhie, Nikolaev and other cities and regions stop protesting or resisting. All Russia would do is turn off the gas spigot (unless it is paid for in advance), get out the popcorn and beer and watch the reports from the Ukraine. What do you think would happen?

Exactly.

Absolute and total chaos. It’s either that or the US/EU would have to come up with a way to not only put a semi-legitimate AND very effective regime in power, but also to pay a bill ranging anywhere form 30 to 100 billion dollars (depending on how much of the problem you want to address immediately). Now look at the same problem from the Russian point of view:

Either the US/EU agree incur huge costs which will severely damage their economies (and they cannot afford that) or

The EU and US begin an ugly fight over “who pays what and under what terms”, and

The EU is hit by a series of shocks as a result of the Ukrainian chaos (illegal immigration, crime, political disputes), and

NATO will be seen as either ineffective/incompetent/useless at best, and as reckless and irresponsible at worst.

So no matter what, the AngloZionist Empire will suffer massive consequences for is crazy notion of letting a huge country like the Ukraine explode right in the middle of the European continent.

To be honest, I am quite certain that Russia does not want that outcome at all. First, the Russian public opinion is extremely worked-up about having fellow Russians attacked by a mix of neo-Nazis and Jewish oligarchs and it would never accept putting up any kind of wall or abandon the Russian-speaking Ukrainians. Second, as I mentioned before, Donetsk and Lugansk along cannot be viable in isolation. Finally, I am not at all so sure that only these two regions will decide to hold a referendum, especially after the economic crisis really hits.

Ideally Russia wants a lose Ukrainian Confederation. This confederation would have to be thoroughly de-Nazified and would probably have to join the economic union with Russia and its partners (if only to benefit from Russian financial aid). Russia would also want the US and EU to pitch in its “fair share” of financial and technical support to gradually re-built “Ukraine v2”, especially considering that these two entities are responsible for breaking up “Ukraine v1” in the first place. Needless to say, “Ukraine v2” would not be Banderastan and it would not join NATO.

As a side note, it would be really smart for the new Ukrainian leadership of this “Ukraine v2” to declare itself not only neutral but also totally demilitarized. Seriously, what is the point of having a military when stuck right in between NATO and Russia? Provide more targets?

As a (former and “recovering”) military analyst I can tell you that by far the best defense against foreign agression for Ukraine would be:

1) the size of its territory (geographical defense)
2) being completely demilitarized (political defense)
3) being officially neutral (legal defense)
4) being in between two rival blocks (military defense by means of “other side”)

That does not require a single Hrivna of financing, looks extremely progressive, would get a standing ovation from all its neighbors and would provide the perfect “buffer” to reassure both NATO and Russia. And just imagine the amount of money saved which the “Ukraine v2” could use for far more urgent and contructive needs!

Alas, that would also require a vision which is far beyond what the current freaks in power can even begin to contemplate.

As I have mentioned it in the past, the USA’s entire Ukrainian policy is based on a fallacy cooked up by Zbigniew Brzezinski and parroted by Hillary Clinton: Brzezinski believes that Russia cannot be a superpower without the Ukraine and Hillary believes that Putin wants to rebuild the USSR. They are both completely wrong, of course: Russia is already a superpower (it has now defeated the US/EU/NATO alliance in both Syria and the Ukraine) and Putin does not want to rebuild the USSR at all. I wonder if there is anybody in the US polity which understands who much these conceptual mistakes will end up costing the USA. By listening to these two hateful maniacs (this is really what Zbig and Hillary are!) the USA has completely mismanaged every step of its crucial relationship with both the EU and Russia.

In the case of rump-Ukraine more is not better, more is worse; less is better. The less Russia will have to manage and pay for the reconstruction of the Ukraine the better off Russia will be. From the EU’s point of view, however, the more Russia takes over of the Ukraine, the better for the EU. This is even better from the US point of view because from the US point of view the more the US/EU “own” the Ukraine, the more they will have to pay for it and the more the transatlantic alliance will come under stress. So, paradoxically, it would be in the best interests of the USA to have Russia take over all of the Ukraine. Sounds crazy? Maybe, but that is still a fact.

So here is the truth: the Ukraine is not a prize at all – it is a huge burden.

That is a truth which no politician can openly state, of course.

Checkmate on all boards

But we can, and should. Because if we keep that truism clear in our minds, we can then see why Russia’s victory in this massive confrontation with the united powers of the US/EU/NATO is so total. Can you guess?

Because no matter what, Russia will have the option to chose how much of the Ukrainian burden it is willing to shoulder whereas the West will have to take whatever Russia does not want. Yep, that’s right. Just remember the thought experiment we just did above. Russia could, in theory, refuse to take up any further burden and declare “ain’t my problem, sorry” and there is nothing the US/EU/NATO could do about it (not to mention that such a Russians stance would completely deflate the stupid canard about Russia being ready to invade the Baltics, Poland or any other EU country).

In a sane world ruled by non-delusional people the real priority of western politicians would be to cuddle, beg, plead, threaten and trick Russia into taking over as much of the Ukraine as possible – the whole thing if possible. Let Russia deal with the neo-Nazis, let Russia pay Ukrainian pensions and salaries, let Russia rebuilt the entire economy, let Russia waste its energy and resources on this ungrateful and truly Herculean task. If Russia agreed to take over the full Ukraine NATO could even re-heat its “Russian threat” canard and justify its existence.

Luckily, however, as long as Putin is in power Russia will never agree to anything like it. Time is on Russia’s side and the worst the situation of the Ukraine becomes, the weaker the US/EU/NATO block is, the stronger the Russian bargaining position becomes.

So while Russia cannot remain indifferent and while Russians cannot cynically get some popcorn and beer and watch it all go to hell, Russia will continue to play a very low-key game: Russia will stick to its principled position, it will refuse to be a party to any ludicrous solution, and it will condemn the crazy and neo-Nazi policies of the freaks currently in power in Kiev.

Other than that, Russia will simply wait for western leaders to wake up from their current delusional hallucinations and get serious about solving a problem which is first and foremost their problem which they created and they will have to pay for solving.

The Saker

Coldtype on May 15, 2014 · at 5:16 pm EST/EDT

@ David K

Any country with it’s own currency can print money to finance it’s debt

We need to get away from terms such as “financing government debt” when it comes to describing the operations of sovereign currency issuers for there is no such thing. This only serves to encourage the fallacy that these governments operate under the same constraint as a household. A sovereign currency issuer need never borrow that which it creates at will. A bond issuance is the exchange of one government asset (Dollars in the US) for another (Treasury Securities) that pays interest. This is the functional equivalent of opening a savings account at the Federal Reserve. All interest due on these bonds is paid via keystrokes in the monetary unit of account without fanfare or stress.

A nation that owes debts in a currency that it does not issue is not monetarily sovereign. The same applies to a nation that must procure provisions in a currency that it does not issue.

What normally happens when a country starts printing money is inflation and currency depreciation (and externally it doesn’t really matter if it has an independent central bank or if it is the government itself that does the money printing)

We need to careful here. Inflation is the condition whereby too few real resources are flooded by too much currency. If say, the resource in question is labor can you credibly argue that it would be inflationary to hire out of work teachers to reduce class sizes, or construction workers to repair and upgrade infrastructure? If a sovereign currency issuer decides to address these matters via fiscal spending there is nothing to indicate that an automatic consequence of said action will lead to an unsustainable rise in prices.

Take China for example, a sovereign currency issuer in which banking is a public utility (as it should be). There is no outside force that can prevent her from spending her monetary unit of account to expand her internal infrastructure. She needn’t turn to the IMF for strings-attached “loans” to invest in her own economy, nor resort to the absurdity of borrowing her own currency from “investors” before she may spend it.

The nations of the European Union by entering into a currency union in which the issuing authority (ECB) is constitutionally insulated from their respective legislative authorities have relinquished their fiscal sovereignty to their peril as they now belatedly realize. These nations now have a status that is roughly analogous to that of the individual states in the US who must first acquire the dollars it needs via taxation or borrowing before it may spend.

Taxes at the local level in the US fuels state spending but taxes at the federal level do not pay for anything and represents money destruction for its primary function is to drive demand for the monetary unit of account. The monetary sovereign needn’t take from its citizens that which it created for them to spend in the first place—except to create a demand for the currency via a tax obligation in the currency that only it may create.

Again I reiterate that there are natural limits to what a monetarily sovereign government may purchase for the availability of natural resources is indeed finite. If the Dollar should lose its reserve currency status (as perhaps it should given how irresponsibly its been wielded) then there’s troubled waters ahead when it comes to the purchase of oil (we use 80 million gallons per day) for if we must use a currency that we do not issue to settle accounts then we, like everyone else, must earn or borrow this currency. That of course will be an epochal event here in the Armed Circus, however, my larger point is that as things now stand there is no fiscal constraint that would prevent the US from purchasing any resource that is available for sale in dollars for it can obtain them with a keystroke.

82 Comments

Anonymous on May 14, 2014 · at 5:19 pm EST/EDT

Petrodollar

In a previous post you had mentioned at China and how quiet they have been…

In March as the world’s attention was on Ukraine, China was finalizing a deal with New Zealand to trade only using their own currency, bypassing the Petrodollar.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11221953

http://covertress.blogspot.ca/2014/03/petrodollar-alert-putin-prepares-to.html

And in April, same for Australia:
http://www.ibtimes.com/australia-becomes-third-country-establish-direct-currency-trading-china-says-it-will-hold-5-its
metatron on May 14, 2014 · at 5:26 pm EST/EDT

Re:”To be honest, I am quite certain that Russia does not want that outcome at all. First, the Russian public opinion is extremely worked-up about having fellow Russians attacked by a mix of neo-Nazis and Jewish oligarchs and it would never accept putting up any kind of wall or abandon the Russian-speaking Ukrainians.”
Except that that what it looks like Putin is doing. The rebels have 27000 volunteers to fight but only enough weapons for 6000. If he only provided them with weapons(as he’s being accused of every day) the Donbass would be be cleared in less than a week.
Anonymous on May 14, 2014 · at 5:31 pm EST/EDT

Well, you’re halfway there.

Why has Washington mounted the most sustained propaganda campaign since probably the Korean War? What is going on in the US media is like nothing I have ever seen before.

What is more, although it is carefully unsaid, between every single line is: WAR. Something in the US wants WAR. And whatever that something is, it is at least so powerful that it can control the entirety, repeat the entirety, of the US media.

Why?

The answer is that it is not just Ukraine. The entirety of Europe has failed. The US has failed. Specifically, shipping jobs overseas has resulted in domestic populations that cannot function. And the problem is getting worse. Much worse.

Case in point. Europe is sliding into deflation. Deflation reliably destroys the debtor, read “poor”, class. Europe society is about to implode.

It’s not just Ukraine, and the only solution is war. A real war. With a real adversary. And they have picked their adversary: Vladimir Vladimirovich.

The only problem as you point out is that V. V. is not playing. He understands the game perfectly.

What we will see within 12 months is a false flag casus belli.
VINEYARDSAKER: on May 14, 2014 · at 5:37 pm EST/EDT

@metatron: If he only provided them with weapons(as he’s being accused of every day) the Donbass would be be cleared in less than a week.

Maybe. And then what would happen the week after? That is a very US thing to do – flood a place with guns and see what happens. Except for then you would have to deal with 27’000 armed men. Not to mention that God only knows what kind of chaos these 27’000 armed men would create all around them.

Building an effective military force is a time consuming and slow process in which discipline and centralization of command is absolutely crucial. It implies building up an effective, skilled and highly disciplined officer corps carefully selected from specially capable and trained soldiers.

Just look at the pathetic “force” the Ukies have created by just distributing guns and uniforms.

I am quite happy that Russia does not do that.

However, *some* targeted covert aid would, of course, be a different issue. I would back that.

Cheers,

The Saker
bfrakes on May 14, 2014 · at 5:52 pm EST/EDT

agreed,my dear saker.
OTOH anonymous has a valid point,
actualy several.
Anonymous on May 14, 2014 · at 5:53 pm EST/EDT

Anonymous14 May, 2014 17:31:

Quite so. And if for some reason a good war cannot be achieved, the next-best solution (or perhaps even the best solution) is a bipolar world with China isolated so that they cannot continue to grab all the western jobs.

If we cannot have a bipolar world, deflation and debt default will just accelerate.

That’s what it’s about.

The problem is though that even if China could be isolated, automation cannot.

And automation is a much bigger deflationary monster than China. So their best efforts solve no more than half of the problem if even that.

Best wishes

Anonymous in Finland
Anonymous on May 14, 2014 · at 6:01 pm EST/EDT

@ 14 May, 2014 17:19

I’m not a financial genius, but I try to keep up a bit because so much hinges upon this area, as is basically the motive at the very top.

Glad so see your links. Knew about N/Z deal, but not the others.

But.. I though Jim Rogers said at least 9mo to a year ago, that the really big $$.. ie. Rothchilds, Rockefeller and friends moved to Singapore.
I could be wrong, and I have no illusions about my ability to be so like alot of commenters I see over the ‘networld’

If I am correct, this scenerio has been in my mind for some months.

Taking down Russia has been a long time drea and motive for over a century at very least.
See European Island

These bimbos with all their money tech, science, and hollywood inspired military toys ( that don’t work any better than today’s other products in America ) can’t find their arse with both hands. Horrid methods of death and total destruction are their best shot as ugly as it is.

And finally, they damn well know… they ARE this smart I think, that they can’t beat Russia in the long game alone.

It’s not called The New Great GAME for nothing :)
China could be the wild card.. just a guess.

I’m a novice but I used to play pretty good poker, just my 3cents…. keep the penny. :)
karin
rob on May 14, 2014 · at 6:01 pm EST/EDT

Interview with Sergi Lavrov in English.

Russian Foreign Minister Sergey Lavrov interview to Bloomberg TV channel, Moscow, May 14, 2014

http://www.youtube.com/watch?v=TA1siUNjN8I
rob on May 14, 2014 · at 6:03 pm EST/EDT

Interview with Sergi Lavrov in English.

Russian Foreign Minister Sergey Lavrov interview to Bloomberg TV channel, Moscow, May 14, 2014

http://www.youtube.com/watch?v=TA1siUNjN8I
вот так on May 14, 2014 · at 6:06 pm EST/EDT

“…The Americans have it even better: they simply don’t ask this question, don’t think about this issue and have no plans to own anything if by “owning” we mean “paying for”. This is completely immature and plain silly. Denying this problem will not make it magically disappear.”

I would add that behind the Ukraine aggression from Israel/America/EU lies the desire for the country to be in chaos. While their midterm plan may be to include the Ukraine in the EU and NATO, much like the rest of eastern Europe has been taken over, their short term goal is to create as much problems there to sucker Russia into making a move into Ukraine. Long term goal, is the break up of Russia and the neutralisation of China as an economic rival. I imagine the goons behind the I/USA/EU plutocracy think that as long as they keep Ukraine in chaos and Russia portrayed as the “bad guy”, they are “winning”, so no real effort will come from those quarters to stablise the situation in the Ukraine.
Anonymous on May 14, 2014 · at 6:07 pm EST/EDT

Yep, it’s official: Kiev is finally ready to negotiate… or so they now say.

http://www.theguardian.com/world/2014/may/14/ukraine-talks-moscow-plan-regions-osce

With the honorable exceptions of Seamus Milne and John Pilger, The Guardian has shamelessly acted as a mouthpiece for NATO throughout this whole crisis (and several others); so if even THEY are reporting it, there must be some substance to the story.
Anonymous on May 14, 2014 · at 6:07 pm EST/EDT

Dear Saker

There is another solution: that the Maidan-movement (the non-nazi, anti-corruption, pro-real-democracy part of it) get their shit together and continue their revolt into a truly anti-oligarch, anti-gangster and anti-political-class uprising. Expropriating the wealth of the oligarchs would be a good start for covering the liabilities of the Ukrainian state. It may indeed be a faint possibility, but there IS a serious schism between the interim government, the nazis and the main bulk of the Maidan movement.

When it comes to weapons, East Ukraine is rife with them. One of the reasons that Slaviansk has been such a hotspot is that in has in its vicinity a storage facility which holds 2,5 million small arms. This facility is currently under control of the Ukie military. It would not take much to change that situation, and weapons and ammo would not be a problem for the federalists. In total an estimated 10 million firearms exist on the Ukie territory, surely material for som fireworks and partying…

/Hagen
Mohamed on May 14, 2014 · at 6:14 pm EST/EDT

Russia will pay for it as it was paying in the past, with uncertain future. But this time in return, Russia will get guaranteed:

1. Crimea which they already own.
2. Federalized Ukraine.
3. No NATO in Ukraine.
4. Maybe, Ukraine might sign Custom Union with Russia as desired by them.

Best regards,

Mohamed.
VINEYARDSAKER: on May 14, 2014 · at 6:16 pm EST/EDT

@Hagen:There is another solution: that the Maidan-movement (the non-nazi, anti-corruption, pro-real-democracy part of it) get their shit together and continue their revolt into a truly anti-oligarch, anti-gangster and anti-political-class uprising.

That would be a dream come true for all the Ukraine (including the East and South) and it would get the full support of Russia. The problem is that I don’t see any leader of this “original Maidan” movement. I accept that many, possibly even most, people who originally took to the Maidan went there fed up with Yanukovich and his gang of corrupt Mafia dons. Hell, I would gladly have a “frank exchange of views” with that SOB myself as I see him as THE prime culprit for it all. But I am afraid that just like in Egypt and Syria the original protest movement got completely absorbed by the CIA-run clique of freaks now in power. I see no sign at all that such an “original Maidan” movement even exists today. In the hearts of the people maybe, but not outside it, at least I do not see it.

Kind regards,

The Saker
Mohamed on May 14, 2014 · at 6:22 pm EST/EDT

“Anonymous on 14 May, 2014 17:19 said…
In March as the world’s attention was on Ukraine, China was finalizing a deal with New Zealand to trade only using their own currency, bypassing the Petrodollar.

Hi there,

Do you think New Zealand with dare to do the above without the express approval of USA?

Best regards,

Mohamed.
Serendipity on May 14, 2014 · at 6:22 pm EST/EDT

Since, without a cooperative program by Russia, the US and the EU, none of them is willing to rebuild the Ukraine, the Ukrainian future is, as The Saker says, total chaos. Probably Russian public opinion will not allow Putin to stand by and watch the Donbass be part of this, so Putin will likely allow the Donbass to become part of Russia. There will be major recriminations flying between the EU and the US (neither of which will care two hoots about the people in rump Ukraine). But total chaos in the rump Ukraine will cause major problems for the EU, perhaps including a major disruption of the energy supply from Russia due to interference from Ukrainians, in which case the winter of 2014-2015 (even if no war occurs before then) will be a very hard time for the Europeans, who will be very unhappy with their governments, and may express this in the streets. The US (govt) *could* just sit back and claim that it was all the EU’s fault (a la Kerry recently), but it could then no longer pretend to be the moral leader of the world. The leaders of the US might decide that the only way to avoid this humiliation is WAR, whatever the consequences.
вот так on May 14, 2014 · at 6:23 pm EST/EDT

An article showing the “holdings” of the energy company Burisma Holdings that Biden Jr. joined up with.

VP’s Son Hunter Biden Joins Ukraine Gas Corporation

http://www.boomantribune.com/story/2014/5/13/161323/076

As one can see, most of the fields Burisma Holdings plans/planned to exploit are in the east and south. I would guess their only current viable option is in western Ukraine and I would guess that source would entail fracking to extract.
Mohamed on May 14, 2014 · at 6:31 pm EST/EDT

Dearest Saker,

I am posting the below audio for you:

http://dissentradio.com/radio/14_05_09_mcgovern.mp3

This audio an interview of Ray McGovern from the Dissent Radio from The Scott Horton Show. Please pay extra attention at 15:00.

Here is the link to the site:

http://scotthorton.org/

Also, on this site you will see a button for “Amazon.com”. If one goes to Amazon.com from there, the site gets support. Also, this is explained in the by Scott Horton at the end of the audio. Maybe, you should consider something like the “Amazon.com” button.

Best regards,

Mohamed
Anonymous on May 14, 2014 · at 6:34 pm EST/EDT

Golly…this is difficult to unwind…what a freaking mess DOS has created. If I were Russian speaking Ukrainian I would seriously consider moving my family to Crimea or Russia proper. Who knows what those idiots at DOS or in Kiev have in store. Russia should want to keep those areas in the Russian-speaking-dominated East that produce food and have valuable industries under their protection…those areas which have the best shot at being self-sustaining without huge capital investment. Russia needs Eastern Ukraine as a buffer. It will likely require a substantial investment by Russia. The alternative is no buffer and Ukraines assets are stripped by Oligarchs and IMF. The goal should be a Ukrainian “Republic” with strong independent regions or states and a relatively weak central government that has no military or taxing authority without the States approval.

One way or the other the West will strip valuable assets from Ukraine, its people will be debt slaves, and life for ordinary citizens will be bleak. Just like the US — only worse.

AGS
Celabelle DeCadix on May 14, 2014 · at 6:35 pm EST/EDT

@saker
“Ukraine is not a prize at all – it is a huge burden.” An excellent point that I plan to use whenever the “uninformed” (I’m being lenient here) talk about how Russia wants to invade.

@anonymous at 17:31
Yes, I agree, this push for war concerns me greatly, because the “something that’s behind it” has lost all sense of reality. It would have to be a doozy of a false flag to stir people up into war mode though, because the vast majority, in the US and in the EU, don’t want war. The other factor is that war is costly and everyone’s broke. So maybe there’s hope cooler heads will prevail and WWIII won’t happen. I fervently hope so.
Anonymous on May 14, 2014 · at 6:39 pm EST/EDT

A heap of wishful thinking.

The worst text of The Saker I’ve ever read.

Every issue, idea, or thought found here could be contradicted and rebuffed (you do it yourself in few places) but as 1/3rd of Sakers’ readers do not blindly follow your “oracles” let them doing that.

In order to be more constructive I’m asking you, the Saker, give us probability (numbers) which side will help Ukraine v.2.0 in what relative money. But be closer to the Earth __as it is__, in other words do not fly Saturn high.

In the end __someone__ will have to pay to put Ukraine on her legs (bring out from the shambles), won’t it?
Christoph on May 14, 2014 · at 6:41 pm EST/EDT

“What do you think would happen? Exactly. Absolute and total chaos.”

That is exactly the desired outcome. And it will work as long as official Washington can stick it to Putin and Gazprom i.e. indefinitely.

This is not about Zbig and Hillary, this is 200 years of imperial strategy applied:

“The present geopolitical policy of the United States is a direct and wholly consistent continuation of the old imperial strategy of Britain. It is that
unmistakable cocktail of aggression, subversion and mass murder waged at the vital nodes of the landmass, from Palestine and Central Asia to the gates
of China, in Taiwan and Korea, that seeks to undermine any movement towards a confederation of nations capable of turning the continental base into a Eurasian league of socio-political cooperation and defense (against
Anglo-American assault).”

Guido Preparata: Conjuring Hitler, Conclusion.
Israel Shamir on May 14, 2014 · at 6:42 pm EST/EDT

Ukraine is an integral part of Russia; expensive or not, it is needed for Russian progress. Donbass and Novorossia is the heartland of Russian industry. Nikolaev is the greatest ship-building yard, Odessa is the most important civil harbour, Dnepropetrovsk is the missile city, Kharkov is the greatest tank producer, Kiev is the heart of Russian Orthodox Church.
In 1918, the Germans imposed the Brest Litovsk peace treaty upon Russia, the “obscene peace”, Lenin called it. Russia today has the borders of Brest Litovsk. Re-union with Ukraine is very necessary, esp in case of war. Russia is naked without Ukraine. Recovery of pipelines is also quite important. Yes, Putin would prefer to have Ukraine within the Union State (with BL and Kaz), for many reasons, economical and social. That will do. As for the EU and US paying for Ukraine’s rebuilding, forget it. Look at Moldova, the most miserable place of them all – and in full compliance with the EU. This is the future of pro-Western Ukraine…
Israel Shamir on May 14, 2014 · at 6:43 pm EST/EDT

Ukraine is an integral part of Russia; expensive or not, it is needed for Russian progress. Donbass and Novorossia is the heartland of Russian industry. Nikolaev is the greatest ship-building yard, Odessa is the most important civil harbour, Dnepropetrovsk is the missile city, Kharkov is the greatest tank producer, Kiev is the heart of Russian Orthodox Church.
In 1918, the Germans imposed the Brest Litovsk peace treaty upon Russia, the “obscene peace”, Lenin called it. Russia today has the borders of Brest Litovsk. Re-union with Ukraine is very necessary, esp in case of war. Russia is naked without Ukraine. Recovery of pipelines is also quite important. Yes, Putin would prefer to have Ukraine within the Union State (with BL and Kaz), for many reasons, economical and social. That will do. As for the EU and US paying for Ukraine’s rebuilding, forget it. Look at Moldova, the most miserable place of them all – and in full compliance with the EU. This is the future of pro-Western Ukraine…
Anonymous on May 14, 2014 · at 6:59 pm EST/EDT

Saker and all:

Russia has many ways to counterattack (not necessarily militar):

1. The use of the ISS
1. Shutting down USA GPS System in RUssia.

Russia does not intend to extend the use of the International Space Station (ISS ) after 2020 as U.S. proposes , announced the Russian Deputy Prime Minister Dmitry Rogozin .

“We need the ISS until 2020. After that date we would like to dedicate these funds to more promising space projects ,” Rogozin said , quoted by Russian news agencies.

The Roscosmos ( Russian ) , NASA ( EE . UU . ) Space agencies and the European Space Agency (ESA , for its acronym in English ) agreed to extend until at least 2020 life of the orbital outpost , which involved 16 countries.

Rogozin , who noted that Roscomos want to focus on manned recalled that the United States lacks the means to send their astronauts to the orbital platform.

At the same time , he added that Russia will behave ” pragmatic ” and will not hinder the work of American astronauts in the spacecraft .

Also said that Russia suspended from next June first operation in its territory of 11 U.S. stations GPS navigation system .

Rogozin said that Moscow only modify the decision if EE . UU . accepts deploy in their own territory the system infrastructure Russian Glonass satellite navigation , or otherwise shall be final suspension from next September first.

He announced that Russia will also ban the use of its rocket engines in military satellite launches by the United States.

These engines RD- 180 and NK -33 will be supplied to the U.S. side if this guarantee will only be used for civilian purposes.
” We continue to develop major projects worries high-tech partner as unreliable as the United States, which politicized everything and everyone ,” he said

Strong and very well played!!!
Anonymous on May 14, 2014 · at 7:00 pm EST/EDT

It is going to be very simple. Because of the promised dream of the Western life and brainwashing the all of the former Eastern Europe / they were locked like a small animals in a cage for 40 years/ people of the former Eastern Europe woke up to the reality of the Orwelian world.Today everyone in Europe knows very well that the highly propaganized “Velevet revolution” lead by Mr.Havel was nothing just a huge historical fraudand looting. It was nothing just a takeover of the East part of Europe by the EU /US. Of course the NEW FAST RICH – oligarchs are just laughing into the face of the still naive population how they got duped.
It looks like that the Ukraian especially young people are still don’t understand that this is nothing just a primitive trap, they just have a vision of the rich western life which is also desapearing into the thin air. In US right now you have two empty houses on every single homeless person. Of course they can’t live there because bankers said NO!
Anyway, Putin is doing absolutely fantastic job just to let the situation totaly fall apart to let the opportunity especialy for the young generation to see what is behind the curtain. Till then he can’t do anything because he will be labeled as a “monster” fabricated by the West.
I’m positive that this is a very hard task on him to see how the innocent people dying every single day just as price for a destabilization of the Europe and another nations living in Europe including the best perfoming economy in Germany. The tall is already high because of the immigration not just to the west,but also to the East.
Definitely Saker’s proposal to create a neutral zone for Ukraine would the best solution not just for Russia, but especially for the rest of the Europe.
I have a very interesting experience with one very naive gentelaman from US. In around year 1998 I had an opportunity to meet him during one presentation about the wars and their consequences around the world. He said to me :”WE the USA citizen we have to fight around the world to keep our living standars in order”! I was totally in shock at that time to realize that US citizens openly are talking about their agresion regarding to the benefit of their living standards.Last week I have received the news that this gentleman have lost his house and he became homeless. Of course I feel very sorry for him becaue this is another evidence how the people can be very easily brainwashed ending with a terrible result.
Same mental transition is going on in Ukraine right now. Nationalistic fanatics right now think they have to fight because they want to have a western style life, they have abandoned their very rich culture and history. They don’t understand that if they wouldn’t be skimmed by the corrupted oligarchs and if the richness of the country would be equally distributed after the work provided profit it would be a very different picture not just in Ukraine, but around the all world. It was proven by not one, but many high level professional scholars.
I think it is going to be a transition to except another curencies coverd by the gold / thanks god to Putin and the BRICK has prepared the gradual transition / because it would be a total disaster when the US$ will colapse from one day to another it is very clear for everyone on this earth.

Yes, the western politics are in a very big headache and this is nothing just what they have created. What you sow, you will reap.
Let the delusional nationalistic Ukraians to get to their knees, maybe they will realize later on how badly they have hurted their own country and their innocent people.
Thank you Saker for another brilliant analyses.
Grim Deadman on May 14, 2014 · at 7:04 pm EST/EDT

De-nazification and de-natofication of Ukraine are important, but tactical steps, the prelude to the undeniable must of Russia’s foreign policy: the de-ukrainization of Ukraine. It is completely unacceptable that the lands of New and Little Russia be occupied by the russophobic chimera that is the Ukraine. They can be independent all they want, but the ideology of hatered towards all thing Russian inherent in even the mildest forms of Ukrainian nationalism (“Ukraine is not Russia”) is to be removed once and for all. Then and only then will there be lasting peace in Eastern Europe, indeed, in all of Europe if the USG would care get it’s fat debt-swelled a** out of Kosovo.
C Stegiel on May 14, 2014 · at 7:12 pm EST/EDT

The collapse of the economy of the USA is well advanced. The traditional solution is plunder of assets. Given chaos in Ukraine and IMF predation war is the optimal solution. With war no one expects rapid recovery and plenty of money is made.
Nora on May 14, 2014 · at 7:23 pm EST/EDT

Saker,

You must be feeling better! Thank Heavens! And what a delight it is to come here and see three new postings, right in a row. Wow — serious food for thought!

вот так

That is fascinating. Could the Ukraine be so lucky as to have good old American greed trump good old American militarism and utter disregard for the lives of the innocents we attack? Maybe Monsanto, Cargill, Biden Jr. and his banking ties, et.al., might prefer a peaceful confederation? The Koch Brothers started out in oil, I believe; I wonder if they have any involvement — because, what we’re potentially talking about here are campaign contributions. And all the Neo-Cons and Neo-Liberals etc. scurrying around inside the State Department, DoD and White House might have to answer to someone beholden to interests who want to keep the place at least together enough to safely plunder what grows in and flows under its soil.

The problem is, our National Security State/Military Industrial Complex has always got a few rogue elements who might not go along, so Anonymous 17:31 is chillingly right when warning us of a false flag casus belli within the next year or so.

Also, who pays Blackwater/Academi/Greystone/whatever? Can they just contract out to, say, Kiev or are we still paying their salaries?
Nussiminen on May 14, 2014 · at 7:26 pm EST/EDT

Other than that, Russia will simply wait for western leaders to wake up from their current delusional hallucinations and get serious about solving a problem which is first and foremost their problem which they created and they will have to pay for solving.

One thing is dead certain here: Parasitic ruling classes on their last legs will never dispense with their hubris, imbecility and depravity until they’re overthrown, period. Sanctimonious pleas about “getting serious” and “solving problems” are greeted with, I have to confess, richly deserved contempt. I mean, the über-grovelling, lovesick Ukros asked to become True Western Subjects, did they not? The ongoing sodomization of their silly joke of a country is at their own discretion. From this perspective, Western imperialism could actually be said to be honest, serious, and constructive. It is people who attribute to the West any moral stature whatsoever who need their hrads examined.
Theodore Svedberg on May 14, 2014 · at 7:29 pm EST/EDT

I think you exaggerate the importance of the Ukraine’s weak economy as a major factor. I am sure the US would be willing to pay the cost of rebuilding if, in exchange, NATO gained a foothold in Ukraine. Just think about the incredible wealth that the US controls. We spent $1 trillion on our adventure in Iraq and Afghanistan over a 10 year period.

A $100 billion is just 1/10th of that. The strategic prize, to the lunatics in Washington that direct this policy, is US bases in Ukraine. They would be happy to pay that amount. Remember what Cheney said when he became vice president: ‘deficits don’t matter’. And he was right.
Theodore Svedberg on May 14, 2014 · at 7:29 pm EST/EDT

I think you exaggerate the importance of the Ukraine’s weak economy as a major factor. I am sure the US would be willing to pay the cost of rebuilding if, in exchange, NATO gained a foothold in Ukraine. Just think about the incredible wealth that the US controls. We spent $1 trillion on our adventure in Iraq and Afghanistan over a 10 year period.

A $100 billion is just 1/10th of that. The strategic prize, to the lunatics in Washington that direct this policy, is US bases in Ukraine. They would be happy to pay that amount. Remember what Cheney said when he became vice president: ‘deficits don’t matter’. And he was right.
Anonymous on May 14, 2014 · at 7:50 pm EST/EDT

I think that Putin sacrificed those poor people in Odessa, in order to win a PR war. I think it is shameful. Odessa is the queen-Russian city in Ukraine. It is also the most important geo-strategic point in Ukraine. It would open up the possibilities for Russian Federation to influence the politics in the Balkans and south-east Europe.

What will happen with Odessa ?
Anonymous on May 14, 2014 · at 7:56 pm EST/EDT

Anon Canuck states:
letting a huge country like the Ukraine explode

But they did not just let it “explode”

The USSA spent a reported $5 billion pushing it over the cliff.

In the face of EU objections the USSA response was “Fuck the EU.”
Anonymous on May 14, 2014 · at 8:10 pm EST/EDT

@ Israel Shamir 14 May, 2014 18:42

You know that, I know that, a few from commenting here know that as well.

But the moment, the scare which touched Western leaders when Putin asked Parliament for consent for intervention in Ukraine and put Western and Southern Military Districts on highest alerts and ordered maneuvers close to Ukraine border has just vanished.

Mr Paul Craig Roberts says what’s taken can’t be retaken without military intervention and US/NATO were rather reluctant to do so if Russia had grabbed all the artificial state.

Now everything is boiling, no one has the slightest idea what’s going on and what the results will be in near and further future and in what way.

Sakers’ analyses are only as good as the input he gets is correct and permits to do the processing. The rest are sheer speculations. Which many commenters love to perform.

Nearly all visions are based on Ukraine seen as a place on a map, chessboard, a pile of bonds, list of military advantages or disadvantages, a play cards, a monopoly board or a piece of shit which should not be touched as it smells badly and tidying it up would be damn costly.

I ask you – where are the people, who lives in Ukraine, in your analyses, oracles, forebodings and strategic games?

To sum up my thoughts, I’d be grateful if someone told me what the real cause of the Ukraine mesh it is – from highest probable to the least, as there might be many causes. My crystal ball would be all smiles if I know the starting point e.g. the point from which it could develop images from the future of some value.
Dave on May 14, 2014 · at 8:11 pm EST/EDT

The Banderistas are applying the strategy pioneered by James Curley in Boston and Coleman Young in Detroit: Blatantly favor your own ethnic group to win their votes and convince other ethnicities to emigrate. It’s working, except that the voters “leaving” Ukraine are taking big chunks of territory with them. Ukraine will be lucky if it still has a seaport next year.

Once a nation starts breaking apart, the only way to stop it is civil war, and Putin will kill the Banderistas and install a puppet regime if they try that.
Robert Snefjella on May 14, 2014 · at 8:15 pm EST/EDT

Financially, Russia has been ‘forced’ to do what they’ve wanted to do, and intended to do – just waiting for that opening – and lots of countries have been working at or towards: de-fanging US dollar based imperialism. VISA: Walk the plank. Fed: Take a hike.

Splendid answers to the Ukraine’s economic problems can not come from the mega trillion dollar indebted, multiple ways bankrupt, quadrillion dollar derivatives hung-over Empire. The Empire is addicted to dishonesty, does mercenaries, and bombs, and mass murder, and enslavement, while guzzling pharmaceuticals and commandeering the global trillion dollar heroin and cocaine business. It does not repair society.

Nor can it come from a financially tottering, ethically despicable EU appendage to the Empire. (Get a life, Europe!)

Think out of Empire box Ukraine. Consider talking nice to the Chinese and Russians.

From Jim Willie, way back in 2013

“…the grand hint to the end-around solution in search for a USDollar alternative has been in front of the nose for several years, dating back to the China-Brazil bilateral swap deal in 2005. Little attention has been given a long sequence of similar bilateral swap deals that have centered upon the Chinese Yuan for initiating and settling trade. Nation after nation have lined up with the Beijing leaders to conduct trade in something akin to a credit card account based in Yuan currency, which converges toward zero over time on balance. Trade is initiated by one side delivering goods. The swap facility is tapped. Trade goes in the other direction, and the swap facility is credited toward zero. Numerous nations have signed up with China on such bilateral swap facility deals that enable brisk trade, in essentially a barter framework. The word barter is never used, since it might upset the powerful banker groups that shuffle bonds and currencies like so much stained wampum and contaminated salt at the corrupted trading posts. With Russia, South Korea, Japan, Iran, India, and Australia onboard with Chinese Yuan swap deals, one must suspect that a critical mass of perhaps half of global trade is conducted outside the USDollar shadow. This is a growing critical mass…”
VINEYARDSAKER: on May 14, 2014 · at 8:16 pm EST/EDT

@Theodore Svedberg: I think you exaggerate the importance of the Ukraine’s weak economy as a major factor. I am sure the US would be willing to pay the cost of rebuilding if, in exchange, NATO gained a foothold in Ukraine. Just think about the incredible wealth that the US controls. We spent $1 trillion on our adventure in Iraq and Afghanistan over a 10 year period. A $100 billion is just 1/10th of that.

Yesterday I was telling my wife (in a very different context) that “if you have just one nostril above water” it does not take much downward movement to drown”. The same goes for the Ukraine. It is (partially) BECAUSE the US spent $100 billion in Iran and Afghanistan that it cannot spend them in the Ukraine. I know that like any borrower Uncle Sam thinks that he can borrow any amount of money forever and that he can also therefore also spend any amount of money on whatever, but that is just not true. The Ponzi scheme of the US economy can only survive as long as the rest of the planet agrees to finance it and that scheme is coming to an end, especially at a time when the weakness of the AngloZionist Empire is becoming so obvious.

This being said, nothing would make me happier if, after spending 5 billion dollars to hand Crimea to Russia, the US would spend another 100 billions just to keep Banderastan afloat :-)

For Russia – it’s a win-win situation.

Cheers,

The Saker
- Coldtype on May 15, 2014 · at 3:27 am EST/EDT
  
  @ Saker
  
  A minor quibble here with regard to your characterization of US “debt”. There is a common misperception out there that a sovereign currency issuing nation such as the United States had the same fiscal constraint as a household. This is false. Unlike households, businesses, and municipalities who are USERS of the currency of account and therefore must either earn an income, sell an asset, or borrow before they can spend, a sovereign ISSUER of the currency needn’t borrow that which it creates at will via keystrokes. The US Fed and Treasury coordinate bond sales for the primary purpose of meeting the Fed’s interest rate target not to raise funds for spending.
  
  For bond purchasers they are given the functional equivalent of a savings account at the Fed whereby they may exchange on US asset (dollars) for one that pays interest (Treasury Securites) to be paid in the monetary unit of account that the Fed creates at will.
  
  The US can never run out of dollars and can afford to purchase anything available for sale in this currency. The same holds for every sovereign currency issuer who doesn’t convert its currency to precious metal on demand, or peg its currency to another that it cannot issue thus maintaining a floating exchange rate. A tax obligation in the monetary unit of account is sufficient to drive demand for a currency.
Anonymous on May 14, 2014 · at 8:17 pm EST/EDT

@ Theodore Svedberg 14 May, 2014 19:29

Honey to my heart. At last someone who understands that the US if she wanted to revive her economy it would do it in two years allotting all her sources/resources, even the ones brought back from abroad, using printing money and high tariffs.

(That strategy was developed to topple China – to create social pressure for high standard then to get rid them. China would disintegrate into independent provinces – the plan was concocted many years ago.)
Anonymous on May 14, 2014 · at 8:18 pm EST/EDT

I disagree with you. Russia really wants and needs the human capital and natural resources required to support the Russian MIC in the Donbass. Likewise, the Donbass miners and Ukraine supporting Russian MIC jobs want to continue their symbiotic relationship with Russia. The problem is that Russia doesn’t want the Donbass to secede from the rest of the Ukraine because the Banderastan (Ukraine minus Crimea minus the Donbass) will of necesssity become more extreme. If the Baanderastan becomes more extreme next door to Russsia, NATO can set shop next door and harass Russian until there is invasion or war. Robert Gates said it quite succinctly in an interview, He said: “I don’t think he’ll (Putin) rest until there’s a pro-Russian government in Kiev or a federated Ukraine where the eastern part of the country, for all practical purposes, looks to Russia.” There is a lot more truth in that statement than any of Washington’s arm-chair emperors, emissaries (Jay Carney) and legions of laptop-wielding policy hacks would ever admit themselves.” http://21stcenturywire.com/2014/05/13/date-with-destiny-is-independence-for-eastern-ukraine-a-done-deal/
David K. on May 14, 2014 · at 8:35 pm EST/EDT

Dear Saker,

Very interesting thought experiment, however taking some cues from the actions of the empire around the world since 2001 I don’t think the EU or the US will even shoulder part of the economic burden of fixing Ukraine. They will simply not fix it.

First look at Iraq, Afghanistan, Syria, Lybia, Tunisia, Lebanon… even if you may say that the empire is not responsible for ALL the destruction, have they even tried to fix anything? You will say ah but those countries are far away from the core of the empire they can be wrecked without fear of spillover… but just look at Mexico. If the US were worried about failed states wouldn’t they try to fix the one with which they share a border? Same for EU, look at Kosovo, Bosnia and Moldova… these places have been locked in a bad state over a long time with no apparent improvement.

Now I am not sure if this chain of failed states which do not improve is due to the unwillingness or the inability of the empire to fix them. I believe the only places that took a positive turn are the ones who found the inner strength to pull themselves out of the mud. Czech republic, Slovakia, Hungary, Slovenia. Sure they got some help, but without order and resolve no help in the world would have saved them. Hungary was well on its way to become a second Ukraine before Orban…

About Ukraine. There is nothing to suggest that the Europeans won’t lean back and relax and watch Ukraine slowly burn and self-destruct. All the hot money will be allowed in, but surely none of the people. The myriad NGO’s will keep the country divided along political, ethnical, religious, language lines and make sure no single effective political group will develop that could run the country. Sure there would be a refugee problem, an organized crime problem and possibly even some terrorism spilling over from Ukraine, but those spillovers would affect Russia just as much as the EU. Possibly even more, because Russia has a much longer border, has problems with corruption, rule of law and organized crime itself, and it would be much easier and convenient for Russian-speaking Ukrainians to infiltrate Russian society once they are across the border than it would be for them to integrate in any western societies where they would be strange aliens eyed with suspicion.

Let me say with all clarity that I would truly detest this outcome. No country, no society deserves to be destroyed like this. In fact Putin is removing the one piece of leverage that the Ukraine still holds over the west: gas transit.

Once South Stream is built, with the pipeline capacity of north stream, south stream and whatever transits Belarus, the Europeans will be able to join the Russians with their popcorn and beer, and believe me when I tell you they will have no mercy with the people still inhabiting their “Lebensraum im Osten” (unlike the Russians who seem to have some little-brother feelings for Ukrainians, as in feeling a little bit responsible).

A chaotic Ukraine will serve as excuse for all kinds of NWO projects: increased surveillance of the population. Nato expansion to Finland, Sweden, Austria, Switzerland, Ireland (somebody’s gotta buy all that American military hardware). Of course everything that goes wrong in Ukraine and eastern Europe will be blamed on Russia. There will be cold peace between the Western Europeans and Russia, and the US will be firmly in control of it all (not like now when the German business elite dares to disobey its masters..)

Also Ukraine will be a useful reservoir of cheap labor of white people who at one point were well-educated, enough to keep the lower classes of the whole EU in check dare they demand their salaries not decline in real terms…
Anonymous on May 14, 2014 · at 8:39 pm EST/EDT

Excellent analysis.
Anonymous on May 14, 2014 · at 8:43 pm EST/EDT

Saker,

I believe it is an article of faith among the nattering nabobs of neoconivity that the victims of their benevolent social destruction will gladly and easily pay for the reconstruction of it. And of course repay the cost of such benevolent intervention as well. As so well demonstrated in Iraq, Afghanistan, Libya. Er, well it is sure to work this time. Hunter Biden obviously thinks so.

I think the Prophet Dubya foresaw correctly. “This sucker’s goin down.”
Anonymous on May 14, 2014 · at 8:57 pm EST/EDT

Theodore Svedberg,

We didn’t rebuild Afghanistan or Iraq — we could have, we said we would, but we didn’t. And just bc Dick Cheney said deficits don’t matter doesn’t mean they don’t: he’s not exactly known for his veracity.

Anonymous 19:50

How did Putin sacrifice the victims of the atrocity in Odessa? I’m not sure I understand…

Anonymous 20:10

I think the starting point was the $5 billion Victoria Nuland said we had spent trying to bring “democracy” to Ukraine. Judging from the events of the past six months and our continued involvement, I don’t think her definition of democracy had anything to do with the political or economic welfare of the Ukrainian people. For all its fancy words, the US has never really cared for the welfare of any people, including her own.

Dave

Omigosh! Yes, of course. You’re absolutely right: we’re more of a melting pot than we ever were but still, really, Not. At. All. When my father was growing up, there’d be an intersection with four (!) Catholic churches, one on each corner, Polish, Italian, Irish and darn it, I forget the fourth — and you didn’t dare cross the street into a different parish. (They’re probably all closed now, but the principle remains the same, even if it’s maybe not so much ethnicities any more but political points of view.)

Could we even exist without an us vs. them mentality? Gosh, it’d be nice to try.
Daniel Rich on May 14, 2014 · at 9:04 pm EST/EDT

@ Saker,

Q: However, *some* targeted covert aid…

R: Do ‘you’ have any ‘gta’ missiles lying around to take down/out choppers?

As it did happen, who was responsible for it, who had those weapons, who bought and/or provided them?
Anonymous on May 14, 2014 · at 9:05 pm EST/EDT

Love the chess playing picture. That’s the whole article by Pepe Escobar cropped in 1 picture
Anonymous on May 14, 2014 · at 9:18 pm EST/EDT

Dear Saker ,

Thanks for your answer. First of all: one of my Danish friends who is a journalist and who was a part of the Maidan movement from the very start, has given me the impression that the bulk of those present were not nazis/ ultraukie-nationalists, but pretty average citizens sick and tired of it all (corruption etc.) Now of course in such an environment the most organised, militant and dedicated organised group will get a disproportionate influence which was is exactlyly what happened with Svoboda/ Right sector. As Lenin expressed it on the eve of the October Revolution: the power laid littered in the streets of Petrograd. Someone has to pick iick it up. And the fascists picked up their part in Kiev the IMF-bunch/oligarchs took the rest.

And well, as for your comparison with Syria and Egypt, I will say that those countries actually had states that cared for la raison d´état, and accordingly had some selfcounsious state-apparatuses build, including a repressive class and repressive means (military, police, secret police). Ukraine lacks that completely. Accordingly the Ukrianian “state” is a lot more susceptible for the taking and for a popular revolt than Egypt an Syria ever was. So The Maidan-mainstream (as I will insist calling it) is not dead. It just has to re-awaken. And with quite few means it might actually succeed.

/Hagen
Anonymous on May 14, 2014 · at 9:20 pm EST/EDT

Ukraine as a failed state ripe for the pickings:

The US ruling class knows full well that the Ukraine is a financial tar pit as the Wall Street Journal published the gory details in an article several weeks ago.

The Vultures are descending:

Alan Apter, an American, joined Burisima as chairman last year. Burisima is a privately owned gas company which along with a few others controls for now 10% or so of Ukraine’s domestic production. The rest is produced by companies owned or controlled by the Ukrainian state /pro-Russian oligarch Nikolai Zlochevsky in particular.

Burisima has plans, you can bet:

Hunter Biden has been appointed head of Burisima’s legal unit. His buddy, Devon Archer, is a business partner of H.J. Heinz (who happens to be John Kerry’s stepson) also joined the board to ” help the firm attract US investors, improve corporate governance and expand its operations.” WSJ 5/14/14 page A4).
metatron on May 14, 2014 · at 9:47 pm EST/EDT

Re:”Maybe. And then what would happen the week after? That is a very US thing to do – flood a place with guns and see what happens. Except for then you would have to deal with 27’000 armed men. Not to mention that God only knows what kind of chaos these 27’000 armed men would create all around them. “
A week later they will be around. 6k men without heavy weapons cannot stand up to what Kiev has to throw at them. Remember, Banderist tactics were actually pretty effective at suppressing resistance through terror. And the US/EU can be guaranteed to turn a blind eye to anything. The only reason that the partisans could operate at all was due to weapons and moral support from the Russian government. If they don’t have it, they’re screwed, Look at Dnepropetrovsk right now.

As to officers, some actual Spetznaz would be really welcome, but Putin is providing bugger all!
Maedhros on May 14, 2014 · at 10:10 pm EST/EDT

For all its fancy words, the US has never really cared for the welfare of any people, including her own.
=========================

Not exactly, actually US at the Core cares A LOT for the welfare of Nuland’s people. Really, A LOT!

Cheeney was absolutely right too: deficits do not matter at all. TO HIM!!!
If they matter for people, well, Americans are already discovering.

@Saker
Do you really think that Russia can permit a Syria-light in her courtyard? Or place like Odessa, Kharkov, Nikolajev, Kiev et cetera, under the boots of a hostile and lunatic regime? Do not underestimate the possibilities of a rogue and ruthess foreign-backed regime to hold together, united only by the wish to plunder and subjugate people.

@Christof
What Hitler and Napoleon had in common (hint: it’s more than a fatal invasion of Russia).
Anonymous on May 14, 2014 · at 10:12 pm EST/EDT

Regarding Brzezinski.

He is a perfect example of a very sad truth: anyone with a plausible sounding and semi-logical idea can influence the course of US foreign policy. Especially if their personal agenda gives them the aura of conviction.

Zbig’s a Polish nationalist, and as such hates Russia with a fiery passion. It so happens that Polish nationalism is based on a number of unalterable and self-evident (to a Pole only) truths. One of them is that Ukraine is magical, like the One Ring. It has the power that can make or break empires.

This line of thinking comes from a self-sparing analysis of Poland’s decline (and Russia’s rise) performed by Polish intelligentsia some two hundred years ago. It proved very popular and was incorporated into the entire Polish national mythos. Short version goes thus: Poland got Ukraine in 15th century and grew strong while Russia was weak. Then it lost Ukraine to the Russians in 17th century and grew weak while Russia grew powerful. It’s therefore self-evident that control over Ukraine is what makes one strong. To weaken Russia, one had to take away Ukraine.

Now Zbig wasn’t the first to act on that belief. Pilsudski had the same idea and did all he could to make Ukraine Polish (or at least deny it to Russia). Unfortunately, this overriding need clouded his judgement to the point that he unwittingly gave a boost to Ukrainian nationalism. Having listened for decades to Poles’ assesment of their own importance, these fellows started to think of themselves pretty highly. As better than some mangy Poles who couldn’t even build an empire without them, in fact. So they eventually wiped out over 200,000 Poles in Volhyn and Polesie. Go Pilsudski.

Well, such trivial inconveniences didn’t daunt other carriers of the idea of magical Ukraine. And one of them ended up in Washington advising US presidents on foreign policy. Hi, Zbig!

Well, he was convincing enough. And the US politicians were ignorant enough to buy the idea of weakening the USSR by stoking the Ukie nationalism again. It even seemed to work. So the idea of the Magical Ukraine became a part of US strategic thinking with pretty crappy results we have the pleasure of observing. In the end, control over Ukraine proved to be an illusory advantage that tends to bite one in the ass in the long run. Yo, Zbig, wanna annex Halichina to Poland yet? No? Well don’t worry, they can come over the border anytime themselves…

And what is absolutely horryfying is that this myth is one of many others that the US establishment has internalized from all kinds of helpful Brzezinskis (Chalabis, Karzais, etc) of the world and acted upon. This is the root of the Republic’s corruption and inevitable downfall. Various Hillarys and Psakis are but a symptom now.

BOPOH
Anonymous on May 14, 2014 · at 10:29 pm EST/EDT

@ Anon 14 May, 2014 20:57

> Anonymous 20:10
Quote – “I think the starting point was the $5 billion Victoria Nuland said we had spent trying to bring “democracy” to Ukraine.”

Nope. It’s a mean to achieve (Nuland’s) end. I asked for the prime goal of the mess. Let me quote from another comment of mine:

The Ukrainian coup was an issue about:

1) Black Sea Fleet aka Crimea

2) Ukraine with NATO bases

3) Geopolitical game with few important goals (for the USraelis) – wedge between Russia and Germany versus wedge between EU and the US

4) The New World Social Order (dividing societies on global scale)

5) The New World Economic Order – Chinese Silk Road II, Eurasian Economic Union, ditching petrodollars, etc.

One should define which point(s) is more probable and which would make more sense. Of course, all of the points play important role in this historic moment but one should select more or less sound base for analyses.

Without few axioms (one at least) any analysis will be “round Robin” play.
Reading between the lines on May 14, 2014 · at 10:34 pm EST/EDT

Brilliant analysis Saker.As I was hearing the MSM as of late ,one could tell that the US was actually taunting the Russians to invade Ukraine,now I know why.
-yt on May 14, 2014 · at 10:41 pm EST/EDT

@anon 14 May, 2014 20:10

“To sum up my thoughts, I’d be grateful if someone told me what the real cause of the Ukraine mesh it is – from highest probable to the least, as there might be many causes.”

My interpretation.

Not to go too far back, i see the real root cause of today’s situation in the transfer of west-russian provinces to what is the Ukraine now by the Bolshewik during their first years. Followed up by the addition of Crimea during the 50s of the last century, but the real damage was done already.

That created a situation where after the shattering of the Soviet Union:

1.) Historical, and culturally really important parts of Russia with millions of Russians living there were severed from Russia.

2.) These former Russian regions are now part of an artificial country, with a religious, cultural and mentality faultline.

This artificial country (where it can be said, Russia was born in a way) also is located at a geo-strategic very important place on the map. It has been pulled back and forth between the powers: the west (misnomer or whatever, we know what we mean by that) and Russia.

Now, the oligachy, not worth to be called capitalistic, managed to run the place into the ground, people getting unhappy more and more. This revolutionary potential then was channeled against the then current Yanucovych government with the help of Bandera Nazis (not even neo-).

We then already had the situation of ‘you broke it, you own it’. Bandera’s Erben with the help of certain three letter agencies broke it, the Empire of the latter were already having wet dreams about adding the Crimea with Sevastopol to their empire (i guess), thus strategically dealing a huge blow to Russia.

That move, Russia pre-empted in a mind-blowing action, snatching the Crimea themself, something they could not have achieved with an ‘unbroken’ Ukraine. In the big picture, which from the Russian point of view, is about the survival of Russia, this was like a won war (not just a battle). This explains the rage of the Empire.

What’s happening now, as bad as that may sound for the Ukrainian people, are only the ripple effects of what just happened, with Russia doing everything possible to flatten the waves.

How that may work out in the end, here we are at the crystal ball stage again. My best guess is that the fault line will do what it has to to: provide for the location of the break of the Ukraine into parts, one way or the other.

“I ask you – where are the people, who lives in Ukraine, in your analyses, oracles, forebodings and strategic games?”

Russia has to help the Russians there in a meaningful way to survive without exposing herself do great danger. As for the actions of rest of the world, the people play no role apart from being pawns. When did they ever matter in such circumstances? Sorry to say.

-yt
Anonymous on May 14, 2014 · at 10:58 pm EST/EDT

@ -yt 14 May, 2014 22:41

Many thanks.

> Russia has to help the Russians there in a meaningful way to survive without exposing herself do great danger.

You mean nuclear war started by the US? Sucking in whole Europe with the main nuke battlefield in Poland (buffer state)?

Libya wasn’t being bombed due to Russian and Chinese investments. Some say petrodollars were at stake…

When Russia and China and Iran ditch the “green papers” the world we know and the 1%-ers cherish will collapse.

Will the US try the same strategy to the whole world – either we and our $ or damn with you and the whole world?
Andrew on May 14, 2014 · at 11:46 pm EST/EDT

metatron:

The only reason that the partisans could operate at all was due to weapons and moral support from the Russian government. If they don’t have it, they’re screwed, Look at Dnepropetrovsk right now.

Oh, for the love of God people. The most Russian identifying areas of Ukraine are (or were) Crimea, Donbass, Odessa, Kharkov, and Zaporozhia.

Dnepropetrovsk is Russian speaking out of convenince, but Ukrainian identifying. It is the home city of Tymoshenko and Yarosh! In national elections, Dnepropetrovsk was essentially a slightly better than 50-50 proposition, where Crimea and Donbass would go 90-10.

Sometimes you need to put sentiment aside and analyze a situation with cold rationality. You have to understand that just because a plurality (and that is all it was) of voters between Donbass and Odessa voted for Party of Regions, it does not make this area want to leave Ukraine, become the middle of Novorossiya, or join Russia.
Anonymous on May 15, 2014 · at 12:00 am EST/EDT

to
metatron@21.47

Putin has to wait till the “self-relaint” Ukraians will finally wake to the realization that they are not able to fight this monster by themselves.

If the Putin would enter the Ukraine right now, it will be a total disaster for the all Europe and the WWIII will start.
Ukraians ar still in shock because they would never expect to have such a terror especially from their own, but at the same time absolutely corrupted brothers.
The right time is not yet to come, it will come, don’t worry. When the right time will come, they will fight together brother beside brother to defeat this monster and they will become heroes.
- metatron on May 15, 2014 · at 9:35 am EST/EDT
  
  That’s why I said weapons and spetznas, like they are accused of every day, but I don’t see the rebels parading around with iglas.
  Face it, Putin has folded.
-yt on May 15, 2014 · at 12:19 am EST/EDT

@anon 14 May, 2014 22:58

“You mean nuclear war started by the US? Sucking in whole Europe with the main nuke battlefield in Poland (buffer state)?”

Great danger would begin with much less than that. Total forced split (economical) from Europe and other parts of the world, as well as a new ‘hot’ cold war for a start.

“When Russia and China and Iran ditch the “green papers” the world we know and the 1%-ers cherish will collapse.”

The green papers will only collapse when the confidence in the Empire collapses finally. When and once it does, there will be a substitute, so no ‘world’ collapse because of that. A collapse of some sort may happen, but not from the ditching of the US$ but from the huge debt tower toppling.

Will the US try the same strategy to the whole world – either we and our $ or damn with you and the whole world?

I don’t buy into the probable outcome being lunatics triggering nuclear armageddon. Why? Because in the end today’s powers in the west are humans with a will to survive as well.

-yt
Anonymous on May 15, 2014 · at 3:30 am EST/EDT

Andrew,

Tymoshenko is not Ukrainian identifying or Russian identifying, she is power identifying. Dnepropetrovsk has been the power center for that part of the world for many decades. As the turmoils and craziness expand, one could expect a rise in pro-Russian sentiment there. But not yet. First might come Kharkov. In any case, that fact that Yarosh is from there doesn’t mean that people like him. It might mean that he is a radical surrounded by something he hates, otherwise known as Russians.
WizOz on May 15, 2014 · at 3:51 am EST/EDT

@Dnepropetrovsk is Russian speaking out of convenince, but Ukrainian identifying. It is the home city of Tymoshenko and Yarosh!

Huh, and of Ihor Kolomoisky known for “using Privat’s “quasi-military forces” to enforce hostile takeovers of companies, sending a team of “hired rowdies armed with baseball bats, iron bars, gas and rubber bullet pistols and chainsaws” to forcibly take over a Kremenchuk steel plant in 2006, and has used “a mix of phony court orders (often involving corrupt judges and/or registrars) and strong-arm tactics” to replace directors on the boards of companies he purchases stakes in”.

Dnepropetrovsk is also known to host the Menorah, the world’s largest Jewish center.

“The idea of the Menorah belongs to the President of Dnepropetrovsk Jewish Community Hennadii Borysovych Boholiubov and his partner, the President of the United Jewish Community of Ukraine, the European Jewish Union, member of the Supervisory Board of Dnepropetrovsk Jewish Community Ihor Valerievych Kolomoiskyi. They financed the development and full implementation of the Menorah Center project”.

“Three constituents lie in the basis of the Menorah center: religion, culture and business. The center was created as a platform for revival of the Jewish community that develops very fast within the city and CIS scale. At the same time the project is open and aimed at the development of tolerance in the relationship of different nationalities.

The Menorah Center is the largest Jewish complex in the world. It is a global landmark that has become a powerful impulse for the growth of touristic and investment image of Dnepropetrovsk

“The main mission of the Menorah center is the facilitation of revival of the Jewish society in Dnepropetrovsk, Ukraine and CIS, as well as enhancement of the development of tolerance in the relationship of different nationalities”.

more @http://menorah-center.com/?lng=eng#
Anonymous on May 15, 2014 · at 5:03 am EST/EDT

Coldtype said…
The US can never run out of dollars and can afford to purchase anything available for sale in this currency.

I am indebted to Guy McPherson for this little gem. In theory there is no difference between theory and practice, but in practice there is. It is true that, unlike gold or bitcoins, we need not ever run out of dollars. That does not mean the limit is infinity. The Jekyll Island banksters finagled the government into surrendering the right to issue its own currency in 1913. Being sovereign it could recover that right, but it hasn’t. Doing so might have quite unpredictable consequences in the present world.

The Fed allows the Treasury to write rubbery checks, but if the gov wants to keep operating it has to borrow the money. The Fed does more or less create the money out of thin air. That is they don’t do anything to EARN it, but they are hardly unique in that respect. The Fed does, however, have to receive something of value in return for the credit. It’s a funny kind of bank, but it is a bank.

If too many bonds became available, the bid would decline raising the interest rate. Increased interest would require more borrowing just to pay the interest and before you know it you are riding the hockey stick curve to hell.

There is a reason why we bludgeon our misnamed “Allies” into buying lots of worthless F-35 fighters they don’t want. If Coldtype’s assertion were true, we could buy all the F-35’s Lockheed-Martin thought they could build and immediately scrap most of them. There are limits to everything.
- Coldtype on May 15, 2014 · at 6:34 am EST/EDT
  
  Please don’t misunderstand, just because the US could purchase anything available for sale in its currency I don’t mean to imply that it should do such a thing. There are indeed natural constraints that must be aknowledged even by a sovereign currency issuer which of course is the availability of real resources. My point is that affordability is never a problem for a sovereign currency issuer.
  
  The reason the US force feeds lead balloons like the F-35 on its captives is because it serves the interests of US defense contractors.
  
  As far as the interest rate (on Treasuries) goes there is no outside force that can effect this for the Fed and the Treasury coordinate to set the target rate. Remember the US is not operationally constrained by the need to tax or borrow before it spends. This is key.
Abel Kotze on May 15, 2014 · at 6:16 am EST/EDT

Dear Friend,
I believe that the two independent Eastern Oblasts will be pulled into the RF before or directly after the election in Ukraine. With their coal and industries they are an asset to the RF even if only for the armaments and components manufactured there. I posted in Facebook that Obama can’t play chess against Putin because the Zionists are moving his pieces around all the time. The Anglo-Zionist empire (your term, and I love it) is doomed to failure and Ukies will be flooding into Europe as cheap labor as the Ossies did after the fall of the wall!
Abel – South Africa
A_Chinese on May 15, 2014 · at 6:35 am EST/EDT

Two questions:

1, If Russia turn off the gas to Ukraine, will that also means turn off the gas to Europe?

2, What if the West also refuse to OWN the Ukraine and let it slips into a bloody civil war? This is what I see the US is trying to do now. This war will be fought in the south-eastern region, people in that part of the country will be killed and city will be destroyed. Can Putin let that happen? If he can’t, then…..
Abel Kotze on May 15, 2014 · at 7:11 am EST/EDT

Dear Friend,
I believe that the two independent Eastern Oblasts will be pulled into the RF before or directly after the election in Ukraine. With their coal and industries they are an asset to the RF even if only for the armaments and components manufactured there. I posted in Facebook that Obama can’t play chess against Putin because the Zionists are moving his pieces around all the time. The Anglo-Zionist empire (your term, and I love it) is doomed to failure and Ukies will be flooding into Europe as cheap labor as the Ossies did after the fall of the wall!
Abel – South Africa
hardcore on May 15, 2014 · at 8:21 am EST/EDT

Brzezinski believes that Russia cannot be a superpower without the Ukraine and Hillary believes that Putin wants to rebuild the USSR.
Huh???
This is what they publicly advertise for propaganda purposes, very likely NOT what they truly believe.
I am a bit surprised that, being a former “analyst”, you go for such naïve statements, or, are you also pushing some agenda of yours?
Shelia Cassidy on May 15, 2014 · at 9:03 am EST/EDT

I like your analysis, Saker, but feel that the game has only begun. It is not bout the Ukraine, but is about the last great pile of resources, namely the Lomonosov Ridge and Siberia, which are worth TRILLIONS. The Lomonosov Ridge along is worth some 23-43 Trillion dollars in natural gas deposits and oil. And the real game, since the old Russian Empire started to out-produce Rockefeller’s Standard Oil in the International market in 1903 played right into the hands of Russia’s old enemies, including the Rothschilds. Zhig and Hillary want Russia broken up into at least 3 pieces and have said so – then it would not be able to defend itself. Russia is the only state left that can defeat the British Empire and its minions at their own game. Sad to say, the war will go on. Also, I have to agree that there will be a false flag operation if they can’t sucker Russia into a war over the Ukraine. The people in Washington and London are patently INSANE. And the American public, by and large, is just too brainwashed to begin to see what is happening. Efforts to impeach Obama will do no good. People are organizing to get out in the streets, but they will be marginalized. Russia, I hope will fight on. It is the only thing between us and the Hell of the real Tyrant. God Bless Russia! (stay tuned for what the NSA has to say about this)
mata h ari on May 15, 2014 · at 9:35 am EST/EDT

Step back from the canvas and it is obvious Ukraine is like East Germany to Russia’s West Germany. The debate about Ukraine’s debt or bankrupt economy is an irrelevant issue.

Ultimately, Ukraine have to be re-united or re-integrated back into Russia whatever costs notwithstanding. And what better timing and situation than one expressed freely in a referendum. No one can accuse President and Russia of “annexing” Ukraine or parts of it thereof.

The question now is why does Washington insist on being a spoiler? Alright, gangster does as gangster does. What does that mean? It means, there is no choice but for President Putin and Russia to decide it must stand up to Obumma and dare him. President Putin should move his troops into Ukraine, depose of the stooges of Washington in Kiev masquerading as legitimate “interim government” of Ukraine. Then, let the negotiations begin.

As a major power, Russia can decide the redrawing of the boundaries of Ukraine. Perhaps the better part of West Ukraine can go to Hungary and maybe a bit to Poland. Maybe everyone will be happy then. Except may that dog in the manger.
mata h ari on May 15, 2014 · at 9:50 am EST/EDT

The US’s and EU’s economic recovery are real albeit fragile. It would be suicidal for Washington to start a war with Russia. The slightest whiff of war will send the stock markets into a steep plunge that not even the “too big to fail” banks and other other financial giants or other equally over-exposed companies in terms of loans, will not be able to recover. The effect will be systemic and will see also a death fall of the US dollar thus hammering the final nail in the coffin for which it will take a long time – 10 years? – for the US’s economy to be rebuilt.

This US’s “house-of-cards” is President’s strongest card against Obumma and the Bankers/ultra rich 1%ers.

Russians in Ukraine SHOULD be reunited or reintegrated with Russia. This is a God-sent opportunity. President Putin should follow the SAS’s motto – “He who dares, ..”.

Be assure, the world is with you. Even I, who may be from the East, wish what is best for the Russians and Ukrainians. Our prayers are with you and that the gangster Obumma and the US will back off when you rise to your feet and stare him in the eye.
Anonymous on May 15, 2014 · at 9:51 am EST/EDT

Perhaps the following hypothesis should be considered.
Using newly printed fiat currency including bonds fronted by the “International Monetary Fund” and “The World Bank”, to have a modicum of control not only of “Ukraine” but of others including those who have use for the present political/socio-economic relations, “financing” may be found for “Ukraine” hence doubling up the shell game.
mata h ari on May 15, 2014 · at 9:59 am EST/EDT

One last word : Ukraine is NOT Afghanistan. Many of the people there are Russians or Russian related. It will NOT be the quagmire that many fear, or that one Washington can create. The people there will willingly support Russian troops and police to hunt down the detestable right wing Nazi murders and exterminate them like the vermin they are. (Was that too strong?)

Regards
David K. on May 15, 2014 · at 10:24 am EST/EDT

@Coldtype

You probably know this anyway, but it was not clear from your argument about the US being a sovereign issuer of currency. Any country with it’s own currency can print money to finance it’s debt. It’s called monetary financing. The ECB does it even though it is explicitely banned from doing so by the Lisbon treaty (and its predecessor treaties).

What normally happens when a country starts printing money is inflation and currency depreciation (and externally it doesn’t really matter if it has an independent central bank or if it is the government itself that does the money printing).

What sets the US apart from almost all other currency issuers in the world is what General De Gaulle called the “exorbitant privilege”. There are several additional sources of demand for the Dollar which no other currency has: 1. Most international trade between countries is settled in US Dollars, and if say an Argentinian business wants to buy something from a German business, the transaction is normally settled in dollars.
2. The oil trade is dollar denominated, which is really the lynchpin of the dollar reserve currency status…. and look at what happened to countries which tried to intruduce non-dollar denominated oil trade…
3. Government debt of other countries that is traded internationally is almost always dollar denominated, specifically so that the debtor country cannot just start printing money to repay its debt to an international creditor.

These 3 main sources of demand for dollars which other currencies do not have(and not so much the F35) are why we do not see a more rapid depreciation of the dollar currency, which would have normally set in in the face of all this QE that has been going on.

That being said. The exorbitant privilege cannot go on forever. If monetary expansion of the dollar continues, sooner or later it will be dethroned as the reserve currency of the world…. the question is only when.

D.
Anonymous on May 15, 2014 · at 12:38 pm EST/EDT

A Ukraine gas supply disruption will not lead to a total cut-off for Europe, significant ammounts of gas are supplied through the nord-stream and belarus pipelines. Europe consumes c 170 BCM /yr of Russian Gas and 130 BCM/yr is the maximum non-Ukraine transit capacity. Countries most affected are in SE Europe and Italy.

As for Alternatives US shale gas would not happen until 2016 at the earliets – at small scale to begin with, and there is little available LNG around due to Japanese and Chinese demand, current costs are $15 a unit compared to $11 a unit for Gasprom gas.

Pipeline imports from North Africa (algeria) are down due to technical problems and indegenous European production includig Norway cannot meet demand

As for the Ukies they are really stuffed – most oftheir indegenous gas production is in the East (Dnepr -Donets basin) which is likely to be disrupted by the current civil conflict. In other spheres it gets even worse for them, all their coal is from the Donbass and their nuclear plants are dependent on Russian fuel and components

Aslange0
Jamie on May 15, 2014 · at 2:43 pm EST/EDT

Saker what are your thoughts on the (very, very remote – if at all) possibility of some sane like minded people in positions of power in the EU & even somewhere in Washington or the UN bringing these criminals who caused all this to be tried in the Hague/ICC? I mean the evidence against them is there and they are the biggest threat to the world. Will it ever happen do you think and how could it be done?
Coldtype on May 15, 2014 · at 5:16 pm EST/EDT

@ David K

Any country with it’s own currency can print money to finance it’s debt

We need to get away from terms such as “financing government debt” when it comes to describing the operations of sovereign currency issuers for there is no such thing. This only serves to encourage the fallacy that these governments operate under the same constraint as a household. A sovereign currency issuer need never borrow that which it creates at will. A bond issuance is the exchange of one government asset (Dollars in the US) for another (Treasury Securities) that pays interest. This is the functional equivalent of opening a savings account at the Federal Reserve. All interest due on these bonds is paid via keystrokes in the monetary unit of account without fanfare or stress.

A nation that owes debts in a currency that it does not issue is not monetarily sovereign. The same applies to a nation that must procure provisions in a currency that it does not issue.

What normally happens when a country starts printing money is inflation and currency depreciation (and externally it doesn’t really matter if it has an independent central bank or if it is the government itself that does the money printing)

We need to careful here. Inflation is the condition whereby too few real resources are flooded by too much currency. If say, the resource in question is labor can you credibly argue that it would be inflationary to hire out of work teachers to reduce class sizes, or construction workers to repair and upgrade infrastructure? If a sovereign currency issuer decides to address these matters via fiscal spending there is nothing to indicate that an automatic consequence of said action will lead to an unsustainable rise in prices.

Take China for example, a sovereign currency issuer in which banking is a public utility (as it should be). There is no outside force that can prevent her from spending her monetary unit of account to expand her internal infrastructure. She needn’t turn to the IMF for strings-attached “loans” to invest in her own economy, nor resort to the absurdity of borrowing her own currency from “investors” before she may spend it.

The nations of the European Union by entering into a currency union in which the issuing authority (ECB) is constitutionally insulated from their respective legislative authorities have relinquished their fiscal sovereignty to their peril as they now belatedly realize. These nations now have a status that is roughly analogous to that of the individual states in the US who must first acquire the dollars it needs via taxation or borrowing before it may spend.

Taxes at the local level in the US fuels state spending but taxes at the federal level do not pay for anything and represents money destruction for its primary function is to drive demand for the monetary unit of account. The monetary sovereign needn’t take from its citizens that which it created for them to spend in the first place—except to create a demand for the currency via a tax obligation in the currency that only it may create.

Again I reiterate that there are natural limits to what a monetarily sovereign government may purchase for the availability of natural resources is indeed finite. If the Dollar should lose its reserve currency status (as perhaps it should given how irresponsibly its been wielded) then there’s troubled waters ahead when it comes to the purchase of oil (we use 80 million gallons per day) for if we must use a currency that we do not issue to settle accounts then we, like everyone else, must earn or borrow this currency. That of course will be an epochal event here in the Armed Circus, however, my larger point is that as things now stand there is no fiscal constraint that would prevent the US from purchasing any resource that is available for sale in dollars for it can obtain them with a keystroke.
Anonymous on May 15, 2014 · at 5:40 pm EST/EDT

What will happen to the world’s economy when the US’s Ponzi-like economy finally collapse? Yes, many countries will be badly affected but how will the devaluation of the US dollar affect Russia?

Is the value-less of the US dollar reflected in the high price of oil? If Russia, China and the rest of the world move away from the USD even before it collapses, does it mean the price of oil will reduce as the demand for the USD reduces? And finally when it does and reaches the trough, where will the price of oil be? Is there any benchmark?

The USD used to be the benchmark but due to hidden inflation and lack of gold or forex reserves to back up the value of the dollar, the FEDS and Washington managed to transfer the inflation to the rest of the world vide that high price of oil denominated in de facto a valueless dollar.

In short, Russia, an energy producing country may also be affected by the collapse in the US economy and dollar. What will be the price of oil and gas in that scenario?