Ukraine Notes: NATO Are Just Gangsters Running A Transatlantic Protection Racket, Alex Krainer




Published on Feb 25, 2022

The three powers’ show of force was an unmistakable hint that there’s a new sheriff in town and that the days of unchallenged US/NATO dominance over the region are over.

Thus, the “military technical” measures Russia promised if the US and NATO did not agree to her draft treaties will likely be made in support of forces that are already fighting to drive the western powers out of the region. Iran is obviously the prime candidate for such support and during his visit in Moscow President Raisi did not fail underscore Iran’s credibility and commitment to this objective in stating, “We have been resisting the Americans for 40 years.” Together with its proxy forces in Iraq, Iran will make it increasingly difficult and costly for the US to secure its control of the region.

Russia will not need to confront the US militarily at all – the US forces will simply be worn down and eventually pushed out in a similar way as they were pushed out from Afghanistan. For the Western nations which are already facing a worsening energy crisis, this could indeed jeopardize their security. But it could also have severe adverse effects on their economies and capital markets. Paradoxically however, for that same reason the western powers will not advertise that their control is slipping away; they will likely take their blows in silence and keep a brave face for as long as possible to keep the markets convinced that their revenue streams from the Middle East will remain secure forever.

I first published what I laid out here in my daily TrendCompass newsletter on 14th January, titled “Only a hunch: will it be the Persian Gulf?” I can confess, this really is only a hunch, based on my own reading of the situation. However, as events have played out over the last two weeks, I am increasingly confident that my hunch was correct. At the same time however, I couldn’t begin to guess how exactly the events might play out. For one thing, the uncertainty is probably part of the equation: Russia’s current gambit is very radical departure from the status quo and it should be to her advantage to keep her adversaries guessing and distracted in the wrong places. Indeed, it is possible that nothing obvious will happen over the coming weeks. All the same, we should not underestimate changes that are already taking place. As they compound, they will precipitate a collapse of the global order that has become entrenched for more than two centuries now.
How the coming changes will manifest in the West

Russia will probably not invade Ukraine and Russian bombs won’t start raining down on European cities. We’re living in the age of assymetric warfare and it is quite likely that nothing obvious will be captured by TV cameras. But the pain will set in and it will be real. I believe that the changes will be felt most strongly in our capital and commodities markets. Over time, we’ll see a very substantial rise in interest rates which will ultimately push stock prices into a real bear market. Unlike the limited and short-lived corrections we’ve experienced over the last four decades, a real bear market could be drastic and last a very long time. It is what happened in the US after the 1920s bubble and in Japan after the 1980s bubble.

In both cases we saw stock prices decline by over 80%. The US stock market took nearly three decades to fully recover while the Nikkei never recovered, after fully 32 years since the 1989 peak.

We are also likely to see a continued acceleration of inflation in most if not all of the G7 nations, as well as a gradual worsening of the energy crisis which could drag on for years. This could push the energy prices far beyond today’s levels. Even without factoring the conflict with Russia and based on the accelerating depletion of conventional oil reserves, the UK Ministry of Defence predicted in 2012 that the price of Crude Oil would rise to $500/bbl by 2040. Similar trends could materialize in other commodities including metals and agricultural produce, fueling a sustained commodity super-cycle that many analysts have been predicting in the recent years.
How to navigate the changes?

Of course, none of these changes will announce themselves in advance and it would be impossible to predict the timing and magnitude of the events any length of time into the future. But the one thing we know for sure is that large-scale price events invariably unfold as trends which tend to span many months and even years. For traders and investors, the most reliable way to navigate trends is to use high quality systematic trend following strategies.

  AutoPlay Next Video