Ad Hoc Commentary – we shall choose Shame, and then have War…

“…now that Putin had largely secured Crimea, he will likely only stage his next major move in the fall [months]….”

Yours truly still expect Putin to stage his next move in Oct 2014 earliest.

The world today is very much like the world in 1930s. Sovereign debts are questionable today as it was questionable in the 1930s after England, Germany, Austria and other European countries went off the gold standard in 1931. Just as in the 1930s, the democratic-capitalistic system seemed unable to bring the world out of the current doldrums. Today, as in the past, capitalism is increasingly seen as a failed creed. This view is especially prevalent among the educated young, who after many years of formal education, seen their genuine intentions of making a place in the world sadly frustrated by unemployment. In the 1930s, they experimented with communism and national socialism. In the 2010s, they will probably use contemporaneous positive-feeling words – modernism, humanism, globalism.

Geopolitically, in the past we had a resurgent Germany (humiliated by WWI) of the 1930s, today we have a resurgent Russia (humiliated by Cold War). The American public is tired of other people’s war today – just as in the 1930s when the general sentiment was American boys should not die to hold the British Empire together. It is far too easy for the isolationist to cry that Wall Street and Big Business benefit from war. And if the business elites want war to boost their profits, then the children of the business elites should be drafted first in any new war on foreign lands.

Putin, the master strategist, probably understands very well the American’s adversity to any new war. Just like Hitler in Sudetenland, Putin in Crimea took full advantage of the American sentiment. And since Obama is a people’s person, a president that will always say what you want to hear, he would probably do a Neville Chamberlain. We remember that Neville Chamberlain was the British prime minister at the time that said he believed Hitler when the Fuhrer told him that he has no further territorial ambitions after Sudetenland. Just like Putin protecting ethnic Russians, Hitler annexed the strategically important Sudetenland on the pretext of protecting ethnic Germans:

Putin’s address to the Russian parliament on Mar 18, 2014 will be remembered by future generations as the speech that changed the 21st century:
“…Kiev is the mother of Russian cities. Ancient Rus is our common source and we cannot live without each other…”
“…Do not believe those who want you to fear Russia, shouting that other regions will follow Crimea…”

It is at this time we should bring to mind the words that Churchill once wrote:
“…We seem to be very near the bleak choice between War and Shame. My feeling is that we shall choose Shame, and then have War thrown in a little later on even more adverse terms than at present…”

If the West were to choose shame in Crimea, then they must choose shame again in Syria. If they do not, there will be no peace in our time. The Americans should not discount the threat:
“…Russia is the only country in the world realistically capable of turning the United States into radioactive ash…”
“…Even if people in all our command posts after an enemy atomic attack cannot be contacted, the system [Perimeter] will automatically fire our missiles from mines and submarines in the right direction…”

The submarine threat should not be taken lightly. During World War II, German U-boats put a stranglehold on shipping across the Atlantic and food and energy were in short supply in England. This could easily repeat in the 21st century. It is said that the Japanese planners of WWII discounted any submarine threat because “Americans were inherently unsuited for the physical and mental strain of submarine warfare.” If that were true in WWII, it is probably true for youths in this age of American Idol.

On markets, yours truly believes that geopolitical risks are behind us for now, and we can safely buy U.S. equities now – because even those who see the decline in American hegemony do not dare bring money into Russia (no thanks to its bad track record on rule of law). Geopolitics will come back as a risk in Oct 2014 on even more adverse terms than at present. But, that is a terribly long time away. Until then, have fun in the markets.

Good luck in the markets.