Former British Ambassador in Moscow Gives Historical Perspective On Ukraine Crisis

Rodric Braithwaite, the British ambassador in Moscow from 1988
to 1992, recently wrote a column in
The Independent
that provides not only valuable historical
context to the ongoing crisis in Crimea, but also outlines why the
best way for the crisis to be resolved is going to involve “eating
of words on all sides.”

Early on in the column,
Braithwaite outlines a brief history of the last thousand years of
the area now known as Ukraine:

So perhaps we should start with a short history lesson. A
thousand years ago Kiev was the capital of an Orthodox Christian
state called Rus with links reaching as far west as England. But
Rus was swept away by the Tatars in the 13th century, leaving only
a few principalities in the north, including an obscure town deep
in the forests, called Moscow.

What became known as Ukraine – a Slav phrase meaning
“borderlands” – was regularly fought over by Tatars, Poles,
Lithuanians, Russians, Turks, Swedes and Cossacks. One large chunk,
including Kiev itself, joined Russia in the 17th century. Galicia
in the west fell to the Austrians in the following century, but was
taken by Poland after the First World War, when the rest of Ukraine
joined the Soviet Federation. Churchill, Roosevelt and Stalin
handed Galicia and its capital Lviv to Ukraine in 1945. All these
changes were accompanied by much bloody fighting.

Ukraine’s Crimean peninsula followed a different but equally
tumultuous path. The seat of a powerful and predatory Tatar state,
it was conquered and settled by the Russians in the 18th century.
Stalin deported its Tatar minority in 1944 because, he said, they
had collaborated with the Germans. They were later allowed to
return. Crimea only became part of Ukraine in 1954, when Khrushchev
gave it to Kiev as a present.

Ukraine became an independent country for the first time since
the Middle Ages when the Soviet Union collapsed in 1991.

Braithwaite goes on to outline the attachment many Russians feel
towards Ukraine:

…most Russians feel strong emotional links to Ukraine as the
cradle of their civilisation. Even the most open minded feel its
loss like an amputated limb.

Braithwaite believes it is irresponsible
to talk of Ukraine joining NATO, an organization he says most
Ukrainians do not want to join. He adds that the majority of
Ukrainians want to be on good terms with Russia.

One of the most important points Braithwaite makes in his column
is that the West does not have the means to stop Russia being
overly involved in Ukrainian affairs:

…the West does not have the instruments to impose its will. It
has no intention of getting into a forceful confrontation with
Russia. Lesser sanctions are available to it, both economic and
political, but they will hardly be sufficient to deflect a
determined Russia from its meddling.

The alternative is for the West to talk to the Russians and to
whoever can speak with authority for Ukraine. So far the Americans
have been ineffective on the sidelines, the British seem to have
given up doing foreign policy altogether, and only the Germans, the
Poles and the French have shown any capacity for action.

Braithwaite concludes by saying a deal that would likely be
better than any other proposed resolution to the crisis would
have to include both the West and Russia agreeing to stop
interfering with Ukraine, NATO making assurances that it will not
work towards recruiting Ukraine, and the West and Russia both
offering support to Ukraine’s economy.

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White House Budget Puts Price on Obamacare’s Insurer Bailout: $5.5 Billion

Whether or not you think it’s
fair to describe Obamacare’s risk corridor program as a bailout
probably depends in part on whether you expect it to cost taxpayers
money.

In theory, the program is designed to share risk symmetrically
between health insurers and the federal government: Insurers whose
costs are higher than expected will have a portion of their costs
covered by the federal government, but insurers with
lower-than-expected costs will pay into the system.

When the law was passed, the expectation was that the program
would be revenue neutral, with some insurers paying in, others
getting paid, and the whole thing more or less balancing out. But
with the rocky rollout of Obamacare’s exchanges, and suggestions
from health insurers that exchange-based plans might struggle
financially, it has increasingly seemed like a stretch to expect
that the program would raise as much money as it cost.

The Congressional Budget Office complicated matters further when
it estimated that, over the life of the program, which is currently
set to run through 2016, it would end up netting the government
about $8 billion in revenue. That estimate was based on the
experience with risk corridors in Medicare Part D, which
may not
be the best guide to life under Obamacare. 

That’s especially true now that we have an idea of how much the
administration expects the program to cost next year:
about $5.5 billion
. That’s the amount President Obama’s new
budget plan requests to fund the risk corridor program during the
next fiscal year. 

Caveats apply. This is for one year, not the life of the
program. And as the administration
likes to note
, the budget is a “statement of our values as a
nation,” which is to say that it’s not the sort of thing that’s
likely to pass. But it is a signal about what the White House
expects, and believes, and stands for. Apparently, one of our
values as a nation is bailing out insurers participating in the
rollout of a botched health care overhaul.  

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Bernanke’s Not Wasting Any Time – Earns $250,000+ for a Speech in Abu Dhabi

Ben Bernanke isn’t wasting any time cashing in on what might be the greatest transfer of wealth in history from 99.9% of the world’s population to a handful of connected oligarchs and their political minions. Cronyism does indeed pay well, even if bureaucrats have to wait until they leave office to collect.

The Bernank isn’t wasting any time ringing the register.

From Reuters:

Former Federal Reserve Chairman Ben Bernanke said the U.S. central bank could have done more to fight the country’s financial crisis and that he struggled to find the right way to communicate with markets.

“We could have done some things on the margin to mitigate somewhat the crisis,” Bernanke, 60, said on Tuesday in his first public speaking engagement since he stepped down in January after eight years heading the Fed.

“Although we have been very aggressive, I think on the monetary policy front we could have been even more aggressive.”

“This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,” Bernanke said.

Um, so you thought it was? Never forget that these are the clowns running the show.

Bernanke said he could now speak more freely about the crisis than he could while at the Fed – “I can say whatever I want” – and in remarks to over 1,000 bankers and financial professionals in the capital of the United Arab Emirates, he made clear that he had regrets.

Bernanke received at least $250,000 for his appearance at the financial conference staged by National Bank of Abu Dhabi NBAD.AD, the UAE’s largest bank, according to sources familiar the matter. NBAD did not announce the fee.

continue reading

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Stock Rally Stalls As Russia Test-Fires Inter-Continental Ballistic Missile

BTFWWIII?

  • *RUSSIA TEST FIRES INTERCONTINENTAL BALLISTIC MISSILE: INTERFAX
  • *RUSSIA TEST FIRED MISSILE FROM RANGE IN ASTRAKHAN REGION: IFX
  • *RUSSIA MISSILE LAUNCHED AT 10:10PM IN SOUTHERN RUSSIA: INTERFAX
  • *INTERFAX CITES RUSSIAN DEFENSE MINISTRY ON MISSILE TEST

But, the talking heads said Ukraine was fixed and Putin had folded?

Via Bloomberg:

Topol missile launched from firing range in Astrakhan region at 10:10pm Moscow time, news service reports, citing Russia’s Defense Ministry.

 

Launch carried out by Russia’s Strategic Rocket Forces

 

Missile hit target in Kazakhstan: IFX

The Topol Missile:

 

And the reaction…USDJPY blips and the S&P 500 drops 5 points


    



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The Obama Budget In Two Charts

The magical thinking highlighted in two charts, as WaPo reports; in his budget request, Obama projects public debt as a percentage of gross domestic project falling to 69% by 2024, while the CBO has it rising to 79% – a difference of 10 percentage points, or roughly $2.7 trillion. As WaPo notes, the likelihood of this scenario unfolding… zero.

 

 

The difference is due to hopeful expectations that aggressive revenue expectations come to fruition.

 

As WaPo notes, these revenue increases assume a compliant Congress that works with the White House to pass major new legislation in the coming years. And the likelihood of that particular scenario is almost zero.

One interesting "efficiency" gain, President Obama has proposed is the idea of either phasing out penny and nickel coins or using cheaper metals to produce them.

The fiscal 2015 budget, released on Tuesday, points out that the coins' manufacturing and circulation have not changed in decades and that the Treasury Department has been reviewing the coins' production. Obama has proposed similar reviews in the past but the measures stalled despite not being partisan points of contention.

 

The budget does not include a specific cost savings figure for the potential changes but it identifies the rise of electronic commerce as a reason to review the coins' makeup and distribution.

Obama's 2014 had pegged the cost of manufacturing a penny at two cents and the price of a nickel at 11 cents.

One wonders just how long it is before the Dollar bill is worthless too…


    



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Facebook Gets Into The Drone Business

First it was Amazon, now it’s Facebook’s turn. As was reported previously, hot on the heels of its $19 billion purchase of Whatsapp, Facebook announced the purchase of New Mexico-based Titan Aerospace for $60 million. Who is Titan? It is a maker of solar-powered drones which can reportedly stay airborne for five years and which many have suggested can help Facebook achieve its goal of providing global Internet access, especially in places where the “organic” growth of its audience may be otherwise limited by the lack of infrastructure.

Telegraph reports:

Facebook is in negotiations to buy a drone manufacturer with the aim of using its high-altitude autonomous aircraft to beam internet connections to isolated communities in Africa, according to reports. The social networking company is one of the main backers of the internet.org project, which aims to connect the large parts of the world which remain offline.

 

Today, only 2.7 billion people – just over one-third of the world’s population – have access to the internet, according to Facebook. Other founding members include Ericsson, MediaTek, Nokia, Opera, Qualcomm and Samsung.

 

Now TechCrunch reports that Facebook intends to buy the maker of advanced solar-powered drones which can remain in the air for up to five years at a time, in the hope that they can be modified to provide internet connectivity for those on the ground.

 

Titan Aerospace’s drones fly so high – up to 65,000 feet – that they can effectively operate as satellites with far lower operating costs, which the company calls “atmospheric parking”. The Solara 50 and 60 models can carry up to 100kg of equipment.

 

TechCrunch reports that Facebook intends to build 11,000 of the drones to provide blanket internet coverage to parts of the world that currently have patchy or non-existent connections.

 

The project would be in direct competition with Google’s Project Loon, which will see 30 balloons launched into the stratosphere where they would form a network and programmed to use varying wind currents at different altitudes to remain in a geostationary position.

 

If successful, the project would provide 3G-like speeds to isolated parts of the world. But the lifespan of the balloons would be just 100 days, after which they would return to Earth and have to be replaced.

So between Google balloons, Facebook’s drones, and Amazon’s instadelivery service, any hope of seeing the stars unobstructed in about a decade can be laid to rest. But at least everyone will have internet connectivity and same day delivery, even if it is goods that were never ordered in the first place

The good news: it will make passage for the US military’s remote controlled death machines somewhat more problematic with countless airborne objects flying to and fro across the increasingly unfriendly skies. What it means for commercial air traffic is unknown but will surely be spun as bullish for the stocks of public airlines.


    

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Russia Warns “Will Have To Respond” For US Sanctions

 It appears, given comments from Foreign Minister Lukashevich, that things are about to get ugly again…

"we will have to respond…if provoked by rash and irresponsible actions by Washington… and not necessarily symmetrically."

 

Via Reuters,

Russia said on Tuesday that it would retaliate if the United States imposed sanctions over Moscow's actions in Ukraine.

 

"We will have to respond," Foreign Ministry spokesman Alexander Lukashevich said in a statement. "As always in such situations, provoked by rash and irresponsible actions by Washington, we stress: This is not our choice."

And Interfax adds:

  • RUSSIA WILL HAVE TO RESPOND TO POSSIBLE U.S. SANCTIONS, "AND NOT NECESSARILY SYMMETRICALLY" – RUSSIAN FOREIGN MINISTRY

Given that Russian boots remain on the ground in Ukraine and that the US (and the west – ex-UK) are still pressing for crushing sanctions against Russia; one has to wonder whether Putin's carefully worded "annexation" comment did nothing but enable exits for oligarchs… What really changed?


    



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Russell 2000 Up Most Since 2011

Volume is around 35% below yesterday's pro-rata but none of that matters. The S&P 500 is at record highs but it is the "most shorted" and most notably the Russell 2000 that is just exploding higher with a massive gap. Up over 3% on the day, smashing to new record highs, this is the best day in over 26 months. This is the biggest rise in stocks since October 2011 (when global central banks came to a co-ordinated rescue). Bear in mind that the Fed already noted small-cap multiples were over-extended (5% below here)… but BTFATH anyway.

Just an incredible surge in the Small Caps…

.

 

Which has ramped the Russell to play year-to-date catch up with the Nasdaq…

 

And the big winner since we the "most shorted" on 2/21… is the "most shorted"

It's just that kinda market – Thank You Janet


    



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