A Tale of Three Countries - US, Saudi's & Russia
1/ Vladimir Putin is the quintessential kind of bond villain. Intelligent, calculating, ruthless, well trained by the KGB, patriotic, & most importantly resentful in the most technical way. He carries the fall of the Soviet Union.
1/ Vladimir Putin is the quintessential kind of bond villain. Intelligent, calculating, ruthless, well trained by the KGB, patriotic, & most importantly resentful in the most technical way. He carries the fall of the Soviet Union.
2/ I firmly believe Putin learned a strong lesson from Mr. Reagan: the key to winning a war isn't guns but the starving of an economy by systemic debt. The Soviet Union collapsed from an unsustainable arms race w/ the West w/out having currency hegemony. Afghan/Chernobyl = end.
3/ The Russian people are arguably the most injured by culture of any other, sustaining greater losses than any other nation in WWII by orders of magnitude, often times at the command of their own leadership. This culture can sustain immeasurable suffering compared to the West.
4/ This is not a glorification of Russia / Putin by any means, just an observation of the relative endurance to economic pain suffered over 3 generations as compared to the affluence of the West. So Putin bid his time, patiently degrading the Western block via politics & energy.
5/ Putin also realized you don't get locked down in a land-war in Asia w/ no endgame in sight, especially w/ a tribal culture used to insurgency for 1000 yrs. This is what drains economies into systemic debts. The US is not immune but the $ reserve status afforded it privileges.
6/ Moving on to Saudi Arabia, the de facto proxy for US Middle East interventionism against Iran (also an eternal shia / sunni tribal conflict w/ no endgame). The role of SA is to maintain dollar denominated oil contracts & regulate prices in exchange for arms & regional power.
7/ The SA / USA expeditions into Yehmen, Syria, Lybia, Lebanon, etc. as a polar balance to Iran / Russia - (China by angle) has led to a tipping point in oil production regulation, culminating in this weekends collapse. More on that in a moment.
8/ USA. It is no secret to anyone paying attention that the central bank monetary accommodation policies has rewarded speculation & poor performing companies. This is even more acute when you examine the consolidation behavior of hydraulic frackers (HF) in the Dakotas / Texas.
9/ Most distinctly, the bankruptcy rate of HF should be higher ~25% but has been artificially suppressed by private equity in search of yield, propped up zombie operators long past their shelf life. This was done with debt & leverage. Greed is good right? No one watches the end.
10/ The GFC of '08 recapitalized our sacred banks but did little for the rest of the economy in terms of resilience, & certainly nothing for our cultural tolerance for pain. Anyone watch the rise of the YouTube US influencers vs. Russian entertainment?
11/ Flash forward. US debt-to-GDP. This wasn't an arms race like Soviet U, it's war against the deflationary nature of technology & globalism on a weak postGFC foundation & CB money printing. Possible only because we are the world's reserve. Every sector of our economy is in debt 
12/ Putin's opportunity. Cue the COVID-10 instill panic of a global pandemic, global recession initiator, & a collapse of both the supply / demand side of oil. Negotiations w/ the Saudi's on production cuts would NEVER happen under these conditions. Sell on the way down.
13/ IMPO Russia wants to cripple the oil / gas production capacity of the United States for the foreseeable future ($45 / b was barely tolerable w/ furloughs, $30 sustained means a collapse). These aren't jobs & infrastructure you can just switch on/off.
14/ Everyone understands how over-leveraged corporate & private equity are, especially the Russians. This was their chance & they came to the party w/ bells on. The Russian government care's little about suffering so long as the case can be made that it's the virus' fault.
15/ The tolerance for suffering in Russia is much higher than the US & a frightful price war is being setup to cripple our national domestic production into the foreseeable future. We don't have a national energy policy, free markets will take care of everything, until they don't
16/ The uncertainty behind the global economic prospects are simply masking an age old geo-political struggle for energy dominance. In the meantime, Putin will convince every economy to buy energy in something other than $'s. More sanctions? War is not an option. Hunker down. End
17/ @LynAldenContact makes the case better than I ever could on US economic vulnerability. I prime target for Mr. Putin.
