Russia Sanctions Trade Shock: Fulfilling the Fears of Smoot-Hawley?

Before getting to the topic matter of this post, the potential for a sanctions-induced trade shock, we need to separate the state of the war in Ukraine from a military standpoint from the state of economic sanctions. We had pointed out from the outset that Putin had set forth objectives for Russia that had significant tensions that arguably rose to the level of contradictions.

Specifically, Russia was not going to occupy Ukraine or impose government against local will. That was almost certainly code for allowing ethnically-Russian dominated regions, certainly Donbass and potentially much more of Eastern Ukraine, to either cede from Ukraine in a Kosovo or Crimea-type process or have much more regional autonomy, as envisaged in the Minsk Protocol. Russia was going to demilitarize Ukraine. Depending on the level of reduction of capability, that goal did seem attainable with a relatively short war.

However, the third aim, denazification, was a very tall order unless Russia sought only to remove the most prominent perps (it had a list of names it intended to round up and put on trial) and members of the military it captured (neo-Nazi tattoos no doubt make for an easy first cut). Recall that the Russian army made clear that any soldier who put down arms would not be harmed.

A final objective, not stated by Putin but clearly a boundary condition for the campaign, was to limit civilian casualties and destruction of non-military infrastructure.

Russia has run into its constraint of trying to wage a surgical war. As other commentators have pointed out, the Azov Battalion has succeeded in infiltrating enough of the Ukrainian army so that securing some troop surrenders appears not attainable. Mind you, that may not be due to the depth of conversion but the reality it only takes a hard core loyalist or two in a unit to assure that any deserter would be shot. And penetration across the military also complicates the denazification process.

But as we’ve seen, and is not well reported by the West, the Ukrainian army has been moving equipment and personnel into residential areas, thus making it difficult for Russia to take holdout cities without harming civilians (although there is the question of the accuracy of Western reporting. While Russia is certainly killing civilians, that’s typical “Shit Happens” in combat. The claim that Russia is singling them out is unsubstantiated). And Russia appears to have underestimated the increase in professionalism of Ukraine’s army since 2014 due to NATO training.

Interestingly, former British civil servant David doesn’t see these difficulties as fatal:

Western liberal thinking sees wars “breaking out”, for various, hotly debated, reasons, followed by peace initiatives, ceasefires, attempted peace treaties, final settlements, treatment of “underlying causes” etc. That’s not on offer here, any of it.

This is a war, albeit limited, undertaken for specific strategic reasons, and with specific objectives. It won’t be over until the objectives have been reached. Even if some kind of compromise were possible, it’s doubtful whether the Russians would accept it. The crisis was twenty years in the making, and what the Russians are trying to do is to re-draw the map of the region, and remodel the security structures of Europe, for the foreseeable future. We are so used to thinking in news cycles, re-election cycles and so forth that we cannot cope with a long term plan. The Russians are thinking twenty-five years ahead, and essentially they are prepared to take whatever time is needed now, and whatever pain is needed now, to accomplish their goals. They may well be expecting sanctions to last in some form for years, they may have to cope with a low-level insurgency in the Donbass, but they appear to have judged that, in the long term, they’ll be in a worse situation if they don’t act than if they act. But we can’t understand that.

Now to the economic discussion.

The disconnect between the Administration and the Beltway power players versus mainstream Americans is large and seems destined to grow. The US press and Democratic party officials are intent upon, and even gleeful about, punishing Russia through sanctions, since they feel compelled to Do Something while not being willing or able to make interventions that might make a difference to the battle outcome.

European officials are more sensitive to the risk to their economy, with Germany, Romania and Hungary not joining the US appeal last week for tougher sanctions on Russian energy (recall the partial cutoff from SWIFT exempted commodity transactions, particularly energy).

The rhetoric and punishments escalated last week even as signs of real economy costs in the West mount, along with warnings of greater harm if there is no relaxation soon.

Americans are noticing the impact of higher fuel prices even before they have worked their way much through the economy via 1970s-style energy-induced price increases of goods and services. But they are starting. For instance, Uber has just imposed a fuel surcharge.

We’ll discuss an outcome that does not appear to be sufficiently on the radar of economists and politicians: that of a trade shock, where the impact of sanctions-induced shortages and sharp price increases produce “the whole is greater than the sum of the parts” levels of profound economic damage. Mind you, this outcome is not baked in. Spitballing, I’d now put the odds at only 20%. But this situation bears watching. Given the complexity of trade and globalized manufacture, combined with the business press focus on financial markets over real economy nitty-gritty, we very much hope readers with technical expertise and/or a front row seat on industry conditions pipe up on this post and on an ongoing basis.

Caveat: The West May Relent as Costs of Sanctions Become Visible and High

Western leaders may soon find a way to better square the circle of seeming being tough on Russia without producing much self harm.

That concern did play into the initial sanctions, where the partial SWIFT ban was designed to be mighty leaky so as to allow the West to continue buying Russian energy. But apparently no one bothered understanding how oil exporting works. For instance, the financial sanctions resulted in banks not being willing to issue letters of credit used to protect buyers. No letter of credit more or less means no paying for shipments, which means no shipments.1 A few Russian tankers have nevertheless docked post-sanctions and have discharged their cargo. One wasn’t flagged as a Russian ship and sort of does not count; I’m curious as to how the others navigated both the prohibitions at ports and the letter of credit impediments.

The point is that the initial sanctions weren’t as surgical as the US and Europe believed.

The blowback has gotten worse as private companies have piled on with their own restrictions and the US has upped the ante, first by banning all Russian oil, and then by enlisting the G7, with the hope of the rest of the WTO following, to end Russia’s favored nation trading status.2

Yet the Democrats were already set to face big losses at the midterms. A spike in gas prices alone could turn a defeat into a rout. We noted at the time that Biden’s eight point bounce at the start of the war was pathetic by historical norms of 20 to 25 points. And it’s eroding mighty fast. The Hill confirmed our take over the weekend:

Biden is not benefiting from the American tendency to rally around the president in times of crisis. Biden’s small polling bumpfrom the State of the Union address is unlikely to be the beginning of a trend. The combination of bad underlying numbers, high probability of a worsening situation in Ukraine and a Democratic coalition constantly at odds with itself sets up Biden and the Democrats for worsening numbers heading into the November mid-terms.

And that assessment oddly doesn’t include the elephants in the room of worsening inflation and good odds of yet another Covid spike. Democrats may get the wake-up call from a March 8 poll that shows Trump narrowly beating Biden in a matchup.

A colleague who is well networked with Democratic party insiders is strongly of the view that the Administration can’t risk inflation accelerating and will have to back down on Russia sanctions. But it’s hard to see with the press piling on with Russia demonization how Biden can back down, particularly after having been charged with blowing the Afghanistan exit. And Republicans have found a way to weaponize the energy price hikes, by not making it about the sanctions but rather the Administration’s failure to achieve “energy independence”

In the UK, pols are discussing the need to soften the impact of an energy price shock on the poor. From the Guardian:

Some of the poorest people in the UK will “simply starve or freeze”, as a result of rocketing energy prices, consumer expert Martin Lewis has warned, as he urged Rishi Sunak to take action in his spring statement.

Lewis said energy bills for an average household, already set to rise to £1,971 in April, could hit £3,000 in October, when the regulator Ofgem next sets the price cap. “That’s my conservative guess: not the worst case,” he said…

“When you start to have absolute poverty… then I think you have to get to the point where you have to question what the impact on wider society is, because you know that extreme poverty causes civil unrest,” he said…

The chancellor announced a package of measures last month to soften the blow of surging energy costs, including a £150 council tax rebate for homes in bands A to D, and a £200 discount on bills in October, which will be repaid with higher bills in future years.

Sunak is holding the line against making that scheme more generous when he gives his spring statement on 23 March. Lewis – who has been critical of the £200 rebate, which he calls a “loan-not-loan” – urged him to go further, given the renewed increase in prices since Russia’s invasion of Ukraine, which will feed into the October energy price cap….

Lewis… argued that the chancellor’s first priority must be “those people who will simply starve or freeze because of this. And that is not exaggeration”.

The short version of the current state of play is that while Russia was hit immediately with the financial consequences of the sanctions, such as the plunge of the rouble, the freezing of hundreds of billions of central bank reserves, the cutoff of Visa and Mastercard from external transactions, the West in fairly short order was feeling the cost of higher energy prices. And those are only starting to work through their economies.

Possible Trade Shock; Shades of Smoot-Hawley?

There isn’t a clear cut historical example of trade restrictions driving global-level economic dislocation.

I’m of two minds in mentioning Smoot-Hawley Tariff Act, which were protectionist tariffs, signed into law in 1930, which quickly led to retaliatory tariffs. Economists for the most part have abandoned the view that Smoot-Hawley caused the Great Depression; the more careful analyses also reject the weaker formulation, that it made the Depression much worse. The demand shock of the stock market crash and widespread bank failures almost entirely explain the collapse of trade.

But the great eras of internationalization were not the Roaring Twenties but the runup to the Great War and our contemporary globalization of manufacture.

Our system of trade is so complex that it’s a classic case of obliquity: no one can map its operations, so that it’s impossible to devise efficient interventions on a macro basis. But a general rule (hence the name obliquity) is that in highly complex systems, a seemingly straightforward approach is much less likely to succeed than an indirect one. So if we start having large-scale problems, the officialdom is unlikely to be very successful in intervening.

The reason the risk potential is large is that traded products have become critical o all advanced economies. Yet that exchabge is fragile thanks to widespread adoption of just-in-time inventory practices and the vogue for large companies to reduce their number of suppliers so as to increase their bargaining leverage. That means the potential for cascading problems is considerable. We got a taste of that with Covid supply chain issues. Imagine that happening in merely 25% of the products that depend on commodities where Russia and Ukraine have significant market shares. It’s hard to think of an industry that would be spared.

I’ve had economists argue that any trade shock be a one-time, mot terribly long lived event, that buyers and sellers will find workarounds through cutouts and friendly intermediary countries. That seems unduly optimistic.

First, decades of policies supporting globalization have sought to, and largely succeeded, in reducing “friction,” as in costs and hassle, for trading. Any workarounds will take time to develop, leaving trade partners stuck in the meantime. That stress on top of an energy price spike will lead to business failures. Even if not all that many, consider that cost on top of the additional issues.

Some of the discussions of workarounds also seem unrealistic. For instance, the US is now scrambling to find substitutes for Russian crude and is having to make nice to Venezuela. But experts contend that even if the US and Venezuela come to terms, Venezuela has had so many years of underinvestment, that it can’t supply all of the lost Russian capacity. And contrary to “energy independence” minded Republicans, the US can’t produce the heavy grades needed to mix with the super light shale product to produce diesel and heating oil. What happens if the US starts having shortages?

Second, any workarounds will increase the costs and risks of trading, such as more intermediaries and longer transit times. Just in time operations in particular could find it hard to adapt. Many shop floors provide for only minimal space for inventories as a JIT compliance enforcer.

Third, since the diversions will presumably go through countries that are maintaining relations with Russia. They are pretty certain to have first dibs.

Fourth, some goods, particularly food, aren’t amenable to “we’ll limp through with lower output for six months to a year and by then everything will hopefully be sorted.” Scarce and expensive essentials means hunger, stunted development, and more deaths. Readers have pointed out that Russia is an important supplier of fertilizer when global shortage is already underway. Russia and Ukraine are big wheat exporters.

Some commentators contend that Russia has famine in its future due to its dependence on imported seeds. It would take a more granular analysis to reach that conclusion. Yes, Russian production will suffer. But it is going to prioritize feeding its citizens first. So the first casualties of any seed-driven production shortfalls will be Russia’s agricultural goods buyers. This section of a tweet gives an idea of the caliber of what passed for analysis:

Um, seed potatoes are not grown in Russia from seeds. “Seed potatoes” are confusingly potatoes grown from the root structure of other potatoes. And Russia imports about 90% of its potatoes, actual potatoes, and in 2019, about 85% of that was from Europe.

And Russia was already suffering from potato supply shortfalls and high prices because…..drumroll…it had already decided it couldn’t afford to rely on Europe. In 2021 has been buying from other sources like Belarus, Kazakhstan, Iran, Pakistan, and Egypt, which all were experiencing lower output levels. EastFruit explained that Russia had an “acute shortage” of potatoes as of early December 2021, as in before the war. So don’t let anyone attribute pricey potatoes to the war; it was a pre-existing condition. From EastFruit:

After Russian market participants began to realize in August that the country would experience a shortage of potatoes in the 2020/21 season, they immediately began to look for countries where potatoes are in abundance. Potato prices during this period broke away from the standard indicators and began to rise sharply. They are on 3 times average higher now than usually in this period, as can be seen in this EastFruit price monitoring chart.

Russian supermarket chains are now starting to place orders for the supply of potatoes from Egypt. According to Egyptian potato exporters, chains are now asking for a record volume – up to 50 thousand tonnes to each! However, there are not enough potatoes in Egypt to cover this demand. The second problem is the price of Egyptian potatoes – taking into account delivery, prices reach $600 per tonne on the CIF Novorossiysk basis, excluding port fees and duties. And this is 50% times more expensive than the current price for potatoes on the domestic market of Russia which is already record!…

Thus, given the poor choice of suppliers, potato prices in Russia will most likely tend to increase from today’s 30 RUB/kg ($0.41/kg) to 50 RUB/kg in February 2022 or even higher. Given already record high prices for most of the traditional vegetables of the so-called “borsch set” and especially cabbage, rising potato prices to such high levels could also create additional difficulties for low-income consumers. At the same time, high prices for potatoes may again attract new farmers to grow them, although the basic requirements for entering this business in Russia are constantly growing.

If we are talking about actual seed imports by Russia, sugar beet farmers are the most dependent on imported seeds, which account for 75% of the total in 2019 according to Seed World, in a story describing Russia’s new program to reduce purchases of foreign seeds, most of all from the US. Russia is a significant importer of sunflower seeds and the US is the biggest source.

But…Russia is the biggest exporter of sugar beets and beet sugar. It also has a 3.1 million ton sugar stockpile. So any decline in sugar beet seed buys is more likely to hit exports than Russian borscht.

And those sunflower seeds? Russia and Ukraine are major sunflower oil exporters, together providing 90% of India’s supply. Even before getting to procuring seeds, the immediate conflict is producing big spikes in sunflower oil prices. And that means more expensive munchies. From Time:

To keep Martin’s Snacks’ 80,000-square-foot south-central Pennsylvania factory humming throughout COVID-19, CEO Butch Potter has had to shell out 20% more for potatoes than he did pre-pandemic. His packaging film expenses have increased 35%. Box prices are up 30%. He’s also had to raise wages to retain and recruit talent.

None of his operating costs increases, however, are as extreme as the price hikes in cooking oils—mostly of the sunflower and cottonseed variety—that Potter requires to produce snacks such as Jalapeño Kettle Cook’d Chips and Slender Pop Sea Salted Popcorn. Cottonseed oil costs Potter $0.99 per pound right now, he says. Eighteen months ago, it was half that. Sunflower oil is now $1.28 per pound, versus the $0.60 it cost in September 2020…

The two countries [Ukraine and Russia] are key players in certain major global industries, like computer chips, sunflower oil, grains, petroleum, and wood…

Companies like Martin’s Snacks that rely on sunflower oil will be particularly vulnerable. Ukraine is the largest exporter of sunflower oil in the world, responsible for up to 46% of sunflower-seed and safflower oil production, according to the Observatory of Economic Complexity. The second largest producer is Russia, which exports about 23% of the world’s supply.

Curiously Time does not mention that Russia produces 40% of the world’s palladium, is the number two platinum exporter, or that Russia, Kazakhstan and Uzbekistan provide the US with roughly half the fuel for its nuclear reactors, which produce about 20% of US electricity. But DefenseOne confirmed our concerns (hat tip RobertC):

Ukraine banned the export of wheat and other vital food commodities on Wednesday, triggering global fears for the food security of millions of people this year. Now the Pentagon has been urged to study how the disrupted food supply driven by Russia’s invasion of Ukraine will impact security around the world….

Ukraine is responsible for about 6 percent of global calorie exports, said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute, or IFPRI. But in Egypt, for example, half of its imported calories come from Ukraine and Russia combined. In Lebanon, Russia and Ukraine account for 34 percent of its imported calories.

“Because Ukraine is one of the world’s largest wheat suppliers, especially for the developing world, Russia’s actions could cause a spike in food prices and lead to even more desperate hunger in places like Libya, Yemen, and Lebanon,” Linda Thomas-Greenfield, the U.S. representative to the United Nations, said last month. “The tidal waves of suffering this war will cause are unthinkable.”

I’m confused. I thought we’d established that the US and Europe didn’t care much about lives in those countries…but apparently being able to attribute their loss to Russia makes them more valuable.

And then we have chips, as in the non-snack food kind. A Gizmodo story Lambert picked up for Links goes into more detail on the impact of neon shortage. Two now-not-producing plants in Ukraine provide roughly 50% of the world supply of type used for chips. Gizmodo details some of the implications: small fry get hit the worst, but even the big boys like Samsung have only two months or a bit more of inventory. And this piece only consider neon, not the other area where Russia is a key player: the sapphire substrate used in higher-end chips. The short version is there are no ready substitutes.

Although the complexity of this situation makes it impossible to make any forecasts, consider: a worst case scenario is much much worse than stagflation. Just wrap your mind around the consequences of the merely the two outcomes described above: a fair bit of famine and supply shortfalls, even potentially problems with maintaining some critical infrastructure due to chip scarcity. Some of that productive capacity loss could become permanent due to business failures.

And let us remind you….so far we are discussing only what the West has done to itself. What happens if Russia goes full Smoot-Hawley and retaliates, or engages in the passive aggressive version, as in no formal pronunciations, just supplies go to friendlies and the West gets chocked down, not 100% but enough to feel like that.

The Democratic Party is in the process of executing a controlled flight into terrain. Too bad that we are along for the ride.

1 The Biden Administration did not consult the Fed, and that level of lack of sanity-testing suggests that the Administration also neglected to get input from other experts who might have identified second order effects of the sanctions that would increase the damage to domestic constituencies.

I am about 30 years behind the times on the state of play with letters of credit. However, back then, there was a famous case of a buyer being scammed by paying for a tanker subject to a documentary letter of credit (if the seller delivers all the required documents, the funds are released). They included a certification of the cargo using what amounted to a dip stick test to verify that the cargo was indeed oil.

The shipment was oil, to the depth of the dip stick and then a bit more.

Below that was heavier salad oil.

Now as I read between the lines, the current LOCs are simpler, allowing for 30 days after landing for the buyer to pay for the cargo. I assume they get to inspect it to their heart’s content.

2 Each nation has its own implementation by treaty. However, all members of the World Trade Organization agree to give most favored nation status to each other. Russia joined the WTO in 2012.

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  1. Brian Beijer

    Don’t know what others think, but, to me, this was rich:

    Lewis said energy bills for an average household, already set to rise to £1,971 in April, could hit £3,000 in October… The chancellor announced a package of measures last month to soften the blow of surging energy costs, including a £150 council tax rebate for homes in bands A to D, and a £200 discount on bills in October, which will be repaid with higher bills in future years.

    So, all told, they’re talking about 11.5% worth of assistance including the “loan-not-a-loan”. 5% of assistance if they only approve the tax rebate. 0% of assistance in the form of actually sending people money, or even lowering the price cap.

    Then, this quote:

    Lewis… argued that the chancellor’s first priority must be “those people who will simply starve or freeze because of this. And that is not exaggeration”.

    So, when one considers both this quote and the measly level of assistance they are arguing about, one could argue that their only priority are those who will immediately “starve or freeze”, not those who will slowly starve or freeze to death. Does this type of thinking ring a bell with anyone else?

    1. tegnost

      This is my favorite line…

      When you start to have absolute poverty… then I think you have to get to the point where you have to question what the impact on wider society is, because you know that extreme poverty causes civil unrest,”

      So poverty is only a real problem when it’s extreme.
      Poverty means cheap labor,
      extreme poverty means guillotines…

      1. Brian Beijer

        Lol. You’re right! That is a revealing line. It does make me wonder though if when he says “civil unrest”, is his concern guillotines or market disruption?
        After the past two years of the pandemic, and then, statements such as these, I’m starting to wonder if the PMC and economists have figured out how to calculate Just in Time deaths. Maybe these are now calculated in state budgets going forward? Just like as their concern about Covid is limited to hospital bed capacity, maybe their concern about these impending crises of food and heating is limited to making sure that not too many people die, but just the right amount. I’m sure some quick-witted commentor can come up with a catchy phrase about this involving Goldilocks…

      2. Eclair

        Tegnost, that line impressed me as well. And, what passes as ‘civil unrest’ these days?

        In Seattle, Amazon announced that it was moving employees out of downtown Seattle, due to ‘crime.’ Lots of unhoused people living in downtown, in tents, on the streets. Drug deals going down, apparently. Pilfering of food. Note, that our local PCC, near Green Lake, now has a private security guard lurking about every day, not just weekends. People are stealing food.

        What’s the dividing line between ‘crime’ and ‘civil unrest’?

        1. Sue inSoCal

          Eclair, that’s an excellent question. Depends on whether the poor and/or starving (I will not use “food insecure” euphemism) can feed themselves. I’m not sure I’d deem civil unrest stealing food you need to survive, as opposed to organized crime ‘grab the goods’ on Rodeo Drive.

    2. chuck roast

      And here is a country that was set for energy independence and wealth building with the discovery of the North Sea Oil Field. The field was stripped and any public benefits were stolen and squandered. Because markets…go die.

  2. The Rev Kev

    Turns out that you can have all these politicians & operatives making up their own realities in their offices and think tanks, but that they still have to pay attention to real world economics if they did not want to be gelded. Who knew? From what I have read of the present world economy, there is not that much slack built into it as, due to financial pressures, it has been ‘optimized’ to remove all redundancy to make it more ‘efficient’. But we are seeing the consequences of a massive spanner thrown into the works with little thought of the consequences.

    So one example that I read about was a ship sailing from Port A to Port B. And that ship has a port it is registered in, a crew & Captain, insurance, port clearances, owners, maybe holding companies that own those owners, cargo, ship suppliers,etc. But right now, if any one of those long links is connected with a banned Russian entity, that ship cannot sail as in at all. For all I know their insurance might be voided if they did sail anyway. And just in terms of ship’s alone the Russian merchant fleet has over 1,300 going all over the world.

    But all of this could have been foreseen. With just commodities alone, I could have asked a random reader on NC to use Google and Wikipedia to see what Russia & the Ukraine exports and how much is vital to the importing nations. (I would have given them the hint to check on uranium first). A few hours of online research would have shown that this was going to be a total s*** show if both countries went ‘offline’. But apparently western governments do not have access to Google and Wikipedia. Shame that. To be flippant, 2020 was the year that we went into a ditch, 2021 was the year that we saw smoke coming from under the engine hood, and now 2022 is the year that we realize that that smoke is coming from the Lithium-ion battery packs.

    1. Polar Socialist

      You make it sound like The West brexited (or Westxited?) from the global markets. I’m sure somebody somewhere must have at least a second of doubt before doing something so dumb…

    2. John Wright

      We simply need to have some economists promote acceptable substitutes to scarce commodities.

      Here is a quote from the chief economist (Willem Buiter) at Citibank about gold:


      “It has no significant remaining uses as a producer good – equivalent or superior alternatives
      exist for all its industrial uses”

      When he made this claim many years ago I was involved in printed circuit board design/manufacturing and was specifying gold plating, at times, when deemed appropriate.

      Slow learner me, I remain unaware of “equivalent or superior alternatives to gold for ALL its industrial uses”.


    3. Charlie Sheldon

      Another little issue rarely mentioned is this – ship’s crews are not rounded up or employed by the ship owner or in most cases the ship operator – there are these crew management companies, firms that contract with ships and shipping companies for crew members – deckhands, engineers, officers. There are not that many of these firms, relatively speaking, and the largest are located in Europe. The covid years created a crisis in maritime employment, people becoming trapped on ships, unable to meet crew change contract terms, leaving sailors stranded at sea, leaving ships unable to get the required officers, etc. I expect over the last two years adjustments have been made but now a new crisis has struck, complicating all. The impact of these sanctions and the ripple effect on ship operations will only become clear in time. If a flag of convenience ship owning firm, registering ships in, say, Panama, is held by a Russian oligarch, then will those ships suddenly be unable to get crew because the crew management company decides it cannot provide services to that ship? How many Russian sailors are in the pool of sailors in these companies? Are they now black listed from postings? What about all the necessary contract provisions and data transfers to execute the payments to the crew members, are some of those links now broken or not working?

      This is just one tiny example of Yves’ point that our incredibly complex systems have grown beyond human understanding in some ways. The law of unintended consequences is about to express itself in ways we cannot even imagine.

  3. Louis Fyne

    1. What is the US-EU definition of victory? No one is talking about it. Western sanctions ratchet one way until regime change or the US is desperate for your oil.

    Returning Crimea to Ukraine? Never going to happen. And I doubt the western sanctions rollback after an armistice.

    2. —What happens if Russia goes full Smoot-Hawley and retaliates, —

    the odds of that scenario are getting to 100%.

    Russia will not ask for sanctions to be lifted: Russian Deputy FM Vershinin said in an interview with the Izvestia newspaper.

    given the zero coverage/blacklisting of Russia primary sources in US-EU media, the Mideast, Indian news agencies help get any sense of the Russian side.

    3. Specifically, Russia was not going to occupy Ukraine or impose government against local will

    There are Ukrainian media reports (attributed to a local city counciler’s Facebook post) that there will be a Donbas-style referendum to establish a seperatist state in Kherson—major Black Sea port under Russian control.

    The truth? Who knows.

    1. Polar Socialist

      I think they mean Kherson oblast, not the city. The Kherson region would be both sides of Dnepr north of Crimea.

      All regions in the areas of former Russian Empire seems to be named after it’s administrative center. Which makes it at times very difficult to follow in Russian speaking social media the current actions on ground in Ukraine since one has to deduce from the context whether a region or an urban center is referenced. More confusion follows from the Donbass side not usually using the new region boundaries formed after 2020 administrative reformations. Or the “de-communized” names, for that matter.

    1. Roberta Graves

      As an avid gardener I have many plants that regrow year to year and if they are non GMO/non hybrid the farmer can save the seeds and replant.
      Also when I lived in Russia for 6 months in an apartment and sm home (Krasnador and villages southwest) the most common snack was sunflower seeds with most rural homes growing them in their backyard.
      Most root vegetables (beets, potatoes, carrots, turnips, onions, and radishes) will grow from a piece of the existing plant. 30 pieces of potatoes can easily grow 300 potatoes etc.
      Energy is the biggest problem I think.

  4. Ignacio

    Fishermen in Spain are saying they cannot afford diesel cost and prefer to stay moored at ports. Fishing high season is supposedly starting (the mackerel season has already started) and I don’t know exactly how is this threat going. For small pelagic fisheries high diesel prices is indeed a killer. There might be temporary tax breaks on fuels to cope with this, I don’t know.

    Agriculture an fisheries will suffer…

    1. PlutoniumKun

      Energy costs will have a very significant impact on agriculture, but its hard to find any analysis of what impacts this will have on food this year (especially as projected high food prices may already be influencing cropping decisions). The combination of Brexit uncertainty over fishing grounds and high diesel could well keep many fishing boats at home as you suggest.

      Not so long ago, high diesel costs would have been very destructive for dairy farmers in Ireland – but nearly all farms now are electric only for cooling and milking. Its very hard to find any figures on diesel (as opposed to other inputs) for crops – I suspect its pretty much the same for all of them. But rising fertilizer prices will certainly impact on planting decisions. A lot of farmers are looking to legumes this year, but I don’t know if this be a problem if there aren’t enough seeds. I wonder if farmers will simply minimize fertiliser inputs, and rely on high prices to compensate for lower yields.

  5. PlutoniumKun

    A few Russian tankers have nevertheless docked post-sanctions and have discharged their cargo. One wasn’t flagged as a Russian ship and sort of does not count; I’m curious as to how the others navigated both the prohibitions at ports and the letter of credit impediments.

    A tanker full of diesel just docked in Dublin, and is being unloaded. According to the purchaser it had ‘already been paid for’, and so sanctions don’t apply. I wonder if there are some fudges at work.

    1. Charlie Sheldon

      As many fudges as can be imagined. My guess is those ships that loaded and departed before the sanctions fell might find loopholes. But, the whole issue of finance, letters of credit, insurance, in the maritime sector is surely keeping clerks around the world up late at night trying to figure out how to keep going…..

  6. farmboy

    “It won’t be over until the objectives have been reached.” chilling. The longer this war goes on, the worse secondary, tertiary affects will be. Looks like Russian wheat is going to ship as long as letters of credit, insurance, and shippers allow, Ukrainian crop commodities shipping is entirely depended on Russian allowance-unlikely. UN projections suggest as much as 20% rise in food prices worldwide. Chicago wheat is carrying a billion bushels (US crop in any one is year is about 2.4 billion bushels of 5 classes.) of long interest with volatility increasing margin requirements, but traders are drawn in to cover expected sales. Exporters and merchandisers have to hedge, can’t go naked even with these kinds of carrying costs and risks. It’s risk on as far as the eye can see. Economic sanctions blowing up risk in fat tail fashion increasing over time. Will sanctions sanctimoniously be allowed to quietly lapse while Russia pushes to achieve it’s ends? Grain markets will be fatigued and roiled simultaneously, Monday frenzy with Friday exhaustion for months, hard to imagine as the “new normal”.
    CIMMYT, the international organization for wheat and maize improvement and CIGAR, the funding NGO for agriculture development worldwide, have had full Ukrainian and Russian participation with Russia hosting the annual CIMMYT conference in 2010. Both organizations are working climate change, regenerative ag, and small plot diversity after being all in on the Green Revolution of 50 years ago. In the face of climate change Russia will increase it’s useful arable land more than anywhere else on the planet. It would be worth watching if Russia is isolated from these two efforts.

    1. Louis Fyne

      The social media hearsay (unverified, but can be confirmed if some journalists did their job) is that US beef slaughterhouses are booked solid for months on end.

      Presumably ranchers are culling herds to cut feed costs/stop losing money.

      The US may have a weird distortion in which beef prices are stable for the summer, then shoot up around the holidays.

      Chicken may be the same way?

      1. GF

        Amfortis mentioned that his recent big store shopping trip resulted in a large meat purchase due to lower prices than he had seen in a long time.

    2. RobertC

      farmboy — WRT “Exporters and merchandisers have to hedge” can observing their behavior be a leading indicator and warning? Can they retreat and take the year off? Can they move into a safe position? Have they dealt with this scale of shortages and instability before? If so, how did they manage it? Thanks.

      1. farmboy

        absolutely, Commitment of Traders breaks out commercial, large specs, and small specs on a weekly basis. Lots of tea leaf readers do a great job of drilling down for trends. Grain futures markets allow for risk management, so no they won’t take a year off, not even a day. A safe position is a moving target, aspirational really. Allocation of scarce resources is the best of efficiency in grain and commodity markets, the dreaded and damned speculator provides otherwise non-existent capital, liquidity as it were, so the value chain gets lubed and with it, the much studied supply chain.

        1. RobertC

          farmboy — thanks for that hedging seminar! I had to read it three times to understand about 80% and that’s my comprehension limit!

  7. Hickory

    On censorship, I couldn’t get to rt today through qwant’s search engine. The engine that would show the link that I tried was Yandex

    1. lyman alpha blob

      qwant is European and they have blocked access to RT, or maybe more accurately have been forced to block it by the EU and complied.

  8. Blue Duck

    As a father of three young kids, is there anything I should be doing to protect my family?

    1. The Rev Kev

      Only a guess here but if you can afford it, stockpiling essential foods in case there are supply issues would not hurt. And by that I mean staples that will last a very long time. So if corn flakes are your passion, forget them and go for things like oil, salt, flour, rice, etc. Don’t know if the following link is of any help to you but it might give you a few ideas-

      1. Louis Fyne

        everyone needs to do their homework to get the most bang for their buck.

        even under ideal conditions, brown rice can spoil in 6 months due to oils in the bran. White rice lasts decades in a dry, dark place.

        every person is different. there is no one right answer.

        One person may be better off putting more insulation in their attic, while the next might be better off doubling their inventory of spare parts for their repair business.

        1. Risteard

          We’ve found weevils in some imported Asian white basmati rice despite being kept very dry in bins here after a few months, on two occasions. And you certainly don’t want those making more baby weevils in your pantry.

          I wondered if packaging of higher value rice in Nitrogen gas to keep it dry during shioment is moving this problem along the supply chain so it is only apparent after the rice comes out of the Nitrogen, no evidence but is a new problem to us.

      2. Louis Fyne

        and try out stuff first before bulk buying.

        example, took powered milk on a flight once for the kids. tasted nasty and the kids hated it.

        probably would be a fine substitute in baking though.

    2. Louis Fyne

      1. save money to the best you can.

      2. make better bonds with your friends, family, neighbors who you can trust and are like-minded. example, You probably have a friend who will be happy to help you do your own oil changes for a pack of beer.

      3. don’t have any stress rub off on your kids. They are the luckiest kids in the world to grow up in the First World even when times rare tough. teach them academic skills and real world skills. Math, reading, doing stuff w/their hands. Makes great bonding time too.

      4. stock anything essential that you need for work or life. to the best that you can. example: if you have a diesel engine and it needs DEF, stock a year’s worth (not expensive).

      Don’t just go to Costco and blindly stockpile everything. Think it through, discuss with family. Focus on essentials with zero substitute before buying 200 pounds of rice and a pallet of canned food.

      Don’t panic.

        1. fresno dan

          reminds me of those preparations for atomic war – the survivors will wish they didn’t. I say stockpile molly so at least one can enjoy one’s final hours and feel connected to the cosmos…

          1. Louis Fyne

            just to be clear, this isn’t for atomic war or any WW3 scenario.

            This is for what you see with electronics and car production (things are still being made but only accessible at the right price) gets scaled up to potato chips, diabetes testing lancets, fertilizer, car parts, capacitors, who knows what, etc.

            What are the real odds of blowback? No one knows. but a storm front might stop by soon, and it doesn’t hurt to take some reasonable precautions.

            Especially as many of us have never been alive during a time of big inflation and/or shortages.

          2. Sue inSoCal

            Thanks, Fresno Dan. I just had surgery a little over a week ago. I’m laughing so hard at your comment, the stitches hurt. Would that be you connected to the cosmos while crouching under a desk? (Or are you too young for that recollection?)

    3. HotFlash

      Acquire skills, think of what you will need. What if the power goes out? What if gas and/or propane become unaffordable? Can you heat your home, your water, cook your food, light things up?? What will happen to all that stuff in your freezer? Acquire and learn how to use hand tools that you currently use power tools for, eg, drills, saws, grain mill, food processor. Can you make beer or wine, cheese, can food, hunt, forage?

      Grow as much food as you can and get a *good* water purifier.

      Have a good library of real books, the internet may not be with us forever. What if you need to know, oh, Morse code, or as recipe for sourdough bread and the internet is dead? Or you want to teach yourself or your kids history, or Greek, or electronics, or (ahem) Mandarin?

      Three young kids, plan ahead for clothes and shoes. Shoes! Buy durable, buy on sale, shop used, and buy sizes bigger than your kids are now. Or think of who has kids a bit older/younger than yours to hand up or down to as your kids grow.

      Don’t stockpile stupid stuff — ie, stuff you are only going to throw away, esp space-hogs. Sub reusable for disposable — paper towel and toilet paper hoarders, I’m looking at you. Stock up cleaning products — laundry and dish detergent, bleach, vinegar, bar soap, and, if you can find it, bar shampoo. These items may come in handy as trade goods, too, if necessary. When we went into lockdown, things you could not get for love nor money: canning jars, preserving kettles, bread yeast.

      Get a bike, actually get several and learn to maintain them. Get the equipment to do so, some spare cables, chains, etc., and some grease and basic tools. If you get good at it, your neighbours will beat a path to your door (mine do). BTW, bike stores here tell me they are going crazy trying to source simple, basic parts like chains and cables — which all come from (wait for it) CHINA! Which is locking down as I type. In addition to transportation, a bicycle can become a generator or run a sewing machine or blender, if you know how.

      Remember the maker creed: Don’t buy anything you can make, don’t make anything you can find.

      Stock up on small, valuable goods for trade in case you have to travel fast and light and your currency doesn’t work for whatever reason. Dimitri Orlov recommends packets of sewing needles and vodka — story goes that in 1991 a trunkfull of vodka would get you from Moscow to Poland. And be *sure* to keep some cocoa, keeps about forever if you vacuum pack it.

  9. Jonny Appleseed

    To be clear, “seed potatoes” are….just potatoes. In the USA, they must achieve lab certification as “virus free” to gain that designation, but one may plant any potato whatsoever and grow it, so long as those tubers are untreated with chemical growth inhibitors (essentially dilute herbicides) to suppress sprouting. Think about that next time you have a choice between buying conventional and organic potatoes.

  10. Thuto

    The EU meanwhile is leaning on grandiose prognostications of weaning itself off Russian energy dependence within a year to keep the masses clamouring for “tough action against Putin” sufficiently placated. Elite incompetence is a phenomenon regularly lamented here at NC, and the political elites in the west and their army of advisors, egged on by the swarm and blinded by genuflecting to the ideology of western exceptionalism, went hell for leather on imposing sanctions thinking it would be just a second-order derivative of something they’d already done with Iran (I.e. the blowback would be minimal and insignificant). Alas, it’s proving to be anything but and we are likely now in the corridor of uncertainty and hurtling full bore towards a geopolitical event horizon beyond which globalization as it existed as recently as three weeks ago will be eviscerated.

    1. The Rev Kev

      I have not seen it mentioned yet but suppose that the magic pony came true and the EU was able to wean itself off all Russian energy within a year. But if this happened, then all the billions that the Ukraine earns annually with gas transit fees would be gone, gone gone. Will the EU then have to ‘loan’ the Ukraine more money to make up for this loss?

      1. Thuto

        That multibillion dollar hole in its budget is the reason Ukraine opposed the Nordstream2 pipeline but being attentive to such contradictions gets sacrificed when all that matters is narrative and rhetoric.

    2. Martina

      Germany has already revised the plans. First, we meant to phase out all Russian energy import until year’s end. Then that was revised to “replace 80% of Russian energy by year’s end”. Now the goal post has been shifted to 2027.

  11. Altandmain

    Putin I suspect took a very careful analysis of the Western world’s strengths and weaknesses relative to his own. In other words, he carefully planned his strategy and I think it was a lot less impulsive than many pundits will ever be willing to give him credit for.

    It’s not just food production that is affected. Paper mills are shutting down in Europe.

    Also, there are going to be other impacts of fishing boats and the like being idle.

    Food prices are going to skyrocket. Not just seafood, but also land grown food. Fertilizer is up (Russia is a major producer). Coal is also up (Russia is also a major producer). So energy and food are going to keep rising from their current prices.

    I have heard hearsay as well, adding to some people here that there are wildcat strikes going on in some parts of Europe.

    At some point, I think that the West is going to have to quietly relent. Sanctions only ever worked because it was on small and weak nations like North Korea. They don’t work so well against nations like Russia. They won’t work as well against nations like China, which are major manufacturing powers and thanks in no part due to the greed of the Western elite.

    This war was never about unprovoked Russia aggression – the West surely knew there were consequences to expanding NATO. Another reason may very well be the close proximity of nuclear weapons to Moscow if they were placed in Ukraine. Note that the last time the US placed nuclear weapons in Turkey and the USSR in Cuba, well that resulted in a Cuban missile crisis. Putin is no angel, but I think he’s thought this out a lot more than many pundits seem to think.

    Also, where possible, it’s clear that Russia will be much more self-sufficient and so will China. The move away from SWIFT and the US dollar isn’t going to stop even after this war. The Russians were already heading in that direction after the Crimean sanctions.

    As far as the polling for President Biden vs Trump, keep in mind that the polls underestimated Trump in 2016 and 2020. Even more important from a Presidential race point of view will be, how are they doing in the critical swing states?

    Biden only won because Trump badly mishandled the pandemic. The problem is, Biden seems to have badly mishandled the Delta and Omicron, along with the inflationary pressures the pandemic has brought. He seems unable to do much.

    It may reach a point where there is a public revolt even in the developed world against the rising costs of energy, rising cost of food, and the various shortages caused by these sanctions, which in turn triggered Russian retaliation. Politicians may have to relent as well or lose badly.

    1. Altandmain

      Also as an addendum, I should also mention that sanctions never truly “worked”. They didn’t cause any changes in North Korea, Iran, Cuba, etc. People didn’t rise up because of the sanctions.

      It seems more like collective punishment rather than anything else. I don’t see any justification for them at this point.

      I guess the term “worked” I should say, meant without much consequences for the Western world.

      1. NotTimothyGeithner

        South Africa, when the US joined the civilized world by refusing trade with the apartheid regime.

        The apartheid regime is key as SA had a massive second class. They weren’t going to rally around the flag.

        1. Skip Intro

          And don’t forget the ANC, providing an alternate flag to rally around, among other things.

    2. wilroncanada

      The auto industry, a sine qua non in most of North America, is I suspect, already in survival mode. In my little backwater, southern Vancouver Island, the Honda dealership has less than 10% of normal inventory, the Toyota, Nissan, Hyundai dealerships the same. The N. Am big three are spacing out their inventories over their lots, interspersing new with used, probably taken back from leases. They may be keeping their mechanics occupied with taking in trade-ins and auctioned used cars and refurbishing them, selling them as “lightly used,” (the usual grandma drove only to church B S).
      Meanwhile, the used car dealerships are also half-empty. One that I go by every week near the local produce market, at the bottom end of used dealerships, though usually jammed–not enough space to open a door without hitting the next car–has now huge empty spaces. Need I say, in both cases, dealer and used, the prices are ridiculous.

  12. Anthony G Stegman

    I think we should chill for a bit and avoid going full doom porn. Here in the good old US of A recent polls seem to indicate that Americans are okay with paying higher prices if that will hurt Russia. Inflation was already rising prior to Russia striking Ukraine. Supply chains were already pretty screwed up. The poor always suffer, no matter what. The middle class will muddle through, and the wealthy will conspicuously consume as normal. Meanwhile, back at the ranch the climate catastrophe continues to unfold with few paying any heed. This should be the subject of our doom porn, not Russia vs Ukraine. (unless things go nuclear).

    1. Blue Duck

      > Here in the good old US of A recent polls seem to indicate that Americans are okay with paying higher prices if that will hurt Russia

      A classic case of “I don’t want the pollster to think I’m a monster”. See: 2016, Brexit.

    2. Altandmain

      Be very careful about interpreting those polls.

      An example being the “Silent” Trump voter. The 2016 election and how close the 2020 election are good examples.

      Another might be Affirmative Action – the polls officially say that most Asian Americans support it. Recently, it has seen some big losses, such as the San Francisco Board recall.

      People often lie to the pollsters.

    3. tegnost

      Here in the good old US of A recent polls seem to indicate that Americans are okay with paying higher prices if that will hurt Russia

      I googled polls and the only one cited is a CBS poll, amongst many others indicating unhappiness due to inflation. I don’t think you can simply make that claim without some corroboration.

    4. Reaville

      Yeah, combine climate change with “markets” and you get a…well, let’s be polite…you get a step change. In the “just in time global because free markets financialized world” a step change is exactly the same as gross systemic destruction. As AG Stegman said, many of the bad things were already in motion but the biggest and baddest of them all, the loss of our environment remains unaddressed.

      Imagine yourself on a space station with a leaking, failing life support system. Yep. That’s us.

    5. WMK

      Well stated! You may be familiar with Michael Dowd’s Post Doom, along with the usual suspects Guy McPherson and Ken Avidor’s “Mazz Alone”?
      I’ve been scrutinizing abrupt climate collapse, exponential antrhopogenic global warming, Arctic BOE-related horrors, half my life (though my Ph.D. is in philosophy, with a specialization in physics and scientific methodology, I have also a Master’s Degree in Earth & Atmospheric Sciences, specialization in atmospheric physics and dynamic meteorology, from Georgia Tech) and I view these growing regional unraveling conflicts, which may (or may not?) become nuke/WWWIII as being driven in large part by climate collapse, and the dynamics of (a’ la William Catton) “overshoot.”

      Moreoever, let’s not forget that these tectonic and seismic flare-ups (akin to volcanic activity where plates collide) are not just limited to Eastern Europe: Consider Kashmir, the Middle East, Taiwan, inter alia…

  13. lance ringquist

    i believe the new deal would have not been as effective and successful if it was not for smoot-hawley.

    if we had still free trade with europe, a re-energized fascist central europe would have flooded america and under cut the american worker.

    “The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP, the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is compensated for by the fact that American businesses are no longer investing in Europe, but keeping their money stateside. The consensus of modern economists is that the tariff made only a minor contribution to the Great Depression in the U.S., but a major one in Europe.”

    “this is why FDR favored trade, but not free trade, he left tariffs high to protect us from free traders: Peasants who live at lower levels than our farmers, workers who are sweated to reduce costs, ought not to determine the price of American goods

    FDR favored trade but cautioned: conditions so poor that the employees don’t even have access to water: The Slave-Free Business Certification Act is republican legislation

    “A tariff is a tax on certain goods passing from the producer to the consumer. It is laid on these goods rather than on other similar ones because they originate abroad. This is obviously protection for the producers of competing of goods at home. Peasants who live at lower levels than our farmers, workers who are sweated to reduce costs, ought not to determine the price of American goods. There are standards which we desire to set for ourselves. Tariffs should be large enough to maintain living standards which we set for ourselves. But if they are higher they become a particularly vicious kind of direct tax which is laid doubly on the consumer. Not only are the prices of foreign goods raised, but those of domestic good also.

    pages 145-146, Franklin D. Roosevelt, Looking Forward, first published in 1933

    I believe that statement sets the standard by which our trade agreements should be judged. Do the agreements contain provisions that will protect the living standard of Americans, farmers and working people?

    Most of our current trade agreements do not.”

    FDR imposed protective tariffs to favor agro-industrial recovery on all fronts ending years of rapacious free trade.

  14. John

    Fagin in the musical Oliver sings the ditty, “I think I’d better think it out again.” Might have been a good idea before poking the Bear for twenty years or more.

    The interconnections of industry and trade seem to this untutored person to make the game of Go appear simple. The US government has been able to call its shots for such a long time that experiencing blow back must be a shock.

    1. Blue Duck

      John Dolan recently said upon hearing the economic outcome of the sanctions “Someone should write in big red pen ‘you haven’t thought this through’ “

  15. WillyBgood

    In San Francisco construction is wobbling to a standstill. Let’s go Brandon stickers are very prevalent on construction workers gear. I’ve been told last week by three different people in awed hushed tones that Trump predicted gas and general prices to go up like crazy if a Democrat was elected. A rep from the large tile company doing a job in the building told me his shipping price on Italian marble already ordered for the job went from $88,000 to $140,000. I am already furloughed and know of many, many others. How this ends is scary for a lot of us little people.

  16. José

    The South African army was badly battered by Cuban and Angolan forces in Southern Angola, in 1988.

    That defeat precipitated Namibia’s independence from South Africa and the subsequent fall of apartheid.

    It took more than sanctions to destroy the apartheid regime.

  17. Tom Stone

    Civil unrest in the USA will result in the passage of a “Domestic terrorist ” bill with widespread bi partisan support.
    Is anyone else bemused by the cheering for Censorship by what’s left of our press?

  18. Socal Rhino

    I don’t give much credence to polls showing people are okay paying higher fuel costs. Among many other things, they don’t capture intensity of response. To one side of income distribution, okay, if we have to cut European vacations from 4 to 2 this year, we’ll tough it out. On the other, if I can’t drive my truck I can’t work and after a brief period I’ll be homeless. These are not equivalent.

    1. flora

      And which group has the largest percentage of the US population; the ” I can’t afford to go on fancy vacation every other year” response or the “I can’t drive my truck to work” response? / ;)

    2. Altandmain

      In the case of the vacation, that seems like a PMC problem. They work at high paying jobs, often from home now, and it’s a minor issue.

      Folks not working from home who need to drive (often because they are not able to afford an expensive rental close to the city they work) are screwed. Those people are less likely to be able to afford EVs too.

  19. Captain Obious

    It seemed to me last week that one of the side effects of the massive sanctions was great relief that we had stepped back from the threshold of nuclear war: now we really got ’em, and ain’t nuthin’ they can do. See: no nukes — not to worry! So, into the complicated mess, add cyberwarfare. Best hope someone somewhere doesn’t get pissed or desperate enough to sit down at the computer. As Iran showed last week in Erbil, the conflict is not simple… and all our adversaries seem pretty good at the sport of cyberwarfare. Ukraine itself always popped up on Malwarebytes, producing sites that had to be defended against. And North Korea seems to love it. Of course we have Israel on our side, and I’m thinking they are probably unrivaled in that field. Are they the dog that did not bark in the night? How many of the “oligarchs” we are reading about are “exuberantly Jewish” (as was characterized here at NC a few days back), and how does this fit into the larger picture? If cyberwarfare happens, it may make one wish he had gone out in a nuclear blast.

  20. Joe Renter

    Gonzalo Lira has a post from yesterday on his YouTube channel “America, You’re about to be poor- so please don’t lash out at us”.
    I have not watched it in it’s entirety. Not sure who the “us” is.
    Sidenote, I had read years ago that bartering between nations for essentials would be a new economic model. With socialism being 2/3 and capitalism the remaining third of that model.
    And on a local model, it certainly seems relevant.

  21. SImpleJohn

    The War of the Momma’s Boys – Narcissists (Vain Boys) Kill

    Vanity of vanities; all is vanity (Ecclesiastes 1:2-11)
    Vanity, thy name is Joseph Robinette Biden Jr.
    Vanity, thy name is Volodymyr Oleksandrovych Zelenskyy
    “You’re so vain. You probably think this song is about you” Carly Simon: You’re So Vain

    What leads men to think they can wage war just for bragging rights, or if they get what they’re really after, a hero’s adoration? I’ll guess their mothers told them they could be anything, even President.
    Joe Biden wrote a school paper at the age of seven declaring he wanted to be President. What gave Joe this idea? At age seven, what the hell did he think being President meant? Unlimited ice cream cones?
    Same for all those other kids who fed on dreams of glory but ignored the possibility of having to work. Kamala Harris, Pete Buttigieg, Andrew Yang, Meghan Markle, Dwayne Johnson, Mark Cuban, Amanda Gorman. All see themselves as President. Do YOU think they can manage wars, justice, and poverty?
    Even though not many people ever considered him qualified, Joe felt being President was right in God’s eyes. He struggled against his own flaws, largely plagiarism and lying and meanness, and snuck through the cracks in our degraded nomination system and won as the anti-Trump, not as a competent manager. His poll numbers, last time he was not being the anti-Sanders, anti-Trump in Iowa, were 1%. So, he won for who he wasn’t, not who he was. Yet he swaggers like people think he’s competent.
    Meanwhile, in Ukraine, Volodymyr Zelensky has parlayed talent and smarts into a great performance career starting with comedian through to movie actor and on to playing the same role he played on TV only now with lives at stake. He’s obviously a charmer. Apparently, that’s all it took to get 73% of the vote in 2019. That’s sad because narcissists will throw anyone under the bus if it threatens their staying power in the media. When Russia threatened consequences for allowing missiles to move closer to Russia, Zelensky figured bluffing was better for his popularity than giving an inch. True, but at what cost?
    SIMPLY, if Zelensky had agreed to negotiate with Russia, there would be no war-dead Ukrainians.

    1. Minsky

      LOL, I think we know what ‘negotiate with Russia’ really means here.

      Only a simpleton could possibly think Zelensky was going to sit down and say “Okay, Vlad, I’ll give you X, but ya gotta give me Y”.

      I think we all know Vlad’s response. “No. You’ll give me X and Z, I’ll keep Y, or I’ll take Ukraine. Thanks for negotiating.”

  22. Jeremy Grimm

    I remember going to the supermarket as a young teen to buy a loaf of bread for my mom and discovering that the bread which had cost a quarter the week before was selling for over a dollar … and the price never came down. [I think this was the time of Nixon’s sales of grain to the Soviet Union after they had a bad harvest.]

    What a difference some decades can make. The present global trade regime of next quarter profit optimized spread and narrow supply chains coupled with shocks like the Corona flu and the ill-considered handling of Russia in what I viewed as a push to expand and maintain NATO, and consolidate expenditures on the u.s. MIC’s new and improved nuclear arsenals makes for some interesting times. I believe the lesson to be learned from these debacles is the terrible consequences the shocks resulting from Climate Chaos will have.


    Nothing to see here, move along.

    Goldman Sachs cut its S&P 500 price target as commodity prices take a bite out of earnings and sees a 40% chance of recession

    shorter Jen Psaki: It’s all Russia’s fault. ….right…. / ;)

    Let’s see, hmmm, sanctions are disrupting the global financial system. The global financial systems largely benefits the US economy. Disrupting the global financial system largely disrupts the US economy. (But has nothing to do with sanctions. Got it. / meh.)

  24. Andrew Watts

    It’s premature to sound the alarm about catastrophic outcomes for Ukraine’s agricultural sector. Their growing season hasn’t started yet and would only be significantly delayed if the war drags on and prevented planting from happening in April. That doesn’t seem likely considering that the agricultural rich regions of the south were likely the main axis of advance from Crimea and are already being brought under nominal Russian control.

    Good information from the Russian-occupied parts of Ukraine is hard to come by, but it seems like the Russians have already begun subsidizing the costs and fuel necessary for the harvest. We might even see an expansion of production if the harvest is good. It’s not like there is a lack of buyers right now.

    Although I’m assuming that farmers will view the ongoing conflict in part through the lens of self-interest.

    1. Polar Socialist

      I’ve understood that most of Ukraine’s wheat is so called winter wheat, meaning it has been planted already before last November. In the spring it will outgrow weeds, doesn’t need much maintenance and will be ready for harvest in late June.

      Provided that the border between Russia and the agricultural areas of Ukraine will be easier to cross from now on, the harvest will have more routes available to world markets than it has had for years.

      1. Andrew Watts

        Yup, I was mostly thinking about Ukraine’s other staple crops in terms of planting because the wheat has already been planted and the war probably won’t disturb it’s harvest.

        It’d probably be a kick in the pants for any potential sanctions if Russia bought up the entire harvest of the areas it controls in Ukraine and exports it directly from Russian ports. They really will be a superpower in food production with Ukraine in their orbit.

  25. JoeC100

    The list keeps growing – apparently small titanium crews are important to secure jet aircraft access panels and they need to be replaced periodically as their threads wear out (or some such) and as has been noted, Russia is the dominant supplier of titanium. Perhaps in this case, the titanium screw manufacturers will just bid higher for their raw titanium supplies than some other user. This kind of activity will take a while to work through then supply chain system..

  26. flora

    That concern did play into the initial sanctions, where the partial SWIFT ban was designed to be mighty leaky so as to allow the West to continue buying Russian energy. But apparently no one bothered understanding how oil exporting works.

    NC and commentators have mentioned for several years that “nobody knows anymore how things actually work in the real world – aircraft carriers, public health, primary education, large buildings designed for ability to receive semi truck loading and unloading without understanding the driveway and parking space requirements for same (I could tell stories), building and roadway mods made with no reference to emergency vehicle requirements or where the fire hydrants are located, etc). Computer screens make the world flat instead of three dimensional, imo. If it’s not on the computer screen or the job specs then it doesn’t need to be considered. If it’s not on the computer screen it doesn’t exist. We are plagued with flat world (and flat screen) thinkers in high places. “I have here in my hand a spreadsheet….” My 2 cents.

    1. Jeremy Grimm

      I am reluctant to blame my computer system. [I fear blow-back and I do not want to be chasing down any repairs or software tweaks.] I would blame some of the know-nothing problems you listed on management. Feedback from below is either not heard or actively quashed. Disposable personnel are thrashed into ‘meeting’ artificial schedules on Gant Charts carved on stone tablets.

      1. flora

        Yes, I agree. And beyond daily (mis)management problems we’ve dealt with for at least 20 years or more, there is something else. I can’t quite put my finger on its genesis, but after reading yesterday’s links about network Swarms and earlier cancel culure and etc, it seems like a lot of people are – what’s the phrase – “itching for a fight.” It doesn’t matter with who or for what reasons; a lot of people after 30+ years of relative peace are just itching for a fight, a big fight. This includes corporate CEOs getting in on the Swarm. Doesn’t matter that it’s irrational, that it can only hurt the global economy which primarily benefits these global corporations and the US financial system. It seems like people are “itching for a fight”, no matter what.
        Are the pols driving the Swarm, or is the Swarm driving the pols? Heaven help us. /My 2 cents.

        1. flora

          Adding: 19th Century saw immense technical and scientific changes in daily life and production of goods – from using only horse and wind and water power to motorized mechanical manufacturing power. WWI was the first war fought with large scale industrial manufacturing of war materiel, for example. The change in the 20th Century was even greater. Now however, the West’s industrial manufacturing capacity has been outsourced to non-Western nations. Can a Western network Swarm of keyboarders and CEO figureheads fighting a ‘virtual and financial war’ win against aligned countries which combined have large manufacturing capacity and large reserves of energy and food than the Swarm keyboarder’s countries? I guess we’ll find out. / oy.

          1. Jeremy Grimm

            I believe network Swarms are just a new tool among the many tools for manipulating the hoi poi. I agree with you there are broad feelings of malaise, discomfort, weariness, dejection, and anger roiling the hoi poi. The ideas about spontaneous orders can be traced to Hayek. Without condensation nuclei, particles of dust or salt, raindrops cannot form — and neither can network Swarms. Network providers, and those who control them, have great control over their networks. They can make dissent disappear and run bots or provocateurs to generate and direct the formation of a Swarm.

            People may be itching for a fight, but I doubt people are itching for yet another War. I believe people are itching to tar and feather our leaders. As for War, I believe Goering’s analysis from much more troubled times is closer to the truth:
            “Naturally the common people don’t want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders.”

            Only a short time ago there was discussion of dismantling NATO. Now, the u.s. is pushing to expand NATO to include the Ukraine. Now, the u.s. is in the process of spending huge amounts to buy a new and improved nuclear arsenal. The Ukraine was an embarrassment to Biden and the democrats. Now the u.s. is backing the Ukraine opposing the Russian police action and making efforts to place missiles on Russia’s doorstep. Cui bono? I believe Daniel Elsberg’s makes a convincing argument that only Russia is big enough to be a suitable enemy to justify the existence of NATO and most of our MIC. I think the Obama administration thought China might serve that purpose. The pivot to Asia benefited Navy procurement but it probably did not take long for players in the MIC to figure out that too much u.s. military equipment and too much of the economy depended on Chinese production.

  27. lance ringquist

    Yves has made my point. nafta billy clinton trashed our ability so thourghly to have democratic control over markets. i have said we cannot recover, till nafta billy clintons disastrous policies have been reversed, i also added i do not think they can be reversed by conventional methods.

    you can see the pile on russia by corporations. they are the true rulers of the world. prior to nafta billy clintons fascist free trade, corporations would remain most of the times on the sidelines. today they lead the charge on almost everything in our lives.

  28. Michael King

    This may seem trivial to readers but Russia has now ceased exporting vacuum tubes. Before retiring, I sold high-end high fidelity audio equipment. The buyers were generally wealthy as I observed when delivering and setting up purchases. At this level, many of these products still use vacuum tubes. American icons such as McIntosh Laboratory and Audio Research Corporation are among the leading manufacturers. There is a snarky aphorism in the audio world: Tubes Are For Boobs. Go long transistors! :)

  29. Tom Stone

    They did not talk to the Fed first.
    That is astounding
    And it leads me to speculate that.this may be Badass Joe being cranky..
    “Dog faced pony soldier” is simply the best remembered of example of JRB losing his cool, there have been many.
    The big guy is a cranky old man acting like a child.
    Lashing out without any thought or consideration given to the consequences
    because their will is being opposed.
    And not even bothering to talk to the fed suggests that a memorable tantrum was involved,no one wanted to risk their rice bowl by asking awkward questions.

  30. David in Santa Cruz

    This is not going to be over any time soon. I’m having a house built in the far PNW, and one subcontractor just submitted a revised bid increasing his labor cost by 350 percent.

    It seems pretty clear from the circumstantial evidence that the goal of the Russian Federation is to terrorize the Ukrainian-speaking civilian population into ethnically cleansing themselves to Poland and points west and then to hold a “referendum” on a Russian-speaking Anschluss east of the Dnieper.

    That is going to take time.

    The imposition of reactionary sanctions is only going to hurt the western economies in the long run, even though the oligarchs on Wall Street and in the City of London get to feast on Russia’s confiscated financial assets while oil and gas prices go through the roof. The Russians will probably be able to obtain the only things that they really need from the west — spare parts for their cars and airliners — from where they’re made: China, India, and Vietnam, countries that do not honor the western sanctions and never will.

    Remind me again: Why can’t Ukraine be a neutral country?

  31. Carolinian

    Great piece. Thank you.

    Should be said that when it comes to food US price support programs lead to huge stockpiles of things like cheese and grain. I can go to Aldi or Lidl here and get a bag of flour for a little over a dollar and a gallon of milk for about the same price. Somehow they are able to make money or at least not lose money at these prices. My impression is that supermarket shortages are more about Covid and transport and labor problems.

    Gasoline though is the biggie and not easily fixed. Locally most are holding at 3.99 for the last few days–doubtless trying to avoid the dreaded $4.

    Why does one suspect that this commodity crisis was all part of Putin’s calculation if not the Biden administration’s? Despite all the Putin doubts expressed by people like Taibbi it’s the competence gap that likely will weigh in for Russia in the end.

  32. Dave in Austin

    No analysis, just some data points.

    1) The stock market today seems to be dialing-in a big reduction in Chinese demand and production. Copper and engineering stocks were the big losers. Have we forgotten the Chinese Covid story?

    2) The Azovs are the equivalent of the US Civil War state volunteer regiments. Often whole 5,000- man brigades of five 1,000-man regiments were raised in a hurry by a private individuals like Dan Sickles who recruited a patriotic brigade in NYC and was a corp commander by Gettysberg. The Azovs were raised by Zelinskyy’s patron in the same fashion in 2014. They are no more integrated into standard Ukranian military units that the Chechans are integrated into Russian units. And the Azovs were stationed along the breakaway front line two weeks ago and hurriedly sent by the Ukrainians to Mariopol where are now mostly trapped- and dangerous.

    3) I hope that “Nazi” is the Putin version of “Racist”; a useful label to attach to your enemies. He has never called Zelinskyy or any senior Ukrainian official a Nazi.

    4) The Russian tankers. 100,000 ton ships. Not like the big boys. Probably not long range ships. China could buy the oil but who will refuel them? For now, a minus on the “Ships available” ledger

    5) from the Guardian; two adjacent headlines without the slightest hint of intended irony:

    “Tell us Are you planning to offer Ukrainian refugees a home in the UK?”

    “Cost of living crisis Are you an adult in the UK living with your parents?”

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