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Are we eyeing a 10% to 20% corection? Russia could make it happen for us.

If Putin grabbed Crimea and the market reached new highs,what will it do when he grabs Eastern Ukraine, all the Black Sea coast including Odessa (marked with a red blob), Belarus and bits of Estonia and Latvia?

One new ingredient: Estonia and Latvia are members of NATO. Any attack on them is an attack on the United States!

Look at this map:

theNewRussia

Now look at the NATO members — the ones in blue.

NATOMembers

Here’s yesterday’s map:

MapofUlraine

Personally, I don’t think Putin wants war with the U.S.

But he does want to reconstitute the Soviet Union. He’s said that a zillion times.

Putin is no Hitler. But there are analogies. Like Germany in the 1930s Russia is emotionally crushed. Germany took land (Sudetenland) and the West stood idly by. It was called appeasement. But the Germans loved the land grab and Hitler’s popularity soared, as has Putin’s inside Russia.

The Germans went after the Jews. Putin is going after gays, lesbians and other minorities he doesn’t like. Putin’s roving gangs of thugs even beat people up during the Sochi Olympics. Putin rejects western ideas, like liberal democracy, human rights, etc. He’s into traditional Russian values.

Putin is playing a slower, much longer-term game than the Nazis. Think the best game of chess you ever played.

He’s winning. He took Crimea. We did nothing. He downed the Malaysian plane. We did nothing. We put in some “sanctions” but sanctions cut both ways; they hurt us as much as they hurt Russia. The Europeans have no stomach for them — for what? Italy is already in recession. The French want to sell Russia the warships. And now the sanctions are being escalated. Escalating sanctions could really begin to hurt business. Our business. Think Visa and MasterCard in Russia.

From today’s Wall Street Journal:

Russian President Vladimir Putin said he has ordered his government to prepare retaliatory measures against U.S. and European sanctions imposed on Russia last week, as the Kremlin stepped up pressure on Ukraine.

Mr. Putin has shown no outward sign of buckling under the weight of sanctions-the harshest yet imposed by Brussels and Washington-aimed at getting him to stop supporting pro-Russia rebels across the border in Ukraine.

The Russian Foreign Ministry described eastern Ukraine as on the verge of a “humanitarian catastrophe” and said Tuesday it would push for an international mission to help masses of civilians fleeing the fighting. At Russia’s request, the United Nations Security Council met for a briefing on the situation Tuesday night.

 Russia must help the “humanitarian catastrophe.” We’re the good guys, etc.

How much will all this affect stockmarkets? It already has. Look at the last ten days. Not pretty:

DJITenDays

S&PTenDays2

Stockmarkets over-react — both ways.

Stockmarkets absorbed Iraq, Syria, Gaza, Israel, Cyprus, the failed Arab Spring.

But Russia is not going away. They have re-armed, as Hitler did in the 1930s. They’ve moved their pawns to the border. They want those lands.

Are we looking at the 10% to 20% correction in stockmarkets that many are talking about?

I’m assessing the stocks I own and selectively selling some whose prospects have changed. For example, oil has dropped dramatically in recent weeks. Not good for stocks like EOG and HAL.

Some of my friends are bailing completely.

Others are staying. “Where else do I put my money?”

Cash might be a good interim place. At least you don’t lose 2% of it each day. Or some puts on the S&P 500.

It’s a new world.

I’ll think of something funny for tomorrow. For now, I am not amused.

HarryNewton
Harry Newton.

  • devon

    I suspect any Russian action may be a case of sell the rumor / buy the news reaction in the markets. As for oil, I would think there may be a rise in price if Russia moves on Ukraine.

  • cliff

    You portray Russia as being a lawless land of thuggery. IN actuality, most of the rest of the world accurately views the U.S. this way. WE have many more random murders, serial killers, school & theater shootings, etc. than Russia. It is infinitely more dangerous to live in the U.S. you should know that, Harry, living near Times Square with all the crime and violence that goes on there. I don’t know why you stay in NYC with its crime and high taxes.

    • Harry Newton

      High taxes yet. But not crime and violence that I’ve experienced, in or out of Times Square.

    • pahowley

      Cliff, while in this case you’re repeating what the liberal media keep harping on, “everybody hates us”, it is simply NOT true. And that is certainly part of Obama’s argument while out on the golf course. The average people in much, if not most, of the world like us and respect us. Or at least used to respect us. And while the Russians love Putin and Europe may fear him, access to oil, etc., most of the world either knows and cares little about him, or does NOT like them, in fact, fears them. For good reason. You don’t see millions climbing the walls to enter Russia. Maybe a few Russians in nearby countries, but beside that the waiting line is minuscule, no?

  • Minor discussion points:

    Putin taking Estonia and Latvia by force? No… wrong heritage. Wrong history. And… NATO. Taking them by internal coercion?… sure that’s fair game.

    Remember Obama’s signal: “Tell Vladimir After my election I have more flexibility.” That comment dealt with Poland, Poland’s defenses, and NATO’s SE flank. Historians say Dean Acheson allowed the Koran War to happen when he did not include Korea in the US Area of Interest during a speech at the National Press Club. It was war by omission. Obama’s affirmative “Go Ahead” signal was megawatts brighter than what Acheson did NOT say.

    Traditionally, Russia has wanted buffers against Poland. Ukraine, at least a neutral or pro-Russian Ukraine, is that buffer. The EU bankers upset the PH of the brew. The EU bankers want Ukraine to join the EU banking system (only THEY know why!). The natural extension of the EU banking system is NATO. What Russian would NOT be upset by Ukraine in NATO??

    Ethnically, Russia has had a hateful relationship with Ukraine. It is said that the Ukrainians welcomed the Nazis as liberators because ANYTHING had to be better than what they suffered under Uncle Joe Stalin. What we call Ukraine was a jumble of city states and provinces even after WWI. The claim of Ukrainian sovereignty has little face validity and finds little sympathy in Russia.

    I saw that you make Hitler-like references to Putin. That’s ironic because if you listen to Russian news sources, the Ukrainian forces are constantly referred to as Fascist and Nazi. This is all according to Godwin’s Law. http://en.wikipedia.org/wiki/Godwin's_law We are seeing Godwin made a prophet. The claims of the Russians have more credibility because of Russia’s history with Ukraine and Nazi collaboration During WWII.

    My Russian friends tell me that Putin can’t afford and doesn’t wa