Never let a panic go unexploited.
The omens are terrible. It is March, the month of the God of War.
It is just 100 years since the outbreak of The Great War, the slaughterhouse of World War I, which began with failure to realize that mobilizations and ultimatums have consequences. We are hearing lots of call-ups and threates.
There already was a stupid Crimean War between Russia and some European countries (for details, read “The Charge of the Light Brigade”; and recall that more soldiers died of infection than from their wounds until Florence Nightingale organized nurses.)
In fact, the very omens probably mean it ain’t gonna happen.
To quote Karl Marx, “history repeats, the first time as tragedy, the second time as farce.” Even since the Georgia carve-up of 2008, Russia has become more integrated into the world economic system. That means western powers have are mechanisms to hurt an aggressive Russia which were not available during the George W. Bush presidency. Then Russia was able to quickly defeat the government of Mikhail Saakashvili which called up its troops.
Like Georgia, Ukraine, which moreover has an unelected government, is reacting with call-ups to try for a military response. Like Georgia, Ukraine is hopelessly outclassed militarily. Like Georgia, Ukraine will probably break up into ethnic enclaves.
This time, Vladimir Putin may win the battle, but lose the war. The valid threat of economic sanctions by the US and NATO countries hit the ruble today, and the Russian Central Bank intervened to stop the fall. It raised ruble interest rates from 5.5% to 7% as both the dollar and the euro hit historic highs against the Russian currency.
Meanwhile stocks around the world are down. Gold and the dollar are up. This creates opportunities and risks for the global investing community discussed below, along with trading alerts.
*Your editor bailed out of Central European, Russian, and Turkish Fund, CEE, this morning at $25.90. It is currently $26.43 so I missed a few pennies. Volume is 250% of normal full-day trading.
*So far I am not yet invested in Western Assets Emerging Markets Debt Fund, ESD, where I think the money should move. ESD, run by Legg, Mason Global Asset Mgm, invests worldwide. It lost 8.6% in NAV and 14.9% in market price in 2013 (unusually, this CEF uses the calendar year.) ESD us 57% invested in sovereign (government) bonds: by country at year-end in Russia (9%); Venezuela (8.6%); Turkey (7.4%); Mexico (5.7%); Brazil (5.6%); Indonesia (4.7%), Colombia (3.8%) plus small holdings in other emerging countries including Ukraine (0.3%.)
