Political Posts

[Viking]

1 hour ago, Pelagic said:

The other alternative is wait 10-15 years and hope whoever replaces Putin isn't as committed to regional power, all the while making every decision with Russian foreign policy in mind. Still a coin flip.

 

100% agree though that those funds should be put to work now to assist refugees. And maybe incentivize defection among Russian soldiers with a bonus and path to citizenship in the EU.

@Pelagic i agree with much of what you posted. The problem with Mearsheimer’s perspective is it conveniently ignores the reality of what has actually happened over the past 35 years in Eastern Europe / the former Soviet Union. According to Mearsheimer Lithuania, the first country to break from the Soviet Union in 1990, were idiots. A the time, there was a very big risk the Soviet Union would respond with their military. Then the flood gates opened and every country that could ran like hell from Soviet/Russian control. And it continues today.

Look at all the other countries who were successful the past +30 years in escaping the Soviet/Russia bear hug: Estonia, Latvia, Lithuania, Poland, Hungary, Czech Republic, Bulgaria, Romania, Slovakia, Slovenia, Albania, Croatia, Montenegro, North Macedonia. And according to Mearsheimer’s logic all of these countries were idiots to do what they did. So his theory has a pretty abysmal track record explaining what is actually happening in the real world (although is sounds great like most models do).

 

The problem for Ukraine is Russia, under Putin, has decided to wage war. As a result, Ukraine is going to have to fight to maintain its freedom.

[Viking]

7 minutes ago, Gregmal said:

^excellent points. 
 

I would actually be really interested in seeing what the Russian media is doing and how they are framing all this. If nothing else, we all know how the garbage gets rearranged here, but it would be fascinating to see the other side of things. Wars, more than most other events, while ongoing, are really, really easy to shape. There’s always photos or people who you can go to in order to shape whatever narrative it is you’re looking to shape.

 

I think there is a really simple answer to your question: 15 years in jail if you say anything about the war the government doesn’t like. 
 

Not sure i would characterize the ability of citizens in US/Canada/Europe to get information as garbage; not that difficult to access good/balanced information if you want. If its garbage here, it is infinitely worse in Russia today. 

—————
Ukraine news: Journalists flee Russia amid Putin's information crackdown
- https://www.foxnews.com/world/ukraine-war-journalists-flee-russia-putin

 

“Independent and foreign journalists based in Russia are fleeing the country as Russian President Vladimir Putin cracks down on dissenting information about his invasion of Ukraine.

 

Alexey Kovalyav, an editor at an independent news outlet in Russia and a fellow at the World Press Institute, said he left the country in a Friday tweet.

 

"Never thought it'd come to this, but I did have to leave Russia, crossing the border on foot in the middle of the night, with my panic-packed bags on my back and my dog in tow," he wrote. "Felt a massive door slam shut behind my back. Barely had enough time to call my parents. Crazy times."

[Gregmal]

Yea but what’s the guy in Russia, who works construction, sitting in his living room drinking vodka seeing on TV? That’s what would be interesting from the perspective of studying narrative shaping and propaganda. 
 

the stuff that “leaks” through is often leaked through for a reason. Basically to the points @changegonnacome made. Same way you have these toolbag news editors screaming at the underlings “go find me an unvaccinated 6 year old in a red state who’s in the hospital with COVID”. World is big enough to find whatever youre looking for and with enough publishing power you can create all kinds of illusion. What is the illusion being presented to the pro Russia Joe Schmoe? It’s not the one we are told it is here, that’s for sure. They’re people, just like us. What influences them?

[Viking]

52 minutes ago, Gregmal said:

Yea but what’s the guy in Russia, who works construction, sitting in his living room drinking vodka seeing on TV? That’s what would be interesting from the perspective of studying narrative shaping and propaganda. 
 

the stuff that “leaks” through is often leaked through for a reason. Basically to the points @changegonnacome made. Same way you have these toolbag news editors screaming at the underlings “go find me an unvaccinated 6 year old in a red state who’s in the hospital with COVID”. World is big enough to find whatever youre looking for and with enough publishing power you can create all kinds of illusion. What is the illusion being presented to the pro Russia Joe Schmoe? It’s not the one we are told it is here, that’s for sure. They’re people, just like us. What influences them?

“What influences them?” Propaganda works exceptionally well. There is a reason dictatorships are obsessive about control of the media. Most people in Russia are going to think exactly what Putin/Russian military wants them to think.
 

Russia is in Ukraine with a peaceful operation to liberate the country from the Nazi regime that is occupying the country. The Russian soldiers are giving the local population food and warm clothing.

 

https://www.thefocus.news/celebrity/misha-katsurin/

 

 

[formthirteen]

This article was interesting:

https://uscnpm.org/2022/03/12/hu-wei-russia-ukraine-war-china-choice/

 

 

 

One could argue that these Western values and systems are what Putin is afraid of and what made him attack. Those values and systems are not compatible with Russian history and culture.

 

Will it be different with China?

 

 

It seems Munger was right in saying that Russia is uninvestible, and that China can be trusted to a certain degree to do the right thing. We just have to remember to not humiliate their politicians, and perhaps hope Xi isn't as authoritarian and delusional as Putin.

 

https://www.e-ir.info/2011/02/04/can-china-be-defined-as-an-authoritarian-state/

 

 

 

 

 

Edited March 13, 2022 by formthirteen

[cubsfan]

One could argue that these Western values and systems are what Putin is afraid of and what made him attack. Those values are not compatible with Russian history and culture.

 

Will it be different with China?

 

The only thing wrong with this view is that the West is not expansionary regimes. They are not looking to invade

other countries and occupy them forever. If Putin's Russia is afraid of the West rising standard of living - yeah -

that is a threat to Putin.  He always should have been looking out for his own people than run his country like

the Mafia.

[Spekulatius]

@changegonnacome As for Putins nukes, he can always makes the threat to use them, but that’s nothing new. I don't think I would be too scared of this threat. I grew up in Germany 10 miles away from a major army base and 15 miles away from a nuclear missile depot. I know what it means to live under a nuclear threat. Those things would be (and probably still are) primary targets in a first strike scenario,

 

You should be concerned about these things but never afraid. I would also assume that Putin is rational , otherwise there is no point assuming or discussing anything here, Imo.

 

His regular army isn’t much of a threat to NATO at all, that’s for sure and it will get weaker as he loses a lot of material and the financial and tech/trade embargo diminishes his ability to replenish it. At some point, even the Russian people will know that he did a grievous mistake as the bodies bags come back as well as the veterans from this war will tell their story. I don’t think it will remove him from power (although it increases the probability of this occurring)  but it will weaken his position even within Russia.

Edited March 13, 2022 by Spekulatius

[formthirteen]

36 minutes ago, cubsfan said:

 

One could argue that these Western values and systems are what Putin is afraid of and what made him attack. Those values are not compatible with Russian history and culture.

 

Will it be different with China?

 

The only thing wrong with this view is that the West is not expansionary regimes. They are not looking to invade

other countries and occupy them forever. If Putin's Russia is afraid of the West rising standard of living - yeah -

that is a threat to Putin.  He always should have been looking out for his own people than run his country like

the Mafia.

 

Western culture is expansionary which is a threat to authoritarian regimes. It's correct that Western countries are not geographically expansionary. They can buy all the resources they need with money.

 

This might change as Western culture is also trying to expand into the solar system. Maybe Elon's end game is to set up a technocratic regime on Mars because he sees where this is all heading (nuclear war, global warming, Californication, etc.)? He already moved from California to Texas, and he has talked about the possibility of dying on Mars.

[cubsfan]

8 minutes ago, formthirteen said:

 

Western culture is expansionary which is a threat to authoritarian regimes. It's correct that Western countries are not geographically expansionary. They can buy all the resources they need with money.

 

That's a real stretch. Leaders need to take care of their populations FIRST. If standards of living are rising rapidly

and somewhat evenly - countries are generally stable. Putin's move is all about EGO - his ego. That he feels 

threatened by the West is an indication of the failure of his regime to give the average Russian a better life.

Putin is not running the country for the benefit of his people - only for his own legacy.

 

You're witnessing a tragic miscalculation by Putin.

[formthirteen]

Yes, I agree.

[Gregmal]

25 minutes ago, cubsfan said:

 

You're witnessing a tragic miscalculation by Putin.

This is basically my read. He ll get what he wants, but the price was significantly more expensive than he ever anticipated and obviously this is one of those things where once you start there’s no turning back. He basically backed into a corner and we are starting to see the angle develop where “everyone has their media win”. Wabuffo probably hits the timeline accurately, if I had to guess. Of course, like everyone else, I reserve my right to be wrong…a right I just choose not to exercise as often as everyone else!

 

As for the rest, especially the CNN type narratives about rebuilding the USSR and all that hysteria, I’d be short the shit out of it just like all the other nonsense like COVID, polling numbers, Trump-Russia, etc. Thats been the money trade for a while now. Surprised there’s still people falling for it but again, folks believe what they want to and it can cloud their judgment. Makes investing easier for the rest of us. 

[Pelagic]

A neo-liberal intellectual's take to balance out Mearsheimer.

 

https://www.americanpurpose.com/articles/preparing-for-defeat/

 

Fairly optimistic take but I do think a Russian defeat is going to be followed by a resurgence in democracy in other countries under their influence. We've already seen Kazakhstan distancing itself from Russia, refusing to send troops and actually sending aid to Ukraine in the form of medical supplies. 

 

Point 11 is a no brainer, too bad Bayraktar is a private company. Although there's evidence Ukraine is using aerovironment's drones effectively too.

[cubsfan]

10 minutes ago, Gregmal said:

Of course, like everyone else, I reserve my right to be wrong…a right I just choose not to exercise as often as everyone else!

 

Oh, yeah - I have NO frickin idea what's gonna happen. You have our hapless President, etc. and a bunch of 

cowardly NATO countries finally waking up, and the Chinese in the background...  who the fuck knows.

 

But I'm definitely pulling for the Wabuffo scenario.

[Gregmal]

The biggest winner here will be China. Not really a question about that, IMO. Ukraine and Russia are clear losers. EU/US get….not much. Maybe more fuel for getting the good guys in come November but otherwise their victories will be these “media messages” or whatever that means. China plays peacemaker, buys cheap and valuable Russian assets, utilizes the barter chip with US/EU to gain other concessions. Don’t know if there’s an investing play off that….PTR maybe is on the radar but like the folks who just got shellacked buying Russian assets on the exchanges, I’m not sure I see a direct enough correlation to the available Chinese vehicles to make that wager. Fundamentals can be a clear buy but if the political landscape is mucky it’s irrelevant. Which I think applies 100% to Russian stuff(duh right? Lol) but also to a degree with the Chinese stuff that I can’t assess to a high enough degree of confidence.

[no_free_lunch]

2 hours ago, formthirteen said:

 

Western culture is expansionary which is a threat to authoritarian regimes. It's correct that Western countries are not geographically expansionary. They can buy all the resources they need with money.

 

This might change as Western culture is also trying to expand into the solar system. Maybe Elon's end game is to set up a technocratic regime on Mars because he sees where this is all heading (nuclear war, global warming, Californication, etc.)? He already moved from California to Texas, and he has talked about the possibility of dying on Mars.

This is as I understand it as well.  I read enough pro Russian sources and this is a recurring theme.  They are pushing against western liberal cultural and monetary influence expansion.  They are positioning themselves as the saviors.  There's a kernel of truth to it but it's also nonsense when you think about it.  Many other ways to go about it including just putting their own sanctions in place if that's what they really want.  It reminds me of the Nazis justifying the invasion of Russia as destroying communism when really it was a land grab.

 

If you follow the Russian sources they are not really consistent. It's a grab bag of excuses for different audiences.  NATO, protecting Russian affiliated prople, historical claims to the lend, then western decadence.  If anyone is really interested I recommend watching Putin's speech the day before the invasion. It gave me chills but he lays it out there and I would just take him verbatim.

[Spekulatius]

Putin feeling threatened by the NATO and trying to rebuild the Sowjet Union are not mutual exclusive. You could almost say, it’s the same. If you want to rebuild the Sowjet Union, and the states you want to annex to do so join the NATO beforehand, then the NATO is a threat of course.

 

Theoretically, it is plausible that Russia would join the NATO as well in an alternative history where Russia becomes a democracy and there is no Putin. There is nothing to prevents Russia from doing so fundamentally.

Edited March 13, 2022 by Spekulatius

[Viking]

Can we take away any investment lessons from Putin’s invasion of Ukraine? 
 

I think there is one big one: political risk for an investment is being significantly re-defined. This risk was already being re-defined over the past 15 months. KWEB peaked at 86 in January of 2021. Today it is trading at 24 = -72% decline. BABA was trading at $300 in Nov 2020. Today it is trading at 87 = -71% decline. Charlie Munger clearly misjudged one important aspect of his investment in BABA - political risk.
 

But up until now political risk was primarily seen as investing in companies with their base of operations in China (largely along the lines of can you trust the government or can you trust the accounting). Or more recently Russia (take a look how Van Eck Russia ETF has traded over the past 3 months). 
 

But the war in Ukraine is magnifying another big political risk (that is not yet on most investors radar) for companies with global operations: especially those with significant operations in Russia and China.

 

Obviously, all the companies who have exited Russia have destroyed shareholder value in the process. Obviously no one saw this coming. POLITICAL RISK IS NOT THEORETICAL… IT IS REAL. Given the learnings of the past 15 months, and the past 3 weeks with Russia/Ukraine, how do CEO’s and investors now view the political risks of doing business in and with China? For multinational corporations.

 

One of the usual outcomes of war is a spike in nationalism. In all countries. As relations between US and China continue to deteriorate (has been getting worse for years already) at what point do Chinese citizens decide buying Western brands is not just uncool but unpatriotic. Will this be good or bad for Apple’s iPhone sales in China? How about Nike? Or KFC? When war is waging the opinions of ‘the mob’ can change fast (usually with a little help from the government). And once they change there is no going back. And it looks to me like we are on the knifes edge in China. Is this political risk priced into Apple trading at 30X earnings today? (And if Apple sells off, given its massive size, guess what will happen to the market indexes?)
 

The second emerging political risk is where you source your production. Need stuff from Russia to build you widget? You are screwed. Europe and nat gas is the poster child of this risk manifesting.

 

If our relationship with China blows up how will that play out for Apple? People might want to stock up on their Apple products while they are still available. Now i am saying this tongue in cheek. What I know, as an investor, is the risk of a blow up with China is rising.
 

So multinational companies, already taking it on the chin in Russia, now have to be re-assessing and re-evaluating their exposure to China. Especially if the relationship with China and US/the West deteriorates further in the coming weeks. As we learned with Russia, things can get repriced very quickly and in very unexpected ways.

[Spekulatius]

@Viking If anything bad happens anywhere in the world, you want to be in USD and US assets and perhaps gold. Almost anything else wills suffer. US stocks might decline too, but they sure will do better than virtually any stock market anywhere else. This has been true forever ( at least since the 1980’s) and it is true now.

[Viking]

13 minutes ago, Spekulatius said:

@Viking If anything bad happens anywhere in the world, you want to be in USD and US assets and perhaps gold. Almost anything else wills suffer. US stocks might decline too, but they sure will do better than virtually any stock market anywhere else. This has been true forever ( at least since the 1980’s) and it is true now.

i agree and that is what we are already seeing. However, i do think some US equities, like Apple, could be collateral damage. If so, that could be what drives markets the next leg lower. So we could see a flight to quality (US$) and lower equity markets. US bonds could rally with inflation set to move higher. Crazy times. 

Edited March 13, 2022 by Viking

[Gregmal]

Man! And to think not long ago we had a crowd here who contested the intertwined nature of investing and politics. As if taxes, attitudes towards businesses, respect for private property, etc has nothing to do with determining how well an investor will fare. Color me shocked! 

[cwericb]

15 hours ago, Gregmal said:

Man! And to think not long ago we had a crowd here who contested the intertwined nature of investing and politics. As if taxes, attitudes towards businesses, respect for private property, etc has nothing to do with determining how well an investor will fare. Color me shocked! 

We don't often agree, but you took the words right out of my mouth. As I have said numerous times before, anyone who thinks that you can separate investing and politics is taking a very limited view of investing. If the current situation doesn't prove that I don't know what it would take.

[Ulti]

https://www.americanpurpose.com/articles/preparing-for-defeat/

[glider3834]

On 3/14/2022 at 8:42 AM, Viking said:

Can we take away any investment lessons from Putin’s invasion of Ukraine? 
 

I think there is one big one: political risk for an investment is being significantly re-defined. This risk was already being re-defined over the past 15 months. KWEB peaked at 86 in January of 2021. Today it is trading at 24 = -72% decline. BABA was trading at $300 in Nov 2020. Today it is trading at 87 = -71% decline. Charlie Munger clearly misjudged one important aspect of his investment in BABA - political risk.
 

But up until now political risk was primarily seen as investing in companies with their base of operations in China (largely along the lines of can you trust the government or can you trust the accounting). Or more recently Russia (take a look how Van Eck Russia ETF has traded over the past 3 months). 
 

But the war in Ukraine is magnifying another big political risk (that is not yet on most investors radar) for companies with global operations: especially those with significant operations in Russia and China.

 

Obviously, all the companies who have exited Russia have destroyed shareholder value in the process. Obviously no one saw this coming. POLITICAL RISK IS NOT THEORETICAL… IT IS REAL. Given the learnings of the past 15 months, and the past 3 weeks with Russia/Ukraine, how do CEO’s and investors now view the political risks of doing business in and with China? For multinational corporations.

 

One of the usual outcomes of war is a spike in nationalism. In all countries. As relations between US and China continue to deteriorate (has been getting worse for years already) at what point do Chinese citizens decide buying Western brands is not just uncool but unpatriotic. Will this be good or bad for Apple’s iPhone sales in China? How about Nike? Or KFC? When war is waging the opinions of ‘the mob’ can change fast (usually with a little help from the government). And once they change there is no going back. And it looks to me like we are on the knifes edge in China. Is this political risk priced into Apple trading at 30X earnings today? (And if Apple sells off, given its massive size, guess what will happen to the market indexes?)
 

The second emerging political risk is where you source your production. Need stuff from Russia to build you widget? You are screwed. Europe and nat gas is the poster child of this risk manifesting.

 

If our relationship with China blows up how will that play out for Apple? People might want to stock up on their Apple products while they are still available. Now i am saying this tongue in cheek. What I know, as an investor, is the risk of a blow up with China is rising.
 

So multinational companies, already taking it on the chin in Russia, now have to be re-assessing and re-evaluating their exposure to China. Especially if the relationship with China and US/the West deteriorates further in the coming weeks. As we learned with Russia, things can get repriced very quickly and in very unexpected ways.

viking yes I think what this whole situation with Ukraine has really brought home the issue of security around supply chain for companies. I think companies will focus a lot on this going forward & that will mean potentially more investment flowing to companies in Countries that are in 'the West' or aligned with the West & so there are going to be opportunities in that space. So I think geopolitical considerations will take priority over lower cost production considerations. But that transition might need time & I notice that sanctions have been selective around certain commodity export from Russia but not others.

 

 

 

 

 

[Viking]

1 hour ago, glider3834 said:

viking yes I think what this whole situation with Ukraine has really brought home the issue of security around supply chain for companies. I think companies will focus a lot on this going forward & that will mean potentially more investment flowing to companies in Countries that are in 'the West' or aligned with the West & so there are going to be opportunities in that space. So I think geopolitical considerations will take priority over lower cost production considerations. But that transition might need time & I notice that sanctions have been selective around certain commodity export from Russia but not others.

With most investments it is usually best to ignore political dimensions as they are usually too unpredictable (timing and actual impact). This is probably true 95% of the time. The challenge is guessing when we are in the 5% of the time when political dimensions need to be considered. 
 

The other challenge today is investors are pretty terrible at incorporating 1 in 50 year (or longer) events into their investment process. Covid was a great example. Most people are trying to understand the war in Ukraine (and its impact on financial markets) by looking primarily at what happened with the Iraq war (or ‘other’ recent wars). Tiny sample size. And very little in common with what is going on today in Ukraine. So my guess is financial markets are not prepared for a protracted war that gets bigger and uglier (drawing more nations in) and that lasts a long time.

 

i continue to think China is the key to how bad the Ukraine war gets. And to understand where China stands you only have to follow what they are telling their citizens about the war. Today the Chinese communication to their people is pretty much exactly what Putin is saying to the Russian people. Like i have been saying for the past month if you want to understand what someone is going to do… the best thing is to listen to what they actually say. China today is firmly in Putin’s corner. Until i see that change significantly i am going to remain very cautious on the war in Ukraine. China’s support will only embolden Putin.

—————

Below is an example of an article on chinadaily.com that nicely sums up China’s current position: full support of Russia. I continue to think this position will be increasingly difficult to maintain as the war in Ukraine escalates. The West (countries and companies) will not allow China to openly support and fund  Russia’s war - there will be consequences for China… and investors need to have their eyes wide open to the risks.
————-

Nations urged to de-escalate Russia-Ukraine conflict

- https://www.chinadaily.com.cn/a/202203/08/WS62268f9ea310cdd39bc8b05a.html

 

With regard to China-Russia relations in the current international landscape, Wang said bilateral ties are grounded in a clear logic of history and driven by strong internal dynamics, and the friendship between the Chinese and Russian peoples is rock-solid.

 

The China-Russia relationship is valued for its independence, he said. "It is based on nonalignment, non-confrontation and non-targeting of any third party, and it is free from interference or provocation by third parties. This is both what historical experience has taught us and it is an innovation in international relations."

 

As one of the most crucial bilateral ties in the world, China-Russia cooperation will deliver benefits and wellbeing to the two peoples, and is also conducive to world peace, stability and development, Wang added.

 

Edited March 14, 2022 by Viking

[Spekulatius]

Peronally, I am not trying to predict political what is going to happen, I just want to avoid trouble. I do think that the US is the save heaven and to a lesser extend Europe. China is toxic right now and goes to the too hard pile. I think there is a lot of cheap stuff right here in the US if you like tech, there is no reason to go straight into the hornets nest with BABA and the like. I do think that a directional bet with LEAP or even short term option may makes sense (on KWEB probably).

 

As for Ukraine, if you see that Russia is asking China for help 19 days into the invasion , you know they are in deep trouble.  China will probably do a little, but not really significant, because they don’t like to side with a loser and Putin sure looks like this. In addition, he is a Pariah of course.

You do see reports on CNN and Fox News that Russia may only be able to support their war machine for about 10 more days, but these could be long ten days.

 

 

Edited March 15, 2022 by Spekulatius