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By the way ...Putin is playing Chess. European leaders playing piano. We are sunctioning ourselves in order to support a Nazi friendly Dictator and Commedian in Ukraine who cancel all opposing parties. In addition we pay his army and his bills and for his weapons. As European I was not willing to pay the commedian. But nobody asked me.

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The US-NATO-UK Ukrainian Proxy War on Russia is an existential war of survival, for Russia. The West as well. It is now a Zero Sum Game Conflict. American political and economic goals are to destroy the Russian state, apply regime change strategies and steal Russia's vast natural resources.

This campaign comes as the culmination of several hundred years of Western global dominance, not by the superiority of Western ideas and values, of which we hear much, but rather by The West's superiority in applying organized violence, mass murder and resource theft, notably against technologically inferior states. It thus is a test of The West's dominant Geo-Political and Geo-Economic Success Paradigm. Russia is not a technologically inferior state.

The Ukrainian people are entirely expendable cannon fodder for this campaign and they are the modern equivalent of a Pyramid of Skulls.

https://les7eb.substack.com/p/ukraine-long-proxy-war-vi-god-favours

God Favours Russia.

___________________

Washington-London Systems Managers attribute the destruction of Nord Stream to Russia.

Joe Biden made it clear that they would stop it.

Nord Stream has been a long standing concern for American energy interests.

When one commits a crime, one invariably assigns blame elsewhere.

A have the Washington-London Systems Managers.

Others believe this.

No greater and tangible evidence of The Greater Fool Theory than this.

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Sep 23, 2022·edited Sep 23, 2022

Putin is really bad chess player. Really bad , not just bad. At least for his country and population of Russia. I don't know about him personally. because dictators can prosper long time if population is fearful enough. Every good or even semi good, even beginner level chess player sees that immediately at first sight. And at the war time its no time for democracy and debates in parliament. This is quite normal procedure in war time. Especially if u also have some potential hostile, infiltrated and destructive domestic elements.

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Wow. You are supporting Putin aka Hitler of 21 century. France and Brits made concessions to Hitler at the beginning of the WW2 and we all know how that ended. They need to deal this evil dictator as soon as possible. There is no peace with lunatic like Putlin.

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Putin isn't supposed to do what you want. He is supposed to stand up for Russia. Most Russians don't want to see NATO take over their country. Putin is doing what most Russians want which is trying to stop NATO. They may not like his tactics but they do want their country protected.

I'm not sure why you think Putin is crazy to do what he and the Russian people see as necessary. They don't want their country turned over to the likes of Hunter Biden as Ukraine was. It's not like you offer any alternative for Russians but abject surrender.

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Exposing Putin’s tactics is not a sign of support.

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You imbibed state religion.

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Your comparison between those men is erroneous. Their socio-political ideologies and military objectives (and the catalysts for their offensives) are/were significantly different. I recommend working on your research and critical thinking skills, because objective truth is not entirely out of reach.

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"The tasks of German foreign policy in preparing for the coming war were to: undo the military restrictions and reverse the territorial losses imposed by the Treaty of Versailles; take over neighboring lands with ethnic German populations; arrange pacts that would enable Germany to advance its war plans; and build alliances that would help Germany achieve its territorial goals." Putin goal is to undo the USSR dissolevement, take over land with ethnic Russian population, and make new world order. Probably same goals like Hitler's in 1939. He is destined to fail like all dictators in the history. I'm sorry for his people.

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...... He is destined to fail like all dictators in the history......

The notion of a government that wasn't authoritarion and dictatorial by contemporary standards is only a couple of hundred years old. Even then most of what are now called democratic governments in that intervening period have failed.

All the major so called democratic states are moving toward authoritarianism. Canada faster than most but the U.S. isn't that far behind.

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Sep 9, 2022Liked by Alfonso Peccatiello (Alf)

Hi Alf, in my humble opinion (only:) your macro analysis are great education and have a huge probability to be the correct guidance, but I start doubting it a bit if you start framing “EU against Putin” talks. For me its clear that the USA needs a next “Palestina” situation at the East of EU to keep the $ nm1 as long as possible. The poor East Ukraine and Etnic Russian people are paying the price since 2014 illegal intervention of the USA & EU and now ofc even worse. Russian government is not one person and they are defending souvereignty (Kanzler Schröder was right and his time ahead) just as the 90’s proved that Clintons democracy was only a way to steal their commodities. It was the EU that disrupt/canceled the cheap longterm Russian contracts in 2020/2021 on behalf of Biden Team. It was Team Biden that pressured Scholz to sabotage Nordstream. I know Im picking sides now, but Im just hoping that your macro analysis stays neutral as framing “them” as one bad actor or enemy and “us” as troubled policy makers, would let me doubt your macro view (which I dont want:). Ofc, its just my Maastricht:) opinion.

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author

Hi Martijn, the article was intended as a mere macro analysis of what's going on rather than a ''support'' for anybody :)

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Sep 8, 2022Liked by Alfonso Peccatiello (Alf)

True a long war with no winners. Actually the whole energy spat is a massive transfer of wealth from market oriented economies to rentiers, a pretty bad outcome for world growth. Being short EUR is the trade, especially vs USD and CHF. Central banks are badly caught between a rock and a hard place. And by the way, higher energy cost, stronger USD, higher rates are a bad recipe for several EMs.

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Sep 8, 2022Liked by Alfonso Peccatiello (Alf)

I do wonder, though, if there isn't a longer-term benefit which is that this crisis is forcing western policy makers -- especially in Europe -- to get much more realistic about energy policy, including embracing nuclear. One can hope.

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Long-term you could see this as a ''positive'' development, indeed

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Hopefully a broader diversification in suppliers and larger reliance on stable sources like nuclear. Something quite strange is that we have been living for decades with an oil cartel and no western country has ever taken steps to push for a breakdown of the gang.

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Nuclear is not a mature technology. The problem of getting rid of the depleted radioactive ash has not been solved yet. The other problem with nuclear is that the reserves of nuclear materials worldwide would last only 100 years. Then they will be equally depleted as fossil fuels. The only hope is nuclear fusion. But that technology has not yet produced any viable power yet. More research is needed. We need new ideas. Not enough people work in these areas. Too many people graduate with a MBA, not enough people with a PhD in nuclear physics.

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Meh, 100yrs is a long time bro. Human ingenuity will go a long way to allow for fusion reactors, thorium salt reactors, and so on to manifest in time so there is no calamity. In the meantime, enjoy the ride (+ small modular reactors coming soon to be retrofitted to existing coal plants). The method of storing waste is reliable and safe. We take from the earth, and we put it back in impenetrable sarcophagi.

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I've had the good fortune over the years to ask quite a few nuclear engineers about the waste issue. Not one has said it's a deal-breaker.

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Well of course nuclear engineers don't see nuclear waste as a problem. The issue is.... what does everyone else think?

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It is impossible to predict the weather in 5000 years. Similarly, no engineer can predict the safety of nuclear waste deposits in 5000 years. But the half time of these deposits is frequently much longer than 5000 years. If a house is build, it is easy to predict its fate within the next 100 years. No engineer can make a prediction about the fate of that house in 2000 years. Except for the Egyptian pyramids, I do not know of any human built structure which is older than 3000 years.

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Yes, 100 years is a long time for an individual human life. For the human civilization, it is a very short time. Nuclear fusion was performed successfully many times during the past 50 years. Unfortunately, in each case, more energy was put into the fusion than energy gained from the fusion. So fusion is so far an energy sink, not an energy source. The theoretical physicist Stephen Hawking, who died recently, issued the opinion shortly before his death that humanity has less than 300 years to leave the planet to other more hospitable places. In his judgement, the problems humanity is facing here on earth (depletion of resources and environmental degradation among many other problems) can not be solved.

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author

I tend to agree, Daniele.

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What Russia wants in my opinion is what most of the oil/gas producing countries want which is to squeeze the West like never before. The West has treated all of them very poorly and I see them teaming up to punish the Western - especially for the wars that the West wages on friends of oil/gas producing countries and nutty/juvenile/retaliatory sanctions. Sanctions punish citizens not leaders and authoritarians aren't as much sensitive to citizen pain. It is pay back time. The West has alienated all of them not just a little over many decades. They can produce less so prices go up and still make a good living and since many oil/gas producing countries are authoritarian, they don't necessarily care that there citizen will suffer while leaders go all out to punish the West.

I hope energy can bring some equalization between the West and the others - some mutual respect. Good things can come out of a crisis.

I kind of thought that after Trump questioned NATO's existence, the warmongers would do something to make NATO relevant again so they provoke Russia into Ukraine and the pump money into Ukraine until the last Ukrainian dies. The US used to be a peace negotiator, but now the US is an eager war machine ready to test its latest weapons.

Russia's warmonger footprint is tiny compared to what the US/NATO has done all around the world.

Imagine complaining about China's human rights issues and kissing Saudi's ass for more oil. The nerve! The difference, China has no oil, Saudi does so get on a knee, kiss the ring, whirl around on all fours to please what someone not too long ago said Saudi was a pariah state.

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Sep 8, 2022Liked by Alfonso Peccatiello (Alf)

Does this mean continued “Imaginary Wealth” build without productive economic growth for the coming future? Can CB’s ever get out this paradigm because defaults will not be tolerated. These “winks” with free money to industry seems to destroy all price discovery based on economic fundamentals. What a great way to run a Bank. I know it might be necessary to fight an economic war but gee get free money and make money on it? Is this was the United States is becoming? I’ve been investing for 38 years, when I first started it was 1. Company fundamentals 2. Industry outlook and then 3 Central Bank posture. Now its 80% central bank monitoring because of these “winks” you speak of. Always pay attention to your outlook and summaries. Very helpful. Thanks Alf, Mike

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author

Thanks, Mike. And your observations are most welcome!

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Sep 8, 2022Liked by Alfonso Peccatiello (Alf)

"There was also no mention of QT discussions at all." - just wanted to note there were headlines late in the afternoon saying it will be the matter of the October meeting. What are you thoughts on this?

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I believe they will try to postpone QT as much as they can - however you want to design it, it's an extremely painful process for a fragile architecture like Europe

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Sep 8, 2022Liked by Alfonso Peccatiello (Alf)

Alf, Curious if you think European politicians have the political will to see this through and stand up (longer term) to Putin.

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Europe and the Eurozone are a geopolitical imperative project which can't be easily allowed to dissolve - I think they'll stand up as best as they can

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Sep 8, 2022·edited Sep 8, 2022

I don't think Putin has much time left, but not for the most obvious reason. If you do a lot of digging or have been around during his rise to the presidency, Russia is ruled not just by one person, but by a band of people that were around St.Petersburg at his time. A lot of the Duma & his cabinet that hold serious positions of power are part of his power base.

There may very well be a time when playing armchair general may have cost the country too much for them to let him continue. Would be very easy to envision the next few years of Putin stepping down & one of his cronies stepping up, albeit with more co-operation with the West, Russia becomes less authoritarian but just as corrupt & sanctions go away etc...

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Sep 10, 2022·edited Sep 21, 2022

What you say may be true. Only the future can tell. But what we do know is that he is surrounded by hawks. Anyone who is currently likely to replace him is more hawkish on the conduct of the war than Putin

Putin was an still is immensely popular in Russia. It would be very difficult to completely turn that ship around. And it would be impossible if it wasn't a voluntary process. on the part of Putin.

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Surrounded by hawks is what we see publicly, but the same thing happened in 2008-ish when Medvedev got the presidency & after he went in and lost in Georgia, they removed him for Putin again. I don't think you can say he's immensely popular in Russia. I know it's not North Korea level censorship, but there isn't really an accurate way to measure his voter base, I'd say he has some support but it's not a majority of the country at all.

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Whatever, you think happened in Georgia, both the Russians and the Georgians think Russia achieved a surprisingly easy victory there. And they did it in a few days.

*They* didn't remove Medvedev. Ptuin was prohibited from taking a third term as President so he (Putin) gave that title to Medvedev while Putin kept the power and the position of Prime Minister. After completing their respective terms, Putin took back the position of President under the Putin arranged new provisions of the constitution.

Putin has kept Medvedev around in postions of great power in the hierarchy ever since but not in any position where he could perhaps build popular support and start getting funny ideas.

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Sep 20, 2022Liked by Alfonso Peccatiello (Alf)

I really enjoy this refreshing view of global economics that is lacking in mainstream US media.

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author

I try my best :)

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Sep 20, 2022Liked by Alfonso Peccatiello (Alf)

Nice one Alf!

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author

Thank you!

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Sep 11, 2022Liked by Alfonso Peccatiello (Alf)

Hi Alf, excellent hint on liquidity/banking side of ECB decision. Thx so much!

What I do not understand yet is, how you balance this vs. the effects in currency markets. As far as understood ECB action strengthens EU bank balance sheets (by enabling an easy arbitrage keeping this money in the EUR) while at same time keeping rate differential to FED in check a bit. That should be positive for the EUR at the margin IMHO. We need to consider (counteracting) balancesheet increase as you point out. How do you balance these two forces to come to the conclusion to stay short EUR/USD?

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author

Excellent question - I'll try to cover it in one of my next pieces.

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Sep 11, 2022Liked by Alfonso Peccatiello (Alf)

Great work! Many thanks Alf

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author

Welcome!

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Sep 10, 2022Liked by Alfonso Peccatiello (Alf)

I LOVE the fact you include a voice-over summary. It helps me understand the write up tremendously more. Keeps my thoughts in order.

It'll be interesting to see how this will all play out. Your detailed insight on this is especially critical in a macro understanding of the current environment between EU and Russia.

Since more EURO dollars are getting printed as deficits, I am also short EURUSD.

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author

Glad it helps!

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Sep 10, 2022Liked by Alfonso Peccatiello (Alf)

Alf - Good stuff. Hope you enjoy NYC. Since we're adding geo-politics into the mix...any thoughts that EU (and most govts actually) love Putin's maneuvers bc they want inflation and if they can get it and blame someone else, how great is that?? So the conclusion is that authorities won't try very hard to fight inflation, so LONG inflation is the best macro call out there..?

Cheers

Don N.

North Carolina, USA

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author

Hi Don, thanks!

I think losing credibility on inflation is a very big threat for policymakers.

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Sep 9, 2022Liked by Alfonso Peccatiello (Alf)

Great summary, as usual, Alf.👍

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author

Thank you!

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Sep 9, 2022Liked by Alfonso Peccatiello (Alf)

About 30 minutes in on his Cato talk yesterday (https://www.youtube.com/watch?v=fVSmA30qWu0), Jerome answers a question on the topic of returning to a scarce reserve framework vs stopping tightening at a level that satisfies the public but continues an ample reserves regime. He also makes it a point to say that they are open to adjusting the details of the plan regarding balance sheet runoff to reach that level as the environment dictates. 2 Questions: Does this mean that the fed is eyeing a similar stance as the ECB just announced and that you covered here (hike but be prepared to also stop tightening and/or ease)? Also, do you think it makes it more likely that we will end up in Quadrant 1 after leaving Quadrant 4 (vs moving towards Quadrant's 2 or 3)?

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The natural transition here seems to be from Quad 4 to Quad 1, yes.

But it's gonna take quite a lot of time.

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Sep 9, 2022Liked by Alfonso Peccatiello (Alf)

Interesting comment Alfonso, The analogy to EM and external shocks is the appropriate one. Using the ECB balance sheet to avoid short term pain, is the strategy the ECB will always adopt. That is as certain as gravity. As long as everyone still wants to use the Euro as a means of exchange, long live MMT. Who cares about any fundamental arguments for hard money? all these are good arguments for bitcoin. Long term, probably the euro goes down. But against what? every other major currency is just as bad.

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author

Thank you!

Here the EUR was paired against USD, but you could make a similar argument for CHF for instance

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