Monday 28 February 2022

West taking gambles and risks too quickly

 A goof debate on the last thread, the situation in Ukraine moves quickly and it has become the most dangerous crisis of my lifetime in short order.

Russia is defeated, if not on the ground then in the world opinion. The crazy nations like North Korea, Brazil and Iran are not going to save Russia. Even India and China are staying neutral. 

The huge sanctions placed on Russia are going to bite much more quickly than Putin imagined. Equally, the ground war is taking much longer and maybe much more bloody than expected. 

The West is full of preening Politico's and media today very pleased with themselves at Unity and the usual # mentality - echoes of "#Bring back our Girls".

In the real world, we are at the most dangerous point now. Putin won't stand a loss. Heavy and horrible weapons will be used on cities. Already Katyusha's fall on Karkiv which is a Russian populated city. Putin also darkly threatens nuclear retaliation of the real kind. 

I understand the West is also concerned to send China the right message re Taiwan, that this could be your fate too, but this is very risky. Indeed, I can't believe cool heads are war-gaming this properly because the chance of nuclear weapons being used is climbing - from an infinitesimally low number to something in the low digits percentages. Much like the Cuban missile crisis. 

Of course, if Putin is going to end up destroying the world whether we deter him this week or not makes little difference, it is up to the Russian army alone to fix the problem. However, some calmer thought and more work behind the scenes instead of in front of the camera's is desperately needed. 

Friday 25 February 2022

Modern hybrid war - it never ends

 The invasion of Ukraine has been long signalled and 10 years in the making.

The propaganda war has included Russian support for the SNP, Brexit, Catalonia and others. Much bribery in Germany in Italy and all across the EU. Even support for President Trump.

Even when Ukraine falls, which sadly remains likely even if it becomes a low grade war much like has happened in Donbas for several years, the hybrid propaganda will continue.

China has conveniently fallen for it, as have the usual leftie-suspects in the UK like Corbyn and Galloway.

Then next stage will show Putin suddenly keen on peace, trying to partition Ukraine and withdraw from Kyiv, whilst still blaming Ukraine. Then a plebiscite is Eastern Ukraine will ensure it joins Russia fully, perhaps Transnistra too.

Meanwhile, the gas vs sanctions will play out, not too long until the summer to Putin new he had to strike now whilst the gas threats might work on Germany. 

Then what, what next will the Maskirovka try to do - undermining the West will surely only step up? 

Thursday 24 February 2022

Mr Putin's Gas

What plans does Little Volodya have for his gas weapon?   (Methane, that is: large-scale chemical warfare doesn't seem too likely right now.)  Gazprom's great selling point has always been reliability - better, for example, than the Dutch, who in their heyday as an exporter would always interrupt external sales rather than deliveries to their own people.  With Russia it was the exact opposite: Russians could freeze in order to support hard currency sales.  Notwithstanding Putin has been holding back gas for many months now, he's always met minimum contractual obligations and curiously, just today, westward flows of Russian gas are the highest they've been for several days.

"Suspending" Nord Stream 2, as the Germans have done, is virtue-signalling, but meaningless in practical terms:  they'll un-suspend it at the first convenient juncture.  Ol' Uncle Joe Biden said something at the weekend rather bellicose about NS2 but I kinda doubt he has in mind blowing it up, easy and rather satisfying though this would be (there's a James Bond film involving a Russian gas pipeline, as I recall).

So: will Putin turn off the taps, as that long-running and rather prescient little graphic in the opening credits of HIGNFY has it?  More constructively, he may satisfy himself with the dramatic price hike that's already happened, of course.  

One thing's for sure, the Germans (and many others) are in absolutely no position to forgo that gas voluntarily, as we've noted here before.

Which leads us to consider a Big Accident.  If there's too much high-explosive shit flying about in Ukraine, well, all that infrastructure is really quite fragile (although not too difficult to repair).  Quite a big chunk of Russian exports still transit Ukraine, albeit NS2 is designed to put paid to that.  Who knows what any number of rogue actors might think of doing in that very large country, in the fog of war?  There are plenty of people who could profit handsomely from a Big Accident ...

"Short gas" may describe all our positions as consumers right now.  Won't be many commodities traders short gas at the moment, though.


Monday 21 February 2022

Oh ye of little faith

 Told you all it was 21st Feb.

Hope you all stocked up on oil and gas futures.

While we wait for Putin ... here's some meerkats

I've long been quite surprised that the market has sustained so many price comparison sites.   Presumably, the software is relatively simple, the overheads are low and their biggest cost is massive prime-time TV advertising campaigns.  It seems to be as competitive as an industry ever gets - ironic, when at the start of energy-price comparisons we notoriously only had the 'Big 6' of actual energy suppliers.  Right now, unsurprisingly in view of the UK energy pricing debacle, they're in trouble

You'll have read it here; but I don't recall ever seeing in the MSM recognition of the baleful impact the auto-switchers or 'flippers' had on the health of the energy supply market itself.  It was once impossible for small new entrants to access this market - and quite right too: why should the barriers to entry in a sector like this be low?  But a number of factors conspired to turn this situation utterly on its head, so that any two-bit rogue could play - and play with other people's money, too.  High on the list of new factors was the 'flipper':  all you had to do was register with the site, ensure your price was the lowest for a short while (or, with the less scrupulous ones, cross the flipper's palm with silver for 'special favours'), and be sent as many customers as you wanted.  Simples, eh, Sergei?

And play they did - for a while, until the tide inevitably went out and their lack of swimwear was revealed.  Meanwhile, many a rogue syphoned off a chunk of the free working capital that the energy 'market' gifts to end-game suppliers in the form of pre-payments, and green levies collected but not paid over.  As well as genuine profits in the early stages of this game when prices were falling and they could play the Northern Rock tactic of sell long, buy short - without needing much by way of credit-lines.  Yes, of course it was unsustainable.  

The outcome is costing us £ billions to unwind, even though Ofgem's SOLR mechanisms mean no customer loses their supply in the process.  It has also brought the game into fundamental disrepute.  Ofgem is generally quite a good regulator but they screwed this one up royally.  Thanks, Sergei and that Welsh git.


Thursday 17 February 2022

Russia Has A Painful Precedent In Mind

 ... and it's Finland, 1939-1940.

Russia hasn't had stellar success of late, even in Georgia and Chechnya, both a damn' sight easier to chew off than Ukraine.  

But the real pain must come whenever they think of Finland, whose heavily outnumbered forces dealt them a serious bloody nose.  It's generally reckoned the Soviet casualties in the 'Winter War' were of the same order of magnitude as Britain suffered during the whole of WW2 - and that in just three and a half months.  For not much gain  (a bit of Donbass-style land-grab), and substantial international opprobrium.   (Not that Joe Stalin cared very much.  Nor about casualties, for that matter.)

That's what can happen when you take on a nation that is (a) very big, geographically, with unlimited ability for tactical retreat by the defender, and overstretch trouble for the attacker;  (b) fiercely nationalistic.   Given their own dealings with Napoleon and Hitler, we might imagine that for the Russians, this lesson is not lost ...

It's been fairly noted recently that successful guerilla wars are fought by youthful fanatics, not middle-aged populations - with the suggestion that under this precept Ukraine has the wrong demographics for that kind of resistance.  Maybe so: but surely Finland is a much more relevant case study.

Oh, and that extremely interested observer President Xi will also be recalling China's own less-than-glorious attack on Vietnam in 1979.  Still, at least Putin hasn't pooped on Xi's Winter Olympics party in the unseemly way he did with Georgia, slap bang in the middle of Beijing's 2008 summer games, to China's profound disgust.  Well - not yet, anyway.


Tuesday 15 February 2022

Revealing Pictures of Russian Military Preparations

OK, so I last looked at Russian military kit in detail, in earnest, almost exactly 30 years ago.  And guess what?  Almost everything we've seen so far from the Russian side of that messy border is of just that vintage, i.e. 35-40 years old (because they hadn't done much innovating after the fall of the Berlin Wall).  

We are led to believe they have in fact made some serious strides in, for example, AA equipment, but they ain't showing that.

What do we infer?  There might be several hypotheses, not all mutually exclusive by any means:

  • Naturally, they do have some modern kit - but maybe not in large quantities
  • They reckon they can do the job quite comfortably with the old stuff
  • The units they are deploying - at least for the cameras - are not front-line troops: Russian policy has long been to scrap nothing, but to relegate it to equipping reserve formations
  • They have no desire either to expose the new stuff to close inspection (recalling how much they *enjoyed* their own ringside seat at NATO's extravaganza in 1991 - see my Kuwait account ad nauseam); or, of course, to see plum bits of new kit embarrassingly captured
Anyhow, it's a feast of déjà vu for old Soviet hands like meself ...  If I find a bit of time I might make up a bit of a photo-feature.


Friday 11 February 2022

UK growth at 7.5% in 2021

Despite what  the headlines will try to say, the economic growth last year merely puts the UK on par with most other Western Countries post-pandemic. 

The UK had the highest fall in GDP and productivity given we were hit hard like Italy with the first wave of Covid. 

Since then, the successful vaccine roll-out and some spirited determination to live with the virus rather than have constant lockdowns, has allowed the UK to play catch-up. Meanwhile, France and Germany have had a harder time with the later waves and so have not seen their economies re-bound as strongly. 

Germany in particular is in a challenging position. It's main export market for manufacture is China and its main energy supplier is Russia. This is not a good geo-political place to be and there is no easy way out of this for Germany politically or economically. 

Still, that the UK has recovered to near par is a good thing. However, the extra NHS spending, endless tax rises and interest rate rises are going to bake in a nasty downturn at some point, it is quite a way down from such high levels of growth but stagflation beckons for at least a year or two. 

Thursday 3 February 2022

The great game

 Sorry for the long pause, be a bit challenging at work but suffice to say I have a period of free time now….

So, on good authority I have a date for the Russian invasion of Ukraine - Monday 21st of February.

So the question for everyone is, why do I posit this date?