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Western stock markets seem to be assuming that this little spat with Russia will blow over, and that it will soon be business as usual.

It won't. There's a terrible inevitability to events.

The annexation of Crimea was a no-brainer, since Russia needed to protect its naval bases there. The installation of puppet Russian administrations in the Southern and Eastern Ukraine is also inevitable. The problem here is that the process will not be peaceful, and the appearance of Russian tanks in Ukraine to "protect" Russian-speaking people is a certainty.

This will trigger off draconian economic sanctions by the USA and the EU, and Russia will inevitably respond the only way it can, by turning off the gas pipeline. It is impossible to predict events beyond that, but what we can be sure of is that it will not be pretty and it will not be good for world stock markets....Anyone who has worked in resources realizes that to-date, there has been enormous levels of Western investment into Russia, especially into the energy sector; the demand from which will not dissipate over time. If push came to shove, massive debts to Western (especially German) banks would be dishonored entirely, coupled with the nationalization of EU energy assets. There is no doubt Russia will have a tough time of it - but understand that the Russian psyche can handle it. The confiscation of wealth from the West (Germany) as a net creditor, and UK based resource companies would be a very, very large financial blow, which could take decades to recover from. Not including the resultant damage to European manufacturing from massively higher energy costs.

Nothing in life is simple. Cliché characterizations are unless, Putin is doing what he thinks is best... don't forget, the guy is a student of history. Perspective is everything. History does nothing but demonstrate time and time again, its the small insults, the loss of pride in a relatively benign situation, that quickly spins out of control; underlying the unpredictability of human emotion maybe.

I assume the EU never did any forward inductive analysis before they backed a group that overthrew a democratically elected government !!! Because this was always the most obvious outcome under any Game Theory analysis. It is abundantly clear (to me at least) that since Crimea has left, any future Ukrainian elections will no longer allow ethic Russians (numerically) the chance of political power. It is a mathematical inevitability that they will increasingly become a sidelined as massive minority.

Furthermore, given the Ukrainian leadership has no intention of allowing political and economic devolution (which is also opposed by the EU) – realistically, the only political and logical outcome for this minority is self-determination via force of arms. Of course Russia will inevitable have to enter the fray (remember the Falklands anyone???).

AEP's economic threats are mere futile war drum beats from yesterdays story. This book has already been written. The best that strategists can hope to glean from this transition, is to make it as comfortable and as less disruptive as possible. But given nationalism is not a fertile field for logical outcomes - the risk remains that this situation could get a lot larger and uglier as well. The Ukrainian government for one, appears desperate to want to ramp this up significantly...

Whilst Washington is throwing paper darts in the form of notional Russian debt obligations to insolvent Western banks, the Russians just dig up more oil, gas, gold (whatever, you name it..) and trade with China, India, Brazil etc.
All the US government has is paper money and missile systems that don't work, a rigged stock market, a rigged US treasury market and shale gas/oil that takes more dollars to extract (ex. tax break) than it costs in the market.

The only reason there aren't riots outside Wal-Mart is the debt forbearance shown by China for the plastic junk the infantilized US population seem to need to live the American dream (or is that nightmare..?).

The US empire is running on empty and we're seeing the results now in this last desperate attempt to show they're still a 'contender'. If it wasn't so scary it would be pathetic - what a sad end for that marvelous tool for what could have been human emancipation, the American constitution.

Instead of leading the world (which I think was a possibility before the NeoCon tragedy), they are vaporizing men, women and children with drones in countries most American couldn't even find on a map, under some phony pretext, to boost the military-industrial complex. It's like watching a person destroying themselves with drugs and their family members around them....I'm genuinely saddened by it.