Looking Backwards …
LB #1
I decided to write another LBLF this week a part II if you will in the spirit of giving. This will focus on foreign policy since we seem to be going through some enormous geopolitical turmoil. Let’s start in Europe with the German governmental collapse. This from ZeroHedge, “Europe is disintegrating as legacy political regimes are collapsing over across the world.
Just one week after Marine Le Pen precipitated the collapse of the French government, on Monday, Chancellor Olaf Scholz lost a confidence vote in the German Parliament on Monday, a defeat that effectively ended the increasingly unpopular government he has led since 2021 and ushered in elections early next year.
German lawmakers voted to dissolve the existing government by a vote of 394 to 207, with 116 abstaining…The confidence vote, in the same month that the French government fell, deepens a crisis of leadership in Europe at a time of mounting economic and security challenges. The war in Ukraine has reached a pivotal moment, with Russia set to make decisive territorial gains and perhaps even push on toward Kiev, while president-elect Donald J. Trump is set to take office in the United States. And now, Europe’s largest and second largest economies are in the hands of a caretaker governments, as the continent is sent reeling in a tailspin of chaos and revulsion to the status quo.”
This is what I wrote on October 2, 2022 on this very cooperative. “The Russians have been selling natural gas and oil to Europe because of the European dependence on natural gas for heating due to lack of their own supply. The Europeans decided to go green instead of securing their own natural gas supplies. It seems that hasn’t worked out very well, and it seems that just deciding to go green like Germany did with their Germany Renewable Energy Act of 2021 doesn’t mean that magic candles are coming out of the asses of pink elephants.
Let’s do some quick math for a northern European nation. Half the day is night, the country is very cloudy, let’s say half the time, and wind is unpredictable so how much energy gather are they getting. Add to that that solar and wind are less efficient sources of energy and wa- la! You have an energy problem. You were dependent on nuclear and natural gas and coal. Coal was dirty so you shut that down and nuclear wasn’t green enough (even though it’s the cleanest and most efficient source of energy) so you have natural gas as your backup and most dependable base load power source. You, as a country, and largely a continent decide to source it from one source. That one source has now angered the global bully, and the global bully has punched him in the nose and you are laughing at him while he bleeds. The country with the bloody nose said I’m gonna take my gas and go home, and you are saying whoa whoa whoa we need your gas. Russia says fine “Pay for it in rubles or gold then” and Germany replies we can’t do that because we promised the US we would back their play.” That has been a very bad gamble Olaf and now Olaf is no more…
Now there is this from Remix news, “Germany’s economy continues to tumble, with the Ifo Employment Barometer falling to its lowest level in four years, matching the coronavirus low of 2020. Meanwhile, bankruptcies are growing by double digits.
Germany’s economic crisis is defined by a lack of orders, high labor and energy costs, and high regulation, which has led companies to cut staff and delay hiring, leading to the Munich-based Ifo indicator to fall to 92.4 in December, after hitting 93.3 in November. The data used is gathered from a survey of managers across Germany.
“Fewer and fewer companies are adding staff,” said Klaus Wohlrabe, who leads Ifo surveys. “In contrast, the proportion of companies that want to cut jobs is increasing. Almost all sectors are considering job cuts.” Not only is economic uncertainty high due to the usual factors, but the threat of tariffs are also looming from the United States. President-elect Donald Trump is promising to hit Europe and China with tariffs as high as 25 percent, with Germany expected to suffer greatly if such tariffs are put in place.”
So let’s recap, Germany backed America’s play and stood against Russia and the cheaper natural gas that Russia wants to sell and they substituted that for more expensive natural gas that America wants to sell. This was a primary reason their economy is tanking. Now America wants to slam them again with another shock of adding tariffs? Europe needs Russia and Russia needs Europe and Europe trusted America and America screwed them over… Germany, if you would like to see how this ends call any Native American reservation and ask for a history lesson. Never, never, trust the American government.
LB #2
Syria has fallen as the Assad government flees to Russia. This from Michael Carroll at Newsweek, “Ousted Syrian leader Bashar al-Assad says he had planned to keep fighting but the Russians evacuated him, in his first public statement since fleeing to Moscow over a week ago.
From a post published on his Telegram account on Monday, Assad clarified that his departure from Syria was unplanned and did not occur during the “final hours of the battles.” He explained that he had traveled to Latakia, a Russian military base in Syria, to “oversee combat operations” when Moscow arranged for his evacuation to Russia.”
This is quite interesting and ends decades of rule by his family. Israel wasted no time. This from ZeroHedge, “Israeli warplanes in the last several hours have been conducting major airstrikes against facilities across Syria, just 48 hours after the Assad government’s fall and the entrance of Al-Qaeda linked militant factions into Damascus. A weapons warehouse near the Damascus international airport, which has ceased operations, has also been hit. Massive strikes have been reported on Latakia port as well, with giant fireballs lighting up the night sky.
Amid the chaos of the HTS takeover of the country over the last week, and before any type of new government can coalesce in Damascus, it appears Israel is preemptively taking out all military technology and heavy weaponry before anyone else can access it.
An Israeli broadcast correspondent from Kann writes that “An Israeli source tells me: Israel’s goal is to destroy everything from Assad’s army that could fall into the hands of the rebels – from tanks to missiles. We are destroying the equipment of the Assad army.”… After fighting wars on multiple fronts for months, Israel is now concerned that unrest in Syria could spill over into its territory. Israel also views the end of the Assad regime as a chance to disrupt Iran’s ability to smuggle weapons through Syria to the Lebanese militant group Hezbollah.
The Israeli military over the weekend began seizing control of a demilitarized buffer zone in Syria created as part of a 1974 ceasefire between the countries. It said the move was temporary and meant to secure its border.
But the incursion sparked condemnation, with critics accusing Israel of violating the ceasefire and possibly exploiting the chaos in Syria for a land grab.
Indeed ‘exploiting’ the situation for a land grab is precisely what the game plan has likely been from the start, as both Israel and Turkey are the big winners in the Syria crisis, and with Assad gone (having been given asylum in Moscow).” Israel is not wasting a good crisis. HTS or Hayat Tahrir al-Sham is the organization of rebels that overran the government. They are currently designated a terrorist organization by the US and Turkey.
LB #3
Meanwhile we go to South Korea where the president had managed to avoid impeachment last we saw. This from Soo-Hyang Choi and Sam Kim from Bloomberg, “South Korean President Yoon Suk Yeol vowed to “never give up” after lawmakers voted to impeach him Saturday, leaving him on the verge of being ousted after he shocked the nation by briefly imposing martial law…Yoon is now suspended from his duties, and Prime Minister Han Duck-soo has stepped in as interim leader until the Constitutional Court rules on the impeachment motion within 180 days. If the court agrees on his removal, an early presidential election will be held in 60 days.”
Let’s assume that he is removed from office. Let’s assume the party in power is now out of power or will be soon. This comes on the heels of this from Japan in October. This from Helen Regan and Yumi Asada at CNN World, “Japanese voters delivered a stinging rebuke to the country’s longtime ruling party in elections Sunday, plunging the world’s fourth largest economy into a rare period of political uncertainty.
Japan’s Liberal Democratic Party, which has governed almost continuously since 1955, has lost its parliamentary majority in the powerful lower house for the first time in 15 years. Public anger and distrust in the government had been growing over rising living costs, inflation and a massive political funding scandal at the heart of the LDP, with voters voicing their discontent at the ballot box.”
In summary, the UK, US, France, Germany, Japan, and South Korea are all experiencing government regime changes while China and Russia stand pat.
Meanwhile in Taiwan this happened from ZeroHedge, “Last week we documented the launch of huge Chinese military drills encircling the self-governing island of Taiwan, which Taipei promptly blasted as an “unreasonable provocation”. China’s PLA military deployed warships and fighter jets to send yet another “stern warning” against “separatist acts of Taiwan independence forces”.
Since then, the size of the new PLA drills have shocked Taiwan leaders. The PLA Eastern Theater Command deployed joint operations of the army, navy, air force and rocket force. These assets have been largely concentrated in the Taiwan Strait, as well as surrounding Taiwan and the broader South China Sea. An “astonishing” number of Chinese vessels have been deployed at a scale that “could block external forces,” Taiwan’s Lt. Gen. Hsieh Jih-Sheng, said at a Taiwan Defense Ministry briefing days ago.
Financial Times has observed in a fresh report that Taiwan officials are struggling with how to respond in the face of exercises unprecedented in size.”
Why would China resort to sabre rattling such as this? What is really going on? “All of this does indeed appear as retaliation and a pressure campaign by Beijing for Taiwan President Lai Ching-te’s alleged “separatist” activities. China has condemned Lai’s unofficial visits to Hawaii and Guam during a South Pacific tour which went on the week prior to last.
It was his first such visit to the United States since he entered office, and Beijing has vowed “strong countermeasures” in the wake of the trip. Taiwan’s Mainland Affairs Council repeatedly slammed the “blatant provocations” from Beijing which harm regional peace and stability, while China has pointed to Taiwan and Washington provocations.”
That’s right. China has warned that there would be consequences for this behavior and yet it happens anyway. It isn’t shocking that Washington is goading China into acting like this. What is shocking is that Taiwan is trusting the US. Taiwan puts its military on high alert and its biggest ally can’t open the Red Sea shipping lanes against a bunch of goatherders? Taiwan, look at what is happening in Europe and choose very very carefully.
Looking Forwards…
LF#1
Now don’t confuse me with someone that is picking sides in all of these arrangements. I am merely seeking understanding. What the American government does and what I think of the American country are vastly different things. I am sure the sentiment is the same in China. In fact, that is just what we are seeing. This from ZeroHdege, “Last October, when we pointed out that China’s FX outflows had just hit a whopping $75BN – the single biggest monthly outflow since the 2015 currency devaluation – we concluded that the “unfavorable interest rate spread between China and the US will “likely imply persistent depreciation and outflow pressures in coming months”, or in other words, September’s biggest FX outflow in years is just the beginning, and very soon – in addition to geopolitics and central banks – the world will also be freaking out about the capital flight out of China… not to mention where all those billions in Chinese savings are going and which digital currency the Chinese are using to launder said outflows.”
We wrote that on October 20, when Bitcoin was trading just under $30,000, a level it had been for much of 2023. And, just as we correctly predicted at the time… … following this surge in Chinese FX outflows, bitcoin – traditionally China’s preferred means to circumvent Beijing’s great capital firewall since gold is, how should one put it, a bit more obvious when crossing borders – promptly soared more than 100% higher in the next 4 months. That was just the start, because only a few months later, in July, we wrote the follow up as China’s capital flight returned with a vengeance… In any event, the sharp resumption of Chinese capital outflows, which we highlighted in July, is why we also predicted at the time that “almost a year after our first correct prediction that China’s spike in FX outflows would send bitcoin surging, it’s time to do it again.”
You’ll never guess what happened next… And in case you really can’t, here is the answer: bitcoin exploded, nearly doubling again over the next 5 months!”
I am not a Bitcoin advocate, but unlike many who want to scream that it is awful I just choose to not buy it. It is like going into the butcher to buy steaks and having someone yell that you must buy pork. I just choose not to buy it. If someone wants to buy pork and Bitcoin, go for it. I think I am showing a bit of my American privilege with this attitude though. One thing that the great macro analyst Lyn Alden writes about is how easy it is to cross borders with Bitcoin aka it is borderless. She spends part of her time in Egypt. Transferring money across nation-states is foreign to me, but if I did, then perhaps I would consider Bitcoin for the properties that it has that the dollar does not. Try sending a wire transfer to anyone overseas and the banking colonoscopy will make you squirm. I live in a democracy masquerading as a Republic. If I lived in an authoritarian Communist country I might embrace Bitcoin to my bosom like the baby Carlos in The Hangover.
Is it really that simple? Forget libertarian leaning, diamond hands, hodling, MicroStrategy turning into a company that buys Bitcoin on leverage, and Bitcoin ETF in flows setting records… What if the Chinese people are anticipating a Trump and China showdown and are in a hurry to get their money out of China and into something else? What if Bitcoin really just rises when the Chinese people need to get their money out of China? They are the buyer…
LF#2
If we can shift to another continent that has at least one bright spot we can look at Argentina. Jonathan Gilbert and Kevin Simauchi report for Bloomberg, “Argentina’s energy companies are storming public debt markets to capitalize on investors’ optimism over President Javier Milei’s fiscal reforms. Shale oil driller Vista Energy issued $600 million in New York on Wednesday in its first ever foreign bond sale. Pampa Energia SA, which is also ramping up output in Argentina’s heralded Vaca Muerta shale patch, has arranged investor meetings as it eyes returning to capital markets for the second time this year. MSU Energy borrowed $177 million to refinance its debt. The backdrop for issuance is also more favorable. Argentina’s sovereign debt spread is at 757 basis points, hovering around levels not seen in five years, according to a JPMorgan index.
Companies are also able to borrow on more favorable terms. Vista sold its 11-year bond with a 7.6% yield, compared with rates in the 8%-9% range when a wave of issuers came to the market between July and October.”
Free markets, less government intrusion, and less government spending are making long time economic pariah Argentina into a place where American bond holders are willing to put money to work. This is truly amazing. We did a 4 part series on Argentina a couple years ago on these historic and ingrained inefficiencies in their governmental policies. The Milei man with the chainsaw is working his way through those hurdles quickly. They aren’t out of the woods yet as their economy is still suffering while they take their austerity measures, but it is pointing in the right direction. Vivek and Elon are being tasked with the same exercise here and I hope they succeed. If Argentina can show improvement that quickly, America also has promise. We just need to get rid of the dead wood slowing us down.
LF#3
Speaking of dead wood, I bring you Paul Pelosi and his wife Nancy. The last foreign policy is so foreign to me, I can’t believe that I am writing about it. I am trying to figure out how Nancy Pelosi and her husband Paul aren’t in jail. Leighton Woodhouse writes for RealClear Wire, “The Auberge du Soleil, a five-star hillside hotel and spa with a panoramic view overlooking the vineyards of Napa Valley, appears to be first-rate in all ways but one. While the glamorous resort, an hour’s drive from San Francisco, fills rooms that routinely go for $2,000 a night with A-list celebrities and tech titans, financial records suggest it did not provide much of a return to at least two of its investors – Rep. Nancy Pelosi and her husband, Paul. That changed when it received millions in congressionally authorized COVID-19 relief in 2020 and 2021.
The Auberge du Soleil investment, held for decades by Paul Pelosi, has rarely turned a significant profit, according to Nancy’s financial disclosure forms. In some years, he has recorded a loss or a profit of between $50,000 to $100,000. But the year of the bailout money stands apart. In 2021, Pelosi’s ethics forms show that her family’s income from the resort surged to a range of $1 million to $5 million… A RealClearInvestigations’ analysis found that Pelosi’s profits spiked from a variety of holdings that won significant government rescue funds – which amounted to $28 million, a total more than previously known… The taxpayer assistance to the Pelosi-backed resorts and restaurants may have come at the expense of other struggling businesses… Most applicants were not as fortunate. Less than a third of the eateries, pubs and diners that sought funding from the program were approved, and the fund was quickly depleted after it opened.”
Nancy Pelosi recently broke her hip while in Luxembourg. I hope it hurts every single one of your miserable days left on this earth you hypocrite and criminal. With that, Merry Christmas everybody!
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 42,840.
The 10-year Treasury bond is at …at 4.53%
The price of Brent Crude is … at $72.94 per barrel.
The price of gold is … at $2,645/oz.
The price of silver is … at $29.96/oz.
I leave you with this from the information superhighway, What did the bald man exclaim when he received a comb for a present? Thanks—I’ll never part with it.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.