Having visited this country several times in the past and knowing people who live there, including members of my own family, I feel particularly compelled to write about the escalating violence in Ukraine. I have been avoiding the topic for some time, hoping that a peaceful resolution could be negotiated. Instead, for various reasons, these hopes were dashed and what we are left with is further unrest and unimaginable tragedy. Although I am not an expert on Eastern European geopolitics, I will approach this entry through balanced measures, evoking both the human element as well as the financial impact it could have on us Americans.
Kyiv has always been the hotbed of social uprising : the world got its first real glimpse into this character during the 2004 Orange Revolution. I got to see this firsthand during the winter of 2009 and 2010, when various entities ranging from labor groups to communist sympathizers organized rallies around the Maidan Nezalezhnosti, or Independence Square. As a foreigner, it was certainly intimidating to witness the cacophony of voices crying out for one cause or another. Radical nationalists, embittered by poor social mobility, are known to frequent such protests, lashing out violently against perceived instigators. I was in no hurry to be on the wrong end of these gatherings, yet I joined into the fray, my journalistic curiosity getting the best of me.
With camera in hand, I made my way into the heart of the protests. Hammer and sickle flags, a relic of a by-gone era, flashed proudly in the sky while an announcer verbally attacked the current government administration. The crowds cheered. Somewhere along the speech, a cue was given. An old Soviet anthem blared its stoic motifs, met eagerly by a willing choir. It was probably the most non-American experience I ever had in my life.
And I loved it.
Today, the situation is drastically different : there is nothing to admire about the violence that has ripped apart a nation and an inept government's response that has been nothing short of horrific. President Victor Yanukovich has essentially issued a standing kill order against all protestors. Snipers have been instructed to kill without question and without remorse. What is not being reported by our domestic media outlets (at least not at the time of this writing) is that a telecommunications blackout is imminent : this means, no phones, no internet, no way of reporting a desperate and ongoing human tragedy.
Ukraine is under martial law. Exacerbating an already tenuous situation is the rise of alternative media sensationalism disguised as journalism. Popular conspiracy theorists such as Alex Jones have made some surprisingly lucid comments about the violation of privacy rights by the American government ; however, their arguments are centered on the deviance of American politicians and thus create an ironic bifurcation. Whoever stands for American politics are "bad guys" and anybody that is opposed to America are the "good guys."
In the conspiracy realm, the Ukrainian protestors are actually sponsored by America and the European Union, a quiet attempt to overthrow the government using someone else's fingerprints. Adding weight to this accusation are prominent folks like Paul Craig Roberts, former Assistant Secretary of the Treasury for Economic Policy, who gushed in a recent Prison Planet article (one of Alex Jones' websites) that Ukraine will be left begging Russia for help once the EU is essentially done economically raping them.
Mr. Roberts comes off as a Putin-apologist, citing historical reasons as to why Ukraine is mostly Russian. Nothing could be further from the truth! If Ukraine is Russian, why is Ukrainian a completely separate language, unintelligible to Russians? Why did the Soviet Union embark on a violent crackdown on those who dared speak the Ukrainian language? And most importantly, why is Russia so keen on avoiding the genocide tag of the Holodomor, when millions of Ukrainians were deliberately starved to death prior to the start of the Second World War?
In fact, no discussion on Ukrainian politics is complete without addressing the Holodomor, a genocide that occurred "only in reality" and is strangely missing from most people's history books. To not mention this is akin to understanding the Jewish experience in the Second World War sans the Holocaust. The exclusion alone creates an enormous distortion that any subsequent arguments are rendered invalid. That and the startling willingness to label Russian president Vladimir Putin, a former KGB agent and a violator of his own nation's constitution, as a "good guy" trying to "help" Ukraine, suggests either intellectual inferiority, or sponsored propaganda.
Rather than single-handedly focusing attention on the motives of the Ukrainian protestors, one should realize the motives behind all parties involved. Is the West guilty of wanting to spread their tentacles over Ukrainian land rights and assets? Absolutely! But we should recognize that Putin himself wants to reinstitute the Soviet Union : why else would he hand-pick a lackey (Dmitry Medvedev) to do his bidding, allowing Putin the benefit of democratic pretense?
There are no good guys in this evolving story, only different stages of acquiescence. In all fairness, Ukraine has suffered the consequences of Russian tyranny all too often in its long history and as the Bible says, a leopard cannot change his spots. If the Ukrainian people decide to embark on a partnership with the European Union, so be it. It is not for us to judge, but them.
But regardless of the outcome of this paradigm-shifting event, it will have reverberations for all of us. We are no longer in a microcosm, having lost the luxury of global macro-economic independence several years ago. The unrest has severely affected the Russian stock market, with the popular Market Vector Russia ETF down about 8% year-to-date.
This is in stark contrast to both the German DAX and our own domestic indices. Strong manufacturing data in the United States will not be enough to substantially reverse our recessionary ways as the American consumer has already voted with their wallets in the fourth quarter of 2013 : earnings reports from the cyclical sector have disappointed in many cases and underscores domestic fragility.
Yet the markets continue to rally. I wonder, how long will the technical momentum last before the fundamentals finally take over? The DAX in particular is susceptible to the Ukrainian crisis as Germany would be the financier of any proposal involving Ukraine's acceptance into the European sphere of influence. Ukraine's currency and economy is understandably in a mess and was on the verge of bankruptcy prior to Russia's offer of a $15 billion bail-out package.
If Ukraine were to come under the West, someone's gonna have to fork over the money. That someone is Germany. I can't imagine that this would be a net positive for the EU in the short to intermediate term outside of a political victory for NATO. Russian investors, who I presume care more about the money than their own politics, have already priced in the bearish repercussions by pricing themselves out. It appears, therefore, that they've left the Europeans hanging over what likely may be a financial time-bomb.
This in no way looks good for the European markets. And with Asia (specifically China and Japan) well deep into its tightrope act, there does not appear to be any possible way that America can avoid a negative impact. Hopefully, it will not cut so deeply but investors are forewarned :
Ukraine does matter after all.
Kyiv has always been the hotbed of social uprising : the world got its first real glimpse into this character during the 2004 Orange Revolution. I got to see this firsthand during the winter of 2009 and 2010, when various entities ranging from labor groups to communist sympathizers organized rallies around the Maidan Nezalezhnosti, or Independence Square. As a foreigner, it was certainly intimidating to witness the cacophony of voices crying out for one cause or another. Radical nationalists, embittered by poor social mobility, are known to frequent such protests, lashing out violently against perceived instigators. I was in no hurry to be on the wrong end of these gatherings, yet I joined into the fray, my journalistic curiosity getting the best of me.
With camera in hand, I made my way into the heart of the protests. Hammer and sickle flags, a relic of a by-gone era, flashed proudly in the sky while an announcer verbally attacked the current government administration. The crowds cheered. Somewhere along the speech, a cue was given. An old Soviet anthem blared its stoic motifs, met eagerly by a willing choir. It was probably the most non-American experience I ever had in my life.
And I loved it.
Today, the situation is drastically different : there is nothing to admire about the violence that has ripped apart a nation and an inept government's response that has been nothing short of horrific. President Victor Yanukovich has essentially issued a standing kill order against all protestors. Snipers have been instructed to kill without question and without remorse. What is not being reported by our domestic media outlets (at least not at the time of this writing) is that a telecommunications blackout is imminent : this means, no phones, no internet, no way of reporting a desperate and ongoing human tragedy.
Ukraine is under martial law. Exacerbating an already tenuous situation is the rise of alternative media sensationalism disguised as journalism. Popular conspiracy theorists such as Alex Jones have made some surprisingly lucid comments about the violation of privacy rights by the American government ; however, their arguments are centered on the deviance of American politicians and thus create an ironic bifurcation. Whoever stands for American politics are "bad guys" and anybody that is opposed to America are the "good guys."
In the conspiracy realm, the Ukrainian protestors are actually sponsored by America and the European Union, a quiet attempt to overthrow the government using someone else's fingerprints. Adding weight to this accusation are prominent folks like Paul Craig Roberts, former Assistant Secretary of the Treasury for Economic Policy, who gushed in a recent Prison Planet article (one of Alex Jones' websites) that Ukraine will be left begging Russia for help once the EU is essentially done economically raping them.
Mr. Roberts comes off as a Putin-apologist, citing historical reasons as to why Ukraine is mostly Russian. Nothing could be further from the truth! If Ukraine is Russian, why is Ukrainian a completely separate language, unintelligible to Russians? Why did the Soviet Union embark on a violent crackdown on those who dared speak the Ukrainian language? And most importantly, why is Russia so keen on avoiding the genocide tag of the Holodomor, when millions of Ukrainians were deliberately starved to death prior to the start of the Second World War?
In fact, no discussion on Ukrainian politics is complete without addressing the Holodomor, a genocide that occurred "only in reality" and is strangely missing from most people's history books. To not mention this is akin to understanding the Jewish experience in the Second World War sans the Holocaust. The exclusion alone creates an enormous distortion that any subsequent arguments are rendered invalid. That and the startling willingness to label Russian president Vladimir Putin, a former KGB agent and a violator of his own nation's constitution, as a "good guy" trying to "help" Ukraine, suggests either intellectual inferiority, or sponsored propaganda.
Rather than single-handedly focusing attention on the motives of the Ukrainian protestors, one should realize the motives behind all parties involved. Is the West guilty of wanting to spread their tentacles over Ukrainian land rights and assets? Absolutely! But we should recognize that Putin himself wants to reinstitute the Soviet Union : why else would he hand-pick a lackey (Dmitry Medvedev) to do his bidding, allowing Putin the benefit of democratic pretense?
There are no good guys in this evolving story, only different stages of acquiescence. In all fairness, Ukraine has suffered the consequences of Russian tyranny all too often in its long history and as the Bible says, a leopard cannot change his spots. If the Ukrainian people decide to embark on a partnership with the European Union, so be it. It is not for us to judge, but them.
But regardless of the outcome of this paradigm-shifting event, it will have reverberations for all of us. We are no longer in a microcosm, having lost the luxury of global macro-economic independence several years ago. The unrest has severely affected the Russian stock market, with the popular Market Vector Russia ETF down about 8% year-to-date.
This is in stark contrast to both the German DAX and our own domestic indices. Strong manufacturing data in the United States will not be enough to substantially reverse our recessionary ways as the American consumer has already voted with their wallets in the fourth quarter of 2013 : earnings reports from the cyclical sector have disappointed in many cases and underscores domestic fragility.
Yet the markets continue to rally. I wonder, how long will the technical momentum last before the fundamentals finally take over? The DAX in particular is susceptible to the Ukrainian crisis as Germany would be the financier of any proposal involving Ukraine's acceptance into the European sphere of influence. Ukraine's currency and economy is understandably in a mess and was on the verge of bankruptcy prior to Russia's offer of a $15 billion bail-out package.
If Ukraine were to come under the West, someone's gonna have to fork over the money. That someone is Germany. I can't imagine that this would be a net positive for the EU in the short to intermediate term outside of a political victory for NATO. Russian investors, who I presume care more about the money than their own politics, have already priced in the bearish repercussions by pricing themselves out. It appears, therefore, that they've left the Europeans hanging over what likely may be a financial time-bomb.
This in no way looks good for the European markets. And with Asia (specifically China and Japan) well deep into its tightrope act, there does not appear to be any possible way that America can avoid a negative impact. Hopefully, it will not cut so deeply but investors are forewarned :
Ukraine does matter after all.
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