A frank assessment of the West* ability to incur “cost” on the BRICs nations.

**This document comes from a policy and economic perspective it can be viewed as opinion and analysis.

prologue

So its Sat 15 March Australian time, the weekend before the semi autonomous region of Crimea hold a referendum on the future direction that the nation will take, if a positive vote is obtained the region of Crimea will join the Russian Federation proper and thus become a member of the many extended organizations of the BRICs nations.

The US for its part have promised “costs” to the Russian Federation and these seem to be broadly defined as some sort of sanctions, but as the details have been very vague its hard at this time to asses exactly what is meant by the statement:

http://www.abc.net.au/news/2014-03-15/kerry-lavrov-crimea-referendum-sanctions-russia-vote/5323016

leaving aside the duplicity of supporting the overthrow of a government in one part of a nation but then opposing a referendum in the other, I’d like to do a frank assessment of the Wests* general ability to incur “costs” on the Russian Federation and the BRICS nations in general, also some people may find this document educational as this is a frank assessment of the situation, I love disagreement, so please do not hesitate to open a topic on our free forum and discuss it.

Math

Sometimes facts can get in the way of a good story but the best way I can think to explain the ability of Banks (the “West”) to incur “costs” political or economical on the BRICs nation is in the following simple equation:

{ 0 + 0 = 0 }

now to best explain this equation, I think its appropriate to use a number of visual aids:

Public debt to GDP

Above is a visual of Public Debt to GDP:

Here is a link to Government Debt to GDP, the linked image is interactive so you can scroll over the nation and see the Gov Debt to GDP.

http://www.tradingeconomics.com/country-list/government-debt-to-gdp

But here for your convenience is another visual of Government Debt to GDP:

General Government Debt as Percent of GDP by Country

* of note here is the fact that Zimbabwe could be coming in here with a healthier % than the USA and definitely is in a better position than that of Japan.

Summary of Equation:

If a nation(s) productive capacity is exceeded by its debt , unfortunately when the “tide goes out”, or the “tire hits the road” (or any other euphemism that means “cold hard reality”)

That nation effectively does not have an ongoing GDP of which to leverage as a political tool, because by default a debtor is not in control, no matter how much money they owe.

some of this comes back to an intrinsic “confidence issue”, because some believe that the idea of “too big to fail” can be scaled up to geopolitical leverage, I’m here to explain the obvious;

It does not scale well.

because of the obvious loss of confidence in the tool to measure the largeness of “big” in the sentence “Too big to fail”, that being of course the US Federal Reserve Note.

Kolin you are anti “Western”.

Thank you for the opportunity to explain this, its time for another visual aid:

What is the West ?

What is the “West”?

“The West” or more accurately, the perception of the West is nothing more than a fork of reality that was created by a centralized form of information or media, (predominantly TV media).

How to find the Western Perception?

If you take a pen and draw some dots in the above image on the nations generally with the greatest Debt.

For each nation with the greatest Debt locate the Financial institutions that issued the debt both public and private, then when all the dots are penned in, congratulations, that is the “West”.

So we can properly define this conflict between Financial institutions and Governments.

If you have read any of my other documents you would know I’m a large fan of Jim Rickards, I think we generally think in the same manner about aspects of geopolitical events , but as I’m not contracted out to the DOD or any other semi financial institution “Bank” controlled organization I can say publicly what is privately common knowledge , and that is that the financial institutions that want this conflict are facing a crisis of confidence.

The people of the West

That’s the rest of us on that map outside the dots, we, my friends are the victims,  we are victims in two ways:

1. The older demographic are primarily victims because they are still invested in the fake fork of reality which is projected by Television.

2. The rest of us are victims because our non representative governments (try to) use us as the productive means of capacity to pay the ongoing cost of this non existent Debt.

To sum it up in the frankest of terms , We the people of the West are the soviets in this scenario, we are the largely demoralized group with little productive capacity, and what little we do have is being siphoned off to try to be used as leverage to secure the further indebtedness of the rest of the globe.

but its not going to work, so what is the likely answer?

“You married me!”

if any of the readers happened to watch the movie the “Wolf of Wall St” there is a rather entertaining section where after the main character has had considerable “success” and after many drunken and drug addled times finds himself pretty much bankrupt, upon which his “beautiful wife” decides to tell him she is leaving him, he exclaims that its convenient now that he has a number of federal charges pending and is facing bankruptcy that she would want to be leaving and with as many of the assets (of the former wealth) that she can garner.

to which she responds with a very honest and some what hilarious statement :

“well you married me ! “

This effectively sums up the relationship between the West and the BRICs nations, and specifically in this case and in this movie scene that beautiful bride is a Chinese bride, and those assets are more than likely all the assets that exist inside the Chinese sphere of influence.

In the end when us victims of the “West” turn off the TV and start to drink water of an international standard and eat food of an international standard, our beautiful Chinese Bride will be saying thank you for the good times and it was fun while it lasted, at that time we will realize we have no assets.

http://gonzalolira.blogspot.com.au/2014/03/a-chinese-slowdown-may-mean-crash-in-us.html

^ above link is what i believe is a reasonable scenario for the case of a disorganized shadow banking disruption in China, the take away point of course is; they have the cash, they are creditors, they also have a lot of the assets.

Summary:

I invest in Cryptocurrency for the same reason that Jim Rickards invests in Gold, we both have similar ideas about what we think will occur generally.

Where I believe specific cryptocurrency has a distinct advantage over Gold is due to the forward projection of the way in which information will flow in the future, Crypto can effectively function as both a fungible means of payment and a store of value, however Gold has a specific advantage of government trust and mandate, i.e all governments  both financial institutions controlled and semi representative governments around the world,  generally agree that Gold is something that they all value, so Jim has a pretty good strategic argument for Gold in this case.

However where I would add to that argument is the “Internet of things” is going to bring a much higher degree of net representation or if you like “feedback” between government and citizen, where by citizen will directly influence and have greater influence over what is and is not “valuable”.

in the very near future citizen will find “value” in the specific things that are beneficial to them, within certain rules and parameters, this will occur because of the decentralization effect of distributed information.

This is by no means Utopian or non realistic , quite to the contrary, it is just a normal projection of the continuation of the way the data and evidence is leading, this event is a specific part of that projection also.

From all the evidence derived; the US Federal Reserve Note does not look like it will likely be the winner out of any “costs” associated  with a referendum in the autonomous region of Crimea, and if your life saving happen to be in those notes or stocks derived from those notes, then my advice of course is to somewhat diversify, where our Crypto currency Quark has an advantage is that you do not have to be a wealthy person right now to take advantage of exposure to a premium cryptocurrency if you believe in that store of value in the future, other than that id advise Silver and Gold also for wealth preservation.

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