The Effects of Sanctions

Hello this is Darrell Castle with today’s Castle Report. This is Friday the 11^th day of March 2022. I will be talking about sanctions and their effects on Russia, Europe, and the United States. But also, I will be trying my best to discover some version of truth and reality in this war. Winston Churchill once said that in time of war truth is such a precious commodity that it must be surrounded by a bodyguard of lies. It is hard to discover truth considering that one side in the struggle has total and complete control of information. But I keep trying.

The current state of the Russia/Ukraine war

How then goes the war? It is hard to tell since much of what we see, hear, and read is nothing but propaganda, but we are here to talk about a tactic today and that tactic is sanctions. Sanction is an aspect of warfare by different means. It is economic warfare, and it is propaganda. The dictionary definition of propaganda is

ideas, facts, or allegations spread deliberately to further one’s cause or to damage an opposing cause.

It is the noble lie as Plato called it more than a thousand years ago: it may be necessary to inspire people to fling themselves upon distant battlefields to fight some devil. They must, therefore, be convinced that their enemy is the devil.

Sanctions on Russia, including on its central bank …

The war dominates the news in the present, but it will eventually cease. The economic sanctions, however, will affect the world for many years to come. We look now at just some of those effects that occur to me. The economic sanctions imposed on Russia by the U.S., the UK, the EU, and other nations are the most severe ever imposed, and they are having a drastic effect on the Russian economy and the Russian people. The U.S. alone announced 15 sanction programs with more on the way as soon as Washington can think of more. Russian banks, stocks, bonds, corporations, shipping companies, even individual Russians with money abroad have been sanctioned economically.

Most importantly, the Central Bank of Russia had its accounts frozen, the first time I can ever recall that happening to a Central Bank. Even individual American companies like Microsoft, Exxon Mobil, Shell, major airlines, as well as Google and Apple have stopped doing business in Russia. Shipping companies are refusing to enter Russian ports or offload Russian ships in other ports. Many funds are divesting themselves of Russian stocks and bonds. Russian stocks and bonds are crashing as a result.

… and their effects on non-Russians

Who cares, or how would this affect me here in America? There is a good chance that your retirement fund whether public or private is invested in Russian companies. If you receive a retirement pension from anywhere it could be affected. Incidentally, two of the largest companies in Russia, Gazprom, the oil giant, and Russian Railways whose stock is wholly owned by the Russian government, have bonds outstanding which are also crashing. Guess who is buying the bonds of those companies as they fall lower and lower. If you guessed Goldman Sachs and J.P. Morgan Chase, you are correct.

The Russian economy is collapsing if you consider a 20% drop as a collapse. It is like what happened to the U.S. during the Covid lockdowns. The effects on the Russian people have been devastating. Empty supermarket shelves with no food available, jobs lost, with no public assistance available. I’ve seen videos courtesy of Zero Hedge and others of old babushkas wailing in the streets crying how did this happen, we are hated by the whole world, and why did this happen to us. The Russians are also wailing from the boxes containing their sons, husbands, and fathers coming back from Ukraine. That is war folks, war is blood shed on the battlefield and at home.

Migrant streams, anti-war sentiment inside Russia

The suffering of the Russian people obviously does not compare to that of the Ukrainian people, who suffer from actual combat in the streets and actual bombs falling on their homes. Joan and I have contacts inside Romania which is on the Ukrainian border, and they report to us on the thousands of migrants streaming into Romania from Ukraine and even from Russia. According to the UN Refugee Agency more than 1.2 million people have fled Ukraine since the invasion of February 24. There are many more on the move, the spokesman said, and possibly at least that many displaced inside the country.

Back to inside Russia for a moment as an estimated 13,500 protesters have been arrested in Moscow for demonstrating against Putin’s invasion according to MSNBC. Putin continues trying to snuff out dissent, but dissent seems to be growing at home. History tells me that he will grow more and more repressive as dissent grows as well as more vicious in war as resistance continuous to gain momentum. He made some mistakes didn’t he, and that is becoming more and more obvious.

Is Russia fighting WWII all over again?

It is interesting to learn that U.S. generals are not the only ones who continually fight the last war. When was the last time Russia fought a big, armored war? It was 1945 in WWll. We could count the 1973 war between Israel, supplied by the U.S., and combined Arab armies supplied by Russia, but that was a proxy war fought by people using Russian equipment. Even then, the Syrian T-54 tanks proved inferior to the Israeli Centurions although they had superior numbers.

The Russians appear to be fighting WWll again with the tactics they are using or at least their overall tactical plan of attack seems World War Two-ish. Their plan was and is complicated and difficult to achieve unless the enemy does exactly what you want him to do, and he rarely does. A three-pronged armored assault from three different directions which ignores the maxim of massed forces. One attack from the East straight through the middle, one from the North out of Belarus, and one seaborn launched from the south. That is a classic WWll plan as enacted by the Germans. Instead of one massed assault straight to Moscow they launched a 3-pronged attack across a 3000-mile front. As a result they were continually bogged down in places like Stalingrad. Now the situation is reversed for them in Ukraine.

Ukrainian asymmetrical warfare

The Ukrainians have been unwilling to cooperate and mass their forces so they could be wiped out by superior firepower and technology from the Russians. Instead, the Ukrainians disperse out of the cities while arming their city residents just in case. They meet the Russians as guerillas in the open fields and they have been extensively supplied with Javelin anti-tank missiles, and stinger anti-air missiles. These missiles are both what soldiers call Man Pods or man portable weapons. One man can sit in a hole from two miles away pop up and fire a Javelin that flies into a Russian tank and the soldier goes back in his hole. It’s the same for the Stinger and low flying aircraft especially helicopters. That is all devastating to tactics which depend on the shock and awe of armored assault.

Russia refrains from strategic bombing

Shock depends on the element of surprise and that was denied to the Russians. Putin and Biden knew for weeks in advance that this was coming, and they both publicly talked about it. There was no shock which would have forced the Ukrainians back on their heels retreating to the cities and begging for peace. The hundreds of tanks were to supply the awe, but once again, that is WWll awe. I still don’t think Putin has unleashed the full power of his military, and I pray to God he never does.

The Russian air force has been relatively inactive with mostly fighter support and transport planes. Not much close air support of advancing infantry, and no strategic bombing at all. I’m afraid that Putin is going to end up in his own Stalingrad which would mean a house-to-house rat war in the Ukrainian cities, the least desirable outcome for everybody.

Sanctions and their collateral effect

Now let us return to the subject of today and that is sanctions. This economic warfare that we call sanctions falls on everybody not just the intended target. To keep the warfare symbology, it’s the equivalent of calling an artillery barrage or airstrike on your own position which would obviously be a last resort. The President of the United States, heeding demands from both sides of the Congressional aisle, barred the import of Russian Oil and gas. He blamed it on Putin of course:

Putin’s war is already hurting American families at the gas pump. Since Putin began his military buildup on Ukrainian borders—just since then, the price of gas at the pump in America went up 75 cents. And with this action, it’s going to go up further. I’m going to do everything I can to minimize Putin’s price hike here at home.

Well now Mr. President, that old dog just won’t hunt anymore. Inflation was driving the price of gas higher long before Putin’s buildup. Long before you decided to make it worse by caving to demands of the people’s elected representatives. Furthermore, you said you would do everything you could, but that is not true is it Mr. President? You could restart the Keystone Pipeline, restart fracking, approve offshore drilling, approve drilling on federal land, and rebuild refineries. What, then, do you mean by the statement I will do everything I can?

What will Biden really do?

I believe what you mean is that you will strong arm the Germans to close down Nord Stream 2 but not the original Nord Stream which supplies Russian gas into the heart of Germany. You will go hat in hand to the Evil Saudis and Gulf Arabs and be told by them to pound sand. I understand that you are considering a personal trip to Saudi Arabia to make a personal plea to Bin Salmon after you dissed him about his murder of a dissident journalist. You have also sent officials to Venezuela where the state-owned oil company is already sanctioned by the U.S. They were evil yesterday, but they are friends today. I’m sure you know Mr. President that a great deal of Venezuelan oil was owned by the Russian oil company Rosneft, which transferred it to the Russian state to help avoid your sanctions.

Have sanctions compromised Presidential ethics?

I’m sure all this petro diplomacy creates some ethical qualms for you, and you occasionally feel a little hypocritical. You can’t drill domestically for environmental reasons, but for different reasons you are willing to do business with brutal dictators. I suppose ethics are luxuries in the middle of the Putin crises. We have to stand tall against one dictator but not others. Even with all that good will you have from Ukrainian virtue signaling you seem a bit touchy about domestic production. I know you want to use this energy crises which punishes every working American to promote your Green New Deal which requires the U.S. to buy solar and wind technology from China and is a distant dream in any event. To summarize your oil position, I smell a big fat Green New Deal Rat in it somewhere.

The actual figures, by the way, indicate that the average price of gasoline was up 52% before the invasion and it is up 18.8% since then. Since you were sworn in as President crude oil is up 124%. I guess inflation is Putin’s fault as well. That man has done a lot hasn’t he. I mean he caused inflation in the U.S., but he did cure Covid, or at least he took away the mask mandate. One minute we get Covid if we don’t wear a mask. The next minute, we don’t, all thanks to the Russian President.

Money base nearly double – and how sanctions boomerang

In reference to inflation, you have increased the monetary base by 90% since the inauguration. I wonder if all that spending with no corresponding increase in production had anything to do with it. We do know, however, the Federal Reserve causes inflation, but you and many other Presidents are its enablers, and benefactors.

I know you are afraid of recession, as we all are or should be, because it means unemployment and a declining standard of living. That appears to be baked in the cake right now if we take the word of Jim Bianco at Bianco Research. “Not every recession is led by a 50% rise in crude but every 50% rise in crude has led a recession.”

Russia is, however, not without weapons in the sanctions war. If no one wants to do business with Russia the Central Bank will default as will all other Russian companies, and that will leave Western banks and corporations holding a stinky bag of bad debt thus pulling down stock prices and upsetting stockholders which are mostly the top 10%. Putin has already forbidden the export of raw materials essential to Western manufacturing. The West is dependent to some extent on not just Russian oil and gas but other Russian commodities. Much of the raw materials for production like aluminum come from Russia but no more. 70% of all the Neon gas in the world comes from Ukraine through the port of Odessa now controlled by Russia.

Conclusion

Finally, folks, this is all terribly sad especially when one considers that it was all avoidable. I smell the Great Reset, Davos, and Klaus Schaub lurking just out of sight and well concealed by propaganda. Time will tell who is correct, but it will not be war which decides. For as the old maxim goes, war doesn’t decide who is right, only who is left.

At least that’s the way I see it.

Until next time folks,

This is Darrell Castle.

From castlereport.us, appearing here by permission.