Volodymyr Zelensky's defenestration?

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By ALEX KRAINER*

The Ukrainian government appears to have lost the support of some of its staunchest allies.

On May 16th, I published an article entitled “Metropolis cannot stand”, about the events surrounding Ukraine, including my personal meeting with a very close friend of one of the protagonists of the events, a high-level Western official working for the Ukrainian side. I mentioned that this person, as well as German Chancellor Olaf Scholz and some other European and NATO officials (including eventually Italy's Prime Minister Giorgia Meloni) are not sounding very convincing in their declarations of undying support for Ukraine.

This impression would be somewhat difficult to articulate, but it is at least possible to contrast it with the impressions conveyed by people like NATO Secretary General Jens Stoltenberg, German Foreign Minister Analena Baerbock, or Economy Minister of the latter country, Robert Habeck. These, yes, are convincing. As well as the President of the European Union Commission, Ursula Von der Leyen, and her head of gardening – oops! diplomacy – Josep Borrell.

The silent conspiracy is real

Perhaps we can characterize the first group (the unconvincing ones) as the opportunists. They are, however, reasonably intelligent individuals, with seemingly pragmatic and somewhat constructive inclinations. The other group, on the other hand, are the blind and ideological fanatics, who seem unable to correct course, no matter the consequences or the costs. Ultimately, I concluded my story by saying that: “I believe that in the near future we may see an abrupt change in Ukraine, perhaps a coup against the regime of Volodymyr Zelensky and a capitulation of its armed forces”.

Almost as if endorsing the surreal speed with which events have unfolded, this conclusion ended up being corroborated less than 24 hours later: according to veteran journalist Seymour Hersh, a group of European countries, led by Poland, and including Hungary, Lithuania, Estonia, Czechoslovakia and Latvia, are secretly urging Volodymyr Zelensky to end the war, even at the price of his resignation. In other words, Zelensky's government would have lost the support of some of its staunchest allies.

China coming in

President Volodymyr Zelensky, who is now apparently very concerned about his future and his physical safety, may be receptive to these messages and may agree to step down if given credible security guarantees. Meanwhile, China has already named its peace envoy for Ukraine, who will surely come up with deals that Ukraine “will not be able to refuse”. The circle of people who will remain fully committed to the Western project of “destroying Russia” from Ukraine seems to be shrinking dramatically.

It never hurts to remember that, already in January of this year, the internecine struggles in Ukrainian government circles resulted in the helicopter crash, which killed several senior security and interior ministry officials. Since then, several top government officials were replaced, but Volodymyr Zelensky is still clearly worried about the presence of traitors in his own ranks. Now, the Empire's agenda in Ukraine shows obvious signs of failure, and all reasonably competent opportunists are ready to jump ship, handing the field over to blind ideologues and fanatics. Not a good group to bet on.

Economic and financial impact for the rule-based order

Again, one of the relevant questions in this whole story is: how will this affect the “rules-based global order”? The hardest blow may be economic, and it will manifest itself first in financial markets. British and European central banks will have to step up quantitative easing (newspeak to refer to printing money out of thin air). The Fed will have to catch up, but it will likely do so after a long delay. The result could be a further collapse of bond markets and a rise in interest rates, reigniting bullish trends in European equity markets and global equity markets. commodities, probably led by the energy market, followed by industrial metals and commodities agricultural. Read: economic recession with inflation or stagflation.

In 2021, I made a similar prediction about British bonds, in an article dated October 27, 2021, “The fall of global Britain: an investment hypothesis”. I predicted that the pound and the Gilt (British Treasury Bond) would collapse and that the FTSE (London Stock Exchange Index) would likely rise. Here's what happened over the next twelve months:

Gilt dropped as much as 27% during that time; and the pound, about 22% (at its lowest point) of its value. The FTSE has not risen much, but it has clearly bucked the trend and continued rising, reaching a new all-time high last month (April 2023).

These developments clearly corroborate the idea that we are witnessing the monetary collapse of an empire in decline: its financial obligations and currencies are progressively losing value and investors have no choice but to buy real assets, driving up share prices. We should expect more of the same throughout the western world. Volodymyr Zelensky's defenestration, whether by resignation or coup, is likely to be a catalyst for the process.

It's not complicated, but it's going to be spotty.

The syndrome isn't complicated to understand, but it isn't necessarily easy to navigate: markets don't start moving the day we learn something new. Instead, they start moving at some point when the critical mass of participants starts to take action. The transition will be invisible to fundamentals analysts, but will become noticeable in the price trajectories of the relevant securities. That's why I strongly believe that the most reliable way to navigate changes will be through systematic trend tracking.

I have repeatedly drawn attention to the idea (actually an empirical fact) that the best way to protect your equity from inflationary or stagflationary consequences is through exposure to currency futures. commodities. A comprehensive approach would then include trying to acquire some farmland (if possible), some gold and silver bullion, and using available liquid assets to acquire significant exposure to currency futures. commodities. Also, I think cash can become an issue.

Put more explicitly, last week I met two individuals who told me the same story: they had bank accounts in German banks and, without any warning, their accounts were frozen. No reason was given and no remedy appears to be available. They can't even get in touch with anyone from the banks.

I had a different but similar experience. After trying to withdraw some money from an ATM, the machine swallowed my card and did not give me the requested money. However, my account was debited for the withdrawal amount. The money recovery process has already proved to be very difficult and frustrating. The bank customer support is all kindness and politeness, but the promised period of 15 days to remedy the problem came, passed, and the money was not refunded.

Now only the imponderable remains: this time the estimated time to resolve the problem is 50 days, but it could take longer… Just 18 months ago, Amazon canceled my account and appropriated between 4.000 and 6.000 euros in copyright that they owed me. Of course, if I could spend half a million dollars in legal fees and pursue these royalties for the next 10 years or so I could probably get it all back, but the system is clearly against the average person and scarred by abuse.

Long story short: avoid holding large balances at multinational banks and other companies that are beyond the reach of local authorities or otherwise too costly to use. These rigs attract a very large clientele with seemingly competitive and convenient services, but once their fishing nets are full they are in a position to abuse their customers' trust. And they probably will.

*Alex Krainer is a financial and geopolitical analyst. Author, among other books, of Mastering Uncertainty in Commodities Trading.

Translation: Ricardo Cavalcanti-Schiel.

Originally published in Alex Krainer's TrendCompass/ Substack.


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