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Preventing WWIII: Part 2 – Reviving Western Deterrence

by with No Comment Behavioral SentimentFeatured HighlightsRisk Analysis

Preventing WWIII: Part 2 - Reviving Western Deterrence

Opinion: The following article is commentary and its views are solely those of the author.

Aggressive Western Action Can over-extend China and Revive Needed Deterrence.

Some cliches are just correct, in spite of their being cliches – “if you want peace, prepare for war” is one. But really it should be “if you want to avoid war, deter war”.

Therefore, it is not clear to me why there is opposition by some in the Republican party to fighting Russian aggression in Ukraine. For some, I guess it is a knee jerk reaction against Biden administration policy while for others it seems to be a general loathing of American involvement in the world. 

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Each is understandable on its own but does not take into effect the appeasement of Russia will have on Western deterrence around the world – including in the Western hemisphere and the Indo-Pacific. While most Americans understand that Russian control of Ukraine threatens the main Western European countries, the key to Russian imperialism really is in the south. Historically, Russia has always tried to find a warm water port to call its own. For nearly four centuries Czarist Russia fought Ottoman Turkey so that Russia could expand its territory southward and have a warm water presence in the Mediterranean. Currently, a Ukrainian presence in the Black Sea denies Russia even the opportunity to pressure modern Turkey to abide its wishes.

A Russian victory in Ukraine would mean dominance of the Black Sea by the Russian Navy and directly challenge Turkey to appease Russian power by giving them free passage through the Dardanelles to the Mediterranean. That in itself would not be worth much to the Russians without a port in the Mediterranean, which they currently have. That they have one goes back to the disastrous decision by the Obama administration to invite Russia back into the Mideast in order to take care of Syrian chemical weapons. This came, we all remember, when the Syrians laughed at Obama and crossed his “red line” about using chemical weapons against its own people. We might also remember when then Secretary of State John Kerry (the one who was never right on a single foreign policy issue ever) who, first demanded that Syria turn over all chemical weapons in a week, then reassured them that even if we attack it will be “unbelievably small”.

In 1973-4, Henry Kissinger brilliantly took advantage of the Israeli-Arab War’s outcome with Israel’s surrounding the Egyptian 3rd Army in the south and controlling the road to Damascus in the north, by brokering a cease fire on both fronts. This led directly to the expulsion of Russia/Soviet Union from the Middle East. While Russia continued friendly ties with the murderous Assad family – first Hafez and then his son, Bashar, they did not have a military, air or naval presence there. Due to this longstanding relationship with Assad’s Syria, Obama and Kerry thought it a brilliant idea to have them come in and do the dirty work that they didn’t want to do – prevent Assad from gassing his own people. 

As Russia came in and established air and sea bases in Syria and introduced the infamous Wagner group to carry out its brutal ground operations, Russia slowly started to strengthen its position in the region. While slyly allowing Israel to attack Iranian arms shipments meant for Hezbollah while pretending to be its ally, Russia formed a close  relationship with Iran. Wagner, which fought hand in hand with Hezbollah in order to prop up the Assad regime (and attack American forces fighting ISIS) is now rumored to be training Hezbollah in the use of Russian anti-aircraft systems. 

In addition, reports last week that an Iranian Ilyushin 76 cargo jet has now landed in one of the Russian air-bases they established after Obama’s kind invitation to return to the Mideast. This plane, filled with Iranian arms destined for Hezbollah has been unable to land in regular Syrian airports or bases because Israel continuously puts them out of service. Knowing that Israel would never attack a Russian base – this is a safe haven that Russia gladly supplies. 

When free countries unite in warfare there is usually one joint goal  – that they are all united to defend freedom – that is why they fight together.  While autocratic and totalitarian regimes fight together it is usually a combination of a negative goal – disturbing or destroying the current world or regional order – as well as the goal for each power in itself. Currently, the joint goal in the Mideast (of Russia, China, Iran and North Korea) is to hurt the main ally of the US in the region – Israel, in order to weaken and embarrass the US. For Iranians, they also want Israel destroyed. For Russia, they want Israel weakened so they can replace the US as the power broker in the Mideast. For China, it is to dismantle America’s control of the flow of oil and, eventually, the replacement of the USD in the global economy with the Yuan.

Ukraine is important in this calculus because, as we said above it gives Russia complete control of the Black Sea and will pressure Turkey – whose NATO membership is uses only to its own advantage – to break permanently with the West. While the Chinese theory is that the two fronts the US is supplying arms to, Ukraine and the Mideast, are tying it down and expending its resources it would otherwise use in the Pacific, in truth, an aggressive strategy on both fronts would be to over-extend Russian and Chinese resources in order to keep China from moving on Tiawan. A credible threat of destruction or even marginalization of the Axis allies in the Mideast – including (besides the soon to be gone Hamas) Hezbollah, Shiite-Iranian proxies in Iraq and Syria, as well as Iran itself combined with a major offensive in Ukraine will tie down Axis resources and possibly prevent a Chinese blockade or attack on Taiwan.   If its two main allies need full supply and full readiness to be able to respond to credible and massive attacks by Ukraine, Israel and the US, China itself might have to expend resources to prop up its own allies. 

Add to that a major show of naval force in the Indo-Pacific by Japan, India, Australia and South Korea combined with US forces will give China the choice of destroying their own wavering economy by attacking or blockading Taiwan or in maintaining peaceful Pacific trade routes while trying to prevent the collapse of its Axis allies. 

An immediate and radical change in policy can restore Western deterrence quickly.   Re-arming Ukraine and leaving Israel to do its job without pressure to stop in Gaza and to respond forcefully in Lebanon will send a strong message. Biden brought two carrier groups to the Mideast and told Hezbollah, “don’t”. But they did.  

In spite  of that  US Secretary of Defense Austin told Israel that its response to Hezbollah aggression in the north is “provoking” them.  

And the US hesitates even against Iranian proxies. Just now, the NY Times has reported that Biden-Blinken have turned down a Pentagon plan to be more aggressive in response to Iranian attacks against US forces in Syria and Iraq for fear of “provoking Iran” (this seems to tell us that the Austin complaint from Austin to Israel is really from Blinken).  

Iran never seems to fear provoking the US.   

Israel fooled itself by thinking Hamas was deterred by its destruction of an arms factory or two (as the US is doing now in Iraq/Syria) when proper deterrence would have meant them knowing we can and will go into Gaza and destroy their underground city as Israel is doing now. Instead, media fear mongers, backed by Israeli ex-Generals on the payroll of the US progressive left (via cushy think-thank jobs) combined with policy directives by successive governments have told us and Hamas time and time again that Israel cannot destroy Hamas as the cost is too high. I don’t want to speak too early, but that seems to have been as wrong as their assurance that Hamas is deterred since they want to drink white wine in the evening overlooking the Mediterranean while watching their children play innocent video games.

It is time to stop calling for cease fires and repeating UN hypocrisy and to start being aggressive and provocative in the defense of freedom. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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Preventing WWIII: This is a 1936 Moment for the Middle East

by with No Comment Featured HighlightsRisk AnalysisRisk Management

Preventing WWIII: This is a 1936 Moment for the Middle East

Opinion: The following article is commentary and its views are solely those of the author.

The wonderful historian and public intellectual Niall Ferguson has aptly called the current US-China relationship a “Cold War II” and the current debate in the punditry is if the Israel-Hamas war lead to a WWIII. But what if we are already in WWIII? While Russia and the rest of the world did not expect the war in Ukraine to still be fought nearly three years later, the Russia-Ukraine war is now clearly a part of the fight of the West vs the new Axis – Russia/Iran/China/North Korea. But it was the Hamas attack of Israel on October 7 and the response of the Axis and its allies that have more clearly established the battle lines.

We have Russian and Iranian weaponry vs. American and Israeli weaponry. The Russians and the Iranians are using what we so quaintly call “proxies” for a plausible (un)deniability, sheltering them from retaliation. Iran has its various Shiite militias, with Hezbollah being the strongest and most lethal. Hamas and Palestinian Islamic Jihad (PIF) are the Sunni useful idiots helping the Shiite empire to destroy their Sunni cousins by dying for the cause. The Shiite militias formed and fighting in Iraq and Syria along with the Houthis in Yemen round out Iran’s ability to pretend it is not fighting while creating a genocide of Sunnis in Syria and Iraq and Jews in Israel. On the Russian side we have of course the infamous Wagner Group which in its racist undertaking is taking over and subjugating sub-Saharan Africa in its run to control minerals, gold and diamonds. They are now helping Hezbollah with weaponry and training by providing anti-aircraft weapons. The two groups fought hand in hand saving Bashir Assad, the leader and butcher of Syria, to stay in power so they already have close ties. Wagner is Russia and Russia is Wagner. Hezbollah is Iran and Iran is Hezbollah. The quicker we understand this the better off we will be.

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We don’t have any details on Chinese or North Korean weaponry being used by Hamas or Hezbollah, but that might just be a timing issue. China has already decided not to report Hamas atrocities to its people in its official Chinese language news service and are eliminating Israel from its maps. It only reports Israeli’s response and has taken a clear stance supporting its ally, Iran. Will they learn from their Axis allies and also form proxies in Asia to destabilize countries like the Philippines or Vietnam while being immune to retaliation? They don’t need to conquer or even blockade Taiwan if they can destabilize their neighbors while still selling the West all that it wants to buy and inundate our youth via Tik-Tok propaganda.

Japan has realized what this war is about, and is supporting Israel like it never has. Being totally dependent upon the Mideast for its oil, Japan has never been a close friend of Israel. But they have now condemned the Hamas attack while refusing the criticize Israel’s massive response. The Japanese understand well that an Israeli defeat can lead to Chinese dominance in the Indo-Pacific.

Back to the Mideast – it seems we always go back to the Mideast.

Iranian backed Hamas and PIJ launched a brutal attack on Israel.

The Iranian backed Houthis in Yemen declared war on Israel and launched cruise missiles and drones in their opening attack.

Iranian backed and financed Shiite militias are moving to Syria and Lebanon hoping to open two new fronts against Israel.

Iranian backed and financed Hezbollah is attacking from the north in what, for some reason, we are not yet considering a war.

And Iran itself is feeling safe from attack from Israel or the US/West since “only” its proxies are fighting.

This is the remilitarization of the Rhineland of 1936 and a Western betrayal of Israel by hamstringing the IDF by allowing gasoline into Gaza or by a forced cease fire, will be the Munich, 1938.

Are we in WWIII yet? Not being an expert, I don’t know. But the main link tying the Axis together is Iran. They are the most experienced in exporting terror and supporting anti-Western regimes from the Mideast to Africa to America’s doorstep – Latin America. They support and are supported by the Castroite regimes in Cuba and Venezuela and have made deep inroads in Argentina, Brazil and now even Mexico. They are currently nearly as great a threat to the west as is China and probably a greater threat than Russia. A nuclear Iran would create three nuclear powers that could threaten the West as an Axis or independently. The Obama-Biden Iranian policy has been proven a total disaster and its seems that the Biden team is finally understanding this. But they can, in Margaret Thatcher’s famous warning to the first President Bush, “go wobbly” at any moment.

The only way to prevent a full fledged WWIII is Iranian regime change. This would bring the entire Persian Gulf (and its oil) into the Western sphere of influence as China does not yet have the naval power to challenge the US. Hezbollah would be instantly neutralized reducing the threat of war and denying the anti-Western powers another presence in the Eastern Mediterranean. Although the Syrian butcher, Bashir Assad would still have Russia to back him, it is not clear that Russian power alone could keep him in power. In Latin America, Iranian export of terror would stop instantly.

This does not mean that the US needs to invade Iran in order to defeat it. A majority of the Iranian people are sick of the Islamist regime and sick of paying the price for their being ruled by terrorists. The destruction of Iranian nuclear and missile facilities along with the destruction, by air and cruise missiles, of the main Revolutionary Guard bases will be enough. It is not an easy task -but one within the capabilities of the US Navy and Air Force. It is only the Revolutionary Guards that keep the terrorists in power in Iran – the regular Iranian armed forces can be left alone to decide if they want to help overthrow the regime or stay in their barracks. Once they see that the Guards are weakened it is a good bet they will take the side of the Iranian people and help topple the Islamist-terrorist regime.

Regime change in Iran in 2023 will change the global dynamic just as regime change in Nazi Germany in 1936 would have saved 70 million lives in WWII. A failure to act against the source of evil and to cut off the main link in the current Axis will just kick the can down the road – once again. We have appeased Iran enough and if the West and the US don’t act quickly it will have to act while simultaneously fighting off a Chinese attack in the Indo-Pacific – on its own or with its very own proxies – as well as terrorist attempts coming from Latin America and Russian nuclear blackmail in Europe.

And we haven’t even spoken of the West’s moral obligation to prevent a second holocaust, which will be the very first task of a nuclear Iranian regime.

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/

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Ready for Risks as Nervous Markets Await Plenty of Outcomes

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Ready for Risks as Nervous Markets Await Plenty of Outcomes

So you want to be a trader. You imagine that it will be fun and possibly easy to make money from the comfort of a cafe, office, maybe a bus or subway train with a simple touch to an app on your phone that allows seamless possibilities to take advantage of trends that are easy to spot. Yet, this may not be the week to decide on beginning your endeavor, perhaps you will want to watch the global markets and learn from the possible mistakes of others in the coming days.

Simple trends for the moment have largely disappeared and financial markets face a rather important week of data and global risk events that not even the most experienced trader can comfortably embrace. Risk events will shadow this week of trading. There will be a lot of drums beating and earplugs are recommended for speculators.

To get started the war in the Middle East, actually the war between Israel and Hamas is ongoing and it will not end soon. Israel doesn’t want U.S ground troops and while some media sources may make these claims, it is extremely unlikely to happen. Yes, the U.S has sent war ships to the Mediterranean, but this is largely to suggest to Iran that the nation not become overtly active in the conflict.

Global investors who have been around the block and have traded when other conflicts have escalated – Ukraine, Iraq, Afghanistan, African wars, and simmering feuds between China and India are somewhat used to these news flows and developing crisis forays. It does not make things easier, but at the same time being able to separate the noise from the actual reality of these events is essential. Learning to be mindful of the media and its frequent empty hyperbole regarding what could happen next is vital. Traders need to be critical thinkers.

If a day trader can step away from concerns regarding conflicts and focus on how behavioral sentiment is going to develop via the gyrations of financial institutions and larger investors, they will go a long way in starting to pursue a more tranquil path and find the ability to organize their thoughts quietly.

Gold is flirting with the 2000.00 USD mark per ounce. U.S indices continue to trade near lows and risk adverse tendencies will likely continue to flourish in the near term. There is a parade of important data releases and rhetoric that will come this week. Traders who are technically driven should consider paying attention to the economic reports and pronouncements that will come as they mix with business outlooks and varying time frames that must be considered when making bets on the financial markets.

Most of Monday’s economic reports are in already. Australia posted better than expected Retail Sales. German Preliminary Gross Domestic Product statistics came in with a slightly better than anticipated number, although growth is still negative.

Tuesday, 31st of October, China Manufacturing PMI – economic data from China came in slightly better than expected the past week, but shadows lurk and the manufacturing numbers will help provide insights regarding headwinds the nation is facing. The USD/CNY remains at elevated levels. Transparency remains a desire for international investors who want to participate in China.

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USD/JPY Six Month Chart as of 30th October 2023

Tuesday, 31st of October, Bank of Japan – the BoJ is expected to make no changes to interest rate policy (you have heard this song before), but the USD/JPY remains near the 150.000 level and the Bank of Japan is not comfortable with this higher ratio. The question remains how they can combat this value properly. By suggesting the notion the BoJ can intervene when they want to, can keep financial institutions from over aggressively buying the USD/JPY. Expect to hear some of these intervention warnings again tomorrow.

Wednesday, 1st of November, U.S Federal Reserve Funds Rate and FOMC Statement – Jerome Powell made it pretty clear in mid-October the U.S Fed will likely not raise its interest rate at this meeting. However, he warned the potential exist to raise rates down the road if inflation shows unwanted sparks. American consumers are a reason for concern too, although the Fed will not admit this – the U.S Fed would like to see less consumer demand which they believe would help decrease inflation. Problematically, U.S Treasuries are not only sticking near higher yields because of the potential of higher interest rates, but they are also being bought as a safe haven because of Middle East worries. This will continue to put pressure on the U.S government because paying off bonds with higher yielding rates of returns to investors can become increasingly difficult, particularly when U.S government spending appears to be nearly out of control.

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GBP/USD Six Month Chart as of 30th October 2023

Thursday, 2nd of November, U.K BoE Official Bank Rate and Monetary Policy Summary – no changes are expected by the Bank of England. Perhaps like the ECB last week the Bank of England will try to ‘sound’ a sedate level of rhetoric and say they are monitoring economic conditions which remain rather lackluster, but are showing slight signs of improvement via inflation and potential growth. The GBP/USD continues to fight near lows and the 1.20000 level is likely an important juncture.

Friday, 3rd of November, U.S Non-Farm Employment Change and Average Hourly Earnings – the jobs numbers are expected to come in less than the previous month’s results. The wages report could be important if there is a significant change not corresponding with the estimate. Inflation needs to show signs of decreasing before the U.S Fed backs down from its aggressive interest rate stance, if the Average Hourly Earnings number remains stubborn, so will the U.S Fed.

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Broader Alliances: Sustaining Economic and Political Power

by with No Comment Featured HighlightsRisk AnalysisRisk Management

Broader Alliances: Sustaining Economic and Political Power

The following article is commentary and its views are solely those of the author.

If the United States decides to abandon its role as the premier global superpower and shall only be a Pacific and Atlantic power, withdrawing as defender of free seas, free trade and freedom in general, its democratic allies will have to start looking elsewhere for broader military alliances. This large group of nations would have to defend their interests against a revanchist China tied to Iran, Russia, North Korea and many of the Latin American countries – possibly including Brazil, and South Africa who have questionable politics and outlooks.

Eastern Mediterranean Alliance: A Strong Sea Power

Here is a speculative, yet reasonable look at the future of the free world. Let’s start with the Eastern Mediterranean where the two major powers are Israel and Turkey. One cannot deny that both these countries outclass all others regarding military might in the region. Israel’s air force is second to none and its navy is becoming a strategic necessity as it needs to defend its natural gas fields miles offshore. It now has six submarines that are capable of projecting power anywhere in the Mediterranean and even into the Indian Ocean and Persian Gulf. Turkey is currently a NATO member, but it is not clear that this will outlast the first half of the 21st century.

There is currently an informal alliance among Israel, Greece and Cyprus (both NATO countries) via joint military exercises and intelligence sharing. The Israeli navy and air force train regularly with Greece and its special forces train in the Cyprian mountains with its army. It would be in all three countries interests to formalize a treaty – if not of mutual defense, at least of mutual aid during times of war. All three of these countries are democracies and all three have mutual economic interests.

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A formalization of this alliance makes sense now and if there is a NATO collapse it turns into a necessity for Greece and Cyprus. Adding Egypt (although it would be the only non-democracy) to this group would only strengthen the alliance and keep Turkey at bay. A post-Erdogan Turkey that is comfortable with its Islamic character and its modern society could even join this grouping with Israel as a potential peacemaker between the historic Greek-Turkish rivalry.

This alliance without Turkey is a powerful force in the eastern Mediterranean, and this alliance with Turkey could neutralize a nuclear Iran. A Post-Hezbollah Lebanon which is in the interests of all of these alliance members (including Turkey and Egypt), could become a reality and another member.

A New Alignment: The United Border Nations

What about Eastern and Central Europe? Poland is rapidly becoming the major non-nuclear European military power. Within the next few years it will outshine Germany and the U.K and rival France. It is quite clear, nuclear weapons aside, Poland would probably defeat Russia in a number of weeks, if not days if a conflict were to ignite.

Whether the Russian-Ukrainian war ends in a Russian defeat or in some sort of face saving armistice, Russia will not lose its aggressive nature or nuclear capabilities and it will inevitably become aligned more closely with China and Iran because of its current political nature.

The important new alignment will be categorization of ‘countries bordering Russia’. A new alliance of Poland, Finland, Sweden, Norway and the Baltic states – Lithuania, Estonia and Latvia together would have the land, sea and air power necessary to deter and defeat, if necessary, any Russian imperialist expansion. Even with closer ties to China it would be difficult to imagine that, over the next 50 years, Russia would be a threat to this alliance. Adding Ukraine to this grouping would make a powerful force. Its joint population of over 100 million people, while not quite Russia’s 150 million – would be a formidable adversary, especially as the technological skills of these countries is first world and continuing to improve. Adding the other former Warsaw Pact countries like Czech, Slovakia, Romania, Moldova and Bulgaria can only increase its potency.

Unlike the Eastern Mediterranean alliance mentioned above, this would have to be based on a mutual defense treaty in order to properly deter any Russian-Chinese-Iranian attack. Linking up, informally with the ‘new’ Eastern Mediterranean Alliance would create a powerful grouping of free countries against any attempt by authoritarian adversaries. Adding an economic aspect to these border nations and an alliance with the Eastern Med group with free trade zones would create a strong challenge to any attempted Chinese hegemony.

Asian Border Nations Group: Potential Look Ahead at Potential

If we were to unite the Eastern Mediterranean and Border Alliances to an admittedly non-democratic Asian ‘stans nations, including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan with a joint population of around 80 million, we are beginning to see the creation of a multi-cultural alliance that extends from the Arctic Ocean through Central Europe, Northern Africa and into Asia.

The Crucial Partner in Order to Balance Power: India

Which leads us to the Indian Ocean; a dominant India can help control the sea lanes from the Persian Gulf to the Bay of Bengal and down to Australia. An Indian-Australian alliance, along with Israel would create a democratic economic and military force that would keep China and Iran from dominating the region. This would require an Indian navy that is not only large, but effective also because it would hold a main responsibility for patrolling the seas from the Persian Gulf up to Australia strongholds.

As India also reaches its potential as a global manufacturing giant, it will be a force to be reckoned with. Including into this potent mix of nations, is the possibility of adding authoritarian countries like Saudi Arabia and the other Gulf states; along with Thailand, Myanmar, Malaysia and Indonesia who have strong ‘western’ economic interests and would create a formidable bulwark against China’s imperialist Belt and Road project.

Without the need to project naval power worldwide the Unites States could use it massive naval, air and ground forces to take better control of the Pacific Ocean along with Japan, South Korea and Australia.

If we add countries like the Philippines and Vietnam, then China would be deterred from further aggression. The only other region that would fall under American responsibility would be the Atlantic Ocean – the shipping lanes to Europe, West Africa and the Mediterranean. Along with the UK and France there would be no challenger to the control of the Atlantic. This could also lead to a revival of the old Monroe Doctrine and maybe free South America from the destructive influences of Iran, China and Russia.

The Global Economy and Free Trade Zones with a Stable USD as Reserve Currency

What does all this mean for the global economy? The free world along with its less than free allies who fear China, Russia and Iran could still maintain a U.S dollar based world. Free trade zones amongst and between the various alliances along with a revival of manufacturing led by a technology revolution using AI, quantum computing, renewable energy and space exploration could lead to a global resurgence of free countries that could stop the authoritarian appetites of Russia, China and Iran in its tracks. This can only happen with a stable reserve currency the ‘West’ can rely upon which is the USD.

Potentially a U.S freed from being the sole defender of freedom in the world, would help get America’s fiscal house in order and allow it to focus on being a dominant economic power. Is there a future for the ‘free world’ without a United States that projects power globally? Currently, a U.S withdrawal from global military assertion would certainly cause the end of freedom (economic and political) in the world for many nations. However, with the new alliances described above and a fiscally responsible United States, freedom could yet make a comeback.

Disclaimer: the views expressed in this article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.