Time to call Putin's nuke bluff?

Investment Analysis Clubs Macro Economic Trends and Risks
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I’ve been hearing more and more that WWIII has already started. Enough so that I now agree. For example, consider this:

https://eand.co/is-this-world-war-iii-eed6d0e2dec1

Now Bill Ackman agrees:
https://www.cnbc.com/2022/03/07/russia-ukraine-bill-ackman-s…

I understand why we are not directly involved - it would make WWIII a formal reality, and bring the possibility of nukes being used by Putin, which he has threatened. But maybe we need to call his bluff. As Ackman says:

But Ackman argued that NATO’s reluctance to intervene due to the nuclear threat posed by Russia was a poor strategic move.

“What then do we do when [Putin] wants more?” Ackman asked. “The nuclear threat is no different when he takes his next country, whether it is part of NATO or not, and by then we are strategically worse off.”

We need to get involved. Start with no-fly. Stop him. Now. Risk the nukes as bad as that sounds.

While I have been rotating my portfolio since January into more value (but not out of tech completely either), I have been reluctant to do more. For example, to abandon QQQ entirely go full value, or large cash. Over the last 5 years each of my panics were soon reversed as mistakes. And I’ve let that guide me this time around. If I had stuck with my January portfolio I’d be 12% lower still on top of my 18% loss YTD. I think it was a mistake this time.

But my guiding principle in this is either:

  1. This ends soon, and markets pop big time
  2. This escalates, and my IRA becomes the last of my worries
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Calling his bluff is not hard. Just do it in a way he did not expect.

Ignore the Ukraine. Do the LAST thing Putin can manage.

Have other areas adjoining Russia start to take Russian land near them and claim it for their own. This opens up second, third, and fourth fronts for Putin to fight–simultaneously. If the Ukraine attack is poorly prepared, it is because Putin stripped other parts of the military to supply them–and that means the rest of the Russian military is even more poorly prepared.

Start cutting up Russia like the turkey it is–and everybody gets a portion. This all happening at the same time puts Putin between a rock and a real hard place. He might go nuclear–which means he lost, and he will know it.

Revolution !!!

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bjurasz

But my guiding principle in this is either:
1) This ends soon, and markets pop big time
2) This escalates, and my IRA becomes the last of my worries

Concur. It’s either A or B.

A. There comes an end phase. The world does not end. Good companies that we can buy at deep discounts are good decisions. Major gains to be realized.***

OR

B. Escalation. Major nuke exchange. NOTHING will matter, least of all what we “have in the bank”. IT ARE OVER. HELP FAMILY AND FRIENDS AS YOU CAN.

Stark but fact.

(***But how deep and how wide will be the bathtub curve of the market? Troublesome, but it will have a bottom and it will have an upturn.)

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The nuclear threat is no different when he takes his next country…

I disagree with Ackman for two reasons.

First, actually quite surprisingly, it isn’t even clear that Putin can take Ukraine. It is shocking how poorly the Russian military is performing. They don’t want to be there; the Ukrainians are willing to die to keep them out.

Second, because Russia looks like they have gotten themselves into a quagmire, time is on our side. The longer the quagmire exists, the harder the hit to the Russian economy. In a few weeks, spring will be in Europe and dependence on Russian gas will diminish. In the months that follow, NATO can deploy more troops to the borders, the West can arrange alternative supplies of oil & gas (to the degree possible), and as the Ukrainians become better armed and equipped, the Russian task of just taking Ukraine becomes that much more difficult.

Hindsight being 20/20, NATO should have called the bluff back in November when Russia started building up troops along the Ukrainian borders. They could have deployed 10,000 or so NATO troops into Ukraine for a “friendly joint training exercise.”

Of course, that didn’t happen because no one wanted to “provoke” Russia. Turns out Russia does not need provocation to attack. That’s what everyone got wrong.

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Third reason - Let’s not be so flippin gungho to put our soldiers back in yet another war of choice.

Of course, it is rarely those that would be sent to fight that are so eager to have us back in a war.

They could have deployed 10,000 or so NATO troops into Ukraine for a “friendly joint training exercise.”

This assumes Ukraine would have authorized such. From every indication prior, Ukrainians at all levels of government were under the false impression that Russia was never going to attack - that the USA was wrong. Perhaps we even asked Ukraine if we could send in troops and they told us no.

01/28/2022
Ukrainian president downplays U.S. assessment of imminent invasion
https://www.politico.com/news/2022/01/28/ukrainian-president…

Ukrainian President Volodymyr Zelenskyy on Friday publicly downplayed the threat of an imminent Russian invasion, adding to the dissonance between Kyiv and Washington.

His remarks put more daylight between the Ukrainian government and the assessments of U.S. officials, who repeatedly have warned that Moscow could move its troops across the border at any moment.

Speaking at a news conference in Kyiv, Zelenskyy accused Western media reporting of undermining Ukrianians’ faith in their government and stoking economic panic across the nation.

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Second, because Russia looks like they have gotten themselves into a quagmire, time is on our side.

As much as I hope this is true, I am compelled to point out that Russia has been in Ukraine for a week. When we talk of “quagmire” I’m thinking of Afghanistan: 10 years for Russia, 18 years for the US. Or Vietnam: 20 years.

“A Week” might be premature to declare it so.

The longer the quagmire exists, the harder the hit to the Russian economy. In a few weeks, spring will be in Europe and dependence on Russian gas will diminish.

Dependence on that gas surely peaks in winter, but it’s not like it goes away in Spring, Summer, and Fall. It still runs much of their industry and economy.

Hindsight being 20/20, NATO should have called the bluff back in November when Russia started building up troops along the Ukrainian borders. They could have deployed 10,000 or so NATO troops into Ukraine for a “friendly joint training exercise.”

Having NATO deploying troops - and fighting - in non-NATO countries seems a recipe for disaster. Not that what we’re witnessing isn’t also a disaster but it’s hard to see how a handful of NATO troops could dissuade Putin from what he surely wanted to do (and propagandized for months prior.) Would having troops from Syria, Lebanon, and whatever have stopped Bush/Cheney from invading Iraq?

Of course, that didn’t happen because no one wanted to “provoke” Russia. Turns out Russia does not need provocation to attack. That’s what everyone got wrong.

I don’t think the analysts got it wrong, I just think they believed the American public was not ready for yet another war on foreign soil after our most recent debacle nearby. That doesn’t make it right, it just makes it what it is. It’s easy to paint a rosy scenario of “what if”, but “what if” American troops were dying anyway? Should we send in even more, to a country for which we are ill equipped to invade, supply and defend, when Russia has a common border a thousand miles long? And hundreds of thousands of troops and rail lines that run right to the border?

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