Post by
Experienced on Feb 26, 2022 11:48pm
Optics vs Reality
So far we have seen lots of press about the sanctions on Russia. The popular press makes it all sound like a devastating blow to the Russians when in actual fact the sanctions are by and large toothless tigers.
The latest one announced was the expulsion of Russia from SWIFT. But wait. We need to look at the fine print. Energy trade was excluded.
This begs the question - What else does Russia export that could be covered by these new sanctions?
The short answer is not much. So this latest measure will not have any significant effect on the Russian economy and certainly won't change Putin's mind.
Besides all this, Russia and China each have their own version of SWIFT, albeit, very small and less developed than SWIFT but it does provide an alternate channel for Russian goods to be sold and paid for. BUT the press will never tell you about that. Probably because they don't even know about it because it wasn't covered in the press releases by the US Government and the EU.
What us as investors need to address is the question of how the manipulators on Wall Street plan to play this next week given that most people don't have a clue about how international markets really work and how to figure out what is noise and what is really important. Whichever way the denizens of Wall Street decide to go, you can bet that their trading floors are going in the opposite direction. The trick is to go with what they are doing NOT what they are saying.
In my case, as mentioned before, I am overweighted cash, so if they take the market down, I will have to buy things on sale like them and if they decide to take the market up, I will sell and increase my cash position for when they decide to take the market down.
The reason I am so glib about all this is that since energy has been excluded from the SWIFT decision and SWIFT is last big thing the West can do, there is very little from a pure economics and finance point of view to change the economic situation from what it was before the invasion. This comment is not intended in any way to minimize the tragedy of the potential loss of life and dislocation of hundreds of thousands of people as a result of the stupidity of this war.
Comment by
autofocus111 on Feb 27, 2022 11:43am
Ex "I am overweighted cash" Not sure about holding just cash. I have my 'cash' assets split roughly evenly between electronic fiat, physical gold, and self-custodied BTC.
Comment by
Experienced on Feb 27, 2022 1:15pm
I wasn't recommending that people just hold cash. If you recall from my earlier posts I mentioned that I was currently about 40% cash.
Comment by
autofocus111 on Feb 27, 2022 2:38pm
Yeah I'm ~25% in 'cash' as well, but a broader version of that as I alluded to in my previous post. As the recent invocation of the Emergencies Act demonstrated, access to electronic fiat can be frozen. PS: ENB is a core holding for me. Owned it (via ENF.T) along with TRP and PPL (via PVE-UN.T) for well over a decade.