United States Sacrifices Poland And The Czech Republic

Posted 22 Sep 2009

One technique for valuing fiat currencies is treating them as the common stock of issuing nation.  Almost all empires end for financial and economic reasons.  Gold's two week moving average is over FRN$1,000.  The United States is proving to be no exception.

On 17 September 2009 the United States formally announced the intent to abandon the plan for placing ballistic missile defense (BMD) armaments in the Czech Republic and Poland.

 While the stated purpose of these missiles is protection from Iranian intercontinental ballistic missiles (ICBM) the geo-political implications are mainly with Russia.  

As the United States has overextended itself as the policeman of the world the national debt has skyrocketed and the FRN$ is under intense pressure because it is destined like all other illusions before it for the fiat currency graveyard.  Therefore, it is not surprising to see Poland and the Czech Republic feeling betrayed by being sacrificed on the altar of fiat currency.

</embed>

REGIONAL POWER

Russia is the dominant regional power and is extremely pleased by this move.  The BMD is likely not the key issue but instead the US presence on Poland's land as the BMD will instead by operated from navy ships in the Mediterranean.  Indeed, Poland has a deep history of tense relations with Russia and understandably their feeling of betrayal must lead to despair.  

If the US had BMD on Polish land then the US would feel more inclined to protect those assets and this would likely enhance Polish national security.  Indeed, this implied security guarantee likely carries more weight than the explicit NATO one.

But now the Russians must be ecstatic at the US choosing to cut and run from the region on this issue.  Russia wants, even needs, to be recognized as the ascendant power in the former Soviet Union.  This will spill over into bilateral relations between both the United States and Europe with other former Soviet Union states, like Georgia, Abkhazia and South Ossetia, as well as Central Europe's role as a base for US power declining.  Additionally, Vladimir Putin is very upset at the Western media's silence and the American Empire fanning the flames of ethnic strife:

I was in Beijing at the time.  I looked through the world electronic media.  Complete silence.  As if absolutely nothing is going on.  It was as if somebody ordered everyone to keep their mouth shut.  To those who organized all this; I can only say congratulations.  Congratulations.  You did an excellent job.  The only problem:  your results were poor and this will always be the case because the work you do is unfair and immoral.  In the long run immoral policies always lose.

IRAN AND ISRAEL

The US seems hell-bent on striking Iranian nuclear facilities.  Any strike on Iran would likely require significant steps such as destroying the air support, navy, anti-aircraft weapons, the nuclear facilities, assess the damage and finish what was started along with any Iranian retaliation.  The likely move would be blocking the Strait of Hormuz where significant amounts of worldwide oil production passes.

With each super oil tanker worth about $175M at current prices the owners and their insurance companies would likely not want their boats in the area should a conflict erupt.  Without the black oxygen the worldwide economy would likely asphyxiate.

Understandably Israel is most concerned with Iran's nuclear ambitions and could unilaterally entangle the US with its own airstrike on Iran.  To prevent this the US has tried to impose sanctions on Iran, particularly with gasoline as despite having oil production Iran does not have much oil refinery capacity.

 On 24 September 2009 the G-8 will meet and all will need to be in agreement in order to disrupt the flow of gasoline.  But Russia alone can both produce and transport not just Iran's import deficiencies but its entire demand.  And just a few weeks ago Russia opposed new Iranian sanctions.

GEORGIA, ABKHAZIA AND SOUTH OSSETIA

In August 2008 when the Kazakhstan currency, the tenge, went poof I also wrote about the implications of the Tbilisi pipeline in relation to the Georgian and Russian conflict.

 The 1,099 mile Baku-Tbilisi-Ceyhan crude oil pipeline from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean should begin transporting in 2009 with an initial transportation of 1 million barrels a day, about 1% of worldwide production, with a capacity of 10 million barrels a day.  This is an incredibly important geo-strategic asset.

The tensions around Georgia, particularly in the capital Tbilisi, have gotten increasingly tense lately.  For example, 20 August 2009 Georgia said it seized two cargo ships visiting Abkhazia.  Georgia is attempting to forbid economic activities with Abkhazia from foreign ships in international waters without permission from Tbilisi.

Abkhazia and South Ossetia broke away from Georgia in the 1990's.  Georgia has significant US backing and about 90% of South Ossetia are Russian citizens.  Russia has recognized both Abkhazia and South Ossetia as independent countries and has stationed thousands of troops in both regions.

As Reuter's reported:

Georgian Interior Ministry spokesman Shota Utiashvili said Tbilisi would hold Russia, which controls Abkhazia's borders and its coastline under a deal with the region, responsible for any attacks on its ships.  Abkhazia's navy does not exist," he said. "There are no Abkhaz territorial waters, as these waters belong to Georgia. If there is an attack on Georgian ships, Russia would be responsible, not the separatist government."

Clearly Georgia is willing to seize foreign ships in international waters only because they feel the safety provided by their alliance with the American Empire.  But as Poland and the Czech Republic have found out when the interests of the Empire are no longer served the countries will be discharged.

GOLD TO OIL RATIO

The gold to oil ratio has been consolidating around 14.

This suggests that oil, priced in gold, is still fairly expensive and outside historical norms.  The reason may be due to Peak Oil or the exacerbation of geopolitical tensions.  This is a prime reason that physical gold is on the move and China is teaching its citizens how to buy silver.

CONCLUSION

The United States, a once great land of plenty, is now failing nation with empire abroad and tyranny at home.  With millions marching on Washington DC the Bonus Army march in 1932 which included 43,000 and about 17,000 World War I veterans should be remembered where President Hoover ordered General McArthur to fire on former veterans.

 The worldwide Empire is beginning to retreat so the geo-politics and geo-strategy are changing.  For the nearly a decade the FRN$ has been weakening at an extremely quick pace.

 The United States has quickly and willingly sacrificed this aspect of the Polish and Czech Republic relationships.  Other nation states which think they have a deal with the United States should be wary as they will likely receive the same treatment.

Disclosures:  Long physical gold and silver with no position in the problematic GLD and SLV ETFs.