‘Archduke Ferdinand’ Moment? Drums Of War Grow Louder In Ukraine and Middle East

Friday, July 18, 2014
By Paul Martin

Friday, 18 July 2014

Today, Asian stocks were mixed but the Nikkei fell 1% and European indices are down this morning after U.S. stocks fell. Risk aversion has returned to markets on concerns that the tragedy could lead to an escalation in the military confrontation in the Ukraine and tensions and even conflict with Russia.

While defensive assets were quickly rotated into, the VIX, which measures volatility and is sometimes dubbed the “fear gauge”, shot up as much as 17%.

Geopolitical tensions with Russia and in the Middle East are leading to safe haven demand and there are bargain hunters buying gold bars and coins at these levels.

With the U.S. seeking to impose tough new sanctions on Russia, we appear to be on the verge of a new and more intense phase of currency wars and indeed of an economic war.

What Happened To MH-17?
There is much speculation as to how it happened, with claims and counterclaims and much pointing of fingers. The Ukrainians and the Russians are blaming each other. U.S. politicians such as John McCain and Hillary Clinton have been very vocal in blaming the Russian separatists.

The plane was flying at around 33,000 feet. This suggests quite sophisticated, high tech weaponry which is largely beyond the capabilities of the insurgents. The insurgents rely primarily on shoulder-mounted rocket launchers. There is evidence that suggests that they commandeered more sophisticated surface to air missiles – a BUK missile battery – in recent weeks. There remains doubts as to whether they had the necessary radar equipment, whether they have the fifteen man specialist crews needed to man the BUK missile battery and whether they would be capable of shooting down a plane at 33,000 feet – if even in error.

There is very little concrete evidence at this time that could allow any side to come to definitive conclusions. The black boxes and recording devices could provide answers but, depending on who secures them, even that evidence would likely be disputed given how bad relations have got in Ukraine and between NATO, many western powers and Russia.

There needs to be a forensic and unbiased investigation by the U.N. or by another genuinely neutral body. World leaders demanded an international investigation into the tragedy.

The tragedy could mark a pivotal moment in the worst crisis between Russia and the West since the Cold War.

A Butterfly Flaps Its Wings And Your World Changes
A butterfly flaps its wings and your world changes.

The tragic deaths of 298 innocent civilians on the Malaysian passenger jet is partly due to the dangerous game of poker currently taking place between major powers and the lack of will or complete failure to broker a meaningful ceasefire and peace negotiations.

Real people, people like you and me, have had their lives destroyed. Yesterday morning, many of those 298 people woke up in the comfortable homes around Europe and started preparing for departure. They were excited about the prospect that they would be enjoying the beauty of a far distant land and gain a reprieve from their daily routines.

The conflict in Ukraine was probably known to them due to it being headline news for months now. It may have been a concern, but not a serious one. They probably hoped for the best and hoped that international governments would find a resolution.

In a way, they may have felt it was remote to them, not immediate, a different place with people who spoke different languages, had a different history. In a flash that illusion was gone and their lives and the lives of the participants in the conflict became forever linked.

The Rest…HERE

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