Shadow of the Dragon

Creeping toward Bethlehem

Time itself appears to be accelerating at a frightening pace. Only yesterday we were all worried about the Millennium Bug, and wondering how to make something special of that ultimate banality – New Year’s Eve 2000.

Now, a whole decade of it is gone by – it is 2010, and some people are having a great deal of difficulty wrapping their minds around that fact.

To make matters worse, somehow the end of January fell upon us totally unexpectedly. T&B has been aboard El Aleph, somewhere in the Andaman Sea, availing ourselves of an opportunity for some quiet reflection – rereading Ribakov and the 19th century Russian classics, and yet, thanks to the wonders of the internet, remaining current with the phenomenal world – the reflections cast on the wall of our cave.

The last time we checked, it was comfortably mid-month, with plenty of time to get our paper out the door during January. Now, somehow, it is the 31st, and we are still struggling. We hope that the wait has simply whetted your appetite. In any event “January” is a mere convention! We have decided that this year January is the month that ends when we finally get T&B published – not a day sooner. Indeed, we may well date it January 33, 2010.

As we go to press, we are receiving numerous queries regarding the significance of the Paulson remarks about Russia pressing China to sell Fannie and Freddie bonds. Simultaneously, and without any need for Russian encouragement, the Chinese are telling Washington in no uncertain terms that any sale of weaponry to Taiwan will result in sanctions against the US.

As regards the Paulson remarks, we find it taxes credulity to imagine that the Chinese take Russian investment advice, or that they were simply too obtuse to realize that the US Agency bonds were toxic waste. That said, at the time the purported advice was given, a US client state had just launched a brutal attack on South Ossetia, killing a dozen Russian peace-keepers in their sleep, this with the active encouragement of the Cheney faction; Washington then took loud umbrage at Russia’s stinging military response, impotently threatening Russia with all manner of sanctions before Sarkozy finally settled matters, preserving the rump of Georgia, and alas, its sociopathic president.

Times have changed – the days are over when the US could mete out punishment pretty much as it chose to any country whose policy happened to cause displeasure, while the very notion of anyone punishing Washington seemed absurd.  The US is by far the world’s largest debtor, and this brings certain limitations. Russia is not much of a threat; her aspirations to super-power status are a thing of the past – China is perhaps another matter altogether. Any Western diplomacy aimed at pushing the two closer together sets an entirely new standard for idiocy!

This all fits well with our subjects in the current issue: the investment consequences of the ongoing shift in global economic power, and Russia’s New Asian Century, an old theme which is playing out very much as expected.

The New Year found us a bit cautious in our investment approach, and that has not changed – to state that the global economy is skating on thin ice when we ourselves are faced with an imminent temperature drop from +33 degrees to -30 centigrade as we step off the plane in Sheremetovo seems a bit ironic, so we shall refrain.

Happy shivering!

T&B

p.s. After more than a decade in Russian finance, piracy would seem an eminently logical career progression.

For those curious to know where Russia strategists migrate when our beloved Moscow freezes over, please follow the appended link:
http://www.facebook.com/photo.php?pid=4442469&l=42bf00ea6d&id=583713102

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