War threat in Ukraine

[Craton]

I started this thread in the Business Investment Economics thread to maybe focus on the economic /social impact of the war. For examples issues around the loss of Ukraine grain to world markets impacting on political/economic stability.

There are a number of threads on the conduct of the war and so on. I thought this one might focus on the above issues. I started it before the invasion when investors might have some consideration of the economic consequences. Frankly I think they are enormous.

meanwhile , in the real world

Russian forces made minor advances in the ongoing offensive in eastern Ukraine on April 19, seizing several small towns and advancing into the key frontline towns of Rubizhne and Popasna. Russian forces continued major assaults with heavy air and artillery support but are continuing to build the logistics and command-and-control capabilities necessary for a larger offensive. Russian forces have not achieved any major breakthroughs, nor have they demonstrated any new capability to conduct multiple successful, simultaneous advances. Russian forces additionally made grinding progress against remaining Ukrainian defenders in Mariupol’s Azovstal Steel Works and announced plans for a May 9 Victory Day parade in the city – indicating Russian forces will declare victory in Mariupol by that date at the latest.
- ISW

@Dona Ferentes

As per @basilio's OP and post above, can we keep this thread just on Business Investment Economics?

I've been posting up "war reports" over on the Russian Invasion thread. Perhaps your above post would be better suited there?
Up to you, your call.

 

[Craton]

tell you what @Craton . At least I'm on message, rather than the post previous to mine. I have set the screens and don't get General Chat, as I prefer to talk about stocks. Sorry if I offended you.

No offence taken and my post wasn't intended to upset either.

Certainly the post before yours wasn't appropriate and I'm sure the man with the big stick, is keeping an eye over proceedings in this thread and has taken note.
Please don't think I've singled you out, just my attempt to keep things organised between the two threads.

E.g. I've heard online discussion that if the hostilities continued into 2023, especially the shelling and bombing, Ukraine probably wouldn't get crops into the ground.

Even if the conflict did end now, the sheer cost of rebuilding will be in astronomical. The mental scarring will be intergenerational IMHO and so the economic scale of getting anywhere near back to normal, boggles the mind.

I also heard that Putin and his croonies have taken/stolen an estimated $1 trillion from the Russian coffers for their own personal gain. Makes me wonder how many luxury yacht makers and mansion builders will go out of business.
Seriously though, what impact has Putin and his Siloviki excesses had on the financial and business world?
One could reasonably fathom that those excesses inflated the price of luxury goods and if nothing else, promoted corruption and dishonest business (and political) practices.

The spread of that corruption as we've seen, has transgressed borders and again, to the deteriment of the average person's quality of living and buying power.

 

[moXJO]

I’ve been a member since March 2020.

GG makes an accusation, refuses to offer evidence, and then blocks so he can hide from the truth.

Ignorance is bliss, for some.

That's when covid started in Australia..... suss

 

[moXJO]

Possibly fantastic news if it isn't a trap or fake news.



Possible that Russia may be running out of resources and need to prioritise other areas. Or that they have come to the realisation that they shouldn't be caught up on one area.

Well done to those Ukraine fighters. Will go down in history.


Expanded (top account is pro Ukraine)

 

[Dona Ferentes]

Possibly fantastic news if it isn't a trap or fake news.



Possible that Russia may be running out of resources and need to prioritise other areas. Or that they have come to the realisation that they shouldn't be caught up on one area.

Well done to those Ukraine fighters. Will go down in history.

As I understand it, the Black Sea fleet Naval infantry was in the fight at Mariupol and hence any move against Odesa couldn't happen. Then the Moskva went down. Also the Chechens were there, but probably less effective than some thought.

A whole lot of reconsideration happening?

 

[Craton]

Thus Mariupol, and indeed probably all Russia's current/ongoing conflicts, has caused Putin to weigh up his "moral sunk costs".

Keeping in mind that Russia's high priest has given his blessing to inflict terror, ah I mean, for the "special military operation".

The problem of moral sunk costs pervades decision-making with respect to war. In the terms of just war theory, it may seem that incurring a large moral cost results in permissiveness: if a just goal may be reached at a small cost beyond that which was deemed proportionate at the outset of war, how can it be reasonable to require cessation?

On this view, moral costs already expended could have major implications for the ethics of conflict termination. Discussion of sunk costs in moral theorizing about war has settled into four camps: Quota, Prospect, Addition, and Discount.

A nice counter to the above is the "moral sunk costs fallacy fallacy". No not a typo:

Don’t cry over spilled milk, or so the expression goes. The so called sunk cost fallacy claims that there is a bias humans have to follow through on an endeavor if we have already invested time, effort or money into it, whether or not the current costs outweigh the benefits.

It is irrational to use irrecoverable costs as rationale for making a present decision.
If we acted rationally, only future costs and benefits would be taken into account, because regardless of what we have already invested, we will not get it back whether or not we follow through on the decision.

My take is that moral sunk costs, at an emotive level, is a "thing" that can be applied to all investments across the board.

So then and just focusing on the two in conflict:
Russia has two options, either carry on as before (and Russia will as the moral compass has left the building) plus, it has already sunk huge amounts into gaining territories in Georgia, Moldova and Ukraine or withdraw. Highly unlikely but maybe after Victory Day [9 May] and spin that into some semblance of leadership and sound economic management.

Ukraine has only one option; defend at all costs, continue to throw everything at the invaders including (literally) the kitchen sink and don't spare the rod!

 

[moXJO]

Ukraine is being fed arms from the rest of the world. At some point Russia has to have used its quota that was allocated to use in Ukraine. The sanctions must be cutting into their ability to resupply.

Seeing lots of evidence of Russian troops leaving all equipment as they go AWOL as well.

 

[noirua]

Ukraine war: Arizona sends charity estimated $400,000 worth of tactical, defensive supplies

The charity Evil Cannot Enter Heaven raised an additional $75,000 from individual donations over the past two months.

www.foxnews.com

 

[Craton]

Indian's position within the context of this "Clayton's WWIII"

From the India Economic Conclave 22nd Apr 2022.

On the day 2nd of India Economic Conclave: 'Russia is already facing a hard cash crunch but this war had to happen still India is in good position', says Geopolitical Strategist, Peter Zeihan in an interesting conversation with MK Anand (MD & CEO, Times Network) on the 2022 India Economic Conclave

"One way or another, the world will have to get used to four to five million barrels less of Russian crude, later this year."

Have the markets started to factor in a pending oil shortage and how that will impact on world economic output?

 

[Dona Ferentes]

Possibly fantastic news if it isn't a trap or fake news.

fake news

this is the seating arrangement

 

[Dona Ferentes]

"One way or another, the world will have to get used to four to five million barrels less of Russian crude, later this year."

Have the markets started to factor in a pending oil shortage and how that will impact on world economic output?

Schlumberger and Halliburton have left Russia. How do they keep their wells operating, let alone drill without them?

US production would fall dramatically if those two companies decided to not operate in the US. They are vital to world oil production. Russia doesn’t have that expertise, let alone the equipment.

Optimising flow from an oil well is a tricky business

 

[3 hound]

Halliburton have left Russia. How do they keep their wells operating, let alone drill without them?

Is this a joke, Halliburton one of the most immoral corrupt companies around is pretending to have a moral compass.

Something doesn't add up.

 

[Craton]

A two part expose by Aussie "Perun" an excellent piece on "The Long War" aka cost of war and sustaining it.

14 Apr 2022
Part 1: The Price of War - Can Russia afford a long conflict?

Description:
So apparently hour long presentations on defence investment weren't dry enough, so I'm dusting off the Economics degree (strongly recommended when pairing with military or strategic studies) to ask the question of what the economic situation may be if this war drags on.

22 Apr 2022
Part 2: Ukraine vs Russian - Who wins a war of hardware attrition?

Description: Continuing on from our look at the relative economic power of Russia as compared to Ukraine and its supporters in NATO, today I look a little more at the question of military equipment resupply specifically.

 

[Craton]

First signs of stress in the West's armament supply chain?

Forbes from early Mar 2022 and this from 27 Apr 2022 Defense News reads in part:

WASHINGTON ― The U.S. may not be able to make more of the shoulder-fired Stinger anti-aircraft missiles it has been sending to Ukraine until at least 2023 due to parts and materials shortages, the head of manufacturer Raytheon Technologies said Tuesday.

The revelation, during Raytheon’s quarterly earnings call, underscores the challenge facing the Pentagon and defense industry as they seek to boost arms production in response to the ongoing Russia-Ukraine conflict. The bottleneck is fueling recommendations from Capitol Hill that President Joe Biden invoke the Defense Production Act to prioritize supplies of components for weapons like the Stinger.

Further in the article:

Echoing a Center for Strategic and International Studies assessment, Blumenthal said the U.S. had likely sent Ukraine one-third of its Javelins and that it would take a year to ramp up Javelin production and 32 months to replenish Javelin supplies.
“The cupboard is empty, or it will be very, very shortly unless the president invokes the Defense Production Act to provide that demand signal on an expedited basis,” Blumenthal said.

So the costs mount up. With the US coughing up around $2.26 trillion on borrowed money in the 20 year Afghanistan effort, that's not including the lost and ongoing human costs, I'd reckon the West's combined contribution to Ukraine could already be surpassing that eye watering number.

What really is eye watering though is the projected interest cost for that little dance in Afghanistan:

We’ll keep incurring costs long after President Biden's pullout from Afghanistan is complete. Naturally, the United States has financed the Afghan war with borrowed money. Brown University researchers estimate that more than $500 billion in interest has already been paid (included in the $2.26 trillion total sum), and they figure that by 2050 the cost of interest alone on our Afghan war debt could reach $6.5 trillion. That amounts to $20,000 for each and every U.S. citizen.

 

[gartley]

Scomos bushmasters finally arrived in Poland. Wonder how long they last out in the field. Appears quite a few arms supplied by west falling into Russian hands...

 

[3 hound]

Scomos bushmasters finally arrived in Poland. Wonder how long they last out in the field. Appears quite a few arms supplied by west falling into Russian hands...
View attachment 140917

Have we switched to talking about Afghanistan?

 

[Dona Ferentes]

not from the Guardian,

(PS find the declining power with bottomless resentment and thousands of nuclear warheads <Martin Wolf>)

 

[noirua]

Russia shuts off gas supplies to Poland and Bulgaria

Russia has cut off natural gas supplies to Poland and Bulgaria, dramatically escalating its response to Western sanctions imposed on Moscow over the war in Ukraine.

edition.cnn.com

 

[Smurf1976]

Is this a joke, Halliburton one of the most immoral corrupt companies around is pretending to have a moral compass.

Something doesn't add up.

It's about technical ability, ethics or not.

 

[Craton]

Some interesting numbers with1000's of businesses exiting or suspending business with Russia, possibly leading to recession in the short term.

From: $1 TRILLION Estimated Loss of Business Due to WAR. Top 10 Company Losses.

Company	Estimated loss and or write down/off
Netflix (Online Streaming)	$54.0 billion (stock valuation drop due to losing over 700k in subs)
BP (Oil/Gas -UK)	$25 billion (exit and loss of a third of reserves)
Shell (Oil/Gas - UK)	$5.0 billion
Exxon Mobil (Oil/Gas - USA)	$4.0 billion
Societe Generale (French Bank)	$3.1 billion (write off)
Citigroup (Banking/Financial Services)	$3.0 billion (in losses)
Renalt (French Car Manufacturer)	$2.42 billion (write down)
Carlsberg (Brewer)	$1.4 billion
AB InBev (Brewer)	$1.1 billion
McDonalds (Fast Food)	$600 million (plus $50 million to be paid to employees)