It is not from the benevolence (kindness) of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
In the Real World the Trade Deficit Is More Important Than the Budget Deficit | CEPR
Dean Baker writes:
….the trade deficit is a direct measure of the amount of demand that is going overseas rather than being spent here. This represents income generated in the United States that is not creating demand in the United States. By definition, this lost demand must be made up by other borrowing, either by the public sector (i.e. budget deficits) or the private sector. Currently the trade deficit is running at an annual rate of around $480 billion (@ 3.0 percent of GDP), which means that the sum of net borrowing in the public and private sector must be equal to $480 billion.
Read more at In the Real World the Trade Deficit Is More Important Than the Budget Deficit | Beat the Press.
Europe’s Five Deadly Sins on Ukraine | Carnegie Europe
Jan Techau of Carnegie Europe writes:
….In recent years, Russian President Vladimir Putin has talked about the Kremlin’s fears of Western encirclement. He has declared that EU and NATO enlargement are part of a conspiracy to destroy Russia, that Ukraine is not really a sovereign nation, and that Western agents provocateurs were behind Ukraine’s 2004–2005 Orange Revolution.
Amid all that rhetoric, the West failed to recognize that Putin was deadly serious. Such talk was dismissed either as cheap propaganda or as the mild lunacy of a handful of overideologized true believers. Nobody imagined that Putin himself really believed his own bluster.
But for the Russian president, the fight over Ukraine is not an imperialistic adventure, it is a fight for survival against a mortal Western enemy. Just because observers in the West know that’s nonsense, that doesn’t mean that others think the same. Such Western projections were finally debunked when German Chancellor Angela Merkel remarked to U.S. President Barack Obama on March 2 that Putin was “in another world.”
Read more at Europe’s Five Deadly Sins on Ukraine – Carnegie Europe.
Recession time for Russia | The Market Monetarist
Lars Christensen at The Market Monetarist writes:
….. sharply increased geo-political tensions in relationship to Putin’s military intervention on the peninsula of Crimea has clearly shocked foreign investors who are now dumping Russian assets on large scale. Just Monday this week the Russian stock market fell in excess of 10% and some of the major bank stocks lost 20% of their value on a single day.
In response to this massive outflow the Russian central bank – foolishly in my view – hiked its key policy rate by 150bp and intervened heavily in the currency market to prop up the rouble on Monday. Some commentators have suggested that the CBR might have spent more than USD 10bn of the foreign currency reserve just on Monday. Thereby inflicting greater harm to the Russian economy than any of the planned sanctions by EU and the US against Russia.
By definition a drop in foreign currency reserve translates directly into a contraction in the money base combined with the CBR’s rate hike we this week has seen a very significant tightening of monetary conditions in Russia – something which is likely to send the Russian economy into recession (understood as one or two quarters of negative real GDP growth).
Read more at Recession time for Russia – the ultra wonkish version | The Market Monetarist.
The Crimean principle
The Crimean regional government in the Ukraine plans to hold a referendum, to leave Ukraine and join the Russian Federation, amongst its predominantly Russian-speaking population. The Russian parliament has voiced its over-whelming support for the idea.
Gary Kasparov, former world chess champion and member of the Russian opposition, points out that the same principle could apply to Kaliningrad.
Germany should adopt this law & offer referendum to Kaliningrad (Königsberg!) to rejoin Germany. I'd bet on result!
— Garry Kasparov (@Kasparov63) March 7, 2014
Geographically isolated from the rest of Russia, Kaliningrad — formerly known as Königsberg — was part of Germany (East Prussia) until annexed by Josef Stalin at the end of WWII.
Chili for Masochists: Asia’s Spiciest Foods | The Diplomat
By J.T. Quigley writes:
Bhut jolokia, also known as the ghost chili, is (according to Guinness World Records) the hottest pepper in the world. Remember the Thai Bird’s Eye Chili and its maximum Scoville rating of 100,000? Bhut jolokia tips the scales at between 855,000 and 1,500,000 Scoville units.
…..the Indian military has turned it into a “biological weapon.” Chili grenades are actually part of the Indian military’s counter-terrorism arsenal.
Read more at Meals for Masochists: 7 of Asia’s Spiciest Foods | The Diplomat.
Putin invaded Ukraine because he had to | Foreign Policy
Leon Aron at Foreign Policy writes:
The right foreign-policy move at the right time can boost a leader’s ratings and the regime’s popularity. This is doubly true for authoritarian regimes that lack democratic legitimacy, and it is true for Russia today.
In Vladimir Putin’s Russia, as one top pollster told me in Moscow a few weeks ago, “foreign policy is pretty much the only thing that works.” What he meant was that, with the country’s economy slowed to a crawl, and with the regime facing near-universal revulsion over the corruption, thievery, and incompetence of officials at every level, racking up foreign-policy successes has become vital to maintaining Putin’s popularity — which, in turn, is key to the legitimacy of the whole enterprise.
Read more at The Front Lines on Russia's Home Front.
India decidedly bullish
India’s Sensex, on the other hand, is decidedly bullish. Completion of a 13-week Twiggs Money Flow trough above zero signals buying pressure. Breakout above 21500 would offer a target of 23000*. Respect of resistance is less likely, warning of further consolidation between 20000 and 21500. Failure of support is unlikely, but would signal a primary down-trend.
* Target calculation: 21500 + ( 21500 – 20000 ) = 23000
Shanghai remains bearish
China’s Shanghai Composite Index is testing short-term resistance at 2080. Breach would suggest another test of 2180. But the primary trend is downward and follow-through below 1990 would signal a decline to 1850*.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
Nikkei finds Yen support
The US Dollar found solid support at ¥101 against the Yen. Recovery above ¥103 would suggest an advance to ¥111*. Breakout above ¥106 would confirm. Recovery above the December 2013 high on 13-week Twiggs Momentum would strengthen the signal. Breach of support at ¥101 is unlikely, but would warn of a correction to primary support at ¥96.
* Target calculation: 106 + ( 106 – 101 ) = 111
The Nikkei 225 found support at 14000. Recovery above 15000 would indicate another attempt at 16000. Completion of a 13-week Twiggs Money Flow trough above zero would strengthen the signal.
* Target calculation: 16000 + ( 16000 – 14000 ) = 18000