For weeks I thought it was all just posturing. For weeks, I figured that Biden would work out some sort of diplomatic solution. I could not help but think of every headline about the buildup of troops at the border of Ukraine as a way of making us feel more comfortable with war. I saw the headlines about the phone calls between Biden and Putin, and I hoped that both sides would conclude that war is not worth the cost.

Today I see that I was wrong. Now I see the headlines of war. I see the pictures of explosions and troops with dirt on their faces. I think of the timing. I think of the message. It seems like the war is on cue.

We’re in a midterm election season now. Inflation is high. Democrats are teetering, fearful of a difficult election ahead, fearful of massive losses. Even with very positive redistricting results so far, Democrats could still suffer heavy losses. But this war. It seems like a timely distraction, almost as if Vladimir Putin, President of Russia, is trying to do someone a favor.

He could have waited for later. Putin almost certainly knows the polling isn’t looking well for Democrats. He also knows he has an ally in Trump. Starting a war now could put Biden on his heels and make the Democrats look weak. But there is something else.

In a tiny Reuters article, there is a murmur to suggest that the war in Ukraine could do what the Fed couldn’t do alone. The war could help to bring the temperature down for the world economy, and bring inflation to heel. Honestly, I don’t know exactly how that could happen. Reuters quoting the New York Fed president, John Williams:

“My expectation is that we can manage, if you will, the soft landing we often talk about in monetary policy, which means keeping the economy basically in a strong place and growing,” while restoring more balance between supply and demand, Williams said during a virtual event organized by New Jersey City University.

That article had just two paragraphs, and I quoted the second one. It’s almost like it’s a secret code to investors. “If I wave my hands like this, bail. If I wave my hands the other way, hoist your sails.”

Eyes are now on the markets as if most of us have enough money in the markets to matter. 90% of the stock in America is owned by the top 10%. Yes, the market dipped for a short time this week with angst over the war. They’re not even really sure if they can call it war yet. Maybe they’ll just call it an “incursion”. But whatever happens in Ukraine, we can rest assured that over the long term, stocks will continue to outperform inflation. From the Equitable Insurance Company:

An analysis of holding periods between 1926 and December 31, 2017, found that the annualized return for a portfolio composed exclusively of stocks in the S&P 500 index was 10.22% — well above the average inflation rate of 2.89% for the same period. The annualized return for long–term government bonds, on the other hand, was only 5.63%.**

If I were to talk to my 19-year old self, I’d say, “put $50 a week into an index fund.” So the news of the war has little hold on the securities markets except for the addicts, the speculators. There must be something else going on.

Putin says that he’s just really, really concerned about security. He doesn’t want NATO in a country that borders Russia. To hell with self-determination. Ukraine belongs to Mother Russia. Please come home.

Putin is very quiet about the money. Russia has a pipeline that runs through Ukraine. Ukraine earns $7 billion a year in transit fees alone for that pipeline. According to Wikipedia, the Ukraine GDP is $622 billion for a population of 44 million people. That sounds like a really nice chunk of change with a GINI index of 26.6. That means the income is distributed very evenly there compared to the United States (41.1) or Russia (37.5).

I’m not so sure Putin’s complaint is about NATO or restoring the Russian republic as much as it is about natural resources. India Today has a nice rundown of the loot that Russia would like to take from Ukraine:

Besides natural gas, Ukraine is loaded with minerals like coal, iron, titanium, and other non-metallic raw materials. It’s the leading country when it comes to reserves of iron, titanium, and non-metallic raw materials.

Russia’s fight with Ukraine will have a spillover effect on the coal and electricity sector. Last year, India imported coal to meet the domestic coal shortage. And with the Russian invasion of Ukraine, that supply chain is going to take a hit.

Ukraine’s natural resources are enormous, with exactly 5% of the earth’s natural and mineral resources. Ores like titanium, iron, and non-metallic raw materials are major Ukrainian exports.

It just so happens that Ukraine has the second-largest reserve of natural gas in the world with just over 1 trillion cubic meters to work with. I hear it gets pretty cold in Russia. I think they would prefer to be friends with Ukraine, but if they can’t have that, they’ll just be really assertive.

I think there is one more thing that bugs Putin. His economy is not doing well. He needs a distraction. A war could fit the bill. A conveniently timed war could provide enough entertainment to keep the homeland happy with Putin, and satisfied enough to ignore the wealth that has been stolen from the people of Russia.

According to a 2017 report by the Commission on Security and Cooperation in Europe, Russian oligarchs and officials have worked with the western banks to siphon off money stolen from the Russian people. The report titled, “RUSSIA’S WEAPONIZATION OF CORRUPTION (AND WESTERN COMPLICITY)” had this to say:

The Russian brand of corruption thrives off of globalization and depends on access to the global financial system. Under this model, weak property rights and lack of rule of law support a corrupt system at home, where markets are distorted and courts are politicized. State funds are looted and assets are acquired through corporate raiding and asset stripping. Cronies then siphon off national funds to safe havens outside of former Soviet countries.

Sounds familiar, doesn’t it? Note the timing of the report. June 6th, 2017 — just a few months after Trump took office. And just after the invasion of Ukraine, who is praising Putin as a genius? Donald Trump. Never forget that Trump is a card-carrying member of the Rentier Class. This is what I just don’t get about people who support Trump. Why would they support someone who praises, even if indirectly, the crony capitalism of Russia?

When I see a headline about the war, I’ll remember that war is a useful distraction from the corruption in the world.

Write on.