What Goes Up Must Come Down – Including Prigozhin
The US stock rally is plummeting. US unemployment is falling. China is crashing. Its citizens are fleeing. Its population, declining. And Russia's military champion fell from the sky like Icarus.
A lot of things that went up recently came down hard today. The most notorious of those was the formerly ascendant leader of Russia’s most victorious forces, which sacked the tiny town of Bakhmut, gateway to Wagner’s mutinous exit. Having conquered Bakhmut after many months of fighting, the Wagner forces beat a quick retreat and left the country.
Of all the things that tumbled today, Prigozhin’s landing had to be the hardest. He fell from the sky like Icarus, who lost his wings because he flew too close to the sun. As Prigozhin was making his own personal exit from Putin’s capital today, his plane tumbled straight down from the sky with a missing wing like … well, a man jumping out a high window, arms flailing. Russia must have run out of high windows for its dissidents or mutineers to leap out of, or there was simply no window high enough for a man of Prigozhin’s caliber or for the level of betrayal he displayed toward Putin, with whom his rebellion struck a little too close.
Prigozhin was the man who had the guts to say Putin was lying when he claimed his invasion was about NATO. Prigozhin tried, however, to take the blame off Putin by saying Putin had been deceived, unequivocally claiming that NATO was a false pretext concocted by Russia’s own military industrial complex. (Yes, they have one, too.) Prigozhin stated emphatically (and at risk of his own life) that, in his opinion as Russia’s most successful military leader, NATO never posed any actual threat to Russia. He said he saw how that narrative was falsely assembled by the MIC in Russia to goad the nation to war, which he claimed was so the weapon-industry oligarchs could fill their own pockets and so the generals could win shiny new medals to bolster their careers. (Just saying those were the antagonizing statements that enraged Russia’s MIC and Putin and led to Prigozhin’s reported demise.)
Apparently the barium borscht, which Putin likes to serve his opponents and traitors, was also running low in Moscow during Prigozhin’s visit this week, given that an eye-opening death by rapid descent was preferred. Some say Putin served up death in a box of wine this time, loaded on Prigozhin’s plane with a bomb inside right after all the cargo was inspected — a last-minute present to board the plane. Some say terrorists provided the wine. (Is there a difference when someone focuses his weapons on intentionally blowing up mothers and children by the tens of thousands if not hundreds of thousands?)
Meanwhile Ukraine noted with concern the falling support by some Republican candidates in last night’s presidential debate for Ukraine’s defense against Putin. That concern was expressed by a Ukrainian legislator even as Ukraine retook another tiny town in eastern Ukraine in a battle reclaiming lost land, using a convoy of US-supplied Bradleys. The battle was hard-won like Wagner’s taking of Bakhmut, except that it took many months less than Wagner mercenaries spent on Bakhmut, and several more small towns have been won.
Somehow the many months Russia’s most vicious forces spent in their conquest were readily dismissed while the weeks Ukraine expended on its reclamation in the region are deemed a disappointment. I think Ukraine just spent far too much time talking up its summer offensive, which talk also gave Russia months to dig in its defenses. Ukraine raised the bar of expectations for itself in something that was never going to be an easy fight.
Had Ukraine said nothing, the perception would be that they are taking back their land piece by piece while not losing any more of it in other areas. That may well happen to Russia’s occupying forces like bankruptcy — bit by bit then all at once because nations often reach a certain point in a region where it finally becomes clear to themselves that they are losing and then they clear out in rapid retreat to end their losses … as we saw at Kkerson. We shall see. It looks far from over at this point, but the tide clearly turned many months ago, and Prigozhin put an exclamation point on that at Bakhmut. Now Russia’s champion has been turned into an exclamation point, plunged like a spear into the ground to show emphatically what happens to those who speak against the Russian MIC or Plan Putin.
Unemployment tumbles, so do stocks
Moving on to economics, stocks took off like a plane from the tarmac this morning because of AI-powered Nvidia’s impressive report. With the NASDAQ immediately climbing more than a hundred points, it looked like the dying bear rally was given a boost, but the rally quickly fizzled and tumbled out of the heights like a Russian private jet with its wing blown off. As I started writing this editorial, the NASDAQ was down from yesterday’s close by about 170 points. I think it bodes poorly for the massive AI rally of recent months that it cannot perform even on a day when Nvidia hit its rocket boosters, full throttle. The market tumbles helplessly toward the ground.
Unemployment, which had seen a tiny rise near the start of the summer, just plunged again, crashing to its lowest point since … well, since the Fed started fighting inflation with the ostensible goal of raising unemployment enough to curb consumer spending. But, hey, at least consumer spending is the one thing that hasn’t gone down in this economy. Summer spending at bars and restaurants actually soared!
Even I — the guy who long said jobs would hold out long enough to cause Powell make a nose-cone landing with his 747 size economy — finally said a couple of months ago that I thought unemployment would start to rise this summer as layoffs would be whittling jobs down enough to finally match the available work force, after which unemployment would start to slowly rise, but it hasn’t so far. I am not surprised by that, however, as the shrinkage of the labor force was substantial, and companies are still reluctant, therefore, to let any workers get away. Besides, the lag effect of Powell’s tightening already assures he’ll see no “soft landing.”
Even Dollar Tree, which you would think would gain popularity in a time when consumer’s must be trimming budgets somewhere to dodge inflation, tumbled today. Its stocks fell for the same reason many retailers said they are struggling — not because of dwindling consumers but because shoplifting is soaring. Maybe we should start taking small crimes seriously again. In the local news of the main city in the county where I live, a few businesses have announced in the past month (another just yesterday) they are leaving town due in large part to break-ins, shoplifting, and unruly homeless people that now litter the city with their encampments, even recently flooding its local library and city hall with a sprawling homeless camp. It is, of course, a very liberal city — a wannabe Seattle — that attracts such features with its enabling policies.
Existing home sales in the US have fallen for 16 out of the last 18 months.
Oil prices, which I had expected to rise this year in my start-of-the-year predictions, didn’t rise for long before they started falling again due primarily due to concerns about China’s failing economy. Goldman Sachs had recently predicted a significant rise in oil, too.
That great Sino giant that conquered the economic skies of this globe for the past two decades also fell further in the news today. It’s local government financing vehicles that crashed into a $9-trillion boondoggle are a problem that is growing worse:
That path forward is a treacherous one for President Xi Jinping’s government. To thread the needle, the provinces and cities whose borrowing drove the world’s largest infrastructure boom will need to roll back their spending and restructure debt — all without drastically dragging down economic growth. If they fail, it could thrust the world’s second-biggest economy into a prolonged malaise….
Several companies haven’t been able to generate enough income to pay interest on loans. Banks are unwilling to lend, investors are shunning their bonds, bonuses are being cut and it’s becoming harder to find viable investment projects, the employees said, asking not to be identified due to the sensitivity of discussing government finances publicly….
“A collapse in local government investment would be comparable to the economic impact of the crisis in the property market.”
Yeah, you gotta watch that last bit in any communist or former communist country when talking about things like the economy or the special military operation. It can take the air out from under your wings in a hurry as many have found. All of China’s spending fuel is gone. The ghost town glory days are being seen for what they were — Xi’s folly. But talking about it openly can get you … Prigozhined.
Hedge funds have dumped a record amount of Chinese stocks and are continuing on that dive path.
Chinese citizens are fleeing the falling economy in which they had been locked down as prisoners in their own nation (and own homes) for months and are now slipping into the US across the Rio Grande. Some conspiracy folk say with absolutely zero evidence but lots of speculation these are Chinese soldiers making a cloaked entrance as refugees into the US. (They also said Operation Jade Helm in the Obama days was going to place the entire US under military control.)
I think it’s going to be pretty hard for all those mothers and children who are swimming across the border as soldiers to take the US without any weapons, given they are captured on video as crossing with just about nothing. (Watch the embedded video in the article below.) I’m pretty sure the flight of capital that is certainly happening from China underscores the likelihood that we are seeing a corresponding flight to economic refugees. Why wouldn’t they want to go where their money is going?
The hopeless expression of a former Chinese construction worker in the video also adds up with China’s decline. It these illegal aliens are soldiers, China has decided to embed some of its elderly with them — perhaps for the experience they bring. If the elderly do not bring a reign of terror, then imagine the bombs all those Chinese children accompanying the invasion in their father’s and mother’s arms will be able to smuggle into US daycares. Sometimes application of common sense would be helpful, but conspiracy theories are so much more energizing.
Finally, a Chinese nuke sub apparently went down never to rise again … at least not with living crew … off the coast of Taiwan. The report, not substantiated by the Chinese government, which doesn’t substantiate much these days, says the sub ran aground, and the crew were killed as a result of the damage to the sub. Again, the report is unconfirmed by China, and the sources of the report are unnamed as is the standard of the New Journalism these days. (Not being the one to write the reports, all I can do is point out the credibility gaps to be weighed.)
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