RUSSIA’S SITUATION IS ACTUALLY DIRE

Today, Russia’s finance minister revealed that Russia has lost access to $300 billion of their $640 million in reserve funds. Thus, “debts in countries unfriendly to Russia we will pay in ruble equivalents.”

That - that there? - that is DEFAULT. That’s D-E-F-A-U-L-T. As in “sorry, we can’t pay you what we owe you.” It’s the national equivalent of bankruptcy.

Russia. Will. Default. On. Its. Debt.

CNN reports:

The default could come as early as Wednesday, when Moscow needs to hand over $117 million in interest payments on dollar-denominated government bonds, according to JPMorgan Chase. Although Russia has issued bonds that can be repaid in multiple currencies since 2018, these payments must be made in US dollars.

This will have major results, none of them good. Russia will be dependent on the good will of Xi Jinping to come through on that request Putin made for military and economic assistance, and Xi will be looking at a customer going belly-up. One thing everyone who has ever dealt with the Chinese knows is that they are very unsentimental when it comes to business.

This comes on top of the other consideration the Chinese must make regarding Putin’s plea for help: are they willing to jump into the international dumpster with Russia? If China breaks the sanctions to aid Putin, the sanctions get applied to China. Xi is already concerned about the slowing of the Chinese growth rate in GDP; he knows the Chinese people allow the Communists to run the show so long as they deliver the goods - the new homes, the good jobs, the economic growth. Mao could jump into the Korean War in 1950 despite the United States having The Bomb because - as he once said - where could we bomb China that it would hurt them? The country was so undeveloped it had no strategic targets. Today, China is nothing but strategic targets, and not just for missiles and bombs. The sanctions would definitely have an effect, and as big as the People’s Liberation Army is, it isn’t big enough to successfully put down widespread dissent in the country. And Xi knows that.

Nobody can say what the Chinese will do with total assurance. But the fact that Russia can’t pay its debts, and that the sanctions are working due to a unified West and the support of the rest of the world, - that’s a Big Fucking Deal.

UPDATE:

National security adviser, Jake Sullivan went to Rome today for talks with Chinese Foreign Minister Yang Jeichi. He stated to CNN: “We are communicating directly, privately to Beijing that there will abolutely be consequences for large-scale sanctions evasion efforts or support to Russia to backfill them. We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country anywhere in the world.”

Sullivan was equally blunt on NBC: “If they think that they can basically bail Russia out, they can give Russia a workaround to the sanctions that we’ve imposed, they should have another thing coming because we will ensure that neight China nor anyone else can compensate Russia for these losses. In terms of the specific means of doing that, again, I’m not going to lay all of that out in public, but we will communicate that privately to China as we have already done and will continue to do.”

This. Is. Important.

This also has an immediate effect in Ukraine.

Wars may appear to be won by winning battles, but the battle that has to be won before the battlefield battles can go into the history books is the battle of logistics.

Logistics. Is. Everything.

“My horse! My horse! My kingdom for a horse!” Richard III ended up buried under what became that parking lot in Manchester where he was found because he lost the battle of logistics. No horse. No escape.

Tom Ricks has written a deeply informative, piece about logistics that everyone ought to read:

“Say you and your family want to visit Granma back in Indiana, about 500 miles away. You and your partner throw the kids, the dog and some clothes in the minivan, and you’re ready to go.

“But wait: There is no food available on your route. So you go back inside and pack up a couple of days of meals, squeeze it into the back. And you feel ready.

“Also, there are no gas stations on the way. You don’t feel comfortable carrying gas cans in the car, so you get your pick up truck, and fill up some cans, and put them in the back. You can drive that while your partner drives the minivan.

“But also there are no dependable sources of potable water. So you put 200 gallons into cans and lift them into the back of the pick up.

“Also, there are no doctors or hospitals. So you persuade some medical people you know to come along in their own car. But they also need food and water and gas, and space for their bandages and medicines and equipment, so they bring two pickups with them, loaded up.

“Now we have a convoy of five vehicles. Ready to go? Not quite. There also is reliable information that you could be attacked along the way. So you get five truckloads of soldiers—two for the front, two for the back, and one to control and command their operations.

“But wait. This security force also needs food, fuel, and water. So that’s another five truckloads right there. Plus, they need ammunition and back up gear. And batteries for all their radios. Add another truck.

“When they show up, the medical people roll their eyes and say that with all these additional people, they’re gonna need another truckload of supplies.

“Finally, you have the convoy ready. You roll out and get about a mile. A truck gets a flat! Guess what: There are no automotive repair shops on your route either. So you round up a team of mechanics. They have their own truck, plus three for food and water. And two for fuel. And two truckloads more for spare tires, engine oil, filters, and tools.

“And finally, your convoy, now consisting of 25 vehicles, is on the road. But you need to avoid the main roads, which might be mined, or have ambushes waiting. So you take to the back country, even to dirt roads. That way is safer, but it also is mighty slow. In two days you make just 63 miles, and then begin to run low on food and fuel. So you hunker down and do some new calculations on how many more truckloads of those you might need.

“Now you are thinking like a military logistician.”

Analyst Philipps O’Brien points out that the limited Russian advance into Ukraine can be explained by the fact that the average Russian unit has a truck lift to take it 90 miles from the nearest large supply dump. The number of trucks on-hand must be doubled to get to a point 180 miles distant.

Basically, for a truck to make a round trip with supplies, there are only a certain number of hours they can spend on the road. The rest of the time has to be devoted to maintenance, meals, weapons cleaning and sleeping. At 90 miles, the truck can make two trips a day. At 180 miles, the truck is down to one trip a day. To keep the unit supplied with the same amount of everything it needs now requires two trucks, each making one trip a day. Further than that, the force must transport the supplies from the supply dump to a new supply dump closer to the front. That requires all the trucks that are supplying the force, and more.

The Russian army does not have enough trucks to support a force further than 90 miles without moving the supply dump closer. And that means they may have to make more than one supply dump change to accomplish the goal of taking control of a country the size of Ukraine. And once the supply dumps are inside Ukraine, the Ukrainian Army can attack them. Supply dumps are very vulnerable to having explosives thrown at them. You get all kinds of “secondary explosions” when the ammunition supply or the gasoline supply gets hit.

See how the logistics war happens?

Looking at the map, the only Russian movement anywhere that is further than 90 miles is from Sumy to Kyiv. And that one got stranded for a week in the famed “40 mile convoy” because the Russian trucks broke down. They needed maintenance. They had bad tires to start with. And they were driving down roads in the middle of forests, in which the Ukrainian Army could operate and attack them. Which has happened. The Ukrainians have knocked out somewhere around 10-15 percent of the Russian trucks, of which they have no spares.

Putin has a Potemkin Army.

He bought lots of nice scary-looking tanks, but he didn’t buy enough trucks to support that Army. That’s because all the Russian Army’s wars since the Chechen War have been fought within that 90 mile range.

Fixing a logistical fiasco requires time and a great deal of money. You throw money at your logistical problem and hope that the force in the field can sit tight until the cavalry gets there.

But what if you have no money?

Putin went to war because he viewed that massive $640 billion in foreign currency reserves as a moat. He didn’t believe Western sanctions could possibly go so far as to attack Russia’s central bank and render those foreign currency reserves unavailable.

As a tactical matter, the Russian invasion force is unlikely to face a serious counterattack in the near future. It is hard to imagine that, say, in the next two weeks the Ukrainians could push them backward.

Money and time. Do they have time? Could the invading force continue to degrade in the field? Absolutely. Could it disintegrate entirely? While that’s a low-probability outcome, it’s not impossible. The clock is ticking on the viability of the Russian army.

The clock is also ticking on Russia’s economic collapse. Every day, Russia’s economy gets worse. Last week J.P. Morgan estimated Russia’s GDP will decline by 12 percent in Q2. That’s approximately a decline of one percent of GDP every week from here on out.

As Hemingway pointed out in “The Sun Also Rises,” bankruptcy always looks like it won’t happen. Until suddenly it does.

And this is why the danger of a nuclear strike becomes only more likely the longer this goes on. We are dealing with a man who has said more than once that he cannot conceive of a world in which Russia is not given its due. This is a guy who will pull down the temple on top of him when he goes.

There. Are. No. Easy. Answers. Here.

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