Why Russia may finally invade Ukraine

President Putin, a KGB veteran, has a problem. A large part of the Russian Federation’s budget is from oil and gas exports. As the prices of oil has dramatically slumped, the Russian economy is in serious trouble as over 25% of its GDP is from petroleum products.

The Russian central bank has just raised its key interest rate from 10.5% to 17% overnight! That means that the Russian government is desperate to attract foreign capital as its ruble collapses, having lost almost 50% of its value against the U.S. dollar.

It also pays foreign debts in U.S. dollars, so the cost of buying those dollars has just doubled! Imagine having a $1,500 a month mortgage and within a few months, you are required to pay $3,000 a month. You get the point.

Why has the currency collapsed? Oil prices, and sanctions over its meddling in Ukraine. This can lead to mass public protests and social upheaval in Russia.

That leads me to think that Mr. Putin may decide to start an all out war with western Ukraine. Why? Because its takeover will lead to an end of the sanctions, as they’ll be pointless.

The sanctions don’t just hurt Russia. They hurt the western countries that are effectively blocked from doing business in Russia.

Saudi Arabia is acting like a monopoly, driving down the price of oil as it has nearly $1 trillion in reserves, and it knows that U.S. shale oil and other producers will be driven out of business. Why?

Because it costs them $80 a barrel to extract the oil. If you are selling it at $60 or less, it’s a disaster. That’s good for Saudi Arabia, and bad for U.S. businesses. Once Saudi Arabia is finished, the consumer will know it as oil prices will rocket up. That’s all that the U.S. public will care about.

I don’t know if our government has a hand in this; that lowering oil prices was manipulated to hurt Russia because of Ukraine. Russia is heavily dependent on its energy exports. It also hurts ISIS, Iran, Venezuela and other oil producers that we want to hurt.

Our government may have made a secret deal with the Saudi’s to send U.S. troops to protect Saudi Arabia if ISIS attacked it; in exchange for pumping oil as fast as they can to depress the price of oil. As Saudi Arabia has that nearly $1 trillion in cash reserves, I’m sure that they think (as does the west) it’s better to spend down that money than lose the country to ISIS.

Eventually, we shall know the real story. Governments have a technique not to release the real story until decades have past. By then, no one really cares. How many of us care about what happened in the 19th century to anyone? Almost no one.

Who really pays attention to President Kennedy’s assassination stories ? Only the conspiracy theorists. Even if there was a conspiracy, it’s just a footnote of history. Why? Time creates objectivity and blood runs cold.

But in the meantime, everyone is being hurt.

So once Russia assumes total control over Ukraine, sanctions won’t mean anything. Since the west has a very short memory, it will be likely that the sanctions will be very quietly lifted piece by piece and by then, oil prices will be heading up again.

The U.S. public will ignore sanctions news, but focus on gas pump prices. It will be the lead story for weeks.

That’s what Mr. Putin hopes, and as the Russian public liked him defending Russian nationals in Ukraine, his popularity may surge again.

After 9/11, President Bush’s popularity surged to record highs when he decided to strike back at countries, one of which had nothing to do with 9/11. So it doesn’t matter what a “leader” does, just so he “does something.” As President Putin is far smarter than President Bush (as is almost anyone), war could be coming.

I doubt that President Obama, a smart but naïve president, will do anything. He just wants to get along with a major power, and only attacks weak countries using drones.

On the other hand, Cold War II could be really beginning to the delight of the defense industry.

It’s going from bad to worse.