Where finance and media intersect with reality


In the Blind Spot (Oil sanctions, roubles, gain-of-function)

Screenshot 2022-08-09 at 07.12.04

Owing to holidays and other unexpected absences, this edition of the Blind Spot Wrap is in catch up mode. It is compiled by Dario Garcia Giner (DGG) and Izabella Kaminska (IK).

Economics, finance and markets:

  • Apple has asked suppliers in Taiwan to comply with the longstanding Beijing rule that products manufactured on the Island are labelled ‘made in China.’
  • Palantir stock drops 15 per cent after unexpectedly poor results and weak guidance.

Energy matters:

  • Norway is creating an energy rationing contingency plan.
  • A shortage of energy and food is forcing the EU to quietly begin unwinding sanctions, argues Irina Slav at the Oil Price.

    Slav spells out what only a writer called Slav can spell out these days. The EU and the US are backtracking on sanctions. A key indication of this is the new trend for backing an “oil price” cap rather than a complete embargo and the application of ever greater exemptions for Western commercial players. And yet, the theatre continues. The West’s jibber jabber simply doesn’t match what is happening on the ground. What’s more, there is an increasingly comical reluctance at the political level to admit the policy is leading to energy and food shortages in Europe and beyond. At the Blind Spot we have argued from day one that the sanctions were at risk of causing us more harm than Russia. This was obvious to anyone with the capacity to look at the market dynamics objectively. We have been similarly critical of policies focused on energy caps, which are equally impossible to enforce without the full assistance of Saudi Arabia — the world’s swing-oil producer. Even with Saudi Arabia on board, there’s no guarantee a cap can undermine Putin because of the logistics involved and the share of gas in the energy mix picture. That G7 governments have been so disingenuous about these realities with their own populations is incredibly disappointing. – IK

  • The Spectator’s Owen Matthews argued last week that the Russian economy isn’t doing OK at all.

    Matthews’s evidence is a new study published last week by the Yale School of Management which argues that the stability of the rouble and Russian stock exchange are not indicative of economic health because they have been “manipulated”. As Matthews notes: “Only a fraction of pre-war volumes of roubles are actually traded, and then most are notional dollars, not real ones. As the Yale study points out, a parallel black market has sprung up where actual cash dollars trade at up to a 100 per cent premium on the official rate: a return to a Soviet-style system of official and unofficial exchange rates.”Matthews has a point. But we don’t think it matters. Nothing, after all, is fair in love and war, and the capacity to manipulate prices and fend off equity sales by applying capital controls was always going to be part of Putin’s defensive toolkit. That this behaviour is not very free market is an entirely bizarre argument, especially when the West itself is basically forgoing monetary neutrality and trade liberalisation for similar political reasons. For now, high prices can compensate Putin more than enough for the drop in overall sales volumes. And while it is true that eastern demand cannot easily replace Western demand in the short term, meaning the Russian economy will be exposed to potential deficits that have to be financed with inflationary money-printing, this again misses the point. It’s not that the Russian economy is flourishing. It is that it can handle the economic “hurt” better than Europe can. It’s like some sort of macho boxing match — the issue at hand is who can better handle and withstand the punches being thrown at them. Putin’s bet is that his economy is harder and more resilient — or at least more likely to grimace through the pain — than Europe’s. – IK

We didn’t start the fire:

Boiling geopolitical pots:

  • Amid a recent flare-up between Israel and the Islamic Jihad, a small Iran-backed militia in Gaza, the Israel Defense Forces (IDF) have released footage showing their impressive ability to carry out targeted assassinations with missile strikes.
  • An interview with gun-for-hire Erik Prince, which looks at the rise and fall of Blackwater.
  • Politico on the bizarre Soviet movie that predicted Putinism.
  • Amnesty International released an article condemning Ukrainian forces’ fighting tactics, setting up military bases in residential areas (including near schools and hospitals), and launching attacks from civilian areas.

    That Ukraine is using such tactics shouldn’t be too surprising. Armies like the Ukrainians, or even militias like Hamas or Hezbollah, are forced to rely on the protection offered by civilian infrastructure in order to make military strikes by their stronger opponents as costly as possible in terms of PR damage.- DGG

Bitcoin drama:

  • Craig Wright, who claims to be the inventor of Bitcoin — the anonymous Satoshi Nakamoto — was awarded just £1 after the conclusion of his suit against YouTube blogger Peter McCormack for a series of tweets in which the YouTuber claimed Wright was lying about creating the cryptocurrency. The symbolically low figure comes as the judge described Wright’s case as ‘straightforwardly false in almost every material respect’.

    The Craig Wright affair is indicative of the fact that those with money can easily take advantage of the legal system. – IK

Covid’s not over:

  • Germany announces the return of Covid measures for the Autumn period on expectations Covid will return.
  • Dr. Richard Ebright, a major gain of function critic, says that Anthony Fauci is hiding the truth about US funding for the controversial research method.

    One of the key sticking points during the Senate homeland security and governmental affairs subcommittee was the opacity of the NIH panel responsible for oversight of gain of function research. These sorts of panels are usually supposed to be transparent, with the names of panel members publicly known. When I was investigating the lab leak hypothesis at the FT, however, I was told repeatedly that in this case information about the structure of the panel was not publicly available. Dr Steve Quay, one of the scientists challenging the zoonosis origin theory, testified at the subcommittee that he did not know why the names had not been published on this occasion.

    My interview with Harvard geneticist George Church, published a couple of weeks ago, shows that this level of opacity is far from standard practice in the field. As Church noted to me when I asked him about the transparency of such panels: “The ethics panels that I know, overall, they’re all their names and qualifications are public information.” He added: “The lack of transparency at this point is mainly in cases of where we have intelligence gathering, where there still are military and economic secrets that would be very difficult to have full transparency on those. But anything that involves public health and ethics of testing new medical technologies, I’m pretty sure those panels are well met.” – IK

Wine time:

From the fake news zone:

  • The Russian military says it has analysed biological samples from Ukrainian soldiers which prove the soldiers were subjected to biological experimentation and exposure to biological weapons. Russia claims West Nile pathogens and enhancement drugs like Pervitin were administered to Ukrainian personnel by the United States. Most surprising of all, Russia claims that Covid-19 was released and created by the United States.
  • Bizzare video uploaded by a mass shooter in Kansas, Ohio who allegedly killed four individuals, including a 15-year-old child, where the individual claims he is a victim of a secretive mind control program. News stories regarding the incident claimed the motive of the shooter is as yet unknown, though local police investigators are now suspecting mental illness.


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