As Senator Ron Johnson so appropriately blasted, "I'm not sure sanctions had any effect whatsoever other than, you know, the Russians have mocked them," and so it is that the Treasury's (little heard of) "Terrorism and Financial Intelligence" division is preparing to unleash its most deadly weapons yet - an arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies. It appears clear that while the US dropped speech-bombs and sanction-mines, proclaiming the disastrous economic significance of these efforts, Russian stocks soared (vastly outperforming the US) and the Ruble strengthened... and so - as undersecretary David Cohen tells the WSJ, "What we've done over the past 10 years is to create a new method of projecting U.S. power..." e.g. sell non-US stocks (thus buy US stocks).
While the US equity market has already become a monetary policy tool, it appears now it is a global geopolitical force for good too...
the Obama administration is trying to shore up international support for a growing arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies.As the administration prepares for a possible next round of sanctions against Russia, it is increasingly relying on an obscure unit inside the Treasury Department—a group of sanctions architects and financial sleuths in the Office of Terrorism and Financial Intelligence—to play a leading role in U.S. foreign policy....Founded to disrupt terrorist financing after the attacks of Sept. 11, 2001, the Treasury office now plays a central role in exerting pressure overseas as the American public has little appetite for military intervention."What we've done over the past 10 years is to create a new method of projecting U.S. power," Mr. Cohen said in an interview. "We do that in a way that is unique in the world."His office includes an intelligence shop that scours bank reports and spy agencies' gleanings for financial patterns that could threaten U.S. security, making Treasury "the only finance ministry in the world with an in-house intelligence unit," Mr. Cohen said...."We have become proficient at reducing collateral damage," Treasury Secretary Jacob Lew said in remarks to be delivered Monday at a conference hosted by the Center for Strategic and International Studies that is looking at the office's work in its first decade. "But we cannot escape the fact that when we deploy these methods, there will be those who will unintentionally pay a price."
But it seems not everyone is so excited about the threat of this obscure war-mongering from the US Treasury...
Some of the resistance Treasury faces comes from U.S. businesses that worry about the fallout. Meddling with an economy as big as Russia's, for instance, could trigger significant losses for U.S. businesses if their work is affected by the sanctions, or if Moscow decided to retaliate....Leaders of several European countries, including Hungary, have opposed tough sanctions on Russia, a major energy supplier on the continent, and their reluctance weighs on the sanctions policy of the EU, which makes such decisions by consensus. German firms have complained openly about the prospect of losing business in Russia.
Still, despite the massive outperformance of Russian stocks (and the Ruble) since sanctions began, Obama is proclaiming his actions as a major factor in Putin's retreat...
Still, Mr. Obama last week credited the sanctions and other measures the international community took against Russia with serving as a key "counterweight" to Russian troops on the border with Ukraine, most of which are now believed to have moved away.
So perhaps that explains the shocking decoupling surge in US equities this week as bonds rallied , volatility rose, and Russia stocks leaked lower...
Welcome to the new order... where elites wage wars on the stock exchanges... while real blood flows on the streets
