History repeats because the passions of man NEVER change. Russian interest rates have soared and she has found itself in an embarrassing situation. Russia has had to cancel the sale of government bonds for the seventh time, because she cannot find any buyers.The consequences for the country are very dramatic, yet predictable. Russia will raise taxes to cover its expenditures for war. She has already done so with respect to Crimea – yet more is coming. If the credit crisis experienced by Russia at this time continues, this will introduce another development that will instigate war.
The first Credit Crisis following the fall of Rome was a major significant blow that severely set back the global economy for about 52 years. This was the war between France and England. Neither could raise any more money to fund their war efforts and as a result, they began a campaign to confiscate wealth. Edward I of England borrowed from the Jews and then could not pay them back. He suddenly discovered they were Jewish – just amazing! He banished all Jews from England and of course they could not take anything they owned. That eliminated his debts under the pretense of religion.
Philip IV of France learned that Edward I was also borrowing money from the Italian bankers. That problem was solved by arresting the bankers and cutting off Edward I’s funding. When he realized that the Pope was withdrawing the Papal Treasury from Italian bankers because of Philip IV’s actions, he simply confiscated the Catholic Church and moved it to Avignon. Then he was determined to keep fighting so he installed a French Pope who declared the Knights Templar were devil worshipers and confiscated all their assets including bank accounts they held for other people – including the English. This further shut down the banking system for it had been the Knights Templar who were the equivalent of the wire-transfer system in those days. Philip IV literally wiped out the banking system in Europe to win his war.
Beware of history and its lessons. Russia’s air force just provoked the West sending its long-range bombers into Western Europe where they violated the Dutch airspace and had to be forced out by sending up NATO fighter jets. Moscow is clearly increasingly testing the Western defense readiness. If anyone thinks that war will not come because Russia has too much to lose, they better study history for that is why war becomes more likely. If a party has committed, as has Putin, to confrontation and has the support of his people as he does (including the Orthodox Church), then he can be in a position where there is no choice. If Putin cannot raise capital for nobody will buy his bonds, he will eventually be between a rock and a hard place. Either he invades to retain dignity and power, or he backs-off and loses power domestically as the support of the people turns against him.
The Russian economy is declining sharply. It will fall into a deep economic depression going into 2020. Putin NEEDS war to keep the people focused on external enemies or they will come after him when they figure out this ain’t working.