This article originally appeared at Global Economic Trend Analysis
Reader Bradley writes …
“Why are you wasting time with Ukraine? It does not matter from an economic standpoint one way or another. Is your family from Ukraine? Citibank is advising that oil will go down to $20 a barrel. That is pertinent. The Baltic Dry Collapse continues. That is pertinent. And, no, this has nothing to do with the longshoremen slow down at West Coast ports.”
In contrast, reader Al writes …
“Thank you very much Mish for your continued excellent coverage and opinions regarding Ukraine especially, but also Greece! It’s very difficult to find good information on Ukraine and I think it’s one of the most important issues happening today. Of course Greece is pivotal too. I live in Calgary, Canada and work as an Investment Advisor with CIBC Wood Gundy. I tend to think like you and Paul Craig Roberts, but I’m hopeful that the bad guys in the Washington-London-Israel triangle are on their way out.”
You Cannot Please Everyone
File this one in the “You cannot please everyone” category.
Reader Al will be pleased with this update, reader Bradley won’t.
Separatists Raise Flag Over Debaltseve
Seven hours ago, the Wall Street Journal reported Ukraine Pulls Out of Strategic Town in East.
Ukraine withdrew troops from the embattled strategic railway hub of Debaltseve early Wednesday after pro-Russia rebels overran the town in what Kiev and Western officials called a violation of a fragile, European-brokered cease-fire.
Dozens of vehicles from tanks to trucks rumbled along the road to the nearest large town, Artemivsk, and Russian state television showed what it said was footage of separatists raising their flag over Debaltseve.
Ukrainian soldiers described battling to get out, at times under fire from two directions. Ukrainian military data showed 22 soldiers had been killed there and more than 150 wounded over the last three days, the Interfax news agency reported. Nearly 2,500 troops escaped, the report said.
Ukrainian commanders had vowed to hold the rail hub, a vital link between the separatist capitals of Luhansk and Donetsk, but their forces appeared overwhelmed by a rebel advance on Tuesday. President Petro Poroshenko said the retreat had been “orderly and preplanned” and that his forces had fulfilled their mission.
Orderly Not! Preplanned Questionable!
Mish readers knew the above would happen many days ago, before the ceasefire began (which we knew would collapse as soon as it started).
Other than spreading Kiev propaganda (not on purpose, but via quotes), the Journal article is at least reasonably accurate albeit many hours if not days late.
The notion that Petro Poroshenko has any idea what he is doing militarily should have been in question many months ago, not days ago.
I prefer to get my news from credible sources.
Banal Attempt to Save What Can be Saved
Looking for a more accurate description of the “orderly retreat”? Then once again Colonel Cassad has a map and an answer in his latest post “About the Current Situation”
Since February, the DNR has begun preparatory work to collect humanitarian aid for the spring-summer campaign, primarily on clothing and footwear. I remind you that in a winter campaign we started training although in August many were convinced that the fighting would end in September.
There is still a boiler in Debaltseve from which you can attempt to escape by the field and byways. Of course, such sporadic attempts to break free are not an organized withdrawal of troops. Rather, they are a banal attempt to save what can be saved. Many who were lucky enough to jump out of the boiler are now prisoners. Their equipment was abandoned or burned in the boiler.
The remaining part of the boiler is unlikely to survive until March and I think that pretty soon we will see the area stabilize near the Svetlodarsk-Mironovsky front. In this regard, Poroshenko’s statement about “organized withdrawal” on the background of hysteria is eloquent but laughable testimony to the actual stage of agony of Ukrainian forces.
We may soon see apocalyptic pictures of attempted escape and death. Naturally, this situation is unlikely to suit the US, so in the coming weeks we can expect some bloody mischief.
Map of Current Situation
Cassad did not say this, but I will: If the trend continues, more Ukrainian troops are about to be surrounded.
Will Poroshenko once again idiotically proclaim “forces had fulfilled their mission”?
Jacob Dreizin Chimes In
Earlier today, reader Jacob Dreizin chimed in with this analysis.
The cauldron is down to an estimated 3500 Ukrainians. 1000 escaped without their weapons (overnight or this morning) and up to another 1000 were either killed or taken prisoner over the last two days.
Recall that the entire Ukrainian “first line” forces in the Donbass were estimated at around 40,000 as of early January, with another 35,000 (mostly semi-organized trash) in the second line, further back (mostly garrisoning occupied towns, manning checkpoints, and generally making civilian lives miserable.)
The defeat of an encircled force initially numbering 8000 means that 20% of Ukraine’s first line has been liquidated. This does not include significant losses to the forces based at Artemovsk, who had tried to break through to the cauldron over the last week. Nor does it include January losses at the Donetsk airport (DNR forces still finding bodies there.)
Of course not all in the cauldron have been killed. Some will return to battle, but not right away.
Nonetheless, their equipment is almost all either destroyed or else now in rebel hands (or will be very soon.)
This amounts to hundreds of pieces of equipment including tanks, BMP/BTRs, rocket launchers, cannon, mortars, heavy machine guns, etc., not to mention hundreds of trucks and mountains of ammunition. Enough to equip 8000 soldiers. The forces “allowed” to evacuate without surrendering would be on trucks mostly; anyone trying to make it out on armor would be a priority target.
It’s maybe not quite on the scale of the losses from the Ilovaisk cauldron last year, but it’s close.
It’s both a huge material loss and a huge embarrassment for Kiev.
Also, let’s be clear: Any U.S. weapons to Ukraine would require at least 6 months of training of Ukrainian forces to be effectively deployed. The war will probably have been decided by then.
Finally, keep in mind that Russia is next door and will one-up the U.S. at every step. So far, the equipment coming across from Russia has been mostly along the lines of what the rebels were able to capture from the Ukrainians themselves. That is to say, mostly surplus items of 1960s or 1970s vintage. But if the U.S. started sending modern weapons to Ukraine (beyond what little has been covertly sent already), suddenly you would see rebels driving around with the most modern post-Soviet hardware. And “somehow” they would acquire an air force. It’s very unlikely that Washington will go through with its insane arm Ukraine scheme, especially with Germany opposed.
Watching Ice Melt at 33 Degrees
Every day I look at hundreds of articles in a couple dozen places, to comment on. I try to balance things out. I am quite sure I miss some things that are relevant. But I am equally sure I cover topics that are important that others miss.
Ukraine, Greece, and Spain are all very important. And it is increasingly difficult to separate politics from the economy, in Greece, in Spain, in Ukraine, and even the US.
Contrary to popular belief, Ukraine is relevant. Its currency is collapsing. The US is propping up a regime and proposing to send weapons. An all-out war with Russia is not out of the question.
A collapse of the Ruble is also not out of the question.
In contrast, watching the Baltic Dry index is like watching ice melt at 33 degrees. Moreover, it is widely covered. And I have commented on the setup numerous times.
Demand for iron, copper, coal, and other dry goods has collapsed, and as predicted in this corner. Meanwhile new ships come online. There is nothing more to say until the story changes. Baltic dry is not much of a story in my book.
In Greece, in Ukraine, and in Spain the story changes nearly every day. So I follow, Greece, Ukraine, Spain, the Fed, and many other things that change everyday.
You Can’t Always Get What You Want
For those unhappy with what I write, I offer a musical tribute.
Link if video does not play: Rolling Stones – You Can’t Always Get What You Want (The David Frost Show 1969).
Many bloggers stay away from politics, from war, from unions, from pensions, from anything and everything controversial for fear it will cost them traffic. I prefer to say what I think needs to be said.