This morning's worrisome headline is the resignation of the Russian government's cabinet ahead of what is referred to by outgoing prime minister Mikhail Fradkov as "approaching significant political events."  While Fradkov wants to give Putin full freedom over staff decision  (and Putin faces an election in six months and is picking a successor), I'm concerned that there may be a lot more to this story than meets the eye.

 

For one thing, Russia has been holding military maneuvers with China recently, and it's well publicized that Russia has been supplying a lot of the core technology and technical expertise to the Iranians at their Busher nuclear plant.

 

While we don't have a fully formed opinion on this yet, we can see that Fradkov may have been less than a perfect "Yes Man" for Putin.  For one thing, Fradkov has argued in favor of a lighter tax burden on the working class.  But things like tax cuts are not the stuff of a large remilitarization program, such as the resumption of bomber flights, and the upgrade of the Topol M ICBM's, indicate.

 

While the West seems to believe that Russia is a significant energy player, and don't get me wrong, they are, there have been reports suggesting that Russia may have been over-estimating reserves -- something that lots of Middle East players do, just as a matter of course.  What would seemingly support this notion however, is that Russia and Vietnam are setting up to conduct some joint venture oil and gas discovery work.

 

While it's not  a 'done deal' by any stretch, the likely appointment of First Deputy Prime Minister Sergei Ivanov may mean that Putin has hand-picked him as successor.

 

The New Cold War

I've told you for a while that it seems there is a collision course being set up here of grand scale:  The US, holds its hollowed out dollar, down to less than 1/20th of its 1913 original purchasing power when the Federal Reserve (which is neither) took over the money reins of the USA.  Russia, on the other hand, has not been out peddling 'liar's paper' - the CDO and in some cases it's been argued - over-rated paper debt instruments.  Instead, they have paid down their national debt, invested in infrastructure, and seem to be doing a dandy job of flanking the US in foreign relations rather well. One up capitalists.

 

Part of the reason that they've been able to do is this that the US has been bogged down in either two, or three, or total war, depending on how you would assess Iraq, Afghanistan, the global War on Terror - or is it simply World War IV against whoever has resources?

 

Now factor into this stew the headline that "Russia reveals new superbomb" and a person prone to worry might be reaching for the Tums.

 

Curiously (or is it?) the superbomb story is getting big play where?  In Iran's Press-TV.

 

The development of a "vacuum bomb" is certainly a major break-through for the Russians in military technology - and one that "shocks" a lot of experts and politicians, who also are worried that it marks the start of a new arms race/cold war.  A conventional device with the same kind of overpressure developed by nuclear devices previously.

 

In comparison with the US MOAB (mother of all bombs), the technology is apparently similar, in that they are fuel air bombs (a small charge disperses the fuel, which is then detonated by a second charge resulting in a massive blast).  It could be that Russia has equaled, or bettered, the US in the 'right' fuel mixture of  ingredients to get maximum 'ooomph."

 

Whether the New [Cold for now] War is underway depends how you construct the linkage between events.  The least worrisome is that all of this is no more than swarf, to use a serious metalworker's term. (Insignificant debris or waste from machining).  OR, one could say yes, Russia (along with their pals, the Chinese) may be rolling up resources and allies for future use as the US dollar seems to be in another headlong decline this morning (chart above).

 

Ultimately, depending on how far the dollar falls, the Russians and their partially gold-convertible currency (featuring the chevronet - a gold coin)  plan has been doing just fine, with the Russians now holding $416 billion in reserves.  Again, this comes at a time that we're hemorrhaging red ink because of military spending.

 

Is it possible that the pending US dollar 'near death experience' will topple the US as the world's 'reserve banker'?  There goes the US debt scam, for sure.