Category: Uncategorized

This article portrays the Putin as retreating from the Europeans resolve over the war. But it seems both sides are playing a game of chicken.

Putin is waiting for winter to come to hit the Europeans hard with the expected shortages. Once people start dying from the cold, that will push people one way or another. However, the Nord Stream shutdown is not due to sanctions. The Russians have no idea how to run their pipelines without western expertise. Exxon, BP, and Shell were the companies that made Russian oil productive. With the sanctions and the war those companies exited meaning all the oil drilled out of the crazy Russian permafrost is beyond the capability of the Russians. Their military equipment completely broke down against western equipment, why should we expect their oil drills to fare any better without western equipment. In all likelihood once winter hits Russia will not be able to produce oil at all. Likely, the end of the Russia economy.

The Europeans seem to be just printing money to subsidize energy. Since demographically speaking the Central Europeans are basically at a retirement age and they don’t have a replacement population this printing of money will never get paid. The shutdowns of their manufacturing and agricultural businesses will have a detrimental effect on their economy leading to companies finding alternatives. This war came at the worst time for Europeans. As most of them start retiring and the state prints money, socialism breaks down. The state will not be able to provide resources that it previously has in the future without borrowing/printing more money. Europe is no longer a meaningful place for investments, it will however, be a place to get access to cheap human capital.

If Ukrainians keep pressing for advantage they can likely fully take over the lands they lost to the Russians in 2014. However, once winter approaches this will slow down. Putin likely thought that he could waltz into Ukraine, and win it in a few days. The war would be over with Ukraine falling. The west to prevent bloodshed would appease him. And the Russia would still have access to western oil expertise. All of those things have fallen apart. The Ukrainians may very well win, but in doing so they will have taken down Europe and Russia.

The United States is pretty vested in the Ukrainians winning because if Russia isn’t completely demolished they will attack NATO countries triggering Article 5 of the alliance meaning America has to send troops. America really, really doesn’t want to do this (especially after Afghanistan and a significant decrease in people joining the military). So it is okay with Europe failing as long as it means it doesn’t have to go fight a war over there.

Long story short we are seeing the destruction of the Russian AND European economies not just Russian.

I’ve taken a significant position on WEAT, a commodity futures ETF for wheat. Most of the world will experience food shortages next year. The reasons are for the following:

• 1/3 Pakistan under water and likely not able to start their food growing
• Drought in the Western United States
• India banning wheat exports due to food uncertainty.
• Ukraine’s output continuing to dwindle as a result of the war as it is one of the primary producers of wheat.
• Russian [fertilizer shortage due to sanctions will affect Brazil,](https://oec.world/en/profile/bilateral-country/rus/partner/bra) a major producer of food. Also, African countries rely on fertilizer to generate enough food for their population
• China also banning its export of fertilizer as it still deals with the African swine fever which is having China buy all foodstuff from the global market to regrow their herd.

All of these conditions are pointing to a 2023 with conditions set for a famine that will likely be included in the next “Old Testament.” (The thesis for this investment is also based on human misery and for that may the gods have mercy on me.)

The question then becomes why hasn’t WEAT taken off? It seems to have taken off right after the start of the Ukraine war but has fallen back. The reason is that the contracts for wheat for 2022 are based on fertilizer and inputs from 2021. We have not priced in wheat from the inputs of 2022 conditions and in general the crop haven’t even been planted yet (if it will in terms of Pakistan).

I hope I am wrong and maybe the United States will step in but it doesn’t produce enough to feed a billion mouths.

Crypto no longer seems like a viable investment to me. The reasons are several:

1. The era of cheap Capital is over as we are faced with a tectonic shift is what is happening in the world. Crypto being so volatile while the existing fiat currencies also being volatile doesn’t bode well for it as a currency that will be used.
2. Crypto has no fundamentals. We are returning to an era where fundamentals matter. Crypto not having any fundamentals doesn’t bode well for it to remain relevant.
3. Crypto still isn’t easy to use. I still don’t know how to build or pay for things easily.
4. The value of crypto will continue to drop. The game is up, and the losers are starting to realize they are losers.

It was fun while it lasted but FTX’s demise has only accelerated crypto’s demise.


As we go through a major economic reshuffling, the question that keeps coming to mind is: What won’t change in a decade? We are still on the early side of a major capital, demographic and geopolitical reorientation that will take a better part of a decade to sort out. During this period, companies will be constrained by capital and workers. The Cloud, APIs, and Automation will be a major part of the equation.

As baby boomers retire in significant numbers starting this quarter, we are experiencing a lot of things all at once. The first is that we no longer have workers sufficient enough to replace the retiring baby boomer population, as GenZ is the smallest generation we have. The second is as baby boomers retire and sell their small businesses there is immense room for automation to take foot which has not happened yet. Many SMBs still use on-premise tools that haven’t been updated to take advantage of the current generation of Cloud powered tooling.

As baby boomers retire and move their $79 trillion dollars of wealth to safer asset classes the capital structure is going to change. We are entering an era of expensive capital where interest rates will be significantly high for years. The result of this is there just won’t be enough capital to do any meaningful R&D through VC-based companies. So companies will be driven to efficiency and to make do with less. Automation and APIs will take on major roles at companies. This does not mean additional SaaS tooling but tooling that does work on behalf of companies. In the words of Clayton Christensen, a Job to Be Done.

So what won’t change in a tremulous decade ahead? The Cloud. If anything, the Cloud is still in the early adoption phase and has significantly further to go.