When the Unthinkable Becomes Thinkable in Ukraine

Red Alert!: Russia’s annexation of eastern Ukraine means Putin is drawing a nuclear line in the sand and he will use tactical nukes to defend his nefariously expanded country, unless a peaceful status quo is accepted.

 The US, with only modest assistance from Europe, has provided the sophisticated arms and intelligence to turn the tide against the Russian invasion of Ukraine. It has become clear that Russia is unlikely to win a conventional war with a NATO backed Ukraine without hollowing out its overall military. Putin desperation is evident with persistent battlefield losses and his begging for weapons from Iran and North Korea as well conscripting inmates and blue-collar Russians to be sacrificed on the Ukrainian front lines. Even China rebuffed his request for a pipeline to restock his depleted arsenal. On the surface this may seem like a victory, as it has severely drained Russia’s army of soldiers and weapons as well as excised its economy from the dominant Western financial system. This has solidified what we always thought was the Putin’s primary goal, annexing eastern Ukraine where ethnic Russians now dominate. This can be shockingly bad news or good news regarding ending this war. The good news is that the rush to annex 15% of Ukraine means Russia may be ready for a peace settlement. The unwelcome news is not just that Putin will emphatically claim this 90,000 square km plot of land (the size of Hungary) as Russian territory, but that he will expand the Russian nuclear umbrella to defend his new terrain with nuclear weapons. Other than the 1962 Cuban Missile Crisis, which brought the world to the edge of a nuclear winter, we have had a peaceful 60-year period without a serious threat to the stalemate of mutually assured destruction (MAD). To this point, most analysts have concluded there was virtually no chance the Soviets would dare test MAD and risk a nuclear war that could wipe out most of humanity. What makes the unthinkable, thinkable are “tactical nukes”. Tactical nuclear weapons vary in destructive yields from fractions of 1 kiloton to about 50 kilotons and are not meant to deter a nuclear war. Strategic nuclear weapons to support the MAD doctrine, have yields that range from about 100 kilotons to well over a megaton. The Hiroshima bomb ending WWII was 15 kilotons. Should Putin take out part of a small city with less than a 1 kiloton nuke, the damage would not be as horrific as Nagasaki or Hiroshima and allow relatively safe habitation within months. Such a sociopathic strike would not trigger a nuclear response by the West yet send a message that Putin is not bluffing this time. The US has an estimated 150 mini-nukes while Rusia has an estimated 2,000 of these tactical weapons. For reference, a one kiloton nuke has the equivalent destructive power of 1,000 tons of TNT or 625 pounds of Dynamite with radiation fallout that returns to safe levels in about a month. The reason Chernobyl can’t become habitable is its 163,000 kg of nuclear material. This is 3,550 times the Hiroshima uranium material used. For those with a morbid curiosity, they can view the impact zone of a tactical nuke using the following link to see how limited an impact area can be and thus how enticing it could be for Putin to use on a non-NATO country to deter attacks of his annexed territory   https://nuclearsecrecy.com/nukemap/   Tactical nukes are so dangerous because they are far less destructive than “unthinkable” strategic nukes, thus they are “thinkable”.

The first point of this discussion is that Putin has been backed into a corner, unable to win conventionally, thus his “only” choice is to be willing to use tactical nukes to deter continued counter attacks on his militantly usurped lands. With Putin in power, the only way to prevent his use of a tactical nuclear missile would be if US intelligence verified the positioning of such short-range weapons in Ukraine causing the West to push Zelenski to agree to the first ceasefire of the war. 

The investment market outcomes can vary greatly, depending upon an actual firing of a tactical nuke compared to prescient negotiations to prevent an attack. An actual nuclear strike to bring Ukraine to Russia’s peace table would initially trigger a massive short-term decline in the US Dollar and stock market while bonds and precious metals would soar. However, regardless of a nuclear strike or not, as soon as a ceasefire and peace talks begin, the investment market carnage will begin to reverse. 

The previous dozen times Putin threatened a nuclear attack on the West for helping Ukraine, he was ignored. In classic Putin style, like the pot calling the kettle black, he has created the pretext for a nuclear event, stating the US presents an existential nuclear threat to Russia’s territory – in Ukraine. Now that he claims a democratic ownership of eastern Ukraine, his new mass terror threats to use small battlefield nukes should be taken very seriously in our opinion. Either the West will realize this and pause Ukraine’s offensive prior to opening pandora’s nuclear box, or they will do so after a Ukrainian city experiences a small taste of nuclear horror. Regardless of a ceasefire with or without a nuclear event, the surprise for investors is that this endless combat may be ending sooner than expected and morphing into an escalating cold war which will accelerate Russia’s journey to becoming a nuclear armed 3rd world country.


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