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The Other Vladimir

Goodbye Lenin, hello Putin...
The STOCK MARKET isn't happy about Ukraine, writes Nick Hubble in Dan Denning's Daily Reckoning Australia.
Is this a buying opportunity, or a bunker down signal?
Let's ask the Germans. They've had experience with this sort of thing.
Goodbye Lenin is a movie about the fall of the Berlin wall. The main character's mother is a committed socialist who suffered a stroke and fell into a coma when she saw her son being arrested for protesting against the East German government.
Due to her fragile state, doctors order her son not to expose her to any emotional volatility. She might relapse into the coma. 
Her son, obsessed with guilt over having caused her accident, decides that she couldn't handle finding out about the fall of the wall – and the failure of socialism – while she was unconscious. And so a hilarious charade begins.
The son has to find old East German comrades of his mother who are willing to pretend the country is still divided. Just as they convince her, a gigantic Coca-Cola billboard – the very symbol of western capitalism – is unfurled outside the window. So they come up with a story that East Germans actually invented Coca-Cola years ago.
When his mother wants to watch TV, her son begins filming news shows with a friend, making up stories about what's going on in the world. All of them are designed to be very comforting to a socialist, but they get gradually more ridiculous. At one point, the first German Cosmonaut is elected to lead the country. He takes time off his real job as a taxi driver to film an inspiring speech in the local library about his plans for the country. The librarians are completely baffled, as the government he claims to lead no longer exists.
In the end, it's impossible to hide the arrival of West Germans in Berlin. And so the family pretends that West Germany failed and the East Germans are having to support them by providing food and shelter.
It's a remarkable film that's a must see for anyone who believes ideology is removed from everyday reality. For example, the mum keeps her savings in cash because she doesn't trust the state run banks. But she forgets where she hid the stash after waking from her coma. By the time she remembers, the conversion period into Deutschmark is over, and so thousands are wasted. It's a bizarre scenario where a committed but sceptical socialist's clever financial plans are thwarted by a combination of the victory of capitalism and unforeseeable personal events.
Ukrainians would not find this movie funny. Instead of saying 'Goodbye Lenin' as the Germans did, they're saying 'good morning Putin', the other Vladimir of poor reputation these days.
Some media is reporting the Russians have invaded the Ukrainian peninsula of Crimea. Others say their disguised forces have been there for days, securing key infrastructure for the proper invasion. Apparently Ukraine's new head of the navy defected to the Russians after one day in office.
As always, things are much more confusing than they seem. Ukrainians only represent about 25% of the population of Crimea, the region Russia is invading. There are a few Tartars, but mostly Russians of various groups and religions. It's as confusing as Yugoslavia. And the politicians are resisting the inevitable resolution in Ukraine too.
Just like every tyrant before, Russian president Vladimir Putin is using the excuse of protecting the Russians living in the Crimea for his military actions. Not to mention keeping his own military bases there secure.
The climax of Goodbye Lenin comes when the mother is walking on the street and a helicopter carrying a torn off statue of Lenin flies past. Lenin seems to look her in the eye as his upper half flies past on the way to the scrap heap.
There have been violent outbreaks in Ukraine between pro-Russian and anti-Russian protesters over the Lenin statues that still dot the country. The pro-Russians are guarding them, while the Ukrainians tear them down.
Would you risk your life to tear down or protect a statue of Lenin? What if it was a symbol of oppression or heroism to you?
Even if they want to opt out of the internal strife, Ukrainians and Russians in Ukraine can't seem to get a break. Their bank transactions have been limited to $100 a day and Crimean bank credit cards are no longer accepted across the country. The currency is tumbling too.
In the face of all this killing, economic turmoil and tension, it's easy to think the Ukrainians are nuts. Why would they give up the creeping benefits of capitalism for complete chaos? Russians do chaos very well.
We brought up the German movie to explain why completely irrational looking behaviour happens. In short, the answer is nationalism. Without it, politicians couldn't muster much of an influence. But with nationalism comes the opportunity to cause trouble.
No matter how things might look to us from the outside, who knows what the Ukrainians see from the inside? Who knows how their sources of information are deluding them? Or deluding us on the outside?
Either way, with people willing to die for nationalism, anything can happen. This could escalate fast. And seriously mess up capital markets. But here's the thing. After the German reunification took place, all manner of economists trotted out to say it would be an economic disaster. The stock market halved. But then the German stock market outperformed the French and British ones dramatically over the following decade.
Investing in the Ukrainian stock market is probably a little out of scope. But if the Ukraine crisis spreads, there might be a buying opportunity yet.
Unless Australia picks a fight with Russia of course. Then all bets are off. That hasn't deterred our political class from getting involved in your name, probably at the bequest of our ally and big brother, the USA. Australia has done what it can to support the Ukrainians. Foreign minister Julie Bishop took it to the Russians by summoning their ambassador and...well that's all she's done for now.
In our opinion, none of this would've happened if American penalty specialist Oshie hadn't won that ice hockey game against the Russians single handedly. You could see then in Putin's face that someone would pay.

Best-selling author of The Bull Hunter (Wiley & Sons) and formerly analyzing equities and publishing investment ideas from Baltimore, Paris, London and then Melbourne, Dan Denning is now co-author of The Bill Bonner Letter from Bonner & Partners.

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