US secretary of state Conde Rice says Russia’s international reputation is in “tatters.”

But Andy Carpenter in Investor’s Daily Edge says the reality is Russia is emboldened by the simple fact that the US is no longer the world’s sole economic engine.

There is now a huge amount of money being poured into emerging markets infrastructure projects. The lion’s share of this cash will go to Russia, China and the Middle East. Smart investors now must think globally, says Andy…

Vladimir Putin, Russia’s prime minister, is a corrupt, cutthroat Russian badass. So is his pal, Russian President Dmitry Medvedev. US President George Bush has always wanted to be a badass, but he’s never been able to pull it off. The best he’s been able to do is pose as a rhetorical badass.

That’s not a particularly bad thing. Because, even though vengeance and vigilante fantasies are hardwired into the male DNA, a world leader should be thoughtful, firm, even stern, but not a macho man.

As an aside – I am not sure if Sen. John McCain is a badass or not.

But the GOP’s choice for US president sure did get off one of the funniest, most ironic lines of the century when, on Wednesday, he said this about Russia’s invasion of Georgia…

“I’m interested in good relations between the United States and Russia. But in the 21st century, nations don’t invade other nations.”

Unless, of course, the invasion is aimed at redefining the global status quo, which is exactly what Russia did this week.

Breakin’ Some Eggs

This shakin’ up the global status quo is not an investable trend right now. And it’s more than likely Russia’s foray into Georgia will have little or no effect on the US stock market.

Still, what’s happened to the US economy, combined with its foreign policy since 2001, opened a door that allowed Russia to rattle the world’s cage.

In fact, the mess in Georgia is in many ways the US’s doing.

What most of the media has ignored – other than to show old tapes of Bush in Georgia saying he’d support its burgeoning democracy – is that during the past few years, Georgia’s pro-western government has grown very close to Washington, particularly with both Sen. McCain and the office of the Vice President

Because of that, even before the invasion, there were more than 100 US military advisers in country.

So, you must assume that when Georgia’s Harvard-educated President, Mikheil Saakashvi (Misha to his friends), launched his spectacularly ill-conceived, and ultimately humiliating, attack against the breakaway region of South Ossetia, it was with a minimum of tacit approval from Washington.

Saakashvi gambled and lost when his military totally botched its attack.

But, it looks as if the Kremlin gambled and won when it sent its 58th Army across the border and, with its air force, routed Georgia’s army.

In a textbook execution of modern warfare – right from the US military’s playbook – Russia used high-altitude bombing to pound the Georgian military into withdrawing from South Ossetia, then backed up the bombing with ground forces.

As is the goal of that sort of limited campaign, the rout laid waste to the bulk of Georgia’s military assets, leaving Saakashvi’s troops unable to mount any further actions.

What’s important to focus on now, is that by attacking an American ally that was being considered for NATO membership – and getting away with it – the Kremlin demonstrated that Russia is once again the region’s dominant power.

Its military, in tatters and disarray when Putin took office in 2000, has been rebuilt and is regaining its pride.

So, the bear is growling again. And the global implications are clear, because it now looks as if Russia suddenly belongs to the elite club of countries that can write its own rules.

Just as the US ignored widespread criticism when it invaded Iraq, Putin and Medvedev have ignored international pressure over a war they helped to provoke by arming the South Ossetian rebels.

And its rewards were equal to the risk it took in Georgia. Because, from the Russian standpoint, the immediate benefit is clear.

NATO membership for Georgia, which the US had been pushing earlier this year, is now likely off the table. Saakashvi’s blundered South Ossetia incursion saw to that.

In fact, Ukraine’s NATO membership may be temporarily derailed, too. Its pro-western President, Victor Yushchenko, will likely keep his head down and his rhetoric soft while Russia can still taste fresh Georgian blood.

On top of that, you can expect Russia to fall farther away from Washington’s sphere of influence.

Moscow now thinks it correctly gauged the new global realities when it guessed that Washington – committed to, and overextended in, the wars in Afghanistan and Iraq – would not overreact to its Georgian adventures.

So, you can expect Moscow to step up its confrontational stance toward Washington by continuing to expand it relationships with anti-US regimes, such as Hugo Chávez’s Venezuela and Raúl Castro’s Cuba.

And, it will also try to balance NATO’s firepower in Europe by deepening its relationship with China.

Russia has massive amounts of the commodities China needs to keep its economic expansion rolling. The Russians will make a fortune selling its oil, natural gas and rare earth commodities to China.

And, don’t expect Americans to work up much of a lather about the new global reality.

They’ve already got two “hot” wars as well as a slowing economy and housing market crisis to worry about.

On top of that, Russia may not even be a political issue in the US presidential election.

Why?

Because many Americans might ask how it came to pass that during the past eight years – while the US claimed its mission was to spread democracy – it fostered so many new enemies… and why it can now only threaten what well might be its biggest threat with but an army of rhetoric.

---

INTERNAL ENDORSEMENT

Just this Once

BELIEVE THE HYPE!

It was the email that shocked the investment world.

One noted investment authority told his readers to take seven huge stock market gains on one day… SEVEN HUGE WINNERS on one day that ranged from 526% to 102%… seven, and on stocks… not options.

But that was just the beginning! It now looks to be setting up to happen again this year, too.

That’s why you must check out the whole story right here.

---

MORE GLOBAL REALITIES

So, one final question remains.

What would embolden Moscow to suddenly think it’s a player again in the global power scheme?

The answer is much deeper than the mere suggestion that Russia is kicking the US while it’s down or even that most of the world is sick of a one super-power reality.

Those are easy answers… the kind the media loves because they don’t require much contemplation, just jingoistic thinking.

No, beyond foreign policy, what’s emboldened Russia is the simple fact the US is no longer the world’s sole economic engine.

The world is a fast changing place, where wealth is being more evenly distributed.

In fact, Merrill Lynch (NYSE:MER) just doubled its emerging markets infrastructure forecast to $2.25 trillion annually during the next three years. The huge expansion is due to more aggressive government spending across the globe.

And, Merrill expects 70% of infrastructure spending to be concentrated in China, the Middle East and Russia.

Remember, infrastructure is more than just office buildings and roads. It’s electrical conduits, sewer, sewage treatment, power generation, dams, tunnels… the list goes on and on.

To give you a better example of the infrastructure spending in the pipeline, Xstrata (LON:XTA), a global mining company on the London Stock Exchange, recently estimated that there would be $22 trillion in emerging markets infrastructure spending in the next 10 years.

And, remember, as a global diversified mining group, Xstrata has no reason to inflate numbers. As the saying goes, it has no dog in this fight. Yet, its $22 trillion estimate is right in line with that of Merrill’s top global analysts.

Merrill Lynch breaks down its upward revisions in emerging markets infrastructure spending over the next three years (new versus old estimates):

• China – $725 billion vs. $400 billion
• Middle East – $400 billion vs. $225 billion
• Russia – $325 billion vs. $195 billion
• India – $240 billion vs. $110 billion
• Brazil – 225 billion vs. $100 billion
• Mexico – $120 billion vs. $60 billion
• Turkey – $65 billion vs. $50 billion

Of course, China’s infrastructure spending is ballooning because it will place greater emphasis on transportation spending and continued strong spending on water, power and other critical infrastructure needs.

And, the China estimates don’t incorporate additional spending needed to rebuild areas stricken by the recent earthquakes.

The new estimate for India factors in the government’s more aggressive position on accelerating infrastructure spending over the next decade.

The Indian Planning Commission has abandoned its old plan and pushed its $300 billion spending commitment to a new higher orbit of $550 billion as part of a long-term infrastructure strategy known as the Twelfth Five-Year Plan.

The investment spending numbers in the Middle East are massive and are climbing steadily with the help of enormous wealth and high-energy prices,

Merrill’s Middle East estimate is actually pretty modest compared with the $480 billion three-year burn-rate based on the International Monetary Fund’s numbers.

Otherwise, budget surpluses, massive foreign currency reserves and large current account surpluses should keep infrastructure spending programs going for years.

And, in a way, the US only has itself to blame.

It has been bragging about the beauty of capitalism so long and so loud that the rest of the world finally got the message.

But, I’ll guarantee you something. Americans, particularly US individual investors, will be the last to embrace capitalism’s rapid global expansion.

Ironic, huh?

Like allowing Russia to get off the mat.

Source: The Russian Bear Is On Its Hind Legs Again