Out of sight, out of mind. That appears to be the status quo on events unfolding in Ukraine, and along the western Russian border for now where, however, things are just as agitated as they have been during the past month. Only this time, not so much next to Ukraine, where the Russian army already has a massive enough military presence to steamroll into the country at a moment's notice, but up north, in this case in the Pskov region where the Russian ministry of defense reported that a major military drill is taking place, right next to the Estonia and Latvia borders. Just in case the former USSR member states needed to be kept on their toes.

From the ministry:

In the Pskov region with army aviation Western Military District (WEST) and units of the Airborne Troops (VDV) conducted a joint exercise. The event involved two pairs of Mi-8 MTV-5 and MI-24. On the eve of the crews flew from Leningrad Oblast to the airfield Crosses. The exercise pilots helicopters Mi-8 MTV-5 was carried landing personnel of the Airborne air assault way. Crews Mi-24 helicopters provide cover paratroopers from the air, as well as work out the elements of combat maneuvering and hovering over the point. Teaching is planned character and end the use of rocket-bomb armament helicopters on land targets on the ground in the Pskov region.

Hopefully land targets on the Russian side of the border.

And just in case escalating tensions along Russia's western border - and one can be certain Estonia and Latvia will scream bloody murder any second - here is a retired Chinese general who just told SCMP that a "war with Japan over territorial disputes is becoming increasingly likely" and that China is more than capable of defending itself.

From SCMP:

A retired People's Liberation Army senior officer says a war with Japan over territorial disputes is becoming increasingly likely and that China is more than capable of defending itself. Other military experts are not convinced the PLA would win any future conflict, despite China's military build-up and modernisation. Some cite the PLA's lack of battle experience as well as technological weaknesses in certain areas, aircraft engines for example, that could hinder the PLA's fighting capability. China and Japan moved closer to armed conflict after Beijing established its first air defence identification zone last November in the East China Sea to include the disputed Diaoyu islands, known as the Senkakus in Japan, Major General Luo Yuan said. "China should remain in a high state of vigilance because Japan has a history of manufacturing small incidents to trigger military conflict," Luo said. Luo, a vice-president of a Beijing-based think tank of retired military officers, the China Strategy Culture Promotion Association, dismissed suggestions in some Japanese media reports that the country had air combat superiority because its pilots and crews had greater experience and training. "That conclusion is a deceptive tactic used by Japan to confuse the public," he said. The PLA has deployed its most advanced aircraft and logistical support to military bases along China's southeast coast, a move designed to show that the army is prepared for any military conflict in the area. "So far, all aircraft sent by both countries to the Diaoyu waters have been third-generation fighter jets. The PLA's newest and most advanced planes entered service at the turn of this century, including the J-10, J-11B and the [Russian-made] Su-27," said Luo. "In contrast, Japan has deployed to the region only about 30 F-15Js, which their air force has used since the 1980s." Luo declined to say how many fighter jets the PLA would mobilise in an armed conflict. He said China had an overwhelming advantage in the number and types of aircraft available. "China has several military airports along the southeast coast that could provide effective logistical support to PLA fighter jets because those air force bases are much closer to the Diaoyus," he said. "But in Japan, there is just one airport close to the Diaoyus: Naha airport in Okinawa."

While it is quite clear, what is most disturbing about this story is just how much thought has gone into this analysis:

Canada-based magazine Kanwa Asian Defence said the PLA's missile strategic force had deployed its S-300 long-range surface-to-air missile batteries at bases in Fujian since 2012. Ni Lexiong , director of a defence policy research centre at the Shanghai University of Political Science and Law, said he was not convinced the PLA would have the upper hand in any conflict. "It's a fact that China's logistical support near the Diaoyus is better than Japan's because military bases in Fujian and Zhejiang province have been ready for war with Taiwan since the 1950s," he said. "But we shouldn't ignore the Americans, who would play a decisive role in any armed conflict between China and Japan." Macau-based military observer Antony Wong Dong said that if hostilities did break out with Japan, all military bases and facilities on land and sea would be targets for bombing.



"China has more fighter jets than Japan, but one Japanese pilot is probably equivalent to at least three PLA pilots due to their intensive training and joint drills with the US air force," he said.

And the bigest question mark: does China believe the US would step in to defend Japan? "Luo argued the US would not intervene in any conflict."

If China indeed believes this, then the probability of an armed conflict with Japan over whatever pretext, is far higher than the experts - ostensibly the same experts who said the probability of Russia annexing Crimea is non-existant - believe.

Finally, those wondering how to hedge a possible war between China and Japan, it should be quite clear that in a world in which the idiot market is governed by HFT algos which take any flashing red headline, even if it says *TOKYO BOMBED, ABE SAYS DEFLATION AMONG THE RUINS, and trade it as bullish, ramp stocks to record highs, and where central planning has made a terminal mockery of price discovery, the best and only strategy is to buy deep out of the money calls just in case World War III does indeed break out.