Some Truly Gigantic News.

No, not about stock market which behaves like a loony--that is totally expected in the "economy" where median house price of $320,000 is considered "affordable", yes, for very few, actually. And even rent is not affordable for 66% of renters. Now, the news about real economy, of Russia. These news mark a major new point of bifurcation for Russia. Today, Russia's hi-tech colossus State Corporation Rostec acquired 92% of interest in another Russia's giant--United Aircraft Corporation (UAC).   

Implications of this monstrous transaction are truly proportional to the size and capabilities of this variant of Russian State Keiretsu (sort of) which emerges. In the same time today, Vladimir Putin introduced legislation to State Duma, for passing--many in Duma after that soiled their pants, the legislation is about the right of Russia's Prosecutor General to literally hunt for the foreign accounts of Russia's bureaucrats (in Russian) who are not supposed to have any foreign assets while being employed by state structures. Like Duma legislators, among others, maybe? What does this remind you of? Oh, that, sure as hell, reminds me of what overwhelming majority of Russians were begging for decades since criminal so called liberal oligarchy came to power in 1991--to reformat economy. You see, those damn Bolsheviks, Communists, whatever "Ists", they, for some obviously nefarious reasons, took backward Russia and turned her into the industrial superpower and most educated nation in the world. Majority of Russian population still remembers this, despite all massive efforts of all kinds of "dissidents", "liberal" (in reality totalitarian laissez-faire and Russophobic) brainwashing machines known today as media, or direct efforts of hostile propaganda, to pour buckets of sewage on Russian people historical experiences and memory.

As it turned out--this is why Western "intelligence" can not grasp it--that, unlike Americans, who are fiercely anti-government and anti-state in metaphysical sense, Russians throughout all their history were, actually, building a state. They had to--otherwise how can one survive more than 800 years of brutal warfare out of 1200 years of history without the state. It matters that, quoting George F. Kennan:

Not all that went by the name of communism in Russia was bad; nor were all those who believed in it. 

No, don't worry, Russia is not about to become communist or is about to become new Soviet Union--not even close. Russia will continue to remain capitalist, free enterprise (in fact new programs in support of small and mid-size business are being readied as I type this) and broadly free socially and culturally. But here is the issue--Russians, unlike Westerners, have a very different concept of national treasure. As I spoke about this for a while on this blog, using American examples--is Boeing a national treasure of the United States? Absolutely it is, it is a part of America itself. Is Boeing a private company? Well, yeah. But can you imagine a group of Boeing's shareholders getting together in some secret place and deciding (well, just imagine for the sake of the argument) to dissolve Boeing, sell its assets and go on living on their acquired immense wealth? This is impossible--because this would be considered, and rightly so, the act of national treason in America and, I am sure, those who will come to this decision to sell Boeing will be hunted down and revenge will be exacted because Boeing, while being a private company, in reality IS NOT. One can earn or lose money on Boeing's shares but Boeing is in effect a (American) state company. And, of course, US government actively supports Boeing not just out of altruistic intentions or because it is greedy, no. It supports Boeing because it is a national, state strategic asset. Remember air refueling  aircraft B KC-767scandal?  

The same principle applies to many American companies because there IS NO market forces and "honest" competition (all figments of imagination of Western "economists") when the fate of a nation is on the table. Fate of modern nations which have no massive and advanced real hi-tech machine-building complex is sad--they stop being players. This is exactly what US-inspired 1990s "reforms" pursued in Russia--to deindustrialize the nation which won WW II in Europe, restored itself after the war, led the way into space and even today remains among most educated nations of the world. For overwhelming majority of Russians their national treasure is not just oil, gas and minerals, albeit this too--crown jewels of Russia also are her spacecraft, weapons, fundamental sciences, many machines, in general, even still largely Soviet public education, all those things which separate just any nation from superpower. Bolsheviks "poisoned" Russians making them wanting to work in real economy, and merging UAC with Rostec is one of those ways to guarantee that never again sleazy and bloody hands of "oligarchs" will ever again touch what is Russia's main national treasure, the one which allows Russia to exist as a nation, as a civilization--a powerful advanced Russian State. I already can hear squealing from Russia's "liberal" (completely marginal) quarters--it is music to my ears and I am a consummate capitalist. But I can only follow Kennan's dictum that many things which Soviet system provided for Russians were, indeed, not only good but had a major historic positive impact. Putin and his people are trying to preserve them.  But as I always say, until "West" learns REAL Russian 20th century history it will continue to remain in a complete delusion.      
Remember this picture Putin presented as a gift to PM Medvedev on his birthday in 2016?

As you can see, the hint was obvious--get busy with re-industrialization of the nation. Today we may say that it is in a full swing. Enough to look, among myriad other things, at the portfolio of still in construction gigantic shipyard Zvezda near Vladivostok--it has orders for 23 gigantic ships, especially Aframax-class. Even Soviet Union didn't build those. Stock Market, you say? I believed since 2013 that he and his people were preparing some breakthrough for Russia. There were signs, then Crimea happened, today signs are everywhere and only blind and deaf can not see and hear them.   

A Good Question To Ponder.

Bloomberg asks:

Why the U.K. Won't Punish Russia by Going After Its Debt Markets.

Indeed, why? Bloomberg goes on to say that:

• Britain Can't Act Alone

• Russia Can Survive Without debt

• US is afraid of Damage To Global Markets

These three points are rather startling, however implicit, admission of Russia's actual rather massive real economic weight and that is the thing which most in US (and UK) still can not deal with being in a complete denial. As Bloomberg admits:

In some respects, the sanctions imposed on Russian companies and individuals in 2014 showed that Russia can always muddle through on its own.

One may ask then--how do they, Russians, do it? Granted, of course, that it is not to 2014 but 2018 and I am not going to be original here by continuing to review enclosed (that is full) technological cycles which Russia grows as mushrooms after the rain and will refer to the World Bank data. Look at these two tables, they speak volumes and, again, those are merely WB projections:

As you can see, it is industrial sector which contributes most to Russia's growth. Not finances, not services, however many of them crucial or important. So, what's the catch? There is none. Russia's so called "financial", "debt" or "stock" market is absolutely irrelevant in Russia's economic outlook, real economy, however is, hugely at that. Nobody in Russia gives a damn, with the exception of a minuscule strata of Russia's moneyed and hip who make money in stock and speculations, about how quotes are doing daily. Russians, of course, do care how Ruble does but that is the extent of the interest of the overwhelming majority of Russians in the so called "financial" (euphemism for hollow bubbles of derivatives detached from the reality) markets. 

The explanation is as simple as explanation of a propaganda BS of US GDP being 19 Trillion Dollars--in reality being probably half of declared number. Russians DO care about internal market. This caring, unlike it became the case with otherwise sensible Trump's campaign re-industrialization slogans, manifests itself in Russia's steady industrial, especially manufacturing, output.

MOSCOW, Feb 15 (Reuters) - Russia's industrial output rose 2.9 percent in January compared with January a year ago, recovering after two months in red, the state statistics service said on Thursday.

There should be no surprise in that for a simple reason: Russia has the largest, and by far, population among European nations, her market is, actually, huge and is primed for a massive industrial outputs (inputs). How so you may ask--very simple. Take aerospace. Or, much maligned initially Sukhoi Super Jet 100. While media were screaming about this regional jet being an economic failure, 170+ of those have been already produced and flying, while there are 170+ are on orders already. This is just the start, Sukhoi already announced development of a 75-seater with 50+ confirmed firm orders plus with almost full localization, including fully Russian-engines, for future aircraft. Russia's regional (a relative term) commercial aviation is not about to explode--it is already exploding, with new SSJ-100s and upcoming IL-114 long overdue removal of old and obsolete Antonov and Western aircraft. Together with MS-21 Russia needs thousands of those in upcoming decade or two. 

A very similar picture is repeating itself in many industrial fields from car market which is expanding (a first sign of people willing to buy durable and expensive consumer goods) both for domestic and foreign manufacturers to pharmaceutical. Russians do not care about making money on stock exchange, what Russians do care is to have a decent and, most importantly, stable job--guess who provides it? Right, State. Not in a sense of a direct employment, albeit this too, but in what today increasingly looks like Russia's second industrialization guided by the government based on largely nationalized or financially controlled and supported strategic industries which continue to turn out world class products be it commercial aviation, industrial equipment or consumer goods. Russians just love building machines, so much so that recent poll in Russia found a startling revelation--many Russia's young hipsters with all those "useful" degrees in marketing, finances, banking, sociology and "strategic analysis" were ready to retrain for a blue (really?) collar jobs such as CNC Operators or machinists of all kind. Russia doesn't need "financial analysts" (BTW, the US doesn't need them either).

Even brief review of jobs sides both in Russia and US gives a very interesting insight into Russia's economy. Russia, which is less than half of US in population has more than a half, 2500+ against about 5000 jobs, demand for CNC operators than it is the case in the US. Obviously those numbers are not precise and they do fluctuate but even the approximate ratio is revealing. Unlike the US which surrendered her  consumer and industrial market to China, Russia has a very different view on that issue and continues on with re-industrialization. For majority of Western "analysts" still stuck in the Soviet memes of 1970s and 1980s, the acquaintance with Russian-made world-class consumer goods may provide a cultural shock.  Not to mention professional top of the line equipment. 

The market which is so voluminous as Russia's will be increasingly in need of a whole spectrum of consumer and industrial goods. But nobody in the West, it seems, can wake up to the reality that at this stage Russia doesn't really care if somebody "punishes" her or not, especially such a pretentious economic "giant" as UK, whose GDP is barely 60% or Russia (if to believe the very shysters from London who run a global financial ponzi scheme) and which is the GDP of utterly de-industrialized backwater still thinking that it is a superpower. And then, of course, there are Russia's Military-Industrial Complex and massive strategic natural resources against which UK doesn't even register as a serious power thus raising the question--how, indeed, can UK "punish" Russia when Great Britain was the first, as incomparable Corelli Barnett noted: 

"… swift decline in British vigor at home and the failure to exploit the empire were not owing to some inevitable senescent process of history....That cause was a political doctrine....The doctrine was liberalism, which criticized and finally demolished the traditional conception of the nation-state as a collective organism, a community, and asserted instead the primacy of individual. According to liberal thinking a nation was no more than so many human atoms who happened to live under the same set of laws....It was Adam Smith who formulated the doctrine of Free Trade, the keystone of liberalism, which was to exercise a long-live and baneful effect on British power....Adam Smith attacked the traditional "mercantilist” belief that a nation should be generally self-supporting…"

Russia is increasingly self-supporting and no amount of blackmail, especially in such fields as snake oil sales and trading of the air and useless papers (or machine code lines), aka financial sector, can change the fact that the only way UK can "punish" Russia is to make Russians speak to Boris Johnson and thus make life of Lavrov and Zaharova miserable.  Meanwhile London should start paying more attention to a wide spread pedophilia and rape of English girls by increasingly culturally enriching (did the land of Shakespeare, Newton, Conan Doyle and Beatles need that "enriching"?) "Asian men" (and local ones) and resign itself to the fact that it is nothing more than a nice tourist attraction. That is until it gets completely "enriched" and will be finally ruled by Sharia.