Thursday, March 29, 2018

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.   

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