Tuesday, March 10, 2020

First Results.

From where it really matters. As was totally expected, Russian national currency Ruble lowered itself somewhat, from 67 for $1, to 72, or by about 7%.  But this is not what really matters: yesterday someone started to preach the gospel of upcoming panic in Russia and even lines forming at currency exchange outlets. Well, as first business day after the holiday has shown--no panic and no buying of US Dollar or Euro out. Business as usual (in Russian). This is not to mention, of course, the fact that nobody in Russia really gives a damn about what is happening on Moscow Stock Exchange. Russia is wired differently. This, however, is not without some drawbacks: Russia is seriously dependent on imports of pharmaceutical products (from EU mostly) and this is one of those sectors which may see a growth of consumer prices. This problem is not new and that was true in USSR as well. Steps to address this situation, including developing own pharmaceutical industry, have been undertaken but as it is the case with any large national project--it takes time. I recall early 2000s demonstrations of diabetes patients because of the shortages of insulin and other diabetic care items. Not anymore, Russia produces a number of own insulin types and covers diabetic necessities well. 

In general, modern Russian economy is increasingly flexible and people on the streets of Russia do trust own economy and finances, well, with the exception, of course, of urban office plankton, who due to limited education and intellect, consider themselves all-knowing. But that is expected from this type. So, where are going from here, then? What these few last days are about? I think they are about what is known as tour' de force, commonly known as demonstration of force, by Russia who, as is the case since Putin's 2007 Munich Speech, wanted to remind everyone that present World (Dis)Order lived out its usefulness. Here is how it works:
Remember Gandhi?   
This is exactly what is happening. While I am not pushing here the point that the United States or US Dollar are about to collapse, this opinion cannot be ignored:
“The real problem in the US economy is all the debt. We have so much debt, not just in oil companies but in all sorts of companies and everybody is missing this,” Schiff said. Unlike during the 2008 financial crisis, the US is unlikely to be able to re-inflate the dollar, as it simply doesn’t “have enough bullets in their gun to reflate a larger bubble” and now is bound to “deal with a full aftermath of this coming crisis.” “In 2008 the dollar went up because everybody was buying it. This time, the dollar is going to tank, because everybody is selling it,” Schiff told RT. “And this commodity bear market, including what’s happening in oil, is going to be very short-lived. Because once the dollar starts to collapse, all these prices are going to rise including the price of oil.”
In other words, as Michael Hudson and many others warned--the crisis of 2008 hasn't been resolved, it was painted over. Banks were saved instead of saving US industries and labor. Recall what happened 24 years ago:
Remarkably accurate, Alan Greenspan is not a stupid man. But in 2008, as was the case even earlier--it was real economy which was sold to financial "industry", not the other way around, and we know the story after that. Thus, the current belch of the "market" is not just about Coronavirus, the "Oil War" initiated by Saudis and having their bluff called by Russia, or, for that matter anything else in particular, it is the whole thing--it is a systemic crisis of the global financial oligarchic capitalism which DID escalate asset values and did even more to enrich a relatively small group of fat cats from Wall Street. We all live with the unfolding consequences of this global fraud, driven by petrodollar and perception of the American military might which served as the pillars of this increasingly unstable system. We all can see today how, quoting Greenspan, it not only threatens but already impaired "real economy, its production, jobs, and price stability".  

Methods to overcome this chaos, if someone in the West would decide to overcome it for real, will not be yet another mindless 'shock and awe' spending to avert global recession. These people calling for that, and that is most of Western "financial elite", are morons, since think that pouring gasoline on fire will extinguish it. You cannot expect anything else from them. The measures which really can avoid a complete collapse down the road, even when all current problems with virus and oil will fade away, cannot be and will not be coming from this "elite", they can come only from the State.  And that's what makes those needed measures virtually impossible, at least in the United States, albeit, Trump announced measures to deal with this situation remind me something, something which is on the tip of my tongue, ah, yes, state capitalism, also know as "socialism" (it is not really) among most ignorant parts of population:
Funny how things work out, even if to consider that US Congress may sabotage this plan. As Dmitry Orlov once succinctly and sarcastically observed in a piece symptomatically titled Resurrecting the American Economy
But perhaps most importantly, it must be understood that repatriating production to the US and redeveloping the industrial base will not be a profitable venture, at least not initially. At the outset, and for at least the duration of the first Five-Year Plan, it will definitely lose money. Borrowing it is a bad idea; the federal government is already $21 trillion in debt. Instead, this money needs to be confiscated from the top 1% of the population which owns close to 40% of the country’s wealth. Doing so will yield roughly $50 trillion—more than enough to fund this project. This is best done as part of a Cultural Revolution: round up the one-percenters, make them wear dunce caps and march them through the streets while pelting them with fruits and vegetables and heaping verbal abuse on them. Oh, and take away all of their money and sentence them to a lifetime of free public service. These may seem like significant changes, and indeed they would be. But there are reasons to believe that if they are made and Stalinism 2.0 is imposed on the US and followed faithfully, then there is a chance that America can indeed be made great again. And so, good luck and God bless! 
Remember Obama warning in 2009 about people with pitchforks marching on Washington?  We are entering this time and we are pass the point of no return.     

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