A Bit Of Economic News.

When speaking about basic facts I made one mistake, Russia's manufacturing grew in 2021 (relative to successful 2019) not 6.9 but 5.9% which is still very impressive.  But the news from the processing industries--that is where the value added is highest--is even more impressive: the growth is 9.2% (in Russian from Rosstat). 

Remarkably, the US and Qatar are redirecting LNG tankers from Asia to Europe because European natural gas prices are, well, insane. So a lot of money to be made there while the going is good even despite the demand shrinking somewhat, which is only natural because many simply cannot afford to exist in such economic conditions. I don't know how Poland will be able to escape inevitable blame for insisting on the market-determined gas prices, but then again--it is purely EU and European Commission matter, let them start throwing turds at each-other. Hungary and Serbia were the smartest ones, they simply signed long terms contracts with Gazprom and are sitting pretty (probably with pop-corn) observing this whole clusterfuck in EU. 

Per Russia's ultimatum. There were some objections to calling it that, but my response is simple: if it walks like a duck, quacks like a duck and looks like a duck, then there is a good chance that it is a duck. Same here:

Judge for yourself. But in general, many people missed one very serious moment in all of this back and forth between Russia and NATO. Russia threw the US off balance. This is simply by implying an escalation dominance in the areas which Russia historically deems crucial for her security. Ukraine is one of them. Is there a degree of ambivalence in Putin, Lavrov, Shoigu's and other statements? No doubt about it, there is a certain small degree of it which makes the other side guess WHAT will be the response if the red line is crossed. The military part of this response is somewhat predictable when it comes to Ukraine, but what else, what else--Russia is ready to discuss it and she is in the open with her concerns, let's call it like that for now, concerns. Aegis Ashore is one of that--both in Poland and Romania. Plus, Vladimir Putin was not this time generous towards Western "partners" and speaking at the Board of Ministry of Defense couple of days ago admitted that even written obligations from the West are pretty much worthless. But still, better than verbal promises alone. 

And while Russia's economy is still recovering from the ruins of 1990s and early 2000s, it is clear that it is large and self-sustainable enough to issue ultimatums not fearing any economic consequences. I would even propose that shopping in Moscow, St. Petersburg or Kazan is in no way inferior to visiting Paris or Milan boutiques which sell brand crap for ridiculous prices designed for the type of public which in Russia is known as нищеброды (difficult to even translate properly--uncultured lacking taste pauper-beggars maybe) who hunt only for status brands and things as to be a part of a conspicuous consumption class. Yes, there are many of those among moneyed strata both in Russia and in the West. The result, very often, looks like this:

But then again, I am old fashioned, but, yes, I still love good shoes and good watches (emphasis on good, meaning beautiful and reliable). I buy my Wranglers at Walmart (and Lee's at COSTCO) and some things in Eddie Bauer. I would say that is more than enough for man's happiness. But that's just me, what do I know. 

They Just Don't Learn.

Chris Hedges of RT, formerly of NYT, a Pulitzer Prize winner, what have you, wrote a piece two days ago. It is about the decline of the "US Empire" and the piece is filled with historical parallels and, naturally, the fate of the Soviet Union is mentioned, despite a rather dramatic difference between the context of Soviet collapse and America's disintegration. I understand where Hedges is coming from but then he suddenly exhibits a defining trait of America's intellectual class, without exception, attributable to the whole of it, no matter if it is neocon wing of it or honest peace-loving people, such as Hedges. 

Russia, whose economy is roughly the size of Italy’s, is also attacked for destabilizing the Ukraine, supporting Bashar al-Assad in Syria, funding France’s National Front party and hacking into German computers. Biden has imposed sanctions on Russia — including limits on buying newly issued sovereign debt — in response to allegations that Moscow was behind a hack on SolarWinds Corp. and worked to thwart his candidacy.

I wrote about this issue not for once, but the ignorant myth of Russia's economy being the size that of Italy's, Spain's, Australia's, you name it, continues to be perpetuated by many and this myth is not just patently untrue, it is downright dangerous. Because American "elite" resides in a delusion about outside world for the last 30 years at least, they continue to make their decisions based on absolutely false premises, many of which are being pushed on them through media. Let's face it, statements such as "the finest fighting force in history" or "the largest economy on planet" are as American as flag, apple pie and baseball. Modern United States cannot live without self-aggrandizing. But how about forensic mental experiment? I will start with... America's GDP which does not reflect America's claim (mostly through inflation of the value of assets) to being largest economy in the world, with China long ago overtaking the US as a main manufacturing hub of the world. It is just cold hard fact, China's real sectors dwarfs that of the US. Using US Dollar and its value as a measure of economy, in the meantime, is a sign of ultimate economic and geopolitical ignorance. 

On the other hand, even common sense, forget actual IMF data which defines Russia's economy as being larger than that of Germany, should prompt people who call themselves "journalists" to merely imagine what would happen to Italy if she, granted my love for Italian culture and football, ever decides to build the space program the size of Russia's, will start building nuclear power stations, maintain state-of-the-art armed forces and, simply, provide decent standard of living for most people in the climate which, as Texas has demonstrated recently, can only be described as a calamity. Even this small list of real industries should give a pause to any journo at best, in a worst case--this list is a good primer for the start of a serious cognitive dissonance. But, no. The spouting of this crap continues unabated, I can remind you another popular cliche--Russia punches above her weight. This is not just the issue of ignorance, albeit this too. It is a classic case of Kubler-Ross grief model with Stages 3 (Bargaining) and 4 (Depression) being manifestly present in contemporary American writings, be that by delusional neocons or by those who profess views opposite to neocons'.  

Truth is, should Russia have the economy the size of Italy's, she wouldn't be able to do what she does and that is setting global agenda and, frankly, laughing at West's sanctions and even direct sabotage. America's "garrulous patriotism" cannot take it across the whole political and ideological spectrum. In a Stage 3 (Bargaining) of Kubler-Ross this bargaining takes grotesque forms with mantras of American greatness which begin to sound more and more ridiculous and do not anymore provide a desperately needed therapeutic effect. They cannot, because America's slide towards the bona fide thirdworldism cannot be stopped within present pseudo-economic and political system and culture, and what's left is to fight facts of life. Recall, brilliant essay by Irina Alksnis, a very sympathetic towards America's plight, which since then has become even more relevant.   

However, to hear this simple advice--not to mention  following it--the United States need to stop, at least for an instance, and silence themselves. To stop shaking air with statements, declarations, demands, and threats, which come across as either strange, or outright silly because of their obvious inability to ever become a reality. But it is precisely, it seems, what the US is not capable of doing. As a result--the continuation of never-ending declaratory carousel: Moscow, Assad must go! Russians, we will provide for freedom of navigation in Kerch Strait! Russians, we will punish you for support of Maduro. But the most insulting for Americans is that only Russia can understand them. Because we remember the pain behind those words. 

And so it goes: America's economy is not the largest in the world, hasn't been for a long time, Russia's economy is not the size of Italy's, it is much larger than that, it is, actually, larger than that of Germany and continues the pursuit of economy of Japan, but even these forecasts, which forget to mention Germany's real industries shrinking for 28 months in a row now, even this BS, heavy on FIRE economy--a real reason behind America's decline--stats show where the Italy's and Russia's economies are. And again, America's real economy, not manufacturing of debt--the main US industry--is not $23 trillion, it is not even $15 trillion and is probably around 12-13, at best. 

Real size of Russia's economy? Probably around $5 trillion now and at least Russia doesn't count prostitution and illegal drugs trade as addition to GDP as EU does.

Counting Drugs and Prostitution in GDP Makes a Mockery of Budget Rules

I don't understand why the author is so incensed? In the world where Tesla and Facebook have bigger "capitalization" than Boeing or General Electric, anything is possible, so adding sales of heroin and the value of the side-road or truck stops' restrooms blowjobs is only natural for creating an impression of large booming "economies". In fact, I see no difference between prostitution and cooking of books which is MO of modern Western "economies". Actually, no--there is a difference, prostitution is more honest. But then again, in my latest book, I touch upon the issue of inability of modern Western media, at least the majority of them, to learn. It is a systemic problem and it is, as I am on record for years, impossible to cure after decades of America's self-aggrandizing which, at some point, reached a scale of a full Kafkaesque grotesque and even well-intentioned people, who see the problems, are not immune from baneful effects of a BS narrative industry, which missed the point that the ball is over and that the fancy carriage is nothing more than yet another pumpkin, under the teary glance of a Cinderella bound to dream about the magic night, not knowing that the Prince is not coming. 

Will they learn? I don't know....

Stephen Cohen Makes Mistake(s).

I do follow Stephen Cohen's thoughts on international relations in general, and Russian-American relations in particular, but while having respect for his courageous and honest position on the subject, it doesn't mean that I agree on everything with him. His latest piece in The Nation with the title Will US Elites Give Détente With Russia a Chance? is not exactly an exercise in precision forecasting. To start with the question in the title, the answer is extremely simple: Absolutely NOT. Detente between the United States and Russia is impossible in principle at this stage for a number of an extremely important reasons ranging from the America's loss of military-technological parity and overall decline, both relative to others and in absolute terms, of the main instrument of American foreign policy, her military, to a near catastrophic economic outlook for the United States. This major, in fact, defining military-technological factor of the American thinking eludes Stephen Cohen, as it does overwhelming majority of American political scientists. And then, of course, there is a growing recognition within Russia of her own role of an emerging power pole and the center of global influence. Finally, did anyone take a stock of US "elites" recently? The decline, even compared to 1980s, of intellectual level is astonishing. Isn't rather sorry present state of the United States a good indicator of those "elites" quality, or, rather, lack thereof? Remaining American common sense realists (and even this term requires serious elaborations) and patriots are literally removed to the fringes of political power and have very little say in a disastrous US foreign policy. Did Stephen Cohen ask himself lately when was the last time the US won any war?

Now we come to this ever important economic issue. Make no mistake, Russia's economic problems are by no means something to be sneezed at, not at all. But it also has to be understood that typical Western monetarist criteria (Cohen, being namely American scholar hardly operates far beyond those criteria) give an extremely distorted picture of Russian economy. Cohen makes an assertion:

Putin’s domestic problem, on the other hand, is economic and social. Russia’s annual growth rate is barely 2 percent, real wages are declining, popular protests against officialdom’s historically endemic corruption are on the rise, and Putin’s approval rating, while still high, is declining. A public dispute between two of Putin’s advisers has broken out over what to do. On the one side is Alexei Kudrin, the leading monetarist who has long warned against using billions of dollars in Russia’s “rainy day” funds to spur investment and economic growth. On the other is Sergei Glaziev, a kind of Keynesian, FDR New Dealer who has no less persistently urged investing these funds in new domestic infrastructure that would, he argues, result in rapid economic growth.    

It is a "loaded" statement, very recognizably affected by Moscow's rumor mill, but let's start with pointing out what is going on here:

1. This "growth" thing. Here is World Bank's assessment:

Real GDP growth in Russia surpassed expectations in 2018, reaching 2.3 percent, mostly due to oneoff effects of energy construction. Forecasted growth of 1.2 percent in 2019 and 1.8 percent in 2020 and 2021 reflects a more modest outlook.Russia’s macro-fiscal buffers remain strong, with fiscal surpluses across all tiers of government and low public-debt levels. When compared to advanced economies, Russia spends less on health and education. Rebalancing in favor of these categories could improve the overall efficiency of public spending. Short-term inflationary risks have abated, with the Bank of Russia signaling a return to a neutral policy rate. Lending activity is recovering, but the banking sector remains afflicted with high concentration and state dominance. Having eased slightly, the poverty rate remains in double digits with many households close to the poverty line and lacking formal employment. Informal employment is rising in the face of close-to-zero net job creation by medium-sized and large formal enterprises.

Did you catch it? Not enough lending for GDP growth, which is, in normal economies, is a sign of, well...look at the US and her corporate debt. 

U.S. corporate debt is now at an all-time high of over 45% of GDP, which is even worse than the levels reached during the Dot-com bubble and U.S. housing and credit bubble: 

So, Judging Russia using criteria which provide, mostly virtual, "growth" of Western economies, is akin to judging Russia's military power in Power Projection Forces, which Russia not only doesn't need but will have a fairly easy time defending (that is to say sinking) against them.  

Now, let's take a look at, indeed, the real growth which is defined by, and you have guessed it already, industrial and agricultural fields primarily--the fact denial of which is in the foundation of not only lousy, to put it mildly Western forecasts and "intelligence" on Russia, but also in the foundation of, say, American delusion about true size and capability of own economy. Here is a verified data (from Russia herself) on manufacturing following a dip in January 2019.

This is what really defines an actual state of economy and while still represented in monetary (Ruble) units one requires a serious review of overall industrial and agricultural development to have a real feel of economic trends. Yes, there are issues with stagnating wages, yes, there are also issues with poverty, but that is precisely a leftover from monetary policies which kept inflation in check while Russia remains under the unprecedented economic sanctions. And here Cohen makes a huge mistake, Russia's presidential elections were not about electing just President, they were about electing a Commander in Chief first and foremost. One has to keep in mind this crucial distinction.

2. Putin's ratings do not decline, in fact, they remain steady and high when the question of "do you approve of President's work" is asked.

MOSCOW, May 31. /TASS/. The approval level of Russian President Vladimir Putin’s performance among Russians has risen by almost three points over the past 5 months (January - May) to reach a 64.5 percent approval rating, according to a poll conducted by the Russian Public Opinion Research Center and published on its official website. "In the period between January and May 2019, Vladimir Putin’s approval rating rose from 61.7% to 64.5%, whereas Prime Minister Dmitry Medvedev’s approval rating score increased from 34.3% to 37.4%," the research center reports.

Opinions of American pollsters are not welcomed--they are as fake as US main stream news organizations. In fact, as I stated not for once, most of information on Russia circulating today in the West, unless in is obtained and explained by serious intelligence-analytical organizations (and even then...), is basically a trash. Data provided by Russian media and statistical institutions, even by officially registered as "Foreign Agent" Levada Center (most of Russian "business" media should be also registered as such) proved to be much more reliable and truthful. In terms of identifying short and long trends, for sure. 

3. In this case I also don't get the significance of Cohen elaborating on supposedly "breaking out" of a TWO DECADE+ long discussion between Kurdrin and Glaziev. What's so significant about this massive public discussion in Russia, which is represented widely in media, between Western monetarists and Keynesian-leaning economists? While this discussion, which is not even a news, continues, Russian state returned under own control more than 70 percent of strategic industries and most resources. So, what's so significant about Kudrin saying something? Everybody in Russia knows what he is going to say, but instead of wasting time on his beaten to death arguments, one should really pay attention to how Russia ignored recent Davos forum and why SPIEF grows in global importance. I do understand frustration of "advanced" liberal Russian office plankton and hipster hamsters with Putin, after all they have huge opinion about their very mediocre abilities, but their "protestations" have little effect on a massive shift of Russia away form liberal policies. Russia has money today, it is just the decision on how to open this stream into economy without dis-balancing fairly well-established financial indices, is not made yet.    

So, what struggle Stephen Cohen talks about when states:

It seems unlikely that President Trump or any of the advisers currently around him understand this important struggle—and it is a struggle—unfolding in the Russian policy elite.

I don't know. This struggle, like this discussion, mentioned above, between Kudrin and Glaziev is unfolding now for what, 15 years, maybe 17? As events with Abyzov show, so called "liberal" pro-western "elite" in Russia begins to understand that the only person who separates them and the nooses on the lamp posts, or sharp pitchforks, is none other than Vladimir Putin and his team. In the end, somehow, Putin lately (few months, at least) comes across more and more as a person of a cool and even relaxed disposition who knows that what is needed to be done is being done. 

So, while Russia has some serious problems and there are some protests, I can vouch for this simple fact: MOST--I don't know, 70%, 80%--of population of Russia knows what their country faces today and what it is up against, and that is the main reason why Russia increasingly sought as an ally, no matter if her economy grows 2% (sure, Russia doesn't have Wall Street to fake economic data) or 3%, especially against the background of a tectonic change in global power balance, which Russia and China drive. And while Stephen Cohen's instincts and appeals are good and laudable, he exhibits the same trait characteristic of American Russian Studies field, he misinterprets Russia dramatically. I know, I am writing about this for years. I am almost forced to recall truism attributed to Metternich "Russia is never as strong as she seems, she is never as weak as she seems". Stephen Cohen is a wonderful man and a frequent guest of Russia--I think it is about time we all start operating with hard cold facts. As per summit--do not expect much from it, just another photo-op. United States is NOT treaty-worthy party anymore, especially her current POTUS, so let's drop any pretenses that anything will change between Russia and the United States. No Detente is in plans. Let's say thanks that they at least talk to each-other.