Information For Thought.

Or as it is more conventionally known in the world not affected by 17 Moments of Spring and Stierlitz's thought process--food for thought. Let's start with a simple truism: by now only completely sublime (or complete morons) still think that US financial market is a viable part of economy. Of course, it is not, because it is a casino set up for enriching a very narrow group of people and financing their utterly destructive ponzi schemes by means of exporting otherwise insane inflation abroad by means of T-bills, yes, those US Treasuries which are the main instrument of US existence as a more or less functioning economy. More or less. Here is the "map" of the main holders of this, ahem, "treasure" as of today. I deliberately included only holders with $100 billion and above:

As you can see Japan and China are most "invested" into those papers today running a "balance" of more than $2.3 trillion combined. Ah, yes, about the balance. This is a hefty sum, even $1 trillion is a hefty sum and leads us to a very interesting conclusion which Russians, through a very reputable Ria.Ru arrived today and this conclusion will never make it to US media for a obvious reason. Get a load of this title: 

США готовятся объявить дефолт по долгам Китаю

The United States Are Preparing To Declare Default On Debt To China 

That's warmer and that is what largely behind anti-China campaign in the US in regards to Covid-19. I make a disclaimer immediately here: I don't know HOW Covid-19 originated, nor, at this stage, do I particularly care because I arrived to my personal conclusion that it is not any kind of bio-weapon and thus was not a deliberate act. But default on China's debt, and many things point in this direction, could be a desperate act of trying to save a collapsing pyramid of financial manipulations and issuing of worthless debt obligations which are... which are...so, nobody really knows if there is a serious interest for buying those anymore (especially short term) other than Fed and Fed is not talking. 

How probable is this scenario? I think it is fairly probable, and keep in mind, even financial information pouring out of US "analytical" financial orgs may still have a very low reliability, as it is generally he case with US economy whose statistics is simply a result of cooking the books for all kinds of rating agencies to present US economy as top of the line credible. Well, manipulation, you know. This is not to mention the United States demanding now some "compensations" from China for Covid-19. Remember US kangaroo court making Iran "guilty" for 9/11 instead of kicking Saudi's ass? Same shit, pardon my French. So, anyone has any doubts now on how it will all proceed? Mind you, China is not Iran, she is the largest economy in the world by far and she will be royally pissed. Well, she already is. But by now we know the quality of personnel in US "elites" who, as I state ad nauseam, can not properly juxtaposition cause and effect, it is totally conceivable that they will decide, possibly out of a complete stupidity, to push the pedal to the metal and destroy whatever is left of US economy by exposing it for what it is--a huge ponzi operation with zero trust (ahem, credit rating) and with it demolish whatever is left of US Dollar's attractiveness.

You may say, they are not THAT stupid. Actually, they ARE. Consider environment from which this cabal of financiers, analysts, economists and other moneyed people came from. I write about this non-stop. You think that they really know what is going on? I doubt it. They, certainly, can calculate debit and credit based on GIGO but most of them never worked a day in a productive capacity and never built anything of real value. This post-modern generation of Ivy League humanities sewer are all one-trick ponies fed non-stop monetary orthodoxy of laissez faire. They know how to "make money", maybe run a bank, what real economy is and how it works--no. They were not taught this intricate subject and that is why they think that defaulting on debt to China could be a good idea. Some common sense voices exist even there:

If the U.S. entered a steep recession or depression without dragging the rest of the world with it, users might leave the dollar. Another option would involve some major power, such as China or a post-European Union Germany, reinstating a commodity-based standard and monopolizing the reserve currency space. However, even in these scenarios, it is not clear that the dollar necessarily would collapse.

What is highlighted in yellow is precisely what is happening now and one of the major indicator of the new economic reality is the fact that in Russia, which also is affected by the whole clusterfvck, unlike it was the case in 2008, there is absolutely NO rush to buy USD, not even close compared to 2008. In fact, never in my life did I encounter such a condescending attitude towards USD, being given a title of "funny green papers" (zelyonye bumazhki). For years I wrote, economy and strength of a state is defined by a complex combination of factors among which currency and finances are but couple among huge number of factors defining national strength. I think now it is a good time to REITERATE Barnett's definition:

Needless to say, modern US meets fewer and fewer of those criteria. Simple as that, and that is an information for thought.       

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.