What Matters. Again.

James Kunstler yesterday summarized, artfully as ever , the essence of the American economy nowadays: 

Real capital is grounded in the production of real things of real value, of course, and when it’s detached from all that, it’s no longer real capital. Money represents capital, and when the capital isn’t real, the money represents…nothing! And ceases to be real money. Just now, America is producing almost nothing except money, money in quantities that stupefy the imagination — trillions here, there, and everywhere. The trouble is that money is vanishing as fast as it’s being created. That’s because it’s based on promises to be paid back into existence that will never be kept, on top of prior promises to pay back money that were broken or are in the process of breaking. The net result is that money is actually disappearing faster than it can be created, even in vast quantities.

Many of us (yes, me included) wrote about it for years and years, yet, through the new crop of "market analysts", the idea that money is the only thing that matter was being carved into the minds of majority, while covering up for the real state of what I call them--tangibles. Let me demonstrate. This is US industrial (that means tangibles) output within last 12 months:

Now take a look at the 10-year span:

These graphs based on US official data should be kept constantly visible for people who continue to press the idea that Covid-19 is the reason for this all. Obviously, it is not. As I repeat ad nauseam since the start of this pandemic--virus is merely a trigger, one of. The shit was going down the drain for a long time and, as the recent increase in anti-Chinese rhetoric based on a totally false (what's new, really?) accusations on Covid-19 origins demonstrates, things are not that good for the United States. 

Obviously, US "elite" knows how to manipulate the currency and conduct currency wars--it is expected from them. Most of them never saw modern industrial plant and never ran any kind of productive business which would have been based on those tangibles--main capital, as in buildings, machinery, cadres (yes, people), manufacturing plans and training, trucks, ships, what have you. From the get go those people were "educated" in banks' operations, debit, credit, fees, "valuations", stocks, margin calls and other mambo-jumbo in the foundation of fake American GDP. As new update of old Soviet/Russian anecdote about cowboys goes today:

Two cowboys, Bill and John, ride their horses in prairie. While riding there, Bill sees a pile of horse shit and because he has 100 dollars it occurs to him--why wouldn't I dare John to eat this pile of horse shit for a hundred dollars. So, he dares John to do just that. John thinks: hm, of course, eating horse shit is really humiliating and disgusting but 100 bucks, damn, too serious of a money to pass on such an opportunity. So, he agrees and eats this pile of shit and Bill gives him his 100 bucks. They continue to ride side-by-side after that. While riding both think. 

Bill: well, it is all cool that John ate a pile of horse shit but, man, 100 bucks is too great sum of a money to pay even for such an atrocious challenge. I wish I never dared Bill and kept my 100.

John: well, it is really cool to have 100 bucks, but, man, I ate a pile of horse shit for that and now Bill will taunt and humiliate me for this. I wish I never agreed to accept his challenge.

While thinking like that they pass another pile of horse shit and John dares Bill to eat this pile of shit for 100 bucks. Bill agrees and does just that, John gives him 100 bucks. After that both cowboys continue to ride side-by-side in full silence. After few minutes of riding in silence John breaks it: "Hey, Bill, you know what? Don't you think that we both just ate a load of horse shit for free?" 

Bill replies: "But we just created $200 worth of GDP and created two new jobs." 

So, while the United States is getting ready to squeeze China for whatever it can--I think T-bills "targeted" default and putting "pressure" on Chinese owning businesses in the US is a natural choice (I could be mistaken, of course), evidently some rags in the US are beginning to experience a hangover from giving up tangibles: now they are lamenting the "mistake" of outsourcing. No shit, morons. And the problem here is not just classic issue of export of capital well described more than 100 years ago by many classic Marxists. Not just that, in Marxism basis (foundation) of the productive forces (and productive capital) defines the superstructure of morality and culture. This applies fully for a number of the Americans' generations we can identify by the letter or title: X, Z, Millenials, what have you most of which were brought up by the imagery of the office universe in which real life was and is happening non-stop. In fact, once you take a broader look on who is dramatically over-represented in modern art, two categories stand out--financiers and artsy types. One after another, stock brokers, bankers, art galleries owners, programmers, fashion designers and "free thinkers" dominate every single facet of cultural life in the West, with the actual labor and the images of the complex machinery and industrial technologies being absent from socio-cultural "space" in the United States. 

This teeny-weeny detail about modern "culture" aversion to any productive labor, since George Lopez spoiled brat niece Veronica's hysterical reaction to an offer to work at airplane parts plant, speaks volumes. Let's face it, we have an enormous number of people around who would faint at the very sight of your average run-of-the-mill CNC machine or paint booth in some large machine and production shop, as well as from the necessity to learn about safety on the production floor. It is so not cool, it is so not iPhone and orange mocha frappucino, it is so not progressive and sophisticated that life, as in real life, by definition cannot be happening there. But, as the story goes--it is precisely there where REAL life actually happens and where REAL value, as in crucial tangibles, on which civilization exists, are produced. Well, the United States in the last 20+ years was reducing these productive forces to a small fraction of what they used to be and, in doing so, also cleared the space for planting the most destructive and dangerous cultural practices, which now are in the symbiotic relation and mutual influence of those proverbial Marxist basis (foundation) and superstructure. They go hand in hand today with opioid catastrophe, rampant drugs use, overall degeneration of cognitive faculties of whole generations and, as the result, increasing number of almost insurmountable  hurdles towards the ONLY thing which may save this country--economic self-sufficiency. 

Economic self-sufficiency which is also a foundation of REAL national security starts from industry. No industry--no American nation. Simple as that. Modern generation of American "elites" has no idea, or, possibly, doesn't even care about what happens when the attempts to re-industrialize fail precisely because no one knows how to do it for real, not by doing what they got used to do--"printing" money which only accelerates a decline, towards eventual disintegration. So, here it is--no real recovery without real industries, which translate into real employment, this means reorienting production for the internal market and.... here we pause, because this seemingly simple scenario requires a long and substantive debate because this is where the issue of trade comes in and 99.99% of the American "elite" are a free trade neo-liberal fundamentalists who have neither knowledge nor skills to avert what is already not just on the horizon but knocking on the door. If you think otherwise, just take a look at the graphs above, especially a 10 year one. Things just got worse, not better since 2010. I am sure vast number of events coordinators, DJs and shopping assistants will have to rethink seriously their career choices if they even want any shot at any vacancy in a dramatically shrinking America's basis, before collapsing superstructure buries 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.