I'm not another economist, I'd rather called myself a kinda animal which/who leads by its/his instinct or prejudices (who does has them not?). But I know the world market could be effective weapon against some BIG countries in the hands of Americans. They can sacrifies the wealth of the nation (we're still talking about leaders' moves not the deals of avarage citizens) to press others into deep financial and economical crisis.
Devoiding Russia of money will create unemployment to say the least (but the list is longer, of course). To devoid Chinese jobs may mean China's desintegration into several lesser states according to province borders. Who knows what the f***g Uncle Sam is all about?
But I can say Russia has made another blunder believing in the Western world after the dissolving of Soviet Union. Did Mr Putin believe in "good intentions" of the US leaders? Yes, he did. Did he wanted to integrate Russian economy into the world of empty money? Yes, he did. But the sober up has come a little too late. First the Goergia, now the "bailout" of US private banks at the expense of the rest - let it be small American investors, or bigger internation corporations, Russian for that matter. The question - why the "financial crisis" has occured now when the dire financial state of the world was known for years?
Neocons last stand. Either them or us, even through the World War III. The ends justify the means.
But first we have come out live from the US Presidential Elections 2008. If Mr Obama lose the presidential seat there will be popular uprising in the USA or a Civil War II. If he wins then... I'm sorry, but now my glass ball has become murky...
As soon as I stopped reading the above comments I have come across interesting analysis which confirmed my views on Russia. Read the last article on Russian financial position and what or who pushed Russia into the crap of "the world financial market". Read the full text, I will quote only a small excerpt concerning recent Russian finacial policy and why it failed so soon.
Russian Market Leads in Losses
Russia Blog, By Yuri Mamchur
October 6, 2008
Picture (click to enlarge): From Buy.com [>].
Introduction: (quotes)
On Monday, October 6, the Russian market lived to see perhaps the worst day if its life. Despite several trading pauses, total market losses equaled to 19 percent. Some blue chips lost nearly 40 percent. Declining oil prices didn’t help either. The RTS index dropped to 867 points, while Micex stopped trading when its index dropped by 18.66 percent, reaching 749.66 points.
Russian market performance today seemingly was the worst in the world. Behind Russia came Indonesia, where the market dropped 10 percent. Japanese Nikkei dropped by 4.25%, Hong Kong’s HangSeng – by 4.97%, Shanghai’s CSI 300 – by 5.12%. French САС 40 dropped by 5.7%, British FTSE – by 5.53%, German DAX – by 5%. When the stock exchanges closed in Russia, they opened in America with ultimate losses on Dow Jones IA of 3.17%, Nasdaq – of 4.13%, NYSE – of 5.5%.
Main themes: (quotes)
Russian companies saw value evaporate on both Moscow and London exchanges. In London, shares of Russia’s “Norilsky Nickel” lost 44.28%, VTB – 36.18%, “Tatneft” - 45,23%, «Uralkaly» – 47,78%, «Rosneft» –39,77%, LUKoil – 36,09%, «Surgutneftegaz» – 31,25%, Х5RETAIL – 26,12%.
In Moscow, “Norilsky Nickel” plummeted 37.67%, “Rosneft” – 27.41%, Gazprom – 24.42%, LUKoil – 24.16%, “Surgutneftegaz” – 22.92%, MTS – 21.21%, Sberbank – 16.32%, VTB – 24.5%...
Other excerpts:
Russian analysts blame the delay of the America’s bailout bill, its potential inability to save the markets, declining oil prices, and sheer fear among investors. “The halt of trading doesn’t change the situation anymore,” admits Anton Motovilov, analyst for Univer Investment Group. Sergei Karyhalin of Kapital Group says “Investors keep on running away from risk.”
“There is no light at the end of the tunnel,” said Aleksey Trunyaev, a trader for Aton Company, “I don’t see any real reasons for growth in the near future.” The only factor that calms market players is their belief that the market cannot fall perpetually. Anton Motovilov suggests that “’The darkest hours are right before the sunrise.’ We might see some growth before the end of the year, because the capitalization of many companies at the moment is far below the value of their assets, which should motivate long-term investors to gain strong [long-term] positions.
However, an anonymous American wag noted, “There is another old saying: It’s always darkest just before the tornado!”
Picture (click to enlarge): From Politics... [>]. A quote - "So one thought I would be spewing politics from this sight, but mostly it's to keep you all updated on my life here in Moscow. But it's been boring lately, so I turn to politics. Very simple. The western press really is harsh against Putin and Russia. But you know, everybody can piss off, because the Russian populace genuinely like and support him. He's been good for the country and that's it. Simple. So all this news about Putin being a authoritarian is bullshit and western propaganda to undermine Russia's resurgence in the world. The west is just pissed that their multinational corporations (Exxon-Mobil and BP) can't rape and pillage Russian resources for their profit while Russian people don't get any of it. If he is an authoritarian, then he is one by the people's consent. Better then a "democracy" where there is no consent. Hail to the chief!"
Russia Offers Belarus Its Ruble
Kommersant
Oct. 07, 2008
Picture (click to enlarge): Belarusian President Alexander Lukashenko has motivation to accept Putin’s proposal. (Photo: Dmitry Azarov)
Introduction: (quotes)
Russian Prime Minister Vladimir Putin stated yesterday that he has suggested that Belarus create a “currency pool” with Russia, its partner in the Union State, and use the Russian ruble for settlements in energy trades at least until the instability on the financial markets passes. Putin was in Minsk for negotiations with the Belarusian Prime Minister Sergey Sidorenko. “The problems the American economy and American currency system have encountered today are well known to us,” the Russian prime minister said. “In that connection, there are grounds to think about what I said. For the Russian national currency, it's important.”
Main themes: (quotes)
“Currency pool” is a term used in Great Britain in the 1940s and in Southeast Asia in the 1990s. It is the partial unification of current exchange regulation, including through international reserves. In practice, it is a unification of parts of national reserves. In Russia’s case, the changes would be mainly a matter of image. Russia’s international reserves exceed $540 billion. Those of Belarus consisted of $4.58 billion as of September 1, as determined by the International Monetary Fund, and $5.6 billion according to the Belarusians. The Belarusian National Bank does not make public the amount of its reserves it keeps in Russian rubles, but it acknowledged in its 20076 annual report that 80.1 percent of its reserves were in “currency with limited convertibility.” The Russian ruble was considered such a currency at the beginning of 2007.
Belarusian President Alexander Lukashenko has motivation to accept Putin’s proposal. Belarus’s balance of trade with Russia in the first half of the year was negative. Export from Belarus to Russia totaled $6 billion, and import to Belarus from Russia was $12.7 billion. The creation of a pool would more closely tie the Belarusian rubles to the Russian one, but there have been several suggestions that Belarus simply convert to the use of the Russian ruble, which Lukashenko rejected. The move would limit the Belarusian National Bank’s ability to regulate macroeconomic processes in the country and require greater transparency of it.
RUSSIA AND BELARUS SET TO FORM SINGLE SCIENTIFIC AND TECHNOLOGICAL SPACE
The Voice of Russia - www.ruvr.ru
07.10.2008
Picture (click to enlarge): From "ECOMIR", the Belarusian Republican Scientific Technical Center [>].
Introduction: (quotes)
Russia and Belarus are getting down to forming single scientific and technological space, in keeping with the agreement that Russia’s Prime Minister Vladimir Putin and the Belarusian President Alexander Lukashenko have reached in Minsk. The parties to the talks in Belarus have also come out for further consistent promotion of integration cooperation in general. The Voice of Russia has the details.
Main themes: (quotes)
Moscow and Minsk are set to go ahead with their efforts to shape single economic and customs space. Efforts to that end will be closely coordinated with Russia’s and Belarus’s partner Kazakhstan. According to Vladimir Putin, Russia and Belarus could and should act as a motive force behind the efforts to set up the new single spaces in question.
Other excerpts:
But Alexander Lukashenko also believes that Russian-Belarusian union relations need a fresh impulse. He feels a reasonable option was suggested during his meeting with President Dmitry Medvedev in Brest this past summer, namely to agree a number of feasible and reasonable programmes that the parties would pledge to implement. Yesterday’s decision on drawing up some basically new programmes in cooperation in space exploration and nanotechnologies is a move precisely to that end. Meanwhile Moscow feels that yet another feasible and reasonable step to be made would be the expanded use of the Russian rouble in business transactions between the two countries. The rouble will thus gain some extra weight in the process of its transformation into a regional currency. Minsk would like, for its part, to get another Russian credit on easy terms to create a safety cushion of sorts for its own financial system. All signs are the idea has met with understanding from the Russian Prime Minister Vladimir Putin.
Brazil, Argentina abandon US dollar
PressTV
Tue, 07 Oct 2008 08:03:52 GMT
Picture (click to enlarge): Brazil's President Lula da Silva (R) and Argentina's President Fernandez de Kirchner
Introduction: (quotes)
Brazil and Argentina have launched a new payment system in their bilateral trade, doing away with the US dollar as a medium of exchange.
The two Latin American nations started the Payment System on Local Currency (SML) on Monday following a last month agreement inked by their presidents to use local currencies in a bid to end transaction in dollars.
Main themes: (quotes)
On Thursday, Argentine Central Bank President Martin Redrado and his Brazilian counterpart Henrique de Campos Meirelles signed the enforcement of the agreement for the SML, under which exports and imports between the two countries will take place with the Brazilian real (BRL) and the Argentine peso (ARS).
The new monetary system mainly favors small and medium industries in both countries because it will save them bank charges when averting their local currencies to dollars. According to the Central Bank of Argentina, the trade between the two major South American economies stands at about 25 billion US dollars per year.
Other excerpts:
Although the SML seeks to gradually eliminate the dollar from the bilateral trade, the currency will continue its presence in transactions between Brazil and Argentina, as their central banks will set the exchange rate for the real and the peso with respect to the dollar. Brazilian authorities said that the SML deepens the integration between Brazil and Argentina and hope it will serve as an example to be adopted by other countries of the Mercosur, like Paraguay and Uruguay.
Should the Russian Financial System be Saved?
Aleksandr Salitzky, Strategic culture foundation
October, 6 2008
Picture (click to enlarge): From Self-Imposed Restrictions According to Kudrin [>].
Introduction: (quotes)
I’d venture on a brief historic retrospective. The state of hypertrophy of the financial sphere as the principal cause of the current Western crisis indeed has a long history. One of its components was the transfer to “floating “moneys, their excessive trading, insurance of currencies and the removal of the limit of accounts for international capital movement. The abolition of this limit in the leading industrialized countries was perpetuated in 1973-1983. The step produced chaos Susan Strange aptly called “Casino Capitalism” in her book “Mad Money”.
The emergence of international capital markets and the continued spreading of full negotiability over the rest of the world were accompanied by the continuous slowing down of world economy growth rates. To all appearance the current decade would not be an exception to the rules. That is of special importance to the countries that are deeply integrated into western markets (in Russia they are equated to “global economy”). The continued overgrowth of the financial sphere (and the convertibility sphere at large, too) effectively resulted in withdrawals of resources from the depressive production sector. The situation was also deteriorating due to the fact that economies more and more often began to be managed by “financial gurus”, or, simply speaking, ledger clerks of dubious repute.
Viewed globally, Western capital (after the 1973 “OPEC oil riot”) was trying to regain full control of resources of the developing countries using mechanisms of expensive credits, “debt strangleholds” and even deliberate provoking of currency and financial crises in too boisterously developing economies. That was also done by enacting the mechanisms of emerging financial markets with a forced lifting of control of financial flows. The in-depth scrutiny of this sphere was made by Nobel Prize winner Joseph Stiglitz. We should agree with his conclusion of the causes of the 1997-1998 Asian currency and financial crisis. He wrote that liberalisation of the accounts of moving capital was the sole most important factor that provoked the crisis.” This outstanding scientist has nothing good to say about the IMF and the likes of George Soros.
I can assume that nothing but the activities and the very nature of the latter served as some sort of a warning to sober-minded responsible financiers. As it turns out, most of them make their homes in Asia. So, contrary to the assumptions of a harmonious global combination of Western capital and work done by “peripheral” countries (making the basis of neo-liberalism) , by 2005 the picture was totally different. The attempts to fully liberalise financial markets failed. The major developing countries (to say nothing of oil-exporting countries) were suspicious of the idea and gradually became financially self-sufficient, rich in “convertibles”, incorporating the selective use of foreign investments and actually broke down the monopoly prices on credits. Neither money nor specific institutes of the developed proved redundant in the conditions of financial globalisation they themselves launched. Locked in by their own moves, western finances began to destroy themselves.
Main themes: (quotes)
In the case of Russia in 2006-2007 the swelling of an excessively liberalised financial market could evidently not be viewed as the best way of accelerating investment processes. With the average amount of capitalisation of financial markets at the turn of this century was 90% of GDP and 20% of GDP on “unripe” markets, a different conclusion should have been made. That situation as Russians realize more and more bitterly now was indicative of the site of concentration of problems to be faced by the global economy and highly likely – of its potential abrupt fluctuations. So, “underdevelopment” of financial markets should hardly be overcome at all, to say nothing of at a too high a rate. It should be recalled that on the eve of the 1997-1998 Asian crises capitalisation of the stock markets in a number of Easter Asian countries grew to 150% to 200% of their GDPs.
One could of course set out looking for “western conspiracy”, and even to succeed in this search given that the Kremlin was overtly disobedient in August.
But is not easier to consider the issue of right timing for making the rouble fully convertible? Do we have more money than China, which does not have it yet? Or is Mr.Kudrin and his team wiser than Indian financiers who are in no haste to fling the doors of their stock exchange open to anyone, taking pains to filter the money bags arriving to their country?
It could be worthwhile to admit that the decision taken in 2006 was based, on the one hand, on the worn-out outdated IMF prescriptions and on the other – their unwillingness to tackle the problem of financial control?
And, finally, the fathers of our remarkable financial system should take the responsibility of stating that the principal goal of A.Kudrin’s group of economists in the government is creating hothouse conditions for its institutes. What a wonderful phrase –“lack of liquidity”! What does it have to do with our money-lenders who rake in 15% to 20% interest for mortgage credits to young families and businessmen, and who say they have no money? They are still free to borrow money in the West at 7% to8% interest.
What price an international financial centre in Russia? Whose is this brilliant idea? Understandably, the phrase can mesmerise one for a time, as did the term “capitalisation”, but should we not start by admitting that this country does not have a credit that would be competitive according to international standards. No other than A.Kudrin recently explained that financing of 90% of investments is done by businesses and enterprises themselves. In the meantime our financiers of genius engage in creating speculative bubbles or simply grab any opportunity to adopt new legislative acts for gaining access to free money say in the form of mandatory insurance of deposits, cars and other vehicles, and so forth. Is it not clear that with all these easy-to-use leverages the financial sector would never become a helper of the production sector, even overwhelming it by ample crediting of imports of consumer goods?
What about fighting inflation? As A.Kudrin explains it to us “ordinary people” with reference to “the Dutch disease” and other fashionable terms, it is almost an inherent characteristic of Russia. Well, then why not to inquire how China, as “an economy in transition “ goes about fighting inflation, bringing it down to 4.9% in August from 9% (calculated as annual) in January? All told, oriental financial advisers would not be out of place in Russia. I remember that money was flowing in the pockets of experts from the IMF and other institutions, even when we were empty of pocket. And by the way, no other than these experts are now responsible for depreciating western finances with the ensuing deplorable nationalisation of once highly esteemed institutions.
Not more than 5% to 6% of Russians have saved enough money to live modestly for at least 12 months. 17% to 19% have something in terms of savings. And that’s the verdict to the Russian financial system.
In other words, Russian socio-economic policies, based on eclectic borrowings of quotes from the now dead neo-liberal doctrine and social Darwinism, are bankrupt.
The need for its decisive review is evident at least from the viewpoint of the fact that Russians are scary expecting the continuation of the reforms of the utilities and public health sectors bewildered at the mess in the area of education and energy. One more thing is also evident: the social ill-being of the nation is the direct consequence of the inadequate investments into the production sphere, and deliberate blowing of bubbles on real estate and securities markets and inept anti-inflation fight led by mediocrities.
What is needed is good flogging and a most resolved re-education of the financial system, this voracious sophomore that has become an intermediary between real earnings and people’s pockets.
Other excerpts:
As for short-term and mid-term prospects it would be preferable (also with an eye to maintaining balanced relations with the West) to have closer interaction with Asian partners emphasizing bilateral and multilateral agreements. It is time to maintain financial cooperation with them. As for energy and transport development programmes (and programmes of development of land and woods reserves) they should be worked out taking into account the fact that Asia has a more stable nature of demand for resources, the presence of dynamic entrepreneurs with connections in the production sector of their economies.
Incidentally, that would be in full accordance with Russia’s international obligations. The June 28, 2008 Declaration of the Shanghai Cooperation Organisation reads:”In the conditions of the slowing down of the growth of global economy carrying out of responsible currency and financial policies, control over capital movement and ensuring food and energy security acquire especial importance.”
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