Friday, December 19, 2014

Putin on the defensive forced to invest a lot of his personal political capital

Let's begin by what I personally consider bad news: either Putin really believes in liberal market economics or he has to say he does.  He began his Q&A and ended it with a categorical expression of full support for the policies of the Central Bank and its Chairwoman, Nabiulina, and a no less categorical expression of support for the Government and its Prime Minister, Medvedev.  Worse, Putin declared that he believes that market forces will by themselves correct the current disequilibria.  At most, he agreed that certain decisions should have been taken earlier or more forcefully, but that's it.  

Some will love it.  Lew Rockwell went as far as to say that he would hand Elvira Nabiulina the award of "Central Banker of the Year".  Not everybody agrees.  For example, Victor Gerashchenko, a former Chairman of the Central Bank, declared that if he had been in the position of Nabiulina today he would have "asked for a gun to shoot himself".

I have to admit that I personally am dismayed by Putin's apparent beliefs in market economics.  I say 'apparent' because there might be things going on which I am not aware of.  For example, while Putin speaks of "market forces" China seems to get heavily involved in the Russian economic crisis.  For those interested in these developments, please check the following sources:

First, check out the latest CrossTalk: Dumping the Dollar.
Then read Pepe Escobar's Go West, Young Han.
Then check out this article in the English version of the People's Daily.
Finally please read this article in Zero Hedge.

The Chinese friend who sent me the article in the People's Daily made a particularly interesting comment.  He wrote:
"Yin and yang politics?  I cannot help but notice a strong pattern. China and Russia each engages each other's enemies/allies with whom they have friction in order to bring them into the Eurasian fold. What do you think? Is this intentional? I had my doubts earlier in the year, but more and more this keeps happening".
I think that he is spot-on here.  It is very much in the Russian strategic interest to have China applying some "Yuan diplomacy" in the EU not only because China is a close ally, but mainly because China is "not the USA".  At this point in time, *anything* which can weaken the total control of the USA over its EU colonies is welcome.  Any Yuan invested in the EU is one Dollar which is not.

This is just an example.  Putin probably knows a lot of things which we don't and he probably cannot say everything he thinks or plans.  But my purely subjective impression is that Putin simply does not have the power needed to confront the Atlantic Integrationists head on.  Mikhail Khazin, who knows a lot, recently even declared that there were Atlantic Integrationists in the "power ministries".  And since I am pretty sure that he was not referring to the Ministry of Defense that leaves either Internal Affairs or State Security.  If true, that is not good.  Either that, or Putin sincerely believes in liberal market-economics.  I most definitely don't believe in them at all.

There are, in my opinion, two major problems with Putin's logic.  First, Russia needs not less, but more regulation and more state control.  At the very least, I really believe that the very institution of the Central Bank is a toxic one: it was created by the US-controlled Eltsin regime to subordinate Russian politics (and politicians) to the international banking cartels and we see that it works perfectly.  Putin can send bombers to the Gulf of Mexico, but he is unable to remove Nabiulina, nevermind take control of the Central Bank.  Nikolai Starikov has even said that there is a joke going around now saying "Putin, send the troops into the Central Bank!".  That is how disgusted many Russians have become with this supra-national institution which is accountable to nobody.  But there is even worse.

The choice of a free-market non-regulated "solution" basically leaves Russia fully enmeshed into the AngloZionist controlled financial system.  How can Russia free herself from the "Dollar yoke" while remaining fully part of the Dollar-dominated international system?!

I have to tell you that while I gratefully posted Peter Koenig's excellent "Free Fall of the Ruble – A brilliant ploy of Russian economic Wizards? Who’s chess game" this was one of those instances when I post something I find very interesting but which I do not agree with.  I just don't get the sense that Putin is about to pull some clever judo-move on the western plutocrats.  I most sincerely hope that I am wrong here, but that is my gut-feeling.

Generally, Putin was clearly defensive when asked questions about the Central Bank and the Government.  Especially in contrast to the absolutely magnificent way he handled the questions about the Ukraine, even when asked by a very hostile Ukrainian journalist.  Again, as I so often say this, I am not a mind-reader or a prophet.  I cannot tell you what Putin thinks or what he will do.  But I think that many years of studying the man give me a pretty decent gut feeling about him and that gut feeling tells me that while he has a clear and strong vision on international politics in general, and especially about the Ukraine, he lacks such a vision for economic problems.

For the Ukraine his position is crystal clear: "Crimea is ours forever, we will not let you crush the Donbass, we want a untied Ukraine in which the rights of all people and regions are respected and you will have to negotiate with the Novorussians who have a right of self determination" (which leaves open the possibility that while Russia might "prefer" a united Ukraine, the Novorussians have the right to decide otherwise).  Clear, direct and, I would argue, perfectly reasonable.  In contrast, in economic I get a sense of faith-based politics: "market forces will correct the current artificial situation and within 2 years the crisis will be over".  The problem with that is that the very same Putin ALSO says that the West is completely manipulating the markets and not allowing them to act.  So what he is really saying is this: "the Empire does not have the means to artificially skew the markets for more than two years".  Oh really?  I am not so sure of that at all.  In my book the Empire has been skewing the markets for many years already (I would argue since 1971).

Bottom line, what I hear from Putin is "more of the same" and since I don't like what I have seen so far, I can only add "only worse".

Can this nightmare be averted?
Still, the situation is not necessarily hopeless.  While I think that Putin's economic policies are wrong and while I believe that the Russian Central Bank is very much part of the problem and not the solution, this is not a black and white binary kind of choice: playing by the wrong rules or on the wrong field does not necessarily mean that you will lose, only that you have made the wrong initial choice.  For one thing, you can make the argument that the Ruble is a much more credible currency then the Dollar.  Second, I do agree that market forces are resisting the US distortion and that the integration of China and Russia will inevitably contribute to help the Russian economy.  Third, the EU is already in recession and if that get's worse, and it will, this will start pulling down many US banks who are heavily linked to the EU market.  Fourth, in objective terms, Russia is sitting on a tangible fortune of natural resources and she has full access to the gigantic Chinese market.  In these conditions, it is going to be awfully hard for the AngloZionists to "isolate" Russia.  So, objectively, Putin is right about one thing: even if it does get worse before it gets better, it will inevitably get better.

So is Putin a genius chess player?  That is not quite how I would put it.  He definitely has a record of absolutely brilliant moves, but right now he is clearly struggling.  I am like everybody else, I would like him to pull yet another brilliant "chess move" and stick it to the Empire but I don't see how we could do that, at least not in this point in time.

What I saw today is a Putin clearly on the defensive who had to invest a lot of his personal capital of popularity and trust.  He honestly admitted that things might get worse and that there is no quick fix to the current crisis.  He did commit to a time frame of 2 years which is both very shot and very long.  It is plenty enough time to lose his popularity and very little time to turn around such a huge country like Russia.

The most poignant moment of the entire 3 hours came when Putin explained what was at stake today.  He said:
You know, at the Valdai [International Discussion] Club I gave an example of our most recognisable symbol. It is a bear protecting his taiga. You see, if we continue the analogy, sometimes I think that maybe it would be best if our bear just sat still. Maybe he should stop chasing pigs and boars around the taiga but start picking berries and eating honey. Maybe then he will be left alone. But no, he won’t be! Because someone will always try to chain him up. As soon as he’s chained they will tear out his teeth and claws. In this analogy, I am referring to the power of nuclear deterrence. As soon as – God forbid – it happens and they no longer need the bear, the taiga will be taken over (...) And then, when all the teeth and claws are torn out, the bear will be of no use at all. Perhaps they’ll stuff it and that’s all.  So, it is not about Crimea but about us protecting our independence, our sovereignty and our right to exist. That is what we should all realize.
Amazing words which fully confirm one of the most important facts of the current situation: the AngloZionist Empire and Russia are at war, a war in which either the Russian Bear will be "stuffed and that's all" or the AngloZionist Empire will crumble.  This is an existential war for both sides, for the AngloZionist Empire and the Russian Civilizational Realm - one of them will defeat the other.

This is not the first time that Putin explains this, but this time I felt an urgency in his voice which I have not heard before.  He was both warning the Russian people and asking for their support for him personally.  My guess is that he will get it, I just don't know for how long.

The Saker