A discussion in http://thesaker.is/open-thread-for-today-2/
From Glazyev for thinking people:
Glazyev’s precise critique of the Russian Central Bank applies exactly to the FED, City of London, ECB. This is what terrifies Yellin, Lagarde, BoJo.
And Glazyev knows full well.
After the Bail-out Fiasco of 2008 with Bush and Obama stealing tax and Germany doing double duty, look at EUropeans! Russia has also this very EUropean problem, with 1 HUGE difference : China. China is thus TARGET #1 because it dealt with the Banks.
We have FDR’s Glass-Steagall 1934 Bank Separation Law, repealed in 1999 by Clinton under the Lewinsky scandal.Thank you very, very much for this, it substanciates my fears, but what I don’t understand is why the Russian leadership does not see this (Glazyev’s positions are well known, and if even I understand the truth of his point surely the Russian leadeship understands much better), or if they see it why do they not act on it?
I’m a westerner and I see all these systemic problems in my own country (de-industrialisation, financiarisation, decrease in investment for fundamental scientific research, cuts in education, creeping heathcare privatisation, mass propaganda…). I’ve made my peace with it because I understand that our leadership is terminaly corrupted and actively works against the general interest – and this cannot change, because of the motives and moral principles of those in power.
The question that baffles me is why does Russia not embark on Glazyev’s path, China has spectacularly demonstated how effective it is as a direction for further economic development and prosperity?
The forecast for the development of the Russian economy from the Ministry of Economic Development strikes not with its pessimism, but with the lack of a concept and development of a new paradigm of economic development.
The scenario for the Russian economy is discouraging: a 7.8% fall in GDP in 2022, a continued fall of 0.7% in 2023, and growth in 2024 and 2025 of only 3.2% and 2.6%, which by 2025 will not make it possible to compensate for the failure of 2022. In fact, a return economy to the levels of 2008 by 2024. The collapse of investments by 20% in 2022, their freezing at the bottom in 2023 (+0.3% by 2022), the growth of unemployment from 4.8% current to 6.7% in 2022 and stabilization at this level in 2023.
Forecasts and development scenarios of the Ministry of Economic Development are submitted to the government and sent to the regions for the formation of budgets and state economic policy. What follows from the MED forecast?
According to the plans, there will be no launch of the investment cycle, there will be no mobilization development, there will be no New Economic Policy (NEP). Otherwise, they would not have assumed an increase in unemployment where it cannot be, by definition, and would not have put minus 20% of investments in two years by 2021. As part of a mobilization spurt, there is always a shortage of personnel, because. points of growth and development multiply exponentially, and the investment cycle is a natural process of survival and transformation.
The forecast of the Ministry of Economic Development is consistent with the recent forecast from the Central Bank. Passive position, conservation of the current state (expectation of natural adaptation of the economy to external challenges), adjustment to current realities and situational maneuvers to extinguish the sources of “economic fire”, and not to prevent the risk of “fire” itself.
In other words, the Central Bank and the economic bloc are still operating within the framework of the old paradigm, where the imperative of faith in the free hand of the market (a typical liberal concept), inflation targeting at any cost, the formation of a “financial safety cushion” through the distribution of accumulated income into reserves (mainly unfriendly countries) operates .
The latter seems to have been sorted out, moreover, by the hands of “Western partners”, when, having created a zone of toxicity of reserve currencies, the United States and Europe are forcibly squeezing the Russian government out of these assets. Although, judging by half of the distribution of gold reserves in toxic assets, ours were in illusions to the last. But it is good that they have now realized that the doctrinal setting of oversaturation of reserves at the cost of limiting current development is a dead end. Reserves still cannot be used in critical situations, and therefore there is no point in accumulating them.
Inflation targeting under the past paradigm of medium-term price stability in the current circumstances is a senseless and harmful initiative. It is absolutely normal and natural in the conditions of economic restructuring to fix high inflation as a natural reaction of the economy to eliminate inefficiency, adjust the economy to new price proportions and search for alternative macro-financial balances. In other words, on a trajectory of fragmented and impulsive development, increased inflation is a sign of a healthy economy that is establishing new equilibrium factors.
The worst thing is faith in the free hand of the market in the conditions of perestroika. Just like an echo from the 90s. The country is facing fundamental challenges that modern Russia has not yet known, we are at a civilizational break in the phase of tectonic transformation of the world economic and geopolitical space.
Three months have passed since the NWO, the economy is partially paralyzed by the rupture of trade, financial and logistical ties with the outside world. Where the hell is NEP 2022 from the government? Three months is enough time to understand what reality we are in. In the current conditions, it is absolutely necessary to strengthen the role of the state, at least at an early stage, at the starting point. But so far we are seeing situational maneuvers to plug holes in the ship’s hull, while it is necessary to act ahead of schedule.
There is a feeling that the Ministry of Economic Development and the Central Bank are not fully aware of what they predict. What kind of unemployment can we talk about in the face of the scale of the challenges facing the country? What kind of investment collapse in 2022 and investment paralysis in 2023 can we talk about when the country is on the verge of virtually unlimited investment projects?
The economic bloc and the Central Bank are still stuck in 2021, when we are already in a new reality. It’s time to wake up, otherwise, given the concentration and scale of economic and geopolitical challenges, the country will not be able to withstand the burden of accumulated problems and accumulated imbalances. An attempt to revive past patterns of response to crisis processes is not relevant in the context of the new “post-reality” that took shape after February 24th.
Objectively speaking, there is more than enough space in the country for development on the trajectory of liberation from the oppression of transnational corporations. According to my recent calculations, in Russia, foreign companies (the share of non-residents is over 50%) formed about 16% of revenue, 18% of gross value added, about 20-21% of net profit and provided employment for 13% of those employed in the economy for a group of companies whose revenue exceeds 20 billion rubles Almost 90% of these companies are from the list of unfriendly countries.
Many of them leave under the pressure of stupidity and political circumstances. It’s not bad. Previously, there was a problem of struggle for the sales market, which were captured by TNCs through the institution of lobbying. Now all this riffraff is gone. Now huge niches have been vacated in the country, which can and should be occupied by national companies.
Why am I so critical of government economic decisions?
First, lack of time. Their forecast suggests that they decided to sit out for a couple of years until everything resolves itself. This does not happen, nothing is absorbed in the economy without critical consequences. We don’t have two years, not one year, not even one month. It was necessary to act already yesterday. There are a lot of unresolved problems.
Secondly, private business alone will not be able to solve a complex of infrastructural, organizational, technological and financial problems. We need a tough and strong-willed hand of the state, which will create a base for start-up growth, which in the future will be intercepted by private business. It’s time to tie up with these liberal games in the free market. The backbone of sustainable long-term development is formed only through a vertically integrated economy and centralized planning. It’s been in the UK, it’s been in the US and it’s happening in China. Fairy tales about the free hand of the market for fools.
Thirdly, remember that development is impossible without innovations and technologies, and they, in turn, are impossible without science. From 2014 to 2021, investment in research and development (both private and public) declined absolutely dramatically – by 21% in real terms. From 2% in GVA in 2014, the share has decreased to 1.46% by 2021. Yes, there is an island of stability in the form of IT and related industries – this is wonderful, but industrialization cannot be done without technology. China understood this in 2003 and actively invested in science. It’s time for us to understand.
One can try to replace critical imports from West to East. But this is an intermediate task. Import substitution and localization of production chains are impossible without compensating for the technological gap, and this requires science and technology. This is a matter of survival and development of the country. Primary task.
I will soon prepare a set of tasks and directions that are relevant for implementation in Russia.
https://t.me/glazieview/1738