Tag Archives: Russia

If the 20th Century was America’s Century the 21st looks like being China’s….

China-Century

The 21st century belongs to China: Why the new Silk Road threatens to end America’s economic dominance – Beijing is building a trans-Siberian railway system that rivals the Marshall Plan in its ambition and global reach

PEPE ESCOBAR, TOMDISPATCH.COM TUESDAY, FEB 24, 2015 10:15 AM +0000

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.

To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

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Putin’s Burst Economic Bubble Is the Essence of Crony Capitalism

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This is what you get when all the oligarchs take the money overseas. By Janet Allon December 19, 2014

Vladimir Putin’s macho act has been admired by the likes of Pat Buchanan and Rudy Giuliani. “That is what you call a leader,” Rudy Giuliani, the former New York mayor, said after Putin invaded the Ukraine, unilaterally and without any public debate.

Alas, “swaggering strongman” Putin is hitting a bit of a snag, writes Paul Krugman in his column today. “Mr. Putin never had the resources to back his swagger,” Krugman says. “Russia has an economy roughly the same size as Brazil’s. And, as we’re now seeing, it’s highly vulnerable to financial crisis — a vulnerability that has a lot to do with the nature of the Putin regime.”

The ruble started sliding in August when Putin sent troops to Ukraine and has started downright plunging in recent weeks, Krugman points out. “And all indications are that the Russian economy is heading for a nasty recession.”

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The global plunge in oil prices has not helped, but it does not explain the bottom dropping out of the ruble. So what’s going on?

Krugman:

Actually, it’s not a puzzle — and this is, in fact, a movie currency-crisis aficionados like yours truly have seen many times before: Argentina 2002, Indonesia 1998, Mexico 1995, Chile 1982, the list goes on. The kind of crisis Russia now faces is what you get when bad things happen to an economy made vulnerable by large-scale borrowing from abroad — specifically, large-scale borrowing by the private sector, with the debts denominated in foreign currency, not the currency of the debtor country.

In that situation, an adverse shock like a fall in exports can start a vicious downward spiral. When the nation’s currency falls, the balance sheets of local businesses — which have assets in rubles (or pesos or rupiah) but debts in dollars or euros — implode. This, in turn, inflicts severe damage on the domestic economy, undermining confidence and depressing the currency even more. And Russia fits the standard playbook.

Except for one thing. Usually, the way a country ends up with a lot of foreign debt is by running trade deficits, using borrowed funds to pay for imports. But Russia hasn’t run trade deficits. On the contrary, it has consistently run large trade surpluses, thanks to high oil prices.

Continue reading Putin’s Burst Economic Bubble Is the Essence of Crony Capitalism

Russia’s Currency Is Plummeting and Putin’s Billionaires Are Cannibalizing Each Other

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By Julia Ioffe

While we were all panicking about Ebola and the US was obsessed with the Democrats’ getting schooled in the midterms, the bottom dropped out of the Russian economy.

The ruble has been nosediving for weeks, despite the fact that the Russian Central Bank has spent some $40 billion over the last two months to prop it up. In January, you would have to shell out 32.86 rubles to buy one U.S. dollar. Through October, that number edged higher and higher into the thirties, prompting nervous jokes from Russians as they watched their national currency lose value before their eyes. By November 1, a Russian would need to scrape together over 43 rubles to buy one U.S. dollar, a drop of over 30 percent.

Every day since November 1 has brought new lows for the ruble. By Wednesday, the Russian Central Bank, which had been spending billions of its reserve dollars every day to prop up the Russian currency, announced it was no longer going to do so. It was going to let the ruble float. (Technically speaking, it said that it would “only” spend $350 million a day to prop up the ruble.)

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The ruble promptly nosedived.

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85 year old US philosopher and “world’s top public intellectual” Noam Chomsky has doubts about our future..

Noam Chomsky

The Dimming Prospects for Human Survival by Noam Chomsky March 3, 2014

Part 1: An Ignorant Public Is the Real Kind of Security Our Govt. Is After

A leading principle of international relations theory is that the state’s highest priority is to ensure security. As Cold War strategist George F. Kennan formulated the standard view, government is created “to assure order and justice internally and to provide for the common defense.”

The proposition seems plausible, almost self-evident, until we look more closely and ask: Security for whom? For the general population? For state power itself? For dominant domestic constituencies?

Depending on what we mean, the credibility of the proposition ranges from negligible to very high.

Security for state power is at the high extreme, as illustrated by the efforts that states exert to protect themselves from the scrutiny of their own populations.

In an interview on German TV, Edward J. Snowden said that his “breaking point” was “seeing Director of National Intelligence, James Clapper, directly lie under oath to Congress” by denying the existence of a domestic spying program conducted by the National Security Agency.

Snowden elaborated that “The public had a right to know about these programs. The public had a right to know that which the government is doing in its name, and that which the government is doing against the public.”

The same could be justly said by Daniel Ellsberg, Chelsea Manning and other courageous figures who acted on the same democratic principle.

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The government stance is quite different: The public doesn’t have the right to know because security thus is undermined – severely so, as officials assert.

There are several good reasons to be skeptical about such a response. The first is that it’s almost completely predictable: When a government’s act is exposed, the government reflexively pleads security. The predictable response therefore carries little information.

Continue reading 85 year old US philosopher and “world’s top public intellectual” Noam Chomsky has doubts about our future..