Russia Settles In for a Long “New Normal”

Will Russia Ever Recover from the Ongoing Economic Crisis?

We should be prepared that the current environment of sluggish or negative growth will continue for quite some time, says Alexey Kornya, chief financial officer of Russia’s top cellular carrier, Mobile TeleSystems.” This is the new normal .” __Institutional Investor

Popular Putin Wins Many Awards

Popular Putin Wins Many Awards

Mr. Putin has declared “mission accomplished!” for the Russian economy. He is not suffering after all, and as for the peasants: “Let them drink vodka! Lots of vodka!”

Without some convincing reversal of the Kremlin’s autocratic and kleptocratic habits, a settlement of international tensions over Ukraine or an unexpected leap in oil prices, the prevailing outlook for Russia is for continued economic decline.___ International Investor

Low oil prices and international sanctions against Russia for its invasions of Crimea and east Ukraine have combined with an even earlier downward trend in the Russian economy.

Even before those recent woes … the economy had been slowing sharply from the combined impact of long-standing bureaucracy and corruption and the waning of an unsustainable boom in corporate and consumer credit. “It’s easy to forget now that we grew just 1.3 percent in 2013, when Brent oil averaged more than $100 a barrel,” notes Tseplyaeva. __Russia’s New Normal

Russia’s economy was already on the way down, as was Putin’s popularity. By invading Ukraine and invoking Russian patriotism, Putin bought himself some time. But he expected his sabre-rattling to drive oil prices higher — not lower. And he never expected US President Obama to show leadership — for once — in pushing for moderate sanctions against Russia.

Genuine support for Putin may not be as high as the approval ratings of 85 percent or so that are frequently cited. It’s a rare Russian who would express disapproval of the president to a stranger over the telephone.

… the twin currency and credit shocks are taking a vicious toll on the growth industries Russia once looked to for diversification away from raw materials, and they are gradually undermining investment at blue-chip companies. New-car sales fell by roughly half in the first quarter of 2015 from the same period last year. Mass-media ad revenue slumped by one third. Top residential real estate developer Etalon Group slashed its 2015 construction targets by 28 percent in March, to 5.4 million square feet. Commercial rents are dropping precipitously, promising more expensive ghost projects like the Moscow City financial center, whose 70-story towers loom mostly vacant over the Moskva River. “This is a time when you can renegotiate anything with your landlord or suppliers,” says Michael Calvey, senior partner at Baring Vostok Capital Partners, a veteran, Moscow-based private equity investor. __ Can Russia Bounce Back? __

The largest problem that Russia faces is massive top-down corruption, and a chilling lack of opportunity for ordinary citizens. Top dogs get choice cuts, and the peasants get whatever the top officials and gangsters don’t want.

Russia’s core problems: grossly inefficient monopolies and lawless bureaucrats who alter the rules of the game at will to enrich connected individuals, starting with the president’s friends.

One thing has not changed in Putin’s Russia. It remains by far the most corrupt of the major emerging markets, according to Transparency International’s annual Corruption Perceptions Index. Russia ranked 136 out of 175 countries in TI’s 2014 survey, compared with 100 for China, 85 for India and 69 for both Brazil and Turkey.

If anything, the Russian state is spreading its tentacles farther in response to the latest crisis. Law enforcement began monitoring food wholesalers and retailers for suspected price gouging last September, and in March, Putin urged the authorities to show greater vigilance. “Illegitimate actions of resellers and retail merchants arbitrarily raising their prices must receive the appropriate legal response,” the head of state told a collegium at the Prosecutor General’s Office. These are ominous words for a sector of the economy that has until now developed independently. Days before Putin’s statement prosecutors in the Ural Mountains province of Sverdlovsk announced 50 different “administrative actions” against a regional macaroni producer for “impermissible” price rises of 8 to 10 percent, radio station Echo of Moscow reported.

__Russia’s New Normal: As Corrupt as the Old Normal

Corruption was already “built-in” to the Russian system long before Putin and Yeltsin, and long before the Soviets laid waste to the country and its people. Putin has succeeded in making sure that he, personally, gets a piece of every pie.

It may actually be true that Russians — just like black Africans, Iraqis, Libyans, Syrians, Egyptians, and the rest of the third world — truly need a strong and bloody dictator on the throne, to keep from slipping into criminal or religious anarchy. If so, the way forward for Russia — and the Europe that must put up with Russia — will grow dimmer by the year.

Wish Fulfillment

Wish Fulfillment

Stalin was quite capable of liquidating any Russian he wanted, and Putin seems to be following the same path. A symbolic spanking of Obama in an art gallery may be suggestive of stronger measures the little big man would like to take. Presumably, Obama has no near-term trips to Russia planned.

Regardless, a Putinist form of neo-Stalinism has descended upon Russia, liberally interlaced with a level of criminality and “stealing from the poor to give to the rich” that even Stalin would have frowned at.

Without some convincing reversal of the Kremlin’s autocratic and kleptocratic habits, a settlement of international tensions over Ukraine or an unexpected leap in oil prices, the prevailing outlook for Russia is for continued economic decline.___ International Investor

For more insight into Putin’s peculiar kleptomania, a thorough reading of Bill Browder’s book is strongly recommended.

Like all mafia bosses, he barely distinguished between his personal property, the property of his clan, and the property of those beholden to his clan. Like all mafia bosses, he amassed wealth by outright robberies, as with Yukos, by collecting so-called dues and by placing his cronies wherever there was money or assets to be siphoned off.

… Several times, at least one of them embarrassingly public, Putin has acted like a person afflicted with kleptomania. In June 2005, while hosting a group of American businessmen in St Petersburg, Putin pocketed the 124-diamond Super Bowl ring of New England Patriots owner Robert Kraft. He had asked to see it, tried it on, allegedly said, ”I could kill someone with this”, then stuck it in his pocket and left the room abruptly. After a flurry of articles in the US press, Kraft announced a few days later that the ring had been a gift – preventing an uncomfortable situation from spiralling out of control.

In September 2005, Putin was a guest at New York’s Guggenheim Museum. At one point his hosts brought out a conversation piece another Russian guest must have given the museum: a glass replica of a Kalashnikov automatic weapon filled with vodka. The gaudy souvenir costs $300 in Moscow. Putin nodded to one of his bodyguards, who took the glass Kalashnikov and carried it out of the room, leaving the hosts speechless. __ Putin Would Steal Anything from Anyone

There are still some die-hard Putin worshipers who avoid thinking about their hero’s many deep faults as if their lives depended on it. If they lived inside Russia, they might be right about that. But anyone else who chooses to wear blinders that cover over the little big man’s shortcomings is only paving the road to a gargantuan attack of cognitive dissonance.

[Putin and his friends] want to be like Hitler was in 1933 and simultaneously like Stalin was in 1945,” he said. In my opinion, that answer is a brilliant explanation of the doublethink plaguing the Russian authorities.

When you have “weapons of mass retaliation” at your disposal, along with millions of adoring citizens willing to see their state terrorize the world as the only way out of the mess that leaders have gotten them into over the past 25 years, the temptation to escalate the conflict must be very great. __ Irony of Celebrating Victory Day

When you are more consumed by megalomania than the most brain-blasted meth-head, who is going to stop you?

In some ways, there is no longer a Russia. There is only the top-dog criminal Putin and his inner circle. When the first circle of crime falls, Russia itself will fall into a world of pain.

The “new normal?” They have not seen anything yet.

China will play a waiting game with Russia, hoping the country will eventually implode from a lethal combination of ethnic strife, government corruption, Islamic rebellion, fiscal mismanagement, and a commodities driven economy that lacks diversity. When a total collapse does occur and chaos ensues, China will move in a deliberate and swift fashion across its 4,000 km boarder with Russia to secure what it can of the Russian Far East and Siberia. _ China’s Manifest Destiny

Would Russia Still be Russia Without Siberia?

Russian brain drain worsening since the invasion of Ukraine More than 200,000 of Russia’s best people are leaving every year.

Foreign investment continues down Russian economy likely to shrink 5% or more this year alone

This might be a good time for parts of Russia to begin seceding from Putin

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2 Responses to Russia Settles In for a Long “New Normal”

  1. thebillyc says:

    your article about fukushima was at least credible and based on real facts. ok- maybe vlad is a crook- so what? he is smarter than our crooks. all your fantasies about russia being our big enemy- what a waste of time. like “the west” is not in the clutches of criminal oligarchs? please. spy vs spy went out with mad magazine- all this puppet theatre is mere distraction from the fact that we are all slaves for global crime lords known as the chosen. “we have never been at war with ____” or “we have always been at war with _____” , but especially “some animals are more equal than others”.

    • alfin2101 says:

      Your comment above appears to translate to: “Just look the other way, mofo, while my man rapes the girl” — or in this case, while the man rapes the country. Loving Putin means hating Russia.

      It is easy to say that “all governments are criminal and all politicians are crooks,” because it is true to a point. The case of Putin’s Russia is exceptional, and one must keep his wits tuned finely enough to discriminate between the common and the exceptional. Otherwise, one may as well have an IQ of 70, like the average sub Saharan African.

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