When I read this I don't know whether to laugh or cry. Poor, poor, Russia. So mismanaged it is unbelievable.
Putin is stuck in a gold standard world of 40 years ago. He spent billions defending his currency's arbitrary exchange rate when in fact he should have just let it float, remember that?
Now he's spending billions more buying a useless asset like gold when instead he could be investing in his people: infrastructure, science, health care, food production, good housing, medicine, raising wages, etc.
What a sad story this huge country is. Imagine what it could achieve under the right leadership? This gold buying is really, really, absurd and so ignorant and backward. Very frustrating to see if you have any sympathy at all for the Russian people and I for one, do.
14 comments:
You are right, Putin's Russia can be very frustrating! Every time it looks like they are working toward diversifying and domesticating their economy, it ends up being a head-fake. With sanctions, I thought this was a golden opportunity to finally put Russia's greatest asset to use - its people - in modernizing its economy. Nope, no money!
What is the point of buying gold when they already have large proven reserves of gold in the ground?! What is the difference??? Why do they need to buy what they already have???
Interesting headline, Putin is putting a Russia. Airbase in occupied Ukraine where at least two long range nuke bombers will be based. Response to NATO in Baltic's, perhaps
Lawrence you think that is bad there are people out there trying to figure out how to extract it from human excrement in the sewer systems:
http://mikenormaneconomics.blogspot.com/2015/03/scientists-want-to-mine-our-poop-for.html
dont underestimate the power of the 3 metals in column 11 of the periodic table.... with some people... VERY unique electrical properties with those 3...
"He spent billions defending his currency's arbitrary exchange rate when in fact he should have just let it float"
Wasn't that in an attempt to keep inflation under control? I remember it was running very high at one point.
His financial advisers were well taught by the American bankers who rushed over there to turn the place into a capitalist Mecca so they could loot it, after the USSR collapsed.
Fools gold never goes out of style.
Russia buying gold is the Central Bank of Russia buying gold. BTW, the Central Bank of Russia is politically independent and Putin doesn't control it. A lot of Russians are upset about this and think that this should be changed. It's the Western-trained economists that are still highly influential in Russia. Putin is not the Tsar that many imagine him to be and event the Tsars had to deal with the Boyars and the bureaucracy. The percentage of neoliberals is small in Russia as whole but they are over-represented in government and some are the new Boyars.
The Central Bank of Russia buying gold is not as crazy as it sounds. The bank is de-dollarizing, along with the People's Bank of China. Both are increasing gold reserves and decreasing holdings of US Treasuries as foreign exchange reserves, that is, selling tsys and buying gold. This supports the policy of multi-polarism.
Secondly, Russia and China are both major extractors of gold. They use gold buying by the central bank as a way of increasing liquidity, The way it works in Russia is that the miners sell their gold to the banks for rubles, and the banks sell to the central bank for rubles that the cb keystrokes into their accounts. China does the same.
Central banks can and do lend. So even though Russia's policy rate is elevated, the Central Bank of Russia can make funds available through special facilities, which it does.
All this notwithstanding, I agree that the policy of running a fiscal surplus is ill-advised. I have not yet figured out the details behind it but on the surface it is a mistake for a country that floats its currency to do in a recession. The Central Bank of Russia did wisely float the ruble on the introduction of sanctions, but the fiscal authority has not sufficiently made use of the policy space it affords.
The good news is that the government has resisted calls by powerful neoliberals, in particular former finance minister Alexei Kudrin (2000-11), to "liberalize." and "reform" and "restructure" the economy based on imposition of austerity. But Kudrin (an old friend of Putin), who had been attacking Putin publicly, just recently admitted that Russia was doing a lot better than he had expected in reacting to the fall in oil price concurrently with sanctions.
The commentator who seems to be the best is Alexander Mercouris. He writes at Russia Insider, an online publication founded by an American ex-pat living in Russia.
Interesting headline, Putin is putting a Russia. Airbase in occupied Ukraine where at least two long range nuke bombers will be based. Response to NATO in Baltic's, perhaps
I don't think that there is much of a "perhaps" about it. Russia said there would be a response to NATO (read US) escalation.
Good comments, Tom. You save this blog from the sometimes very narrow-minded MMT hysteria of a Franko and even Mike Norman at times. For Franko, Norman, and Erickson, everyone who doesn't see things as they do is "stupid." It's a case of "deformation professionelle," and a lamentable underestimation of people far more competent than they imagine.
What Putin has done for Russia since Yeltsin, and in the face of tremendous obstacles is absolutely amazing. And intellectual midgets like Franko delight in sophomoric snide remarks about how "stupid" he or his policies are.
Here is another instance of Putin's abilities, summarized by Pepe Escobar, who fortunately does not suffer from the narcissist complex of a Franko and others.
http://www.tomdispatch.com/post/176026/tomgram%3A_pepe_escobar%2C_the_pivot_to_eurasia/
Another example of Putin's "stupidity" is Stephen Cohen's remark that without Russia the agreement in Vienna would not have been possible. If there is stupidity, it surely resides in certain sectors of Washington.
http://www.thenation.com/article/is-the-ukrainian-crisis-triggering-the-end-of-the-us-dominated-post-1991-world-order/
Another example of Putin's "stupidity" is Stephen Cohen's remark that without Russia the agreement in Vienna would not have been possible. If there is stupidity, it surely resides in certain sectors of Washington.
Not only Cohen saying this. Even Obama thanked Putin.
http://www.businessinsider.com/obama-calls-putin-on-iran-syria-2015-7
John, please send me an example of me labeling someone as stupid, whom you think doesn't deserve the label.
FYI, I've been a bit of a student of Putin's pragmatism, although increasingly curious about the extent of Russia's expertise in fiat currency operations.
I don't always read Tom's Dispatch, but regularly follow Chuck Spinney and also Cockburn at Counterpunch.
One reason to be buying gold is that the new Sino-Russian banking strategy is focusing on the third world, many of whom don't have stable judicial systems, etc. Gold is still used between central banks as collateral when dealing with weaker states.
Just a thought. I, too, have trouble believing Putin is stupid enough to be contemplating a hard metal regime for Russia.
http://themindrenewed.com/interviews/2015/727-int-086
or download it (57mb):
http://themindrenewed.com/mp3/TMR_117_DrPaulCraigRoberts_Greece_128kbps.mp3
Items mentioned in (or otherwise relevant to) the interview
John Perkins, Confessions of an Economic Hit Man, Plume (December 27, 2005)
Jean-Claude Trichet, "Tomorrow and the day after tomorrow: a vision for Europe", speech by then ECB president Trichet at the Humboldt University, Berlin, 24 October 2011
Jean-Claude Trichet, "Building Europe, building institutions", speech by then ECB president Trichet on receiving the Karlspreis 2011
in Aachen, 2 June 2011
Paul Craig Roberts, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, Atwell Publishing; 1 edition (February 2, 2013)
Yanis Varoufakis, "Why I Voted NO" (English translation), YanisVaroufakis.eu (21 July 2015)
_____________, "The Euro-Summit 'Agreement' on Greece – annotated by Yanis Varoufakis", YanisVaroufakis.eu (15 July 2015)
_____________, "Dr Schäuble's Plan for Europe: Do Europeans approve? – English version of my article in Die Zeit", YanisVaroufakis.eu (17 July 2015)
Tony Cartalucci, "US-Israel Wage War on Iran in Syria", New Eastern Outlook (04 April 2015) (internal link)
Which Path to Persia? : Options for a New American Strategy Toward Iran [external PDF], The Brookings Institution, Analysis Paper (20 June 2009)GreenwaldOnCameron
Transcript of UK Prime Minister David Cameron's speech on "extremism" delivered on 20 July 2015 (https://www.gov.uk/government/speeches/extremism-pm-speech)
Press release regarding the "Counter-Extremism Bill - National Security Council meeting", containing the remarks that David Cameron "will say to the NSC" (https://www.gov.uk/government/news/counter-extremism-bill-national-security-council-meeting)
Point 1: "For too long, we have been a passively tolerant society, saying to our citizens: as long as you obey the law, we will leave you alone. It’s often meant we have stood neutral between different values. And that's helped foster a narrative of extremism and grievance." (Underlining added)
Glenn Greenwald's tweet: "David Cameron is right at this moment delivering one of the creepiest and most authoritarian speeches you'll ever hear."
CIA 1035-960: "Countering Criticism of the Warren Report"
Operation Northwoods
TMR 097 : Dr. Daniele Ganser : NATO's Secret Armies - GLADIO & The Strategy of Tension
UK Home Secretary Theresa May challenged by John Humphrys to define "extremism"
Karl Popper, "Utopia and Violence", World Affairs, 149.1 (summer 1986), pp. 3-9 (http://www.jstor.org/stable/20672078?seq=1#page_scan_tab_contents)
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