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Privatization Is the Atlanticist Strategy to Attack Russia
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NOTE: Readers are asking to know who, in addition to the Western-financed NGOs, are the Fifth Columnists inside Russia. Michael Hudson and I left the description general as Atlanticist Integrationists and neoliberal economists. The Saker provides some specific names. Among the Fifth Columnists are the Russian Prime Minister, head of the Central Bank, and the two top economics ministers. They are springing a privatization trap on Putin that could undo all of his accomplishments and deliver Russia to Western control.
http://thesaker.is/putins-biggest-failure/

Two years ago, Russian officials discussed plans to privatize a group of national enterprises headed by the oil producer Rosneft, the VTB Bank, Aeroflot, and Russian Railways. The stated objective was to streamline management of these companies, and also to induce oligarchs to begin bringing their two decades of capital flight back to invest in the Russia economy. Foreign participation was sought in cases where Western technology transfer and management techniques would be likely to help the economy.

However, the Russian economic outlook deteriorated as the United States pushed Western governments to impose economic sanctions against Russia and oil prices declined. This has made the Russian economy less attractive to foreign investors. So sale of these companies will bring much lower prices today than would have been likely in 2014

Meanwhile, the combination of a rising domestic budget deficit and balance-of-payments deficit has given Russian advocates of privatization an argument to press ahead with the sell-offs. The flaw in their logic is their neoliberal assumption that Russia cannot simply monetize its deficit, but needs to survive by selling off more major assets. We warn against Russia being so gullible as to accept this dangerous neoliberal argument. Privatization will not help re-industrialize Russia’s economy, but will aggravate its turn into a rentier economy from which profits are extracted for the benefit of foreign owners.

To be sure, President Putin set a number of conditions on February 1 to prevent new privatizations from being like the Yeltsin era’s disastrous selloffs. This time the assets would not be sold at knockdown prices, but would have to reflect prospective real value. The firms being sold off would remain under Russian jurisdiction, not operated by offshore owners. Foreigners were invited to participate, but the companies would remain subject to Russian laws and regulations, including restrictions to keep their capital within Russia.

Also, the firms to be privatized cannot be bought with domestic state bank credit. The aim is to draw “hard cash” into the buyouts – ideally from the foreign currency holdings by oligarchs in London and elsewhere.

Putin wisely ruled out selling Russia’s largest bank, Sperbank, which holds much of the nation’s retail savings accounts. Banking evidently is to remain largely a public utility, which it should because the ability to create credit as money is a natural monopoly and inherently public in character.

Despite these protections that President Putin added, there are serious reasons not to go ahead with the newly-announced privatizations. These reasons go beyond the fact that they would be sold under conditions of economic recession as a result of the Western economic sanctions and falling oil prices.

The excuse being cited by Russian officials for selling these companies at the present time is to finance the domestic budget deficit. This excuse shows that Russia has still not recovered from the disastrous Western Atlanticist myth that Russia must depend on foreign banks and bondholders to create money, as if the Russian central bank cannot do this itself by monetizing the budget deficit.

Monetization of budget deficits is precisely what the United States government has done, and what Western central banks have been doing in the post World War II era. Debt monetization is common practice in the West. Governments can help revive the economy by printing money instead of indebting the country to private creditors which drains the public sector of funds via interest payments to private creditors.

There is no valid reason to raise money from private banks to provide the government with money when a central bank can create the same money without having to pay interest on loans. However, Russian economists have been inculcated with the Western belief that only commercial banks should create money and that governments should sell interest-bearing bonds in order to raise funds. The incorrect belief that only private banks should create money by making loans is leading the Russian government down the same path that has led the eurozone into a dead end economy. By privatizing credit creation, Europe has shifted economic planning from democratically elected governments to the banking sector.

There is no need for Russia to accept this pro-rentier economic philosophy that bleeds a country of public revenues. Neoliberals are promoting it not to help Russia, but to bring Russia to its knees.

Essentially, those Russians allied with the West—“Atlanticist Integrationists”— who want Russia to sacrifice its sovereignty to integration with the Western empire are using neoliberal economics to entrap Putin and breach Russia’s control over its own economy that Putin reestablished after the Yeltsin years when Russia was looted by foreign interests.

Despite some success in reducing the power of the oligarchs who arose from the Yeltsin privatizations, the Russian government needs to retain national enterprises as a countervailing economic power. The reason governments operate railways and other basic infrastructure is to lower the cost of living and doing business. The aim of private owners, by contrast, is to raise the prices as high as they can. This is called “rent extraction.” Private owners put up tollbooths to raise the cost of infrastructure services that are being privatized. This is the opposite of what the classical economists meant by “free market.”

There is talk of a deal being made with the oligarchs. The oligarchs will buy ownership in the Russian state companies with money they have stashed abroad from previous privatizations, and get another “deal of the century” when Russia’s economy recovers by enough to enable more excessive gains to be made.

The problem is that the more economic power moves from government to private control, the less countervailing power the government has against private interests. From this standpoint, no privatizations should be permitted at this time.

ORDER IT NOW

Much less should foreigners be permitted to acquire ownership of Russian national assets. In order to collect a one-time payment of foreign currency, the Russian government will be turning over to foreigners future income streams that can, and will be, extracted from Russia and sent abroad. This “repatriation” of dividends would occur even if management and control remains geographically in Russia.

Selling public assets in exchange for a one-time payment is what the city of Chicago government did when it sold the 75 year revenue stream of its parking meters for a one-time payment. The Chicago government got money for one year by giving up 75 years of revenues. By sacrificing public revenues, the Chicago government saved real estate and private wealth from being taxed and also allowed Wall Street investment banks to make a fortune.

It also created a public outcry against the giveaway. The new buyers sharply raised street parking fees, and sued Chicago’s government for damages when the city closed the street for public parades or holidays, thereby “interfering” with the rentiers’ parking-meter business. Instead of helping Chicago, it helped push the city toward bankruptcy. No wonder Atlanticists would like to see Russia suffer the same fate.

Using privatization to cover a short-term budget problem creates a larger long-term problem. The profits of Russian companies would flow out of the country, reducing the ruble’s exchange rate. If the profits are paid in rubles, the rubles can be dumped in the foreign exchange market and exchanged for dollars. This will depress the ruble’s exchange rate and raise the dollar’s exchange value. In effect, allowing foreigners to acquire Russia’s national assets helps foreigners to speculate against the Russian ruble.

Of course, the new Russian owners of the privatized assets also could send their profits abroad. But at least the Russian government realizes that owners subject to Russian jurisdiction are more easily regulated than are owners who are able to control companies from abroad and keep their working capital in London or other foreign banking centers (all subject to U.S. diplomatic leverage and New Cold War sanctions).

At the root of the privatization discussion should be the question of what is money and why should it be created by private banks instead of central banks. The Russian government should finance its budget deficit by having the central bank create the necessary money, just as the US and UK do. It is not necessary for the Russian government to give away future revenue streams in perpetuity merely in order to cover one year’s deficit. That is a path to impoverishment and to loss of economic and political independence.

Globalization was invented as a tool of American Empire. Russia should be shielding itself from globalization, not opening itself to it. Privatization is the vehicle to undercut economic sovereignty and increase profits by raising prices.

Just as Western-financed NGOs operating in Russia are a fifth column operating against Russian national interests, so are Russia’s neoliberal economists, whether or not they realize it. Russia will not be safe from Western manipulation until its economy is closed to Western attempts to reshape Russia’s economy in the interest of Washington and not in the interest of Russia.

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
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  1. This is an extremely powerful and articulate column. It should be widely read and circulated.

    Very good.

  2. Philip Owen [AKA "Soarintothesky"] says:

    If only Russia had been looted by foreign interests. Nationalism was Yeltsin’s mistake. He forbade privatization sales to foreigners so he had to invent banks and money in a country without either. That gave Russia massive inflation, an oligarch class based on the mafia (who had money to set up banks) and no business skills. Foreign ownership will upgrade Russian business massively. Foreign firms that did finally arrive through joint ventures and post privatization buyouts massively uplifted productivity – Bosch, Volkswagen, British American Tobbacco (cough!) and Nestle come to mind. Unchallenged sectors, such as provincial hotels have not improved so readily.As for exports, Ford can switch to exporting in a few weeks of a currency change. Sistema needs ten years and counting.

    Most of this piece is about your difficulty with understanding the time value of money and the price mechanism. Perhaps you studied at the Sergey Glasyev school of economics? He’s proposed creating money when inflation was already at 14% too.

    The last 500 years of capitalist globalization has resulted in 5/6ths of a much more populous humanity having undreamed of living standards without slavery and the bottom billion have hope. Nationalism leads to Nehru’s India, Mao’s China or North Korea.

    This article is reactionary twaddle.

  3. Ivy says:

    Privatization has a Wizard of Oz man behind the curtain aspect that too few are willing to investigate. Thank you PCR for looking at the matter closely.

  4. ” . . . Russia will not be safe from Western manipulation until its economy is closed to Western attempts to reshape Russia’s economy in the interest of Washington and not in the interest of Russia.”

    The Russian government should bear this in mind.

    • Agree: Realist
  5. Anonymous • Disclaimer says:
    @Philip Owen

    This is an uninformed comment.

  6. @Philip Owen

    “The last 500 years of capitalist globalization has resulted in 5/6ths of a much more populous humanity having undreamed of living standards without slavery and the bottom billion have hope.”

    That’s about as farcical as they come. So-called capitalism has basically always been Crony Capitalism without anything like a free market and in most developed countries the cost of government is about 50% of GDP. Most everyone is a half-slave on the government plantation.

    The reality is that government run economies, left or right, steal or destroy much of what technological progress creates. How many people were killed by governments in the twentieth century? How much wealth was destroyed? How much money was looted? For what? To protect the people? That’s as silly as your belief in Crony Capitalism.

    Who’s going to protect the people from the apex predator that is the government? Who is going to protect us from government run economies? Certainly not anyone like you.

    • Replies: @Wizard of Oz
    , @Philip Owen
  7. hbm says:

    Globalization is not “a tool of the American Empire”.

    The American Empire is the tool of those for whom Globalization is the goal.

    And we all know who the “globalists” are.

    • Replies: @Cagey Beast
    , @Fran Macadam
  8. lushfun says: • Website

    generally privatizing monopolies like rail or utilities (water or otherwise)
    does not bode well for public using them
    rates are generally hiked in excess of what is needed because one needs to recoup capital invested and return on capital, all of these things can go quiet far

    the privatization the water works of Cochabamba in Bolivia comes to mind… or even London(Thames water), where water became worse but the costs rose quiet precipitously. Public built the system and then it got sold for a pittance and became less efficient and more costly…

  9. anonymous • Disclaimer says:

    Chicago’s mayor Richard Daley pushed the parking meter deal through a compliant city council with the one-time payment quickly being used up and the rates getting jacked up. Street parking went from being a service and convenience for Chicagoans, pulling in enough to maintain it and then some, to being a way to gouge and bleed the public. When he left office he was then employed by some of the same companies that did business with the city including the parking meter deal. Gee, what a coincidence. Similarly, some of the Russian privatizers may be looking to gain financially further on down the road from these deals. John Perkins, of economic hitman fame, showed how enriching key individuals helped get deals done that weren’t necessarily in the interests of the majority. There’s nothing wrong with purchasing Western technical expertise but the Russians certainly wouldn’t want to sell their land out from under their feet and become renters in their own country. They have to be careful never to allow it to happen whereby foreigners could get into a position of having leverage over them in any way. The West, primarily the US, has made it clear over and over again that it considers Russia to be an enemy and an obstacle. Why should the Russians do anything that helps their enemy and enables them to grow stronger and wealthier? The West is not the Salvation Army coming to help.

  10. @Philip Owen

    The last 500 years of capitalist globalization has resulted in 5/6ths of a much more populous humanity having undreamed of living standards without slavery …

    In the western hemisphere we had slavery for most of the last 500 years. It wasn’t abolished in the US until the 1860s, and in Brazil in 1888.

    If you’re interested in boning up on the relationship/rivalry between slavery and capitalism, you could do worse than Marx: http://isreview.org/issue/80/karl-marx-and-american-civil-war

    • Replies: @marwan
  11. Privatization is one of three legs of the neoliberal agenda designed to transfer sovereignty from nation states to global monopolists. The other two legs are open borders and free trade. Neoliberalism equals Feudalism. And not just feudalism but global, eternal feudalism.

    • Agree: Seamus Padraig
  12. I just logged in to say that Soarintothesky is right about the problems of a nationalistic economic policy. If you want to keep foreigners away from your economy then you’ll also keep their technology, organisation and money away. The results are apparent in ‘capitalist’ success stories like Russia and Greece (both ruled by corrupt cliques, both underperforming etc)

    • Replies: @anonymous
    , @MarkinLA
  13. @Drapetomaniac

    You are all over the place with your paradoxically simplistic all or nothing argument. There is a lot of nuance in any good argument about privatisation. After all one of the benefits can be the disruption of the stranglehold on politics of public sector unions or the mere fact that a huge body of public sector workers is a huge vote for lower productivity than the optimum and for putting the cost burden of high public sector pension rights and other non cash benefits on the unorganised private sector workers.

    Also you can count on the private sector – where there is any competition or just shareholder pressure to increase dividends – to be active in seeking productivity improvements which underly modern prosperity.

    • Replies: @NoseytheDuke
  14. @Anonymous

    Doesn’t sound like that to me and your just saying so doesn’t carry much weight or make you credible.

    • Replies: @anonymous
  15. @hbm

    And we all know who the “globalists” are.

    No, you’re wrong and you make it more difficult for us to figure out the mess in front of us when you go down this well-worn road. “Globalists” does not equal “Jews”. Globalism comes from several overlapping and sometimes contradictory political traditions and motives. Anyone who says globalism is all about the Jews has a very poor understanding of the history of the Anglosphere, for one thing.

  16. Russia will not be safe from Western manipulation until its economy is closed to Western attempts to reshape Russia’s economy in the interest of Washington and not in the interest of Russia.

    USSR had a closed economy and it did not save it from Western manipulation because manipulation starts with people and there are plenty of people in Russia ready to sell it for the right price.

  17. Rehmat says:

    NGOs just like lobby groups are indeed fifth columns used by almost all world power. Since United States is the self-proclaimed the “international policeman” – it like its military bases in foreign lands, has more NGO than any other western imperial power, especially in the Muslim world. These fifth columns, mostly funded by the US State Department and Jewish oligarchs and tax-exempted Jewish foundation, are know to help bring pro-Israel “regime changes” in those so-called “rogue states”, such as Iran, Syria, Lebanon, Iraq, Egypt, Pakistan, etc. to name a few.

    Eric Herschthal writing in ‘The Jewish Week’ (February 15, 2011) had claimed that Gene Sharp’s 90-page manual ‘From Dictatorships to Democracy’ had “the Jewish influence on Egypt’s glorious revolution’. In order to clear the ‘fog’ – he immediately informed his readers that Gene Sharp (born 1928) is NOT Jewish but son of a (Zionist) Protestant minister. However, he did admit that Gene Sharp’s ‘The Albert Einsten Institute’ was “funded for two decades by Peter Ackerman, who was Jewish”. Philip Shishkin paid glowing tributes to Gene Sharp in Jewish-owned ‘The Wall Street Journal’ (September 13, 2008) for providing “a list of 198 methods of nonviolent action, like the staging of mock elections to poke fun at problems like vote-rigging, using funerals to make political statements and adopting symbolic colors, a la Orange Revolution in the Ukraine. Less conventional tactics include skywriting political messages and organizing anti-government “protests.”

    https://rehmat1.com/2011/03/27/the-jewish-influence-on-me-revolutions/

  18. anonymous • Disclaimer says:
    @Chris from Greece

    The results are apparent in ‘capitalist’ success stories like Russia and Greece (both ruled by corrupt cliques, both underperforming etc)

    But doesn’t foreign colonization of a country’s economy simply result in rule by corrupt foreign cliques rather than domestic ones?

    • Replies: @Chris from Greece
  19. @anonymous

    There will always be people at the top, the middle and the bottom. Do you want to live in a society where those at the top are the corrupt politicians, their oligarch friends and the huge number of government ‘workers’ (that are paid above market wages but don’t produce anything)?

    • Replies: @anonymous
  20. On “privatization” in Russia (interesting how the same names keep turning up over and over again):

    http://m.institutionalinvestor.com/Article.aspx?ArticleId=1020662

  21. anonymous • Disclaimer says:
    @Chris from Greece

    There will always be people at the top, the middle and the bottom. Do you want to live in a society where those at the top are the corrupt politicians, their oligarch friends and the huge number of government ‘workers’ (that are paid above market wages but don’t produce anything)?

    I already do. I live in the US. It’s somewhat masked since they have more money here to throw around and create smokescreens. You’d prefer our crooks to your own?

    • Agree: Orville H. Larson
    • Replies: @Chris from Greece
  22. @anonymous

    I’d prefer foreign corporations to Greek ones that only survive thanks to overpriced government contracts. My advice is to visit countries like Greece and then talk about how bad things are in the US. You can’t imagine the level of incompetence and corruption that is considered normal here.

  23. @Chris from Greece

    Ah, the old “other countries are worse so don’t complain about the US” argument (not that it can be called an argument). I’m sorry, but that’s rubbish.

    • Replies: @Chris from Greece
  24. @Beefcake the Mighty

    Why don’t we switch places. You’ll come here and i’ll go to the US.

    • Replies: @Beefcake the Mighty
  25. @Chris from Greece

    That the US has an oligarchy that should be opposed has nothing to do with whether I prefer to live here or in Greece (or anywhere else).

    Now, why don’t you go home and deal with frauds like Syriza instead of lecturing Americans on how good they have it?

  26. marwan says:
    @Seamus Padraig

    slavery still exists in many islamic countries . for example the islamic republic of mauritania has 600,000 people living as slaves . in syria and iraq , islamist groups have slave markets where slaves and sex slaves are bought and sold . boko haram admits to involvement in child slavery .in afghanistan they have bacha bazzi , homosexual pederasty slavery . we know slavery was bad 160 years ago , but how much worse now ??

    • Replies: @ttttt
  27. anonymous • Disclaimer says:
    @Wizard of Oz

    Oh, my. Wizard of (Zion) is polluting another thread.

    • Agree: Kiza
    • Replies: @Wizard of Oz
  28. @hbm

    A distinction without a difference. Empire is always in service to the largest financial interests. The Raj in India was first the private province of a company, and when they couldn’t maintain control of it on their own, the government they controlled became overt ruler: the British Empire.

    • Replies: @Wizard of Oz
  29. @Fran Macadam

    Are you saying the British East India Company controlled the British governmemt in the 1850s or the Indian government? To suggest the former would bespeak colossal ignorance. Actually I think the British government took a lot of control long before the 1857 “Mutiny” but my question remains.

  30. @anonymous

    I infer that you are the Russian Expert. Nothing else but indignation at being called out for stupidity could prompt such a totally irrelevant angry response – even from the profoundly stupid.

  31. @Wizard of Oz

    It would appear that wisdom is completely absent when it comes to your own, self-proclaimed wizardry.

    Where has privatisation benefitted the people of a nation? Enlighten us with a few examples please.

    Most of the assets that become privatised are essential, strategic assets.

    Essential infrastructure is vital to the wellbeing and security of the nation and is thus too important to be left to the whims of profit. Friedrich List.

    • Replies: @Wizard of Oz
  32. MarkinLA says:
    @Chris from Greece

    You mean like China or Japan? There are ways of trading with other countries that don’t involve you giving them control. This is the kind of argument you always get about economic policies – a ridiculous all or nothing argument.

  33. MarkinLA says:
    @Chris from Greece

    I worked in the defense industry so I know about businesses that only survive because of overpriced government contracts and how they game the system.

    Here is a clue to everything – people are self-serving and corrupt. Now build a good government with that knowledge.

    • Agree: Kiza
  34. Kiza says:

    This is Back to the Future, the Ziocon style.

    I have written before that the Ziocons missed to loot Russia completely in the late 90s. They, and some their Russian compradors (defined as native agents of a foreign enterprise), failed to dissolve Russia into statelets and had to run out of Russia when Putin came to power. One such was Berezovsky, for example.

    I also wrote before that they will never give up, even if Putin thinks that he established a balance between the Russian national interests and the liberal/pro-Western thieving “elite”. This is the part of the neoliberal “elite” which did not leave Russia and temporarily accepted Putin’s rule. He even allowed one of them, his high-school colleague, Medvedev, to share power with him. But in politics there is no such thing as a steady-state. The neoliberals=Ziocons appear to be making a move now, pushing for privatization as a first step of Back to the Future.

    As I wrote before, the Ziocon=neoliberal “elite” consists of a global network network of Jewish oligarchs, mainly US,UK,French, Russian, Ukrainian and so on. These people have probably organized the shoot-down of MH17 (by a Ukrainian oligarch) to impose economic sanctions on Russia. These people may have also been involved in pushing Saudi Arabia to attack Yemen and to increase the production of oil to pay for it, at the time when the oil price was collapsing. On top of this comes the Russian intervention in Syria, which also costs money (Putin played into their hands, but they left him little choice). The goal is, obviously, to empty the Russian budget and make privatization a necessity.

    I know that there will be a few fools who will laugh and ridicule this explanation of mine, but I can only say to them that if I were thinking up a really profitable scheme against Russia, I would do exactly what I described. Therefore, when they argue against my explanation, they are just claiming that Ziocon Oligarchs are benevolent individuals who would never do something like this. Now, good-luck with the ridiculous conspiracy theory that Ziocon oligarchs are benevolent.

    • Replies: @Seamus Padraig
  35. @NoseytheDuke

    It’s hard to know where to begin with someone who seems to think he knows enough to get away with disdainful rudeness when he actually knows zilch but has read some theorising stuff likely to be spouted on the doctrinaire left or maybe fascist right.

    To start with you don’t seem to have a clue about the assets which ate privatised in different countries that you describe as largely “essential” and “strategic”. Of course, if that were a description of what should be in the public sector you would have gone along with Stalin and Mao in their collectivisation campaigns for food production and the millions who died as a result. After all nothing is more essential than food and nothing is more strategic thsn its adequacy.

    Then what do you say about railways? Private from the beginning in the US and in the UK too till nationalised (and reprivatised?). How does your generalisation deal with the privatisation of railways?

    As I have been involved in privatidations – though not so as to benefit myself except as taxpayer I can tell you of a number of outstanding examples. In Australia the general rule has been that the earlier states privatised their electricity generation and distribution businesses the better they did. Victoria was a basket case which had lost its AAA rating when getting great prices for its electricity assets in the early 90s helped completely turn it around. No industry has been lost because of higher electricity prices because, on the whole, the generators have been highly competitive and forced to keep prices down. Now that renewables like solar are beginning to make an impact one can only say as a citizen that ot is a pity the obsolescence of railways wasn’t recognised and scted on early as it was with electricity generation and supply. A pity about the private sector investors!

    Qantas – by far the oldest airline in the world never to have suffered a fatal accident – was privatised some 20 or 25 years ago after decades of subsidies to allow it to compete, inefficiently, with the many state owned airlines around the world. It is no longer a drain on the taxpayer and actually serves its market like a business which cares about keeping its customers.

    Telstra (then Telecom I think) which, when I was called on to address its government employed senior staff many years ago was a monopoly employing lots of nice uncommercial engineers and improved immensely when it was privatised and became innovative and competitive telephonic and other electronic communications. It also made a lot of money for taxpayers as against the investors who bought shares in most of the privstising tranches.

    Sorry it is getting boring fixing your lazy ignorance with the thousands of examples of duccessful privatisations. Not ths all are successful.of course it has to be done right.

    • Replies: @NoseytheDuke
  36. @Wizard of Oz

    Of course it would be hard for you to know where to start, you’d need to extricate your head from your arse first. Good to see that your clown-act has a seemingly endless supply of material though.

    In addition to substantial price increases for consumers, electricity privatisations in Australia have led to poor maintenance of the grid infrastructure leading to many, costly and deadly bush fires. It has also been the cause of older power using dirty brown coal stations remaining in use to the detriment of the environment and health of residents living near by.

    Take a squint at the salaries of Qantas execs and you’ve got an insight as to what efficiency in business means to a clown school graduate. As to safety, privatisation has meant having planes repaired and serviced in third world countries rather than in Australia leading to several dangerous incidents and the devaluation of the Qantas brand. Many Australians used to only ever fly Qantas whereas few people hold to that since it was sold off. It has also returned to the taxpayer, cap in hand for help.

    Had Telecom not been sold off Australia would already have a much better and cheaper national broadband network (the one technology that solves many of the problems of the tyranny of distance) instead of the slow, expensive, backward shambles that it currently has.

    Of course anyone can sensibly observe the end results of such simple-minded worship of money and private control just by visiting the once great US and seeing what has become of it now.

    What is your favourite Kool Aid flavour anyway?

    • Agree: Kiza
  37. Kiza says:

    Let me agree with you by stating a totally general principle:
    No country can call itself a democracy if it privatizes natural monopolies, such as electricity delivery, water, telecommunications, transport (such as airports and so on). If there is only one coming to your home, then IT MUST NOT BE SOLD OFF TO ANY PRIVATE COMPANY, full stop.

    As PCR says, private enterprises can compete on customer service and maintenance contracts on such publicly owned natural monopolies, but not own them.

    In Australia, there is a private bank which specializes in buying natural monopolies and bribing politicians (e.g. Bob Carr) with cushy post-political jobs to help it buy roads, airports etc, it is Macquarie Bank.

    Anybody who says otherwise, is either a paid shill or a complete moron.

    The corruption is everywhere as PCR gives the nice example of Chicago parking meters. It is the politicians Après moi, le déluge, sell off or rent a monopolistic public asset over 20 future election terms, but pick up the money now and spend. Just kick the can down the road to decay. No future.

    • Replies: @Seamus Padraig
  38. @Kiza

    These people may have also been involved in pushing Saudi Arabia to attack Yemen and to increase the production of oil to pay for it, at the time when the oil price was collapsing.

    I think you may have the causal chain backwards, Kiza: the Saudis increased production in order to slash the price of oil. They are gambling that, over the long haul, they can beat both Russia and Iran in a price war.

    • Replies: @Kiza
  39. @Kiza

    Let me agree with you by stating a totally general principle:
    No country can call itself a democracy if it privatizes natural monopolies, such as electricity delivery, water, telecommunications, transport (such as airports and so on). If there is only one coming to your home, then IT MUST NOT BE SOLD OFF TO ANY PRIVATE COMPANY, full stop.

    I strongly agree. And to that list I would add: healthcare, basic education, petrochem, defense/aerospace and banking. Privitizing any of these is just asking for trouble.

  40. Kiza says:
    @Seamus Padraig

    It is a bit of a chicken and egg.

    The world economy is in poo, the demand for oil is very low. Saudis increased production to gain market share, this depressed the prices even further. They did this to fight the Russian, Iranian and US shale-oil producers, but also to maintain the income needed for war. But someone may have encouraged them to start the Yemeni war and take part in the Syrian war at such bad time, or they are just plain stupid if they decided on their own.

    The net result is that, despite record oil production, Saudis are almost bankrupt, using their old reserves to maintain internal social coherence (rule of the family) and to pay for their wars.

  41. Philip Owen [AKA "Soarintothesky"] says:
    @Anonymous

    If you think that you are no expert on Russia. I haven’t seen evidence of it yet. A year or two as an expat in Moscow is no qualification.

  42. Philip Owen [AKA "Soarintothesky"] says:
    @Drapetomaniac

    I should point that it was Fascists, National Socialists and International Socialists who did the heavy lifting on destruction in the 20th Century. Not least Mao. Doesn’t change my argument.

  43. gwynedd1 says:
    @Philip Owen

    Whats the difference between a foreigner and a Russian oligarch reaping the profits overseas ?

    What gave Russia massive inflation was credit from the state banks of the crumbling Soviet empire. When a credit monopoly is broken its a race to buy up all the assets with the credit institutions available.

    There is even a reference to it in the article:

    “Also, the firms to be privatized cannot be bought with domestic state bank credit. “

    • Replies: @Philip Owen
  44. polistra says:

    Returning to parts of the Soviet system (like Sberbank) may seem strange, but it’s not. I recently bumped into a 1968 book about Soviet economics, written by the US Commerce Dept. The authors were trying to be negative, and I must admit that it would have sounded negative if I’d read it in 1968. Now, after 40 years of destruction by the bankers and free-traders, the 1968 Soviet system sounds like a tremendous improvement on our system.

    In Google Books:

    https://books.google.com/books?id=rlyy5Xcr7-4C

    Look around page 137-160 for a sense of how savings banks, profit, and capital investment worked.

  45. Philip Owen [AKA "Soarintothesky"] says:
    @gwynedd1

    Sut ydych chi?

    Well, at the time of Yeltsin’s decision there were no Russian oligarchs. They were probably beyond his imagination.

    Da iawn. You are right about the banks. One of the more insane and deliberate measures was the depositing of money from state banks into the private banks to be lent at higher interest rates. It was the process you describe amplified by the one I describe. (How deep should one go in a comment section). Wyn’i dim.

    Ddydy i dim yn siarad yng Nghmraeg. Ryf i’n byw mewn Rwssia.

  46. joe webb says:

    As part of my continuing effort to bring some sanity to economics, particularly the antics of these wobbly characters of the Left…

    Subject: Fw: NYTimes.com: Swedish Bank Move Creates a Global Shudder ( understand space-time? )

    You may still be reelin’ from yesterday’s news that mad scientists have actually finally measured gravity, you know, that mysterious stuff that has evaded detection up until now, or so they claim.

    Now, the incredible news that banks will charge you to store your money is upon us. Writhin’ , or writing about this stuff is unthinkable, literally, like space-time, which I refuse to wrap my head around. I am Newtonian, conservative, prefer people who look and feel like me, and so on which drives liberal know-it-alls into spasms of jewlib chatter, if not screams. They claim to understand space-time, which I doubt, that is , I doubt both space-time and the me-tooers who claim to understand it. Just more social/intellectual climbing probably.

    Money, a solvent of various factors like labor, investment, confidence, time preference, marginal propensity to consume or save…all of this is like space-time I guess, but since I have admitted that I am skeptical of pointy-headed scientists and their egos…get published, etc., I swerve into economics which at least possesses the virtue of being earth-bound, like me., although admittedly soft and spongy and capable of sucking gravity out to Somewhere Else, like China, or Timbuktu.

    The time honored position that deflation is dangerous to an economy because people tend to save rather than spend when prices are falling…you know, wait a bit longer for an even cheaper price factor.

    Now, the polyannas like “Charles Dumas, the chief economist for Lombard Street, an independent research house based in London says that consumers in Europe and the United States will not hoard their gains but instead spend them on houses, cars and other items.” of this article assure us that everything is actually OK.

    Pay to have your money stored in a bank, buy now when prices are falling, space-time wobbling in this latest science scam (probability theory in pracatice ), it is too much to accept as Normal.

    The above claim by Monsieur Dumas seems to be an even greater booster-type operation…a symptom of a repressed knowledge that Consumers Are Not Spending and that that is the taboo economic reality behind the current world-wide malaise of international capitalism. (Consumers don’t have money, ergo do not spend, investment ergo falls, capital ergo cheapens itself, ergo, ergo…pretty soon, if you want to actually take out a loan for a useful project, like actually building a house (not flipping it), the bank will pay you to take out the loan.

    The loan will still be a loan and must be paid back, but you get a little incentive, like a point or too (financial and crime lingo ) to “borrow” the money.

    Sounds good to me, except maybe I will wait a couple more weeks to get a better deal. Deflation? Why Worry!’

    The only positive in all of this is that like the Great Recession of ’08, lots of surplus capital will go up to Money Heaven never to be heard from again. The Money Men will lose trillions, fiscal spending will be given a boost by dents in sidewalks as the falling bodies of Wall St. demonstrate that even with space-time, individual aggregates of atoms and molecules will still demonstrate that Newton is basically correct, and Gravity, whether measured now or not, certainly exists.

    Another certainty is that money must be allocated in proportionate and realistic amounts to keep the Capitalist ship on an even keel. Starve Labor, then the ship lists. Sail into uncharted waters of negative interest rates, bubbles foaming up from the economic depths, whirlpools of space-time collapsing tried and true economic realities, and gravity again appears to do its unmeasured but real sucking downward. Ethereal Money goes up to Heaven and flesh and blood people stagnate.

    Never mind racial Disparities….nobody cares when the wolf is at the door.

    Ludwig von Drake

  47. ttttt says:
    @marwan

    Sex slavery is most rampant in Israel.Forced slavery is the other name for the occupation and exploitation.

    So font divert and digress.
    Boko Haram functions in lawless country, lawlessness is created by Anglo Zio .
    Syria and Iraq had no forced labor before the Zio destroyed the countries .

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