Mikhail Khazin. The Outlook for Russia in 2016

1

Михаил Хазин. Прогноз для России на 2016 год

As is customary on our website, forecast for current, 2016, based on the analysis of the forecast for the previous year, 2015 (see http://khazin.ru/khs/hs_1844366). Most of this forecast consisted in the analysis of political elites, both domestic and international (as long as internal political forces seriously linked with external forces). For this analysis, in General, even today I have no major complaints and trends identified in this forecast are quite clearly marked.

As I expected, the sharp downturn caused by the devaluation of December 2014 is over, but he is not replaced by growth, instead Russian economy on the trajectory of depressive downturn, which was formed in late 2012. Roughly speaking, the policy of the Central Bank and the government, we “passed” for one, the past year, the amount of recession that would have formed more slowly at 2-3 and even 4 years. We can say that the leadership of the government and the Central Bank has followed the order that was announced by the Obama, who wanted Russia’s economy would be completely destroyed.

If we talk about trends, by the end of 2015 we can say that the global elite (most likely, on the eve of the November 2016), in full conformity with forecasts, has clearly divided into two large groups.

The first of these “financiers” are closely tied to transnational banks, a product of the Bretton woods system and “Reaganomics”. This is a very solid team, which in detail was described in the forecast for the previous year. But the second group – summary. It includes at least three large groups, also described in the previous forecast.

This is the American “isolationists,” i.e. those for whom the interests of the American economy is more important than the interests of the global financial system. It valeriansee financiers that focus, primarily, on London (and, until recently, Hong Kong), elite (former) British Empire. And finally, this “continental elite” of Europe, i.e. representatives of the “old” aristocracy, the remnants of nineteenth century empires (German, Austro-Hungarian, Ottoman). Note that some of the things can often be found on the Internet, type “trump (or Obama) is the agent of the Rothschilds” if they generally can be adequately interpreted, can be interpreted this way: at the present stage of history of the national interests of major regional elites, largely the same.

Theoretically, there are other forces, such as Islamic and Chinese. But their attempts to offer independent design solutions while it did not work (the activity of China’s economic belt new silk road are faced with very serious domestic economic problems), the main task on the basis of which was established by the British-Chinese Alliance (conclusion of the yuan as a global currency) is becoming more controversial. Yes, the main instrument of this task, the largest Bank in the world HSBC, in such a situation, decided to transfer its headquarters to Hong Kong. To predict the same for Russia fundamental precisely those forces that seriously affect our situation, and in annual term.

In this sense, it can be noted that, as I suspected, seriously stalled the project “Transatlantic partnership”, i.e. a free trade area between the EU and the US. There are serious reasons for considering that the refugee crisis was the response of those forces in the EU, which this project does not want. UK same just presented a stiff ultimatum, the meaning of which was that it did not wish to accede to these agreements, up to withdrawal from the EU. While, formally, the negotiations on the establishment of such a zone are underway, but judging by the state of Affairs (in particular, the provisions of Merkel), the chances of its implementation in any complete form anymore.

As a result, a variant of the “castle on the hill”, which implemented the “team Obama”, which can be called “soft isolationists” (because she gave in 2011 to bring the issue of global currency under the control of the United States, greatly weakened the role of the “financiers” in the White house and, finally, in 2014, stopped mass distribution, without which the infrastructure of global Finance can not exist), in fact, failed. And the key situation in 2016, including for Russia, will be the question of who will win the US elections in November – the representative of “hard” isolationists (conditionally trump) or the representative of the “financiers” (conditionally H. Clinton).

Representatives of the Russian financial profession is “liberal team”, consisting of two basic parts: “family” (Yumashev, Voloshin, the oligarchs of the “first call”) and “gidaro-Chubais”. In the late 90’s they badly clashed, but then merged to the degree of indistinguishability (whom, for example, closer Shuvalov?). This team monitors the financial-economic and budgetary policy of a country determines the basic rules. And here the results are very poor.

The standard of living of the population after the devaluation and, as a result which began in 2012 crisis, rapidly falling. The authorities, instead of taking any real anti-crisis measures, stupidly raise taxes (as Russian liberals for all the problems of the economy are reduced to a balanced budget) that kills not only small and medium, but also creates serious problems for large businesses.

The substitution is not, as ruble-denominated investment resources do not exist in nature (it was banned in the times of Gaidar, several times he tried to revive partially within the budget costs, but it is impossible today), foreign investments are very limited (there is no exchange to provide profits to investors), and all this happens when the exorbitant tax burden.

Here you can lead this discourse. Russia’s fiscal policy, developed by foreign consultants in the early 90-ies, was originally not very compatible with business. In fact, it was created to eliminate production in Russia with high added value, to make it a raw appendage of world economy. But, the severity of Russian laws is always offset by the inconsistency of their enforcement and business, and even the production, somehow lived. And the oligarchs, to “Yukos case”, taxes were not paid at all, and then, through the use of various schemes involving offshore companies, did it is very, very limited.

But the information revolution has done its job, and today the IRS is able to make almost any company associated with the real sector, to pay ALL taxes that must be paid by law – which makes any economic activities are fundamentally unprofitable. In a sense, right now is the incompatibility of the tax system with the life that was laid in the 90-ies, started to be implemented in full.

In addition, there was another, in a sense, revolutionary change. The fact is that until recently, the a priori profit of any business scheme in Russia was at least 50%. And on that basis was formed the administrative rent (kickbacks). And today, as a result of natural processes, it is seriously decreased (conditionally to 15 percent). It’s not so little – in the EU, for example, it is not more than 3-4%, but if the Executive continues to receive rents based on the level of 50%, which remains the owner of the business?

There is another circumstance. Insufficient monetization of economy and the fall in private demand (due to devaluation) makes it difficult to service previously taken on the loans. But the law on bankruptcy, we have drawn up in favour of a lender and, moreover, requires a bankruptcy if it is unable to maintain at least some payments. Since today is the state of almost any enterprise, in a fairly short time we can expect a massive wave of bankruptcies of enterprises of the real sector, with their total destruction (because of the bankruptcy, under our laws, it is almost always the sale of fixed assets scrapping). What will be with economy is terrible to say.

All of the above creates in 2016, a serious threat to the state. We, theoretically, can not be hunger, food, albeit inferior, enough for all. But, we do not have, for example, the system guaranteed delivery of food to the population, it is purely commercial in nature. And if you maintain this system will be disadvantageous (for example, due to the fact that in small towns will cease to pay the salaries of a large company), then at any time in such settlements may disappear bread, milk, other important products.

Similar situation with the provision of public services. Water, light and heat can turn off – and to stop creating. Because there is no money, no repairmen (who are not paid a salary) and so on. I’m not talking about the fact that I can stop going ambulances (for big cities thing principle), will close hospitals and so on. All these problems are not rocket science, but for their decisions today from the officials want, first of all, the qualification (and it is already far not everywhere there are people who understand what to do), and, secondly, the ability to take responsibility. With this, modern officials are really bad, they used that on any job you can find “outsourcers”. But if contests win a fictitious company, lowered cost, then they are real performers will not find. Previously, these problems “poured money” on an emergency basis, but today and with this there is a serious problem.

In General, the main problem of the country is an administrative collapse, which, theoretically, could begin in the third quarter of this year (before the elections). At the same time rely on “administrative vertical” is quite naive, for example, we can take policy of the Central Bank. All the “experts” keep saying that “Nabiullina completely controlled from the Kremlin”, but the trouble is that “Kremlin” is or Putin or Sergei Ivanov. And they are not able to formulate specific and clear instructions (well, except for someone from a financial institution to help or, instead, not to help). As a result, the General discourse is still formed the floor – and officials from the Administration are not even able to understand what the real problems are solved by the leadership of the Central Bank. But, as a consequence, the obtained solutions of the devaluation of the end of 2014, which is favorable to anyone, but not Russia in General and Putin in particular.

On devaluation, however, it makes sense to say more, as the end of 2015 showed an amazing result. The fact that the constitutional task of the Central Bank is the stability of the national currency, the ruble. Stability is an antonym to the word “volatility”, that is, minimization of the total level of fluctuations. So, by the end of 2015 Russia was ranked in the global currency viability rating last place. I will repeat once again: first from the end.

Such an outstanding result cannot be explained naked incompetence. It can only be obtained consciously. And for him there are two explanations. First, the leadership of the Central Bank is in close ties with the corrupt leaders of the largest (including state-owned) banks, which purposefully increase the amplitude of exchange rate fluctuations for the purpose of obtaining maximum profit. From the point of view of the law, it is a crime.

Second, you need to pay attention, when there was devaluation. In just a few months after the US stopped the issue of the dollar. That is, the global dollar system began to experience liquidity problems. And increased volatility of the ruble, of course, caused an increase in the outflow of capital (i.e. increased demand for the dollar), which was supported by this same system.

As a result, even if not to take into account speculation (i.e. sale of foreign currency at the highs and buying it on the lows that are associated with the Central Bank of bankers is not difficult), the profitability of investment in dollar (January 1, 2015 bought, December 31, sold) was approximately 100%. And what kind of private investments in the real sector in this situation can you say? The trader wants to get profit and not to maintain at its expense the Russian economy.

Note that, formally, such a policy the Central Bank is not a crime – because we are members of the IMF signed its Charter, and just stupid to follow instructions. But it is unlikely that management at the Central Bank in the current situation, openly to confess the real reasons for this policy. And while all this is added another circumstance.

The fact is that “liberal” the team we had put the administration of U.S. President bill Clinton. And, in General, largely, continues to be supervised by the same people who determined the world financial policy of the 90s (most famous among them Larry summers, visitors can find on the Internet in his letter to Chubais, when he was last Perm Deputy Prime Minister, very informative in terms of understanding of the system relationships). But, given the already mentioned problems with elections in the USA, in the event of coming to power in January 2017 (the details of the election campaign in the U.S. can be found in our policy reviews: http://www.fondkhazin.com/#!obzory/c1zps), “isolationists” are sufficiently strongly to demand from Putin to get rid of representatives acutely hostile to them “teams”. Recall that a similar (albeit much less acute) problems resulted in the need to replace Yavlinsky at the Gaidar in the early 90-ies.

Taking into account the peculiarities of Putin, who is extremely unwilling to personally hurt people close to him, despite any mistakes, “liberals”, maybe, could and not to worry. But, because of the above-mentioned economic and administrative problems, their positions become much more vulnerable. And this will inevitably cause a sharp attack at all any alternative leaders of the financial-economic block of the government.

In particular, there was an increase in “hitting” on D. Rogozin (in the appointment of his son and gossip about the apartment), S. Glazyev (which the Chairman of the Moscow economic forum and, in General, the representative of “liberals” Ruslan Grinberg was not invited to the main market of the IEF, which has positioned itself as the main intellectual alternative to the liberal “mainstream” about “the attacks” in the liberal media even to say nothing). But the General background “yellow” liberal media (not to mention the Internet) has become much more stringent.

Note that Putin himself is in a difficult position. And the situation in Ukraine and the situation in Syria, and the economic crisis demand from it certain actions. But these actions do not hang in the air, they are complex ways (domestically and abroad) affect each other and require what is called a comprehensive, systematic strategy to ensure that these actions were mutually reinforcing and not, on the contrary, weakened. At the same time, in Putin’s circle are at least two (actually more, as the grouping of “isolationists” is, as described above, at least three different groups) the opposite of grouping, the partners of which in the external world actively oppose each other.

So, as part of its Syrian strategy (and partly Ukrainian) Putin is actively counteracts the global financial elite, despite the fact that, as I mentioned, in the framework of financial and economic policy, he goes in advance of this group. If the result of historical examples, it looks as if Alexander Nevsky, going to war with the Teutonic order, instructs the supply of his army to a subsidiary company this order itself. He would he under this policy until the lake Peipus? I doubt it.

Here I will complement its observations, given the forecast for the previous year. The fact that Putin does not suit the world’s financial elite for several years, it is clear. The reasons can be a lot of arguing, they are not the subject of this forecast. But the main enemy of this elite today is not Putin, and the American isolationists, the elites of Britain (“Windsor”, “the Rothschilds”, call them what you will) and “generalized Vatican”, as a symbol of “old” continental elite. In this situation of acute conflict with Putin is not in the interests of the financial elites – it may require too much effort. And for this reason the strategy chosen was the “soft strangulation” of the ruling today in Russia the political elite.

The only exception is if the aggravation will go to Putin himself. In this case, it will become a major threat to the financiers and the cob may be applied extremely difficult. It is not excluded, what exactly for this reason that Putin is an extremely complex manner, but does not pass a certain “red line”. For those who think that such reasoning is characteristic only for the defenders of Putin “in the pay” report that, from my point of view, there is no guarantee that it will change its policy even after the situation will change.

But the situation may change later this year. I already wrote that (conditional) trump (theoretically, the President of the USA can still become a Democrat and Sanders, for example, if Clinton will be out of the race for the crimes committed by it, and connections in the campaign of independent candidates period has not been exhausted) probably will demand Putin’s dismissal of supporters of the “financiers” in his entourage, as a guarantee of partnership. But here Putin have serious problems.

What trump will negotiate with Putin – is totally obvious. And it is the concern of “financiers”. For this reason, I expect a sharp increase in pressure on Putin, directed at not so much to remove him from the post of President of Russia (it is not clear how it can be done), but to make it completely “neruopathy” within “Western” society. How will this be done – I don’t know, but the fact that such attempts will be, this is almost certainly because “resolve the issue” before November. Current, remember, year.

The point here is in the fact that interest in Russia (conditional) trump is twofold. He has a passive component: Russia should not support his enemies “financiers” and take responsibility for regional problems, which trump does not want to waste American resources. In particular, security in Eastern Europe and partially in the middle East, where security, in particular, refers to the prevention of unnecessary activity created by “financiers” terrorist networks such as ISIL.

Note that it is for this reason howl like that of a mythical “Russian threat” Pro-American (or rather, set the “financiers”) of the current elite of Eastern Europe. In this sense, by the way, very indicative of the position of the Hungarian leader Orban, supported by a society that no pressure is not afraid of and, respectively, about Russia, nothing bad said. But the current political elites in other countries of Eastern Europe in a different position: they are not mythical Russian invasion I’m afraid, and that as a result of the destruction of their senior partners in the battle with the “isolationists”, they will drive from their homes! In this case it’s not even that they will lose their “feeders”, it is obvious that the new authorities of these countries will begin anti-corruption investigation – and there is no guarantee that the new U.S. government will defend them. In the end, for trump they are just the representatives of his enemies. At best, those of them who were American citizens would be sitting in an American prison.

This, once again, the passive position. And in such a position, theoretically, at least, “financiers” can, say, four years, to take revenge. Or, in the case of Putin, and to persuade him not to take tough measures against its representatives. The trouble for the “financiers” that trump has and constructive script. The fact that any revenge is only possible if a General model (based on the dominance of the financial sector) will remain unchanged. And no alternative options at the trump yet.

More precisely, it is limited to the ideas of Ron Paul on raising interest rates by the fed until the values at which all “parasites” living on emissions (including transnational banks) will die, companies and households go through bankruptcy and, cleansed from debts (remember that this is our bankruptcy is the destruction of businesses, and in the USA it is Vice versa, where the law protects the real producers), the economy “will start from the bottom” and start growing. And – by the same accelerated growth of the financial sector, as an alternative model just yet. So the “financiers” will dramatically weaken but preserve the model will retain some of its capabilities.

Note that in itself this idea is quite reasonable (especially in terms of writing off debts of households), if to implement it in the early 90’s- it was not! But now it will lead to a decline of this magnitude (see http://khazin.ru/khs/hs_1136733), that does not seem little! And that will be the “push” is the big question. However, American experts it is all not arguments – they with our theory of crisis do not entirely agree. But there is one hypothetical option that will allow some straightening: if the situation is “pull”, it is possible to try to meet decay arrange for alternative growth. Only – on other principles, not by emission of stimulating demand.

The trouble is that the world is not not what alternative models of economic growth, there is not even scientific language, which would be to try not to develop an alternative model, but even to describe the current situation. The crisis has been going on for almost 8 years, and to explain the economic “mainstream”. The reasons for this are described in the framework of our theory (see http://khazin.ru/khs/hs_1622262), but need a few more words to say. The fact is that, after the “financiers” have become completely dominant in the world elite since the end of 70 years (40 years for, among other things, two generations), they were able to completely rebuild the economic discourse so that the dominance of financial component built into it inherent (inalienable).

In other words, everyone who studied economy for the last 4 years, will be automatically from time to time to repeat the dominance of the financial sector of the economy. Moreover, they and their actions will be build in the framework of this basic thesis (as there would say the unforgettable Victor Stepanovich Chernomyrdin? “Wanted as better, it turned out as always?” Or: “What kind of party we build, we receive the CPSU!”). That, of course, “isolationists” cannot accept categorically. And the only alternative to total dominance of the financial “mainstream” are those the new economic school (built on the basis of political economy), which remained in Russia.

In fact, we, in Russia, even the theory of crisis is, moreover, written almost 10 years before it starts. But the problem is that these schools and this theory today are not adapted for General distribution – they still need to adapt. In particular, this theory cannot be used for practical application, it exists only for theorists macroeconomists. But still it exists!

And, theoretically, the economic presence of these schools makes it very interesting for the part of global elites who have seriously decided to press the “financiers” in the world of Olympus. This is a very serious trump card, because no other basis for the transition from passive scenario against “financiers” (“you need to take them because they are very bad”) to active (“we need to support, because we know exactly what to do to make it better!”) just not visible! If you take a historical analogy, it’s an option from the transition to a situation where no one is willing to take responsibility in Russia after the February revolution, the situation, when Lenin, in answer to the question: “is there any party ready to take power?” (i.e. the responsibility) said: “There is such party!”. About the script today there is a lot of controversy, but the fact that he, who is the script ready to show, looks in the eyes of any society are much stronger than those who have not, obviously.

Thus, the elimination of “liberal dictatorship”, which will be possible for the political elite of our country after the coming to power of the (conditional) trump will help her to not only dramatically reduce the risks of his position within the country, but serious trump cards for a more or less equal negotiation with external partners. That is the task that Putin today is trying to solve is clearly unworthy methods (force coercion of the West to cooperate), may in this case be resolved by way of constructive and far more effective.

And in this case only appears in the base for long-term and mutually beneficial cooperation with serious partners, but the problem that arose after 1917, when Russia lost its mission in the world elite! The right word, for achieving such a result worth fighting for!

The forecast for Russia, in General, ends. It again involves reasoning about the oil prices and the ruble exchange rate (however, the oil I wrote in the forecast for the world economy, and the ruble is so dependent on intervening, including purely subjective factors that make it from the economist would be somewhat presumptuous), but describes, rather, the fundamental factors that will determine the behavior of the largest luxury groups that form today’s agenda for Russia.

Just in case I will repeat the basic provisions of the forecast. The economy will fall, living standards, too, the threat of administrative collapse increases. The leadership of the Government and the Central Bank is not just totally incompetent, but do not consider the problems of the Russian economy as the priority. At the same time – by the end of the year, the conditions can occur that fundamentally change the external background, which exists in our country and, theoretically, we will finally be able to destroy the basic model, which for 25 years pulls us into the abyss.

LEAVE A REPLY

Please enter your comment!
Please enter your name here