Sunday, December 28, 2014

Falling Ruble Nationalizing Russian Economy

by Bill White

The accelerating decline of the ruble against the dollar and euro is driving Western business out of Russia and pushing Russians to spend their money nationally—an unintended but predictable side effect of Western sanctions which shows that the Eurasian bear is not some South American nation that can be collapsed.

The calling of debts that must be paid in dollars and euros by Western banks has sent Russian businesses into a scramble to sell rubles, causing a short-term but intense drop in the currency’s value on international markets.  This has caused the ruble-price of imported goods to increase almost 67%, while prices of domestically manufactured goods have remained stable.

As a result, the corrupt liberal strata of Russian society, who seek to imitate America’s hip urban nihilism, are having trouble maintaining a Walmart-like lifestyle based on cheap American and European goods. Instead, this politically irrelevant minority beloved by the internationalist West is crying about their inability to buy imported mozzarella.

“I can’t say that people are buying less [mozzarella],” Andrei Golubkov, spokesman for the imported food store Azbuka Vkusa told the media. “The price for Belorussian [mozzarella] is cheaper than the Italian one.”

Similarly, wannabe members of the Zionist Imperium are canceling vacations to Western Europe, instead taking vacations to St, Peterbsurg, Moscow, and Sochi. After Russia placed its own sanctions on imported agriculture, prices for some foods increased 10-30%. Ultimately, this should prove a boon for the Russian economy. Unlike nations such as Venezuela and Argentina, which depend on dollar-denominated imports because they lack diverse natural resources and a broad manufacturing base, Russia is potentially autarkic. Thus, rising prices for Russian goods should spur investment in national industry and agriculture that will lead to a new stabilized price without affecting the availability of goods.

For American and European companies, dependent on Russia as a market for their consumer goods, the news is not as good. Unilever PLC, the second-biggest manufacturer of consumer goods, has reported that American and European sanctions are driving it out of Russian markets. McDonald’s Corporation, PepsiCo Incorporated, and Danone SA are being driven out of Russia by regulators concerned about their “cheap and unhealthy” ingredients. European beer and tobacco companies, too, like Carlsberg AIS, which has lost 18% of its value, Imperial Tobacco Group PLC, which has seen an across-the-board 7% decline in sales, and British American Tobacco PLC have also been impacted. And unlike Russia, which can manufacture its own plastic junk and its own unhealthy, greasy, sugary food, brew its own beer, and grow its own tobacco, once these companies are supplanted by local rivals, they are unlikely to be able to re-enter the market.

Thus, the short-term pain of economic reorganization is likely worth it for Russia, whose people still trust in Vladimir Putin’s economic vision. From 2000 to 2010, under Putin’s rule, Russia’s middle class expanded from 30% to 60% of the population, as a result of Putin’s arrest of Jewish capitalist oligarchs and his nationalization of the media and the energy industry. Putin’s favorability rating even in lying Western polls is at 74%, more than twice that of America’s unwanted negro President Barack Hussein Obama.

Western media has tried to herald the impact of economic sanctions on Russia because they recognize that they lack the military power to confront Putin. Yet in a recent survey, 55% of Russians said that the weak ruble has not had a significant impact on their lives. Western media has spun this by claiming Putin’s support comes from un-hip, un-cool poorer people who are not visiting Western capitals to learn about the latest decadent trends. Instead, it is the segment of Russian population that is urbanized, Westernized, and wants to be dancing in the streets in leather chappes waving a rainbow flag and leading a CIA-backed revolution which is suffering.

This decay of Westernized Russia can only be good for Putin, and it enforces a model of development pioneered by China, which largely prohibits Western imports and investment, instead cloning Western products with national alternatives. Such autarkic development makes a country immune to sanctions, and in the case of China has made the West largely dependent on its exports.



Anonymous Dave said...

I'd smile, even laugh about this article. If I didn't know that I will be on the receiving end of the shit storm backlash that it will cause here.

3:35 PM  
Anonymous Dave said...

To clarify: What this is going to do to people here in the US, not what will happen on this blog.

Sorry for the confusion.

7:54 AM  
Anonymous Anonymous said...

Bill is at Canaan USP in Pennsylvania now.

1:04 PM  

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