Streetwise Professor

October 6, 2011

Flirting With Disaster Man, or, Brezhnev is All Right With Me.

Filed under: Economics,Financial crisis,Financial Crisis II,Politics,Russia — The Professor @ 7:14 pm

Watching Vladimir Putin the last couple of days has been like witnessing a slow motion train wreck.  He’s driving the train, but just think about the poor schmucks that are along for the ride.

Exhibit 1.  Putin says Russia ready to handle Euro debt crisis.

Putin, who turns 59 on Friday, said Russia was ready to handle any fallout resulting from the slowdown in global growth and sovereign debt problems faced by the developed economies of the West.

“I will say straight away that Russia is better prepared than it was in 2008,” Putin said. “We have built up serious experience, a reserve of durability — in the economy and in the financial sector.”

Uh huh.  And that’s exactly what he said in 2008.  Right at the time of Lehman.  When Russia had bigger reserves.  When Russia was coming off several years of robust growth rather than slowly coming back from the ’08-’09 calamity.  When its fiscal balance was better.  When it hadn’t committed to vast increases in social spending, subsidies for utilities, and defense spending.  When there was some prospect, however faint, that the country would modernize somewhat.   When years of kleptocratic stasis did not appear to be fated.

So yeah.  Much better prepared.

Exhibit 2.  In the same speech to western investors, Putin just spun out grandiose fantasies that even the most glassy-eyed Nashibot would realize is utter tripe:

Throughout his remarks, Putin was big on promises. Russia, he said, would soon return to 6-7 per cent GDP growth (versus an estimated 4 per cent this year), while investments would increase to being 25 per cent of GDP instead of 20 per cent.

Twenty-five percent investment.  Riiiggghhtt.  At a time when domestic capital is packing its bags (to the tune of an estimated $50 billion, with the pace accelerating dramatically in September) and foreign investors keep their track shoes laced for a quick getaway—if they are stupid enough to invest in the first place.  Russia has never invested 25 percent of GDP.  Except under Stalin, maybe, and that was literally and figuratively at the point of a gun.

Exhibit 3.  In response to laments that Putin’s standing for election represented a return to Brezhnevian stagnation, his spokesman Dmitri Peskov says: “Hey, that’s a feature, not a bug!

“Brezhnev is not a minus sign,” Peskov said. He was a “huge plus for our country. He laid the foundations for the economy and agriculture.”

That would be the foundation that is crumbling everywhere, if you haven’t noticed.

Insofar as foundations goes, it reminds me of this bit: scroll forward to the riff about the castles falling into the swamp:

Said spokesman also admitted that the epic Sea Hunt episode in which Putin, doing his best Lloyd Bridges impersonation, recovered the long lost Greek vases was staged.  I’m sure you’re stunned at the revelation.

If you want to get a dose of the reality that is on its way, listen to this interview of my friend Sergei Guriev. Pay special attention to the part where he is asked about whether Russian under Putin risks a Soviet-style collapse. That should tell you all you need to know about where Russia is and where it is going. If you can’t even talk about the prospect for collapse if changes are not made, you are flirting with disaster.

Since Jesus is not on his way, I guess Russians will just have to sing that Brezhnev/Putin is just all right, because that’s what they’re stuck with.

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17 Comments »

  1. Brezhnev was a good-natured, hairy, bear-like statesman. A kind old grandpa.
    Putin is short, bald, vindictive walking inferiority complex. A dressed up gopnik.
    The only thing they have in common is vanity. But Brezhnev went on his medal spree after his cognitive abilities declined, while Putin is supposedly in his right mind when sticking botox.

    Comment by So? — October 6, 2011 @ 8:00 pm

  2. It does all seem to hang together. Putin knows the popular culture humor about Brezhnev being little more than an aged zombie. This explains his obsession with artificially portraying youth and strength in the media. One would think he could have found a better plastic surgeon that could have added Mickey Rourke features to his appearance. That would have been a huge popular culture winner. Putin is becoming a caricature of himself.

    Comment by pahoben — October 6, 2011 @ 8:15 pm

  3. The past week has just been so much good news. Putin coming back. Eurasianism. The hint of a new left term. And the sight of so many liberals getting pissed off. It can scarcely get better.

    So yeah. Much better prepared.

    Putin says truth, as usual. Reserves are lower, but Russian corporations are much less dependent on short-term credit from Western banks, so will not be as much exposed to margin calls in a new crisis (this was the big problem in late 2008).

    Also, much less of today’s growth (e.g. in consumption) is fueled by credit, as was the case in 2008.

    In the same speech to western investors, Putin just spun out grandiose fantasies that even the most glassy-eyed Nashibot would realize is utter tripe:

    I trust Putin. What’s wrong with any of that?

    Russia has never invested 25 percent of GDP. Except under Stalin, maybe, and that was literally and figuratively at the point of a gun.

    Actually, it invested around 35% of GDP in the 1980’s. It was above 25% for most of the period after the 1930’s AFAIK. And it touched 25% during 2007-2008.

    Comment by Sublime Oblivion — October 6, 2011 @ 8:16 pm

  4. As usual, the verbal flatulence that is SO makes a fool of himself.

    BTW SO, did you note that the life expectancy projections for Russian males has fallen below 60 again (to 59 in fact) in the latest CIA world fact book?

    So much for the improving health and demographics of Russia you keep fantasizing about.

    As for “Eurasianism” sorry, but Russia’s former imperial possessions have no desire to reenter Russia’s killing embrace.

    Vladimir Putin is trying to take Russia back in time
    The Russian prime minister’s aim of recreating the zone of influence of the former Soviet Union in a ‘Eurasian Union’ is doomed to failure.

    http://www.telegraph.co.uk/news/worldnews/europe/russia/8808712/Vladimir-Putin-is-trying-to-take-Russia-back-in-time.html

    Comment by Andrew — October 7, 2011 @ 2:10 am

  5. What kind of maniac announces openly, seemingly proudly, that he shamelessly lies to his people? First Putin lied about his decision to return to power, then he lied about finding Greek jugs. Then he said: “Yeah, I lied. So what? What’s wrong with any of that?”

    But the real question is, what kind of utter psychopath responds to these lies with “I trust Putin. What’s wrong with any of that?”

    SUBLIME PSYCHOPATH, that is what kind of psychopath. Such is Russia.

    Comment by La Russophobe — October 7, 2011 @ 5:24 am

  6. “He laid the foundations for the economy and agriculture.”

    This is the kind of truly psychotic statement that can only come out of a neo-Soviet state. Is Peskov really unaware that soon after Brezhnev left power the USSR COLLAPSED INTO THE DUSTBIN OF HISTORY?

    With statements like these, how long before that happens again?

    Comment by La Russophobe — October 7, 2011 @ 5:43 am

  7. > slowly coming back from the ’08-’09 calamity

    Not really. By many indications, Russia is in a new recession already. One more reason for the Tsar and fellow kleptocrats to lie desperately – not that they need it.

    Comment by Ivan — October 7, 2011 @ 7:05 am

  8. BTW SO, did you note that the life expectancy projections for Russian males has fallen below 60 again (to 59 in fact) in the latest CIA world fact book?

    The CIA does not record Russia’s mortality statistics, nor does it have the resources or any reason to. It is flatly contradicted by the state statistics agency which shows male life expectancy to be 62.8 in 2009 and 63.0 in 2010. No doubt it will be much better this year and overall LE may finally exceed 70.

    Not really. By many indications, Russia is in a new recession already.

    Do you have any evidence of that whatsoever? I’m talking of concrete indicators things like falling industrial production, plummeting PMI’s, etc, not your fantasies.

    Comment by Sublime Oblivion — October 7, 2011 @ 5:50 pm

  9. SO,
    wow. What, the hierarchy demands your being (pretending) more ignorant than Putin? Even falling industrial production is news for you?

    http://iea.ru/2/pp.htm – can you decypher what this graph means?

    What about this: http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=8610 ?

    “The PMI remained indicative of no overall improvement in business operating conditions in September, equalling the no-change mark of 50.0 following August’s 49.9. On a quarterly basis, the average figure for Q3 of 49.9 was the lowest since Q4 2009, and contrasted with the post-crisis high of 54.8 registered in Q1 2011.”

    Comment by Ivan — October 8, 2011 @ 12:27 am

  10. Do you have any evidence of that whatsoever?

    Эх, Андрюша, нам ли жить в печали?

    Comment by peter — October 8, 2011 @ 8:45 am

  11. Did you read your own link past the first paragraph?

    “Разумеется, тот факт, что курс рубля практически однозначно связан с ценой нефти и балансом движения капиталов, а последние зависят от состояния внешних финансовых рынков, никто не отменял. Равно как и то, что отсутствие экспортного спроса и падение импорта, в случае если европейская экономика погрузится в серьезную рецессию, а китайская – ощутимо замедлится, не обойдет стороной ни российскую промышленность, ни динамику нашего ВВП. Однако имеющиеся пока в наличии данные позволяют говорить скорее о близости к стагнации в производстве и о возросшей волатильности на валютном и фондовом рынке, нежели о сползании в кризис. Несколько технических замечаний.”

    Comment by Sublime Oblivion — October 8, 2011 @ 12:50 pm

  12. Did you read your own link past the first paragraph?

    Yes, why? You asked if there is “any evidence of that whatsoever”, I gave you a link to a blog post by a prominent economic commentator discussing such evidence in detail. Are your comprehension skills really this poor?

    Comment by peter — October 8, 2011 @ 1:41 pm

  13. Ivan,

    Oops, sorry, your reply to SO wasn’t up yet when I posted mine.

    Comment by peter — October 8, 2011 @ 2:37 pm

  14. It doesn’t correlate with the official figures. And in any case it looks more like a plateau than a collapse.

    The PMI fluctuates a lot. It is now at break-even point, i.e. exactly 50. That indicates a stagnation that may become prolonged or not, but it does indicate a recession. For that, looking at the chart in your link, it would have to drop to significantly below 50, such as 45 or lower (i.e. as was the case in real recessions such as 1998 and 2009).

    Comment by Sublime Oblivion — October 8, 2011 @ 4:18 pm

  15. SO,

    yes, the mantra “there is no recession” may be enough for another month or so, but you should really be focusing on inventing stories about how vicious foreign forces are to blame for the recession: a month is not a very long time, and you are not that inventive.

    Comment by Ivan — October 9, 2011 @ 12:25 am

  16. SO, you are both a liar and a moron.

    List by the CIA World Factbook (2011 estimates)

    UN ENT Country AVG MEN WOMEN
    131 161 Russia 66.03 59.33 73.14

    http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy#List_by_the_CIA_World_Factbook_.282011_estimates.29

    Comment by Andrew — October 11, 2011 @ 7:34 am

  17. Please try reading, Andrew.

    The CIA does not record Russia’s mortality statistics, nor does it have the resources or any reason to. It is flatly contradicted by the state statistics agency which shows male life expectancy to be 62.8 in 2009 and 63.0 in 2010. No doubt it will be much better this year and overall LE may finally exceed 70.

    Comment by Sublime Oblivion — October 13, 2011 @ 9:08 pm

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