EDITORIAL: The Neo-Communist Stock Market

EDITORIAL

The Neo-Communist Stock Market

It’s getting rather embarrassing these days to be a Kremlin flunkie.

One minute you’re given marching orders, for instance, to tell the world the Kremlin isn’t buying up shares in Russian enterprises in a cosmically insane effort to create a Potemkin illusion of prosperity just like they used to do in Soviet times.  But no sooner do you start parrotting that absurd line (as a number of Commissars of the Internet did right here on this blog) than the Kremlin comes out and admits it’s going to do exactly that, spending 15% of the National Welfare Fund starting on Monday.

And sure enough, on Monday the RTS dollar index was up nearly 5% with the key equities of interest to the Kremlin (Gazprom, Lukoil, Rosneft, etc.)  and the overall oil & gas index up over 10%.  But other sectors were down, particular the consumer & retail index, which was down nearly 5%. Electrical and finanancial indices were also in the red.

The Kremlin also moved aggressively to support the value of the ruble, which has plunged right along with the stock market, by simply banning currency trading it doesn’t like and spending truly obscene amounts of money buying its own currency in order to create the illusion of value and staunch breathtaking inflation. This action is motivated by the same sort of “thinking” that tells the Kremlin it can protect the stock market itself by simply banning trades whenever they move in an undesirable direction.

The contempt being shown by the corrupt Putin regime for the basic principles of market capitalism is quit stunning.  It’s as if the Kremlin has concluded that the rules of economics simply don’t apply in Russia, just the same view it adopted during Soviet times.  The whole nation of Russia is rapidly turning into exactly the same kind of Potemkin Vilage that the Soviet rulers created, and day by day more and more ownership of property is moving into the Kremlin’s clutches.  Indeed, at this point it’s quite difficult to say whether there currently exist any real bases of economic power in the country that are fully outside the Kremlin’s control. 

Writing in the Moscow Times columnist Alexei Bayer sums it up:

Prime Minister Vladimir Putin recently said that the financial crisis has undermined confidence in the United States as the leader of the free world and destroyed trust in Wall Street — perhaps forever. It is an amusing assertion. Even though the debacle began in the United States, the dollar has been rising, gaining around 15 percent against the ruble. Investors have been dumping emerging governments’ Eurobonds and buying U.S. Treasury obligations — still the safest financial asset around.

The Kremlin risks emulating another arrogant government, the administration of U.S. President George W. Bush. Until recently, Bush and his economic advisers kept insisting that U.S. economic fundamentals were sound and that the financial crisis would take care of itself.

Russian leaders seem to think that their country will not only avoid the coming global economic calamity, but could actually benefit from it. In reality, Russia is facing an imminent downturn at a time when it is unprepared, isolated and with business and investor confidence badly shaken. There are troubling signs that Russia has been excluded from the important international decision-making process regarding key economic issues.

Ever since oil oligarch Mikhail Khodorkovsky was thrown into prison, the Kremlin has moved inexorably to wipe out such centers of power.  And with them, of course, go the country’s ability to innovate and grow. Russia has once again purged dissent and information from its society, with the natural result being that it languishes in a state of economic malaise from which there is no escape.

7 responses to “EDITORIAL: The Neo-Communist Stock Market

  1. Tower Bolshevik

    “Neo-Communist stock market”?

    Like KKK Zionists.

    “Buying up shares in Russian markets”?

    From years of reading Marx, Lenin, and Trotsky I always thought Communism was out to strip the ruling class of power, not buy up stocks and become part of capitalism.

  2. The term “KKK Zionists” is definitely an oxymoron. The communists did strip power from the rulling class when Lenin consolidated his power. At least the previous communist leaders didn’t flaunt their wealth and extravagence in front of the slave people, but the current bunch of ‘leaders’ are shamelessly robbing the country of it’s wealth while stuffing their swiss bank accounts with the loot while still trying to convince the huddling masses that socialism’s ideals are noble and right.

  3. Well, the core premise of Communism is that the state (ruled by a dictatorship of the proletariat) should control all the means and modes of production. That is why in the Soviet Union, the state governed by the Communist Party owned all factories, owned all land, and controlled all aspects of the economy. What little market capitalism was allowed under NEP was crushed by Stalin with his drive to industrialize and collectivize.

    What do we find in Russia at the moment? Key government officials and former KGB colleagues of Putin now account for most of the board members and administrators that oversee the operations of Russia’s major corporations. With the Russian state buying up stocks directly or through state-controlled intermediaries, you are in effect ensuring that the state will once again own most of the means and modes of production of any value in Russia and the state managing the economy.

    The question remains as to when the Russian stock market will be effectively a charade. If and when the state will own most of the stocks on the stock market, what will be the use of having a Potemkin stock market? Will the state sell stocks back to itself for the sake of maintaining the faction of a functioning stock market? Much like elections were regularly held in the Soviet Union to ensure the illusion of democracy.

  4. At any rate, you mentioned that the Kremlin stops trading whenever the stocks drop drastically, without mentioning that they do the same thing when they go up. If it goes up/down by 5% or more, they stop the trading.

    Capitalism isn’t perfect, and there are alternatives. Rather regulated economies have produced the happiest people – see Switzerland, Denmark. They have a significantly higher standard of living than Americans.

  5. SIGNIFICANTLY higher standard of living in Denmark and Switzerland? Give me a break! Imagine what the American standard of living would be if we spent less than 1.5% of GDP on defense. Our European friends love to let the Americans do all the heavy lifting when it comes to defense. Then whine like babies when they are asked to help. People in the old Warsaw Pact countries take Russia’s aggression much more seriously than the NATO dead weight countries like France and Germany, who just take us for granted, because they can. If Obama is elected, the U.S. will cut defense spending, and unless Europe wants to become a territory of the new Czarist Russian empire, they’ll have to drastically increase their defense spending, God forbid. My distant cousin from Denmark didn’t hesitate to move to the U.S. first chance she got. She got tired of seeing more than half her income taken away for taxes. She’s happily living in Phoenix and wouldn’t go back for anything.

  6. TBS, I hate to break this to you, but Bill is right, “KKK zionist” is definitely a contradiction.

    I see blind rage in you, an obscure british film, 28 Days Later can explain it better than I can.

  7. I would be inclined ot agree with Bill, and I want to add to what he said. The standard of living in northern Europe is NOT higher than in the US. The opportunities to live above middle class are completely absent… Everything is expensive, and has been for years, even before the dollar started falling… I lived in Sweden for a semester while in college in the early 2000s, it was amazing how many taxes there were. I don’t know what the use of a college education is when you get pigeonholed into a job from the beginning and stay there your whole life. Sure, the security is nice, but you have no growth potential, ever.

    This state of events may be OK to many over there, but the increasing immigration of young, hungry people from muslim countries is going to play havoc with this set-up. I am curious as to what happens to their picturesque euro-brotherhood in a few decades.

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