Another Original LR Translation: The Perils of Putinomics

A note from the translator:  The whole world has been laughing at Pooty’s potty potted pearls of market wisdom. Old Poot just can’t learn not to toot! Every time the KGB goon turned ‘prime minister’ shoots his mouth off about the economy, it costs the Russian taxpayer another billion or two, plus kickbacks! Why do they put up with it? Anyway, LR did in an article on this yesterday. Of course, the matter did not pass unnoticed in sensible Russia either. Here is Dmitri Oreshkin of Yezhednevny Zhurnal on the matter. If only more Russian could see the good sense that some of their compatriots are writing.

The Market as Mirror

by Dmitri Oreshkin

Ezhedevny Zhurnal

3 December 2008 

Translated from the Russian by David Essel

Prime Minister V.V. Putin said the way in which the stock market set the value of the Russian economy was “deformed and unfair”. This is a statement to remember since it reflects the PM’s conceptions of economic deformity and and economic justice.

These conceptions are deeply rooted in a Soviet ignorance that genuinely does not comprehend why “greenbacks” with nothing material backing them up are highly valued while the Soviet rouble, backed by mountains of natural resources, is priced so cheaply.

It’s not fair!

But let’s be serious. The trouble is that money and shares are not at all what they seem to be in the eyes of our economic gurus brought up in the materialistic traditions [of the USSR].

Money has from ancient times (and all the more so today) been mostly a matter of a) relativity and b) trust. Happy morons are displayed on our TV, chanting that it costs 7 cents to print a $100 bill and we are supposed to get the drift that a Franklin is therefore worth that amount! Soon greedybags America will choke on its green rubbish and the world will heave a sigh of relief.

Intense and prolonged applause. [TN: the phrase used in Pravda of old in reports of First Secretary speeches at Party congresses, as recognisable to a Sov as “expletive deleted” is to us].

Hang on a second! How much – precisely – is such a relative thing as a quantity of inert yellow metal worth, the very stuff that the leader of the world proletariat said would be used to make toilet bowls under communism? What’s so valuable about the metal? Or cowrie shells? Or sable and marten pelts? (In Slav Croatia, the currency is the Kuna, which means marten). And the rouble [TN meaning of which is ‘chunk chopped off ingot”]? Who the hell can know what they’re ‘worth’? They have relative values. That piece of green paper that cost seven cents to produce has riding behind it not just a trainload of additional software but also truckloads of non-material value such as trust. And it is quite impossible to say how much all that is worth. For some, “that” may be worth nothing, while others may consider it to be worth trillions. The former will press their point with innumerable weighty arguments, the latter only have one argument – but a real killer: the world accepts and uses these pieces of paper. And by the trillion. And therefore, that is approximately what that trust is worth. While it continues to exists. And if it suddenly goes, then….

Than what? This, in fact, is the reason why financial markets exist: it gives those who enjoy playing with their printing presses an independent indication of the real value of their paper.

Here, patriotically-inclined citizens,on the one hand, rant about their physiological aversion to Uncle Sam’s green excreta while at the same time they crowd out bureaux de change all over the country in a rush to exchange our rock-solid roubles backed by honey, hemp, wax and fur for that globalistic waste of print. And for why? Lose the surface verbiage and there’s just one reason: they have got the message from the markets and they BELIEVE that the dollar, all its faults notwithstanding, is going to stand up steadier than the rouble. Better safe than sorry. This deformed and unfair process will continue until such time that the markets – and through them the people – can be convinced that the rouble is worthy of similar (or better still, greater) trust.

Trust is a non-material category and thus not part of the picture for happy economic morons. Not for them a scintilla of understanding of the stock markets, which to all intents and purposes engages in the very activity of deciding which country’s paper, producers and and economic sectors are worthy of greater trust and which of lesser. Stock market speculators (prize c****, the lot of them, as I see it) each day weigh up the risk and potential profits of shares, answering for their decisions out of their own and their clients’ pockets. If one considers them through the eyes of a Commie-minded patriot, they are no use and do nothing but harm. But looked at from the point of view of an unprejudiced economist, they supply a valuable non-material product: a real notion as to where and how much to invest, which trends are promising and which are dead-end streets. So in a sense, a natural, self-financing Gosplan.

Yes, of course, they create bubbles when they all rush to invest somewhere they think will bring them profits. Yes, they make a Microsoft or a Google worth 90 billion by pumping money into this vapoury sphere. But that is in fact just the right thing to do because our development will come more from vapoury IT than from solids and liquids like coil and oil. The hydrocarbons will run out one day and we won’t have new technologies ready to take over without information exchange and computers. And it would be nice to have something to switch over to, wouldn’t it?

And yes of course, some bubbles burst and any market traders who haven’t thrown themselves out of the 101st floor window will then rush on to invest in the next even more progressive developments that promise wonderful earnings. God only knows what they will be. The dotcoms were inflated like bubbles at first, settled back, and now are here to stay for ever – thanks to the stock markets that fed them. And that’s the simple reason why our economic gurus are being a bit hasty in wishing death to America and to the dollar.

Perhaps America will actually be toppled from its position of world economic leader as premier Putin promised on 9 September. We’ll have to wait and see. Other questions may be more important, however – how about: what is the likelihood of the raw-materials economies’ over-valued bubbles deflating still further because, given the global crisis, the new investment trends will be in ever higher technology, in energy saving, and reduction of commodity consumption?

And where do you think that more economical means of production are most likely to be introduced first – in Russia and China with their large energy reserves or in such lightweights as the USA and Japan where they don’t have proper money and the stock markets blow hot air?

The stock markets to a certain extent also replace the Central Electoral Commission – with one big difference: voting is taken rather more seriously since the results can cost you real money. The market voter is essentially the same, no more clever or stupid than the election voter, but he does have a clearer understanding of the relationship between his pressing of the buy/sell button and his bank balance tomorrow. This makes it somewhat harder to pull the wool over his eyes. Even if that wool is of specially selected patriotic quality and offered for sale by such wonderful salesmen as V.V.Putin and V.V. Zhirinovsky.

And that is just what has gotten our prime minister mad. The problem was so easy to solve otherwise! Put [Electoral Commission boss] V.E. Churov in charge of the stock exchange and within two week all indices will be standing at 98.5%. A statesmanlike understanding can always be achieved, can’t it? Because at the moment, we’re having to force VneshEkonomBank to spend treasury reserves on buying shares with falling values in order to maintain rates and images. And the value of those little bastards do rise a bit following such purchases but in a matter of moments go on to drop down lower than before, turning the money spent on them into no more than ashes. And that’s what annoys V.V. Putin and why he emphasises how unfair everything is. It just won’t do that the decision whether or not to sell Russian paper is taken outside Russia’s borders (by suspicious people with money). Things would be quite different if we decided to whom to sell and at what price – now that would be fair. Strictly speaking, if that were the case, there would be no need for VneshEkonomBank. Or money, actually. All that would be needed is E.V. Churov.

Just think how much money we’d save for the state economy! It would be just like the USSR.

Actually, I sympathise. I do. Out there, abroad, you have guys doing whatever they decide to do. He at home, we can’t move one way or the other and are left to sit things out in the bushes. Why shouldn’t real patriots buy, say, shares in state-controlled Rosneft (formerly Yukos). In 2006 the country sold these to its citizens in a “peoples’ IPO” at 200 roubles a pop and it is now buying them up at 100? Or VTB shares? They used to go for 10 kopecks but you’ll be lucky to get 3 kopecks form them on a good day now.

What’s the fuss?! Okay, so you’re only getting back half what you put in. But on the other hand you are helping that good man I.V. Sechin, who is a real patriot for Rosneft. And that’s not bad for these universally sceptical and unholy times.

Or maybe – dreadful thought – Russia’s citizens are not quite up to the mark when it comes to trusting the economic course set by prime minister V.V. Putin and his trustworthy comrades who bought up Yuganskneftegaz through an off-the-shelf company based in a Tver vodka bar? Maybe some owners of rouble-denominated shares have allowed a shadow of doubt to creep into their thinking about the “2020 strategy” which sounds so suspiciously like the plan to build Communism by 1980? No, no – that’s to think the unthinkable. The Russian people as a united whole have given V.V. Putin their mandate and trust him to continue and uphold the one and only true course. That, of course, is the message we were given by the aforementioned V.E. Churov. There’s no question, really: voting at the elections was honest and fair. So by definition voting at the stock exchange is unfair and deformed. No two ways about it.

Only a blind man can fail to see the difference between the Sov and today. Back then the slogan went: “The Party’s Plans are the People’s Plans! Things are quite different today under the new slogan: “Putin’s Plan is the People’s Plan!”. Far more concrete and optimistic.

But the bastards don’t seem to believe it. What more do they want?

How can it be, objects an upset prime minister, that the share value of a company is lower than the value of its assets?

As Kozma Prutkov in the old satyrical jokes would have said in a fatherly way: it’s easy for something like that to happen and here’s how. Let’s say you’ve bought a Mercedes Benz for 100 grand and then paid another 10 grand to have it delivered by helicopter to your residence in the back of beyond and then it goes and breaks down on you three hundred clicks from the nearest main road. In this sort of situation, you’re going to have a hard time trying to get one of the local reindeer herders to buy it off you for a fair price of 110 grand. They might offer you 3-4 marten pelts if you’re lucky… Or wouldn’t that be a fair price?

It depends on how you look at things. The value of a material asset (a fairly relative amount in itself) is affected by the non-material talents of the manager, who in this case ordered a helicopter and produced the situation described. Sometimes this input can be strongly negative. And the market? The market is just a mirror. And sometimes you will see the stuff of nightmares reflected in it and will wish you had not gone up to it.

It is so unfair that America’s inflated market, the market of the country whose fault it all is, has lost 40% of its value over the year while Russia’s super-reliable and shiny bright market that was going to be a haven of calm for world finance has dropped from 2400 to 600 in less than 6 months, a fourfold drop in value?! Russia has done worse than any other BRIC country. The Americans must have started the crisis on purpose. Just to spite us. I mean, they wouldn’t let us build Communism – right? The swine went and invented friction – just so we couldn’t gift mankind with the most progressive perpetual motion engine.

They should burn in hell!

And I nearly forgot. There another nasty sting in the offing. What with our prime minister giving us useful tips on how to estimate fair prices, some people may chance to ask themselves what would have been the ‘fair price’ of that same Yuganskneftegaz when it was privatised back when oil was $10 a barrel, the drilling platforms were just mountains of rusting iron, and the oil workers were pawning their last pair of boots to buy vodka.

I happened to be out in such parts at the sunset of Soviet power. It WAS a seriously deformed and unfair sight to behold. The Soviets were absolutely right to forbid the citizenry to look into mirrors of genuine economic assessment.

And thanks to this little attention, we lived happily in the knowledge that we led the whole planet. Leaders and guides united us and helped us stand firm against encroachments. We could count our successes from Novocherkassk to Prague to Afghanistan to Poland. (This worked particularly well for those who got their daily supplies from the special stores.)

I think our popularly elected prime minister is pining for those happy but now lost times. And he doesn’t like it that those stock-market traders are getting a bit big for their boots and are saying: “We’ve got the measure of you, dear comrade. And do you know what, the measure’s short. Nothing personal, just business.”

The stock market should be shut down pronto on the grounds that it is committing ideological and economic sabotage. Furthermore, we don’t need one in the current situation of class struggle to double GDP.

We’re friends with Chavez so let’s do as he does.

One response to “Another Original LR Translation: The Perils of Putinomics

  1. fun to read, about the vicissitudes of trust
    but could you imagine an era of “Cold Peace”
    whereby the remnants of the SU will be forced into some sort of closed market system like frozen Siberian mud with the economy moving along on sledges… establishing some sort of internal market trust… or is there no escape, not even a bypass from the dynamics of global economy

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