Russia, a Gap country disconnecting from the world
by tdaxp ~ September 17th, 2008
Ralph Peters notes that Vladimir Putin prefers a wealthy government to a wealthy society. That’s essentially right: Putin prefers a government with a great freedom of action to a wealthy society. So Putin will happily oversee the destruction of the Russian economy in order to free himself of the “golden straighjacket” that integration into the Core could have brought.
For the second day in a row the Russian Markets Halted as Emergency Funding Fails to Halt Rout . Russia’s capital markets have lost more than half of their wealth since 8/8/08. The petty billionaires who once trusted Putin to manage their wealth are now seeing that his plan for them is the same classic maneuvering in the Gap: befriend when you are weak, crush when you are strong.
While we can adjust to high oil prices pretty easily, high oil prices allow Gap leaders like Putin to stay in power through the wealth that oil brings. High prices are — for lack of a better word — bad, because of the way they further warp Gap societies.
[1] http://www.tdaxp.com/archive/2 008/06/19/the-foreign-polic...
September 17th, 2008 at 6:14 pm
lets just admit it dan. you don’t know the first thing about what is going on in russia. and you certainly lack the capacity to make the leap that the market reaction there is a reflection of putin’s policies.
amusing though, to blame it all on putin. but this is not an amusing time we’re in.
September 18th, 2008 at 6:01 pm
What is your point?
As I read your comment, it consists of two insults and an emotional reaction. Do you have a substantive point?
September 19th, 2008 at 6:18 am
You anger so easily Dan. I don’t mean to insult, just probing.
I would consider it folly to look at Russia’s market solely through the prism of a “strong man” paradigm. Which is what you do in this post. Whether you meant to or not is another question, but that is the effect you leave with the reader.
The economic situation is much more complex than what you state. Oil prices, for example, are undoubtedly the major pressure on Russian markets now. The collapse of the US financial system is also a major player as systemic risk implies flight to quality. These two problems, alone, would more than account for the break down in market confidence there. Of course, the “strong man” paradigm is a more simplistic explanation, but it doesn’t fully account for the economic evidence. And I’m not at all arguing that the political risk in Russia hasn’t had an impact. But it is by no means the cause in and of itself.
After all, we wouldn’t really be comfortable saying that the SEC Chairman is singularly to blame for the US financial collapse? Nor would we be comfortable saing that the “culture of greed” was singularly to blame. There are a combination of factors. From where I sit, I would say the single most relevant item that could be viewed as a true “cause” of the collapse is failure to exchange the CDS market. That is supposed to happen at EOY. But who knows if it will now.
September 19th, 2008 at 6:26 am
Fed,
Thanks for your comment.
Ad hominem remarks are not useful to me. If you want to chatter about emotional states, do so on your own blogs.
Obviously false. While no post can include every ‘paradigm,’ both the first and last paragraphs describe the concepts of the Core and the Gap, which are system-level concepts.
A comparison to the power of Prime Minister Putin with Securities and Exchange Commission Chairman Chris Cox, with respect to their domestic economies is absurd.
October 21st, 2008 at 5:08 am
[...] for all the big talk, the Gap state of Russia was unable or uninterested in helping Iceland. So the Core’s IMF will instead. Likewise, the [...]