Trying to annoy the United States, Putin took the Russians hostage — Slava Rabinovich
The crisis, which is now sinking the world was to come anyway. However, there are two factors that accelerate pandemic and coronavirus, and the fall in oil prices, says well-known political and economic analyst Slava Rabinovich, whom many consider a financier № 1 in Russia.
Interview with Rabinovich, the first of which we published, took place after the start of the dramatic fall in oil prices and “zeroing” terms of Putin, when the who has just declared that the spread of the novel coronavirus has reached the stage of the pandemic, to “Loktionov” economies of many countries and the collapse of global financial markets.
In the past year, many experts, economists said that this year coming global financial crisis. It has already begun? Or is it not a crisis?
— In principle, it is not pronounced — if to admit that the crisis has come, — told the “FACTS” Slava Rabinovich. — In General, on the basis of the formal rules of Economics that a recession is a decline in the economy, i.e. the GDP decline for two quarters. Now most of the countries in the world do not have negative growth of GDP, especially not seen such a prolonged decline of GDP. But you can see a clear deceleration in most economies of the world. In some economies the situation is worse than in others, in some European countries the situation is much worse than in the US. However, we are talking about the rate of positive GDP growth, or about zero. In America in General is far more favourable situation.
But the problem is that economic crises occur not only in themselves, due to cyclical capitalist economy, they can still attack faster, or the severity may be more pronounced due to any additional factors, which no one expected, the so-called “black swans.”
Just in the last couple of months, we see two distinct “black swans” — it’s an epidemic of coronavirus and the oil shock on the way down. In relation to the USA it is commonly said that the oil shock is a sharp rise in the price of oil up, because the United States was importing oil, and any such jump very hard impact on the economic and price stability in the United States.
Slava Rabinovich think financier №1 in Russia
In respect of the countries-manufacturers of oil-exporting countries such as Russia, the oil shock is when the price of oil drops sharply. But now with respect to the United States oil shock with an increase in the price of oil doesn’t have the same values as before. For example, was a historically significant oil shock in the days of the revolution in Iran 1979, when the middle Eastern oil producers has greatly affected the oil market and it really took off. That’s when America this shock felt much more. The U.S. is a self-sufficient producer of oil and gas, even exported this raw material to Europe and other countries.
A shock at the moment and a kind of “black Swan”, of course, is ruined through the fault of Russia, the deal with OPEC, the so-called OPEC-plus. The fault of the unprofessional, stupid and arrogant behavior of the Putin administration, the deal collapsed, and Saudi Arabia and other producers in OPEC are quite right to take this move of the Kremlin as the outbreak of an oil price war. And then Saudi Arabia announced a significant price reduction of contracts for the supply of oil to Europe, America and Asia on a very substantial number of dollars per barrel. Several different levels for different continents, but nevertheless a significant discount in order to displace Russian oil market Saudi oil.
However, Saudi Arabia could easily increase production of oil by about two million barrels per day. And in less than two days, as the governments of some other countries in the region followed suit and also announced an increase in oil production.
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Many believe that such actions are at the time in collusion with Ronald Reagan helped to destroy the Soviet Union. It was not a decisive factor in the collapse of the Soviet Union, but one of the most important. The USSR went bankrupt, not only for the long-term causes of the failure of the socialist economy, but also due to the fact that over a very long period of rising oil prices, the Brezhnev era, providing the so-called “Brezhnev’s stability.” However, this apparent stability in fact was stagnation.
If not for the high oil prices, the inefficiency of the socialist economy would manifest itself much earlier. And Brezhnev reigned, lying on his side unconscious, and the Soviet Union did not bankrupt simply because received a huge infusion of hard currency for the sale of oil and gas.
Then Reagan with Thatcher held talks with Saudi Arabia and other allies-oil producers in the middle East — and as a result of market conditions and probable collusion with these countries, oil prices have collapsed. The Soviet Union was not only expelled from the oil market, but exploded economically. And we all know what it led to.
Now, starting a war against Saudi Arabia and other OPEC members, Putin, most likely, is not aware against whom he this time went. It’s not the Ukrainian army of the sample in 2014, but something much more serious. Many of the opposition in Russia is rather rubbing their hands, because in the period of the dictatorship of Putin’s apparent strategy of “the worse, the better” — in principle, the only possibility, the hope of the opposition. Street activism, as you know, in Russia suppressed. One can only hope that Putin will continue to make as many mistakes…
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Returning to the world of economic Affairs: of course, the second reason for Putin’s attack on OPEC is a long — standing obsession of the Russian President and his surrounding mental retardation type Sechin to annoy the United States and, in particular, to bankrupt American companies involved in shale oil. They believe that the decline in oil prices to, conventionally, 50 or even 40 dollars, those companies will just explode, “America is not shit”, because it would have to solve their own problems in the oil industry.
But it is still funnier than it looks, because, first, a huge part of the American oil industry is not based on any shale oil. As for shale oil, all of these companies are financed on the free market of capital in the capitalist system, which in the U.S. is extremely effective. And even if some companies go bankrupt, even if their borrowed funds can not be returned — they are in the process of bankruptcy is actually not going anywhere. These companies will remain, they will simply move on to the new owners — the creditors. Lenders put them up for auction. Buyers will be some private equity funds, of which the world is full. Funds cheaply buy these companies is already freed from debt, and invest more money in research and development of technologies that will allow to reduce the cost of production of one barrel of oil.
That is nowhere companies involved in shale oil, will not go away. Moreover, if the level of oil prices will become so critical that modern technology will not allow you to work in a cost-effective mode, — production just freeze. But it can be very easily thawed within one week. And when the world prices for oil will become more favorable, the production almost instantly resume.
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Therefore, Putin and Sechin really did something against the wind. And when they do it against the wind the spray will absolutely fall in their face, but will not reach either to OPEC, nor even to the United States. Putin’s so-called “effective managers” will manage to experience the results of their “effective” solutions. But, unfortunately, they hold hostage the entire Russian people, who have to “enjoy” another devaluation, another significant decline in the purchasing power, consumer demand, real incomes… the Russians will continue to Peter out.
Second time returning to the global economy: I think that now nobody will be able to tell precisely when there will come a recession, in which countries and in what form it will take and how much will be deep and long. One thing we can know with absolute certainty: the financial authorities of each country — be it European Central Bank, whether the Federal reserve will react to the slowdown in economic growth. And I personally think that interest rates in the US will drop very soon, it will actually tend to zero.
But to predict exactly when a recession will come and what it will be — impossible, because too many in this equation is unknown and moving parts, including a completely obscure to date, the development of a pandemic coronavirus. Coronavirus acts on the world economy direct and very destructive ways. The pandemic affects some sectors more than others, and some absolutely murderous way.
It is quite noticeable in China, where economic growth is five or six percent to zero can lead to unpredictable consequences. Because a developing economy of China is not adapted to feed the population in times when economic growth is zero or even negative.
The crisis of 2008-2009, China has experienced normally because of the very high economic growth in previous years and actions in the planning and the command economy of the PRC government could take quickly and purposefully. For this country at that time had huge foreign exchange reserves, the management was able to dispose of them and salicylate any holes and gaps in some sectors of the economy.
Where will this lead in the long term, we don’t know very well, because in China probably already have, and you will have even more holes. There will be greater financial and economic imbalances that there is not a well-regulated free market as possible in countries where there is a real free capitalism and democracy.
And China’s problems, of course, will result in the external world, because this country over the past 15 years has been a “workshop of the world”. Companies like Apple are already experiencing some difficulties due to the fact that large chunks of China just closed for production. And those American and other companies that have production in China, probably will have more problems with disruptions in production chains.
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As previously reported “FACTS”, the collapse in oil prices has dealt a crushing blow to the budget of the Russian Federation and Putin will cost 3 trillion rubles.
The interview, which Rabinovich explain why the Russians are looking for Jewish roots and who in Russia gets richer at the expense of the serfs and slaves, can be found on our website in the near future.
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