Wednesday, October 8, 2008

The Global Credit Panic Is Russia's Chance to Reverse the Status of Colony

First, dear readers, let us establish why states through out history have established colonies in far away and not so far away places. The reasons are varied and defense, expansion of populations and outlet for ambitious men, imperial or missionary drives are part of the answer, however, these are all "cost" centers of sorts. Only one reason exists that actually benefits the bottom line of a nation: economics.

Colonies, specifically economic colonies, serve a dual purpose. The first is as a source of raw resources, be they common resources in greater abundance in the colony or rare resources found no where or in few other places. The second, equally important duty is as a dumping ground, a closed but yet extended market, for the excess production capacity of the home country.

For this reason, the Tsars moved east into Siberia, even as the British, French, Spanish, Portuguese, Dutch, Swedish and Danes moved to the Americas (also to be followed by the Russian Empire at a later date), Africa and eventually the rest of the world. This is what the original 13 British colonies of the modern USA were built upon. This is what China with the various zones of economic control was used for. This is what the US passed the Monroe Decree in it's attempt to block off the Americas only for itself. History is full of such instances and they go back to the ancient Greeks and Philistines, over 4,000 years ago.

Unfortunately for Russia, and the former states of the Soviet Union, that is also the exact position that they found themselves in in 1991 and have continued to be in various and to various degrees since. Only Russia to a greater extent has started to truly throw off the mantel of Western colony and reassert itself.

Soviet enterprises and what passed for businessmen were simply not ready for the onslaught of the West and to a smaller degree of the east Asians. Coupled with corrupt and drunken government puppets, they and the people as a whole, fell quickly prey to the schemes of the imperial powers. Not since the Polish invasions of the Time of Troubles (Smuta) have foreign powers held so much power and sway over the lives of all the Rus peoples.

Raw resources, industrial equipment and even the brain power of the former Soviet Union have been drained and captured and pulled out, while masses of manufactured goods of foreign make dumped on the Russian market at below production costs, making sure that no local competition could ever surface. Even food, was pushed in as one Russian and Ukrainian farm or kalhoz after another failed and whole villages cleared out. All the while, corrupt oligarchs and politicians played to the tune of their Western (and Eastern) masters.

Russia's first break came when the ponzi scheme that was the Yeltsin economy collapsed in 1998. Though at first seen as a total calamity, it in truth held the final opportunity for Russia. This was the final point that would determine if Russia would survive or if the Third Rome would fracture and dissolve away forever. It survived, by the Grace of the Heaven and by the economic short sightedness of Western corporations.

With the collapse, profit margins of Western companies shrank fully and they fled Russia like rats off of the Titanic. With the pressure gone, even momentary, Russia's companies came roaring back and in the few years that followed, before the Western return, they had made their move to grow and grow quickly. With their growth, the empty service economy model of the West (to the ever wise exclusion of Germany) collapsed, just like it is now collapsing in the rest of the West. Russian companies provided Russians jobs and greater spending monies, but they provided something much more valuable: they provided hope for the people, for the future and a strong drive to buy Russian to make Russia powerful.

Are you listening America? This is YOUR only hope for salvation, to follow the Russian model of success not the Service Economy model of debt and failure.

So Russia had thrown off the yoke of the economic colony for over produced goods, but it has still clung to its other economic colonial designation: the source of raw resources. No society will ever get rich by digging up its lands and shipping them off at low commodity prices to foreign factories, nor will it ever gain respect or a strong enough foundation for true national defense. Only through strong economic industrial growth, will Russia stand taller than the rest. While this process is under way, it must be accelerated and an environment made appealing enough to first draw back the vast Russian diaspora with their experience from abroad and two to draw the brightest and best from the rest of the world and make them want to be Russians. Drawing the poor and uneducated is not the solution.

This Great Bank Panic is Russia's chance, a chance to stand on strength due to the wise prudence of Putin and Medvedev and Russia's firm financial base and push its goods through to the Near Abroad and than to Europe and Africa and eventually Asia and the Americas. At the same time, its export of resources should be curtailed through heavy taxation. Vast and cheap energy and raw resources in Russia itself will help stimulate growth of the key value adding industries that will provide the world with finished quality goods.

It is paramount for the government through policies and the modern businessmen and reformed and now patriotic oligarchs to seize this moment and like the eastern powers of Japan, S.Korea, and Taiwan, work together to plan the nation's course to economic success. For when the dust finally settles from this financial collapse, the only powers sure to stand are Japan, S.Korea, Taiwan, China, Germany and Russia, for the Third Rome will never get another opportunity like this one.


roman said...

look a little closer to home

Willy said...

Before anything really good happens in the markets, some country or group of countries must issue money. Right now, we are in the throes of systemic failure principally because we have only debt-based money substitutes - there is NO money circulating ANYWHERE in the world in any appreciable amount. When people have finally had enough and insist upon using real money again, then Russia and other countries can finally begin to lead the world into a time of prosperity.

Any attempt to resurrect this dying system by injection of more money is doomed to fail, and will only result in more failures, war, and inflation. Russia is making the same mistake that all the Western nations are making, by throwing paper at the problem. Plus, if they really understood the nature of modern warfare, they would realize that they just got taken out by the financial power of the US. The US couldn't have made more direct hits on nearly all the financial capitals of the world if they had used nukes. The advantage of doing it by collapsing the interbank debt markets is that no one even knows they've been hit, let alone by whom.

If there had been even ONE decent sized country which had money in circulation, it would be doing very well right now.

Unfortunately, it is probable that even the best government in the world, one which actually cares about its ordinary citizens, does not have the fortitude and bravery necessary to institute a system with real money. Dig in and wait, we have a long way to go.