Smart Economy

Breakthrough in USA and Russian negotiations over Ukraine?

Are we about to see a breakthrough in USA and Russian negotiations over Ukraine? A complete and total prisoner swap or change including illegally imprisoned Ukrainian pilot Nadia Savchenko and others?  Walter Derzko

124 Early Warning Signals that point to the Isolation, Decay, Collapse and Implosion of the Russian Federation, a failed state just like we saw before the collapse of the USSR by Walter Derzko

 

In Feb 2011, I wrote a tongue and cheek blog posting called  Forty One  (41) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime)

http://bit.ly/fsflvg. It caused quite a stir and coincidently it was translated by the Russian opposition (B. Nemtsov) into Russian and reposted to dozens  of Russian blog  sites. The KGB was even on my back by writing nasty Soviet style yellow journalism smear postings against me , so I guess the article hit a nerve in the Kremlin. The KGB was logging into my blog site daily for about 6 months after that.

 

Well, the Yanukowych regime did collapse, the PUTIN is still (barely) hanging on.

 

So I think it's time to update my Early Warning Signals blog post  with new data points.—Walter Derzko

 

Here is my fourth  cut.  Thank you to everyone who has suggested new data points that I missed.

 

There are  likely many more early warning signals, but who knows which ones will trigger the collapse of Putin or the RF? Maybe an oligarch/elite/ inner circle revolt or palace coup? Or a sovereign debt default? Watch for an August 2015 Surprise !!!!

 

124  Early Warning Signals that point to the Isolation, Decay and Collapse of the Russian Federation just like we saw before the collapse of the USSR by Walter Derzko

 

 

-Life Expectancy: The overall life expectancy at birth in Russia was slightly lower in 2009 (the latest year for which figures are available) than in 1961, almost half a century earlier. [1]

-Life Expectancy:  The  life expectancy at age 15 for all Russian adults was more than two years below its level in 1959; [1]

-Life Expectancy: According to the U.N.’s World Health Organization, the life expectancy for a 15-year-old boy in Haiti is three years higher than for a Russian boy the same age. [2]

-Life Expectancy: The life expectancy for young men sank by almost four years over those two generations. [1]

-Life Expectancy: The country’s death rate far exceeded its birth rate: in 2000, life expectancy for men was only 58, and for women 71. [2]

-Life Expectancy: Despite a recent slight uptick in births versus deaths, life expectancy now stands at 64 for males and 76 for women (137th and 100th in the world, respectively, hardly fitting for a supper power)[2]

-Mortality: The country has high mortality rates due to elevated rates of smoking, alcohol consumption, drug use, chronic human disease, violence, poor diets and obesity. Investment on healthcare is low. [6]

-Mortality: According to Russian health experts,  40 percent or more of the infant deaths in Russia are caused by social factors like alcoholism and drug use by parents or their failure to take their children to doctors or hospitals or to get required vaccinations. [26]

-Mortality: Death rates from cardiovascular disease are more than three times as high in Russia as in western Europe [1]

-Mortality: Russian death rates from injury and violence have soared, on par with those in African post-conflict societies, such as Liberia and Sierra Leone. [1]

-Mortality: Put another way, post-Soviet Russia has suffered a cumulative "excess mortality" of more than seven million deaths, meaning that if the country could have simply held on to its Gorbachev-era survival rates over the last two decades, seven million deaths could have been averted. This figure is more than three times the death toll World War I inflicted on imperial Russia. [1]

-Mortality:  The mortality among working-age Russians is rising.  In 2014, for example, mortality rates among Russians aged 30 to 45 went up by 1.2 percent. [26]

-Mortality: Two out of three Russian men who died, died drunk [2]

-Mortality: Twenty-five percent of Russian men still die before the age of 55, many from alcoholism and the violent deaths, plus other diseases it fosters. [2]

-Population Decline: Since 1992, according to official Russian figures, Russia's population has fallen nearly every year (1993 and 2010 are the exceptions, with the latter experiencing an increase of just 10,000 people). According to these figures, between 1993 and 2010, Russia's population shrank from 148.6 million to 141.9 million people, a drop of nearly five percent.  [1]

-Depopulation: Predictions are that Russia, with a population of 146 million, could become a nation of fewer than 100 million people by 2025, and hardly a superpower [2]

-Depopulation: Russia  is  aging and the birth rate is  plummeting. Putin himself in his first State of the Nation address in July 2000 warned the Russian people, “We are in danger of becoming a senile nation.” [2]

-Fertility: Fertility rates plummeted to 1.2 births per women in the late 1990s and now stand at 1.7 births per women. That rate is still about 20 percent below 2.1 births per woman, the level necessary to ensure population replacement. [6]

-Fertility: A drop in fertility by 50 percent between 1987 and 1999 has resulted in a reduced number of women now at childbearing age, which is beginning to affect the country in a major way: Two thirds of all births in Russia take place among women between the ages of 20 and 29, and this population will decline from 13 million currently to 7 or 8 million in the coming years.  Consequently, even if each women were to have more children, the total number of births would fall. [6] and [26]

-Fertility: Another factor mitigating against higher fertility is Russia’s high divorce rate. In 2012, for every two marriages, there was one divorce.[6]

-Fertility: Russia’s abortion rate, estimated at two abortions for every birth, has traditionally been the highest in the world. [6]

-Fertility: The protection of children and traditional family values was also the stated purpose for the enactment of a lesbian, gay, bisexual and transgender propaganda law to prevent distribution of "non-traditional sexual relationships" ideas among minors. [6]

-Fertility: The government is also considering reinstatement of a tax on childlessness, estimated at 10 percent of women in their late 40s. [6]

-Working Age Population/ Labour Force: Russia’s working-age population is declining by a million people a year, a faster rate than the decline of the overall population, which in 2013 stood at around 143 million, 3 million less than when Putin took office [2]

-Working Age Population/Labour Force: Over the next decade, Russia's labor force is expected to shrink by about 15 percent.

-Working Age Population/ Labour Force: Russia is facing difficulties  filling critical jobs with largely unskilled non-Russian migrants, many working illegally in the country. [6]

-Working Age Population/Labour Force: Other countries with low fertility rates turn to immigration to pick up the slack. While immigrants make up about 8 percent of Russia’s population, the nation has a reputation for nationalism and xenophobia, and fertility rates are even lower in neighboring Belarus, Ukraine and Lithuania, all possible sources of immigration. [6]

-Working Age Population/ Labour Force: the average age of a worker in the defence industry in close to retirement age and the army is forced to provide untrained conscripts to work in defence factories, resulting in quality problems and defects, exploding rockets and planes /jets falling from the sky. [7]

-Unproductive workforce: Russians aren’t nearly as productive as they could be. For each hour worked, the average Russian worker contributes $25.90 to Russia’s GDP. The average Greek worker adds $36.20 per hour of work. And Greece is not a country you want to trail in productivity. The average for U.S. workers? $67.40.

-Migration: It’s no surprise then that well-educated Russians are leaving their country in droves. Between 2012 and 2013, more than 300,000 people left Russia in search of greener economic pastures, and experts believe that number has only risen since Moscow’s annexation of Crimea last year.(Bloomberg, OECD, PBS, Telegraph, Wall Street Journal, Freedom House, Washington Post) [21]

-Aging Population: Russia’s aging population has placed strains on the economy that will impact numerous sectors including agriculture, manufacturing, the armed forces and retirement schemes. In the next decade, Russia's labor force is expected to shrink by more than 12 million, or around 15 percent. [6]

-Aging Population: The contraction of Russia’s labor force is exacerbated by low retirement ages: 60 for men and 55 for women. In certain situations, for example, hazardous occupations or unemployment, retirement ages are lower. Nevertheless, Russia’s older population does not fare well. According to a 2014 global survey of the social and economic well-being of older people, Russia ranked 65 among 96 countries.]6]

-Health: Only 30 percent of Russian babies born are born healthy [2]

-Health: Many unhealthy Russian babies are “discarded” or sent to government institutions where they often develop cognitive difficulties. Unhealthy children grow up to be unhealthy adults: half of the conscripted Russian army has to be put in limited service because of poor health. [2]

-Health: The syphilis rate among girls 10 to 14—a statistical category that boggles the mind—had gone up 40 times the previous decade. [2]

-Health: One study showed that , 64% of the pregnant women infected with syphilis delivered an infant with presumptive or confirmed congenital syphilis [3]

-Health: Only 30 percent of boys between the ages of 15 and 17 were considered healthy [2]

-Health: Chronic teen alcoholism; 77 percent of teens between the ages of 15 and 17 drink vodka regularly; in rural areas, the percentage can be as high as 90. [2]

-Health: Chronic heroin epidemic; Cheap heroin from Afghanistan is rolling in. Russia has more heroin addicts than any other country [2]

-Health: An H.I.V. epidemic spread by dirty needles was taking hold. Between 2000 and 2012 the number of new cases of H.I.V. increased six fold.  About 700,000 Russians were estimated to be living with HIV/AIDS in 2013, a 5 percent increase over the previous year. [2] and [6]

-Health: Chronic TB epidemic. Many of those infected with H.I.V. also suffer from tuberculosis. Russia is second only to India (with 1.3 billion people) in the number of cases of M.D.R. (multidrug-resistant) tuberculosis [2]

-Health: When it comes to the environment,  50 percent of Russia’s water is not potable.

-Health:  Air pollution continues to be an extremely serious issue, suggesting that a solution proposed during the late-Soviet period continues to hold sway. Back then, a Russian health minister advised the country to “breathe less” in order to live longer.

-Health: Russia won the most medals—33—in the recent Sochi Winter Olympics, but many of these athletes are now being accused of doping over the last decade.

-Corruption:  Ubiquitous unabated  Institutionalized corruption and widespread bribe taking, kickbacks, covered up by double entry book keeping systems. A corruption perception index by Transparency International ranked Russia 136th last year, just behind Nigeria. [11]

-Corruption: Average Bribe in Russia Doubles in Rubles, Remains Steady in Dollars.  The amount of the average bribe in Russia has nearly doubled this year, reaching 208,000 rubles ($3,485 at today's rate), as the country's currency has shed value amid Western sanctions and an economic downturn, according to Interior Ministry estimates cited by pro-government Izvestia daily on Friday. This compares to about 109,000 rubles Russians are believed to have been paying or receiving as an average bribe in 2014, though police concede that their estimates may not be completely accurate, the report said.The increase in bribe amounts is substantially less significant in their dollar equivalent, because the Russian ruble traded at around 35 to the dollar at the start of 2014, but has slumped to around 60 to the dollar as of this week. [28]

-Corruption: Theft of state property and funds via selective privatization (to your inner circle of friends) and crony capitalism. [11]

-Corruption: Unrestrained money laundering:  Russian Bank official charged over laundering of 17m dollars a day; Interfax news agency, Moscow, in Russian  14 Mar 2011

-Corruption: Off shoring of assets and oligarch profits; Cyprus,  Switzerland, Belize, Virgin Islands, UK and possibly the Vatican Bank ? [7]

-Corruption: Growing nepotism: German Daily Reports on Nepotism at Russia's Gazprom Frankfurt/Main Frankfurter Rundschau (Russia)

 

 

-Corruption: Reverse Money Laundering: In Russia, corruption has gotten so bad that the logic of money laundering has turned upside down. Many companies face the opposite problem: In order to get things done, they need to take clean money and make it dirty. Russia has a  service known as "obnal," or dark money: the process by which legitimate companies take legitimate profits and launder them into off-the-books slush funds to be used for bribes and tax evasion. Obnal has become a billion-dollar business in Russia [4]

-Culture of Kleptocracy: Russia’s appalling business reputation acts both as a brake on foreign investment and a stimulus to capital flight. [7]

-Lawlessness:  police focus on extremists and political opposition instead of bandits who run free.[7]

-Illegal Use of Administrative resources: Cyber attack, info wars, online provocateurs to protect the status quo, false flag terrorist operations for excuse to declare martial law.

-Illegal Use of Administrative resource: RF false flag operations - “LNR” factory sews fake Ukrainian military uniforms  [17]  

-Overregulation: Russia’s centralized economy requires that citizens  get a “document” or a spravka from government workers , who demand bribes for timely executions

-Weakened military/ security  control at the periphery of the empire. Already facing food shortages and other issues with the countersanctions, Stratfor believes Moscow is “stepping up its security apparatuses within the regions, stepping up its control within the governors and within the mayors.”  Stratfor believes Putin is trying to prove that he can “isolate Russia from the West, from Western foods, and keep Russia Russian.” But using the people to demonstrate his power and sustainability, is risking the social contract Putin made with the Russian:  “You will always receive your paychecks; I will keep the economy growing; I will quadruple–pretty much-standard of living; you will have Western-style foods and goods inside of Russia.”  Putin’s popularity was sky-high for the last 15 years, because he delivered on his promise to the Russian people of strong leadership. But now Putin must chose to battle the West or give in to the needs of the people. [15]

-Conflicts on the periphery: Extremist calls increasingly common in blogs, social networks - Russian police; RIA Novosti > Feb 1, 2011

-Conflicts on the periphery: Russian paper fears conscripting postgraduate students could trigger Russian brain drain  Vedomosti website, Moscow, in Russian 12 May 2011

-Conflicts on the periphery: Russia is in civilizational decline, new nations emerge-Siberians see themselves as separate nation from Russia  http://bit.ly/lSzxZm 

-Conflicts on the periphery: 16 Russian Hot spots/ tension zones or fronts against PUTIN. Putin may someday have to fragment his army (which is understaffed, undertrained and is facing increasing desertions) to all regions of the Russian Federation and beyond to quell growing tensions and hot spots that, if erupted simultaneously or with some help, could splinter his defenses and threaten the territorial integrity of the Russian Federation and lead to regime collapse. 16 fronts /hot spots against PUTIN: 1) Crimean Tartars and all Crimeans in general, 2) Eastern Ukraine, 3) Chechnya, 4) Chinese in Siberia, 5) Japanese territorial island disputes 6) Canada & US & Russia  assert control in the Arctic 7) Cossacks Seek Greater Role in Southern Russia’s Economic and Political Life 8) Georgia 9) European front-The Dutch and MH17, Baltics  and Poland 10) Karelia will seek to rejoin Finland 11) Moldova/Transdneistria 12) Ethnic tensions brewing with Circassian activists in Karachaevo-Cherkessia, North Caucasus 13) Russians in poverty --revolt/protest in Moscow 14) Russians in poverty-- revolt/protest in St Petersburg 15) Russians in poverty-- revolt/protest in the rural oblasts of the Russian Federation and 16) NATO and the US fleet re-enter the Black Sea --It's not a matter of if but only a matter of when and if it happens in a coordinated fashion. [7]

-Conflicts on the periphery: The Siberia/China flashpoint. In 2000, 28 million Russians lived in Siberia and the Far East. In 2010, only 25.4 million live there. On the other side of the border, Chinese growth and interest in Russian resources could make the Far East a flashpoint. A 2001 Treaty on Friendship and Good Neighborliness, codifying territorial compromises and designed to diminish American influence, formally "sunsets" in 2021—at which time, China may decide to claim some of Russia's resource-rich territories that may well be largely deserted. [18]

-Conflicts on the periphery: The Russian economy shrank by 4.6 percent in the quarter ending June 2015. Although the media has focused on the stability in Moscow and maybe St. Petersburg, the economic decline in Russian provinces has been much more serious. Debt in Russia’s 83 regions has risen by 100 to 150 percent since 2010. Russia’s economic minister suggested that possibly 60 of those 83 regions are in crisis mode, and 20 may have already been defaulting on their debt. President Vladimir Putin and the Kremlin have $541 billion in reserves, but intervention to bailout the regions would drain much of Russia’s wealth, which is spread throughout its currency reserves, the National Wealth Fund and the National Reserve Fund. Stratfor predicts that the Kremlin will allow the economies of many of the country’s Soviet-era mono-cities, which rely on a single industry, to continue to deteriorate. As a relic of the Soviet period, the mono-cities employ the bulk of their populations in a single industry such as manufacturing, metallurgy, timber or energy. These mono-cities generate about 30 percent of the country’s industrial production. With only a single skill, workers in mono-cities generally cannot migrate to find better jobs or salaries. [15]

-Conflicts on the periphery**: Revolts and protests. Stratfor expects that protests against the Kremlin will increase as more Russians fall under the poverty line, and regional and municipal debt grows. They expect the Kremlin to retaliate by cracking down on protest movements and opposition parties to block the formation of any broad and serious any serious challenge to their hold on power.  They believe that Russia can hang on with its current strategy for the next couple of years, but Putin’s popularity will soon fade. Eventually, regions could revolt in a similar process that led to the dissolution of the Soviet Union in 1991, when 15 nations comprising a third of the population and a quarter of the Soviet Union declared independence. [15]

-China Pivot off: The launch of China’s "New Silk Road" last month, bypassing Russian territory, was a serious blow to the Russian economic interests. The first Nomadexpress container train has already traveled on route Shihezi (China) - Dostyk (Kazakhstan) - Aktau - Alat (Azerbaijan). From Azerbaijan, the express goes to Georgia, Turkey and the EU. Thus, a joint project of the Trans-Caspian international transport route and the New Silk Road became a reality. The main feature of the project is bypassing Russian territory. Another important caveat is the time.  The route takes six days to cover, instead of 25-40 as before. Of course, China is challenging Russia as Eurasia’s largest Eurasian transit state. The New Silk Road has the potential to become more attractive than the obsolete Trans-Siberian Railway. Moreover, Kazakhstan's participation in the project almost completely eliminates the issue of its further foreign policy orientation – it has shifted from Moscow to Beijing. By the way, in this context, Ukraine also has a unique opportunity to expand its own transit opportunities thanks to Chinese shipments. [23]

-China Pivot Off: Gas cooperation between Russia and China is frozen. The gas contract between Russia’s Gazprom and China's CNPC on construction of a Power of Siberia pipeline, pompously presented earlier (signed in May 2014, its estimated total value was $400 billion), is frozen for an indefinite period. As it turned out, the idea of ​​reorientation of Russian gas exports from Europe to Asia, with China being a priority, has failed. The main reason is the reduction of gas consumption in China caused by the slowdown in the country’s economic growth, the development of gas production within its own territory (By 2020, China will have produced nearly 30 bcm of shale gas alone), focus on gas imports from Turkmenistan (China currently imports 30 bcm of gas from Turkmenistan, with the possibility of expanding imports to 60-70 bcm by 2020), as well as a gradual decrease in share of oil and gas energy in the country’s total energy balance within the framework of the latest global trends. Besides, the Chinese side did not agree to the price offered by Gazprom, which attempted to propose an equivalent to the European price. China has almost always pushed for the suitable price, which is significantly lower than that for other purchasers of the Russian gas. It is equally important that Bejing has provided no options of the financial assistance whatsoever for the construction of new gas pipelines on Russian territory, to the Chinese borders. Such stalemate allows forgetting the prospects of gas cooperation between the two countries. Besides, it is better for China to wait a full collapse of Putin's regime, so that, as member of anti-Russian coalition club, it could bite a piece of the “Siberian pie”, on far more favorable conditions of access to the those very oil and gas fields. It seems like China has flagrantly given Putin a “black mark” on a gas issue.[23]

-China Pivot Off; Bank transactions sour. With regard to financial cooperation between the two countries, there is growing evidence of Chinese banks' reluctance to carry out interbank transactions with their Russian partners. Chinese banks have also considerably reduced participation in foreign trade transactions with Russia. Cases of recent expansion of payments in rubles and yuan in certain Chinese border provinces can be explained by China’s will to extend the operating field for yuan, as Bejing has witnessed sharp reduction in the inflow of foreign currency to Russia, especially of the US dollar and euro. So, Putin should not expect any financial aid from China. There are currently no other donors due to severe Western sanctions, and they are not expected to emerge any time soon. [23]

-Chinese Land and Resource Grab: Land is yet another demonstrative issue in Russian-Chinese relations. More precisely, it is about Bejing’s rapidly growing appetite for the development of Russian territories. For example, a huge stir in Russia was caused by the plans of Trans-Baikal regional authorities to lease nearly 300,000 hectares of land to the Chinese company Huae Xinban for a 49-year term for less than $5 per hectare. Although this issue has not yet been fully resolved, the locals have already organized a protest movement. Most probably, the opinion of local activists will not be taken into account, and China will get the desired land by either paying more for the rent, or simply by financially stimulating Russian officials. No wonder the Russian Prime Minister Dmitry Medvedev offers Russian youth to study Chinese, not just English.

-Chinese Land and Resource Grab: Another fact confirming the intention of China to get hold of as much Russian resources and territories as it possibly can until the final collapse of the present Russian Federation is the country’s broad interests in Russia’s Magadan region, the top region in silver mining and the fourth in gold extraction. Chinese Southwest mining company has decided to invest RUR 400 million this year in the development of deposits of antimony and silver. The company's plans cover the construction of roads in the region, mineral exploration, and mining of silver and other precious metals in the already known deposits. Earlier, the Kremlin did not allow China getting close to Russia’s main fields of natural resources across Siberia and the Far East. [23]

-Capital Outflow:  The net outflow of capital from Russia reached $32.6 billion during the first quarter of 2015, according to the  Central Bank. The bank is now forecasting that capital flight may reach $131 billion by the end of 2015. In reporting first quarter numbers, the Central Bank also upwardly revised the 2014 figure for net capital outflow to $154.1 billion from the previously reported $151.5 billion. That figure marks the highest annual total of capital flight since the Central Bank started tracking the trend back in 1994. [5]

-Evaporating Foreign Direct Investments (FDI)   Foreign investment is now below zero Foreign direct investment stopped coming to Russia at the beginning of 2014 according to Central Bank data .  "Currently, there are direct and indirect bans on investing in Russia and our western partners now have doubts about some of Russia's large-scale projects," [7] and [22]

-Growing   prolonged recession: Russian won’t likely come out of the recession until 2017 if that. [7]

-Budget Deficit: Russia’s central government has cut its budget by 10 percent across the board in 2015, except for defense. As a result, social programs have been slashed, and even funding to host the World Cup 2018 has been severely restrained. [15]

-Plummeting Rouble: The Rouble has lost over 50% of its value against the $USD in 2015 [7]

-Plummeting Rouble: As Rouble Collapses, Russia’s Cossacks Issue Their Own Currency – with Putin’s Picture on It [12]

-War in Ukraine:  Moscow has spent an estimated 53 billion rubles ($835 million) as of May 2015 to support and finance the separatist forces fighting in eastern Ukraine (UNIAN, May 12).

-War in Ukraine: Putin calculated that everyone would close their eyes to the annexation of Crimea. After an initial burst of euphoria, Crimea has turned out to be a burden rather than a victory; Ukrainians in the east have not supported Putin’s aggression, and “besides, the West is acting in a very monolithic and consolidated way by introducing serious sanctions which are constantly being intensified. At the same time, no one supports Russia,” not even its “closest and most dependent” neighbors. [25]

-War in Ukraine: Eastern Ukraine resembles Transdniestria but not really Abkhazia or South Osetia, Zubov suggests.  Both places are ones in which “the soviet mentality dominates.” For Ukraine’s future, “it is very important that this mentality be overcome,” and that will require tact and care in dealing with the population of the east once Russian forces leave. Once Moscow pulls its forces out, Zubov argues, pro-Moscow groups “will not hold out two weeks. They understand that perfectly well, and therefore as soon as Russia leaves the Donbas, they will go with it, surrender or flee. The so-called  LNR and DNR will cease their existence very quickly.” [25]

-War in Ukraine: And Russia will leave {Ukraine} because it does not want to suffer further sanctions and become a large North Korea. According to Zubov, “unofficial talks are going on about this now.” Their task is simple: how can Russia leave without losing face. “But apparently, it won’t be able to do so without losing face.” Thus, Ukraine will have to show great tact in dealing with the situation. Putin wasn’t prepared for all this because he had not prepared for war. Indeed, Zubov says, “no one seriously thought about war even in Soviet times, and when Khrushchev attempted to do something in Cuba in 1962, he was immediately removed. Everyone understands that nuclear war is impossible. Therefore Russia only uses this as a threat.” [25]

-War in Ukraine: How will Putin pull out? Zubov says that in his view, Putin launched his aggression in Ukraine for three reasons: to boost his popularity, to keep Ukraine from leaving the Russian sphere of influence, and to ensure that Russia’s military-industrial complex would not suffer given the importance of Ukrainian plants for its operation. But because he miscalculated, the Kremlin leader “has lost everything.” [25]

-War in Ukraine: Dead Russian soldiers a state secret.  Last May President Putin officially declared military deaths in peacetime a state secret. His decision was seen as an attempt to cover up the Kremlin’s role in the Ukraine war. Russian human-rights groups protested Putin’s decree. Last week, the Supreme Court upheld Putin’s decree, ruling against the complaint by a Russian civil society group claiming that the decree was illegal, that it was hiding the true information about Russia’s military involvement in eastern Ukraine.[33]

-Western sanctions hurting economy: Sanctions could cost Russian industry $20 bln: Official [9]

-Uncontrolled inflation: Russia’s inflation rate hit 16.9 percent in the first half of 2015, cutting wage values by 14 percent over the last 12 months. [15]

-Low energy/ oil prices; The Russian budget needed $85-$100  oil to break even, depending on which source you listen to. Now in Aug 2015 it’s in the mid $40s

-Low energy/oil prices: Russia is at the Mercy of Oil Markets. The price of oil has now fallen below $45 a barrel—welcome to the new normal. OPEC continues to pump oil at historic rates as it tries to price out competitors (US fracking and LNG), and Iran expects to bring over a million new barrels a day to world markets after the lifting of international sanctions. These are deeply troubling developments for Moscow, which relies on oil and gas sales for nearly 50 percent of its government revenues. In 1999, oil and gas accounted for less than half of Russia’s export proceeds; today they account for 68 percent. Moscow has grown so reliant on energy sales that for each dollar the price of oil drops, Russia loses about $2 billion in potential sales. For Russia to balance its budget, oil will need to surge back to $100 a barrel. That’s going to take a while.

(CNBC, CNN, Wall Street Journal , World Affairs, EIA, BBC, Financial Times) [21]

-Low energy/oil prices: Quality of Russia's crude reserves deteriorating admits Russian ministry [13]

-Low energy/oil prices: Eleven of Russia’s 14 oil processing firms are now operating at a deficit; and consequently, “what we see today is just the quiet before a very strong storm.” [20]

-Low energy/oil prices: Even if oil prices were to rise to 70 dollars a barrel, that would not be enough to prevent a further decline in the Russian economy. And given that the actual price will be much lower, that decline will be very steep indeed. As prices fall to 40 dollars a barrel, Zhukovsky says, Russia will discover “a third bottom” and then “a fourth” and so on. [20]

-Surplus of energy on the world markets; the real essence of Putin's energy woes are structural, not cyclical. The global energy game is changing — and it is not changing in Moscow's favor.

Shale, liquefied natural gas (LNG), and renewables — three areas where Russia is extremely weak — are ascendant and are dramatically altering the market. [8]

-Energy-dependent, undiversified economy: If one looks at Gazprom as a barometer of Russia's fortunes, one statistic says it all: in 2008, the company had a market value of $360 billion; today it is worth just $55 billion. [8]

-Lack of Diversification: It’s not simply the size of your economy, but its diversity and resilience that counts. For years, the Kremlin has supported and protected large state-owned companies at the expense of small and medium-sized enterprises (SMEs). But those smaller firms are the foundation of any strong and well-diversified economy. SMEs spur innovation and respond effectively to changing times, technologies, and consumer tastes. In the EU, SMEs contribute an average of 40 percent to their respective countries’ GDP; in Russia, SMEs contribute just 15 percent. Those are daunting figures for anyone looking to start a business in Russia. Things aren’t getting better—between 2008 and 2012, Russia’s private sector lost 300,000 jobs while the state added 1.1 million workers to its payroll. Rather than diversifying, Moscow is doubling down on its state-centered approach to economic development. (JYSkebank, The Economist) [21]

-Technology substitution: Russians need to recognize that the low oil prices are not the product of “a conspiracy of the US and the Arabs against Russia.” Instead, they are the result of an Arab effort to drive down the price so that the latest technological innovations in extraction technology the Americans have will not be profitable. Russia isn’t part of the equation for either, Zhukovsky says, but this also means, the basic trend won’t change anytime soon. Moreover, if Russia sits and does not make fundamental change, the new oil extraction technologies will in fact be “a death sentence” for the Russian economy. Russia’s only chance to “move forward” is to focus on scientific and technical progress, to behave as the Chinese have done gradually shifting into ever higher tech areas rather than relying on the sale of natural resources or minimally processed goods.  But that is not what the Russian government is doing. [20]

-Economic speculation:  Vladislav Zhukovsky, an economist known for predicting disasters in the Russian economy and for then turning out to be right, says that the situation is more dire than almost anyone imagines because oil is heading to 25 US dollars a barrel, the ruble to 125 to the US dollar, and inflation to 30 percent. If he is even partially correct, Russia faces not a “black Monday” or a “black September” but a “black” and bleak future. […] Many at the top of the Russian economic pyramid are behaving as they did in 1998, betting on an ever weaker ruble by buying hard currency and then planning to get back into the Russian market later at firesale prices and thus improving their position but not the country’s. These people, Zhukovsky says, “have their families, portfolios and property abroad. They are interested in having the situation in Russia be as bad as possible and the ruble to fall as far as possible so that they will be able to sell their apartments there and buy them here on the cheap.” In 1998, at the time of defaults, the Russian stock market fell 80 percent, the ruble fell 84 percent, “and all our bureaucrats … took the money they had and converted it into hard currency. “When the market collapsed, they bought shares at three cents on the dollar. The very same thing is happening now. Moreover, Zhukovsky adds, after the coming collapse “the American, European or Chinese investors will come.” They too will take advantage of the low prices just as they did in 1992 and 1998  [20]

-Independent Press shut down [7]

-Opposition hounded, jailed or murdered [7]

-Western food embargo; Putin orders that  tons of western food be destroyed

-Western food embargo: Putins hopes local producers will fill the export food gap, but Moscow Strawberries Rot in Fields After Trade Near Metro Banned

-Western food embargo: Putin to ban four EU food exporters - Albania, Iceland, Liechtenstein, and Montenegro and Ukrainian food exports to Russia from Jan 1, 2016 if Ukraine implements the trade provisions of its EU association treaty; The potential Ukraine ban is more significant, with food exports to Russia last year still worth $415 million, out of total exports of $11 billion, despite the conflict over Crimea and in east Ukraine. The Iceland ban is the biggest. According to Russia’s Federal Customs Service, the Nordic state exported $232 million of mostly seafood to Russia in 2014. Albania exported $10 million of fruit and dairy. Montenegro exported $40,000 of fruit and vegetables. Liechtenstein didn’t export any food.  [19]

-Jokes, satire and anecdotes about Putin and the regime: "If you see smoke and smell burning rubber, don't rush to call the fire department. It's probably the smell of your neighbors using Russian contraceptives" ))) [16]

-Growing poverty levels: Caught up in the worst economic decline since the 1998 ruble crisis, Russia’s national poverty rate increased by 14 percent in the first half of this year. So far, Russia has been unwilling to increase the minimum wage or social benefits to fight poverty. [15]

 

 

 

-Growing poverty levels: As of Aug 2015, 23 million Russians live below the poverty level and another 14 million that live in 319 single industry cities and towns can be soon be  added to the poverty rolls since the Russian government can’t afford to pay subsidies [7] and [27]

-Growing poverty levels: Moscow stores report growing theft of food and even toilet paper [29]

-Growing poverty levels: Government Proposal to Limit Russians' Ownership of Livestock Elicits Outrage [10]

-Growing Poverty levels: Falling or No government subsidies for 319 single industry towns who have lost their single industrial base [7] and [27]

-Subsidy Drag: There are 319 single industry towns who have lost their single industrial base [7] and [27]

-Subsidy Drag: Only three former USSR  territories have economies that could make a contribution to the Russian Federation or the Eurasian Union:  Kazakhstan, Azerbaijan and Turkmenistan. The rest are an economic drag-the economically badly off countries of the CIS – Uzbekistan, Kyrgyzstan, Tajikistan, Armenia, Moldova and others,

-Military Industrial complex decay**: “A couple of months ago, Vladimir Ryzhkov visited Mikhail Sokolov on air of Radio Svoboda and lamented the fact that Putin’s geopolitical adventures were destroying the Russian military-industrial complex, because a huge part of the supply of components, systems, engines, etc. in the Russian arsenal belonged to the Ukrainian companies. Now they do not cooperate with the Russian military-industrial complex, and the Russian military-industrial complex will be destroyed. In September 2014, in the first round of the Ukrainian sanctions against Russia, apart from other measures, it was banned to export a number of military goods. Now the government of Ukraine has approved an expanded package of sanctions. It is supposed that the sanctions list will include 156 legal entities and more than a thousand individuals, among whom will surely be many organizations and people from the Russian military-industrial complex. [7]  and [24]

- Unsustainable Militarization & renewal stalling:  Russia will not need its military-industrial complex for the next 20-30 years. Russia needs receivership and the Marshall Plan. This statement would be wrong, if the Constitution of the Russian Federation acted in Russia, and there was society in the sense of ‘nation’. But we have nothing, and will not have, as long as it appears with the help of receivership as it was in West Germany after 1945 and de-Nazification. The Russian military-industrial complex is doomed.The Russian military-industrial complex has international sanctions imposed against it, which have long hammered the final nail in its coffin by a simple forward contract. The latest weapons of the XXI century and the sanctions against the Russian military-industrial complex are incompatible with each other. The program of upgrading the Russian army for the period up to 2020 is just the greatest scheme of stealing  20 trillion rubles in the history of Russia, and nothing more. By 2020, some will become very rich, a lot of people will become very poor, but there will be no Russian military-industrial complex, as there will be no XXI century weapons. When the ‘guns before butter’ choice  is made, in the conditions of attacks on other countries and international sanctions, there will be no guns, no butter, no country,” Rabinovich wrote on his page on Facebook[7] and [24]

-Collapse of defence parts industry** Russia has no substitution for many critical Ukrainian military parts [7]

-Aging defence industry workforce [7]

-Inexperienced defence industry workforce: Russia is facing difficulties  filling critical jobs with largely unskilled non-Russian migrants, many working illegally in the country. [6] and  [7]

-Educational Decay: According to the Organization for Economic Cooperation and Development, OECD, the proportion of Russia's adult population with postsecondary training or degrees is higher than in almost any OECD country. And in the Soviet era, Russian scientists and inventors were renowned for their acumen (albeit mainly in fields with military applications). But today, Russia's educational system appears to be broken, or at least the country seems unable to derive the expected benefits from it [1]

-Educational Decay: Standardized international test results reveal that Russian primary and secondary schooling today is at best mediocre. In a 2009 OECD test to measure scholastic performance, Russian students' reading scores were lower than Turkish students', and Turkey itself is near the bottom of the OECD rankings. Russia's university and higher education system looks even worse. [1]

-Innovation: Although Russia today accounts for about six percent of the world's population with a postsecondary education, barely 0.1 percent of the worldwide patents granted by the U.S. Patent and Trademark Office over the last decade and a half were awarded to Russians. This is not some U.S. conspiracy against Russian inventors: the records of the UN's World Intellectual Property Organization show that Russia's share of out-of-country patent applications over that same period was less than 0.2 percent of the global total. [1]

-Innovation: The picture is hardly better when it comes to the output of scientific papers: the number of articles by Russians in peer-reviewed journals was no higher in 2008 than it had been in 1990, whereas output almost everywhere else in the world rose over those same years. By 2008, Russian authors were publishing far fewer scientific papers than the authors of Russia's BRIC peers: Brazil, China, and India. In effect, Russia stands as a new and disturbing wonder in today's globalized world: a society characterized by high levels of schooling but low levels of health, knowledge, and education. [1]

- Alienation of Europe & the West; Russian Veto in the UN Security council over the MH17 tribunal

-Alienation of Europe & the West: Russia has outraged and alienated Europe and much of the Arab world. It is fitting that Russian analysts are calling for Moscow to defend its final stronghold in the Middle East. Thanks to the work of our agents of influence, Syria is set to become Russia’s Last Stand in the region. Even the short-term survival of the Assad regime only works to deepen the bitterness the Sunni majority feels toward Russia. Indeed, Russia’s identification with Shi’a forces—Iran, Assad, and Hizballah—ensures the wider alienation of Russia from the 90 percent of the world’s Muslims who are Sunni. As we’ve already seen in Libya, the inevitable collapse of Assad and other retrograde client states elsewhere will ultimately deprive Russia of the billions of dollars it invested there, and leave Moscow increasingly isolated and disliked internationally. [7]

- No Incentive to Change** : Russia’s biggest problem may be denial. Typically, a stumbling economy brings about change in political leadership. Some countries, like Greece, take this to an extreme—Athens has seen five different governments in five years. But Russians have gone the other way—as their economy has slowed, Putin has grown more popular; he now holds an approval rating of 86 percent. More surprising is that while 73 percent of Russians are unhappy with their economy, 7 in 10 approve of the way Putin is handling it. How is that possible? About 90 percent of all Russians get their news from Russian television channels directly controlled by the Kremlin. By framing sanctions and the invasion of Ukraine as “Russia vs. the West”, Putin has succeeded in stoking the country’s nationalism. Today, 63 percent of Russians have a very favorable view of their country, up from 29 percent in 2013 and 51 percent in 2014. It’s easier under those circumstances to blame bad economic circumstances on outsiders. Credit where credit’s due—Putin knows what his people want to hear. It’s just not clear if he knows how to fix his flailing economy. (TIME, Pew Research Center, Washington Post, Pew Research Center) [21]

-Kremlin Revolt**: Kremlin Elite Engaged in Search for Putin's Replacement, Piontkovsky Says   Aug 13, 2015 by Paul Goble [14]

-Kremlin Revolt**:  Putin Alienating Kremlin Elites with His Nuclear Blackmail Threats   Such a demonstration of “schizophrenia in the Kremlin,” one that is approaching “the clinical,” Borovoy argues, frightens those with the elite who still have a modicum of good sense because it signals that there is very little Moscow might do and that the actions of the foreign ministry are simply another part of the Kremlin’s “propaganda machine.” Those within the elite may be more likely to desert him over this than even over economic sanctions, Borovoy suggests, because everyone can now see that the Putin regime is behaving according to the following “inadequate” logic: “Because we do not like your reaction to the downing of the Boeing, we will no longer feel bound by the non-proliferation treaty and provide nuclear arms to those who want them.”

Such a declaration, the Russian opposition figure says, is “in violation of all international agreements.” Moreover, he argues, “the despair in which Putin finds himself suggests that such inadequate actions will be carried out.”  That in turn will force the international community to conclude that one of its members “has gone mad.” [30]

-Kremlin Revolt**: Is A Slow Putsch Against Putin Under Way?  [35]

-Sovereign Debt Default**:  “International rating agencies like Standard & Poor’s  warn that Russia might default in a massive way sometime in the next two or three years. They suggest that Russia’s regions won’t be able to pay their debts, and Moscow will have trouble covering them. Moreover, these experts note, the Russian economy is now in recession, an economic downturn deepened by international sanctions, a decline in the price of oil and the devaluation of the ruble which makes repaying any foreign debt all the more expensive. “From this,” Dokuchayev writes, “extends a direct path to sovereign default.” By the end of this year, Russian companies and banks must repay 134 billion US dollars in foreign obligations. That is no small sum, but it would seem bearable given that the country’s reserves are about 400 billion US dollars.  But if Moscow has to cover other losses, seeks to support the ruble, and faces a new drop in oil prices, that may not be enough. Many of those suggesting that Russia is at risk of another default focus on the last factor and suggest that as Iran comes back on stream and the war in Libya ebbs, the supply of oil relative to demand will grow and prices will fall to 20 US dollars a barrel or even lower in the coming months. If that happens, the “Novyye izvestiya” writer says, a dollar will be equal to 120-130 rubles and a euro to “about 150.”  That could lead Russia to default by itself.”  [31]

-Sovereign Wealth Fund: **Russia has already been forced to dip into its huge Sovereign Wealth Fund, saved during the years of high oil prices. Anton Siluanov, the Finance Minister, has warned that if the budget deficit does not reduce, the entire fund could soon be used up. [32]

-Existential Threat to the USA:  Pentagon chief: Russia is a 'very significant threat; 'Defense Secretary Ash Carter is calling Russia a "very, very significant threat," agreeing with an assessment made by top military officials. A chorus of top military and political officials (General Dunsford, Secretary of State John Kerry, his top Europe official, Victoria Nuland, Defense Secretary Ashton Carter, and General Philip Breedlove, the supreme allied commander for NATO)  have said recently that Russia is the top threat to the U.S.'s national security in comparison to the Islamic State in Iraq and Syria. [34]

 

 

 

 

** Key driving factors

 

 

 

 

References

 

[1] The Dying Bear;  Russia's Demographic Disaster;  By Nicholas Eberstadt

[2] The numbers Putin doesn’t want you to see Vanity Fair March 31, 2014

[3]  High Rates of Congenital Syphilis in Russia Linked To Inadequate Prenatal Care  https://www.guttmacher.org/pubs/journals/3519003.html

[4]  http://www.vox.com/2015/7/30/9073285/putin-russia-corruption 

[5] Russia: Massive Capital Flight Continues May. 01 2015  http://www.themoscowtimes.com/business/article/russia-massive-capital-flight-continues/520112.html

[6] Russian Demographics: The Perfect Storm

[7] private conversations with industry experts

[8] Putin is actually in serious trouble http://www.businessinsider.com/putin-is-actually-in-serious-trouble-2015-8

[9]  http://www.unian.info/economics/1110555-russias-costs-from-sanctions-estimated-at-20-bln.html

[10] http://www.themoscowtimes.com/news/article/government-proposal-to-limit-russians-ownership-of-livestock-elicits-outrage/527766.html

[11] Forty One  (41) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime) http://bit.ly/fsflvg

[12] http://windowoneurasia2.blogspot.ca/2015/08/as-ruble-collapses-russias-cossacks.html

[13] http://bit.ly/f8w1F1

[14] http://windowoneurasia2.blogspot.ca/2015/08/kremlin-elite-engaged-in-search-for.html

[15] STRATFOR: RUSSIA ECONOMY HITS PERFECT STORM   http://www.breitbart.com/national-security/2015/08/12/stratfor-russia-economy-hitsperfect-storm/?  

[16] http://www.bbc.com/news/blogs-trending-33851990

]17] “LNR” factory sews fake Ukrainian military uniforms  http://euromaidanpress.com/2015/08/11/lnr-factory-sews-fake-ukrainian-military-uniforms/

[18] Implosion The End of Russia and What it Means for America by Ilan Berman 2013

[19] Russia hits EU allies with symbolic food ban  https://euobserver.com/foreign/129885

[20] Russian Economy Approaching ‘Perfect Storm’ -- Oil at 25 Dollars a Barrel, Ruble at 125 to the Dollar, and Inflation at 30 Percent  http://windowoneurasia2.blogspot.ca/2015/08/russian-economy-approaching-perfect.html

[21] These 5 Facts Explain Russia’s Economic Decline   http://time.com/3998248/these-5-facts-explain-russias-economic-decline/

[22] http://rbth.com/business/2015/01/29/russia_is_facing_record_capital_and_investment_outflow_43261.html

[23] http://www.unian.info/politics/1111271-china-finishes-putin.html

[24] 'There will be no Russia soon': Russian financier names cause of imminent collapse of Russia http://joinfo.com/world/1007537_there-will-be-no-russia-soon-russian-financier-names-cause-of-imminent-collapse-of-russia.html

[25] http://windowoneurasia2.blogspot.ca/2015/08/putins-russia-is-deeply-ill-country.html

[26] http://windowoneurasia2.blogspot.ca/2015/08/another-echo-of-1990s-russias.html

[27] http://www.themoscowtimes.com/business/article/russian-single-industry-towns-face-crisis/526024.html

[28] http://www.themoscowtimes.com/news/article/average-bribe-in-russia-doubles-in-rubles-remains-steady-in-dollars/526556.html

[29] http://windowoneurasia2.blogspot.ca/2015/08/how-bad-are-things-for-russias-poor.html

[30] Putin Alienating Kremlin Elites with His Nuclear Blackmail Threats  http://windowoneurasia2.blogspot.ca/2015/08/putin-alienating-kremlin-elites-with.html

[31] Seventeen Years On, ‘Shadow of Default’ Still Hangs over Russia  http://windowoneurasia2.blogspot.ca/2015/08/seventeen-years-on-shadow-of-default.html

[32]  http://thenationonlineng.net/suffering-from-a-glut-of-black-gold/

[33] http://www.thedailybeast.com/articles/2015/08/19/how-russia-hides-its-dead-soldiers-killed-in-ukraine.html

[34] http://thehill.com/policy/defense/251622-pentagon-chief-russia-is-a-very-very-significant-threat

[35]  Is A Slow Putsch Against Putin Under Way?    http://www.forbes.com/sites/paulroderickgregory/2015/08/20/is-a-slow-putsch-against-putin-under-way/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102 Early Warning Signals that point to the Isolation, Decay, Collapse and Implosion of the Russian Federation-a failed state, just like we saw before the collapse of the USSR by Walter Derzko

 UPDATE from Thursday .

 92 Early Warning  Signals that point to the  Isolation, Decay, and Collapse of the Russian Federation,  just like we saw before the collapse of the USSR by Walter Derzko

In Feb 2011, I wrote a tongue and cheek blog posting called  Forty One  (41) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime) http://bit.ly/fsflvg. It caused quite a stir and coincidently it was translated by the Russian opposition (B. Nemtsov) into Russian and reposted to dozens  of Russian blog  sites. The KGB was even on my back by writing nasty Soviet style yellow journalism smear postings against me , so I guess the article hit a nerve in the Kremlin. The KGB was logging into my blog site daily for about 6 months after that.

 

Well, the Yanukowych regime did collapse, the PUTIN is still (barely) hanging on.

 

So I think it's time to update my Early Warning Signals blog post  with new data points.—Walter Derzko

 

Here is my second  cut.  Thank you to everyone who has suggested new data points that I missed.

 

There are  likely many more early warning signals, but who knows which ones will trigger the collapse of Putin or the RF? Maybe an oligarch/elite/ inner circle revolt or palace coup? Watch for an August Surprise !!!!

 

102  Early Warning Signals that point to the Isolation, Decay and Collapse of the Russian Federation just like we saw before the collapse of the USSR by Walter Derzko

 

 

-Life Expectancy: The overall life expectancy at birth in Russia was slightly lower in 2009 (the latest year for which figures are available) than in 1961, almost half a century earlier. [1]

-Life Expectancy:  The  life expectancy at age 15 for all Russian adults was more than two years below its level in 1959; [1]

-Life Expectancy: According to the U.N.’s World Health Organization, the life expectancy for a 15-year-old boy in Haiti is three years higher than for a Russian boy the same age. [2]

-Life Expectancy: The life expectancy for young men sank by almost four years over those two generations. [1]

-Life Expectancy: The country’s death rate far exceeded its birth rate: in 2000, life expectancy for men was only 58, and for women 71. [2]

-Life Expectancy: Despite a recent slight uptick in births versus deaths, life expectancy now stands at 64 for males and 76 for women (137th and 100th in the world, respectively, hardly fitting for a supper power)[2]

-Mortality: The country has high mortality rates due to elevated rates of smoking, alcohol consumption and obesity. Investment on healthcare is low. [6]

-Mortality: Death rates from cardiovascular disease are more than three times as high in Russia as in western Europe [1]

-Mortality: Russian death rates from injury and violence have soared, on par with those in African post-conflict societies, such as Liberia and Sierra Leone. [1]

-Mortality: Put another way, post-Soviet Russia has suffered a cumulative "excess mortality" of more than seven million deaths, meaning that if the country could have simply held on to its Gorbachev-era survival rates over the last two decades, seven million deaths could have been averted. This figure is more than three times the death toll World War I inflicted on imperial Russia. [1]

-Mortality: Two out of three Russian men who died, died drunk [2]

-Mortality: Twenty-five percent of Russian men still die before the age of 55, many from alcoholism and the violent deaths, plus other diseases it fosters. [2]

-Population Decline: Since 1992, according to official Russian figures, Russia's population has fallen nearly every year (1993 and 2010 are the exceptions, with the latter experiencing an increase of just 10,000 people). According to these figures, between 1993 and 2010, Russia's population shrank from 148.6 million to 141.9 million people, a drop of nearly five percent.  [1]

-Depopulation: Predictions are that Russia, with a population of 146 million, could become a nation of fewer than 100 million people by 2025, and hardly a superpower [2]

-Depopulation: Russia  was aging and the birth rate was plummeting. Putin himself in his first State of the Nation address in July 2000 warned the Russian people, “We are in danger of becoming a senile nation.” [2]

-Fertility: Fertility rates plummeted to 1.2 births per women in the late 1990s and now stand at 1.7 births per women. That rate is still about 20 percent below 2.1 births per woman, the level necessary to ensure population replacement. [6]

-Fertility: A drop in fertility by 50 percent between 1987 and 1999 has resulted in a reduced number of women now at childbearing age, which is beginning to affect the country in a major way: Two thirds of all births in Russia take place among women between the ages of 20 and 29, and this population will decline from 13 million currently to 7 or 8 million in the coming years.[6]

-Fertility: Another factor mitigating against higher fertility is Russia’s high divorce rate. In 2012, for every two marriages, there was one divorce.[6]

-Fertility: Russia’s abortion rate, estimated at two abortions for every birth, has traditionally been the highest in the world. [6]

-Fertility: The protection of children and traditional family values was also the stated purpose for the enactment of a lesbian, gay, bisexual and transgender propaganda law to prevent distribution of "non-traditional sexual relationships" ideas among minors. [6]

-Fertility: The government is also considering reinstatement of a tax on childlessness, estimated at 10 percent of women in their late 40s. [6]

-Working Age Population/ Labour Force: Russia’s working-age population is declining by a million people a year, a faster rate than the decline of the overall population, which in 2013 stood at around 143 million, 3 million less than when Putin took office [2]

-Working Age Population/Labour Force: Over the next decade, Russia's labor force is expected to shrink by about 15 percent.

-Working Age Population/ Labour Force: Russia is facing difficulties  filling critical jobs with largely unskilled non-Russian migrants, many working illegally in the country. [6]

-Working Age Population/Labour Force: Other countries with low fertility rates turn to immigration to pick up the slack. While immigrants make up about 8 percent of Russia’s population, the nation has a reputation for nationalism and xenophobia, and fertility rates are even lower in neighboring Belarus, Ukraine and Lithuania, all possible sources of immigration. [6]

-Working Age Population/ Labour Force: the average age of a worker in the defence industry in close to retirement age and the army is forced to provide untrained conscripts to work in defence factories, resulting in quality problems and defects, exploding rockets and planes /jets falling from the sky. [7]

-Unproductive workforce: Russians aren’t nearly as productive as they could be. For each hour worked, the average Russian worker contributes $25.90 to Russia’s GDP. The average Greek worker adds $36.20 per hour of work. And Greece is not a country you want to trail in productivity. The average for U.S. workers? $67.40.

-Migration: It’s no surprise then that well-educated Russians are leaving their country in droves. Between 2012 and 2013, more than 300,000 people left Russia in search of greener economic pastures, and experts believe that number has only risen since Moscow’s annexation of Crimea last year.(Bloomberg, OECD, PBS, Telegraph, Wall Street Journal, Freedom House, Washington Post) [21]

-Aging Population: Russia’s aging population has placed strains on the economy that will impact numerous sectors including agriculture, manufacturing, the armed forces and retirement schemes. In the next decade, Russia's labor force is expected to shrink by more than 12 million, or around 15 percent. [6]

-Aging Population: The contraction of Russia’s labor force is exacerbated by low retirement ages: 60 for men and 55 for women. In certain situations, for example, hazardous occupations or unemployment, retirement ages are lower. Nevertheless, Russia’s older population does not fare well. According to a 2014 global survey of the social and economic well-being of older people, Russia ranked 65 among 96 countries.]6]

-Health: Only 30 percent of Russian babies born are born healthy [2]

-Health: Many unhealthy Russian babies are “discarded” or sent to government institutions where they often develop cognitive difficulties. Unhealthy children grow up to be unhealthy adults: half of the conscripted Russian army has to be put in limited service because of poor health. [2]

-Health: The syphilis rate among girls 10 to 14—a statistical category that boggles the mind—had gone up 40 times the previous decade. [2]

-Health: One study showed that , 64% of the pregnant women infected with syphilis delivered an infant with presumptive or confirmed congenital syphilis [3]

-Health: Only 30 percent of boys between the ages of 15 and 17 were considered healthy [2]

-Health: Chronic teen alcoholism; 77 percent of teens between the ages of 15 and 17 drink vodka regularly; in rural areas, the percentage can be as high as 90. [2]

-Health: Chronic heroin epidemic; Cheap heroin from Afghanistan is rolling in. Russia has more heroin addicts than any other country [2]

-Health: An H.I.V. epidemic spread by dirty needles was taking hold. Between 2000 and 2012 the number of new cases of H.I.V. increased six fold.  About 700,000 Russians were estimated to be living with HIV/AIDS in 2013, a 5 percent increase over the previous year. [2] and [6]

-Health: Chronic TB epidemic. Many of those infected with H.I.V. also suffer from tuberculosis. Russia is second only to India (with 1.3 billion people) in the number of cases of M.D.R. (multidrug-resistant) tuberculosis [2]

-Health: When it comes to the environment,  50 percent of Russia’s water is not potable.

-Health:  Air pollution continues to be an extremely serious issue, suggesting that a solution proposed during the late-Soviet period continues to hold sway. Back then, a Russian health minister advised the country to “breathe less” in order to live longer.

-Health: Russia won the most medals—33—in the recent Sochi Winter Olympics, but many of these athletes are now being accused of doping over the last decade.

-Corruption:  Ubiquitous Institutionalized corruption and widespread bribe taking, kickbacks, covered up by double entry book keeping systems [11]

-Corruption: Theft of state property and funds via selective privatization (to your inner circle of friends) and crony capitalism. [11]

-Corruption: Unrestrained money laundering:  Russian Bank official charged over laundering of 17m dollars a day; Interfax news agency, Moscow, in Russian  14 Mar 2011

-Corruption: Off shoring of assets and oligarch profits; Cyprus,  Switzerland, Belize, Virgin Islands, UK and possibly the Vatican Bank ? [7]

-Corruption: Growing nepotism: German Daily Reports on Nepotism at Russia's Gazprom Frankfurt/Main Frankfurter Rundschau (Russia)

-Corruption: Reverse Money Laundering: In Russia, corruption has gotten so bad that the logic of money laundering has turned upside down. Many companies face the opposite problem: In order to get things done, they need to take clean money and make it dirty. Russia has a  service known as "obnal," or dark money: the process by which legitimate companies take legitimate profits and launder them into off-the-books slush funds to be used for bribes and tax evasion. Obnal has become a billion-dollar business in Russia [4]

-Lawlessness:  police focus on extremists and political opposition instead of bandits who run free.[7]

-Illegal Use of Administrative resources: Cyber attack, info wars, online provocateurs to protect the status quo, false flag terrorist operations for excuse to declare martial law.

-Illegal Use of Administrative resource: RF false flag operations - “LNR” factory sews fake Ukrainian military uniforms  [17]  

-Overregulation: Russia’s centralized economy requires that citizens  get a “document” or spravka from government workers , who demand bribes for timely executions

-Weakened military/ security  control at the periphery of the empire. Already facing food shortages and other issues with the countersanctions, Stratfor believes Moscow is “stepping up its security apparatuses within the regions, stepping up its control within the governors and within the mayors.”  Stratfor believes Putin is trying to prove that he can “isolate Russia from the West, from Western foods, and keep Russia Russian.” But using the people to demonstrate his power and sustainability, is risking the social contract Putin made with the Russian:  “You will always receive your paychecks; I will keep the economy growing; I will quadruple–pretty much-standard of living; you will have Western-style foods and goods inside of Russia.”  Putin’s popularity was sky-high for the last 15 years, because he delivered on his promise to the Russian people of strong leadership. But now Putin must chose to battle the West or give in to the needs of the people. [15]

-Conflicts on the periphery: Extremist calls increasingly common in blogs, social networks - Russian police; RIA Novosti > Feb 1, 2011

-Conflicts on the periphery: Russian paper fears conscripting postgraduate students could trigger Russian brain drain  Vedomosti website, Moscow, in Russian 12 May 2011

-Conflicts on the periphery: Russia is in civilizational decline, new nations emerge-Siberians see themselves as separate nation from Russia  http://bit.ly/lSzxZm 

-Conflicts on the periphery: 16 Russian Hot spots/ tension zones or fronts against PUTIN. Putin may someday have to fragment his army (which is understaffed, undertrained and is facing increasing desertions) to all regions of the Russian Federation and beyond to quell growing tensions and hot spots that, if erupted simultaneously or with some help, could splinter his defenses and threaten the territorial integrity of the Russian Federation and lead to regime collapse. 16 fronts /hot spots against PUTIN: 1) Crimean Tartars and all Crimeans in general, 2) Eastern Ukraine, 3) Chechnya, 4) Chinese in Siberia, 5) Japanese territorial island disputes 6) Canada & US assert control in the Arctic 7) Cossacks Seek Greater Role in Southern Russia’s Economic and Political Life 8) Georgia 9) European front-The Dutch and MH17, Baltics  and Poland 10) Karelia will seek to rejoin Finland 11) Moldova/Transdneistria 12) Ethnic tensions brewing with Circassian activists in Karachaevo-Cherkessia, North Caucasus 13) Russians in poverty revolt/protest in Moscow 14) Russians in poverty revolt/protest in St Petersburg 15) Russians in poverty revolt/protest in the rural oblasts of the Russian Federation and 16) NATO and the US fleet re-enter the Black Sea --It's not a matter of if but only a matter of when and if it happens in a coordinated fashion.

-Conflicts on the periphery: The Siberia/China flashpoint. In 2000, 28 million Russians lived in Siberia and the Far East. In 2010, only 25.4 million live there. On the other side of the border, Chinese growth and interest in Russian resources could make the Far East a flashpoint. A 2001 Treaty on Friendship and Good Neighborliness, codifying territorial compromises and designed to diminish American influence, formally "sunsets" in 2021—at which time, China may decide to claim some of Russia's resource-rich territories that may well be largely deserted. [18]

-Conflicts on the periphery: The Russian economy shrank by 4.6 percent in the quarter ending June 2015. Although the media has focused on the stability in Moscow and maybe St. Petersburg, the economic decline in Russian provinces has been much more serious. Debt in Russia’s 83 regions has risen by 100 to 150 percent since 2010. Russia’s economic minister suggested that possibly 60 of those 83 regions are in crisis mode, and 20 may have already been defaulting on their debt. President Vladimir Putin and the Kremlin have $541 billion in reserves, but intervention to bailout the regions would drain much of Russia’s wealth, which is spread throughout its currency reserves, the National Wealth Fund and the National Reserve Fund. Stratfor predicts that the Kremlin will allow the economies of many of the country’s Soviet-era mono-cities, which rely on a single industry, to continue to deteriorate. As a relic of the Soviet period, the mono-cities employ the bulk of their populations in a single industry such as manufacturing, metallurgy, timber or energy. These mono-cities generate about 30 percent of the country’s industrial production. With only a single skill, workers in mono-cities generally cannot migrate to find better jobs or salaries. [15]

-Conflicts on the periphery**: Revolts and protests. Stratfor expects that protests against the Kremlin will increase as more Russians fall under the poverty line, and regional and municipal debt grows. They expect the Kremlin to retaliate by cracking down on protest movements and opposition parties to block the formation of any broad and serious any serious challenge to their hold on power.  They believe that Russia can hang on with its current strategy for the next couple of years, but Putin’s popularity will soon fade. Eventually, regions could revolt in a similar process that led to the dissolution of the Soviet Union in 1991, when 15 nations comprising a third of the population and a quarter of the Soviet Union declared independence. [15]

-Capital Outflow:  The net outflow of capital from Russia reached $32.6 billion during the first quarter of 2015, according to the  Central Bank. The bank is now forecasting that capital flight may reach $131 billion by the end of 2015. In reporting first quarter numbers, the Central Bank also upwardly revised the 2014 figure for net capital outflow to $154.1 billion from the previously reported $151.5 billion. That figure marks the highest annual total of capital flight since the Central Bank started tracking the trend back in 1994. [5]

-Evaporating Foreign Direct Investments (FDI) [7]

-Western sanctions hurting economy: Sanctions could cost Russian industry $20 bln: Official [9]

-Growing   prolonged recession: Russian won’t likely come out of the recession until 2017 if that. [7]

-Budget Deficit: Russia’s central government has cut its budget by 10 percent across the board in 2015, except for defense. As a result, social programs have been slashed, and even funding to host the World Cup 2018 has been severely restrained. [15]

-Plummeting Rouble: The Rouble has lost over 50% of its value against the $USD in 2015 [7]

-Plummeting Rouble: As Rouble Collapses, Russia’s Cossacks Issue Their Own Currency – with Putin’s Picture on It [12]

-War in Ukraine:  Moscow has spent an estimated 53 billion rubles ($835 million) as of May 2015 to support and finance the separatist forces fighting in eastern Ukraine (UNIAN, May 12).

-Uncontrolled inflation: Russia’s inflation rate hit 16.9 percent in the first half of 2015, cutting wage values by 14 percent over the last 12 months. [15]

-Low energy/ oil prices; The Russian budget needed $85-$100  oil to break even, depending on which source you listen to. Now in Aug 2015 it’s in the mid $40s

-Low energy/oil process: Russia is at the Mercy of Oil Markets. The price of oil has now fallen below $45 a barrel—welcome to the new normal. OPEC continues to pump oil at historic rates as it tries to price out competitors (US fracking and LNG), and Iran expects to bring over a million new barrels a day to world markets after the lifting of international sanctions. These are deeply troubling developments for Moscow, which relies on oil and gas sales for nearly 50 percent of its government revenues. In 1999, oil and gas accounted for less than half of Russia’s export proceeds; today they account for 68 percent. Moscow has grown so reliant on energy sales that for each dollar the price of oil drops, Russia loses about $2 billion in potential sales. For Russia to balance its budget, oil will need to surge back to $100 a barrel. That’s going to take a while.

(CNBC, CNN, Wall Street Journal , World Affairs, EIA, BBC, Financial Times) [21]

-Low energy/oil prices: Quality of Russia's crude reserves deteriorating admits Russian ministry [13]

-Low energy/oil prices: Eleven of Russia’s 14 oil processing firms are now operating at a deficit; and consequently, “what we see today is just the quiet before a very strong storm.” [20]

-Low energy/oil prices: Even if oil prices were to rise to 70 dollars a barrel, that would not be enough to prevent a further decline in the Russian economy. And given that the actual price will be much lower, that decline will be very steep indeed. As prices fall to 40 dollars a barrel, Zhukovsky says, Russia will discover “a third bottom” and then “a fourth” and so on. [20]

-Surplus of energy on the world markets; the real essence of Putin's energy woes are structural, not cyclical. The global energy game is changing — and it is not changing in Moscow's favor.

Shale, liquefied natural gas (LNG), and renewables — three areas where Russia is extremely weak — are ascendant and are dramatically altering the market. [8]

-Energy-dependent, undiversified economy: If one looks at Gazprom as a barometer of Russia's fortunes, one statistic says it all: in 2008, the company had a market value of $360 billion; today it is worth just $55 billion. [8]

-Lack of Diversification: It’s not simply the size of your economy, but its diversity and resilience that counts. For years, the Kremlin has supported and protected large state-owned companies at the expense of small and medium-sized enterprises (SMEs). But those smaller firms are the foundation of any strong and well-diversified economy. SMEs spur innovation and respond effectively to changing times, technologies, and consumer tastes. In the EU, SMEs contribute an average of 40 percent to their respective countries’ GDP; in Russia, SMEs contribute just 15 percent. Those are daunting figures for anyone looking to start a business in Russia. Things aren’t getting better—between 2008 and 2012, Russia’s private sector lost 300,000 jobs while the state added 1.1 million workers to its payroll. Rather than diversifying, Moscow is doubling down on its state-centered approach to economic development. (JYSkebank, The Economist) [21]

-Technology substitution: Russians need to recognize that the low oil prices are not the product of “a conspiracy of the US and the Arabs against Russia.” Instead, they are the result of an Arab effort to drive down the price so that the latest technological innovations in extraction technology the Americans have will not be profitable. Russia isn’t part of the equation for either, Zhukovsky says, but this also means, the basic trend won’t change anytime soon. Moreover, if Russia sits and does not make fundamental change, the new oil extraction technologies will in fact be “a death sentence” for the Russian economy. Russia’s only chance to “move forward” is to focus on scientific and technical progress, to behave as the Chinese have done gradually shifting into ever higher tech areas rather than relying on the sale of natural resources or minimally processed goods.  But that is not what the Russian government is doing. [20]

-Economic speculation:  Vladislav Zhukovsky, an economist known for predicting disasters in the Russian economy and for then turning out to be right, says that the situation is more dire than almost anyone imagines because oil is heading to 25 US dollars a barrel, the ruble to 125 to the US dollar, and inflation to 30 percent. If he is even partially correct, Russia faces not a “black Monday” or a “black September” but a “black” and bleak future. […] Many at the top of the Russian economic pyramid are behaving as they did in 1998, betting on an ever weaker ruble by buying hard currency and then planning to get back into the Russian market later at firesale prices and thus improving their position but not the country’s. These people, Zhukovsky says, “have their families, portfolios and property abroad. They are interested in having the situation in Russia be as bad as possible and the ruble to fall as far as possible so that they will be able to sell their apartments there and buy them here on the cheap.” In 1998, at the time of defaults, the Russian stock market fell 80 percent, the ruble fell 84 percent, “and all our bureaucrats … took the money they had and converted it into hard currency. “When the market collapsed, they bought shares at three cents on the dollar. The very same thing is happening now. Moreover, Zhukovsky adds, after the coming collapse “the American, European or Chinese investors will come.” They too will take advantage of the low prices just as they did in 1992 and 1998  [20]

-Independent Press shut down [7]

-Opposition hounded, jailed or murdered [7]

-Western food embargo; Putin orders that  tons of western food be destroyed

-Western food embargo: Putins hopes local producers will fill the export food gap, but Moscow Strawberries Rot in Fields After Trade Near Metro Banned

-Western food embargo: Putin to ban four EU food exporters - Albania, Iceland, Liechtenstein, and Montenegro and Ukrainian food exports to Russia from Jan 1, 2016 if Ukraine implements the trade provisions of its EU association treaty; The potential Ukraine ban is more significant, with food exports to Russia last year still worth $415 million, out of total exports of $11 billion, despite the conflict over Crimea and in east Ukraine. The Iceland ban is the biggest. According to Russia’s Federal Customs Service, the Nordic state exported $232 million of mostly seafood to Russia in 2014. Albania exported $10 million of fruit and dairy. Montenegro exported $40,000 of fruit and vegetables. Liechtenstein didn’t export any food.  [19]

-Jokes, satire and anecdotes about Putin and the regime: "If you see smoke and smell burning rubber, don't rush to call the fire department. It's probably the smell of your neighbors using Russian contraceptives" ))) [16]

-Growing poverty levels: Caught up in the worst economic decline since the 1998 ruble crisis, Russia’s national poverty rate increased by 14 percent in the first half of this year. So far, Russia has been unwilling to increase the minimum wage or social benefits to fight poverty. [15]

-Growing poverty levels: As of Aug 2015, 23 million Russians live below the poverty level and another 19 million that live in 191 single industry cities and towns can be soon be  added to the poverty rolls since the Russian government can’t afford to pay subsidies [7]

-Growing poverty levels: Government Proposal to Limit Russians' Ownership of Livestock Elicits Outrage [10]

-Growing Poverty levels: Falling or No government subsidies for 191 single industry towns who have lost their single industrial base [7]

-Subsidy Drag: There are 191 single industry towns who have lost their single industrial base [7]

-Subsidy Drag: Only three former USSR  territories have economies that could make a contribution to the Russian Federation or the Eurasian Union:  Kazakhstan, Azerbaijan and Turkmenistan. The rest are an economic drag-the economically badly off countries of the CIS – Uzbekistan, Kyrgyzstan, Tajikistan, Armenia, Moldova and others,

-Military Industrial complex decay [7]

-Militarization renewal stalling [7]

-Collapse of defence parts industry [7]

-Aging defence industry workforce [7]

-Inexperienced defence industry workforce [7]

-Educational Decay: According to the Organization for Economic Cooperation and Development, OECD, the proportion of Russia's adult population with postsecondary training or degrees is higher than in almost any OECD country. And in the Soviet era, Russian scientists and inventors were renowned for their acumen (albeit mainly in fields with military applications). But today, Russia's educational system appears to be broken, or at least the country seems unable to derive the expected benefits from it [1]

-Educational Decay: Standardized international test results reveal that Russian primary and secondary schooling today is at best mediocre. In a 2009 OECD test to measure scholastic performance, Russian students' reading scores were lower than Turkish students', and Turkey itself is near the bottom of the OECD rankings. Russia's university and higher education system looks even worse. [1]

-Innovation: Although Russia today accounts for about six percent of the world's population with a postsecondary education, barely 0.1 percent of the worldwide patents granted by the U.S. Patent and Trademark Office over the last decade and a half were awarded to Russians. This is not some U.S. conspiracy against Russian inventors: the records of the UN's World Intellectual Property Organization show that Russia's share of out-of-country patent applications over that same period was less than 0.2 percent of the global total. [1]

-Innovation: The picture is hardly better when it comes to the output of scientific papers: the number of articles by Russians in peer-reviewed journals was no higher in 2008 than it had been in 1990, whereas output almost everywhere else in the world rose over those same years. By 2008, Russian authors were publishing far fewer scientific papers than the authors of Russia's BRIC peers: Brazil, China, and India. In effect, Russia stands as a new and disturbing wonder in today's globalized world: a society characterized by high levels of schooling but low levels of health, knowledge, and education. [1]

- No Incentive to Change** : Russia’s biggest problem may be denial. Typically, a stumbling economy brings about change in political leadership. Some countries, like Greece, take this to an extreme—Athens has seen five different governments in five years. But Russians have gone the other way—as their economy has slowed, Putin has grown more popular; he now holds an approval rating of 86 percent. More surprising is that while 73 percent of Russians are unhappy with their economy, 7 in 10 approve of the way Putin is handling it. How is that possible? About 90 percent of all Russians get their news from Russian television channels directly controlled by the Kremlin. By framing sanctions and the invasion of Ukraine as “Russia vs. the West”, Putin has succeeded in stoking the country’s nationalism. Today, 63 percent of Russians have a very favorable view of their country, up from 29 percent in 2013 and 51 percent in 2014. It’s easier under those circumstances to blame bad economic circumstances on outsiders. Credit where credit’s due—Putin knows what his people want to hear. It’s just not clear if he knows how to fix his flailing economy. (TIME, Pew Research Center, Washington Post, Pew Research Center) [21]

-Kremlin Revolt**: Kremlin Elite Engaged in Search for Putin's Replacement, Piontkovsky Says   Aug 13, 2015 by Paul Goble [14]

 

 

** Key driving factors

 

 

 

 

References

 

[1] The Dying Bear;  Russia's Demographic Disaster;  By Nicholas Eberstadt

[2] The numbers Putin doesn’t want you to see Vanity Fair March 31, 2014

[3]  High Rates of Congenital Syphilis in Russia Linked To Inadequate Prenatal Care  https://www.guttmacher.org/pubs/journals/3519003.html

[4]  http://www.vox.com/2015/7/30/9073285/putin-russia-corruption 

[5] Russia: Massive Capital Flight Continues May. 01 2015  http://www.themoscowtimes.com/business/article/russia-massive-capital-flight-continues/520112.html

[6] Russian Demographics: The Perfect Storm

[7] private conversations with industry experts

[8] Putin is actually in serious trouble http://www.businessinsider.com/putin-is-actually-in-serious-trouble-2015-8

[9]  http://www.unian.info/economics/1110555-russias-costs-from-sanctions-estimated-at-20-bln.html

[10] http://www.themoscowtimes.com/news/article/government-proposal-to-limit-russians-ownership-of-livestock-elicits-outrage/527766.html

[11] Forty One  (41) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime) http://bit.ly/fsflvg

[12] http://windowoneurasia2.blogspot.ca/2015/08/as-ruble-collapses-russias-cossacks.html

[13] http://bit.ly/f8w1F1

[14] http://windowoneurasia2.blogspot.ca/2015/08/kremlin-elite-engaged-in-search-for.html

[15] STRATFOR: RUSSIA ECONOMY HITS PERFECT STORM   http://www.breitbart.com/national-security/2015/08/12/stratfor-russia-economy-hitsperfect-storm/?  

[16] http://www.bbc.com/news/blogs-trending-33851990

]17] “LNR” factory sews fake Ukrainian military uniforms  http://euromaidanpress.com/2015/08/11/lnr-factory-sews-fake-ukrainian-military-uniforms/

[18] Implosion The End of Russia and What it Means for America by Ilan Berman 2013

[19] Russia hits EU allies with symbolic food ban  https://euobserver.com/foreign/129885

[20] Russian Economy Approaching ‘Perfect Storm’ -- Oil at 25 Dollars a Barrel, Ruble at 125 to the Dollar, and Inflation at 30 Percent  http://windowoneurasia2.blogspot.ca/2015/08/russian-economy-approaching-perfect.html

[21] These 5 Facts Explain Russia’s Economic Decline   http://time.com/3998248/these-5-facts-explain-russias-economic-decline/

 

 

 

 

 

 

Aging Gracefully without Chronic Human Diseases

I’m adding  a link to a presentation I gave last week to a group of seniors at the Ukrainian Canadian Social Services –Toronto Branch on Aging Gracefully without Chronic Human Diseases.  It’s designed for a non-technical,  layperson audience. You can download it from the link below.

 

https://www.academia.edu/12124838/Aging_Gracefully_without_Chronic_Human_Diseases_v4_UPDATED_

 

Enjoy and Comments Welcomed

 

Walter  Derzko

Toronto

What's the next geopolitical hotspot on the globe? Mongolia, pitting the USA squarely against China and Russia

Last week I had an interesting and lively series of discussions with some policy wonks and political science experts who wanted my opinion on where the next geopolitical hotspots would be...one of my contentions was central Asia. The US military offensive doctrine of "circle the wagons" around Russia has been in play for several decades and it has Soviet-minded  NATO-phobes and Russian nationalists nervously eyeing the growing encrochment and encirclement.

NATO and the USA has been quietly and discreatly surrounding Russia with military outposts or forming alliances and courtships with  western friendly governments for a few decades starting with Poland in central Europe, Ukraine, Turkey, Georgia and  Afghanistan (which could have an alternate agenda too). Logically next they should be moving east into Central Asia.Who is up for courting there? Well, the rarely noticed but strategically important country of Mongolia, located between Russia and China. 

They asked me to prove my contentions, so here's a story I found on the BBC Monitoring FSU News service back in April which supports my views, strategic thinking  and observations:

 USA, NATO flirt with Mongolia over possible deployment of bases - Russian paper Anonymous.  BBC Monitoring Former Soviet Union.  London: Apr 10, 2010.

Abstract (Summary)

On 29 March NATO officially recognized Mongolia as a participating country in the coalition in Afghanistan and invited an Ulan-Bator representative to a meeting of the heads of ministries of foreign affairs, which is to be held in Estonia on 23 April.  The analyst concludes that Mongolia is growing increasingly close to the USA and NATO.  As a confirmation of his conclusion, he also points to the regular participation of the Mongolian military in the joint Khan Quest annual military exercises.  "With its enormous spaces (more than 600,000 square miles) and a small population of less than three million people, of which nearly 40 per cent live in the capital, Mongolia is an optimal place for the deployment of American military intelligence gathering (ground-based, air-based, and satellite) for simultaneously keeping an eye on China and Russia.  The country's new president, who was educated in the USA, will most likely not deny Washington's requests," [Rick Rozoff] asserts on the Opednews.com website.

By the way, Russian specialists believe it to be unlikely that Mongolia will make such an unfriendly gesture towards Russia.  Colonel General Viktor Yesin, the former chief of the Main Staff of the Strategic Missile Troops (RVSN), suggested in an interview with "NG" that this article may be an attempt to cause dissension in relations between Ulan-Bator and Moscow and Beijing.  "If one assumes that such an agreement between Mongolia and the USA will be achieved, it will indeed give the Americans enormous opportunities to collect intelligence on a broad range against Russia, particularly Siberia and the Far East, and especially against China.  But I believe that Mongolia's leadership will hardly choose to take such a step, considering the dependence of Mongolia's economy upon the PRC and Russia," Yesin said.

Full Text (929 words)

Nezavisimaya Gazeta website, Moscow, in Russian 6 Apr 10/BBC Monitoring/(c) BBC

Text of report by the website of heavyweight Russian newspaper Nezavisimaya Gazeta on 6 April

["USA and NATO Flirting with Mongolia," by Andrey Terekhov.  The author rejects idea that Mongolia will permit USA and NATO to deploy bases and recon assets within its territory.]

Washington and Brussels, it appears, have taken a serious interest in Mongolia.  In the assessment of the American expert Rick Rozoff, this country, which is participating in the war in Afghanistan, is in reality of greater interest for USA intelligence gathering than for the fact that it is located between Russia and China.  "NG" experts acknowledge that from a military point of view the deployment of USA bases in Mongolia would have a negative impact upon the security of both Russia and China.

Rozoff is the author of a recent sensational article that says that America "is surrounding Russia and China" with its ABM system.  He notes that in the last decade the USA has set up bases and other military facilities and deployed its armed forces in those parts of the world that it was unable to penetrate during the epoch of the cold war.  This includes: Africa -2,000 military men in Djibouti; the Black Sea region -seven new air force and training bases in Bulgaria and Romania; the de-facto control of Air Force, Navy, and Ground Troops, as well as a tracking facility, in Georgia; and the deployment in April of batteries of Patriot systems in Poland.  USA military facilities in the Middle East, in Central and Southern Asia, in Eastern Asia, in South and Central America, in the Indian Ocean, and in the southern part of the Pacific Ocean continue to be added to the list.  "Mongolia, no matter how remote and inaccessible it might be, is not immune to the world-wide wave of American military expansion," Rozoff states.

On 29 March NATO officially recognized Mongolia as a participating country in the coalition in Afghanistan and invited an Ulan-Bator representative to a meeting of the heads of ministries of foreign affairs, which is to be held in Estonia on 23 April.  The analyst concludes that Mongolia is growing increasingly close to the USA and NATO.  As a confirmation of his conclusion, he also points to the regular participation of the Mongolian military in the joint Khan Quest annual military exercises.  "With its enormous spaces (more than 600,000 square miles) and a small population of less than three million people, of which nearly 40 per cent live in the capital, Mongolia is an optimal place for the deployment of American military intelligence gathering (ground-based, air-based, and satellite) for simultaneously keeping an eye on China and Russia.  The country's new president, who was educated in the USA, will most likely not deny Washington's requests," Rozoff asserts on the Opednews.com website.

By the way, Russian specialists believe it to be unlikely that Mongolia will make such an unfriendly gesture towards Russia.  Colonel General Viktor Yesin, the former chief of the Main Staff of the Strategic Missile Troops (RVSN), suggested in an interview with "NG" that this article may be an attempt to cause dissension in relations between Ulan-Bator and Moscow and Beijing.  "If one assumes that such an agreement between Mongolia and the USA will be achieved, it will indeed give the Americans enormous opportunities to collect intelligence on a broad range against Russia, particularly Siberia and the Far East, and especially against China.  But I believe that Mongolia's leadership will hardly choose to take such a step, considering the dependence of Mongolia's economy upon the PRC and Russia," Yesin said.

He emphasized that Mongolia has assumed the status of a non-nuclear zone and that the country's leadership has demonstrated its intent to remain a strictly neutral state.  Ulan-Bator, which is an observer in the Shanghai Cooperation Organization (ShOS), does not wish to become a member of the organization, as long as it maintains its neutral status.  However, in the opinion of our interviewee, the fact that Mongolia was largely ignored in the 1990s has had a negative impact upon our relations.

Galina Yaskina, a doctor of political sciences and a chief scientific worker at the Institute of Eastern Studies of the Russian Academy of Sciences, is also not inclined to dramatize the situation.  Mongolia has proclaimed that it is not permitting the deployment of foreign military facilities within its territory.  In addition, relations between our countries are characterized as a strategic partnership.  This policy was again confirmed by the Declaration for the Development of a Strategic Partnership on 25 August 2009, which was signed during the state visit of President Dmitriy Medvedyev to Ulan-Bator.  Vladimir Putin was in Mongolia shortly before that.

Doctor Yaskina told "NG" that: "The decline in combined trade has been halted, and the turnover of goods has reached a level in excess of one billion dollars ahead of schedule.  The role of regional and border ties is increasing.  In February of this year the heads of the governments reached an agreement at the request of the Mongolian side in regard to a massive outbreak of hoof and mouth disease in cattle in Mongolia, by which the Russian Federation will give humanitarian aid to Ulan-Bator by offering it 57,000 tons of fodder grain," Doctor Yaskina told "NG."  In the area of defence, cooperation has a positive dynamic and joint exercises are organized.  In the future, the development of relations will undoubtedly be of a constructive nature, she summarized.

Materials: Nezavisimaya gazeta A 1999-2007

Published in Nezavisimaya gazeta on 06.04.2010.

Original: http://www.ng.ru/world/2010-04-06/7_mongoly.html[1]

Credit: Nezavisimaya Gazeta website, Moscow, in Russian 6 Apr 10

Indexing (document details) People: Rozoff, Rick Author(s): Anonymous Document types: News Dateline: RUSSIA Publication title: BBC Monitoring Former Soviet Union.  London: Apr 10, 2010.  Text Word Count 929

Ukraine's Orange Revolution 2.0 Don't count Yulia Tymoshenko out of the presidential election race just yet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(see more pictures at the end  of the post)

Don't count Yulia Tymoshenko, the incumbant Prime Minister of Ukraine and the Tymoshenko Block (BYuT) out of the Ukrainian Presidential election race just yet.  Most of the media around the world seems to have written her off along with the Orange Revolution, that occurred in Ukraine in 2004.  It may be premature for Viktor Yanukovych to be popping Russian champaign corks.

She's too smart and cunning not a have a trump card up her sleeve.  This time, she’s in government and has more control over the election process and the SBU than during the Orange Revolution in 2004. The SBU-Ukraine's secret police, like the CIA –  won’t  be complicit in Party of Regions  fraud, and they  will be there to detect vote-rigging and pre-vote and votor list rigging  should it occur .

In fact  she is more then likely  to use to her  benefit,  the fact that the Party of Regions would probably  try to pull off another repeat election fraud in certain regions again, (like in 2004) She can shape circumstances to her advantage, and she’s smart enough to do just that.. 

Imagine the following ficticious scenario, which I just made up--- The Tymoshenko government, fully expecting election fraud from Yanukovych , prints election ballots with a special invisible water marks, serial codes or other invisible identifying marks, that distinguish between real and illegal ballots, which no one outside of a small group in government is aware of .

 
(Election Results above-Hat tip Roman Z)

 Tymoshenko is only out by 880,000 votes officially and claims that she should be winning by 0.8 % according to her count. 

Nullifying the 1 million ballots that she says were rigged (due to added phantom voters by Party of Regions (PoR) would put her ahead by a few hundred thousand votes.

Watch her pull an election rabbit out of the hat and force a new run off or  have key Pro Yanukovych districts where fraud occurred –such as Crimea, Donetsk and Luhansk  challenged in court and the results declared  null and void. 

Tymoshenko may turn out to be the real come back Queen & Ukraine's first female President and Yanukovych -a two time looser.

(see rferlorg story below)

UPDATE: Feb 17, 2010

http://www.upi.com/Top_News/International/2010/02/17/Ukraine-court-suspends-election-results/UPI-79291266414532/

UPI

17Feb2010

Ukraine court suspends election results

 

 

KIEV, Ukraine -- A Ukraine court in Kiev suspended last week's presidential election results Wednesday to allow for investigation into the prime minister's allegations of fraud.

 

Prime Minister Yulia Tymoshenko filed a lawsuit Tuesday with the Higher Administrative Court to demand a repeat vote of the second round of the presidential elections, which she lost to incumbent President Viktor Yanukovych by a 48.95 percent to 45.47 percent margin.

 

The court said it would examine evidence Tymoshenko submitted that alleges more than 1 million votes were stolen from her, the Ukraine News Agency reported.

[ . . . ]

Walter Derzko,Smart Economy, Toronto

 

 

 

 

 

 

 

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times,  published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1

Contact us about the Opportunity Clinic workshop and to invite Walter Derzko as a keynote speaker at your next event 

 Subject: Lawmakers Say Tymoshenko To Challenge Ukraine Vote Results

http://www.rferl.org/content/Tymoshenko_Bloc_Will_Act_To_Defend_Fair_Elections/1952698.html

*********************************************************************************************************************

N.B. on a personal note.....Tea witha future Prime Minister of Ukraine, Yulia Tymoshenko,  circa 2002 before the Orange Revolution, or maybe it was just the beginnings... (Hhmmm...I just noticed the colour of  the tea cups & the flowers)

 

 

 

 

 

 

 

 

 

When will the recession end? Part 43 The world in 2010-2011 according to the WEF Davos

Scanning through some of the more interesting Davos WEF workshop titles, we get a sense of the concerns of world leaders. And it  sets the tone for the global outlook in 2010 and 2011 for  bankers, politicians  and business people.

 

I highlighted in red some of the titles that caught my eye.  For a full program click the link below.

Source: WEF, Davos 2010, program > http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?date=ALL

 

 

All in all,  there seems to be an urgent sense of  rethinging, rebuilding and redesigning going on.The question is whether it's just for show-political rhetoric or for real?

 

It's just too bad that most of the interesting titles were held behind closed doors and not videotaped for the public.

 

 

27. 01.2010 What Is the "New Normal" for Global Growth?

27. 01.2010 Rethinking Security in the 21st Century

27. 01.2010 Skills Creation: The Future of Employment

27. 01.2010 Rethinking Systemic Financial Risk

27. 01.2010 The Next Global Crisis

27. 01.2010 Financing Low-Carbon Growth

27. 01.2010 Trouble with Bubbles

27. 01.2010 Chronic Diseases: A Global Challenge

27. 01.2010 Rethinking Values in the Post-Crisis World

27. 01.2010 Life on Other Planets?

27. 01.2010 Rethinking Risk in the Boardroom

27. 01.2010 World Economic Forum Brainstorming: Redefining the Global Commons

27. 01.2010 Who Is the New Consumer?

27. 01.2010 Rethinking Energy Security

27. 01.2010 Business Solutions to Rural Poverty

27. 01.2010 Design for Sustainability

27. 01.2010 Rebuilding Economics

27. 01.2010 Rethinking Population Growth

27. 01.2010 Rethinking Compensation Models

27. 01.2010 Haiti: First Responders Back from the Front Line

27. 01.2010 The "Clash of Civilizations" Revisited

27. 01.2010 Rethinking Philanthropy

27. 01.2010 Piracy and Pandemics: From Past to Present Dangers

27. 01.2010 Rethinking the Global Response to Alzheimer’s Disease

27. 01.2010 Reading Leaders' Minds

27. 01.2010 Crisis and Culture

28. 01.2010 Rethinking Our Values Framework

28. 01.2010 Making Cap and Trade Work

28. 01.2010 Global Challenges and the World Economic Forum

28. 01.2010 Values in Your Everyday Life

28. 01.2010 Overcrowded World

28. 01.2010 Redesigning Consumption Patterns

28. 01.2010 Rethinking the Global Commons: Biodiversity I

28. 01.2010 Rebuilding Trust in Business Leadership

28. 01.2010 Rethinking the Ageing Population

28. 01.2010 Rethinking Humanitarian Assistance: Implications for Haiti

28. 01.2010 Rebuilding Fragile States

28. 01.2010 Redesigning the International Monetary System

28. 01.2010 Revamping Development Aid

28. 01.2010 Redirecting Marketing

28. 01.2010 Will India Meet Global Expectations?

28. 01.2010 Rebuilding Long-term Economic Growth

28. 01.2010 Strengthening the Rule of Law

28. 01.2010 Rethinking Leadership Development

28. 01.2010 Managing the Global Commons

28. 01.2010 Rebuilding Critical Infrastructure

28. 01.2010 US-China: Reshaping the Global Agenda

28. 01.2010 Rethinking the Balance of Power in the Middle East

28. 01.2010 Rethinking the Eurozone

28. 01.2010 New Corporate Governance in the Post-Crisis World

28. 01.2010 Does an Algorithm Run Your Life?

28. 01.2010 Towards Low-Carbon Prosperity

28. 01.2010 Rethinking the Global Commons: Fisheries

28. 01.2010 State Leadership: An Opportunity for Global Action

28. 01.2010 Rethinking Africa's Growth Strategy

28. 01.2010 The New Growth Narrative

28. 01.2010 Design for Change

28. 01.2010 Rethinking Market Capitalism

28. 01.2010 Global Governance Redesigned

28. 01.2010 After the Financial Crisis: Consequences and Lessons Learned

28. 01.2010 2010 Investment Heatmap

28. 01.2010 Rethinking the Global Commons: Space

28. 01.2010 Restoring Faith in Economics

28. 01.2010 Right and Wrong: What Science Tells Us

28. 01.2010 Rethinking Business Ethics

28. 01.2010 “The Bard and the Buck”

28. 01.2010 A Future by Design?

28. 01.2010 The Year of the Flood: Speculative Fiction or the Edge of Reality?

28. 01.2010 Viruses -- The Alien among Us

28. 01.2010 Latin America: Facing the Democratic Challenge

29. 01.2010 Rethinking Our Values Framework

29. 01.2010 2010: Dodging the Double Dip?

29. 01.2010 Redesigning Capital Markets

29. 01.2010 Rebuilding the Grid

29. 01.2010 The New Normal

29. 01.2010 Redesigning Government Exits

29. 01.2010 Emerging Multinationals and Global Innovations

29. 01.2010 Redesigning the Global Dimensions of China's Growth

29. 01.2010 Sustainable Investment Goes Mainstream

29. 01.2010 Rethinking the Economic and Social Impact of Fitness

29. 01.2010 Rethinking E-governance

29. 01.2010 Entrepreneurial Science

29. 01.2010 A Global Solution to Illicit Trade?

29. 01.2010 Climate Change: Financing Urgent Adaptation

29. 01.2010 From Brain Drain to Brain Circulation?

29. 01.2010 Will Soil Become More Precious than Oil?

29. 01.2010 Reinventing Management: The Challenge of Exponential Change

29. 01.2010 IdeasLab on the Global Redesign Initiative (New Institutional Approaches)

29. 01.2010 Rethinking Economic Progress

29. 01.2010 Global Industry Outlook: Finance, Services and Media

29. 01.2010 Global Industry Outlook: Heavy Industries

29. 01.2010 Rethinking How to Feed the World

29. 01.2010 Wanted: Capital

29. 01.2010 Neuroscience Update: The Power of Perception

29. 01.2010 Business Leadership for the 21st Century

29. 01.2010 Do You Trust Your Data?

29. 01.2010 Entrepreneurship: The Key to Sustainable Growth

29. 01.2010 Engineering a Cooler Planet

29. 01.2010 The Nature of Intelligence

30. 01.2010 Rebuilding Education for the 21st Century

30. 01.2010 Securing Cyberspace

30. 01.2010 Global Economic Outlook

30. 01.2010 Discover a Hacker's Mindset

30. 01.2010 The Great Shift East in the Global Agenda

30. 01.2010 Rebuilding Water Management

30. 01.2010 Redesigning Financial Regulation

30. 01.2010 Weak Signals

30. 01.2010 Facing a Sea Change

30. 01.2010 More than Just a Game

30. 01.2010 India's Future Agenda

30. 01.2010 Global Industry Outlook: Health, Consumers, Tech and Travel

30. 01.2010 Financial Risk Management 2.0?

30. 01.2010 Rethinking Trade and Climate Change

30. 01.2010 The US Legislative Agenda: A Global Perspective

30. 01.2010 A World without Nuclear Weapons: Utopia?

31. 01.2010 The Global Agenda 2010: The View from Davos

31. 01.2010 A Roadmap for a Sustainable Recovery

31. 01.2010 Being Responsible for the Future

When will the recession end? Part 42 More lies, revisions, paradoxes, deceptions, omissions.

Over a  year ago, I warned our regular Smart Economy blog readers to be on the lookout for well hidden, camouflaged government lies, revisions, over hype, paradoxes, deceptions and omissions that would create a false image of economic prosperity, where none exists and an illusion of "we're back to normal times."

Read the rest of the post below

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times,

published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1

 

Contact us to book your Opportunity Clinic workshop or for a keynote speaker for your next event

The Chinese Paradox

Take China-the fastest growing economy in the world...well maybe? I've always had my serious suspicions about the accuracy of Chinese GDP growth numbers.

100 years ago during the Great Depression, America was hit the hardest economically, because they were the "prime exporter to the world" and in the dirty 1930's when everybody stopped buying US exports, America suffered the most. (Just think...why didn't other countries in the 1930's suffer their own local  Great Depressions? (--well with the exception of the 1933 man-made, forced  Soviet famine in Ukraine, caused by the Soviet Union (read Russia).

China has taken over as the new  "exporter to the world" ( think Japan, America and Walmart) so China should now  be in a recession too and not just America. It just doesn't make any economic sense, unless the Communist government is orchestrating the biggest economic deception and ponzi scheme in the world.

Most savvy entrepreneurs and business people now recognise that all the billion dollar bailouts in China and the USA has only delayed the next great depression, but it didn't eliminate the looming threat of it altogether. All the trillions of dollars of private, business and national sovereign debt accumulated around the globe has to be deleveraged first, one way or another, before things get back to normal. 

[see How China Cooks Its Books  BY JORDAN CALIN  in the widely respected Foreign Policy Journal from 2009 http://www.foreignpolicy.com/articles/2009/09/03/how_china_cooks_its_books ; It's an open secret that China has doctored its economic and financial statistics since the time of Mao and there is nothing to indicate that anything has changed.  But could it all go south now?  --Walter Derzko]

Last June, as  the economy and exports in China were supposedly booming, industrial electricity consumption was dropping, indicating that industry was closing,defaulting and not growing as fast in any case. Since then, the communist Chinese government mysteriously stopped releasing public numbers on electrical demand and usage. I wonder why?

UPDATE: One reader responds with an on-the-ground view:

"...[...]..."in prefecture-level cities --- provincial capitals --- there is huge amounts of construction and consolidation. Huge apartment complexes are being built and older Cold War-era Communist-style housing blocs (nicknamed Khrushchevka's by the Russians--Walter Derzko) are being torn down. The adjustment in figures could also be a realization of energy efficiency as older buildings are torn down and new ones built." ..[..]...Maybe industrial electricity usage has dropped because Chinese companies are becoming more energy conscious and conservative. Lots of people I've met, befriended or interacted with have demonstrated a basic awareness of environmental understanding.

At the same time, most people don't have a deep understanding of anything other than the history of the country and society. Only financial professionals understand finance. Likewise, only teachers understand teaching. Society is very compartmentalized. It makes everything efficient, in a unique way, because not as many people engage in finger pointing criticism." 

We read reports that the  growth of new car sales in China has been growing exponentially but we don't see a corresponding increase in gasoline consumption. Has China figured out how to drive on air or water, or are Chinese officials just storing their new cars in the garage?

And what about all those exports? Where are they going when the cumulative imports of their top trading  partner nations are either flat or still decreasing? Global trade is not just at a comparative standstill, but has nose dived again from a local peak in Nov 2009. The Baltic Dry Index (BDI) is at record lows for the last two years, dipping from 4661 in Nov 2009 & dropping to 2864  on the last business day of Jan 2010.

Surely, the Chinese are more quality conscious and wouldn't be stupid enough and stoop low enough to actually buy and use their own junk and kitchy production at home?

UPDATE: Monday morning Feb 1, 2010, I received an email ( bold and underlining is mine for emphasis) from a regular Smart Economy blog follower --an expat living in China who writes a differing opinion:

Walter ...[..]...This is a fallacy that many economists and critics fall into. What they and you have failed to realize is that the Chinese consumer market is the largest in the world. And it is under-provided. Chinese consumers have historically not been prominent players in the global economy because of their relatively lack of wealth. This wealth is mainly accumulated in Beijing's foreign exchange reserves and sovereign wealth funds, not to mention the coffers of China's political elite.

However, this is changing rapidly. The financial crisis in the US is quickly shifting markets in China, and this effect is playing out now and will continue over the next two or three years. The average Chinese salary is rising, so Chinese consumers are awakening.

Additionally, the government's stimulus intended to get capital into the hands of consumers for consumption. I believe that it was distributed unlike the American stimulus -- which went directly into banks. The Chinese stimulus went into infrastructure projects. The trickle down to the consumer will be much quicker than in the United States. Chinese banks are also more willing to lend credit.

Finally, Chinese merchandise, while traditionally considered "junk", is no longer junk. Check the labels of everything that you own.

Industry leaders all outsource production to China, because that is where labor is most abundant and cheapest. Not to mention the political climate is stable, if not questionable to Western standards.You'll be surprised that most of what you own and consider "valuable" is made in China."

..[...]...I live in China, at the moment, in [ommitted to protect the identity of the email sender].

Here is relatively backwater, but it developing at an amazing pace.

There is construction everywhere, transportation networks are upgrading, business are closing and opening almost monthly. Renovation is rampant. It's all very exciting. This is truly a land of entrepreneurial opportunity, if you can clear your initiative through the authorities. Usually this means merely having the money and the resources required to succeed. Not a bad stipulation.

..or is it an inflating construction bubble, as some Chinese economists at the WEF at Davos are speculating ?--Walter Derzko

PBOC Adviser: Asset Bubbles Are Real Worry For China's Economy
Wall Street Journal
BEIJING (Dow Jones)--Asset  bubbles are "the real worry" for China's economy and the government should properly manage them, a key adviser to China's central ...

 Satyajit  Das, a risk analyst, writing about the current situation in China in a story called Riding the Dragon Part 3 observes:

"The Chinese economic model may be unsustainable. It relies on global trade and investment (much of it export related), which together contribute a high proportion of China's GDP. This trade entails importing foreign components that are then reassembled and then exported. Domestic consumption has been kept low. (this conflicts with the above observation--Walter Derzko) Treasure has been built up in the form of domestic savings and trade surpluses.

Recently, China announced that its $2 trillion treasure would be used to make foreign acquisitions to secure exclusive access to raw material. The problem is that China's treasure is already invested in assets of dubious value and limited liquidity to finance global consumption.

Chinese Premier Wen Jiabao warned that the Chinese growth was becoming increasingly "unstable, unbalanced, uncoordinated and ultimately unsustainable". That was two years ago! Currently, China may be aggravating the problems by massive liquidity-driven stimulus to perpetuate a failed strategy.

Speaking at the meeting of the World Economic Forum in Dalian on 10 September 2009, the Chinese Premier Wen Jiabao repeated his message from two years ago without signalling any change in direction: "China's economic rebound is unstable, unbalanced and not yet solid. We cannot and will not change the direction of our policies when the conditions aren't appropriate." 

So as you can see we clearly have two polar opinions about China. So is this an Equivicality Opportunity? (from the Opportunity Clinic--Walter Derzko)

Deflation vs Inflation?

Commodity prices on a number of industrial feed-stocks and inputs has jumped over 100% in 2009, but producers prices have been relatively flat, since the consumer is tapped out and in debt over their heads. One grocery store chain in eastern Canada has even announced that they will stop charging 5 cents for each plastic grocery bag and absorb the cost since the consumer is overstretched.

Many newspapers trumpeted the story last week about Ford, who announced that it has hired 1,500 new workers for a second shift in Chicago, but most neglected to mention that the starting salary for a new worker was only $14 per hour, half of what older unionized workers got when they first started. These newer union workers will never see the same salary caps in old age or pensions that current longtime auto workers now enjoy....a sign of the continued pauperisation of America.  I see more deflation on the way, and not inflation, which is what the government is truly wishing & hopng for ( to inflate their way out of this debt crisis.)

+5.7 GDP growth in the USA -Real growth or Voodoo economics?

And what about the stellar 5.7% 4Q US GDP number?  While government official and bankers where popping champagne corks, regular investors were selling (read dumping)  shares on Wall Street on Friday.  Google's two founder unloaded (dumped) $10 Billion dollars of their own google shares in the last quarter, taking profits off the table.  Even though they still own $29B in current valued shares, it's not a great vote of confidence for sustained growth in the US economy.

So is the +5.7% GDP increase a sign of real economic growth in the US economy or just a statistical quirk?

The latter, it appears.

It's a statistical aberration if you look at the numbers that make up the GDP.

2 /3  or 60% of the +5.7 GDP growth was due to a process called inventory adjustment-a one time boost to the economic bottom line.

Here's the logic.

As sales on everything nosedived during the 2008-2009 recession, due to excess capacity and falling demand, companies were left with backlogs of excess unsold inventory of all sorts. Instead of making new goods, they first reduced and sold the backlogged inventory. Only then do they begin to restock. This restocking in the 4Q 2009 added the 3.4% to the +5.7% of GDP growth.  Note that this is product going on the back room shelf again, back into inventory and not actually out the door, being sold to the consumer.  Funny how that works-when you add goods to inventory thenthat counts at a positive to GDP, when you actually sell soemthing out the back door it's a negative impact to GDP.

Personal consumption which accounts for 70% of US GDP actually slowed in growth from 2.8% in the 3Q when we had "cash for clunkers' program to 2% annualized growth in the 4Q in the run up to Christmas. Since these are the first estimates of GDP they will likely get revised (probably downward by 30% ) just as we saw in the final 3Q GDP numbers. If you take out inventory adjustments, then  real economic growth for Q4 was only 2.3%. Subtract  30% from that estimate and you get an anemic +1.6% for Q4 GDP growth and that's with $787B in stimulus TARP bailouts. The US needs a minimum of 3% growth just to absorb the new 18-25  year olds who want to enter the workforce, forgetting the 7.2 million people who lost their jobs in the recession.

Another major paradox--If the recession is really over, then why has the NBER been silent on the topic and not officially declared the recession (actually a depression) over?

A more balanced, real-time, comprehensive and realistic economic growth indicator that I like better then GDP is called the Chicago Fed National Activity Index (CFNAI) 3 month moving average, which never gets quoted in the mainstream business media. Most entrepreneurs and managers in my class and workshops have never heard of it. It sharply contradicts the official GDP increase, showing  a slowing and flat. stagnant economy for Oct, Nov and Dec 2009 in the USA.

While Obama was cheer-leading the nation in renewed hope, jobs and prosperity in his State of the Union Address (the deception)-the annual WEF gathering of global CEO's, insiders,  politicians, top bankers and economists at Davos (i.e from the World Bank, IMF, Bank of International Settlements, numerous national Central Banks) were all unanimously (both privately and publicly) warning of a possible double dip recession, or W-shaped recovery (the reality).This falls in line with the over 100 assets, debt and hype bubbles that I've cataloged on the Smart Economy blog last week. It was interesting to compare my list of 100 bubblesto the WEF Davos session on the Next Crisis, which  was broadcast publicly.

But the WEF Davos  session I really wanted to see and hear the most was on Bubbles, which, as expected, was held behind closed doors and  out of public view...sadly no webinar was available.

Trouble with Bubbles

Date: 27. 01.2010 Time: 10:45-12:00

The US dollar is the major funding currency of carry trades as investors borrow at exceptionally low interest rates in search of higher returns around the world.

How can potential asset bubbles be spotted and addressed before they emerge?

[...odd..I had absolutely no trouble at all spotting and cataloging over 100 asset, debt and hype  bubbles in 2009 and into 2010 ..I wonder why mainstream economists are having so much trouble? --Walter Derzko]

At the end of  the Next Crisis Davos workshop (which appears to be a given, a-taken-for-granted assumption by most Davos attendees), participants were offered only 3 choices on what would precipitate the next financial crisis   1) excessive sovereign debt, 2) over-regulation of financial services or 3) or global trade protectionism.

As the Washington Post reports:

"Harvard economist Kenneth Rogoff kicked off the Wednesday discussion with a simple, depressing argument: The banking collapse is morphing into a long-term crisis of government debt.  Instead of financial panic, we now face an "illusion of normalcy," with governments stepping in to guarantee everything.  They've succeeded in fending off another Great Depression -- great!  -- but at the cost of skyrocketing debt." ..[..]...And if history is any guide, he said, financial crises are often followed precisely by a wave of sovereign debt crises a few years later.  "In countries like the United States and Britain, I'm not talking about default, but we certainly may have to see very painful political crises," Rogoff predicted, "belt tightening, higher taxes, slower growth." Rogoff, a former chief economist at the International Monetary Fund, believes we're fooling ourselves if we think otherwise: "We may tell ourselves we're better, we've figured things out .  .  .  We're different.  I submit to you: We're not."

Lord Peter Levene, chairman of Lloyd's of London, was up next, arguing that the prospect of overregulation poses the biggest threat.  "I'm from the government -- I'm here to help," he said mockingly.  "You guys in the industry don't know what to do, so we're going to fix it for you."

He was followed by Jacob Frenkel, a former governor of the Bank of Israel, who maintained that the threat of trade protectionism looms large.

The panelist I like the most and who seemed to be the most candid was Chinese central banker Zhu Min who warned the audience  of new Asian crisis.

Who won the debate?

Washing Post summarizes"

"Yet, even in this World Economic Forum crowd, full of fund managers and chief executives, conventional pro-market arguments didn't seem to resonate.  In an anonymous, electronic vote by the members of the packed auditorium, 50.7 percent agreed that government debt poses the biggest threat, 37.3 percent worried most about protectionism and only 12 percent feared over regulation the most."

Government Market Manipulation & Back room politics

It doesn't hardly surprise me that Bloomberg reports that:

"Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said. Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his new memoir, “On The Brink.” The Russians made a “top-level approach” to the Chinese “that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies,” Paulson said, referring to the acronym for government sponsored entities.  The Chinese declined, he said."

"Russia sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to central bank data."

Don't be surprised !!

I'm sure the US government and other governments have secretly  orchestrated market swings that go in their favor with the Trillions of dollars it holds in your and my tax monies. The estimated cumulatively accounts for the US government  likely totals over  $110 trillion dollars or $12 trillion for the State of California alone.  These secret, off-the-public-balance-sheet,  rainy day investment (CAFR) accounts,  reported in Comprehensive Annual Financial  Reports (CAFR) or Annual Financial Reports are traded by Goldman Sachs and other investment banks. (see Walter Burien's eyeopening video "The only game in Town on http://www.cafr1.com )

And here is my favorite head scratcher:

The tiny African country Ghana has revised its GDP, not by a tiny fraction but up by 50% - Go figure !!! and now projects a 22 % growth in GDP in 2011. ..[next African Growth Bubble?--Walter Derzko]

Ghana’s GDP May Be Revised Up by 50%, Standard Bank Says

By Emily Bowers

Jan. 28 (Bloomberg) -- Ghana may revise up the size of its economy by 50 percent, after underestimating growth for years, Standard Bank Plc said today.

“The implications are clearly huge,” Stephen Bailey- Smith, head of Africa research, said in an e-mailed report.  “Many of the risk measures that we calculate will have a significantly lower denominator,” including fiscal and current account deficits.

While reducing the relative size of the budget deficit, the revision may also cut the impact of oil production, which will begin later this year and was expected to push economic growth to 22 percent in 2011, Bailey-Smith said.  The revision would give a greater weighting to more dynamic sectors of the economy, he said.

“It is our understanding that the Ghanaian authorities (confirmed by the IMF) believe that they have been underestimating GDP and thus GDP growth for many years,” Bailey-Smith said.

No-one was immediately available at the Finance Ministry to comment.

The Bank of Ghana will probably cut its prime lending rate, currently at 18 percent, by 2 percentage points next month, Standard Bank forecast.  The domestic currency, the cedi, will strengthen to 1.35 to the dollar by the end of this year, Bailey-Smith said.  The currency was trading at 1.4305 as of 11:09 a.m. local time.

I wonder where all the hot "carry trade money" that sloshes around the globe is heading to next, after $ $608.5 million dollars just exited from the Russian equity market in the past 12 weeks-another equity bubble that was overinflated and ready to burst.

Have you seen more government lies, revisions, paradoxes, deceptions and  omissions?

Email me and I'll post them.

Walter Derzko, Smart Economy, Toronto

 

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times,

published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1

 

Contact us to book your Opportunity Clinic workshop or for a keynote speaker for your next event

Ten predictions and wild cards for 2010

Everyone likes to play soothsayer in the beginning of each new year, so here's my crack at predictions, black swans  and wild-cards for 2010...but  I genuinely hope that 1, 6, 7,8,9 & 10 don't happen...where is Merlin when you need him?

1. PREDICTION: Several distant earthquakes trigger "ring of fire" volcanoes to erupt &  usher in a period of global cooling - decade long  mini ice age
2. PREDICTION: Evidence of extra terrestrial life (viral/bacterial, prions, other?) confirmed on another planet or moon & /or  artificial life created for the first time with synthetic biology on earth.
3. PREDICTION: Major medical breakthrough cure annonced -Nature's silver bullet ; Hydrated Fullerenes (C60) launched on the market to cure  dozens of  diseases and ills all at once (antiviral, anti-bacterial, anti inflammatory, anti-oxidant, anti Alzheimer's , anti-radiological etc.)
4. PREDICTION: Quantum physics algorithms are created to provide secure banking and computing  and the world wide web.
5. PREDICTION: Carbon nanotube market and novel apps boom
6. PREDICTION: An 8+ earthquake hits the North American west coast
7. PREDICTION: Major unexpected global food crisis and shortages, (from extreme weather-drought, frost, flooded cropland etc, blighted wheat,  bee colony collapse, drought stricken rice in Asia to severely depleted fish stocks, red tide/algae blooms ) REALITY: Florida Freeze Damages as Much as 5% of Orange Crop BusinessWeek Jan 10, 2010; Big freeze brings food shortages and price rises Jan 10 2010;
8. PREDICTION: Several political coup d' etate will occur in one or more developed, failed and developing countries ; ie child Talaban bombers in Pakistan (see school)  
9. PREDICTION: America looses its triple AAA credit rating. (Does every empire have an expiration date? Is America past its due date?)  REALITY: Moody's puts Canada USA, UK on Credit Rating Watch List; Slow  continuous Pauperization of the two former world powers- Russia and the USA ....DeAmericanization-the US reverts into an undeveloping nation with riots, shortages, debt defaults, terrorism, tax revolts (see http://cafr1.com/) and bank boycotts  (just like Rome or the former Soviet Union) . China's economic miracle stalls flat. [BACKGROUND:  The 'American Empire' has peaked, is on a decline. Hong Kong economist Marc Faber says "the average life span of the world's greatest civilizations has been 200 years ... Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social tensions increase; and society enters a secular decline." Online Collectivization REALITY: Boycott Big Banks
10. PREDICTION: A new youth based radical political party formed with new charismatic leaders (see school)

Walter Derzko, Smart Economy, Toronto

 

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times, published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1

Why do some e-marketing ad campaigns work and go viral and others don't

Why do some online ad campaigns go viral while other online marketing messages gather "cyber-dust" on the information superhighway? The key may lie in the motivation of Internet users to email that content to their social network, say researchers from Ryerson University and Simon Fraser University.  

"As more advertising dollars are shifted to viral marketing campaigns, little is known about the factors that contribute to their success, or the Internet users who voluntarily pass along this content," says Melanie Dempsey, an assistant professor of marketing in the Ted Rogers School of Business Management.

Dempsey has co-authored a study on viral marketing with Jason Ho of Simon Fraser University.

The researchers' goal was to gain insight on the factors that prompted Internet users to forward online content to their friends and family. They studied what they call 'e-mavens', people who spend a lot of time online, know intuitively what the next big idea is and spread marketplace information via electronic platforms, such as email.

They asked 582 e-mavens, who are undergraduate students at a major university in Toronto, to fill out an online survey about their motivations for forwarding content, how often they share information electronically and how much time they spend on online activities (such as watching YouTube videos).Dempsey and Ho identified four potential motivations that may guide an e-maven's behaviour.

-First, the need to be part of a group.

-Second, the need to be individualistic and stand out from a crowd.

-Third, the need to be altruistic and

-Fourth, the need for personal growth.

The researchers discovered that Internet users who are more altruistic and/or more individualistic, tend to share more online content than others.

"While e-mavens want to help someone by forwarding online content that may interest them, at the same time, they want to be recognized as an expert," says Dempsey. "So although e-mavens carefully choose what will be forwarded, they are also trying to manage their self-image. E-mavens want to be unique."

The researchers also found that participants who spend more time online tend to share more information with others in their social network. Spending more time surfing the Web also may allow individuals to feel a sense of inclusion.

All of these results, according to Dempsey, may help viral marketing campaigns achieve more success.

"Given the amount of clutter on the Internet, marketers must be able to cut through that chatter and give the e-mavens a reason to share a marketing message with their social network. If they can appeal to the altruistic nature of these Internet users and boost their image online, a marketing campaign will have a better chance of going viral."

Source:  Ryerson University, Toronto;  Their paper, Viral Marketing: Motivations to Forward Online Content, has been published online in the Journal of Business Research.

Walter Derzko