2 minute video - which if you removed the world Iceland, and replaced United States would really sound like a complete parallel (except their stock market is down 90%; and their exports of horses are on the rise as their currency crumbles)
In my 2009 Outlier Predictions [Dec 16: 13 Outlier 2009 Predictions] posted on Tuesday, I wrote specifically of my fears with Russia
Russia, if low oil prices persist, invades another former satellite country both as a nationalistic reason (diversion to the populace from worsening domestic conditions) and to try to light a fire under European natural gas, and/or oil prices.
In Friday's Wall Street Journal, the front page story focused on Russia... keep your heads up.
- Russia's oil-fired economic miracle is unraveling as industry shrinks and job losses mount. Now the first stirrings of social unrest have the Kremlin groping for a response.
- Gloom deepened over the outlook for oil-export revenue, Russia's main earner, as prices plunged Thursday despite OPEC's move this week to deeply cut production. This could spell trouble for Russia, which has pegged its 2009 budget on much higher oil prices, meaning it will have to trim spending.
- The drop in oil prices is eroding the Kremlin's ability to replenish its gold and foreign-currency reserves just when it needs them most. Although the country's reserves are the world's third-largest behind China and Japan, it has been spending tens of billions of dollars in an attempt to prop up its falling ruble and stave off public panic.
- Since October, more than 7,500 firms have informed the government they intended to lay off people, and 207,000 workers have had their working hours reduced, he said, calling these "worrying signals."
- The government is drawing up a list of the most significant enterprises that might need a bailout, Mr. Putin added. That would come on top of the more than $200 billion the Kremlin has already pledged to shore up the economy. (sound familiar?)
- ...popular discontent is growing. Last weekend, thousands of angry residents in the far eastern city of Vladivostok took to the streets and blocked traffic to protest government plans to raise tariffs on secondhand foreign cars, which are one of the impoverished region's biggest moneymakers.
- Similar protests have been attempted in Moscow, St. Petersburg and Kaliningrad, and further demonstrations are planned for Sunday in Vladivostok.
- Public anger also spilled onto the streets this fall in the Siberian town of Barnaul, as thousands of pensioners who had lost their right to discounted public-transport tickets staged noisy protests.
- The prospect of further unrest poses what could be the biggest challenge yet to the authoritarian system built by Mr. Putin. It also foists a stark choice on the Kremlin: to stifle dissent, or to placate protesters to provide some kind of pressure outlet. For now, the Kremlin has decided on a mixture of both. But the government's options may narrow as its financial reserves shrink.
- "They're incredibly scared of this," says Yevgeny Gontmakher, an economic adviser to the Kremlin. "They don't know how to operate in this environment."
- Such social protest has been rare in recent years amid widespread political apathy and fear of government retribution.
- Previous periods of low oil prices in the 1980s and 1990s contributed to the downfall of two Kremlin administrations -- those of Mikhail Gorbachev and Boris Yeltsin. Often, social discontent has begun in Russia's far-flung regions, where Kremlin control is comparatively tenuous.
- Public panic is one of the Kremlin's greatest fears. "I've already seen how things get worse as the result of an oil-price collapse," says Yegor Gaidar, who was acting prime minister in 1992. "It's dangerous -- but people who have not governed a nuclear-armed country don't quite understand that."
*note - only political junkies will understand the implied joke about looking into Putin's eyes. For the rest of you, trust me it was funny ;)
On to the social acrimony I see rising substantially in the Happy New Year... folks, American papers really seem to gloss over much of what goes in the world. We are very American-centric here. Thank gosh for UK papers who actually have a more world friendly view. Behold what could await the globe after the firecrackers Dec 31st. As each individual country's politicians are threatened by a peeved off citizenry (except here in the US where people seem to just "take it"); expect protectionism as a reaction.
UK Telegraph: Protectionist Dominoes Are Beginning to Tumble Across the World
- Greece has been in turmoil for 11 days. The mood seems to have turned "pre-insurrectionary" in parts of Athens - to borrow from the Marxist handbook. This is a foretaste of what the world may face as the "crisis of capitalism" - another Marxist phase making a comeback - starts to turn two hundred million lives upside down.
- We are advancing to the political stage of this global train wreck. Regimes are being tested. Those relying on perma-boom to mask a lack of democratic or ancestral legitimacy may try to gain time by the usual methods: trade barriers, saber-rattling, and barbed wire.
- ...."If we are not able to do that, then social unrest may happen in many countries, including advanced economies. We are facing an unprecedented decline in output. All around the planet, the people have reacted with feelings going from surprise to anger, and from anger to fear," he said. (not so far in the US - first you need to teach people what is going on before they can be outraged about it)
- Russia has begun to shut down trade as it adjusts to the shock of Urals oil below $40 a barrel. It has imposed import tariffs of 30pc on cars, 15pc on farm kit, and 95pc on poultry (above quota levels). Police crushed "Dissent Marchers" holding copies of Russia's constitution above their heads in Moscow's Triumfalnaya Square.
- India and Vietnam have imposed steel tariffs. Indonesia is resorting to special "licences" to choke off imports.
- The omens are not good in China either. Taxis are being bugged by state police. The great unknown is how Beijing will respond as its state-directed export strategy hits a brick wall, leaving exposed a vast eyesore of concrete and excess plant. Party officials have warned of "mass-scale social turmoil".... saw a move towards export subsidies for the steel industry and a dip in the yuan peg - even though China already has the world's biggest reserves ($2 trillion) and the biggest trade surplus ($40bn a month).
- So is the Communist Party mulling a 1930s "beggar-thy-neighbour" strategy of devaluation to export its way out of trouble? Such raw mercantilism can only draw a sharp retort from Washington and Brussels in this climate.
- The last great era of globalisation peaked just before 1914. You know the rest of the story.
- Masked rioters set fire Saturday evening to the offices of a credit data company in Athens, continuing protests that have raged across Greece for two weeks.
- Earlier Saturday, protesters attacked a city-sponsored Christmas tree in central Athens, tossing garbage and hanging trash bags from its branches before clashing with riot police.
- Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits in the calendar year 2007, an Associated Press analysis reveals. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.
- Crisscrossing the country in corporate jets may no longer fly in Detroit after car executives got a dressing down from Congress. But on Wall Street, the coveted executive perk has hardly been grounded. Six financial firms that received billions in bailout dollars still own and operate fleets of jets to carry executives to company events and sometimes personal trips, according to an Associated Press review.
- Wall Street's reliance of the rarified mode of travel has largely escaped the scorn poured on the Big Three automakers.
- Insurance giant American International Group Inc., which has received about $150 billion in bailout money, has one of the largest fleets among bailout recipients, with seven planes, according to a review of Federal Aviation Administration records.
Off to go find some panda pictures....98% gloom/2% panda - 2009 here we come.