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Saturday, October 20, 2007

Uh-Oh . . . Is That Mean Old Mr. Inflationski we See Behind the Curtain?

The Moscow Times reports double-digit overall inflation in Russia's future, with prices on the market basket of goods ordinary people can afford even higher:

Rising food prices swung to the top of the political agenda as Finance Minister Alexei Kudrin conceded Thursday that inflation could hit double digits this year, busting through the government's target of 8 percent. "We have not yet completed our own forecasts, so I turn to experts' views, according to which inflation could be about 10 percent," Kudrin told reporters.

With the State Duma and presidential elections looming on the horizon, rising consumer costs and spiraling inflation are emerging as political hot potatoes. Higher food prices were a dominant theme in President Vladimir Putin's televised call-in show Thursday, as several pensioners quizzed him on what he proposed to do about it. Putin announced that the government had started to sell grain from national reserves to ease domestic prices, a measure that comes on top of cuts in import tariffs on milk and other dairy products earlier this week. Putin also backed calls for a crackdown on local monopolies in the country's food markets.

Over the last year, milk prices have risen 16.5 percent, butter has risen 20.3 percent, vegetable oil 17.1 percent and meat 7.4 percent, Russian Newsweek reported Monday.

State television this week has shown footage of Prime Minister Viktor Zubkov checking food prices in stores, a visible sign to voters that the government is taking the hikes in food prices seriously. "I've noticed the change, but prices here are always rising," said Nadezhda Osipova, 68, a shopper at a Ramstore supermarket in northern Moscow. She added, however, that the store had "good discounts for the basics: sugar, salt and flour." Earlier in the day, Deputy Economic Development and Trade Minister Andrei Belousov said full-year inflation could be even higher than Kudrin suggested.

Soaring food prices were the main reason behind a rise in consumer prices of 0.5 percent in the first week of October, and 0.4 percent in the second, Belousov told reporters. Food accounts for more than 40 percent of the country's consumer price index. Analysts have said for some time that the government's 8 percent inflation target was looking increasingly unlikely to be met, but Thursday's comments were the first time officials have conceded that inflation could reach double digits. "It's not easy to acknowledge [higher inflation], particularly in an election year, when the political aspect of low inflation is crucial," said Julia Tsepliaeva, an economist at Merrill Lynch.

Agriculture Minister Alexei Gordeyev this week said the government was in talks with retailers and producers to freeze prices on "socially significant products," such as milk, vegetable oil and butter. Retailers have said they will introduce price freezes -- but only if manufacturers agree to do the same. In an open letter to Zubkov this week, the Russian Union of Dairy Companies asked the prime minister to consider their position, Kommersant reported. "We think that the adoption of measures on a federal and regional level to limit prices of dairy products is undesirable, as it represents yet another attempt to solve the population's social problems at the cost of the countryside," the letter said. Zubkov has hinted that rising food prices are down to more than rising costs, while the Federal Anti-Monopoly Service says it is investigating the country's six largest dairy companies over price collusion.

Shoppers at the Rizhsky market in northeast Moscow echoed this. "Prices have risen because the people who work at the bazaar have artificially raised them," said Valentina Maksudova, 75. "I believe in Putin. He will help fix the problem with the prices." [LR: These idiots also had faith in Stalin.] During Thursday's phone-in show, Putin said some local authorities had given preferential treatment to intermediary companies, which has driven up food prices. "[Authorities] must create market conditions and not protect those they have a special relationship with," Putin said. Marina Kagan, head of corporate affairs at leading diary producer Wimm-Bill-Dann, said a lot of the talk about price collusion had been "emotional."

"We are working with the [anti-monopoly service] on this issue," she said.

Unimilk, the country's second-largest milk producer, appeared to fall into line with calls for voluntary price curbs, saying in a statement this week that it would freeze prices until the end of the year. Producers argue that food prices have increased because of unfavorable market conditions. Kagan said the company had been affected by a particularly dry summer in the country's milk-producing regions and higher global demand for powdered milk products. "We are in a dialogue with the government, but there are some factors that are beyond our control," Kagan said. "Currently, we are not planning any price increases before the end of the year."

But analysts said it was not so easy for producers to freeze prices as they grapple with cost rises of their own. "All of the producers over the last 18 months have been trying to deal with rapidly rising costs: transportation, personnel, advertising," said Brady Martin, a consumer goods analyst at Alfa Bank. "Their response has been to raise prices." While analysts concede that the government's measures on import and export duties could have an impact on inflation in the short term, there is concern that retailers are simply too numerous for any price controls to have a widespread effect.

Alexander Morozov, chief economist at HSBC in Moscow, said the price controls would have a greater impact on cities such as Moscow and St, Petersburg, where the organized retail sector -- consisting of the larger supermarket chains -- represents a greater share of the market. The government has sought to emphasize the global factors behind inflation. "Our country is becoming part of the global economy and all that happens on the global markets affects [us]," Putin said during the program, noting that the growing use of grain in biofuel production and the lowering of agricultural subsidies in the European Union had all contributed to price hikes. Grain prices have risen 60 percent year on year globally, as higher energy costs and increased demand for grain have coincided with poor harvests.

Economists say domestic factors are as much of an issue in pushing up inflation. In the run-up to elections, the government has increased its appetite for budgetary spending, throwing money at pensions and wages. Recent hikes in state salaries have gone straight into consumer markets, said Tsepliaeva, of Merrill Lynch. A more palatable measure, perhaps, would be to allow the ruble to appreciate, but the Central Bank has already indicated that it will not do this before the end of the year. A weaker ruble helps domestic industry, crucial to filling the Kremlin's tax coffers, and the government has to balance the interests of industry and those of the electorate.

Masha Lipman, a political analyst at the Carnegie Endowment for International Peace, said the government had a tendency to throw money at its problems, rather than face up to the task of carrying out difficult reforms. "The policy of the current government is demobilization. They try to keep the people reasonably content and have pushed them further and further away from decision making," Lipman said. "This means that they can't count on the public understanding."

Forbes has more on the debacle, in an article headlined: "PUTIN ADMITS INFLATION IS OUT OF CONTROL."

Russian President Vladimir Putin isn't one to mince words--as evidenced most recently by a question and answer session, broadcast on Russian television on Thursday. During the broadcast he lambasted U.S. foreign policy on Iraq and Iran, accused Western companies hoping to snatch some of Russia's oil and gas wealth of indulging in "political fantasies" and promised to ramp up the country's nuclear arsenal. But lost amidst the tough talk was a rare admission from the president that the economy wasn’t quite as healthy as the government would like the electorate to believe, mere months away from presidential elections.

Putin said that inflation, which has risen by 8.5% so far this year, was a problem as the Russian economy hadn’t stayed within "the planned parameters;" he'd hoped to keep inflation below 8.0% for the year. Inflation is expected to rise even higher--up to 10.0%--according to Finance Minister Aleksei Kudrin. "This is a problem against which the government must fight," Putin, the KGB agent, turned President, said. Though of course Russia isn't to blame, he added. "Our country is becoming part of the world economy, and what happens on world markets has an effect on us," he said, laying part of the blame at the door of the European Union. He said that an end to subsidies from the EU had driven up the price of main food products by 25.0%. He said that the government was adopting measures to tackle inflation, such as reducing import duties on dairy products, and that prices would stabilize by the end of the year.

Needless to say the admission was also rapidly followed by protestations about the strength of the Russian economy and the government's responsibility for this. Putin said that GDP growth for the year has so far been 7.7%, while the country doubled its foreign investment and gold reserves and incomes rose by 13.4%. "Russia is strong enough and rich enough to defend itself," he added.

Fifty-five year old Putin, who took over as President in 2000 remains an idolized figure in Russia, despite his controversial image in the West. The question and answer session--his sixth so far--had 1.7 million questions submitted according to the Kremlin. Under the Russian constitution Putin will have to stand down before the presidential elections next March, rather than run for a third term. He has kept analysts second guessing not only about his own role--which looks increasingly like to be as prime minister--but who will replace him as head of a country which is rapidly beginning to reinstate itself as a leading global power.

Meanwhile, the MT reports, heedless of what the Russian people actually want or need, just as in Soviet times, the Kremlin barrels ahead with its crazed provocation of Cold War II, Arms Race Redux:

President Vladimir Putin announced Thursday that the defense industry was developing new nuclear weapons as part of a "grandiose but fully realistic" plan to rearm the military. "We will develop missile technology, including completely new strategic complexes," he said during a televised call-in show. "Our plans are not simply considerable, but grandiose. At the same time, they are absolutely realistic," he said. "Our armed forces will be more compact but more effective and better able to ensure the defense of Russia."

The clearly populist remarks were worded in a way that the public could easily understand. [LR: These remarks can only be populist if the people are benighted morons.] But the message also appeared to be aimed at the United States, which is determined to build a missile defense shield in Eastern Europe, despite Russia's objections. Putin also took a question on U.S. missile defense during the call-in show, vowing that the armed forces would respond if the plans went forward. "If these decisions are made without factoring in the interests of the Russian Federation, we will take steps to ensure our security," he said.

The military's General Staff is preparing the response, he said in answer to a question from an officer who participated in the testing of an intercontinental ballistic missile earlier Thursday. The Topol-M, the nation's newest intercontinental ballistic missile, was fired from the Plesetsk Cosmodrome in northern Russia and flew across the country to hit a target on the Kamchatka Peninsula. Senior Russian and U.S. officials have met repeatedly to try to resolve differences over the U.S. missile defense plans. Russia has expressed concern that the shield might be used to target its intercontinental ballistic missiles. Washington says it would only monitor and intercept missile launches from Iran and North Korea.

Putin met with the U.S. secretaries of state and defense last week to discuss the issue again, and initial reports indicated no progress. But Putin said Thursday that the two sides had edged closer to a compromise. "The latest contacts with our American colleagues show that they have indeed given some thought to the proposals we made, and they are looking for a solution to the problems and for ways to ease our concerns," he said. The Financial Times reported Thursday that the United States had offered to scale back its missile defense plans if Iran halts its nuclear program. The report, citing senior U.S. officials at a meeting of NATO governments Wednesday, said visiting U.S. officials told Putin about the offer last week in an effort to convince him to put pressure on Iran. Putin visited Teheran on Monday and Tuesday. Iran's top nuclear negotiator, Ali Larijani, said Wednesday that Putin had carried a "special message" that included the nuclear issue in talks with Iran's supreme leader, Ayatollah Ali Khamenei. But on Thursday, Iranian President Mahmoud Ahmadinejad denied that Putin had discussed any such trade-off during his visit.

During his call-in show, Putin also promised upgrades for the naval and air components of the country's strategic nuclear triad, including for Tu-95 and Tu-160 long-range bombers. He said conventional forces would be beefed up as well, with the commissioning of a much-delayed fifth-generation jet fighter in 2012 as part of a rearmament program that will be completed by 2015.

1 comment:

Artfldgr said...

One thing is for sure, money is not flowing around the country. Other things that are scarier, would be the remarkably huge number of things they have been doing. History of the past would say that they already, or are near to having a bunch of things that will suddenly be unveiled.

May Russia announced a new multiple maneuverable warhead nuclear missiles that has the ability to bypass the missile defenses that they claim are a problem (though states that we say the missiles are there to face, aren’t a problem for us to hit their technology).

One thing that is a big panic though is that the states that just bought lots of things from Putin just found out that this stuff doesn’t work.

“Syria took delivery of MIG-31E interceptors capable of simultaneously shooting several targets more than 110 miles away and the Pantsyr-S1E self-propelled anti-aircraft gun and missile system “

However, here is a little fly in the ointment on Iran issues. Syria and Iran signed the kind of agreement that made WWI so much fun. In 2005, Syria signed a mutual defense pact with Iran.

Remember I said that Iran is the conduit? Well I did some checking, and guess what; they are the conduit, and often through Syria.

“Iran uses Syria as a conduit to re-supply Hezbollah. After the 2006 34-day war, Tehran rearmed and financed Hezbollah through Syrian middlemen to prepare the terror group for the next battle with Israel.“

I do not see anyone looking at it from a view point of what would happen after, they are all concerned about what would happen during. A kind of short sightedness that kind of keeps the discussion locked into the potential horror of conflict, and not on the results that conflict would bring.

The vote in turkey though kind of sealed the deal for me in that, as was recently pointed out on the net, the Turks hate Americans more than any one else. However angry and hateful, the Turks haven’t been dumb. They even probably see a chance to grab some new property and such if things go up against Iran, but as it looks Syria and Iran come as a package war deal. Though Syria’s recent bruising showing that their country is open and undefended might make them waffle on HOW they execute their side of the agreement given hostilities.

Putin needs cash. If he is modernizing and building as he has been, there has been a lot of stuff put into it. From yamentau mountains upgrade (and building of quite a number of other locations), new missiles, new torpedoes, and on it goes.

His state does not make a lot of marketable products, and since the people are earning so little and such, they are not going to turn around and become the economic force he needs to generate capital that HE can use. his people cant generate enough income for him to tax to take and spend on equipment.

That leaves raw materials, information, and weapons… what else are they really dealing in that puts such monies in state hands to fund the things that the state wants?

This is the huge problem that makes them dangerous, and the fact that one of the two major money makers for them, oil/gas and illegal arms is being threatened. Not only that but if those are the only things they are really trading in or have to trade, their influence in these states will plummet.

I don’t think that to do that is the design of the deal. The US has given Russia literally billions of dollars and there is very little hatred that I can sense, in fact the opposite, towards Russia. Most people think they are in the straights and there is no ability to actually be a danger. Though people forget that expertise and such can be transferred too, and that results in competency changes.

There is quite a bit of evidence that Laden was part of a pincers style tactic in Afghanistan. In this way, Laden who seems to be on our side, and seems to be against Russia, at the expense of Russian soldiers, ends up moving vertically very fast by such manipulations, along with the added bonus that all the best against them are also now known. It wasn’t that Laden suddenly found a new religion; it was that he was long ago on that side, and doing well. Or does all the training and competency come from the luck of the draw? Economically they are not staggering the world, but tactically they are doing what? Who is helping them? Gen. Ion Pacepa of Rumanian DIE has pointed out that much of world terrorism came from the motherland and lots were committed through his offices before he decided to change sides.

There are not many countries with tactical knowledge and minds trained that can be put on tasks to create the end result of a small group with such abilities. While money can buy a lot it also gets attention. However advisors and their states barter, and if the thing is ultimately in their favor, then the barter is to grease things for them.

Islamic fundamentalism is a problem, while I will not join the crowing about all Muslim practitioners. The court is still out on that one as it has not gone either way. A large portion of it is that there is backing and such and advice, and a milking of the public that under more ordinary circumstances would just go on with their lives.

I will say to those wishing to actually see something that makes sense in the area to open up a map. Note that the game is influence and control. Ownership is not actually important if someone else exercises control, ownership is a problem if it prevents someone else from exercising control. This is the view of the leader, while the leaders project the view of the proletariat. That view is that nobody should own anything, which puts the problem into the territory that no one can prevent the exercise of control, because they do not own and can’t prevent use.

The reason I showed that view is that for a state as large as the US or Russia or many others, they can exercise control of other states. The key difference is that the United States existence and promised future is not dependent on Russia being destroyed, but actually quite the opposite. The larger the customer base the easier it is to generate massive wealth and such, and the more savvy the base the more productive they are and the more it spreads around.

However Russia under the communist system, which is what they have still, but reformed (which it can do at will technically, and as drastically as it wishes. The fact that many die when this happens shows that there are no limits that will stop that wheel from turning if they turn it), has made the eradication of all other economic systems its purpose, and has decided that there are no limits to this game OTHER than those that would not work towards that outcome.

This is why most states that want to trade and make junk, and so forth, are generally threatened by that existence. Though they could remove it, they don’t. If that was their ultimate goal, it wouldn’t be impossible.

So it is vital to one side to have control over states and what they do, and that need requires that the other sides join the game. Ultimately this is what makes the cold war so bad, there is no way to opt out. Everyone that wants to play becomes a target, and if you don’t want to play you become a target, unless you’re living on something totally worthless to the main instigators of the game.

Russia wants control of more resources since it sells resources for its machine. So it beefs up anger against some enemy in a bunch of states, and keeps it running. It provides weapons and expertise (with forked tongue), and it teases with new technology piecemeal. This allows them control over oil or the results of oil sales as it goes into their pockets not the pockets of the population of these states.

Iran is stuck the way someone gets stuck when the state wants to build a new highway system. Except in this case, there I no place to move to, so you have to exist as this conduit. The conduit is so important to one player, and that player is the tougher of the two main players in what actions they take, and so the side to pick to befriend is a no brainer, and it ultimately leads to them uplifting someone that has no limits and can handle the system in a way that the only issues are the bigger picture issues. There are few issues with the public. To the 600 lb canary, this is good. It means that the conditions of limits does not exist and there is complete strategic freedom.

The person uplifted maintains the situation, and they do what they are told. In exchange, they continue to keep a position that without the support and advice, would not be effective enough to maintain the public situation.

So in these states the game is to keep them unbalanced, and keep the resources under the control of such situations. So Iran gets teased with nuclear weapons and such, and that justifies the leader in office cause he is getting stuff no one else is getting, and the people who are pumped up through control of their perceptual reality, stew.

So again the situation is that they control the resources and can manipulate many features of it. instability drives up the profits on raw materials, and often causes buyers to take more than they need for a while (its not sustainable). You can color in the states that are in this situation. They are the ones with a public you can pump… and not the ones in which the public is neutralized. The smallest nothings with no resources are pumped because results of that makes them valuable to a certain someone. Some are a bit of both, like Syria, because they are close enough to be both. Iran isn’t that close, and ultimately it does better just playing the weapons shipment hub of the middle east and Africa.

Its not that these states are crazy and that’s why they want nuclear weapons. well maybe a little becase its easier to control a zealot than it is to control a thinking man and often less dangerous. Besides when someone gets rid of him, everyone is too happy to care for the details.

Their desire is two fold. The potential to crush something they hate is the carrot that keeps them under the harness..but for the leaders, it’s the freedom it would give them from being under this situation. Once its complete, the ability of control diminishes a lot in the realm of military and such, though it then picks up with interstate intrigue and espionage. Which really isn’t different any way since they are key and intrigue is a constant.

Ultimately there are several outs. One is that the west goes to war, and in that situation the regime changes and they are no longer under the thumb. (this has backfired a lot because since they are not kept, they can turn, which is not something they can do with the other player to any great degree).

The war thing is the only discussion on the table, though it also will involve Syria, unless Syria bails, or the change happens fast, in which Syria can say… I didn’t have time to act. I do not think that Syria will act other than to let troops move back and forth over the border. However, since they are in little position to argue it will not amount to too much.

Another thing is that Russia hands Iran a small nuke to put in a hole and set off. That would change the whole face of the game and no one would act. The situation would freeze. Whether it will tactically go that far, that’s a whole other thing.

While Iran can change sides and then open up, I doubt that they will, since the return demand would be that Al move to the country and retire, time to let someone else drive. It’s a clean play. Gets them out, but since it would not let the current resident stay, its not going to be an option. Though letting him stay may end up being a bargaining chip to a faster outcome.

If the west gets wishy washy it will accept one of the “you win” compromises where they seem to get something out of it, like inspectors, but none of those things will have any effect at the arms moving. That’s what will happen if the democrats take office. Might even be what will happen anyway given the political winds.

If this last one happens weapons will continue to flow. The 100 years war (a series of close wars and conflicts that together have that name), was like the middle east situation in that the resolution of that situation doesn’t come, as there are other forces supporting the continuations.

Ultimately if you wanted to be serious about no more arms to hizbollah (at least not enough to support war), and no more arms to Africa, and no more arms to here or there, and a state will not stop doing that because it’s a major revenue stream for those in power, then what do you do? blockade those weapons? On the sea it’s easy, no one around for miles and subs don’t leave footprints. However given the way thing work it isn’t as easy as movies make it.

If the weapons come over land, through another state that wants the forbidden technology that you wont provide, and the other will, there is no limit. Not only are they getting a route, but that route is sovereign. Something the ocean and canals are not. The route also hides everything your moving. The volume of over land things is so large that lots of stuff can move and unless a border searches it, there is no way to know whats in it.

Also there is plausible deniability, that once they leave your hands its not your responsibility. However, look at that map, shipments are traceable back to them. that is unless chavez starts making them and shipping them taking the heat and helping to make the situation more ambiguous.

Putin is not stupid by a long shot. If this is not going to end in some sort of compromise that amounts to nothing, then he has to pump up and such before that time. He cant just suddenly turn around and yell RAWR… he has to establish in the minds of the people he is going to press the issue on, that they have stuff. the public forgets fast, and most don’t remember that new nuclear weapon from may or things from a year ago. This whole puff up and such is getting all the items that they have to surface at the same time in the news at once. That way, when they lean and make some kind of, our troops and your troops shouldn’t get that close. This too needs preparation time, and so the problems in these northern border countries, can suddenly escalate (due to some tale of heavy conflict) and create a situation where the troops can get near each other. This has been done several times before. In Israelis war the US didn’t intervene due to Russian presence.

I believe that war is the choice option since it will close the door. If not permanently at least for the time that the situation is hot. After all, rolling down the window and saying these machine guns are for the war 4 countries over, will not wash.

Secret US air force team to perfect plan for Iran strike

the reason that I think that its war is that Russia still has lots of operatives in the west, and that if we were making plans, they would know that real plans and such were being made, and perhaps part of their nature. They cant do much about it to prepare anything as that would say “hey! We know”, so it sits and other options have to be taken. They also will not provide Iran with anything that might counter stealth or such. that would remain a secret for them if it exists at all.

Project Checkmate, a successor to the group that planned the 1991 Gulf War’s air campaign, was quietly reestablished at the Pentagon in June.
It reports directly to General Michael Moseley, the US Air Force chief, and consists of 20-30 top air force officers and defense and cyberspace experts with ready access to the White House, the CIA and other intelligence agencies.

This is the only thing that makes sense to me. why else would the bother be worth it. after all? Russia has huge resources, Irans only use is to buy stuff, and to help control the amount of oil reaching the market and increase the per unit return. It allows them then to use such things as leverage when dealing with other states in their local sphere.

Unless there is a greater reason, like the conduit for weapons and mischief, its just not worth that much.