A Wind of Change

 Much can depend in a nation's life on the personality and beliefs of its leader. Even more, often enough, on those of the men surrounding him. To this, Russia is no exception.

President Putin has always stood by the re-industrialization of the economy and the advancement of the real economy vs the financial economy. However, this always met with limited success and seemed to only make advancements more in a reactionary manner to key anti-Russian world events. Import substitution, raised due to western economic war on Russia, is a prime example of this. While successful, its success has been much more limited then by any account it should have been. It is as if the ship of state was constantly being met with a ponderous head wind, breaking its progress. Agriculture and military have been the exceptions.

Indeed, that head wind was the number two man in Russia. An avowed Atlantist and part of the globalist financial elite, Dmitry Medvedev, as prime minister, was never exactly pro Russian development or mercantilism (there it is that evil word Mercantilism, so hated by the neoliberal free trade crowd). It can be understood of course as 1. Financial economics by its nature is an extraction economy, its quick cash through liquidation of industry and sell off of resources. When backed up by people who see themselves as citizens of the globe or global elites and hold no particular driving and all consuming love for their homeland, their Rodina, this is a formula for disaster.

Since the removal of Medvedev from power and with him the Atlantist neoliberal block and their replacement with Prime Minister Mishustin, the winds of change have arrived.

This was first seen by the Russian advantageous positioning to support the economy during and after the Covid19 lock-downs. I detail these HERE. In tendum, the Russian government gave assistance to the Russian medical supply and biotechnology industry to allow Russia to become an over night medical equipment heavy weight, bringing forth top of the line technologies (detailed HERE) and to be the first to start mass production of the first registered Covid19 vaccine (detailed HERE). Already nations have lined up to purchase and franchise the production of equipment and vaccine. Russia has also shown an ability all over her vast distances to greenfield to completion almost two dozen hi-tech medical hospitals, projects completed in under 100 days each and not temporary trailers like the Chinese "wanders" but permanent building with all the hi-tech equipment (also Russian made) that would be expected from world class facilities.

"The president gave marching orders for the government to work out a package of programs for the growth of the Russian IT industry, to create maximum comfortable conditions for specialists of this industry. Now we are reviewing the changes that will be required in the legal codes to create tax havens for the IT sphere."

Prime Minister Michael Mishustin

One such maneuver is the lowering of pension taxes required from the IT industry from 15% down to 7.6%, almost a 50% cut. Taxes on profits will drop from Russia's already low 20% to 3% for companies who earn 90% of their profits from production and sale of software solutions.

Additionally, manufacturers of electronic equipment and AI systems will also be covered under these new taxes.

No major economy in the world has such beneficial tax codes for the IT industry. Coupled with the fact that Russia produces more engineers than any other nation, an excellent communications infrastructure that is now being upgraded to 5G, its comparatively lower salaries compared to other nations and very cheap utilities and land costs and there is no logical reason not to invest, except for fear bred by ignorance and foreign propaganda. Taking into account the weak position of the ruble vs foreign major currencies, for those selling abroad and ignoring this , it is just down criminal incompetence.

The Russian government has also undertaken a gigantic effort in reviewing, updating and deleting antiquated government standards throughout all industries. This has helped catapult Russia into one of the world leaders of the Ease of Doing Business index in 6 short years. What, the Western MSM forgot to mention that?

Post COVID 19, A World Only For The Rich

As most people with any lick of understanding of how the economic world works, at least in its present incarnation, understands that the rich, the really rich, are little affected by the downs of the economic cycles.

There are several reasons for this, one amongst which is mentality quite separate from the middle and lower classes. Many in the modern lower 95% of any modern society are dominated primarily by two strains of though: a duty to pay off any debts taken upon their shoulders and a live for today and face tomorrow when it comes mentality. Both of these are sure to always lead to disaster in a long enough time scale and even more so in the present post COVID economic collapse.

First, the mentality of the "duty to pay off debts". Believe me, the rich do not share your ignorant mental state, ignorant because it ignores the business construct of any such interest laden debt, that of mutual risk. Sure they foster that mental state on the lower 95% to make sure the poorer classes will spend their last penny in savings to pay off what will more than likely be confiscated anyways. They teach you that default and bankruptcy should be cringed at, as some how below real people of character. However, they themselves have no such qualms, never had and never will. Just look at how many times the president of the United States, Mr. Trump, has filed bankruptcy, as a millionaire and billionaire.

In truth, their approach is the correct one. When one takes out a loan, one is entering into a mutual risk agreement with the creditor.  The creditor knows there is a risk that the creditie will not pay off the loan and the creditor sets the loan rates accordingly. The creditie knows that there is a chance that he will not be able to pay off the credit and will loose the object of that credit and should, though most absolutely do not, set his priorities on payments (and thus the overall value of the credit) accordingly. At all times a cost vs benefit analysis should be done by the creditie, at all times during the credit pay off period. If it becomes a bad investment, and a house or car is just that, an investment, not your property or your "home" but a cold blooded investment up until the point it is 100% paid off, the creditie should be ready to cut his losses and return the keys to the creditor. This is especially true when the creditie looses their soul source of income.

Bankruptcy and default not a slur words and the rich have never had a second thought of utilizing the tools set before them to reinvent themselves and safe guard their wealth. 

Secondly, is the mentality of living for today. Most of the rich have plans and plans within plans. Those that work take on contracts with contingency plans, the golden parachutes of modern speak. They are always looking for better opportunities and will jump ship as needed. They do not hold loyalty to their companies as those companies do not hold loyalty back to them. This is especially true the lower one goes on the employee grade. Modern corporations will not think twice about down sizing or reducing paid staff as needed to dictated by economic prudence. The bigger the corporation the more this is the truth, with a few exceptions, primarily in smaller, talent dependent companies, such as consultancies, who are only as good as their talent and must be ready to plus up on a very short notice.

Of course, this was not always so. Under the more socialist models, it was disallowed and in some countries such as France, it is still very difficult, but in any Neo-liberal economic model, labour is a resource, as my MBA B-School professors taught us, a view I never agreed with, but that is irrelevant as 99% did.

The Rich are always on the look out, following trends, switching and reinventing themselves, their industries and their locations as need be.

However, as is the problem with all Neo-liberal economies, the super accumulation of wealth, whether its flaunted or kept behind tall walls, in the hands of a very small subset of society, has been on a relentless drive. In most Neo-liberal societies wealth and property ownership by the top 5% is often between 60-80% of that nation's total wealth. With that comes a power over politics unmatched in by any other segment and perpetuates the wealth accumulation.. As a matter of fact, if one takes away the description of the supposed form of government and compares wealth distribution in the Neo-liberal "democracies" with that of most Middle Eastern dictatorships, such as the Saudis or Kuwaitis, one will find more commonalities then discrepancies. With wealth comes real power.

Now we reach the post Covid reality, which is very quickly coming upon the majority of the world. Prior to now, in the global lock down, much was written about this and even more ignored. The majority of the lower 95% preferred to believe in the myths of the V shaped rebound: "just you wait, as soon as the doors open, it will be back to work and just like before". Like before was already broken and slowly sinking, now the corks are out of the barrels and water has poured in.

The reality is that many businesses aimed at the middle class and poor are gone. The cost of credit to open new ones and for the lower 95's purchasing are skyrocketing.  Social distancing laws are a force multiplier on price. Additionally, with mass unemployment will come a massive downward push on most salaries, even as meager savings are destroyed on survival.

Lets take commercial flying for example. With airliners required to seat passengers in every other seat, this will lower occupancy in large planes by 30% and in small commuter planes by up to 60%. Associations of commercial airliners and experts have already predicted an average cost of increase in tickets of 40%. This will put commercial flying out of the reach of the majority of Neo-liberal societies suffering from downward pressures on wages and lack of credit to fuel spending. Equally so for small and many medium sized businesses.

The average office manager will think twice before sending an employee to a conference or training. Sure, online trainings will take up some of the slack, but they are rarely of the same caliber or bring in the same revenue for the hosting company. Again, downward spiral of a negative feed back loop.

As fewer and fewer economy classes passengers will be available, ticket prices will inadvertently rise, making them yet more inaccessible, until the primary target will be the cost immune rich. I have flown on business class only flights, those do exist and they will start to expand, pushing out the unaffordable economy class flights. More and more, we will return to an era where only the rich flew and had that mobility.

A similar process will start to take place in many other industries: restaurants, live entertainment, vacationing, housing, upper education, insurance and medicine and so forth.

Additionally, as all of this is happening, already often bankrupt local governments are finding tax income streams collapsing while outlays are exploding. Like it or not, they will have to raise taxes, further destroying their economies, or force austerity, further destroying their economies or like several American cities have already done: file bankruptcy and quit the game.

The present landscape and its socioeconomic trends are moving much of the Neo-liberal world into a full tilt dystopia, something more akin to Latin American realities: a tiny upper crust that owns 80% of everything, a service/managerial educated 20% who owns the remaining 20% and 79% in total grinding poverty, debt slaved to the top 1%. A bright happy future this is not.

Another Blow to US Business Prospects in Russia

Today the news hit the papers that a group of US Congressmen, led by Eliot L. Engel, have put together a new bill of sanctions upon Russia for the alleged violations of human rights.

“Vladimir Putin is a cruel authoritarian with a long track record of silencing civil liberties, including freedom of the press, freedom of speech, political opposition, and democracy. We need only to look at the violent killing of Putin-critic Boris Nemtsov to see how Putin brutally suppresses those who speak out against him,” Engel said.

As I have written in the past, Russian freedom of the press is in quite good health, better health, one might say then the US corporate clone media. As for political freedom, Russia has 5 parties in parliament and over 700 registered parties in the country, many times more than the US or any of the other Western countries who have declared themselves the arbiters of democracy. Additionally, as to Boris Nemtsov, a man who by the time of his death, was a long gone political has been and could not have garnered 3% of the vote in the previous elections, having him gunned down across from the Kremlin, in broad day light only made sense in an Austin Powers movie or for a foreign power in need of a new martyr for a fake narrative.

So let us take stock of this situation. In the middle of a COVID exasperated but long foretold economic collapse, with spiraling systematic mass unemployment and mass bankruptcies of major retail corporations, meat rationing due to the closure of meat plants and the destruction of herds by bankrupt farmers, and a run away Fed that has now decided to print without end, the US has decided to up the anti.

Not satisfied with its endless wars in Afghanistan, Iraq and illegal intervention in Syria replete with the mass theft of Syrian oil, it finds itself on the brink of war with Iran and Venezuela, with new tensions with Cuba, with bad blood with its European vassals after out and out piracy of German, French, Italian and Canadian (ok they are not European) medical supplies. The US has launched in effect a war of words, accusations and again trade with China, a war threatening to turn hot. It has extremely tense relations with Turkey, has attempted to strong arm Saudi Arabia, the very nation because of whom the US dollar is the world's reserve currency. Even India has started to again distance itself after America's ham fisted attempts at putting pressure on that nation.

So in the midst of a total collapse in world credibility and partnership, the insanity that is the modern US government, to include both parties of the Congress, has decided to reignite the pressure and standoff with Russia, by creating yet more sanctions.

Russia has had waves of sanctions launched against it in the past 7 years. First for the democratic choice of Crimeans to leave the Ukraine after a western sponsored nazi coup, then for Ukraine's genocidal war against the Donbass that has thankfully failed, followed by the fictitious 2016 Russian election tampering, the comedy show of the supposed Skripel poisonings and for Rosneft continuing business dealings with the legitimate Venezuelan government, instead of confiscating and pocketing billions of Venezuela's oil revenues, like some others. I am sure I have missed a few more.

To this end, President Putin will now face ever stronger domestic pressure to respond in kind and further more so since Russia sent a plane of medical aid to the US and was already rewarded by howlers of Russophobia in the US media. Russian public opinion was very angry about any Russian sent help to the US which is seen by many as an aggressor. To that end, to put his hand out, President Putin took a hit to his own popularity. That this has now been repaid first by the western MSM screaming about cynical political ploys and now with additional sanctions, President Putin's position can not help but harden. Additionally the Medvedev Atlantist neo-liberal block has effectively been removed from power and those still remaining in positions, neutered.

So what does this mean for US business: more of the same as it has for the past 7 years. US business has lost market space, has lost revenue and opportunities. Not only has US business lost large chunks to European and Asian competitors, Russia through aggressive import substitution has created manufacturers who first filled Russia's own needs and are now starting to come onto the world market as competitors to those same American corporations.

Just a few examples: Exxon was forced out by Obama from the northern Russian marine oil fields. Rosneft brought Exxon in because Exxon already had the technology it needed. With Exxon gone, Rosneft was forced to invest its own funds into developing those same technologies and once developed, it is now free with its own patents to compete and to compete at a lower production margin. Exxon itself, in just one trillion dollar light sweet crude field, a field in a sea of many such fields, lost $100 billion over a 10 year period and the US taxpayers equally lost $10 billion in taxes.

The various large scale Russian infrastructure projects, such as the Amyrsk LNG plant, the World Cup football stadiums, the expansion of various Russian oil refineries over the past 5 years and so on have also seen strict banning of any US based vendors. When asked America's political instability towards Russia is the given reason.

Even world credit card markets now have the Mir card as a new competitor. True, still in the early stages on the world stage, it has taken over a large chun

In a post Corona and more precisely mid Greater Depression era, these major projects will be some of the few still left ongoing. The pressure on US business, with such huge closed markets, along with a loss of markets in China and a broken EU, will be enormous. What can readily be the very lifeline for millions of jobs is no more and can be no more in the face of the cowardliness of American business leaders to call out the insanity of Washington.

Such is the price of silence.

Every Catastrophe Offers Opportunity

In true form, when ever one door closes another door opens.

With Covid-19 ravaging supply chains all over the world, medical supply chains have found themselves no exception. From the early days of the pandemic in China to the now global crisis, it quickly became evident that outsourcing the majority of your medical materials and equipment manufacturing, including ingredients for medication, to one country, is hardly a good idea.

Long before Covid-19 became a household name or was even thought up, various voices in Russia were urging the government to more fully invest in local manufacturing of at least medicines if not the equipment for hospitals. The government was slow to act, however the financial and economic war that the West declared on Russia in 2014 brought more attention and political will to this issue.

As President Putin made it his aim for the drastic improvement of the Russian medical system, especially outside of the top 5 major cities, it quickly became obvious that importing all the needed medical equipment would prove to be a very expensive endevour and one that was wrought with tensions as the US Congress played its favorite game of Tariff Russia. Thus, investments were already being realized in the medical fields for manufacturing of state of the art medical equipment for various purposes in Russia: from x-ray to artificial/assisted breathing machines.

Along comes Covid-19 and world wide everything unravels. Luckily for Russia, or a God send, you decide, the plague hit Russia almost last and has only in the past 2 weeks started to rev up. This gave Russia an additional two months to ramp up manufacturing in many sectors and to start to move fringe developments and technologies into full on exploitation. There is nothing like a war time footing to move technology along at rates otherwise not imagined. Survival is the real mother of innovation.

And so, Russia now stands on the precipice of coming out of this as a power of modern medical manufacturing. Below we will go over only a few of the new or expanding productions. As more information appears I will of course update this post.

This can be equally seen in the 16 new infectious disease hospitals being built across the country. These, unlike the Chinese container temporary Wuhan facility, are permanent state of the art facilities with 41 days start to turn key completion build cycles. Each of the hospitals are set up for 500-1000 beds and all the equipment has been procured from Russian companies. From top of the line adjustable beds, to surgical equipment, monitoring systems and stations, ambulances and assisted breathing machines. All are being delivered now and this is only possible because they are localized production, not imports from China or Europe.

So, we will start with the big heavy weight of the Covid-19 season: artificial/assisted breathing machines.

At present, Russia has some 44.000 units of various age and capacity in service, Japan 23.000. As a further comparison, Krasondar, the main southern commercial center with a population of about one million people has 950 such units in service. Milano, the main Italian industrial center with a population of 1.3 million coupled with horrid air quality, had 48 units.

As of March, Russia was producing some 300 state of the art units per month. With massive government support, the production is being increased to 500 units this merry month of April, with the aim of 2500 units monthly by the close of May and peaking at 3.000 units. Of course this level of sustained production is well past the capacity needs for Russia itself, but it will go to fill export orders. As of now, 30 nations have either placed or in the process of placing orders for machines.

The units are being produced by Shabe Holdings, a division of Rostec, in their Uralskii Optical-Mechanical manufacturing plant.

Other key productions of masks and garments are also taking off. Small and medium sized businesses are retooling. Production of the high grade masks has reached 2.1 million units per week with another 300.000 coming online this week. Of course this does not fill the demand but considering previously Russia was importing all of this volume, this has gone a long way in manufacturing from basically nothing.

Two technopark universities in Ekaterinburg and Tymin have also begun printing plastic masks (they still require cloth for the breathing filters) on 3D printers, in serial production. While still at small batches of 500 units per 2 days of printing, the proof of concept in a production environment has been provided, opening the doors to mass production that does not require outsourcing and international logistics or major manufacturing facilities. Equally they are printing replaceable parts to assisted breathing equipment, such as plastic valves that must be changed once every 24 hours.

Medical garment manufacturing, robes for doctors, at 6.000 units daily. At present this is well below daily consumption and stocks are filling the gap. However, manufacturing is being ramped up to 25.000 units per day, as even heavy industry giants like Komaz and Tatneft are retooling for a new manufacturing branch job.

The big bottle neck is cloth for the medical gowns which is still mostly imported from China. In steps Chaikovskii Textile which has come up with a new medical material Panatseya PP180 which is a light weight, flexible material that is inhospitable to bacterial, fungal and viral microorganisms. The textile also is not absorbent, so liquids do not penetrate and cause stains. Full sustained production is in its early stages set to ramp up.

March goggle manufacturing was at 12.000 units per day with the aim of reaching 22.000 units per day by end of April.

Additionally, by end of March, respirators production had reached 20.000 units per day.

Of the seventeen key medications used in treatment of Covid-19, fourteen are manufactured in Russia, the remaining 3 are having to be imported. Unfortunately, this is a much slower ramp up issue, but one that has once again been high lightened as a weak link.

Russian pharma companies are also working on 7 separate vaccines, with live human trials on 60 volunteers (these people are already chosen and half are the scientists themselves) set to start by end of May/early June. Due to the long incubation periods of this virus, testing will take at least 1 month. Generiym, one of those companies, has patented and pushed into full scale production an express test for Covid-19 that delivers results in 30 minutes with a 94% accuracy rate. Yes, I know, the western media has not squeaked a word about this, which should not be in the least surprising.

Other high tech equipment is being manufactured by such companies as Litharinskii Optical Glass Plant, working with Germanium lenses to manufacture top of the line thermal imaging equipment that allows a doctor to scan a crowd up to 30m out and identify individuals in the crowd whose body temperatures are out of norms set.

Evromedservise is now manufacturing a full line of medical furniture with built in ultraviolet radiation lamps for quick and full sterilization of medical equipment and supplies.

Rosatom Helskia has produced large scale radiation sterilization equipment that will sterilize up to 58 million masks per month. Their work contract goes into effect this month.

To keep this engine of production and innovation chugging, the Russian central bank has relaxed all lending requirements to any company starting or currently manufacturing medicines, medical supplies and medical equipment.

Now we will see in what position Russia will be on the medical equipment markets once all of this settles out. Next time you are at your doctor's, the equipment might just read "Made in Russia".

Russia Is Well Positioned UPDATE 4 (1 June 2020)

Despite the "best wishes" of the Western mass media that everything in Russia is failing, the reality of the situation is that Russia is uniquely positioned to rebound economically faster and stronger then the over leveraged West.

Even the NYT came to this conclusion "Thanks to Sanctions, Russia Is Cushioned From Virus’s Economic Shocks", true, you can taste the bile in the first half of the article, but then they get to the various points.

Russia has been cut off from the Western financial markets, Russia has been busy regrowing its industry for the past 7 years and Russia has a huge reserve of over $600 billion set aside for occurrences just like this with a government debt of less than 10% to GDP. But this is not enough, what Russia has, unlike the West, is a leadership that is ahead of the curve.

The Russian leadership has foreseen what is coming down the road and has taken key steps to block that road as best as possible. Russia instantly closed the borders with China, while infected people from China were still traveling everywhere. Russia closed commercial flights with the rest of the world more slowly and that did allow for the infection to leak in. Either way, for what ever reasons: Grace of God, cold weather, partial immunity from TB vaccines, the virus has been slow to spread and the rate of full recovery is 5 times to that of deaths, while globally right now its about 2 to 1, of the officially recognized infections.

The Russian government has stock piled medical equipment and has retooled very quickly to manufacture additional equipment and materials, enough so as to send aid to 14 other nations, including the US, as well as 15 plane loads of trucks and personnel to aid Italy, bringing lacking equipment, such as disinfectant machines, spreaders, and liquid as well as over 200 doctors and military biochem experts. Russia has disinfected over a twenty hospitals and homes for the old, as well as building field hospitals, throughout hard hit northern Italy.

Russia has over 44000 artificial/assisted breathing machines and two large manufacturers are working 24/7 manufacturing more. As a comparison, Japan with the world's oldest population, a population of 120 million, has only 24000 and 10000 are already occupied by the sick from other infections. Milan, Italy had 48.

But more so then the medical preparedness, is the economic steps that Russia has taken to make sure that a post infection economic crash does not come at the end of the month long quarantine.

Europe and the US panicked, sending everyone into lock down without a single thought about how the already financially overstretched and struggling populations will feed themselves and survive a month plus without money to buy food and in some cases without food, not to mention pay rents, credit debts and utilities. All plans came only as an after thought, not much for proper full spectrum planning. Over 10 million have filed for unemployment in the US alone, in just two weeks. Unheard of numbers.

The Russian government, spearheaded by President Putin has avoided this and has put in key points for both the workers and the small and medium businesses. They are as follows:

For people:

1. 50% increase to unemployment benefits by the Federal government, so that unemployment will not be less than the minimum allowed salary. Sure a person will not be eating steaks on this but he will not be starving either. Unemployment is available to anyone who has worked for at least 4 months previously. As a comparison, in the US unemployment is available only to those who work full time, on contract pay (not hourly workers) and has worked at least 12 months previously.

2. Provinces will add to the unemployment payout as much as their budgets allow. Moscow for one will double the unemployment payouts of the Federal government.

3. Sick leave pay has also been increased by 50%.

4. People facing unemployment or inability to pay credit due to pay cuts are now able to take a 6 month credit holiday from payments. Banks, by law, have 3 days to process the paperwork and freeze credits.

5. Pensions will be indexed +6%.

6. Filing for Bankruptcy is now free.

For business:

1. For small and medium businesses percent free loans to pay salaries up to 20 million rubles ($270.000 at current exchange rates) without a need to pay back for 8 months after the emergency is lifted.

2. Rents owed on Federally owned lands and infrastructure waived for 8 months.

3. All taxes on rent givers are waved in exchange for them lowering the rent payments demanded from their renters.

4. All business taxes, with the exception of VAT, are waved for 6 months.

5. Large funds for investment in support of whole business sectors.

6. Bankruptcy for businesses can be stalled for 8 months.

Other ideas are still being worked out.

As you can see, the Russian government is dead set on making sure Russian bounces back fast, hard and ahead of its Western competition. But to make sure Russia does not become a temporary slush fund for Western credit, two additional laws were passed:

1. a 13% tax on all percents, dividends and other earnings on deposits or investments over 1 million rubles. This is only on the money earned, as money making money will now be equated to income, unlike in many countries, so the rich will pay their fair share along with all workers.

2. a 15% tax on all monies being transferred out of Russia. So it will no longer be a quick slush fund and get the cash out later, doing damage to the economy built on those monies. At least a portion will remain in the country to be put back into the economy.

Now we will wait and see what other new projects or laws will come in and only time will tell who in 2 months will be standing, who will be on their knees and who will be on the floor bleeding out with a white chalk outline.

God Bless.

Update 6 April 2020

The situation on the ground has continued to evolve, with several governmental and non-governmental actions starting to continue easing life for Russians and Russian business.

1. Sberbank has created a payment holiday for its clients, for up to 6 months. This, unfortunately, does not mean that percents are not accuring, but payments can be put off, as follows:
   -- Mortgages up to 1.5 million rubles
   -- personal loans up to 250.000 rubles
   -- automobile loans up to 600.000 rubles
   -- credit cards up to 100.000 rubles
   -- small business short term loans up to 300.000 rubles
While the sums are small, it is a start.

2. Government has cut pension contributions from businesses for their employees by 50%. This is the biggest chunk of the payroll taxes that a business has to pay.

3. Internet- all major internet providers have agreed that they will not cut service for those who are unable to pay, during the crisis period, however long it lasts.

Update 8 April 2020

The Russian government has allocated 10 billion rubles ($133 million) to double the salaries of medical personnel fighting the Coronavirus out break.

Emergency salary loans to small and medium businesses are now full operative and are being turned around in under a day. Bank staff are working from 0800 to 2400 daily.

Update 17 April 2020

In order to recharge the economy once the locks downs are over, the Russian government is now offering guaranteed 6.5% mortgages, with the government picking up the tab for any percentage above the 6.5% level. The mortgage level limit is 5 million rubles for Moscow and St. Petersburg and 3 million for the rest of the country.

Update 1 June 2020

The Russian government has now started to pay a one time sum of 10,000 rubles per child between the ages of 5 and 16. The first deposits have started and parents have up to the end of September to file.

Government loans to small and medium businesses for the purpose of paying salaries have now been modified so that if 90% of the work force is kept on, the government will wave the debt totally. If 80% of the work force is kept, 50% will be waved.

The Long Suffering Has Just Begun

Switch on the news, talk to anyone, read anything, run for your life but Coronavirus stories will follow you right along, you can not escape them. Social Distancing, Isolation, Quarantine are the catch phrases of the Spring of 2020. It is the Spring of Panic, but soon it will be the Summer of Anger and Blood.

As governments panic, as politicians choose the “hard” decisions of forced lock downs, they give only secondary thoughts to the facts that they have jammed a klinok, a dagger, into the very hearts of their economies and even less to what that means on the longer scale.

Italy was the first, who nation wide shut it all down, except for pharmacies and grocers. However they gave little thought that the average modern family has only 2-3 days worth of food in their pantry or that the average city has only 5-7 days in stock city wide. Sure distributors are still working and distribution centers have another 15-20 days worth of non-perishables or frozen goods. Forget about the fresh fruits and vegetables to be imported, with docks shut down, workers are home, who will unload, who will stamp the authorizations, who will move the goods. They will rot, which means citizens do not have access at their grocer and shippers and purchasers will lose their shirts. Same goes for imported drugs and drug sub-components.

Further, if these disruptions continue past 2-3 weeks, the distribution centers will run out and with upstream manufacturing, processing and farming effectively shut down, where exactly will the next wave of food come from? Government warehouses of dry store emergency rations? That will stoke anger in a public used to choice and freshness. It is one thing when that public is surrounded by the devastation of war or a natural catastrophe and  has acknowledged psychologically the predicament. It is quite another when their neat lives are disrupted by a flu-like virus they can not see and may not see the patients of. Then their quiet and busy lives have turned to first boredom and then hunger and then anger.

In parallel, most people will now be devoid of their base incomes as well. Most people do not work in such jobs that they can work remotely. Most of the average humanity works either in manufacturing or in services that requires both a server and a customer to be at there locations. Countries such as Italy, Spain, Greece, Portugal, Georgia are tourist intensive, that is from a quarter to half their income is based on tourism and this panic and government quarantines have put a big fat x on all of it.

Sure governments are making half measured steps, such as the US government plans (and only plans at this point) to send out $1000 per worker for 1 month. In the US this will at best pay rent on an apartment and if the family lives in a really cheap, run down ghetto, it may have some left over for utilities. Groceries? Seriously? Insurance? Medicine? Europe is making equally half step measures with Italy banning the charging of rent during the lock down and France stopping the payment of utilities.

But these are half measures and with most workers in the “prosperous” West now surviving paycheck to paycheck, the minus of that one paycheck will mean they will have nothing to buy those groceries with within a couple of weeks to a month at most. Worst, with all other businesses closed down, they will not even be able to sell off their goods for quick cash. This means either the government will have to step in in a large way or starvation, anger, rage and rioting, looting will become the order of the day.

The cycle starts to feed upon itself, demanding from bankrupt governments, already drowning in debt, to print or raise more monies, from economies they murdered, to pay for the bailout of millions of their citizens who will otherwise riot and burn down the city and country.

And even if they are able to pay these sums and sustain their people and feed them and pull up these quarantines in a month and try to get things back without burned out neighborhoods and riot police, what then? Millions of businesses, small and medium and tens of millions of workers, will be out of work, mass unemployment, demanding yet more money and economies left in taters as unemployed citizens buy less and less and feed the downward cycle. Sure, the big connected corporations will get big connected bailouts, but everyone else? Not quite so lucky. Least we forget, in an advanced economy, small and medium businesses make up to half the employment. In a post industrial economy this could be as high as 75-80%. What then?

Unfortunately, few in most governments understand or bother to think through economic impacts. They fail to understand what long term implication or even medium term implications their actions will have. They are reactionary, virtue signaling popularity queens who were elected because they promised more, talked sweeter, looked better then their competition. This is the reality of behind the façade of democracy and its only one global catastrophe away from crushing its own society, and that Come to Jesus moment is upon us all now.