Connections

Now then, children, we're going to start the day with a song, altogether now:

Your toe bone connected to your foot bone,

Your foot bone connected to your ankle bone,

Your ankle bone connected to your leg bone,

Your leg bone connected to your knee bone,

Your knee bone connected to your thigh bone,

Your thigh bone connected to your hip bone,

Your hip bone connected to your back bone,

Your back bone connected to your shoulder bone,

Your shoulder bone connected to your neck bone,

Your neck bone connected to your head bone,

I hear the word of the Lord!

Oh do come along, 'BOE', sing up and look as though you are enjoying it; and 'JK', it's no good you gargling with that, er, throat medicine Barney Magroo sold you; and Andra if you must keep hooting through that Aboriginal tube-thingie then please keep in time!

Now where was I?  Oh yes, the title to this brilliant essay - don't even whisper it, Jimmy! - is "Connections".  You see, in this global age, we are all 'connected'.  I know, I know, this is the sort of incisive, original thinking which makes this blog worth every penny you pay for it.  Oh, I've just remembered, none of you pay anything - cheapskates!

Now where was I again?  Oh yes, 'connections'.  I was struck by an article this morning by A E-P in The Telegraph in which he reports that:

Russia has fallen into full-blown depression and faces a mounting fiscal crisis as oil and gas revenues plummet.

Output from country’s state-owned gas giant Gazprom has collapsed by 19pc over the past year as demand shrivels in Europe, falling to levels not seen since the creation of the company at the end of the Cold War.

A report by Sberbank warned that Gazprom’s revenues are likely to drop by almost a third to $106bn this year from $146bn in 2014, seriously eroding Russia’s economic base.

Of course, if it was just one sector, even a huge one like oil and gas, then no doubt 'Vlad the Impaler' with the aid of his secret policemen would find a way round but, and I know it will surprise no-one, the rest of Russia is fucked, too!

We’ve seen the full impact of the crisis in the second quarter. It is now hitting light industry and manufacturing,” said Dmitri Petrov from Nomura.

“Russia is going to be in a very difficult fiscal situation by 2017,” said Lubomir Mitov from Unicredit. “By the end of next year there won’t be any money left in the oil reserve fund and there is a humongous deficit in the pension fund. They are running a budget deficit of 3.7pc of GDP but without developed capital markets Russia can't really afford to run a deficit at all.” 

A report by the Higher School of Economics in Moscow warned that a quarter of Russia’s 83 regions are effectively in default as they struggle to cope with salary increases and welfare costs dumped on them by President Vladimir Putin before his election in 2012. “The regions in the far east are basically bankrupt,” said Mr Mitov.

So where is the connection, you ask, not unreasonably?  Unfortunately I have lost the source article but about a week ago some economics swot wrote a piece warning that Australia - yes, Australia - is heading for the Barrier Reef and for much the same reason.  Hitherto, the Australian economy has thrived under a colossal demand for minerals and coal of which Australia has 'oodles of boodles' underground.  But now demand for commodities, particularly from China which has kept our Aussie pals in silks and satins, has slumped.  There was one key statistic I spotted the other day, electricity use in China has dropped!  Thus, this diagram courtesy of Zero Hedge explains why:

 

You can see where the Chinese government desperately sought to use its dictatorial powers to inject demand into their economy but one by one they have all failed.  And then there is gold which the Chinese bought and stored in eye-wateringly huge amounts as well as mining their own as fast as they could - they have a division of the People's Army which is employed solely on gold mining!  Well, 'velly solly, Comrade' but the gold price just fell back down the mine!

So you see, it's true, one damn thing leads to another and then on to yet another.  So all I can say is, if it's raining in Moscow today then buy an umbrella for tomorrow - where-ever you are!

ADDITIONAL:  Well, I thought you all needed some high-class, analytical economic reportage now that the Financial Times has been flogged off to the Japs.  I can hear it now - "All Blitiss officers editors will work!"

 

Comments

[Whitewall]

Then it is a good time for Russia to start another war to divert the public mind. It is also a good time for what is left of the West to further supply Russia's targets with weapons. Bog them down in a costly pointless campaign.

[Lawrence Duff]

Oi, the Speccie has lifted my middle east strategy ...

http://www.spectator.co.uk/the-week/ancient-and-modern/9589002/vespasians-middle-east-policy-it-should-be-ours-too/

... bloody plagiarist cheek. But apparently Vespian thought of it first.

I mean, what have the Romans ever ... https://www.youtube.com/watch?v=ExWfh6sGyso

SoD

[backofanenvelope]

Soon, your wish will be granted Lawrence! By about 2020, the RAF will be down to about 15 fastjets - the F-35. They will not be able to carry or use their weapons - if there are any. The Army will just about be big enough to defend one corner of Salisbury Plain and the Navy will have run out of fuel. So, Mr Cameron's successor will just have to sit around twiddling his thumbs

[David Duff]

Now look here, 'SoD', how dare you contradict m'Lords Richards and Dannatts both ex-Chiefs of Staff. At least I reached the rank of Corporal (substantive, mind!) which is more than you did!

"So, Mr Cameron's successor will just have to sit around twiddling his thumbs" - so not all bad, then, BOE!

[Lawrence Duff]

Now if we could just persuade the Russians and Chinese to have a go at each other, we'd have a "Double Vespasian" on the go, in the same military league as the "Double Cannae", and there'd be nothing left for our Mil-Persons left to do.

SoD

[jimmy glesga]

BOF. No need to worry if Corbyn gets in he will just use his persuasive powers and say to our enemies, ' gonnae no dae that'.

[Lawrence Duff]

Raise a toast to good ol' Vespasian, and a little sing song, kicking off with Freddy Mercury's "Boom boom boom, and another one bites the dust": -

http://www.telegraph.co.uk/news/uknews/terrorism-in-the-uk/11763913/Last-of-the-Portsmouth-Bad-Boys-jihadists-killed.html

Notice, all you "if we let them go over there, they'll all come back and terrorize us" nay Sayers, the only one who came back is in jail, and the rest are working their way through their allotment of virgins.

Cheers Vespasian!

SoD

[Lawrence Duff]

Oh Lordy, sometimes it's just too perfect ...

http://m.youtube.com/watch?v=kHHitXxH-us

SoD

[David Duff]

Well done, SoD, that started my (wet) day with a laugh!