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Seasonal Shutdown

Well, it only took a few hours from my last comment about the blood in the Russian interbank market, before the first of the Russian banks needed rescuing. An estimated $531 million to rescue National Bank Trust is just the first order of business for the CBR. Clearly there is a huge level of work to do before the Russian financial sector can even begin to recover, even if-for the time being- the oil price seems to have stabilised at around $60/bbl.

After the crash, investors are beginning to put prices on Russian risk- and these are hugely discounted. For some Russian assets, there is simply no bid at all, so although a floor might be visible in some areas, it is still the case that international appetite for Russia is exceptionally low. This is not just because of sanctions, it is also because there is the growing realisation that the economic impact of Putin's aggressive incompetence will be long lasting, and in some sectors the damage is permanent.

Both policy makers and investo…

"Living in another world"

In the early days after the Russian invasion of Ukraine in March, the German Chancellor, Angela Merkel made a widely reported comment that Vladimir Putin was "living in another world". The point being that the statements that were being made by the Kremlin were so completely untrue that they had literally no basis in reality. 

Over the past few months we have started to become used to Russian propaganda: astroturfing, Putintrolls, and all the rest of it, but nevertheless, no matter how vehemently propagated, the Kremlin position remains completely at odds with objective, evidence based truth. The well funded Russian propaganda machine is slick, well presented and almost entirely half truths and whole lies.

According to Peter Pomerantsev, in his book "Nothing is true and everything is permitted: the surreal heart of the new Russia", the kleptocratic cabal that now controls the Kremlin does not believe in truth even as a concept. Instead they believe that anything and …

Putin jumps the shark

Amid the occasionally rambling and bizarre comments from Vladimir Putin's annual press conference yesterday, a couple of critical points are rather obvious. 

Firstly, Putin accepts no responsibility for the crisis that has hit Russia, continuing to believe his own paranoid fantasy of Western economic destabilization.  

Secondly, he intends to double down and continue his aggressive and disastrous policies.

However, despite the current dead cat bounce in the Rouble, there are two things that could rapidly make the economic situation for Russia irretrievable. The first is in the small print of the Rosneft placement that triggered the deep crash in the currency. Essentially the Bank of Russia underwrote the placement of RUR 625 billion at 150 b.p. below Russian sovereign risk price- and since Rosneft had $7 billion to pay on 21st December, the whole placement went into the forex market. The implication is clear: The Russian central bank, in addition to being the lender of last resort to…

The Dark Night of Russian markets

Yesterday the dam finally broke in the Russian markets: the Rouble had a heart attack and fell over 10%. The continued erosion of the price of oil down to $61 is placing Russian government finances in considerable jeopardy at a time when even a relatively small deficit is unlikely to be financed by Western lenders, and the increasing refinance risk on the existing debts of Rossneft and the banking sector is creating still further demands on the Russian public purse.

At 1 am the Russian central bank raised rates by 6.5% to 17%.

Moscow has made a choice to attempt to defend the Rouble from collapse, but the price of that choice will be a deep recession as the economy digests the rate rise shock.

In fact this could prove to be a catastrophic decision.

Russia urgently needs investment capital in order to modernize and diversify its economy: this has been true for some time. It is also recognized by the authorities as a strategic goal. Indeed the decision to impose sanctions on foreign food im…

The unfit leadership of Edward S. Miliband

To say that Ed Miliband does not have a particularly compelling personality is a statement of the obvious. His non-political hinterland is small and mostly pedestrian. The only remotely interesting thing about him is the brutal ambition that led him to betray his brother David- until then widely seen as the more gifted of the two- and drive him out of politics.

Nevertheless his clumsy geekiness could be sold as some kind of a positive- you may not have picked him for your playground football team, but maybe, at least, he has some kind of intelligence.

Not any more.

His latest declarations on the so-called "war on drugs" are not merely pathetically banal, they are almost entirely- indeed dangerously- wrong. They fact that he has only "read about cannabis" marks him out from the large majority of his generation who certainly have inhaled: so indeed the playground geek does actually live up to his stereotype. Despite this lack of knowledge, however, this has not prevente…

Tony Blair... Moral vacuum

Yeah I know, I know, British right wing newspaper tries to stitch up Tony Blair saying he would be happy to work for Vladimir Putin. 

He did not say that, but he hardly said that he would draw the line either.

The idea that Blair had actually done a real job before entering politics is a bit of a rib-tickler too. Being a Barristers Clerk is not exactly the kind of executive experience you really need when your next job is being an MP, then... Prime Minister.

Blair is emerging as one of the most astonishingly un-self aware figures in British political history, the Mr. Pooter of politics.

Tragic, what a missed opportunity. We are still counting the cost today.

By the River of Death

"What is the name of this place,
I asked him.
Valerik, he answered me.
And translated into your language,
That would be... River of Death."

Lermontov

In a short while Vladimir Putin will make his state of the nation speech in the St. George's Hall of the Kremlin.

Perhaps in the chandeliered magnificence of this room, the Russian President may feel safe. He may make a rousing and grandiloquent speech making the case for Russian greatness. Perhaps he might offer an olive branch to the West that he has spent the past year excoriating, more likely he will add to the litany of grievance and envy he clearly feels.

Perhaps in the end it might not matter.

A few hours ago Chechen militants launched an attack against local police in Grozny. This is the second attack in a couple of months, but it comes at a very significant time for the situation in Chechnya.

Several of the most prominent figures in the ISIS rebellion in Iraq/Syria are of Chechen origin. There are swirling rumours about flig…

Russian meltdown

I make little apology for returning to the subject of Russia. The crisis in Ukraine is rapidly becoming a crisis in -and for- Russia.

The third term of Vladimir Putin, began with a constitutional sleight-of-hand to allow the job swap between Dimitri Medvedev and Putin to take place- and we can date the breakdown of Russia quite precisely from the announcement of this cosy arrangement on 24th September 2011.

Since that time the political atmosphere has darkened dramatically. As I have noted several times, Russia has already fallen 61 places in Transparency International's Index of corruption perceptions since the beginning of Putin's first term, but the breakdown of all rule of law has been confirmed by a series of extra-legal decisions taken in the past few months. The gap between rich and poor is now on most measures the widest in the world, and the ruling elite now comprises merely a few ten of individuals wielding astonishing power and wealth against an increasingly impoveris…

The SNP have Forgotten Nothing and Learned Nothing

On September 19th 2014- a scant two months ago- we learned that Scottish voters had voted to reject the idea of Scotland as "an independent country" by a margin of well over 10%.

Apart from Vladimir Putin who, to be fair knows a thing or two about ballot rigging, the vote was universally recognized as a free and fair expression of the will of the Scottish people.

The result came after an extremely heated and divisive debate, with accusations of bias and corruption on both sides.

To my mind the No vote came from the result of many factors, but the most important was that the economic argument made by the separatists was so weak.

There might be a case for establishing Scotland, like Estonia, as an ultra-nimble free market economy; however the argument made was the exact opposite: that Scotland could only preserve its bloated and inefficient state sector through separation. This argument was self-evidently untrue, and as it became clear that separation would indeed require major ec…

It is still the economy...

As George Osborne rises to speak in the House of Commons this afternoon, I am sure that he will be feeling a little rueful. The Conservatives have talked tough on the deficit, but the reality is that many of the cuts they proposed were quietly rescinded when it became clear that they were often counter-productive. The crisis in British government finances can not be easily tackled by the piecemeal approach that both the Tories and Labour have set out. The problem lies in the the deep structure of the British tax code, which is unwieldy and expensive to administer and deeply unfair in its application. Without a wholesale -even revolutionary- change in the tax code, the nibbles here and there that he will set out today will not change the direction of travel for the UK.

Despite much positive news- and the resilience of the UK economy is the object of some envy internationally- the fact is that the structural deficit can not be eliminated without drastic tax simplification and large scale…

The Morals of a Politician

One of the reasons why I adopted the nom-de-blog "Cicero" was because I saw- indeed still see- parallels between the fall of the Roman Republic and our own times. Although, after the accession of Octavian, Rome remained nominally a Republic with the Emperor initially simply "first citizen", in reality the political system based on Roman Liberty was overthrown. I strongly fear that although the nominal forms of Parliamentary Democracy may survive, the principles, indeed the guiding spirit, of Liberal Democracy are being eroded to the point where our freedoms are being taken away.

I see the challenges not being so much the direct threat of dictatorship, although in truth the nascent Russian democracy has indeed been overthrown by a dictator, but from a more corrosive and collective mixture of ignorance, hypocrisy and greed.

The fundamental problem is that many political platforms are not created based on evidence, but on prejudice. 

A good example has been the policies …

Watching the Cyber war in real time

There are several ways you can take a front row view of the daily battles in Cyber space.

The Norse Platform displays about 1% of the attacks that go on across the Internet every day.

It should be a firm resolve of all Internet users to disinfect their system as often as practical. It also speaks volumes about the current state of global politics.

Mind you watching the attacks- mostly from China against the USA- is strangely compelling, as you can see here.   

Those are real attacks and real damage is cause each time.

In praise of Ed Davey

The political world rarely rewards actual achievement. Instead it tends to reward those who claim achievement, whether or not they have a right to that claim or not. Hard graft often seems to count for less than effective spin. 

However it is worth noting that the Liberal Democrats in government have a very real heavy weight. A Cabinet Minister who has pushed through a radical agenda, despite major opposition from the Conservatives- especially the now former Cabinet Minister, Owen Patterson. A Cabinet Minister who has the respect of his international peers, and who has rightly persuaded some of our partners, such as Poland, to put the long term interests of the planet ahead of short run economic concerns. In the face of opposition that sometimes verges on the hysterical, Ed Davey has crafted a coherent, competent energy strategy and a credible and effective green strategy.

He has not been afraid to make some enemies on the way, but at every point he has been the rational, intelligent vo…

"Open war is upon you, whether you will have it or not"

Europe is on the eve of war.

Since Vladimir Putin came to power Russia has fallen sixty one places in the Transparency International Corruption Perception Index. It is currently 127 on the list, more corrupt than Gabon, Pakistan or Mali. The contempt for the rule of law extends across all aspects of Russian society. Property is routinely stolen, human rights are routinely abused

Russia is the most unequal society in the world and there is no justice in one of the least free countries on the planet

This lamentable record has been accompanied by the rise of one of the most outrageous propaganda machines ever seen in world history. Even the Soviet Union at its worst did not resort to outright lies. Now, Russia expects to be believed, even when all evidence proves that its leaders are speaking the direct opposite of the truth. Those journalists inside Russia who have had the courage to speak the truth have been silenced, often by murder.

Russia has for some time sponsored murder as an ins…

Stand Firm on Russian Sanctions

In the few days, the discussion of Russia has acquired a new dimension. The announced withdrawal of Russian forces placed close to the Ukrainian border and a slight but significant easing on the previously blood-curdling rhetoric coming from Moscow has made some people think that the crisis, fomented and largely organised by the Kremlin, may now be beginning to ease.
Certainly the imposition of sanctions although it has had relatively little direct effect, has indirectly caused the government of Vladimir Putin some real problems. Western companies involved in the Russian market have radically reconsidered the risks of doing business in Russia and almost all have curtailed their investment plans. Some such as Blackstone and Adobe have announced plans to leave the Russian market altogether. The market capitalisation of the Moscow stock exchange has plunged. Inflation, at 8%, is already climbing further. Russia has faced investment shortfalls for some time, but is now facing huge capital …

Politics in the media and in reality

Britain is in a fractious, ill tempered mood.

Discontent with the political class festers, and every mountebank, from Alex Salmond to Nigel Farage is being seized on as someone who can break the perceived corruption in Whitehall and Westminster.

Politicians are held- especially in the media- in widespread contempt.

That, of course is the problem. It is not that politics is necessarily more negative or even more corrupt than it used to be, but rather that we have grown used to a mocking chorus from journalists who are guilty of even more egregious corruption than the politicians they condemn so loudly.

MPs are paid a fraction of the sums given over to the self important blow-hards whose oleaginous faces adorn the top of their columns of angry and often surprisingly badly informed copy. Those who happily take their living from such dubious newspaper owners as the sinister and bullying Barclay brothers, the tax-avoiding Rothermere family, a Russian oligarch, a pornographer and of course Rupe…

Scotland's Choice

There has been a lot of criticism of the Better Together campaign. Some suggest it has failed to engage the emotions, some that it was too negative (it is quite hard to campaign positively for a No vote, which is why the SNP chose the question that they did). Some, who expect No to win, have said that such a victory would be "winning ugly".
There has been little criticism on the Yes campaign- they are believed to have "won the campaign".
I, for my part, beg to disagree. Yes Scotland have comprehensively lost the intellectual argument. They have been totally destroyed. From currency, to healthcare, to pensions every argument that they have put forward has been eviscerated. It is not that Yes Scotland has more emotion that bothers me- it is that they only have emotion. All rational considerations have been ditched and those who raise the perfectly valid questions of how- practically- Scotland can avoid serious problems, are dismissed without any attempt to answer the q…

The Price of Scottish Independence

With three weeks to go, the Scottish referendum debate has been worse than disappointing: it has been dishonest. The fact is that neither side has got to the crux of the argument. Although some have suggested that the Better Together campaign has looked to the head, while the Yes Scotland looked to the heart, in fact both have ignored the fundamental question of identity and the depth of the crisis that Scotland faces.

The Better Together crew have failed to provide an effective emotional defence of the common state. The have mostly focused on the issue of what currency a separate Scotland would use. because they are a more heterogeneous group, they have failed to articulate a vision for the future, and to be honest just talking about the economy, while unquestionably winning the intellectual argument, does not inspire passion.

By contrast Yes Scotland has all the passion, but their positions, from currency to Europe, from pensions to health care have been more or less complete bullshit…

Russia as a failed state

I make no apology for maintaining a string of posts on the subject of Russia. The fact is that Putin's mafia state, nuclear armed as it is, poses an existential threat to the freedom and prosperity of the West and to the peace of the whole world. Russian-sponsored brutality in Ukraine, now thrown into sharp relief by the appalling mass killing of flight MH17, should disgust all civilised human beings.

The initial shock of that act of barbarism may be wearing off somewhat, but its place is emerging a whole variety of questions. From "how could they do this?" has emerged another question: "What does Russia want?", yet as it becomes clear how disconnected and incompetent the Putin regime has become, and even bigger question is emerging: "Can Russia survive?"

At first glance, such a question may seem to be simply absurd, or to play into the hands of the most paranoid Putinista. Yet, the scale of the human rights breakdown under Putin is now so complete, it …

Dishonourable, Disgraceful and Despicable: Putin the Blunderer must pay the price for his brutal incompetance

For the last few months the government of the Russian Federation has been on the offensive on multiple fronts. In cyberspace, in Syria and Iraq, Russian government agents have been active against Western interests. Internationally, through RT and other mouthpieces, official or not, Moscow has created a slick propaganda machine to set out a case against Western policies. Domestically in Russia, of course the free media has finally ceased to exist. Increasingly, Human Rights have been crushed and what passes for Russian political culture is wrapped in a brutal authoritarianism whose strident nationalism strongly resembles those of the Fascist dictatorships of the 1930s.

As this blog has warned repeatedly, Russia has become an enemy power. 

The image of Vladimir Putin has hitherto been one of an ice cold, intelligent, strategist seeking to probe and develop weaknesses in the Western system- a system that he has maintained an unrelenting hatred for. 

Yet as the Ukrainian crisis has unfolded,…