None the less, blaming current crisis on Nobel prize winners is quite superficial in its essence. This crisis is not a result of evil intention or incompetence of pseudo-laureates of Nobel prize, to whom trusted honest stock brokers and bankers, but it is a purely a logical outcome of fundamental principles of organization of monetary exchange in liberal bourjois West, principles that spread throughout the world, which turned this crisis into global disaster.
Since above mentioned economists and those winners of pseudo-Nobel prize in economics that have not been named here all are pretty far from resolving such issues as economical provision of human prosperity, then the only question to D.A. Medvedev and other participants of G-20 summit in Washington is as follows:
How do you – bureaucrats - intend to distinguish
“gurus” that are actually competent in the matters of organization and management of regional and global macroeconomic systems and therefore have the ability to resolve this crisis once and for all
from those “gurus” that with their thorough research and findings have actually paved the way to current mess
— provided that your own education in economics is either non-existent or of the same quality that those of the mentioned pseudo-Nobel laureates, and when you yourself are not willing to go into trouble of looking into the root, studying economic problematic and inadequacy of prevailing schools of economic science?
Unfortunately bureaucrats do not face the question of how to tell an efficient professional from efficient talker only posing as professional, and this problems concerns not only economic domain. And this is the major problem of societies that rendered their governance power to bureaucratic apparatus . Sadly, post-soviet Russia is not an exception here.
Who will be chosen into this international committee of financial “gurus” by G-20 bureaucrats if this suggestion will be put into practice – only time will tell. However one cannot hope neither that these “gurus” will be more capable of efficient functioning than above mentioned pseudo-Nobel laureates in economics nor that those chosen will produce “powerful ideas” which will lead world economy to the mode of crisis-proof functioning because:
Firstly, economic theories of the West are meant to solve radically different problems. Example of that are Nobel laureates’ theoretic “proves” that the crisis was impossible and that pumping speculative “hernia” of economy is absolutely safe for the real sector, for the sphere of consumption and political stability, which only allowed those managers of “hernia” achieve their goals and cause the crisis
Secondly, bureaucracy is notable for its inscrutable “wisdom” and therefore does not need side ideas that in its content do not adhere to morals and opinions of authoritative “gurus” supported by bureaucracy.
As history of economic degradation of post-soviet Russia shows, its bureaucracy finds only defective “gurus” in its pursuit to solve its publicly declared goals of country’s modernization, poverty elimination and increase of wellbeing of its population, and not only multiplication of assets of oligarchs and other “elite” (including bureaucratic elite, which quotes its salary based not on its achievements).
If bureaucrats continue clinging to such approach to the problem, the matters will only become worse. None the less president D.A. Medvedev in his “Address to the Federal Assembly of Russian Federation, November 5th 2008” declared:
“We should not delude ourselves that the economic crisis is anywhere near over yet. We need to keep our wits about us throughout this period and pay close attention to the effectiveness of our work and the justification of our new plans and programs. This applies to the state, business, and to each individual.
I am sure that we will manage to resolve all of these difficulties and will soon put in place a modern and independent financial system able to withstand any external challenges and ensure stable solutions to its own tasks.” ()
This last passage is particularly interesting because before stating anything of that sort it is necessary to:
Unveil the flaws of current credit-financial system
Work out principles of building a credit-financial system free from the flaws of the current one
Prepare a transition plan from the flawed system to improved one
Prepare executive resources that will be able to function efficiently in the new system
Find ways and means to retire representatives of current executive apparatus which would not be able to conform to the new system
Otherwise the statement is nothing but empty words which will never lead to realistic results.
1.2. Kingdom divided against itself…[3]
On the contrary to the leading countries of West and East who managed to successfully develop their economies in the past ten years after 1998 crisis Russian society accepted conditions of socio-economic crisis as a way of life for many years since back-stage junta hiding behind M. S. Gorbachev came into power. None the less Russia has also been affected by current global financial crisis and has to find means to recover from it.
A few weeks ago Russian prime-minister V.V. Putin asked business community the following question: When oil prices in the world are falling why then in Russia oil and petrochemical products prices are not following the trend?” Russian petrochemical market responded to the question posted by the head of parliament by lowering prices, in particular: petrol prices dropped 1-2 rubbles per litre (5-8%).
Due to the fact that oil and its products are included in price-list basis - fall in its prices opened opportunities for manufacturers and sellers of goods (in conditions of lack of solvent demand on products with earlier announced prices) to be able to lower their prices not risking bankruptcy, and therefore support manufacturing and consumer exchange of goods in conditions of monetary deficit in times of financial crisis. But these opportunities were immediately eliminated by Central Bank of Russia.
“Bank of Russia (Central Bank or CB) demonstratively decreased by 30% rate of Russian ruble to currency basket and - when traditionally right anti-crisis measure is considered to be interest rate decrease. CB’s official explanation to such measure – the need to fight outflow of the capital – did not convince analytical experts” (source: ).
Reduction in Russian currency exchange rate improves situation for export but only worsens it for import. If this measure is adequate to public needs in situation when Russia imports up to 70% of food supply and even bigger part of industrial good – is an open question. To answer it we must analyze balances of goods exchange and financial statements of both external trade and internal inter-industrial and inter-regional commerce. But there is not doubt that Central Bank is not trusted anymore to manage Russian ruble exchange rate in the best interest of socio-economic development or Russia since CB became a “state within the state” in 1991.
Interest rate increase creates additional debt, which we know we will not able to pay and that is aimed at worsening the crisis and destroying V.V. Putin’s influence on stabilization of oil products market.
It does not matter if Central Bank’s actions are manifestation of bad intentions of its perverse comprehension of the nature of macroeconomic processes, the consequences are all the same – crisis aggravation.
Besides for one more time it became clear that Russian bank sector as a whole (and not only CB) is not influenced by patriotism: commercial banks that received government aid to overcome liquidity crisis[4] immediately distinguished themselves in the banks statistics by increasing purchases of foreign currencies and transferring financial assets on overseas bank accounts, although financial aid was given to support the real sector of Russian economy. Then representatives of the real sector started to complain that they were having hard times in obtaining credits and in consequence were forced to save money by decreasing production volumes, cutting salaries and laying off people. Hence crisis is spread through chains of exchange of goods both in real sector and in end-consumption sector.