Tuesday, October 13, 2020

Russian Debt Exploding Out of Public View and Thus All the More Dangerous, Inozemtsev Says.

Paul Goble

            Staunton, October 12 – In response to the pandemic, the United States and the EU countries have dramatically expanded public debt in order to cushion the consequences for their populations, but in Russia, the government is keeping its own accounts closer to in balance but allowing the growth of debt in the economy, out of public view, Vladislav Inozemtsev says.

            This is happening because private and state corporations, taking advantage of the bankruptcy holiday, have been transforming themselves into “dummy” bodies that do not in fact function and cannot pay the debts they are taking on, the economist says. When bankruptcies are resumed, the people will be forced to pay and they won’t be able to, the economist says.

            The result will be an economic disaster, far worse than in 2008-2009, all the more so because this process has occurred out of public view and thus reflects the interests not of the state or the public but rather those of a small group of people closely interconnected with the powers that be in the Kremlin (t.me/kremlebezBashennik/17029).

            This process of taking on debt already had resulted in the collapse of many banks, Inozemtsev says; but now it is spreading to the rest of the economy. “And if people continue to keep their eyes shut … the consequences will be sad as our economy is like a house build on a foundation that we are digging away at while those on top use its superstructure for themselves.

            In his post, Inozemtsev provides both a technical economic analysis and data that supports this conclusion. But his basic point is this: “Russian policy, both domestic and foreign is built on lies which have been crowing explosively. Judging from everything, our economy is based on precisely the same foundation.”

            The Kremlin takes pride in the fact that its state budget is nearly in balance despite everything, but it won’t admit that this has been possible only because of the rapidly growing deficits which its bankruptcy holiday and opaque business regulations not only allow for but even encourage. 

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