A must read

[rring]

Go to http://www.energybulletin.net/node/23259 and it will make you think. I would like to know from any Russians if what he said is true and most Americans will agree with me 100% that what he says about America is true.  If the US collapses, the Russian one will look like nothing even happened.

I am assuming every Russian here lived through at least a part of the collapse, I am curious what it was like. I try to research it and it only talks about the macro not the people, except for the shortages and a few riots.

[roykirk]

Go to http://www.energybulletin.net/node/23259 and it will make you think. I would like to know from any Russians if what he said is true and most Americans will agree with me 100% that what he says about America is true.  If the US collapses, the Russian one will look like nothing even happened.

I am assuming every Russian here lived through at least a part of the collapse, I am curious what it was like. I try to research it and it only talks about the macro not the people, except for the shortages and a few riots.

I remember during my first visit to Russia in 2001, I asked one of our guides for her opinion on the collapse of the USSR.  She said, "Before there was only one type of bread in the store, you had to stand in line for 2 hours to get it, but everyone got their bread.  Afterwards, there were 20 different types of bread in the store, and there were no lines because nobody could afford it."  That was about the most succinct summary of the collapse that I've heard to date.

[Ronnie]

It would be tedious to analyze each point the writer made.  He makes certain points but fails of give each it's proper analysis.  He points out that Russia was energy-self sufficient and the US import most of our oil.  On the surface then, it would seem that Russia (SU) was prepared for an economic collapse as the energy would not be shut off.

What the writer fails to point out (so I will) is that Russia had no "fat" in it's energy diet.  Transportation was almost totally mass transit most was used to heat homes.  The US consumes more energy than any other nation, not because it needs to to survive, but because it can.  The price of gasoline in the US lately has already resulted in less unnecessary driving, but we still have a lot of fat in our energy diet.  Fat helps people and animals survive in times of famine.  If the SU, whose energy diet was already running very lean, were in the position of having to import, she would not have survived.

On housing, the writer points out that the government owned everyone's apartments so the people were mortgage free and many lived two or three generations in a home.  The US, he points out have, small nuclear families occupying each dwelling.  Again, by Russian standards, the US has a large surplus of dwellings.  On average American home has 3 or 4 times the square footage of a Russian flat.  Since the density is so low, Americans could bunch up if necessary.  And what of the homes then become vacant as a result of massive foreclosures by the banks?  There don't dissappear.  When jobs dissappear, there becomes a labor suplus.  A labor suplus means lower wages and lower wages means few can afford the exorbitant prices we see currently.

I think we are on the brink of a housing crises.  But it's not the American citizen who will suffer as much as the banking institutions.  they will be forced to write-off huge sums as the value of the loan collateral falls to sustainable levels.  If there is anyone in the world who is "fat" it is the international bankers.  They would be the greatest losers should the US economy go into a recesssion.

As to the collapsing of empire.  It's a ridiculous notion to compare the United States to the Soviet empire or the British or Roman for that matter.  The US does not hold parts of it's territory by threat of force.  Though it has been involved in foreign wars and conquered other regimes, the US does not acquire and hold territory in this manner.   

So the writer has listed what he sees as similarities but does not give them even a ounce of common sense analysis.  It he did he would see that the US is much better prepared to weather an economic disaster than any nation on earth.

[Misha]

The author is clearly Russian and nostalgic for the good old USSR. The main thesis, from what I gather, is that the Soviet Union was better prepared for an economic collapse because the people were poorer, and were already used to adversity. Reminds me of my grandfathers comments about the Depression: we were poor before, poor during and poor afterward, so were not really affected by it. He was right in a way: he was living on a homestead and they were producing their own food, hunting, chopping their own firewood, etc.... However, when given the opportunity, he was more than happy to trade it all in for food bought in a supermarket, a good car, a nice color television with satellite tv,.... If ever there was a total economic collapse, I am sure that I could remember how to grow some potatoes and keep a few pigs on the side 

[Shadow]

In case of an economic collapse, the financial system of a country is what is going down. This means that properties will have less value, money will become unavailable, and banks will be closed, with debts being requested to be paid. In a complete collapse, as seen in Argentina, the currency will devaluate, leaving foreign investors with a the choice to take losses or wait until the currency revaluates.

How is the position of some countries ? All data has been taken from the CIA world fact book. Not the prime source, but the data seems good for comparison.

USA: Population 302 Million. GDP per capita $45800. Public debt 60.8%. External debt/GDP : 88.5%
Russia: Population 140 Million. GDP per capita $9139. Public debt 5.9%. External debt/GDP : 26.7%
Canada: Population 33 million. GDP per capita $38400. Public debt 65.8%. External debt/GDP :53.0%
Netherlands: Population 16.6 million. GDP per capita $47262. Public debt 46.2%. External debt/GDP : 289.4%  :hairraising:
Croatia: Population 4.5 million. GDP per capita 11435. Public debt 47.3% External debt/GDP : 88.2%
Georgia: Population 4.6 million. GDP per capita 2222. Public debt N/A External debt/GDP : 43.7%

Netherlands does not have a problem..the countries financing do.
But when we are looking at which country could at this time best survive an economic collapse, Russia still seems to have good cards.

A small off-topic: 1 billion aid for Georgia ? that would be 20% of the GDP, or an amount of estimated € 6.500 per displaced person, 3 times the yearly average income.
After the 2004 tsunami the US gave 857 millon in aid...seems Santa is early this year.

[MaxxumUSA]

I would like to know from any Russians if what he said is true and most Americans will agree with me 100% that what he says about America is true.  If the US collapses, the Russian one will look like nothing even happened.

Hmm...  I'm a true blue american and I don't agree with all that was said there about America.  Yes - there are some facts listed on that article.  But like others said the author really does not get into the nitty gritty details about points he is trying to make.

The resiliance of a nation - especially our nation - in trouble times is extremely powerful.

USA and USSR were created quite differently and I say this because the feasibility of a USA collapse relates directly to this IMO.

USA was founded basically by immigrants from different parts of europe and ruled by England.  In 1776 we all know that USA declared independence from England and created itself.  I'm no history major but my basic thought here is that from that point on we aquired LAND and grew from that point.  Of course we had the civil war which joined the north and south afterwards.  From that point USA has been an independent nation growing only as we purchased land.

USSR on the other hand was not developed by one nation purchasing land.  It was created in the early 1920's by existing countries that joined in a union.  Again I am no scholar but my basic point is that these were developed countries rather than one country buying a largly empty plot of land and growing.  More countries joined this union either willingly or by having little choice to do so.  So the USSR was extremly young compared to the USA believe it or not.  The leadership of the USSR in the early days were afraid of capitalist activity and used suppression of their people in order to prevent it.  The leash around the average USSR citizen was loosened a little bit here and there but in the end the lack of capitalistic freedoms played a role in the financial demise of USSR.

With the USSR in financial and organizational ruins, these "Countries" that formed the USSR basically said enough is enough and many declared or showed an interest in independence.  In december 1991 the USSR dissolved itself as bankrupt and let all the states go to rule themselves.

Is it POSSIBLE that the USA could have similar financial difficulties?  Yes - in fact it is probable.  We had the Great Depression, and another will probably happen at some point in time.  BUT - does that mean that New York state will request to recede from the USA?  Or that california, new mexico, and texas will file a declaration of independence as a new country?  I think not.

In the USSR you had Georgia, Ukraine, Russia, and of course about 10-15 other countries.  A ukrainian person living in USSR knows that they are ukranian.  A russian knows they are russian.  A georgian knew they were georgian.  They all knew that they shared a common link in that they were all USSR citizens.  In the USA we are ALL american.  When we travel internationally we travel as Americans, not as texans or californians or New Yorkers.  We are american.

So...  when the USSR had problems...  The Ukrainians, the Georgians, Russians, etc all went back to their roots and held on to the identity which existed before the USSR was formed.  IF - and a big IF here - If these individual nations had truly wanted and desired to remain "USSR" then they could have easily overcome their difficulties I am sure and all pitched in and saved the USSR.  The problem IMO has very much to do about the keyword:  "Desire"  They did not desire to save the USSR.  This was probably due to the perceived and real mistreatment of the people of the USSR.

Will USA economy collapse?  Probably - in that the author is correct.  Will the USA disseminate and cease to exist?  Highly doubtful in my opinion.  We americans are extremely resourceful and in times of trouble we can and will stand up to save our country.

- MaxxumUSA

[SANDRO43]

I'm no history major but my basic thought here is that from that point on we aquired LAND and grew from that point...USSR on the other hand was not developed by one nation purchasing land.  It was created in the early 1920's by existing countries that joined in a union. 

Maxxum, you seem to be forgetting that, before the USSR ever came into being:

- A statual entity existed called (Imperial) Russia, covering more or less the same territory
- It had aquired a lot of LAND going East beyond the Urals, rather than West

[Misha]

Sandro is correct, and in many ways the initial European expansion in North America and the Russian expansion eastwards were similar in that both were spurred by the fur trade. The factor that pushed Muscovy to the East was its desire to acquire new sources of sable furs, a lucrative trade item that filled the coffers of the princes of Muscovy (who later claimed the titles to Tsar or Ceasar as they saw themselves as the Third Rome). As they pushed into Siberia and the Russian Far East they conquered thinly dispersed hunters and gatherers and forced them to supply sable furs that they sold to Western European kingdoms. As territories were exhausted by overhunting, the Russians would push farther eastwards, all the way to Alaska and down the coast to California. In North America, the French, English (Great Britain did not exist yet) and Dutch vied to control the fur trade in North America in the 17th century as Russia pushed deep into the continent.

[Misha]

On another note, The Moscow Times has a nice piece looking at the current state of the Russian economy and its prospects for the near future: 10 Reasons Why the Economy Will Falter

The ten reasons according to Anders Aslund (from the opinion piece):

1. Internationally, one of the greatest booms of all times is finally coming to an end. Demand is falling throughout the world, and soon Russia will also be hit. This factor alone has brought the Western world to stagnation.

2. Russia's main problem is its enormous corruption. According to Transparency International, only Equatorial Guinea is richer than Russia and more corrupt. Since the main culprit behind Russia's aggravated corruption is Putin, no improvement is likely as long as he persists.

3. Infrastructure, especially roads, has become an extraordinary bottleneck, and the sad fact is that Russia is unable to carry out major infrastructure projects. When Putin came to power in 2000, Russia had 754,000 kilometers of paved road. Incredibly, by 2006 this figure has increased by only 0.1 percent, and the little that is built costs at least three times as much as in the West. Public administration is simply too incompetent and corrupt to develop major projects.

4. Renationalization is continuing and leading to a decline in economic efficiency. When Putin publicly attacked Mechel, investors presumed that he had decided to nationalize the company. Thus, they rushed to dump their stock in Mechel, having seen what happened to Yukos, Russneft, United Heavy Machineries and VSMP-Avisma, to name a few. In a note to investors, UBS explains diplomatically that an old paradigm of higher political risk has returned to Russia, so it has reduced its price targets by an average of 20 percent, or a market value of $300 billion. Unpredictable economic crime is bad for growth.

5. The most successful transition countries have investment ratios exceeding 30 percent of GDP, as is also the case in East Asia. But in Russia, it is only 20 percent of GDP, and it is likely to fall in the current business environment. That means that bottlenecks will grow worse.

6. An immediate consequence of Russia's transformation into a rogue state is that membership in the World Trade Organization is out of reach. World Bank and Economic Development Ministry assessments have put the value of WTO membership at an additional growth of 0.5 to 1 percentage points a year for the next five years. Now, a similar deterioration is likely because of increased protectionism, especially in agriculture and finance.

7. Minimal reforms in law enforcement, education and health care have been undertaken, and no new attempt is likely. The malfunctioning public services will become an even greater drag on economic growth.

8. Oil and commodity prices can only go down, and energy production is stagnant, which means that Russia's external accounts are bound to deteriorate quickly.

9. Because Russia's banking system is dominated by five state banks, it is inefficient and unreliable, and the national cost of a poor banking system rises over time.

10. Inflation is now 15 percent because of a poor exchange rate and monetary policies, though the current capital outflow may ease that problem.

[SANDRO43]

3. Infrastructure, especially roads, has become an extraordinary bottleneck, and the sad fact is that Russia is unable to carry out major infrastructure projects. When Putin came to power in 2000, Russia had 754,000 kilometers of paved road. Incredibly, by 2006 this figure has increased by only 0.1 percent, and the little that is built costs at least three times as much as in the West. Public administration is simply too incompetent and corrupt to develop major projects.

As summed up pictorially some time ago :

[Shadow]

Investment rate:
USA: 18.8%
Canada: 23%
Russia: 21%
Netherlands: 20%
Croatia: 31%
Georgia: 29%

Due to the population and the GDP, one might contest if Russia should be placed in the category of 'transitional' countries.
Trip reports have shown that also outside Moscow there is work being done on infrastructure.

The price of oil does not have had a tendency to go down over the last 40 years. I doubt that will change soon.

[Misha]

The price of oil does not have had a tendency to go down over the last 40 years. I doubt that will change soon.

Well, let's see, the price of oil collapsed in the 80's and low price lasted for over a decade. The tendency then would be for oil prices to go up and to go down.

[Ronnie]

Petroleum will go the way of whale oil in 20 years or less.

[Shadow]

Well, let's see, the price of oil collapsed in the 80's and low price lasted for over a decade. The tendency then would be for oil prices to go up and to go down.

You are correct there.

[Misha]

Trip reports have shown that also outside Moscow there is work being done on infrastructure.

I forgot to add, trip reports are of course anecdotal, the information presented are based on overall statistics for the country and I have seen these same stats elsewhere. The article does not say that there was no work done, but that there was little work done.

[BC]

When a country whines when gas reaches $4.00 per gallon it really makes me wonder what it will take to break them.

Back in the late 70's I used to work at one of those little self service gas stations.. I was surprised at how many folks would just buy one or two dollars worth.. I wonder if they do the same today.

If all economic hell breaks loose I'd choose MIL and FIL to be at our side.  Food? who needs food when internet doesn't work anymore!!!!  They will have to hold me down when withdrawal symptoms hit..

[ScottinCrimea]

It seems we Americans are quick to state how resilient we are and how we are strong in the face of adversity but is that really true?  Compared to other countries, how much adversity have we really faced to know if we can respond well to the test?  Even with something as local and relatively limited as Hurricane Katrina we didn't see a proud side of our people or our government.

[MaxxumUSA]

It seems we Americans are quick to state how resilient we are and how we are strong in the face of adversity but is that really true?  Compared to other countries, how much adversity have we really faced to know if we can respond well to the test?  Even with something as local and relatively limited as Hurricane Katrina we didn't see a proud side of our people or our government.

Sorry to say so and it is a sad reality...  but hurricane Katty was not a national tragedy that would dissolve the nation.  This is what the OP poster suggested.

Hurricane Katrina might at a long stretch be compared to the tragedy at Chernobyl.  Difference being that cities close to ground zero in Ukraine were no longer inhabitable after the tragedy.


In any case...  we are talking about the collapse of the USSR.  This was a union of countries.  After the break up it was fairly quick in my opinion that the individual countries regained their individual identities.

The OP suggests that Americans could not adapt so quickly.  MY POINT is that we would not need to because we are ALL AMERICANS.  Regardless of circumstances we will band together and solve the problems AS AMERICANS.  IMO one great reason the USSR failed is because not all the members of that union agreed with the leadership at all times.  This caused a want of recession that was a small part of the collapse of the USSR.  And beyond those issues there is the fact that during the USSR era  there are Ukrainians, Russians, Georgians, etc all of which competing for various things ranging from power to money or both.

Again...  I will remind you that the USSR only existed since 1920 or so and was not an actual state but rather a union of countries.  This was a short experiment in communism that resulted in failure by most standards.  Unfortunately it was an experiment that exterminated many many humans - friend and foe of the USSR.

Any opinions?

- Maxxum USA

[Sculpto]

Sorry to say so and it is a sad reality...  but hurricane Katty was not a national tragedy that would dissolve the nation.  This is what the OP poster suggested.

Hurricane Katrina might at a long stretch be compared to the tragedy at Chernobyl.  Difference being that cities close to ground zero in Ukraine were no longer inhabitable after the tragedy.


In any case...  we are talking about the collapse of the USSR.  This was a union of countries.  After the break up it was fairly quick in my opinion that the individual countries regained their individual identities.

The OP suggests that Americans could not adapt so quickly.  MY POINT is that we would not need to because we are ALL AMERICANS.  Regardless of circumstances we will band together and solve the problems AS AMERICANS.  IMO one great reason the USSR failed is because not all the members of that union agreed with the leadership at all times.  This caused a want of recession that was a small part of the collapse of the USSR.  And beyond those issues there is the fact that during the USSR era  there are Ukrainians, Russians, Georgians, etc all of which competing for various things ranging from power to money or both.

Again...  I will remind you that the USSR only existed since 1920 or so and was not an actual state but rather a union of countries.  This was a short experiment in communism that resulted in failure by most standards.  Unfortunately it was an experiment that exterminated many many humans - friend and foe of the USSR.

Any opinions?

- Maxxum USA

I agree with Scott.  Not since WW2 has this country really been unified on any given topic. 

Is New Orleans so habitable now?  All those chemicals released by the floods still poison the land there.  At last check the population of NO was still less than half than before Katrina.  And, did you miss what happened last month?  That city withstood how many hurricanes before Katrina.. but.. now they evacuate the whole place???  Who is going to live with that?  Sadly I think NO will essentially become an abandoned city with nothing but its touristic historic center kept viable for a greatly diminished resident population and the tourists who will continue to come for Mardi Gras and to see the ruins of "Pompeii".

The last time I checked the USA is a Union of States.  There are fifty of them plus territories, some of which we rule by force, Puerto Rico comes to mind as the most specific example.  Secessionist movements are not a very common topic in most of the country, but, there has been a steady movement in California that far outdates my living here for the last 19 years.  Those who promote secession point to the fact that the economy of California alone is greatly disproportionate to most of the rest of the country.  People frequently complain that if Califronia was independent we would be by far the richest country in the world.  Only recently since these problems started have I heard a lot more people talking about this long existing secessionist movement.  Personally I think they are crackpots, but, it is true if the federal income taxes we export to Washington remained here in California.. wow.. life sure would be different here.  We give the Fed a lot more than we get back.

I hate to point out that your "All Americans" concept will fall on deaf ears in a lot of places and "hoods" that have been and continue to be marginalized.  Do you really think the really bad neighborhoods that share none of the prosperity that I suspect 99% of the people on this forum have are going to band together with "us" to save the nation?  No, rather I suspect those who have done without for so long will see it as an opportunity for payback.  Kind of USA out of USA mentality.  I am not saying its right.. just thats how people see things in the ghetto.  Oh, and by the way.. they are armed to the teeth because it is so easy to get a gun in this country.  Not a comforting thought should there actually be a collapse.  You think the cops are going to stay on the job and risk their lives if they aren't getting paid?

I will remind you that our country is only 230 some odd years old.  We are an experiment in capitalism that has left millions of people dead due to our policy of westward expansion and interference in other places in the world like Viet Nam and currently Iraq.  And I think in an earlier post someone said something about westward expansion came with land purchases?  I suggest whoever wrote that have a review of the actual history of westward expansion, in particular the history of Texas and the Mexican American war that led to the conquest of California.  Try not to read that history from the perspective of the winners.. but, have a look at it from the perspective of the country that lost more than half its territory during those wars.

What goes around comes around.  For every action there is an equal and opposite reaction.  And most of all.. there is no time limit on payback. 

However.. after all I have said.. I do not think we will collapse in the way the USSR did.  I do believe there is a redistribution of wealth, a shifting of power, both economic and military, away from our country.  In less than fifty years we will all be speaking Mandarin.  I find it a great pity that the USA and Russia can not find more common ground because both our nations are at great risk because the dragon is awake and if we had unity between the two countries China would be in a much weaker position for a lot longer.  But, I think Russian paranoia and American arrogance will prevent that from happening and we will all sit back and watch as the Chinese eat us alive.

And yes, oil is over.  The new fuels are coming and they will be here sooner than any of us expect.  Already in Berkeley, ground zero for alternative fuels, there are thousands of vehicles running on biofuel reclaimed from resturant waste oils. Bad news for OPEC and other countries with single export economies.

Now, I am going to go have a beer and put myself back into a good mood.  Peace my friends!

[Ronnie]

One of the key differences between the US and Russia is that in Russia a crisis is denied and kept hidden as long as possible until it irreparably erupts.

In the U.S. crises are often invented and exaggerated for political advantage.

[BC]

One of the key differences between the US and Russia is that in Russia a crisis is denied and kept hidden as long as possible until it irreparably erupts.

In the U.S. crises are often invented and exaggerated for political advantage.

Isn't the current financial crisis an exercise in denial?.. or at the very least a bet on when?

[Faux Pas]

Isn't the current financial crisis an exercise in denial?.. or at the very least a bet on when?

A denial of what and by whom?

As I see it, the current crisis is just that, a crisis. It could escalate into something more serious as recession but I would wager a full fledge depression is in the distant future if at all. We hear about the "crisis" as we watch our stocks fall but the economy to your average Joe is the same as it has been for the last 7-8 years. We have bankers begging for federal money.

[Ronnie]

The word "crisis" is being overused.  The number of bank failures in the early days of the Reagan years was tremendous and accompanied by very high interest rates.  Today we have nothing even approaching that. If you told someone in 1981 that interest rates in 2008 would be mid single digits and a few large institutions were upside down and that it would warrant an emergency bailout they'd just laugh. That's why the polititicians avoid the comparison and instead refer to the 1930s which none of us remember or understand very well.  It's become like a fable and a boogy man.

The lesson to be learned (but will not be) is that consolidation of businesses and institutions removes the safety of diversification.  Wrong decisions made by the few CEOs of the big entities are not offset by correct and counterbalancing decisions by competitors.  Yet, some in Washington are spinning this in just the opposite way saying we need fewer and still bigger institutions.  Amazing!

Apparently none even understands that it was the centralized nature of economy of the USSR was the reason for the collapse.

[roykirk]

A denial of what and by whom?

As I see it, the current crisis is just that, a crisis. It could escalate into something more serious as recession but I would wager a full fledge depression is in the distant future if at all. We hear about the "crisis" as we watch our stocks fall but the economy to your average Joe is the same as it has been for the last 7-8 years. We have bankers begging for federal money.

I guess it depends on how you define recession or depression.  For some, it's already a depression.  I sat and watched a coworker yesterday check his 401K online to find that he had lost $50K in one day.  Suddenly, he's looking at working a few years longer rather than retire next year like he had planned.  For him, things couldn't possibly get any worse.

[Ronnie]

I guess it depends on how you define recession or depression.  For some, it's already a depression.  I sat and watched a coworker yesterday check his 401K online to find that he had lost $50K in one day.  Suddenly, he's looking at working a few years longer rather than retire next year like he had planned.  For him, things couldn't possibly get any worse.

Gimme a break. If he was planning on retiring next year why is his 401k still heavy in equities?  Further, has he not learned that one day does not a market make?  Today most of that loss was recovered.