Before the end of 1991, the Soviet Union had broke up and the aligned republics had became independent. In February 1992, Russia began to privatize state-owned assets.
In October 1993, Yeltsin disbanded Russian Parliament by force, imposed a dictatorship and conspired with bankers and industry oligarchs to swallow up state-owned assets.
Privatization reformers represented by the Russian White House (Parliamentary school)
Anti-White House reformers, represented by Yeltsin (President school) 1) Whether to implement Yeltsin's "shock therapy" economically 2) Whether to implement the presidential system politically in which the power of the president is higher than that of the legislative body
On September 21,1993, Yeltsin announced the 1400 Act, abolishing the functions of the Supreme Soviet People's Congress to exercise legislative power, administrative power and control power over the country. The president of the Supreme Soviet called an emergency meeting to announce Yeltsin's coup, oust his presidency and appoint an acting president.
On October 3, 1993, Yeltsin ordered the army to surround the Parliament Building, and the next day ordered the bombardment to the Parliament Building and forcibly dissolved the Parliament. The president of the Supreme Soviet, the acting president appointed by the Parliament, and the generals who supported the Parliament were arrested. Two hundred people were killed and thousands were injured. October incident, October coup.
General Popov and Colonel Zodik of the reformist Federal Security Agency, were assassinated by someone instigated by Banker Biliavsky. The mayor of Siberia, an anti-oligarchic annexation of state-owned enterprises, was shot on his birthday in 1998, while the killer was still unknown.
\1. Two stages of privatization.
1) Privatization of securities (from January 1992 to the end of June 1994): Each person was entitled to free access to a privatized security of 10 thousand rouble at the value of approximately $28 thousand, with which people could be free to purchase shares. 2) "Privatization of currency" (from July 1, 1994): High-quality enterprises such as oil, natural gas, non-ferrous metals and aviation were auctioned and bidden at extremely low prices
\2. Consequences of privatization "Privatization" was an unprecedented movement of "large segmentation" of property; It broke down the economic base of the original system, changed the structure of the social stratum, led to the formation of big capital, and resulted in the situation of "plutocrat infestation and oligarchic participation in politics". It was an unprecedented disaster for the Russian nation.
According to the Outline on Russia's Privatization, there were seven important objectives in the officially declared privatization:
1) To form a private class;
2) To improve the economic efficiency of the enterprises;
3) To establish a social security fund system with income derived from privatization;
4) To promote a better financial situation of the country;
5) To enhance competitiveness and demonopolization of the economy;
6) To attract foreign investment;
7) To create conditions for privatization and establish a sound organizational system.
Yeltsin's collusion with industry oligarchs dashed those goals.
1) The former Soviet Union was a creditor country; Debtor country: domestic debt of 200 trillion rouble, external debt of more than $60 billion; A third of the government budget was used to pay off debts
2) High inflation rate: 25 times of that in 1992; 10 thousand rouble was used to bought a pair of high-grade leather shoes in October 1992.
Shock therapy: large-scale, sudden and quick privatization, regardless of inflation and public affordability: Russia expected to completed privatization of 15,000 state-owned enterprises in a year or two.
Over the past five years of privatization, prices have risen by nearly 50-60 times. Teacher's salary was 50 thousand rouble: 400 rouble was used to only buy a big piece of brown bread, which could be eaten for two days. 1 jin of wine was worth 2 thousand rouble.
81% of bank deposits, 460 billion rouble, were looted by banks. The planned economy provided low wage, and the retiree lost the life dependence in their old age.
Russian official documents showed that from 1992 to 1996, as a result of hyperinflation, the national privatized economy lost more than 9500 trillion rouble, or $1.7 trillion, calculated at the price in 1995, equivalent to 2.5 times the losses during the war.
3）High unemployment rate: 9.1% - 15.2%. During the process of privatization, enterprises were restructured and the number of bankruptcies increased, worsening the employment situation. 4）Serious polarization: the richest 10% of the population occupied 45% of the wealth; 58% of the residents lived below the minimum living standard, and one third lived below the poverty line. 5）Serious sustained economic decline (1992-1999): GNP fell by 44% in 1998 compared to that of 1990, industrial gross output fell by 54%, and consumer goods production fell by 58%. The aviation manufacturing industry previously produced 400 aircraft a year, but now produces no more than 20 aircraft a year, 12-15％ of the decreasing production capacity. 6）Widespread criminal activities: abuse of power, use of power for personal gain, embezzlement and bribery, and fraud. More than 1000 officials were sentenced. About 55% of the capital and 80% of the voting stock were grasped by the hands of criminal groups both inside and outside Russia during the privatization process. 7）State-owned assets sold at a cheap price
500 large enterprises with a total value of over $200 billion were sold at $7.2 billion; Moscow "Gill" automobile factory with the total assets of $1 billion was sold at $4 million. From 1994 to 1996, the companies were sold at $1.8 thousand averagely, while the Honda Accord was sold at $8 thousand.
Privatization did not depend on laws but on "presidential decree" and Outline on Privatization, thus bypassing parliamentary boycotts and speeding up the legalization of "dividing up state-owned assets".
George Soros:
1) Russia was privatized for "turning predatory capitalism into legitimate capitalism".
2) Define the Russian economic system as "predatory capitalism" and "piratical barbarian capitalism." The real money tree was Russia's vast natural resources -- this is an economic realization. "Economic realization": the yield on looting stock wealth was higher than that on creating wealth. Entrepreneurship began to shift rapidly from creation to plunder. In addition to military industry, it has become a third and fourth class country, and an energy and mineral supply base. Its GDP was $1.43 trillion, slightly higher than that of Guangdong Province.
Through "insider trading", oligarchs legally devoured state-owned asserts, excluding foreign capital and private capital (including private foundations).
By the end of June 1994, Yeltsin had realized that 70% of enterprises were privatized and that there were 40 million holders. 70 to 900 thousand people received the benefits of the privatization, and 2000 people were involved in the large cake. But the most people ended up with nothing more than a tiny "subsidiary", a "lottery ticket" that could not produce real wealth. The government's commitment to allocation of assets to people was not real but "dark box operation", and privately transferred to "insiders".
8) The consortia's control over the economy and oligarchs' participation in politics
After the privatization campaign, Russia's economy continued to deteriorate, inflation was severe, and the rouble depreciated wildly. 1 rouble = $2.8, collapse; $1 = 100 rouble, depreciated 280 times October 1992: 1 privatized security = 10 thousand rouble = $50 1994: 1 privatized security = 10 thousand rouble = $7 = 1kg sausage Official exchange rate on November 25, 1994: $1 = 3,235 rouble
Government intention: People bought enterprise debt to control privatization. Employees bought 51% of the shares concessionarily, management bought 5% concessionarily, and the rest 44% were social shares. Results: In 1994, 65% of the equity was held by insiders,13% was still in the hands of the state, and the ratio of funds and the public was very small.
With the rouble value greatly depreciated, people have lost all confidence in the value of the securities of the state-owned enterprises they held, and believed that the securities have long become waste paper without any "dividend". They might as well sell them out early for cash instead of keeping them as rubbish! Industry oligarchs spread rumor that "stock was not worth a penny", conducted short sell of privatized securities, and colluded with banks to using money from banks and foreign capital to buy privatized securities at a low price in the underground market. The privatized exchange vouchers shared by the whole people were soon concentrated in the hands of seven oligarchs, and thus Russia's main economic lifeline was then controlled by such big oligarchs. When the Parliament cashed in on privatized securities in exchange for equity, it was found to have been fooled!
The most serious consequence of Russia's privatization was "the consortia's control over the economy and oligarchs' participation in politics". After Mr. Yeltsin's re-election in 1996, some oligarchs stepped up their efforts to demand political returns or even carried out blackmail to the authorities. A few consortia took the opportunity to control the news media, manipulate politics, share power, and so far interfere with Mr Putin's rule.
In the summer and fall of 2002, the United States and the European Union recognized Russia's status as a market economy. Data show that by January 1,2002, 130 thousand state-owned enterprises totally had been privatized, accounting for 66% of the total state-owned enterprises before privatization. The proportion of state-owned enterprises fell from 88.6% in 1990 to 10.7%, while the proportion of private enterprises rose from 1.2% at that time to 75.8% and collective and other mixed sectors rose from 10.2% to 13.4%.
Russia's privatization has gone through many years of ups and downs, and the thunderstorm-like privatization process has brought Russia back to its feet from the ruins of the Soviet Union. For ordinary people, however, it was a bitter memory that lingered.
Russia's privatization process is divided into small-scale privatization and large-scale privatization. Small-scale privatization refers to the privatization of businesses, service and small-scale industry, transport and construction enterprises, which is realized mainly through auctions, tenders, leases, foreclosures and shareholding system. Small-scale privatization began in 1992 and was basically completed in 1993. Large-scale privatization refers to the privatization of large and medium-sized enterprises, which is realized mainly through demutualization. "Mass privatization", which distributes property rights equally to citizens by means of securities (investment certificates), is one of the most prominent institutional innovations and also one of the most controversial policies.
Privatization of securities
Russia has identified three options for enterprises that are intended to be privatized:
Option 1, enterprise employees can get 25% give-away stock for free, buy 10% discount stock in addition, and enterprise management also can buy 5% discount stock, 40% totally above. The remaining 60% equity will be offered to the citizen with certificates in the society.
Option 2, enterprise employees can buy 51% of the stock concessionarily, and the management can buy 5% of the stock concessionarily, 56% totally. Only 44% of the stock are offered to the society.
Option 3, enterprise employees can purchase 20% of the stock concessionarily. In addition, if anyone (apparently the management) is willing to guarantee that the enterprise will not go bankrupt and stop production and responsible for reforming the enterprise, they can purchase 20% more of the stock with the consent of the General Meeting of the Staff of the enterprise. The remaining 60% are sold to the public.
As a result, 77.8% of enterprises choose Option 2, 21% choose Option 1, and only 1.3% choose Option 3. The move ensures that the enterprises´ majority ownership remained in the hands of "insiders". And you can be sure that the business with more profit and more benign assets are more reluctant to do so and prefer to have the insiders share the profit, while the one-fifth willing to let the society subscribe to its controlling shares are mostly poor-performing, and poor-asset-quality enterprises.
So after the end of the privatization of securities, the vast majority of Russian "privatized" enterprises were in the hands of "insiders", and outside bondholders, including various foundations that were said to have concentrated large number of privatized securities by various means, actually had insignificant ownership of property. According to the Russian government, 65% of the stock of these companies were held by insiders in 1994 and 13% were still in the hands of the state, while external natural and legal persons held only 21%, of which investment foundations accounted for only 6% in 1995, down to 5% the following year.
According to the World Bank's survey in 1996 about the ratio of large and medium-sized state-owned enterprises sold to "managers and employees", known as "insiders", it was 0% in Czech and Mongolian, 12% in Estonia, 2% in Hungary, 5% in Lithuania, 14% in Poland and 55% in Russia. It can be seen that Russia's basic approach to privatization is not about privatization of securities at all, but "purchased by insiders".
And because of the bad organization of Russian stock market, ineffective information and inconvenient trade, the securities held by many residents and even foundations were not cashed till the privatization of securities stopped and the securities were annulled. Statistics show that during the 19-month trading period from December 1992 to June 1994, 116.395 million of privatized securities totally were recovered, accounting for 80.8% of the total issued number 144 million, and nearly one-fifth of privatized securities were abandoned without use.
Privatization of cash
Many people believe that Russia's financial industrial oligarchs were formed in the process of privatizing securities. In fact that was not the case. But they formed after privatizing securities were turned into "privatized cash". The way was not the sales and concentration of privatized securities, but the use of state power to transfer assets that the authorities did not want to "distribute" to ordinary people directly into the hands of dignitaries. Its specific forms include the following:
Data show that there was only one financial industrial group in 1993, seven in 1994, 21 in 1995, 37 in 1996 and nearly 60 in 1997. Furthermore, "oligarchs among oligarchs" were formed, that is, "seven oligarchs". They covered the first, second and third industries and reached all corners of political, economic and social life. They were powerful enough to influence the operation of the whole national economy.
Privatization of land
The privatization of rural land in Russia began in 1993, when the country distributed land to farmers by share. 12 million farmers were given land in succession. Russia followed the western model of private farms. The majority of collective farms and state-owned farms became private farms or joint-stock companies.
In 1993, Russia adopted a new constitution that made it clear that citizens have land ownership and that landowners are free to control, use and dispose of their own land. But at the same time, because of the opposition of the communist party of Russia and its coalition party, Russia has not passed the detailed rules on the implementation of civil land ownership system, which made the land sales have no rules to follow and a mere scrap of paper.
In October 2001, Russia passed a new agricultural law that explicitly allows the sales of land in circulation.
On June 26, 2002, with 258 affirmative votes, 149 dissenting votes and 5 abstentions, the Russian Duma passed the Land Act, allowing Russian citizens to freely trade agricultural land. Land, in Russia, became a commodity. This was the biggest step in Russia's land-ownership reform since the October Revolution of 1917.
However, nearly 60% of farmland had been privatized by 2003, but only 5% was actually owned by landowners. Most of the farmland (51%) was owned only by individuals in the form of "shares of land". And in terms of private land, most (88%) of the land was owned by individuals in the form of "shares of land". Although "shares of land" could be transferred and exchanged, it was only an abstract nominal right associated with the actual plot rather than land ownership in the real sense.
About the gap between the rich and the poor:
Many people say privatization has led to a widening gap between the rich and the poor in Russia and an uneven distribution of assets. In the short run, Russia saw a monstrous society in which a few people became rich and the vast majority became destitute, with little effect in privatization. Data show that in the first half of 2002, the richest 10% of the Russian population accounted for 32.9% of the gross national income, while the poorest 10% accounted for just 2.3% of the gross national income. According to the survey, the real benefits of privatization only covered700 thousand-900 thousand people.
But the best index of the differentiation between the rich and the poor is the Gini coefficient, which is intriguing.
The index is between 0 and 1. The Gini coefficient is 0 for absolute equality and 1 for absolute inequality. The larger the Gini coefficient is, the more unequal the income distribution is; The smaller the Gini coefficient, the closer to the average the income distribution is.
According to Russia's National Statistical Commission, the Gini coefficient was 0.409 in 1994 and 0.381 in 1995. Most non-governmental experts and scholars estimated to be more serious, ranging from 0.400 to 0.405. The annual official to folk figures of the Gini coefficient varied from 1996 to now, but the general decreasing trend year by year was recognized. In 1994, according to a survey conducted by a research group led by Li Qiang, a sociologist in mainland China, the Gini coefficients of income distribution of urban and rural residents were 0.445 on the basis of households and 0.434 on the basis of persons. According to the survey conducted by the research group led by Economist Li Shi in 1995, the Gini coefficients were 0.409, 0.444 and 0.445 on the basis of households, persons and households, and persons respectively. There were also different estimates of the Gini coefficient since 1995, but the accepted trend was also rising.
In fact, the Russian issue was that the assets that the government had promised to distribute to the public were not distributed really but distributed in "dark box operation" and privately transferred to "insiders". If Russia had been as serious about "privatization of securities" as Czech, perhaps Russia's economy would have been different.
After Russian President Putin came to power, he acknowledged that privatization had been a mistake, but he also opposed re-nationalization, "The question of redistribution of Russian property can not be discussed at all today, and should not be discussed. If we allow redistribution of Russian property, the problems encountered and the losses caused may be greater than those at that time when privatization was carried out."
In short, privatization, as Russia's basic state policy, will not change or reverse, and it will continue for quite a long time.
(References of this article: Jin Yan´s From "Eastern Europe" to "New Europe": Looking Back on 20 Years of Transition and Ten Years of Vicissitudes: Economic and Social Transition and Ideological Change of Eastern European Countries)
encyclopedia Wikipedia, the free
Privatization in Russia
Expert comment: This is the most brutal and dirty plunder in human history. The former Soviet Union, a superpower that has competed with the United States for decades, swallowed the "overpowering drug" of U. S. freedom, election, open capital items and free floating exchange rate. In just a few years, its wealth accumulated a few decades was cut off by the international financiers, with only a pile of 'white bone' left! $10 trillion wealth was devalued as $10 million! The former Soviet Union, especially the Russia, paid a terrible price. That's why today's Russians are so patriotic and so strong for Mr Putin.
[Reading Guidance]
A superpower is gone!
A superpower that reached 70% of the U. S.'s national strength in 1980 collapsed and disappeared in just a decade!
A superpower with tens of thousands of nuclear weapons and a huge army armed to the teeth disappeared in a flash!
In an industrial power in which every four families had a private car in the 1980s, the GDP was less than that of Guangdong Province of China at one point!
Men in such a modern country have a life expectancy of only forty years. How did it happen that important industries and resources throughout the country were now in the hands of a group of "oligarchs" holding foreign passports?
A strong superpower was beaten up by a financial war and sold all its "national property accumulated over a long time" and the money used to buy its industry was entirely the superpower's government and people's own money. How did this tragic and ridiculous financial war operate ingeniously?
A huge country collapsed in a terrible financial war and is still bleeding.
Why did the people and officials of this country not only provide funds and conditions for their adversaries throughout the process, but also follow every suggestion from them?
The most surprising thing: after that, the people of the Soviet Union -- Russia, showed their strong dissatisfaction with and deep suffering from the loss of superpower status, but why have every step of the financial war that took their toll been carried out with such people's applause, cheers and flowers? !
How did a wise Soviet Union-Russian nation, a group of patriots put their country and people to the gallows in the financial war?
Why did the Soviet Union -- Russia watch the initiators of the financial war "reasonably and legally" take away all the huge numbers of factories, mines and businesses as booty?
How on earth did all this happen?
And why, so far, you have never heard of this huge-scale Soviet Union-Russian Financial War, with the losses over Russia's total losses in World War II and World War I? Who didn't want us to know? The defeated men were ashamed to say. The winner were secretly enjoying themselves. And a new round of war is under way! Let's slowly unravel the truth!
In this article, the author will try to discuss the whole stage and background of the terrible Soviet Union-Russian Financial War from the perspective of financial warfare, and present a magnificent war process that you have never even believed in before. Let's recall the dead together.
While we admire the initiators of this great financial war, we also have to think about a question: It was not terrible to lose a war, but why were people on the side of this war not aware of losing this war? Although the corpses lied all over the countryside and shed blood like water and the country suffered from great injury and was defeated with the home lost, it failed to be aware!
The entire Soviet Union-Russian Financial War is roughly divided into the following six stages:
The first stage of the war: the preparation of the strategic conditions for the Soviet Union-Russian Financial War
The wise President Reagan's team first issued too many dollars and raised interest rates in the 1980s, ostensibly to increase "the cost of raising money in the west world for the Soviet Union in economic crisis", which is an interesting part of the entire financial war. He used the strong illusion created by the high interest rate in dollars to attract innumerable foreign goods to the American market and families... Then, through various media and information channels, this unprecedented prosperity was spread to the Soviet Union.
At this moment, the whole Soviet Union was shaken by the unprecedented prosperity and overdraft consumption from top to bottom, and lost the confidence and the ability to discern the road.
In fact, President Reagan put forward a kind threat of good will in his talks with Soviet leaders: "I can afford an arms race with you for providing much more money than I do now. You can't win!" [Note]
Later, there was a "cult of the U.S. prosperity" and a "reflection of U.S. prosperity" all over the Soviet Union. This loss of confidence was due to the real U.S. market, the real rich life of the U.S. families, and the contrast of the whole international financial powers., so it was "real", "sensible" and "reflective". It instigated the Soviet Union-Russia's willingness to choose the U.S. model and path, which laid the groundwork for the next round of financial war.
The second stage of the war: The comprehensive war of the Soviet Union-Russian Financial War and the formation of two battlefields
As the initiator of the financial war, the U. S. covered its strategic intentions with friendliness and reconciliation, while using its overdraft credit to form the "fact" of the U. S. unprecedented prosperity, which convinced Soviet leaders and people of free market, financial liberalization, "free" election, and cancellation of government regulation. These come from Smith. This liberal economic theory from Smith Hayek was the cornerstone of the U. S. prosperity.
Since Gorbachev's presidency, Soviet leaders have taken a more decisive road to reform and opening-up than China. Thus, within 3 - 5 years, he abandoned the leadership of the Party, opened the door to the outside, and even actively dissolved the Soviet Union. It would be extremely unfair to put the blame entirely on "a small group of traitors and profiteers"[Note]. Actually it was the collective will of the Soviet people to believe that they were on a golden path that would ultimately lead to "the prosperity in the U.S. model". So they spontaneously and consciously made all these choices! But history played a small joke with them, and also gave us China invaluable experience and lessons!
Here I do not mention the issues at the political level. I just want to guide you smart netizens to think about the following question: If a gold pot is broken, isn't it still gold! ? The lean camels are also bigger than the horses. Why did the Soviet Union suddenly go bankrupt and have almost nothing?
How did the Soviet Union -- Russia suddenly become a second and even third class semi-begging country from a superpower that raced together bridle to bridle with the United States?
The decisive financial blow to the former Soviet empire, in the light of the main attack of financial warfare alone, came first from the U.S. economist Sachs' notorious "shock therapy" -- "Harvard's 500-day Reform Plan"[Note].
The auxiliary war or battlefield were designed to control a small black ruble market, which changed the small black market used only to buy western luxury goods into an underground gray financial market capable of manipulating the price of all the Soviet state-owned currency, rouble [old rouble].
1) The "500-day Plan" turned Soviet state-owned enterprises into valuable securities -- shares, distributed them to all Soviet residents, completed privatization and prepared the Soviet Union in "a fair free market" (that is, the "American Dream" by overdraft credit).
2) The purpose of the "500-day Plan" was said to be "fair" and "legal". So all the people of the Soviet Union accepted the privatized securities without a doubt and with joy. About everyone had 10 thousand to 15 thousand rouble, about $30-40 thousand at that time.
For everyone in the Soviet Union at that time, it was an ill-gotten wealth.
Because they generally believed that the state-owned enterprises were not their own originally, but now they have truly become the "owner of the enterprises" and obtained a valuable security that could be sold in the emerging bond market!
All these reforms, no matter from any angle, were worthy of the Soviet people's joy!
At that time, no one realized that the securities that broke up the whole equity of state-owned enterprises into parts were going to be one of the most helpful tools in the financial war for the complete collapse of the Soviet Union's powerful national economy.
The third stage of the war: the final stage of the Soviet Union-Russian financial disintegration war!
Before launching the most brilliant financial decisive war, the U.S. stealthy commander of the multinational financial war had made quick arrangements to snatch market share with wholly-owned (regular army) and joint-venture (mercenary army) financial companies.
The U.S. and European cross-border financial firms and investment foundations set up large numbers of briefcase banks in the Soviet Union that could conduct "independent accounting" and launched the decisive tornado-like attack relentlessly by taking advantage of Soviet citizens' ignorance of the difference between Soviet banks and "modern private banks" and the Russian people's infinite worship and trust for the western transnational corporation at that time!
At this time, the original "financial regulation" in the Soviet Union had long been the target of centralized attacks by the public media -- described as the last bastion of the old state's monopoly conservatism, the biggest obstacle to Russia's rapid prosperity, and the old system of "restoration" and "centralization". The final bloody assault must be launched to conquer this fortress!
At that time, official newspapers such as Pravda that Soviet citizens always believed in had been turned into "trumpeter" of the financial war after they had been privately bought by "foreign capital"(Soros).
After the collapse of the communist party, politicians of the former Soviet Union were scrambling to win votes, and even those who understood the power of "modern private bankers" did not dare to go against the powerful public opinion and public will and expose and intervene them.
As a result, in just one or two years, some "modern private banks" with independent accounting business and scientific management in which you did not necessarily line up and were treated with smile emerged all over every city of the Soviet Union - Russia like mushrooms. They offered free coffee, and their employees smiled kindly. There was no doubt that they gave the Soviet people a sense of unprecedented trust -- "these banks"(private banks) were much better than the old ones (state-owned banks of the former Soviet Union).
In this context, these "independent private banks and private financial institutions" absorbed a large number of Soviet civil and corporate rouble savings through a variety of gray means such as relatively high interest rate [Note] and free cups of coffee [Note] .
At the same time, these private banks and private financial institutions that appeared to be "unrelated" and "independent" began to use "gray kickbacks and tips" to make inroads on Soviet Union-Russian Central Bank, state-owned banks and financial institutions, such as borrowing huge amounts of rouble!
By this time, since central planning and management system and financial regulation had been disintegrated and loosened by the collapse of the former Soviet political system, a large mount of rouble, along with out-of-control fiscal and privatized securities, went to consumption unboundedly. And then inflation took place in Russia.
And in the hands of the multinational bankers who quietly helped drive all this, enough rouble was hoarded, which was borrowed entirely from the Soviets themselves. As a result, a media campaign against the collapse and crackdown on privatized securities was launched first. As the value of the rouble was greatly devalued, people lost their confidence in the value of the securities of state-owned enterprises they held. However, at this point, multinational bankers quietly began buying up privatized securities in the market.
Since the economy was on the verge of collapse after the dissolution of the Soviet Union, corporate securities had long become waste paper without any "dividend". They might as well sell them out early for cash instead of keeping them as rubbish!
So the multinational bankers quietly bought all the privatized securities of the state-owned enterprises of the entire Soviet Union at the price of junk. From then on, they became the legitimate shareholders, and quickly redistributed [note] the equity and income right through a variety of hidden channels!
This is the perfect end to the first decisive stage of the Soviet Union-Russian war by multinational bankers.
And the former Soviet Union -- Russia's formidable state-owned industrial system built after generations of Soviet sweat, blood and sacrifice (Note that the Soviet Union was a socialist country without private enterprises!) completely collapsed, and the ownership was transferred.
It can also be said that the Russia's entire new national economy and national industry have been sold by the Soviets in the "emerging security market" in a fully legalized and democratic way!
The fourth stage of the war: the important closing battle of the Soviet Union-Russian Financial War began, killing three birds with one stone.
Looking back on the financial war that took place in Russia during the decade of 1989 - 1998, it was a process that killed the country, in which the secrets were really worth historians´ careful taste.
The sales of Soviet Union-Russian privatized securities did not certainly bring the result of an immediate collapse of the country's economy!
If, at that point, Soviet Union-Russian government supervision department had took the following steps:
(1) Tighten the rouble,
(2) A sharp increase in the rouble interest rate,
(3) Without hesitation, resolutely cancel the semi-public rouble and free exchange with dollars,
(4) Strictly crack down on dollar trading and security trading in the black market and gray financial market.
(5) Strictly examine the qualifications of "foreign capital and private banks", and greatly increase the threshold for entry and exit[Note],
(6) Resolutely put an end to the inward and outward flows of funds from transnational and underground financial institutions,
(7) Strictly examine the bankruptcy of state-owned enterprises involved in various types of privatized securities,
(8) Let the rouble appreciate sharply, such as, the level of 1 rouble = $10.
So in this way if the Soviet Union-Russia still had to sell state-owned enterprises, at least it could sell at a relatively reasonable price!
But the fact is that the former Soviet Union-Russia's financial authorities did not do so!
Although at that time they were clear that the "individuals" who bought securities and the "multinational banks and financial institutions" behind them had bought rouble securities at astronomical numbers on its account all over Russia with the smallest amount of rouble, borrowed and reversed!
If these "private banks" had been based entirely on honest, market rules, Western-specific and Eastern-lacking integrity, then they would not have been able to repay the funds they originally collected with high interest rate of up to 30-40 percentage points, or large rouble loans from Soviet state-owned banks and state-owned financial institutions through high interest rate and "expensive gray transactions"!
Although multinational private bankers has already hold large number of securities, these junk securities were not real money after all. The bankers weren't able to pay huge amounts of interest on their loans. Then they faced only two options:
(1) Declaring the bankruptcy of private banks meant not only giving away $10 trillion rouble to Soviet citizens, but also auctioning off their own elaborate stores and luxurious free coffee machines from the United States. The newly acquired privatized securities would return miraculously to the Soviet government.
Such an unprofitable deal would be the nightmares of shrewd bankers and the comedies of former soviets and the Russian government!
(2) The second option for "private banks" was to return interest and principal!
In other words, if $10 trillion rouble was based, the loan interest of 3 thousand to the 4 trillion rouble must be returned each year and the principal of the loan must also be returned!
If the Soviet government had adopted routine financial regulation, ruble deflation would have appeared in the Soviet financial market and these "private banks" would have paid astronomical amounts of dollars, at least 10 trillion rouble each year, to return the principal and interest to the Soviet people and the Soviet government! It was not the Soviet Union's economic system that failed, but the multinational bankers!
[Note: All of these above operations are conventional and market-based operations and conservative and conventional purely-financial instruments in U.S. financial history, and even don't involve closing securities and stock market. These means were later adopted in countries such as Vietnam during the Asian financial crisis. In fact, Vietnam, which was much weaker than the Soviet Union, effortlessly kept Soros' "Financial Expendables" -- "Private Risk Hedge Fund" away from the country in 1998.
(There are later words. Please read my book Great Wall of Money and the chapter "Secrets of the Asian Financial Crisis". Here I do not say more. )】
But, unfortunately, history didn't happen this way!
History is just the opposite, for the people who led the financial decision-making of Soviet Union-Russian government in the in the reform era were not the previous Soviet officials but a group of "U.S. financial experts with rich experience in international financial market"!
Then, one of the most jaw-dropping scenes in the entire human financial market happened:
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"In the case of full exposure of motives and intentions of the U.S. private banks and private financial institutions" and the war forces still obviously in favor of the Soviet Union-Russian Central Bank(at this point the two sides of the financial war was multinational "private banks" and foundations, as well as Soviet Union-Russian "Central Bank" with the power to set the rules of the game. And the Soviet Union-Russian Bank was the creditor of these multinational private banks and thus held all trump cards). And by this time, whether the people of the Soviet Union or the Central Bank of the Soviet Union knew that the coffee of those "multinational private banks" were not really free to supply.
As a result, "after the private banks revolved according to the old market rules", Soviet officials who had real economic power placed their personal interests above national interests.
They decided to open the door entirely to Russia's financial system.
The most tragic and thought-provoking scene of the Soviet Union-Russian Financial War: According to the proposal out of "friendly purpose" of the United States, the commander in chief of this great financial war, U.S. "Friendly" Financial Expert Group, the Russian Bank decided to further ease its supervision over the free exchange of rouble and dollars and fight against the trade of dollars and rouble in the underground black market with freer and opener convertibility!
Yeltsin later lamented in his memoir that [Note] at a time when the national exchange rate was 1 ruble to 2.8 dollars, he had presciently proposed to exchange dollars at 36 rouble to $1 as a strategic reserve, but it had not been approved by the State Council! Indeed, Yeltsin's idea was "prescient" if it had been seen simply from the fixed thought carefully guided by U.S. financial experts and the inevitable result of following this line of thought.
But the crux of the matter is: why didn't the country adopt the reasonable financial strategies described above to avoid a catastrophic financial crisis but adopt a series of "friendly" and "market-based" suggestions from "U.S. financial experts" which would apparently lead to the financial crisis destroying the national economy?
The answer is profound and simple: because the U.S. and the Soviet Union-Russia's "financial experts" and "independent public media" have long repeatedly wilfully slandered and ridiculed "administrative financial regulation" and described the normal financial supervision power and practice of Central Bank as "centralized monopoly behavior"! Thus no one dared to make a public propose to do that!
However, Soviet Union-Russian politicians, including, of course, central bankers, were too busy with the excitement of "U.S. democratic elections" to take into account these economic "trifles".
In fact, most of the officials of the Soviet Union-Russian Central Bank at that time did not think of it as a "centralized monopoly and restoration". But since the U.S. initiators of the financial war created a climate favourable to the realization of the intentions of financial attacks in the "first stage of the war: the preparation of the strategic conditions for the Soviet Union-Russian Financial War", at this particular moment in history any effective and reasonable financial regulation would be seen by the Soviet Union-Russian people as a stumbling block to the U.S.-like unprecedented prosperity and must be removed at all costs! This is a thought-provoking issue!
It can be said that the United States led a series of thorough political reform and ultimately destroyed the Soviet Union's system and economy! This is a very vivid lesson in history!
And then there was an unequivocal financial massacre, for private financial institutions and the black market could actually freely convert rouble and dollars, and there was no strong regulatory means to allow the rouble "to be regulated according to the invisible hand of the financial market"!
There was a dramatic scene when people lined up in the private banks and exchanged depreciating rouble for dollars. At this time, anxious Soviets had no time to pay attention to whether the previous "private banks with good service and no queuing" also provide customers with smiling faces and free coffee! In fact, the smile they used to see from international bankers was now turned into merciless sneer because now, in the eyes of these private banks, they were no longer noble customers but a group of beggars!
The first fruitful result of the most important end of this financial war was also the most wonderful part of this financial war. With the pervasive panic in the currency exchange market, the Russian rouble was changed from 1 rouble to 2.8 dollars to 100 rouble to $1.
At this time three interesting new results appeared, namely "killing three birds with one stone":
(1) The value of the rouble that the Soviet Union-Russia received from selling privatized securities in the security market has fallen by 280 times. The security wealth that Russians used to share in their hands was worth a few dozen dollars.
The Russians sold off all the family belongings accumulated with hard work and sweat by them, their parents and even their grandfathers at such a low price, and could not blame anyone else at all!
Indeed, it all came from their own choice! They used to have a "free decision" right -- that was why the modern financial war had to insist on "free trading power". The wonderful thing was that you couldn´t say what you have to say!
(2) All the Soviet Union-Russian financial system collapsed, and the social market price system also collapsed. Everyone's life savings immediately depreciated by 280 times with the ruble collapsing!
The Soviet Union-Russia became a huge debtor country overnight from a arrogant creditor country in the former Soviet era! Russia's national strength disintegrated instantly. Russia was mired in a series of profound and complex social unrest. This collapse situation also provided a "good foundation" for in the international financiers to launch further financial closing-up and clearing-up campaign!
In the long run, the Soviet Union-Russian superpower dream is truly gone. Even the dream of restoration of national strength as a second-class national power seems hazy and unrealistic!
(3) For the "warriors" struggling in this financial war -- those independent private and joint-venture banks, the private rouble savings attracted by "high interest rate" and the problem of "high interest rate", as well as the repayment of the huge amount of rouble debts legally borrowed from the Soviet Union-Russian Central Bank have been totally negligible!
It can be said that in this Soviet Union-Russian financial war, as the losing side of the war the Russian Central Bank has no way to fight back. Because of the ruble value collapse, the Russian Bank completely lost the ability to pay. It complete failed!
Then the international initiators of the financial war decided to continue the final financial encirclement and suppression!
At this point, the amount of interest and principal for redeeming all those "junk" securities remained enormous. Although rouble devalued by 280 times, considering that interest rate was abnormal at that time, in addition to the cost of "savings" attracted by high interest rate and "gray price", it would still cost hundreds of billions of dollars to repay nearly 100 billion rouble previously used for privatized securities honestly to the Russian Bank. But international bankers didn't want to do that, so a new scheme emerged.
The final battle for the Soviet Union-Russian Financial War has been unveiled!
The fifth stage of the war: the final battle of the Soviet Union-Russian Financial War: devaluing the rouble completely!
In the final battle , the commanders of the greatest financial war in human history made use of the favorable time window, Soviet Union-Russia's no financial regulation at that time[Note], to operate in the main battlefield "exchange market" and auxiliary battlefield "financial black market" simultaneously.
The media's portrayal of panic, like the "self-fulfilling prophecy" of the "stock market defeat" trumpeted by countless media and individuals at China and abroad in June 2007, made disappointed Soviet Union-Russian citizens sell out every ruble and buy dollars! Even astronauts inside the Peace Space Station were anxious to use secret military bands to ask friends on the ground for help in redeeming their rouble at the bank! How poor! How thrilling this financial war was!
The rouble market soon collapsed without suspense! At this point "U.S. financial experts" immediately put forward a "new friendly proposal" "in a timely manner": currency reform! 1000 old rouble was replaced by 1 new rouble[Note] and the exchange rate of 5 new rouble to $1 was set!
The real depreciation of the entire old rouble was 14000 after this' effective measure to stop the financial turmoil 'was implemented. So far, the ultimate holders of the former Soviet Union's" 500-day plan "of privatized bonds--independent private banks and financial institutions--have used them to buy the entire system of ex-Soviet state-owned enterprises at a price of only tens of millions of dollars.
That was the original backdrop to President Putin's idea that economic oligarchs must be fought against!
The sixth stage of the war: the end of the Soviet Union-Russian Financial War - the guerrilla phase!
This unprecedented and greatest financial war was successful basically to the incredible extent. The international financiers have achieved brilliant success! But the aftermath of the financial annihilation is not over yet!
In order to consolidate the success of the financial war, the behind-the-scene commanders of the financial then used various private risk hedge funds [Note] (note: sadly, there was no need to send the regular forces of the financial war to fight against the financial system of such a superpower. Some small risk hedge funds were enough! ) to launch a series of attacks on Russian finance.
But by this time, both Yeltsin's government and then Putin's government hated by the West recovered from the deep pain and started a series of financial regulations.
So these follow-up battles have had little success. The new ruble fell below 40 ruble to $1 at most, but soon stopped falling and became stable. By 17:38 on June 17,2007, the new ruble to dollar was 26:1[Note].
Excluding interest, the initiators of the Soviet Union-Russian Financial War (international bankers and a group of emerging Russian financial oligarchs) bought (rather grab) all the privatized securities that added up to less than 10 trillion old rouble at 72,800 (rouble):1 (dollar), a ultra-low price unprecedented in world history, and the equity implications of these securities covered everything valuable throughout the former Soviet Union's national economic system! These international bankers and emerging financial oligarchs actually spent less than $10 million!
Throughout the collapse of Russia's national economy, it can be said that this is the greatest financial war ever waged by all Free-Mason financiers in human history! Whether the scale, results or means have reached the unprecedented level! This large-scale financial war broke up and acquired the whole national economy of the Soviet Union, and then such a bloody financial war was over!
Such great wisdom will last forever in the depths of the financial jungle forever! Here I want to remind everyone that the truly ambitious wise and powerful men will never be content with just one great success. What they need is greater success to satisfy their ambitions to conquer global finance! By the time they climbed this Russian peak, their eyes were now on the other peaks.