The speech is very long, more than 6000 words. There is no yet a full official English translation. There is partial one here: http://en.kremlin.ru/events/president/news/67828 About 2,500 words (the start of the speech) are about the common history between Russia and Ukraine beginning with “time immemorial” and ending with the Maidan situation in 2014. Then about 1,000 words are about what happened post Maidan and March 21 when, according to Putin, Ukraine adopted a new military strategy which is what triggered the current Russian response. Then, there are about 2,500 words on what exactly that strategy is. Finally, the actual decision: the declaration of the independence of DNR/LNR is about 100 words.

Whether one agrees with the speech or not is beside the point: Putin makes it clear where Russia is coming from and that this is not a random decision. I will spare you the details of history – ‘his story’ is always written by the victors and while we may know the ‘facts’, it is more difficult to fully know the nuances and context which is what really matters when we make a judgement. Here are a few quotes though:

“Since time immemorial, the people living in the south-west of what has historically been Russian land have called themselves Russians and Orthodox Christians.”

“…modern Ukraine was entirely created by Russia or, to be more precise, by Bolshevik, Communist Russia.”

This is not just about Ukraine, Putin is lamenting the dissolution of the whole Soviet Union:

“The September 1989 plenary session of the CPSU Central Committee approved a truly fatal document, the so-called ethnic policy of the party in modern conditions, the CPSU platform. It included the following provisions, I quote: “The republics of the USSR shall possess all the rights appropriate to their status as sovereign socialist states.””

But Putin’s issue is not so much with the fact that the Soviet Union does not exist any more (“our people who accepted the new geopolitical reality that took shape after the dissolution of the USSR, and recognised the new independent states.”) but with the way particularly Ukraine behaved in the aftermath (“it was striking how the Ukrainian authorities always preferred dealing with Russia in a way that ensured that they enjoy all the rights and privileges while remaining free from any obligations.”)

Putin reminds us in his speech that Russia “provided to Ukraine along with economic and trade preferences, the overall benefit for the Ukrainian budget in the period from 1991 to 2013 amounted to $250 billion.” What Russia got back was “Kiev tried to use dialogue with Russia as a bargaining chip in its relations with the West, using the threat of closer ties with Russia for blackmailing the West to secure preferences by claiming that otherwise Russia would have a bigger influence in Ukraine.” The culmination of that was Maidan’2014 “coup d’état where…they received direct assistance from foreign states. “ But Maidan “did not bring Ukraine closer to democracy and progress…” but “into the abyss of civil war” and economic collapse.

It seems Russia’s patience brew over in March 2021 when Ukraine adopted a new Military Strategy which was “almost entirely devoted to confrontation with Russia aiming to draw foreign states into conflict with our country”. He quotes from that document claiming Ukraine has organized terrorist activities in “Russian Crimea and on the territory of Donbas”. Moreover, and what follows is the gist of why Russia is undertaking the present actions, “Ukraine is going to create its own nuclear weapons, and this is not empty bravado…it is only a matter of time…. We cannot but react to this real danger, especially since, I repeat, Western patrons can contribute to the emergence of such weapons in Ukraine”…” In recent years, under the pretext of exercises, military contingents of NATO countries have been almost constantly present on the territory of Ukraine. The command and control system of Ukrainian troops has already been integrated with NATO’s”. He goes into a lot more details on this latter point about how NATO is operating on the territory of Ukraine even though “Article 17 of the Constitution of Ukraine does not allow the deployment of foreign military bases on its territory.”

And the point about each country has the right to choose its own foreign policy alignment, “Yes, of course, each country has the right to choose its own security system, to conclude military alliances….” But “…international instruments explicitly enshrine the principle of equal and indivisible security, which, as you know, includes obligations not to strengthen one’s security at the expense of the security of other States. I can refer here to the 1999 OSCE Charter for European Security, adopted in Istanbul, and to the OSCE Astana Declaration of 2010. In other words, the choice of security methods should not pose a threat to other states, and Ukraine’s accession to NATO is a direct threat to Russia’s security.”

The point about NATO being a defensive alliance: “they are trying to convince us time after time that NATO is a peace-loving and purely defensive alliance. Like, there are no threats to Russia. Again, they offer to take their word for it. But we are well aware of the real price of such words. In 1990, when the question of German reunification was discussed, the Soviet leadership was promised by the United States that there would be no extension of NATO’s jurisdiction or military presence by a single inch in the eastern direction. And that the unification of Germany will not lead to the expansion of the NATO military organization to the East. It’s a quote… They spoke, gave verbal assurances, and everything turned out to be empty words. Later, we were assured that the accession of the countries of Central and Eastern Europe to NATO would only improve relations with Moscow, rid these countries of fears of a difficult historical legacy and even, moreover, create a belt of states friendly to Russia. Everything turned out to be exactly the opposite.”

This is in stark contrast to what Russia did: “Russia has fulfilled all its obligations, including the withdrawal of troops from Germany, from the states of Central and Eastern Europe and thereby made a huge contribution to overcoming the legacy of the Cold War. We have consistently proposed various options for cooperation, including in the format of the NATO-Russia Council and the OSCE.”

Naturally, “As a result, the Alliance and its military infrastructure went directly to Russia’s borders. This was one of the key causes of the crisis of European security, had the most negative impact on the entire system of international relations, led to the loss of mutual trust.”

And this: “In NATO documents, our country is officially explicitly declared the main threat to Euro-Atlantic security. And Ukraine will serve as a forward springboard for such a strike.”

He then goes on to describe that negotiating with the US has been a waste of time. “The dog barks, and the caravan goes”. Then he turns to the situation in Donbas and how Ukraine has failed to implement the Minsk Agreement. “On the contrary, it is trying to organize a blitzkrieg in the Donbas again, as it was already in 2014 and 2015.” So, he plays the human rights card, well known and practiced across the world by the US. He mentions the word genocide to 4m people “fighting for their elementary rights – to live on their land, to speak their language, to preserve their culture and traditions.”

And here it is: “How long can this tragedy last? How much longer can we tolerate this? Russia has done everything to preserve the territorial integrity of Ukraine, all these years persistently and patiently fought for the implementation of UN Security Council Resolution 2202 of February 17, 2015, which consolidated the Minsk Package of Measures of February 12, 2015 to resolve the situation in the Donbas.”

Basically, he is saying, enough is enough,  “In this regard, I consider it necessary to make a long-overdue decision to immediately recognize the independence and sovereignty of the Donetsk People’s Republic and the Lugansk People’s Republic.”

The big question is whether this is where it all ends. If it was not for the 2,500 words of historical preface about Ukraine being an integral part of Russia, I would have said that “Yes, this is where it ends: Russia simply wanted Ukraine to honour the Minsk Agreement and it had to do what it had to do given that Ukraine didn’t”. I am not so sure any more. But I doubt it Russia would go all the way unless it is provoked.

The stock market is a forward discounting mechanism.

How much forward?

It seems quite a lot judging by this chart above.

At 28.6% return YTD, the S&P Index is on course to one of its best years on record. Going back to 1927, only 10 years have seen more than 30% returns. It will also wrap up a spectacular decade for the index: with still a few days left in 2019, it can still beat 2013, the best year of this past decade, which finished just shy of 30%, at 29.6%.

While US corporate profits have remained flat since 2012, the S&P Index has doubled. That’s a lot of discounting. But that pales in comparisons to Apple’s share price which has doubled from the lows this year, while its revenue is down during that period (latest numbers for Apple are only as of Q3, so things may change with Q4 numbers released).

To be fair, the spectacular performance of US stocks this last decade may be just catching up with the previous decade (2000-2009) during which S&P 500 Index declined while US corporate profits increased 2.5x. So, starting point matters.

Therefore, it is best to look at the long term-chart, at the beginning of the post, going back to 1947.  S&P Index and US corporate profits moved hand in hand until the early 1980s when US financialization kicked in (shareholders primacy and the share buybacks era). There had been, of course, some going back and forth between the two even before 1980 but at the beginning of the 1980s they were ‘on top of each other’.

The volatility between the two sharply increased thereafter. Stocks raced higher and while corporate profits also grew, the growth rate of the S&P index outperformed. Then in the mid-1990s, corporate profits stopped growing but the S&P index continued to race higher. The dotcom crisis and the 2008 financial crisis served as a reset but it still took until 2012 for US corporate profits to ‘catch up’ to US stocks.

The time post 2012 seems very similar to the 1995-2000 period whereby corporate profits did not grow but US stocks rose nevertheless. Only this time, at the end of 2019, the disconnect between the two seems to be the most extreme ever.

The stock market is a forward discounting mechanism indeed, but judging from history a reset is more likely to ‘justify’ that discounting. One problem though: no one can claim to know when that will happen.

!! ⚠️ CAUTION! MAY CAUSE EXTREME BOREDOM ⚠️!!

YOU’VE BEEN WARNED

OK. *breathes in*

Let’s do this.

We only spent around 4 weeks in China, but by then, I had noticed some recurrent behaviour traits:

– Ill manners: rudness was pervasive. It was present mostly at train stations: I was shocked to see grown-ups fighting like children, pushing past each other to get on the carriage and to grab a seat, even before others had gotten off. So, most of the time, we ended up standing in the carriage. I watched other passengers to see if this bothered them, but they turned a blind eye whenever this happened. It must be cultural norm, I then thought.

Similarly, in the Forbidden City, Beijing, which was incredibly busy, people were always shoving past each other to take a picture. I almost dropped my phone on several occasions, which would have been a disaster, since I had just repaired it (in Xi’an😄).

– Littering: The Chinese government seems to buy into some basic environmental policy by providing lots of bins and cleaners everywhere, even on the station and running trains! Unfortunately, the citizens don’t seem to share the same environmental concerns and regularly disregard any common rules on disposing of garbage or personal fluids.

We witnessed many examples of this. A particularly amusing one, for me, was on the tube where a young boy eating a chocolate bar subtly dropped the wrapper under the seats and pushed it away with his leg. Apart us pointing and chuckling no one else seemed bothered.

Unfortunately it wasn’t just big city behavior. While descending down the Yellow Mountains a man, ignoring the bin situated right by his feet, threw a bottle deep down the cliff, left to decompose for eternity. In the same countryside experience, people were smoking in non-smoking areas (while, in smoking areas, even though there were plenty of people, no-one was smoking!).

Generally speaking it was also hard not to witness constant relieving of personal fluids. People seemed unfussy about opening their zipper and urinate whenever nature called. Also, my mum had warned me of the cultural habit of spitting and I’ve been wary since then. Once, at a cafe, after seeing a man outside the window spitting all over the ground I made sure I kept track of where it went so that, when we left, I avoided the spitwads. After that little episode, I noticed that every now and then, somebody would lean over and dispose of their saliva.

To be honest, by the time we ended up in Beijing I grew quite disgusted with the amount of people spitting and littering. It really hit me at the Beijing stadium where Coke cans and tissues were strewn across the grass.

– Aseptic nature: It looks like the Chinese government also feels responsible for taming nature to fit neatly into an health and safety proof entertainment.

This was evident in the Yellow Mountains again. All throughout the walk, we were accompanied by built-in stairs and handrails which seemed completely at odds with the idea of mountaineering. In addition, a service of a chair manually carried was offered. I mean, it would make sense if there was a real necessity but I witnessed a young child carried on the chair, while playing on his phone (and people complain that the new generation are too lazy! Maybe that’s due to the naive parents who turn their head away when their children sit on the couch, watching TV or play video games all day long) .

In the Gobi Desert we encountered a similiar approach. Planks of wood and handrail were built across some of the dunes! We, of course, took the longer and fun way up, old school, climbing up the sand, barefooted.

The Silver cave at Yuangshan, an impressive work of nature on its own right, had also been subject to the beautification process. Man-made lights were set up to make the cave seem so much more dazzling, but it felt unnatural and artificial, because it removed the sense of nature’s accomplishment and replaced it with what human civilization has made.

I reminiscented of the days where we would hike in the countryside in Britain. The most civilised works would be the gates to keep out the aggressive cows.

I personally found it hard to enjoy the works of nature when works of humanity were clearly present, begging for attention.

– Friendliness (or lack of): Overall, in China, people’s attitude towards foreigners seemed either extremely unfriendly and unhelpful oral as extremely friendly and generous. We were lucky enough to encounter some of the latter. Random people offered us their help and some taxi drivers did try their best to understand us and get us to our destination (even though they often struggled to understand the Western name of the place we wanted to go to).

China may get plenty of tourists, but we still attracted many curious locals. Once, in Dunghuan, we stopped by a restaurant owned by a family with two boys. The children, who were studying late in the night, were particularly curious and we developed a bond and had a great conversation. They even taught us how to hold chopsticks properly, which was a relief, because since then it wasn’t such a struggle to eat food.

It also became obvious to me that the Chinese have a little pet peeve about loose laces. Every now and then, my shoelaces would undo themselves and a random stranger on the street would pat me on the shoulder and gesture to my shoe. Once a man even went as far as lifting up one leg while walking to point at his own shoe (since he probably couldn’t speak English) and gesturing to me. Another time, I was playing with my sister and this woman shouted across the entire room, frantically pointing at my undone shoelaces. And no, I’m not exaggerating.

– Cuteness: Another thing that perplexed me was how the society was eager to educate children through cartoons. For instance, short clips of safety were presented on the TVs in the trains. I can see why it makes sense though, because these children are going to be the next generation – among the cluster of kids, included a future president, teacher, soldier, doctor. These were going to be people who could possibly change the course of history and the Chinese society is determined to bring the best out of them.

Moving on to Dunghuan, I spotted a cute dog on the streets. Many were present throughout our journey on the Silk Road and they were all homeless. So, I was wary about stroking it, but it was still a cute animal. We had carried on walking and then I realised the dog was following us. At some point, we were inside a shop buying breakfast and the dog was waiting outside for us. Here’s a picture to show just how adorable it was.

The dog followed us the whole way. Unfortunately that day we were leaving to go to Zhangye so it broke my heart to see the dog scampering after the car we drove away in.

I wonder if it will ever think about me.

– Spices (and crawlies): If there’s one thing that was common in China, it was spices. The pungent substances were everywhere. Almost every dish we ate had spices. Plenty of shops in the market were selling spices. What would be a lot of spice to us would be very little spice for the Chinese. In addition, in Beijing, I spotted some live baby scorpions on a stick sold as food, which totally freaked me out. Even now (writing this in Myanmar) I shudder at the mere thought of these tiny animals squirming and wiggling.

To conclude: while China does offer excellent sights and polite locals, littering, smoking and spitting is present almost everywhere and you are bound to be shoved by people, adamant to get on the train. It was an experience like no other and I wonder if I will see things differently when (and if) I return to London.

And that’s China for you, folks.

*curtains close*
*applause*

Low productivity is the least of our problems. Why would we want to produce more output, when there is no one able to consume it, is beyond me. If we take care of our stagnating aggregate incomes and put more real purchasing power in the consumers’ wallets, productivity will take care of itself. However, it is a fact that the 200-year old Industrial Revolution-time model of income generation and distribution has broken down due to the spread of globalization and the rise of sophisticated technology which displaces even cognitive and non-routine human jobs. The problem is that we keep wanting to fix it instead of coming up with a new model which fits better our economic realities.

• Low wages are not a result of low productivity. It is the other way around.
• If full employment comes at the cost of lower wages, purchasing power may not rise and aggregate demand may not rise->output stagnates.
• Stagnating numerator (output) and a rising denominator (employment)-> decreasing productivity.
• Work dynamics have changed dramatically. The 200-yr old distribution model of Work=Job=Income is broken.
• Machines are cheaper, more efficient and smarter than humans in increasingly more industry sectors.
• The rate of growth of human cognitive skills (education and training) is unlikely to keep pace with the rate of growth of machine learning.
• IBM Watson reads 1m books per second (now probably even more): 100k of human evolution is now ‘equal’ to 7 minutes of machine learning.
• New ‘job’ creation in the digital era will happen but is unlikely to keep pace with the destruction of old jobs.
• We will always want to work but do we need a job? If we create AGI but insist on people having a job for survival, we would have totally failed.