August 19, 2014 By Joseph P. Farrell

This very significant article was brought to my attention - along with many others which, hopefully, I will share and blog about eventually, as soon as I have the time to digest them - by former Housing and Urban Development Assistant Secretary Catherine Austin Fitts. It tells a story that, given the current Western "policies" vis-a-vis the Ukraine and Russia, we would do well to remember, for it adequately outlines, I believe, how the USA is being perceived in Russia, both by the general population and by its leaders, and why. The article also provides some much-needed context in which to view the rise of the BRICSA bloc and the Russian foreign policy under Mr. Putin. Here is the link:

Testimony of Anne Williamson Before the Committee on Banking and Financial Services of the United States House of Representatives September 21, 1999

Having taught Russian history at one time at the college level, I personally deeply appreciate Ms. Williamson's understanding of Russian cultural institutions, and the effect they have had on the development of Russian culture and economy(see, for example, her comments on the votchina) . She is, in my opinion, sadly unique in this respect. I would personally have wished only for her to have mentioned the de-feudalization program of rolling back the obrok and barshchina systems of feudalism that had prevailed - for that in effect was what it was - that was undertaken by the Tsardom in the late 19th century, a program whereby Russian serfs were to buy their own land, on the basis of low interest loans from the government, which were in turn financed by Russian government bonds. (Communism, through collectivization of the farms, rolled all this back into yet another form of serfdom, this time sponsored by the Bolsheviks.) During the late 19th century, Russian agriculture, as a result, slowly began to modernize, and began to prosper and Russia began to be a net exporter of agricultural goods. All that changed of course under the Communists.

There are several points this article makes, and I will simply lay them out seriatim, so that the reader can see the historical development outlined in Ms. Williamson's testimony to Congress.

Point one: Russia was looted by the Russian oligarchs, many former Communists, with the aid of the USA, and this money was invested in the USA equities and real estate markets:

And there is no mistake as to who the victims are, i.e. Western, principally U.S., taxpayers and Russian citizens’ whose national legacy was stolen only to be squandered and/or invested in Western real estate and equities markets.

Point two: the Russian oligarchy - again, largely former Communist nomenklatura -  was essentially bought by Western financial institutions, which aided Yeltsin in creating the oligarchical class that was the basis of his political power and "popularity":

Western assistance, IMF lending and the targeted division of national assets are what provided Boris Yeltsin the initial wherewithal to purchase his constituency of ex-Komsomol [Communist Youth League] bank chiefs, who were given the freedom and the mechanisms to plunder their own country in tandem with a resurgent and more economically competent criminal class. The new elite learned everything about the confiscation of wealth, but nothing about its creation. Worse yet, this new elite thrives in the conditions of chaos and eschews the very stability for which the United States so fervently hopes knowing full well, as they do, that stability will severely hamper their ability to obtain outrageous profits. Consequently, Yeltsin’s "reform" government was and is doomed to sustain this parasitic political base composed of the banking oligarchy.

Point three: the Western financiers and newly-minted Russian oligarchy were completely ignoring Russian reformers who wanted, not the mercantilist system imposed on Russia by Yeltsin, the IMF, and the West, but a genuinely capitalist system in which the Russian people were given full property rights (recall the 19th century reforms of serfdom under the Tsars, vs the collectivization schemes of the Communists):

Ironically, the nontransferability of the votchina system’s entitlement was the very flaw a shareholding culture and an equities market could have addressed successfully had Lenin’s revolutionary dictum of "Property to the people! Factories to the workers!" been realized. And such a program existed. It was designed by Larisa Piasheva, a free market Russian economist who was appointed by Moscow mayor Gavriil Popov to design and execute a program for the privatization of Moscow’s assets. Ms. Piasheva’s program was a fearless and rapid plunge into the market which would have distributed property widely into Russia’s many eager hands. Further, the program – inspired as it was by the policies of Ludwig Erhard and his adviser, the renowned Austrian economist Wilhem Ropke - did not rely upon Western lending but instead tailored itself to maximize direct Western investment.

When the Administration says it had no choice but to rely upon the bad actors it did select for American largesse, Congress should recall Larisa Piasheva. How different today’s Russia might have been had only the Bush Administration and the many Western advisers from the IMF, the World Bank, the International Finance Corporation, the European Bank for Reconstruction and Development and the Harvard Institute of International Development then on the ground in Moscow chosen to champion Ms. Piasheva’s vision of a rapid disbursement of property to the people rather than to the "golden children" of the Soviet nomenklatura.

Point four: Russia was looted by its former Communist bosses, and the wealth thus looted was parked in western financial institutions (see above):

And only now, eight years almost to the day later, do US taxpayers learn that the "eager, young reformers" to whom their resources were sent for the purpose of building a new Russia were in league from day one with the exhausted Soviet nomenklatura in a scheme to loot Russia’s wealth and park it in the West.

Once the crime of voucher privatization was fully realized, thereafter ensued a years-long highly-criminal and oftentimes murderous scramble for hands-on control of the enterprises. Directors stashed profits abroad, withheld employees’ wages and after cash famine set in, used those wages, confiscated profits and state subsidies to "buy" the workers’ shares from them. The really good stuff - oil companies, metals plants, telecoms - was distributed to essentially seven individuals, "the oligarchs", on insider auctions whose results were agreed beforehand. Once effective control was established, directors - uncertain themselves of the durability of their claim to the newly-acquired property - chose to asset strip with impunity instead of developing their new holdings.

Point five: the influx of all this additional capital led to inflation of  value on western corporations' shares:

Once the criminal financial flows from Russia and Asia were combined with the easy money common to presidential election cycles and began pumping into the economy in the spring of 1995, it wasn’t long before asset inflation hit U.S. corporate share valuations.

Point six: the IMF was established to prevent the type of asset-stripping and currency speculation that, to a great degree, led to the rise of Hitler and World War Two, but the current policies are counter to the West's own long-term interest and only exacerbating the conditions for general conflict(a point we have been making here in slightly different ways vis-a-vis the Ukraine and Russia):

A world war and a score of years later, the allies established the IMF as a prophylactic money bag to prevent destabilizing trade imbalances and therefore, they thought, a repetition of the preceding decade’s nightmare. Yet over half a century later, the IMF, the World Bank and their similarly US-controlled spawn - the IFC, the six regional development banks and the EBRD - have become 800-pound gorillas of economic distortion and, over time, of pillage which unchecked will guarantee extensive international conflict and a broadly-based anti-Americanism.

Point seven: the playbook is well known and obvious:

Sell assistance programs on an alleged "free market" and "humanitarian" basis by awarding government grants to those academics who can be relied upon to supply the intellectual camouflage politicians and journalists then repeat ad nauseum to a distracted public, move the IMF and the World Bank to target, induce target to raise taxes, fine tune target’s central banking operations, encourage borrowing and debt creation through the target’s government and its national banks, allowing IMF lending to pay yields if necessary; induce target to privatize national property while building a flimsy, artificial "infrastructure" for an equities market good enough to attract high risk foreign investors. Once the target nation’s government flounders, step back and watch speculators assert discipline through a run on the target’s currency. The subsequent devaluation delivers, in turn, a flood of cheap imports to American manufacturers and producers.

The finishing touch on the swindle is to confiscate more money from G-7 citizens (the lion’s share from Americans) to pay for what is said to be an "essential" IMF bailout; thereby allowing Uncle Sam’s IMF minions to entrench themselves more deeply in the target’s government. Taxes are raised, the population struggles beneath indebtedness, government funding demands and the inevitable domestic inflation a devaluation delivers. Western neo-colonialists then bully the target over its rapidly compounding debt in order to extract yet more property. Once successful, the world’s insiders then turn around and deliver cheap shares from privatizations and initial public offerings into the maw of U.S. mutual funds and portfolio investors. US taxpayers get hit coming (foreign aid) and going (bailouts) and innocent foreigners’ property is finagled away either from, or on account of, inattentive and corrupt leaderships. The big winners are the world’s increasingly corrupt and cozy governing class, international bureaucracies and global banks.

Point eight: US policy has been that of deliberate fraud and deceit, and will only backfire against it:

What U.S. policy has wrought across much of the post-cold war landscape is a moral, political and financial abomination based on fraud, theft and deceit.

There's more to the story of the rape of Russia, but this, I think, will suffice to show why Russia is no longer content to be raped, encircled, and demonized. For the careful reader, there is yet another thing evident in this testimony, and that is the close alliance of President Clinton and Harvard University, and of the latter with the financial shenanigans in the rape of Russia. And that, I hope, will also indicate just how corrupt some of our academies really are, and how any pronouncements coming from their "experts" should be taken with a grain of salt. (For an interesting read, also courtesy of Secretary Fitts, see US vs Harvard Pdf, especially the opening paragraph).

Sequere pecunia.

See you on the flip side...