Mish's Global Economic Trend Analysis

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Plagues of Locusts Invade Russia; Putin's Inane Food Contraband Destruction Policy; Law of Asset Destruction Posted: 08 Aug 2015 01:22 PM PDT Putin's Inane Food Contraband Destruction Policy In an action as economically stupid as president Roosevelt destroying US farm produce during the Great Depression, Russia Incinerates Contraband Food. One year into its embargo on western food products, Russia has launched a controversial campaign to destroy all contraband meat, dairy and produce, using on-the-spot incinerators, dump trucks, rollers and meat grinders. On Thursday, three federal agencies began confiscating and burning hundreds of tonnes of illicit cheese, fruit and other goods, acting on a decree signed by Vladimir Putin. Incinerators to destroy the food have been placed at Russian border points stretching from Kaliningrad in the west to St Petersburg in the north and Altai in the east. By mid-afternoon on Thursday, Russia's agricultural watchdog announced that it had already destroyed 55 tonnes of peaches, nectarines and tomatoes in Smolensk; 20 tonnes of cheese in Orenburg; and nine tonnes of cheese in Belgorod. In Moscow, the agency said it seized 28 tonnes of meat products from Canada, the Netherlands and Germany and 28 tonnes of Polish apples and tomatoes. "This work will be performed every day. This is not a one stage campaign — this is serious work," Alexei Alekseenko, a deputy for the agricultural watchdog, told a Russian radio outlet. Serious Stupidity This is not "serious work", it's seriously counterproductive stupidity.  Plagues of Locusts Invade Russia Under any circumstances, destroying badly needed food items makes no sense, and the insanity of such actions is heightened by the report Plagues of Locusts Darken Skies, Threaten Crops in Southern Russia. Waves of locusts began around July 20, according to Stavropol's regional agricultural ministry. Vasilii Yegorov, a deputy agricultural minister, told ABC News that locusts appear in the region every year but normally they are able to exterminate them before they hatch. This year though, Yegorov said, locusts had migrated from neighboring Russian regions, meaning authorities were unable to halt them easily, threatening what is one of Russia's major farming areas. Swarms have been reported across many other southern regions, stretching from Chechnya to the Astrakhan province on the Caspian Sea. Because of the locusts, a state of emergency has been declared in three regions near Stavropol, according to local media. In Stavropol alone, efforts to kill the insects have stretched across more than 350 miles, according to officials. Video of Swarming Locusts I propose a simple economic law. Law of Asset Destruction It never makes any sense to destroy your own productive assets. In war, it may make sense to destroy someone else's assets, but never your own. To dispute point number one, someone may point to a "teardown" that makes a property more valuable, but in such cases the "teardown" itself should properly be considered a liability on the overall asset. Putin Enforces EU Embargo on Russia Once confiscated, rightly or wrongly, those food items became state assets. And Putin destroyed them. In the process, he missed a grand opportunity to make a mockery of the EU's alleged embargo. Putin could have and should have said "In spite of EU food embargoes, we get food items from France, Spain, and Italy". A golden opportunity to laugh at the world was tossed into the toilet. Putin is effectively enforcing the EU's embargo on Russia! What an economic moron. No other word come close to describing the sheer stupidity of this move. Addendum: I had originally called  it the "Law of Productive Assets" but a more fitting title is "Law of Asset Destruction". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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