MSM: Quick With Hits, Slow With Misses
- WSJ article about Russia’s payment system is about seven years too late.
- The Russian government built Mir after the Crimea sanctions.
- Visa and Mastercard businesses may never return to Russia.
Happy Hump Day from the Shangri-La Mactan Island, where we’re relaxing before we board the plane to Italy.
This is one of my favorite hotels in the world.
We used to stay here fairly often, as it’s got the best pool and beach facilities for Micah.
The food and drink are great as well, and I slept like a baby.
Of course, I’m not on holiday, though, so I awoke nice and early to write.
The whole Will Smith-Chris Rock thing is appalling and indicative of a steep decline in standards.
But then again, Hollywood never was much for standards.
So rather than give that story any more oxygen than it already has, I was browsing my WSJ online and found stuff I’ve already written.
Writers like me are slapped with the pejorative “conspiracy theorist” label whenever we disagree with the mainstream narrative.
But I prefer the terms “realistic” and “sound.”
I’ve written that sanctions don’t work in general and that new Russia sanctions are particularly stupid.
I also wrote that Russia was prepared for sanctions after Crimea.
But what strikes me funny is that mainstream newspapers announce government policy with great flair but announce the failures of such policy quietly.
I get it; this stuff is hard.
Murray Rothbard once famously said:
It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
I don’t want just to pick on the Journal, but their editors should know better.
As for the UK newspapers, where the world’s largest financial center is, these guys are completely lost:
Neocons and British newspapers may believe in the sanctions tooth fairy, but no one with a serious understanding of economics does.
And that’s because they always, always backfire.
Why is that?
Because countries must adjust or perish.
They have no choice but to go around those sanctions.
Does that get expensive?
In the short term, absolutely.
But ask any IT professional: most projects are expensive initially (development and production) and get cheaper as time goes on (maintenance).
So when the entire Western media complex shouted “SANCTIONS!” at the top of their lungs, I wasn’t skeptical; I was incredulous.
I had known Russia built a new payment system (expensive), but they had done so eons ago (making it pretty cheap now).
This was the perfect opportunity for the legacy media to reclaim its impartiality.
As sanctions have failed repeatedly, they could’ve said something to the effect of “The world may be outraged, but its governments’ actions suggest otherwise.”
This was an especially easy conclusion to draw, considering the carve-outs for the Russian oil and gas Europe absolutely requires to keep the lights on and its houses warm.
Alas, that wasn’t the case.
“We’re sticking it to the Ruskies economically and weaponizing the dollar to do so. They’ll suffer, and they’ll like it!”
Except that was never going to happen.
Before I go further, I must give a shout out to The Guardian – my least favorite newspaper – who rightly called this way back on March 6th.
So you can imagine my surprise when I noticed a little WSJ blurb that reads, “Russia Built Parallel Payments System That Escaped Western Sanctions.”
Chalk one up for the “No Shit, Sherlock” file.
Have a load of this:
The domestic-payments system continued to work smoothly after Visa Inc. and Mastercard Inc. pulled out earlier this month. While the card giants’ exit from Russia was viewed as a significant move by many in the West, the reality on the ground was anything but. Most Russian consumers never lost the ability to use their Mastercard- and Visa-branded cards to pay for things within the country.
There were roughly 197 million Mastercard or Visa cards in Russia at the end of 2020, according to the Nilson Report, a trade publication. But behind the scenes, the cards don’t rely on the U.S. networks’ systems to process payments in Russia. For years, they have used a homegrown system overseen by Russia’s central bank.
The National Payment Card System—known by its Russian initials NSPK—runs the financial plumbing that underpins card transactions in Russia, even for cards bearing Visa and Mastercard logos.
The system was part of Moscow’s eight-year effort to insulate the Russian economy from Western financial pressure. The Kremlin also has aggressively promoted Russia’s own card company, called Mir, which is built on NSPK’s infrastructure. More than 100 million Mir cards have been issued since its launch in 2015, according to Mir’s website.
Instead of sanctions hurting Russia, the Russian government had already solved this potential internal processing problem.
With Russian banks partnering with UnionPay will take care of international charges, the entire issue is solved.
So the result of all this?
- New Mir cards are ordered once a Russian’s Visa or Mastercard expires (or before).
- New UnionPay cards get ordered if Russians travel abroad.
- Truckloads of lost business for Visa and Mastercard.
Joke Biden squarely took aim at Russia, but shot American business in the foot.
Mastercard had said at the time, “… that it will restore operations in the country ‘when it is appropriate, and if it’s permissible under the law.’”
Yeah, good luck with that.
The (Missing) Honesty
As a Texan might say, the USG is “all hat and no cattle.”
By foisting useless sanctions and military backing – without using the US military, I hasten to add – the USG has given the world the false impression that it’s willing to fight for Ukraine.
The world’s woke sheeple bought that story hook, line, and sinker, with the help of a complicit media industrial complex.
But the USG’s actions have shown the opposite – that the US would like to stop Russia, but it won’t risk its troops doing so.
It’s far happier to throw US companies under the bus to see if prohibiting their services in Russia will work to stop Putin’s incursion.
It sure doesn’t look like it will
When will Visa and Mastercard shareholders sue the US government?
As ridiculous as that may seem, why not take a shot at recovering some of their losses?
Perhaps they’ll go after their board, who allegedly knew this was a stupid move and would just push all the Mastercard/Visa transactions into Mir.
What will be the knock out effects in the years to come for US financial companies?
Do they really think every government in the world will continue to welcome them?
Perhaps they’ll turn to Russia’s Mir system instead.
“Hey, we know what it’s like to be shut out of the world financial markets. So you can rest assured we’ll never do that to you.”
It’s a hell of a sales pitch, isn’t it?
With all the Russian tech expertise out there, it’s not far fetched.
There’s still time for US companies to pull back from the abyss.
They should do it immediately, with the media’s encouragement.
But the media has to break with the government, and there’s really no sign of that happening.
All the best,