Military Forum for Russian and Global Defence Issues


    Russian Economy General News: #5

    Share

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Tue May 19, 2015 11:48 pm

    Neutrality wrote:
    sepheronx wrote:http://www.gazeta.ru/business/news/2015/05/18/n_7206645.shtml

    So....did banks record a growth but 17B rubles less than last year or did they lose 17B rubles this year compared to a growth from last year?  After looking at the figures total, they are far from hurting.  And I am not entirely sad for banks losing money either, since they are major part of the initial problem to begin with.

    Why wouldn't you be worried about banks losing money? There are people's savings in there and where else would businesses get money from?

    How they always got money prior to banking schemes - working.

    Banks have hurt the global economy already.

    KoTeMoRe wrote:
    sepheronx wrote:http://www.gazeta.ru/business/news/2015/05/18/n_7206645.shtml

    So....did banks record a growth but 17B rubles less than last year or did they lose 17B rubles this year compared to a growth from last year?  After looking at the figures total, they are far from hurting.  And I am not entirely sad for banks losing money either, since they are major part of the initial problem to begin with.

    It's a bit puzzling because they have upped the provisions for losses for about 27bln, yet they lost 17 bln last year. Is this the typical, we lost 3 but here you have four?


    Anyway the losses seem rather modest (350 million USD) and seem to be a conglomerate of issues, from NPL's, defaults, capital flight etc.

    Bear in mind this is for 4 months...

    Once things like foreign debt goes away, they will have a lot more money to work with. Added, once interest rates drop, more people will seek loans.

    When all these issues arised, many banks dropped like flies in Russia. And eventually, I imagine many more will too. These banks were the ones with bad loans, bad debt, and were barely surviving and could cause more issues in the future.

    There is a reason why here in Canada, there are very few banks. Only a couple really. Rest are credit unions which don't necessarily fall under the same category.

    Karl Haushofer
    Senior Lieutenant
    Senior Lieutenant

    Posts : 635
    Points : 634
    Join date : 2015-05-03

    Re: Russian Economy General News: #5

    Post  Karl Haushofer on Wed May 20, 2015 10:37 pm

    According to Finnish media the industrial output in Russia contracted by 4,5% year-on-year in April. That is more than was expected. Do you see that this is a surprise considering the somewhat positive news from the economy lately? Reason to worry?

    max steel
    Colonel
    Colonel

    Posts : 2980
    Points : 3014
    Join date : 2015-02-12
    Location : South Pole

    Re: Russian Economy General News: #5

    Post  max steel on Wed May 20, 2015 10:39 pm

    Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .

    Karl Haushofer
    Senior Lieutenant
    Senior Lieutenant

    Posts : 635
    Points : 634
    Join date : 2015-05-03

    Re: Russian Economy General News: #5

    Post  Karl Haushofer on Wed May 20, 2015 10:49 pm

    max steel wrote:Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .
    Taloussanomat presented a contraction of 4,5% as a fact. Did the output contract that much really? It is worrying if it is true.

    EDIT: The 4,5% contraction was not gdp but industrial output.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Wed May 20, 2015 11:01 pm

    Karl Haushofer wrote:
    max steel wrote:Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .
    Taloussanomat presented a contraction of 4,5% as a fact. Did the output contract that much really? It is worrying if it is true.

    EDIT: The 4,5% contraction was not gdp but industrial output.

    Oh shut up.  If you want to believe Finnish media, that is your own fault.  Go find official Russian input.  Or should we continuously have to berate people like yourself for having to keep posting media from Finland, which is known for complete and utter bullshit?  Cause I am tired of having to talk to you trolls about it.

    Go away, please.

    4.5 is barely anything especially for first quarter.


    Last edited by sepheronx on Wed May 20, 2015 11:04 pm; edited 1 time in total

    max steel
    Colonel
    Colonel

    Posts : 2980
    Points : 3014
    Join date : 2015-02-12
    Location : South Pole

    Re: Russian Economy General News: #5

    Post  max steel on Wed May 20, 2015 11:03 pm

    Karl Haushofer wrote:
    max steel wrote:Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .
    Taloussanomat presented a contraction of 4,5% as a fact. Did the output contract that much really? It is worrying if it is true.

    EDIT: The 4,5% contraction was not gdp but industrial output.


    Russian economy contracted by -1.9 % since 2009 . Not bad after considering the crash in oil prices . It is not even certain there will be a technical " recession " defined by two quarters negative growth .. likely but not certain .

    Karl Haushofer
    Senior Lieutenant
    Senior Lieutenant

    Posts : 635
    Points : 634
    Join date : 2015-05-03

    Re: Russian Economy General News: #5

    Post  Karl Haushofer on Wed May 20, 2015 11:15 pm

    sepheronx wrote:
    Karl Haushofer wrote:
    max steel wrote:Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .
    Taloussanomat presented a contraction of 4,5% as a fact. Did the output contract that much really? It is worrying if it is true.

    EDIT: The 4,5% contraction was not gdp but industrial output.

    Oh shut up.  If you want to believe Finnish media, that is your own fault.  Go find official Russian input.  Or should we continuously have to berate people like yourself for having to keep posting media from Finland, which is known for complete and utter bullshit?  Cause I am tired of having to talk to you trolls about it.

    Go away, please.

    4.5 is barely anything especially for first quarter.
    I agree that out media is extremely biased so that is why I asked here if their claim is true.

    Why do you get so emotional anyway? I am pro-Russian myself.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Wed May 20, 2015 11:20 pm

    Karl Haushofer wrote:
    sepheronx wrote:
    Karl Haushofer wrote:
    max steel wrote:Never trust the Sanoma led finnish media . Russia gdp contracted but little rest you can follow this thread .
    Taloussanomat presented a contraction of 4,5% as a fact. Did the output contract that much really? It is worrying if it is true.

    EDIT: The 4,5% contraction was not gdp but industrial output.

    Oh shut up.  If you want to believe Finnish media, that is your own fault.  Go find official Russian input.  Or should we continuously have to berate people like yourself for having to keep posting media from Finland, which is known for complete and utter bullshit?  Cause I am tired of having to talk to you trolls about it.

    Go away, please.

    4.5 is barely anything especially for first quarter.
    I agree that out media is extremely biased so that is why I asked here if their claim is true.

    Why do you get so emotional anyway? I am pro-Russian myself.

    Because, I have had to explain this so many times already, that it is getting so annoying when new members spew the same crap from Finnish media like it is a god saying.  Face it, Finnish media is owned by the USA or foreigners in their endeavour to make Russia look bad in anything.  They own Moscow Times, St.Petersburg times (or whatever it is called) and a whole slew of other garbage.  I, countless of times have had to disprove finnish media claims on this very thread because a Finn cannot seem to learn how to differentiate words and phrases in Russian even through translations, so they come up with their own conclusion in articles.  Add to that, they always Assume and predict which have been utter garbage.

    That is why I am hostile about it.  Either someone here has to repeat themselves a dozen times, over and over and over again, or there should be a rule for no Finnish media or about having to lurk before posting.  Or this site is going to be riddled with BS (which is already happening).

    Wanna know why all of this is happening? Easy, lets all break it down:

    - Most things Russia and Russians purchased were from foreign companies either exporting it straight to Russia or assembling them in Russia
    - Most Russians are saving their money, so retailers all over are facing a major glut, especially automotive industry, and only real earners are e-tailers
    - Automotive Industry is getting hit the hardest with over 30% decline in purchases, and automotive industry accounts for a huge portion of Russias industrial production (military accounting 25% or more of it, automotive accounting for almost same amount and oil/gas industry accounting the rest).
    - Due to oil and gas industry getting hit hard due to sanctions (lack of investors) and oil/gas prices dropping, many manufacturers are pulling back in development of pipelines (especially after the fiasco with the south stream) and thus industrial output for that fell. It will increase soon as soon as the oil/gas starts flowing to China and China's section of pipelines start, and if the Turk stream actually happens and the Turks don't act like the screwups they are in trying to play their games.
    - Huge portion of automotive industry is simply assembly plants, and really lack of domestic development of goods. So it is kits mostly.
    - Only a few automotive companies actually localized majority of production, like Nissan and their H4 engines are made in Russia. Or Avtovaz using parts suppliers from Russia. So in other words, they are the least hurt because they were able to keep prices down due to the ruble dropping and thus cost of production drastically dropping.
    - In contrary to popular belief, if sanctions hit especially in sale of goods, it forces Russia to produce goods. If you ever pay attention to sites like sdelanounas, you will notice significant amount in development of import substitution and new industries popping up. The biggest are right now agriculture and textiles. Soon will be automotive components, heavy industrial goods (automation/robotics/autoCNC), and eventually electronics (last).
    - Nothing lasts forever - Meaning new development will spur new growth as Russia starts to develop what is in demand locally. Already other developers who didn't export before, are exporting now.

    Perfect example is looking at Iran. Sanctions did more good to it than harm. I always read where industrial, GDP and what not drops in Iran, but Iran became the largest in the middle east in industrial production, regardless what some bullshit international institution from USA has said. Hence why Iran's products are growing in demand in surrounding countries and even soon in Russia.

    I can go on for a very long time.

    Want news on REAL industrial development? Go here: www.sdelanounas.ru

    Learn russian or use yandex translator.


    Last edited by sepheronx on Wed May 20, 2015 11:31 pm; edited 1 time in total

    max steel
    Colonel
    Colonel

    Posts : 2980
    Points : 3014
    Join date : 2015-02-12
    Location : South Pole

    Re: Russian Economy General News: #5

    Post  max steel on Wed May 20, 2015 11:23 pm

    It doesnt matter if you are pro or anti russian . You can learn as much here and clear your doubts . Sana no longer owns moscow times or vedomosti they sold their share to somene else .

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Wed May 20, 2015 11:36 pm

    Wanna know how western economies are getting their growths from in terms of their "thriving" economies? They added in drugs and prostitution to their numbers.

    TheArmenian
    Colonel
    Colonel

    Posts : 1523
    Points : 1686
    Join date : 2011-09-14

    Re: Russian Economy General News: #5

    Post  TheArmenian on Thu May 21, 2015 12:46 am

    I believe that the automotive industry was the one that was hit the worst. Car production fell by 21% this year. That alone explains any statistics about industrial output decline.

    http://www.1prime.biz/news/transport_automobile/_Statistics_Russias_car_output_dn_21_to_480000_units_JanApr/0/%7B23C63F52-EF7A-4B29-A38B-7E2AA60DBAA8%7D.uif

    But wait......A good 50% of car production in Russia is foreign owned (GM, Ford, Hyundai, Renault, Nissan, etc.)

    On the other hand, most other industries did better. For sure, many other industries actually rose during the same period.

    Neutrality
    Major
    Major

    Posts : 830
    Points : 848
    Join date : 2015-05-02

    Re: Russian Economy General News: #5

    Post  Neutrality on Thu May 21, 2015 1:53 am

    The only bad part about foreign car producers leaving the country is people losing their jobs. Their production facilities are not as important people think because the localization was well below what would be considered good. Now if the government can relocate these workers to other places in a very fast way, the issue will be solved.

    You don't want to produce anymore? Cool, fuck off then. Government should buy out their facilities and implement them with the import substitution program.

    flamming_python
    Colonel
    Colonel

    Posts : 3189
    Points : 3317
    Join date : 2012-01-30

    Re: Russian Economy General News: #5

    Post  flamming_python on Thu May 21, 2015 2:27 am

    Calm down Sepharonx the man just posed an innocent question. No reason to be touchy about it; if they're clearly wrong than inform them. Jeez.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Thu May 21, 2015 2:33 am

    Most shops are joint projects. Ford sollers, sollers itself, avtovaz (renault and Nissan), Kamaz
    Etc all produce various lines of vehicles. GM shop were they made Opel and others will stop production of Opel but keep producing other brands. With production dropping of a specific line, many lose their jobs unfortunately, but the plants are still operational.

    The brands that will walk out of this with ease are the ones who use localized parts and manufactures rather than just assembly. So ones like Avtovaz, Nissan, Renault, Kia, Great wall, etc will come out ahead. As well, the ones producing cheap auotomobiles. As with less spending money, people will be frugal so when they will spend, it will be on cheaper models. Nissan for example agreed to take a hit at their profit margins and sell their various models at either same price before currency exchange adjustments, or even less. So guarantee that Nissan will do well in future.

    Problem with the automarket is that like oil, it goes through gluts. A mixture of over production, with slowness in economy, it always hits low points. We face same crap here in Canada. Problem is, vehicle sales account for half of our GDP.

    Problem I also see is that Russia went with the idea that mass amounts of automotive manufacturing will bring in lots of cash. Semi true but they shouldnt have concentrated on it too much, as well should have been more forceful and made sure it was manufacturing rather than simple assembly.

    Avtovaz sees that they will be able to increase exports significantly due to ruble devaluation. Much like lada niva days in Brazil or now production of granta in Egypt.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Thu May 21, 2015 2:38 am

    flamming_python wrote:Calm down Sepharonx the man just posed an innocent question. No reason to be touchy about it; if they're clearly wrong than inform them. Jeez.

    I would expect better from a forums really, especially one that is gonna be or supposed to be professional. Much like your guys hatred for racism, I have a hatred to re-read the same garbage hundreds of times because every new guy has to post the same thing and then say "but my media said....." when the very same thing was not only saod but disproven before. Eventually, I will get tired of posting, and so will others, and then the threads/forums will be flooded with such BS and then others will not take any of this seriously.

    I am already tired of repeating myself. So I will leave it at that. You guys have fun repeating yourselves to every new person who will simply post the same garbage.

    kvs
    Colonel
    Colonel

    Posts : 2538
    Points : 2671
    Join date : 2014-09-11
    Location : Canuckistan

    Re: Russian Economy General News: #5

    Post  kvs on Thu May 21, 2015 3:12 am

    http://www.gks.ru/bgd/free/B04_03/IssWWW.exe/Stg/d05/92.htm



    There is some downturn in manufacturing. But note the strong annual cycle in the activity. I see many
    times month on month comparisons which completely ignore the annual cycle.

    The January-April period for 2015 vs. 2014 has gone down 1.5%. The drop in April compared to 2014 is 4.5%.
    I would wait until December 2015 to assess the progress.


    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Thu May 21, 2015 4:30 am

    When it is the January to April, do they account all of april as well, so the 4.5% industrial production drop compared to 2014?  If that is the case, it really isn't so bad especially how badly hit the automotive industry was.

    http://top.rbc.ru/economics/20/05/2015/555c6ed59a79478c50888868

    So they are saying that monthly decline in manufacturing/production in Russia in 2008/2009 was close to around 8% and that this is quite modest given the circumstances.  They say the biggest hit at them was Dun dun dunnnnn! what KVS was saying this whole time - Interest rates on credit.  And now stronger ruble is hurting manufacturing as well.  So people like Vann whom was praising the ruble increase, is actually praising the wrong thing.  So lowering the interest rates will definately help.

    But, they say by Q3 this year, that is when things should really increase cause that is when the current interest rates kick in for producers.  So expect a modest decline or even growth in production/manufacturing.  The other thing also hurting is Russians tightening their belts, as they say real wages are gonna drop by 10%:

    http://www.verstov.info/news/inrussia/48279-zato-my-duhovno-bogatye-realnaya-zarplata-rossiyan-sokratitsya-na-10-uzhe-v-etom-godu.html

    But I wonder where they define wage drops?  I imagine it is based upon the idea of using inflation as the indicator.

    Edit: So looking it over, the hardest hit in manufacturing (they seem to have added manufacturing and production as same thing), is the mining industry dropped by 7.2% being the largest of drops of all of them (next to automotive I presume) but looking over this:
    http://tass.ru/en/economy/795236

    Norilsk Nickel is looking at expanding greatly as they predict one of the mines have $1T worth of metal in it.  So expect mining to increase.  Value of Copper, Iron ore and the likes have dropped, thus I assume that is the reason for the drop.


    Last edited by sepheronx on Thu May 21, 2015 5:17 am; edited 1 time in total

    kvs
    Colonel
    Colonel

    Posts : 2538
    Points : 2671
    Join date : 2014-09-11
    Location : Canuckistan

    Re: Russian Economy General News: #5

    Post  kvs on Thu May 21, 2015 5:16 am

    sepheronx wrote:When it is the January to April, do they account all of april as well, so the 4.5% industrial production drop compared to 2014?  If that is the case, it really isn't so bad especially how badly hit the automotive industry was.

    http://top.rbc.ru/economics/20/05/2015/555c6ed59a79478c50888868

    So they are saying that monthly decline in manufacturing/production in Russia in 2008/2009 was close to around 8% and that this is quite modest given the circumstances.  They say the biggest hit at them was Dun dun dunnnnn! what KVS was saying this whole time - Interest rates on credit.  And now stronger ruble is hurting manufacturing as well.  So people like Vann whom was praising the ruble increase, is actually praising the wrong thing.  So lowering the interest rates will definately help.

    But, they say by Q3 this year, that is when things should really increase cause that is when the current interest rates kick in for producers.  So expect a modest decline or even growth in production/manufacturing.  The other thing also hurting is Russians tightening their belts, as they say real wages are gonna drop by 10%:

    http://www.verstov.info/news/inrussia/48279-zato-my-duhovno-bogatye-realnaya-zarplata-rossiyan-sokratitsya-na-10-uzhe-v-etom-godu.html

    But I wonder where they define wage drops?  I imagine it is based upon the idea of using inflation as the indicator.

    It does include all of April. Without April the drop would be a fraction of a percent. We'll have to wait and see if this is a serious development.

    I am suspicious about the wage drop of 10%. This does not make sense since the running 12 month inflation since last year is under 9%
    and dropping. Inflation will not be 10% in 2015. I have heard nothing about people taking any pay cuts now or in the near future.

    I have been following the Russian economy actively since the late 1990s and media coverage both inside and outside Russia has been
    absurdly negative. Serious problems in western economies are glossed over, but any little thing in Russia is puffed up beyond all reason.
    This wage drop forecast is of the same smelly nature as Moody's prognostication that Russia's GDP will drop by 5.5% in 2015 but
    Ukraine's will drop by only 2%. This one forecast underscores my point: Ukraine is now part of the happy western family and it's
    getting only good forecasts and systematic avoidance of coverage of real crisis conditions. But the Russian sky is falling all the time.

    As for the ruble, the CBR can kill two birds with one stone. Drop the interest rates and that will lower the ruble at the same time.
    The interest rate drop will stimulate Russian production in addition to the forex stimulus.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Thu May 21, 2015 5:20 am

    kvs wrote:
    sepheronx wrote:When it is the January to April, do they account all of april as well, so the 4.5% industrial production drop compared to 2014?  If that is the case, it really isn't so bad especially how badly hit the automotive industry was.

    http://top.rbc.ru/economics/20/05/2015/555c6ed59a79478c50888868

    So they are saying that monthly decline in manufacturing/production in Russia in 2008/2009 was close to around 8% and that this is quite modest given the circumstances.  They say the biggest hit at them was Dun dun dunnnnn! what KVS was saying this whole time - Interest rates on credit.  And now stronger ruble is hurting manufacturing as well.  So people like Vann whom was praising the ruble increase, is actually praising the wrong thing.  So lowering the interest rates will definately help.

    But, they say by Q3 this year, that is when things should really increase cause that is when the current interest rates kick in for producers.  So expect a modest decline or even growth in production/manufacturing.  The other thing also hurting is Russians tightening their belts, as they say real wages are gonna drop by 10%:

    http://www.verstov.info/news/inrussia/48279-zato-my-duhovno-bogatye-realnaya-zarplata-rossiyan-sokratitsya-na-10-uzhe-v-etom-godu.html

    But I wonder where they define wage drops?  I imagine it is based upon the idea of using inflation as the indicator.

    It does include all of April.   Without April the drop would be a fraction of a percent.   We'll have to wait and see if this is a serious development.

    I am suspicious about the wage drop of 10%.  This does not make sense since the running 12 month inflation since last year is under 9%
    and dropping.  Inflation will not be 10% in 2015.  I have heard nothing about people taking any pay cuts now or in the near future.  

    I have been following the Russian economy actively since the late 1990s and media coverage both inside and outside Russia has been
    absurdly negative.   Serious problems in western economies are glossed over, but any little thing in Russia is puffed up beyond all reason.
    This wage drop forecast is of the same smelly nature as Moody's prognostication that Russia's GDP will drop by 5.5% in 2015 but
    Ukraine's will drop by only 2%.   This one forecast underscores my point: Ukraine is now part of the happy western family and it's
    getting only good forecasts and systematic avoidance of coverage of real crisis conditions.   But the Russian sky is falling all the time.  

    As for the ruble, the CBR can kill two birds with one stone.  Drop the interest rates and that will lower the ruble at the same time.
    The interest rate drop will stimulate Russian production in addition to the forex stimulus.  

    It was mentioned in one of my other posts that they do expect to drop interest rates soon again.  I guess they are waiting for ruble to increase further in value before they do it again.

    That said, I edited my post above: Apparently the drop in largest in April is 7.2% for mining industry.  Mining industry though seems to be going through some changes like I posted about Norilsk metal and their expansion.  Also, it was mentioned that month on month drop in 2008/2009 was common to see 8% drop in production/manufacturing so this is clearly nothing compared to those days.

    Here is a quote in the article I posted:
    "In the coming months I expect the same level", — told RBC Deputy Director of the Institute "development Center" HSE Valery Mironov. Collapse 8%, as in 2009, he did not foresee: "there were large reserves and strong overheating of the economy, now reserves are not enough" — said the expert.

    So this gives us an idea that production is actually under compared to being overproduction in 2008/2009.  That is what I am understanding from this, I could be wrong. They are expecting to see similar numbers in drops in the next couple of months too, but are only speculating, as they say it will take a couple or more months in order for current interest rates changes to show itself. So Q3 expect growth (well, or small decline).

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    The status of Russian Economy and its perceived Oil dependency #5

    Post  sepheronx on Thu May 21, 2015 5:25 am

    Wait, I am curious....Do they account Crimea as well into their measurements?

    Neutrality
    Major
    Major

    Posts : 830
    Points : 848
    Join date : 2015-05-02

    Re: Russian Economy General News: #5

    Post  Neutrality on Thu May 21, 2015 12:38 pm

    sepheronx wrote:Wait, I am curious....Do they account Crimea as well into their measurements?

    That is a good point. If they don't, the West will be all over it like hawks and put their propaganda machine in full motion to report something along the lines of: "Russian economy doesn't consider Crimea to be part of it". Rolling Eyes

    Back on-topic: As I understand, everyone here supports the idea of dropping interest rates. So if there are only benefits, why is the Central Bank holding it off? Maybe they are scared it will accelerate the rouble's depreciation again?

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    Re: Russian Economy General News: #5

    Post  sepheronx on Thu May 21, 2015 2:13 pm

    It will drop the value of the ruble, but that is what the government wants. Why do they take so long to do it? I dont know. They seem to be more punctual than anything so they are probably waiting for the ruble to go to something bigher then dropping rates. I just recall in an article I posted this month that they want to do it again soon. Last time, they increased money supply to help drop ruble but I think lowering interest rates were far better. Maybe they are testing waters or they are trying to increase money supply to increase future lending.

    That said, interest rates in Iran are something like 18%, but they have this program where they put some hard money down on a venture fund, meant for businesses/corporations to use, and 3% of the miney used to pay back + interest (something like 3% interest) goes back into the venture fund as to increase it.

    Smart idea really.

    Previous economic issues, 2008/2009 (which was way worst then than now), various companies had set up things like pawnshops that were fronts for a "small, private, loan company" and were charging interest rates of 5% when they were 15% in 2009. Apparently that worked very well too. I can see new Russian NGO's, if funded right by the right groups, they could probably work around the CBR and use them as a method to create a venture fund or loan mechanism for small companies.

    sepheronx
    Colonel
    Colonel

    Posts : 7302
    Points : 7612
    Join date : 2009-08-06
    Age : 27
    Location : Canada

    The status of Russian Economy and its perceived Oil dependency

    Post  sepheronx on Thu May 21, 2015 3:39 pm

    I was reading a segmant on Russia-Insider about lives of villagers in Siberia and how it isnt easy, how multiple villages dont have health clinics except for a hospital 50km away, etc. Then it occured to me: that villages have been mostly deprived, poorly maintained and has not changed in 50 years.

    While villages for the most part in Canada are dead/thing of the past, the ones that do exist are really poor and decrepid as well. Mozt are abandoned though.

    In the article, it stated that they had no econony since 2000, after farms/ranches were privatized, and they make no money. And if this is quite common amongst most villages, then that needs to change. How many people usually live in a village? How much does it cost to maintain the infrastructure? Etc.

    So one way to deal with these is how we dealt with them here. Expand towns closer by. Or they could simply map out various villages and build a town between them to relocate everyone. it will make maintaining infrastructure cheaper, allow an economy to actually develop, since more people in 1 area meens more demand for services, means more small businesses and more ideas/workforce for developing industry (agriculture).

    Manov
    Private
    Private

    Posts : 39
    Points : 48
    Join date : 2015-01-07
    Location : South America

    Re: Russian Economy General News: #5

    Post  Manov on Thu May 21, 2015 9:48 pm

    I guess the key to that its to improve communications (road, railway, airstrip, internet broadband, phone, etc.) I mean develop a program for developing small villages across the country. Those are "making motherland duty" so they need respect and basic services. I think using renewable energy resources, better gas and oil transit and start a program to fix the houses and stores, put clinics with medics making shifts across those villages with a monetary incentive and including more activities between the closest cities and the villages. The key for that is to "maintain the good of the countryfield and get them the modernity of the city"

    kvs
    Colonel
    Colonel

    Posts : 2538
    Points : 2671
    Join date : 2014-09-11
    Location : Canuckistan

    Re: Russian Economy General News: #5

    Post  kvs on Fri May 22, 2015 2:15 am

    Neutrality wrote:
    sepheronx wrote:Wait, I am curious....Do they account Crimea as well into their measurements?

    That is a good point. If they don't, the West will be all over it like hawks and put their propaganda machine in full motion to report something along the lines of: "Russian economy doesn't consider Crimea to be part of it". Rolling Eyes

    Back on-topic: As I understand, everyone here supports the idea of dropping interest rates. So if there are only benefits, why is the Central Bank holding it off? Maybe they are scared it will accelerate the rouble's depreciation again?

    Kudrin wasn't the only monetarist in the Russian financial system.   The CBR has many true believers whose whole reference frame
    was created by the Harvard Boys (e.g. Jeffrey Sachs) back during the 1990s.   They really swallowed the monetarist koolaid even
    though the ones peddling it don't believe in it.  

    So the CBR sees inflation where there is none and sees risk of inflation under every bed.   In the process it is stifling the Russian
    domestic investment capacity.  

    By now it is clear that the rouble is not going to collapse.   The fall to over 70 to the dollar was a hysterical spike created by
    speculators trying to milk the CBR intervention money.   Once the CBR floated the rouble and stopped wasting money propping
    up the exchange rate, this whole racket just died.   I think a good target for the ruble exchange rate is 60:1 to the dollar.  This
    can be achieve easily by dropping the interest rates.

    I the CBR had more than paranoia to back up its interest rate policy, then we would have seen a sustained bout of inflation starting
    after the rouble devaluation.   But the inflation spiked and then fell back to March 2014 levels in March of 2015.   Clearly there is
    no inflationary pressure in Russia that needs to be combated.   The rouble has not gone back to 35:1 to the dollar yet the inflation
    has disappeared.  The CBR justifies its whole policy based on inflation rates, so these inflation figures are real.   Too bad the CBR
    is too blinded by monetarist voodoo thinking to get the hint.

    Sponsored content

    Re: Russian Economy General News: #5

    Post  Sponsored content Today at 3:39 pm


      Current date/time is Sat Dec 10, 2016 3:39 pm