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    Russian Economy General News: #5

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    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Thu Aug 13, 2015 1:28 pm

    Russia’s international reserves stood at $358 bln as of August 7 — Central Bank

    http://tass.ru/en/economy/814218
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Thu Aug 13, 2015 2:44 pm

    Banks have started to profit since last month so I am going to assume they wont move to a planned economy. Although, I wouldnt be against it as so far, the free market concept really isnt the best entirely. Good for some areas but not the whole spectrum. Belarus is a planned economy and is pretty stable.
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    Viktor

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    Re: Russian Economy General News: #5

    Post  Viktor on Thu Aug 13, 2015 4:07 pm

    Excellent ... and now the ports thumbsup

    RF suspend the transit of goods through Latvia

    Russia has expanded its list of sanctions

    Head of OMV: Iran does not replace Russian gas
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    Maximmmm

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    Re: Russian Economy General News: #5

    Post  Maximmmm on Thu Aug 13, 2015 5:15 pm

    Smaller banks are failing left and right though.
    The really good thing is that the gov insurance of bank accounts is up to 1.4mil roubles. Our family had some interaction with the insurance process and it works pretty well.
    On the one hand the culling of weak banks that don't have their shit together is good, on the other hand the same owners often reopen within a year, sometimes even in the same building. We need stronger criminal laws that target loose bank owners/managers. Otherwise we're just wasting taxpayer money.
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Thu Aug 13, 2015 5:25 pm

    That is what the head of CBR said. None performing banks lose their license. If the guy tries again later I see why not if he has the money. If he fails again though.....
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    kvs

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    Re: Russian Economy General News: #5

    Post  kvs on Thu Aug 13, 2015 9:10 pm

    Maximmmm wrote:Smaller banks are failing left and right though.
    The really good thing is that the gov insurance of bank accounts is up to 1.4mil roubles. Our family had some interaction with the insurance process and it works pretty well.
    On the one hand the culling of weak banks that don't have their shit together is good, on the other hand the same owners often reopen within a year, sometimes even in the same building. We need stronger criminal laws that target loose bank owners/managers. Otherwise we're just wasting taxpayer money.

    This shakeout is actually a good thing. Since the around 2000 I have been reading how there are too many not
    quite viable banks in Russia. Too small to grow. The CBR has been withdrawing licenses but the pace is slow.
    If these non viable banks depart due to economic stress then that is the way it should be.
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    kvs

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    Re: Russian Economy General News: #5

    Post  kvs on Fri Aug 14, 2015 2:25 am

    PapaDragon wrote:
    Project Canada wrote:Russia begins mass destruction of illegally imported food

    http://www.rt.com/business/311759-russia-food-embargo-destruction/


    I dont know why it is such a big issue for some people in Russia (mostly opposition) when the ruble is trading like 60 per US dollar, I know it's lost its value but why even bother compare it to the US dollar? an Enemy currency, a currency of a nation that has limitless hostilities against Russia! this is the primary reason why Putin should work double time to thrash the US economy and demolish it completely from it's current position as the dominant economic power in the world.

    No need to get all dramatic my friend. That petition was on Change.org which is US website so it is only an issue for USA crowd (read Ukrainian) Wink

    Contraband burns, mass media trolls, life and business goes on...

    The trolling is insane. Contraband is routinely destroyed in the west. Live animals are routinely destroyed if they don't meet import certification
    requirements.

    http://www.theguardian.com/film/2015/jun/23/johnny-depp-boycott-australia-following-dog-death-threat

    But when Russia starts doing what the west does, then the western propaganda chorus starts howling at the top of its lungs.
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    higurashihougi

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    Re: Russian Economy General News: #5

    Post  higurashihougi on Fri Aug 14, 2015 2:32 am

    Russia may stop transit coal via Latvia

    https://eadaily.com/news/2015/08/13/latviyskie-vlasti-ohvatila-tranzitnaya-panika (in Russian)

    ====

    Russian crop yield this year may reach 100 million tons.

    Mev has just met with Krasnodar leaders and congratulated the local farmers for a successful year. However, there are still concerns about dairy products preservation and consumption, since many processing and perservation facilities in Russia are not in the best condition.

    https://eadaily.com/news/2015/08/11/urozhay-zerna-v-rossii-mozhet-prevysit-100-mln-tonn-v-liderah-kuban
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    KoTeMoRe

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    Re: Russian Economy General News: #5

    Post  KoTeMoRe on Fri Aug 14, 2015 7:02 am

    Maximmmm wrote:Smaller banks are failing left and right though.
    The really good thing is that the gov insurance of bank accounts is up to 1.4mil roubles. Our family had some interaction with the insurance process and it works pretty well.
    On the one hand the culling of weak banks that don't have their shit together is good, on the other hand the same owners often reopen within a year, sometimes even in the same building. We need stronger criminal laws that target loose bank owners/managers. Otherwise we're just wasting taxpayer money.

    Yeah but the problem is that "rationalization" in the long term is even more dangerous for the state. If you have only a few (5/6) huge banks in the country, the risk is big to get one upped by Foreign Banks. Having SOME smaller scattered banks makes a buyout process far more difficult. The Risk of a big default and domino effect rises exponentially.

    Vann7

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    Re: Russian Economy General News: #5

    Post  Vann7 on Fri Aug 14, 2015 10:04 am

    Comparisons between US vs Russia salaries in dollars ,without comparing the needs of each side
    are pointless. In US the education system is one of the most expensive shit ever invented.. The average student who study long careers wants to be serious and get a PHD gets in debt for life time. Somewhere i read students gets in debt for near 1 million dollars for its whole education cost,. Such ridiculous cost of educations does not exist In Russia education system is cheap in comparison and there are according to others a lot of help from the government.  The Medical care.. in US is one of the most expensive in the world..  .. The average american ,middle class needs 2-3 jobs work at least 6 days a week, to decently raise a small family living from the minimum hourly wage . unless you have a well paid job. Transportation system and food is also more things people needs to take into account..

    So if for example..
    is the head of a small family earns in America 5,000 a month..   and in Russia he earns only $1,000.. that means nothing in real practice , if the first one will pay far more for Education ,medical care and housing/rent maintain ,taxes , etc etc etc. Don't know how is Russia taxes operate.. but in America you pay many taxes..federal income taxes ,state taxes, city local taxes ,Urbanization fees ,school fees . the direct taxes of everything you buy and every year you also need to submit a report of your gross income every year  and pay more .. and if you own a property in a rural place with half acre of land for every new extension to your house you need to pay Big tax..  even if you used your own money in your own property and the government did nothing at all . they tax you for improving your house..The you have mandatory this and that that you need to pay if you start a business. they give you a "license" and piece of paper ,that takes seconds to make in printer and charge you $300 to dollars for it. and you need "Renew the license" as they call it.. and pay every year for their blessings.. a piece of paper that takes a second to make.. then pay a certificate for health ,another for this or that. ,they will invent anything to get more money from you.. when you sum all.. you end paying like $thousands a year in certificates and papers ,if you have your own small business. Is no surprise why so many american business moved to China.. to avoid all that endless taxes thing. In short there is endless taxes you pay in the west.. Instead of the Government encourage you to make a business ,they do the opposite ,and makes you pay more for even try.. and dont dare to improve your house of they will tax you for every new meter of construction in your property.

    Then you see later they use all that collected money ,to raise themselves their own salaries ,more benefits and free travels ,free food , free hotels..free car and even free housing for the elite , the whole system of capitalism the way is implemented in America needs to implode it sucks.. Is Big irony that in US ,the elite experience life more closer to a communist rich state ,where they are provided with almost everything for free and very luxury life..is for nothing the Senate in USA is called the club of millionaires. And comparisons between West and Russia without measuring how much cost every thing you will have to spend if you live an average life will not show the real cost of living. So it should be more about how much it really cost living there.. in the place used currency ,instead of how much they earn.

    Prince Darling

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    Re: Russian Economy General News: #5

    Post  Prince Darling on Fri Aug 14, 2015 1:17 pm

    Vann7 wrote:Comparisons between US vs Russia salaries in dollars ,without comparing the needs of each side
    are pointless. In US the education system is one of the most expensive shit ever invented.. The average student who study long careers wants to be serious and get a PHD gets in debt for life time. Somewhere i read students gets in debt for near 1 million dollars for its whole education cost,. Such ridiculous cost of educations does not exist In Russia education system is cheap in comparison and there are according to others a lot of help from the government.  The Medical care.. in US is one of the most expensive in the world..  .. The average american ,middle class needs 2-3 jobs work at least 6 days a week, to decently raise a small family living from the minimum hourly wage . unless you have a well paid job. Transportation system and food is also more things people needs to take into account..

    So if for example..
    is the head of a small family earns in America 5,000 a month..   and in Russia he earns only $1,000.. that means nothing in real practice , if the first one will pay far more for Education ,medical care and housing/rent maintain ,taxes , etc etc etc. Don't know how is Russia taxes operate.. but in America you pay many taxes..federal income taxes ,state taxes, city local taxes ,Urbanization fees ,school fees . the direct taxes of everything you buy and every year you also need to submit a report of your gross income every year  and pay more .. and if you own a property in a rural place with half acre of land for every new extension to your house you need to pay Big tax..  even if you used your own money in your own property and the government did nothing at all . they tax you for improving your house..The you have mandatory this and that that you need to pay if you start a business. they give you a "license" and piece of paper ,that takes seconds to make in printer and charge you $300 to dollars for it. and you need "Renew the license" as they call it.. and pay every year for their blessings.. a piece of paper that takes a second to make.. then pay a certificate for health ,another for this or that. ,they will invent anything to get more money from you.. when you sum all.. you end paying like $thousands a year in certificates and papers ,if you have your own small business. Is no surprise why so many american business moved to China.. to avoid all that endless taxes thing. In short there is endless taxes you pay in the west.. Instead of the Government encourage you to make a business ,they do the opposite ,and makes you pay more for even try.. and dont dare to improve your house of they will tax you for every new meter of construction in your property.

    Then you see later they use all that collected money ,to raise themselves their own salaries ,more benefits and free travels ,free food , free hotels..free car and even free housing for the elite , the whole system of capitalism the way is implemented in America needs to implode it sucks.. Is Big irony that in US ,the elite experience life more closer to a communist rich state ,where they are provided with almost everything for free and very luxury life..is for nothing the Senate in USA is called the club of millionaires.  And comparisons between West and Russia without measuring how much cost every thing you will have to spend if you live an average life will not show the real cost of living. So it should be more about how much it really cost living there.. in the place used currency ,instead of how much they  earn.

    i completely agree, that nominal wages arent the best indicator, its obvious that americans pay a lot more for education and healthcare than other developed countries, they do however pay less taxes than most developed countries (minus Russia and a few others), but i think we can still agree that the average american has more disposable income than the average russia, or the average citizen of more or less every developed country on the planet. But i completely agree that the difference isnt as large as it would seem if you looked at the wages denominated in $
    Also obviously products cost more in the US (barring some local american things the rest of the world imports) and services cost A WHOLE LOT MORE.
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    Maximmmm

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    Re: Russian Economy General News: #5

    Post  Maximmmm on Fri Aug 14, 2015 8:38 pm

    KoTeMoRe wrote:
    Yeah but the problem is that "rationalization" in the long term is even more dangerous for the state. If you have only a few (5/6) huge banks in the country, the risk is big to get one upped by Foreign Banks. Having SOME smaller scattered banks makes a buyout process far more difficult. The Risk of a big default and domino effect rises exponentially.

    For sure, there definitely needs to be some happy middle where there's enough smaller banks to provide ample competition and risk to keep the market healthy. I was just saying that as it stands now, the situation is a bit skewed towards the other side of the spectrum.
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Sat Aug 15, 2015 2:09 am

    Maximmmm wrote:
    KoTeMoRe wrote:
    Yeah but the problem is that "rationalization" in the long term is even more dangerous for the state. If you have only a few (5/6) huge banks in the country, the risk is big to get one upped by Foreign Banks. Having SOME smaller scattered banks makes a buyout process far more difficult. The Risk of a big default and domino effect rises exponentially.

    For sure, there definitely needs to be some happy middle where there's enough smaller banks to provide ample competition and risk to keep the market healthy. I was just saying that as it stands now, the situation is a bit skewed towards the other side of the spectrum.

    well, pray it doesn't happen like here with TD, CIBC, RBC and BMO.  Maybe Russia could go the way of allowing credit unions which do operate somewhat differently.

    Anyway, seems like every day there is a bank name I never heard of from Russia.  Must be ridiculous amount of banks.
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    kvs

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    Re: Russian Economy General News: #5

    Post  kvs on Sat Aug 15, 2015 2:39 am

    sepheronx wrote:
    Maximmmm wrote:
    KoTeMoRe wrote:
    Yeah but the problem is that "rationalization" in the long term is even more dangerous for the state. If you have only a few (5/6) huge banks in the country, the risk is big to get one upped by Foreign Banks. Having SOME smaller scattered banks makes a buyout process far more difficult. The Risk of a big default and domino effect rises exponentially.

    For sure, there definitely needs to be some happy middle where there's enough smaller banks to provide ample competition and risk to keep the market healthy. I was just saying that as it stands now, the situation is a bit skewed towards the other side of the spectrum.

    well, pray it doesn't happen like here with TD, CIBC, RBC and BMO.  Maybe Russia could go the way of allowing credit unions which do operate somewhat differently.

    Anyway, seems like every day there is a bank name I never heard of from Russia.  Must be ridiculous amount of banks.

    There were thousands of them around the year 2000. The banking industry sort of resembled the USA during the 1920s.
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Sat Aug 15, 2015 5:19 am

    http://tass.ru/en/economy/814588

    Sberbank is saying that it is dangerous to close unperforming banks.  I think Sberbank is pulling crap here because I bet anything they have a lot of none performing subsidiaries that ended up losing licenses thus sberbank losing money on it. Underperforming banks, especially ones that are having a growing debt that is growing faster than the profits coming in, or dealing in illegal activity like terrorist sponsors, are FAR more dangerous to the economy than shutting them down.
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Sat Aug 15, 2015 5:34 am

    Russia's Rosneft to acquire subsidiary of Canadian Trican Well Service

    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Sat Aug 15, 2015 6:00 am

    http://aviationweek.com/defense/economy-casts-shadow-russia-s-military-plans

    I was looking at the only comment , can some one post on the comment section with factual information

    A worrying lack of understanding of economics in this article. "Although expenditures on national defense jumped in 2015 by almost 33%, up to $52.29 billion, the weakening national currency decreased the real value of this money almost by half".....if all the items procured were entirely sourced from within the Russian economy, then the real growth in Russia's military expenditure presumably remains at 33%. The issue for the West is whether the budget has remained the same in constant rubles. In a TASS article published on 15 April, Deputy Defense Minister Tatiana Shevtsova said that Russian spending on arms would hit 2 trillion rubles this year, against 1.7 trillion rubles in 2014, an increase of 18%; whereas as recently as October 2014, the head of the State Duma's defense committee, Admiral Vladimir Komoyedov, said (Interfax press release) that the 2015 national defense budget would reach a record 3.3 trillion rubles. So the fall against plan in real terms, in just six months, was 40%. Before the oil price crash and western sanctions began to bite late last year, fully one half of Russia's state expenditure was funded by oil sales; so, taking into account inflation (currently 16%), the real outcome for this year and next must be a collapse in defence expenditure. Despite the posturing, Russia is toast.

    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Sat Aug 15, 2015 7:54 am

    The Federal Reserve Asset Bubble Machine - By RUCHIR SHARMA

    Easy money is driving up the price of stocks, bonds, houses and other assets in a era without historical precedent.

    Janet Yellen’s comment last week at the International Monetary Fund headquarters in Washington, D.C., that stock prices are “quite high” hardly captures the frothiness in U.S. financial markets. The Federal Reserve chair’s admission also stopped short of acknowledging the role of free money in inflating the price of stocks—as well as the price of bonds, houses and every other financial asset.

    At Morgan Stanley Investment Management, we have analyzed data going back two centuries and found that until the past decade no major central bank had ever before set short-term interest rates at zero, even in periods of deflation.

    To critics who warn that pumping trillions of dollars into the economy in a short period is bound to drive up inflation, today’s central bankers point to stagnant consumer prices and say, “Look, Ma, no inflation.” But this ignores the fact that when money is nominally free, strange things happen, and today record-low rates are fueling an unprecedented bout of inflation across asset prices.

    The Fed’s defenders quibble that houses are less pricey than in the bubble of 2007, or that stocks are less pricey than in 2000, which misses the difference this time around. In the past 50 years, valuations of U.S. stock prices have been higher than they are now for less than 10% of the time, and similar figures hold for bonds and houses. This kind of synchronized boom has never happened, not even before the last two major meltdowns. My research team’s composite valuation for the three major financial assets in America—stocks, bonds and houses—is currently well above levels reached during the bubbles of 2000 and 2007.

    Faith in the Fed’s easy-money policies has encouraged a dangerous complacency. The mantra on Wall Street is that good economic news is good news for the markets, but that bad news is also good news, because it will encourage the Fed to keep rates lower for longer. This has led to one of the longest rallies the U.S. stock market has ever experienced, without even a 10% correction. Returns since 2012 are the highest for any three-year period in recorded history, after adjusting for the risk of holding stocks.

    The Fed’s approach has spread to central banks in Europe, Japan and China, creating a new world in which investment decisions are guided by the availability of easy money, not opportunity. Over the past three years, global stock prices have risen rapidly despite tepid economic growth. Oh well, the central bank responds: We target consumer prices, not assets.

    This job description is outdated, because the task is largely done. In emerging nations, the average annual growth of consumer prices now hovers around 5%, down from a peak of 116% in 1994. Add in the rich countries, which are generally more stable, and global inflation has fallen to 2% today from near 20% in the early 1970s.

    Central bankers are still fighting to control consumer prices, only now for the opposite reason. Rather than raising interest rates to contain consumer spending and inflation, they hold rates down to encourage spending and induce inflation, because the global inflation rate of 2% is dangerously low in their view. The fear is that slowly rising prices will tip into falling prices. The boogeyman is not hyperinflationary Germany of the 1930s, but deflationary Japan of the 1990s, when the country fell into a downward spiral of falling prices, weak demand and stagnant growth.

    Japan taught the world two lessons: that consumer price deflation is bad for growth and that it is hard to shake. Both are inaccurate. Before World War I, many nations experienced deflation, sometimes driven by weak demand and leading to weak growth, but as often driven by rising productivity and accompanied by strong growth.

    A recent Bank for International Settlements study on the postwar period found that long bouts of deflation were exceedingly rare, but short bouts were common. More important, average annual GDP growth was roughly the same regardless of whether prices were rising or falling. The upshot: Consumer price deflation is not necessarily bad for growth.

    One problem is that the world changed faster than the Fed. Trade has jumped to 60% of global GDP from 40% in 1980, and increasing competition puts downward pressure on consumer prices. The forces of expanding supply from China to Mexico are pushing the global average inflation rate down to a level that looks scary low only when compared with the 1970s highs. In fact, consumer price inflation is still above the long-term average, dating to the year 1200, which is 1%.

    But global competition wields the opposite effect on asset prices. The opening of financial markets means that many more buyers are bidding up prices for stocks in New York, or real estate in Miami or bonds in Chicago. The result is that central banks are unleashing easy money to fight an imaginary villain, consumer price deflation, at the risk of feeding a real monster, asset price inflation.

    Every major economic shock in recent decades has been preceded by an asset bubble: housing and stocks both before Japan’s meltdown in 1990 and before the Asian financial crisis in 1998; stocks before the U.S. dot-com bust in 2000; housing again before the crisis in 2008. Strikingly, even as asset prices were climbing before the busts of 2000 and 2008, the Fed kept monetary policy loose because consumer prices were rising only moderately. That is the same excuse we hear now, amid a price boom in stocks, houses and bonds.

    It is true that bubbles are most dangerous when people are borrowing heavily, and are buried by debt when the bubble collapses. Because U.S. households have been cutting debt, Ms. Yellen says the situation is not unduly risky. But U.S. corporations are borrowing heavily, and not all bubbles are fed by rising debt.

    The Fed now leads a culture of central bankers who see their job as reducing unemployment and stabilizing prices for consumer goods only, come what may in the markets. This needs to change. In a world in which high trade and money flows tend to restrain consumer prices but magnify asset prices, central banks need to take responsibility for both. After all, asset price inflation is as dangerous as consumer price inflation.

    Mr. Sharma is the head of emerging markets and global macro at Morgan Stanley Investment Management and the author of “Breakout Nations: In Pursuit of the Next Economic Miracles” (Norton, 2012).
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    Re: Russian Economy General News: #5

    Post  sepheronx on Sat Aug 15, 2015 8:12 am

    Austin wrote:http://aviationweek.com/defense/economy-casts-shadow-russia-s-military-plans

    I was looking at the only comment , can some one post on the comment section with factual information

    A worrying lack of understanding of economics in this article. "Although expenditures on national defense jumped in 2015 by almost 33%, up to $52.29 billion, the weakening national currency decreased the real value of this money almost by half".....if all the items procured were entirely sourced from within the Russian economy, then the real growth in Russia's military expenditure presumably remains at 33%. The issue for the West is whether the budget has remained the same in constant rubles. In a TASS article published on 15 April, Deputy Defense Minister Tatiana Shevtsova said that Russian spending on arms would hit 2 trillion rubles this year, against 1.7 trillion rubles in 2014, an increase of 18%; whereas as recently as October 2014, the head of the State Duma's defense committee, Admiral Vladimir Komoyedov, said (Interfax press release) that the 2015 national defense budget would reach a record 3.3 trillion rubles. So the fall against plan in real terms, in just six months, was 40%. Before the oil price crash and western sanctions began to bite late last year, fully one half of Russia's state expenditure was funded by oil sales; so, taking into account inflation (currently 16%), the real outcome for this year and next must be a collapse in defence expenditure. Despite the posturing, Russia is toast.

    The guy has no understanding of economics.  That is OK though, a lot of people don't.  they assume that the inflation rate accounts for all products across the board.  But it doesn't.  As well, 60% of the budget is based on oil sales, but what he fails to mention is that all sales of oil is done in USD, while Russian Rouble has dropped, and all of Russias spending in domestic affairs are done in roubles, they essentially get close to the same amount of roubles as before or a tad less.  The guys also ignores that the fact that the defence budget is still higher this year than it was last year, but using old predictions of what the costs are against what is actually being spent now, and equating it as a loss.  While defence spending as a whole has stayed relatively high and increasing over the years.  If we go by what the current contract prices are, as mentioned on the other forums, the Su-35's go for roughly $33M per aircraft.  So that hasn't changed, or at least that hasn't increased drastically at all (or not increased at all).  While the devalued rouble it looks like it costs more, but that is levied by the fact that they are getting more roubles now than they were before when rouble was worth 35rub/USD.

    He equates everything in $ term but doesn't state that Russian budget and spending is done in roubles, while their exports are usually in foreign currencies like EUR, Dollars and Yuan while rouble fallen in value compared to these currencies.

    Most of these people seem to spout the same bullcrap.  But none of them realise that majority of the components of Russia's airforce equipment is now becoming even more Russian oriented.  Meaning domestic.  Thus Dollars value has no effect on this.  Just because in dollar terms it dropped in half of value, doesn't mean that all of a sudden, (as example) Su-35's increased in value of cost + 50%.  It all comes down to the same concept that I have been saying in PPP economic terms that people seem to ignore.  Just because your currency value drops, doesn't mean that your economy drops in half.  Generalizing inflation as if all products increased by 16%, is a total joke and not even worth mentioning.  His idea that their airforce or procurement is now toast, is silly.  Countries with lot less develop far more advanced airforces through direct purchases of foreign equipment.  This is Russian equipment made for Russia and paid for in Roubles (and their corresponding materials with exceptions of course).

    So let us do some math I believe Ural Crude is equivalent to Brent, brent being at $49/bbl: http://www.oil-price.net/):

    Previous estimates of oil at $100/bbl and standard sales are roughly around 1,000,000 barrels, that comes out to $100 million x former exchange rate (35RUB/USD) = 3.5 billion roubles

    Current: $49/bbl x 1,000,000 x 65 = 3.185 billion roubles.  So theoretically lost less than 400 million roubles. That is $6.1 million.  Not small number but in terms of Russias budget, a drop in the bucket.

    Now, we cannot just add all of these numbers to what Russian government uses to purchase the weapons.  Instead, half of the budget (roughly) is derived through oil and gas.  Now we do not have full numbers, or at least I do not.  But the budget is derived through taxation.  Now Russia gets taxes through various sources and due to taxation adjustments, they may be obtaining a lot more income through other sources.  Mind you, it pissed off quite a few people, but that is beside the point.

    Then there is of course, Russia's defense budget being roughly 30% or more of the budget.  In this terms, that is still not very crazy numbers compared to other countries.  Add to that, Russia does have a very low tax rates thus that does not help them in government budget case but helps average people (so i say stick with it).  Then there is of course taxation through the very defence companies they are purchasing the weapons from and of course, these companies are racking in profits.  So the purchase of Su-35's from the government, the government is going to get some of that back through taxation, which ends up in the gov budget. Add further, with the sanctions, Russia is now forced to localize most production (Su-35 was 95% Russian already with some exceptions. Which are going to change now and some coming from domestic sources and some from other sources, possibly cheaper). So this means that even more people will have work and more tax money.

    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Sat Aug 15, 2015 11:27 am

    Nice post Shepheronx.

    I think inflation is something they need to be worried about more than any thing else.

    With devaluated rouble defence export should be more aggressively targetted
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    kvs

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    Re: Russian Economy General News: #5

    Post  kvs on Sat Aug 15, 2015 12:00 pm

    Austin wrote:http://aviationweek.com/defense/economy-casts-shadow-russia-s-military-plans

    I was looking at the only comment , can some one post on the comment section with factual information

    A worrying lack of understanding of economics in this article. "Although expenditures on national defense jumped in 2015 by almost 33%, up to $52.29 billion, the weakening national currency decreased the real value of this money almost by half".....if all the items procured were entirely sourced from within the Russian economy, then the real growth in Russia's military expenditure presumably remains at 33%. The issue for the West is whether the budget has remained the same in constant rubles. In a TASS article published on 15 April, Deputy Defense Minister Tatiana Shevtsova said that Russian spending on arms would hit 2 trillion rubles this year, against 1.7 trillion rubles in 2014, an increase of 18%; whereas as recently as October 2014, the head of the State Duma's defense committee, Admiral Vladimir Komoyedov, said (Interfax press release) that the 2015 national defense budget would reach a record 3.3 trillion rubles. So the fall against plan in real terms, in just six months, was 40%. Before the oil price crash and western sanctions began to bite late last year, fully one half of Russia's state expenditure was funded by oil sales; so, taking into account inflation (currently 16%), the real outcome for this year and next must be a collapse in defence expenditure. Despite the posturing, Russia is toast.

    Oh God not this devaluation crap again.   The expenditures are in rubles and the forex rate means f*ck all.   Military production and
    deployment are not based on imports.    As for the numbers being floated they are clearly wrong.    There is no indication that the
    Russian defense budget is being slashed by 50% in ruble terms.    Looks to me like a tail chasing pile of BS where the US dollar value
    is being used.   So the defense expenditures are being devalued by 50% because of the forex rate.  

    The Russian government's published 2014 military budget is about 2.49 trillion rubles (approximately US$69.3 billion), the third largest in the world behind the US and China. The official budget was set to rise to 3.03 trillion rubles (approximately US$83.7 billion) in 2015, and 3.36 trillion rubles (approximately US$93.9 billion) in 2016.

    http://www.sputniknews.com/military/20131008/184004336/Russia-to-Up-Nuclear-Weapons-Spending-50-by-2016.html

    http://www.themoscowtimes.com/business/article/russian-defense-budget-to-hit-record-81bln-in-2015/509536.html

    The fraudulent budget numbers are cited here:

    http://www.businessinsider.com/russias-military-upgrade-wont-be-stopped-2015-3

    There is no source for the 1.7 trillion rubles in 2014.   The Russian GDP in 2014 was 71.4 trillion rubles.   The defense spending was 3.4% of
    this which translates into 2.4 trillion rubles.    Clearly the Business Insider figures are trash and so are the ones in the comment.
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    sepheronx

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    Re: Russian Economy General News: #5

    Post  sepheronx on Sat Aug 15, 2015 6:41 pm

    Austin wrote:Nice post Shepheronx.

    I think inflation is something they need to be worried about more than any thing else.

    With devaluated rouble defence export should be more aggressively targetted

    Inflation is a finicky thing because it takes every product across the board, and then creates a mean in terms of what inflation has gone up by.  For instance, certain cheese products increased by 33% while bread prices increased by 1 or 2 %.  Same thing with meats, all the way up to basic products like toothpaste and what not.  There has even been deflation accounted for as well in the year.  But people use this mean of 16% and uses it for every product calculation which isn't correct cause that isn't how much it increased in prices.

    Metal prices in Russia haven't increased as revenue has been sought through exportation.  Since metals and composites account for huge portion of Russian military goods besides electronics, then we can assume that prices in that regard barely increased in price.  Only thing that would have increased would be the wages of the workers and possibly some toolings they get from other countries, and thus that is accounted for in terms of acquiring the weapons.  Maybe imports of certain goods for the composite field (and even that may have fallen in price due to the fact that most composite materials use oil products during processes, which was one of the main factors of price increase in the past for composites).

    There are so many factors involved, that it becomes nearly impossible unless you have a team of economists to shift through the whole thing to determine each and individual cost increases/decreases to determine the inflation.  But we can safely assume that no, the 16% inflation doesn't necessarily reflect defence equipment as much as it did with agriculture.

    As for devaluation of the rouble, it just makes Russian products far more competitive than previously.  In the past, India would have to convert the Rupee from 65 rupees to 1 USD in the millions of USD in order to purchase Russian aircrafts that were roughly $50M per aircraft (lets say).  But now, they don't have to convert it to necessarily the same amount as the aircraft was before $50M will be less now.  heck, I remember reading how Indian steel companies are facing issues because now it is cheaper to purchase steel from Russia to India than it was to buy certain local steel.  So there was a growth in steel sales to India from Russia (this was early this year).

    kvs wrote:
    Austin wrote:http://aviationweek.com/defense/economy-casts-shadow-russia-s-military-plans

    I was looking at the only comment , can some one post on the comment section with factual information

    A worrying lack of understanding of economics in this article. "Although expenditures on national defense jumped in 2015 by almost 33%, up to $52.29 billion, the weakening national currency decreased the real value of this money almost by half".....if all the items procured were entirely sourced from within the Russian economy, then the real growth in Russia's military expenditure presumably remains at 33%. The issue for the West is whether the budget has remained the same in constant rubles. In a TASS article published on 15 April, Deputy Defense Minister Tatiana Shevtsova said that Russian spending on arms would hit 2 trillion rubles this year, against 1.7 trillion rubles in 2014, an increase of 18%; whereas as recently as October 2014, the head of the State Duma's defense committee, Admiral Vladimir Komoyedov, said (Interfax press release) that the 2015 national defense budget would reach a record 3.3 trillion rubles. So the fall against plan in real terms, in just six months, was 40%. Before the oil price crash and western sanctions began to bite late last year, fully one half of Russia's state expenditure was funded by oil sales; so, taking into account inflation (currently 16%), the real outcome for this year and next must be a collapse in defence expenditure. Despite the posturing, Russia is toast.

    Oh God not this devaluation crap again.   The expenditures are in rubles and the forex rate means f*ck all.   Military production and
    deployment are not based on imports.    As for the numbers being floated they are clearly wrong.    There is no indication that the
    Russian defense budget is being slashed by 50% in ruble terms.    Looks to me like a tail chasing pile of BS where the US dollar value
    is being used.   So the defense expenditures are being devalued by 50% because of the forex rate.  

    The Russian government's published 2014 military budget is about 2.49 trillion rubles (approximately US$69.3 billion), the third largest in the world behind the US and China. The official budget was set to rise to 3.03 trillion rubles (approximately US$83.7 billion) in 2015, and 3.36 trillion rubles (approximately US$93.9 billion) in 2016.

    http://www.sputniknews.com/military/20131008/184004336/Russia-to-Up-Nuclear-Weapons-Spending-50-by-2016.html

    http://www.themoscowtimes.com/business/article/russian-defense-budget-to-hit-record-81bln-in-2015/509536.html

    The fraudulent budget numbers are cited here:

    http://www.businessinsider.com/russias-military-upgrade-wont-be-stopped-2015-3

    There is no source for the 1.7 trillion rubles in 2014.   The Russian GDP in 2014 was 71.4 trillion rubles.   The defense spending was 3.4% of
    this which translates into 2.4 trillion rubles.    Clearly the Business Insider figures are trash and so are the ones in the comment.

    It really does become quite funny when people spout the same stuff as always regarding prices Y and X in terms of $ amount.  But people seem to forget that the FOREX market makes only sense and can be a problem if you are a net importer (which Russia is not).  But what it does effect are simply imported goods.  Since Russia is far more self sufficient in military production than most countries, they really have nothing to worry about for military purposes (proven by the fact that what was mostly imported were either things like hydraulics and engines to engine subsystems, to various electronics, and majority of those came from both Ukraine, China and Taiwan), things really didn't increase much.  Especially since the ones coming from Ukraine are now being made at home or starting to be made at home, and various electronics either found alternative sources through China or are using localization parts (recently Uralvanzavod replaced Ukrainian thermal sensors with domestic ones as an example).  So FOREX becomes even less part of the calculation than before.

    Let us not forget that even during tough periods in 2008/2009, Russia still increased defense purchases.

    Only issue is for domestic reasons.  Russia's largest contributor to economic development and growth are domestic consumers.  Hence why there is heavy debate going on right now regarding minimum wage increase.  Finance ministry are aiming for 7% increase but others are saying that it needs to be 11% increase.  If this is the case, then majority of Russia's other companies will need to increase their wages to be more competitive over the minimum wage jobs.  This wasn't a problem for various private companies that paid their workers ridiculously high (I remember Khathi explaining on MP.net that workers at a phone booth in Moscow mall made as much as various engineers for a state run company). Funny how there is no such debate in Canada after our devaluation of the dollar. Only Alberta with the proclaimed $15/hr minimum wage through NDP and people going crazy over that idea saying how they will be screwed. Well, I know I didn't get a raise even though I make much more than $15/hr, and I got nothing for inflation change.

    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Sun Aug 16, 2015 5:18 am

    Russia overtook Germany GDP

    http://www.sdelanounas.ru/blogs/66262/

    Fresh recount data from The World Bank (1 July 2015). It showed that Russia overtook Germany last year, and despite sanctions, falling oil prices and the Ukrainian conflict, Russia's economy has steadily ranked fifth in the world in terms of GDP.


    Austin

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    Re: Russian Economy General News: #5

    Post  Austin on Sun Aug 16, 2015 5:20 am

    As the difference between Germany and Russia is $100 billion in PPP figure , I wanted to know if Russia GDP drops around ~ 2.8-3 % in 2015 as is projected will the PPP figure change in any way and Germany would next year retain the lead
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    KoTeMoRe

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    Re: Russian Economy General News: #5

    Post  KoTeMoRe on Sun Aug 16, 2015 5:28 am

    Austin wrote:Russia overtook Germany GDP

    http://www.sdelanounas.ru/blogs/66262/

    Fresh recount data from The World Bank (1 July 2015). It showed that Russia overtook Germany last year, and despite sanctions, falling oil prices and the Ukrainian conflict, Russia's economy has steadily ranked fifth in the world in terms of GDP.



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