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    Russian Economy General News: #7

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    Austin

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    Post  Austin on Sat Mar 25, 2017 3:39 pm

    kvs wrote:
    Austin wrote:here is what Savers in Russia will earn in Safe Fixed Deposit as interest rate

    https://russia.deposits.org/


    The interest rate is pretty much where FD savers in india earned in 2010

    http://www.onemint.com/2010/05/19/fixed-deposits-interest-rates-in-india/

    You are missing important details.   During that period the CPI in India was between 9 and 10%.   So the policy
    reflected the same approach as the CBR, which I already noted (8.5% rate when CPI was over 10%).   India
    clearly has the right approach.   Look at the interest rates and the CPI.   In 2015 the inflation rate fell to around
    6%

    http://www.inflation.eu/inflation-rates/india/historic-inflation/cpi-inflation-india.aspx

    and the interest rate was cut to 7.75% at the start of the year and decreased more later:

    http://www.bbc.com/news/business-30825893

    So India's financial policy has no resemblance to Russia.   The prime rate is properly lowered to reflect inflation and not
    kept at some absurdly high level for indefinite periods.   Even the mere fact that the CBR does not signal that it will
    drop the prime rate is bad since it offers no prospect of relief even after the crisis that was the pretext for
    the rate policy is long gone.   This is pure 5th column criminal activity at the CBR and Putin has disappointed me to
    a significant extent.   It appears that he was on a lucky streak with this leadership and that luck has run out.  Now
    he is damaging Russia's economy.   He has zero excuse for pimping Nabiullina and could easily have gone back to the
    2011 poli




    India does not have full capital account currency nor does it have full floating rate currency.

    India not under any sanction nor is the possibility that west is trying to screw us or would no in near future.

    And we are growing at 7 % plus

    That's not to say CBR is right but wanted to give some context
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    Post  Austin on Tue Mar 28, 2017 1:42 pm

    EU verdict goes against Rosneft

    "Rosneft" considers the European Court's decision illegal and politicized


    http://tass.ru/ekonomika/4131154
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    Post  GarryB on Wed Mar 29, 2017 9:29 am

    Clearly if Rosneft is going to be sanctioned by Europe for interfering in the Ukraine then they should start interfering in the Ukraine... they should start investing in rebel regions of the Ukraine and interfere as much as they can by funding the rebellion...

    The US and the west have funded a coup and are now funding an illegal government in Kiev, yet no sanctions on them?

    If the west protests then Rosneft can say we will stop interfering when you stop interfering and when you remove the sanctions.
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    Post  Austin on Wed Mar 29, 2017 12:28 pm

    GarryB wrote:Clearly if Rosneft is going to be sanctioned by Europe for interfering in the Ukraine then they should start interfering in the Ukraine... they should start investing in rebel regions of the Ukraine and interfere as much as they can by funding the rebellion...

    The US and the west have funded a coup and are now funding an illegal government in Kiev, yet no sanctions on them?

    If the west protests then Rosneft can say we will stop interfering when you stop interfering and when you remove the sanctions.

    The Rule of Law applies to other countries not to West. As they say "Do as I Tell You , Dont Do As I Do"

    What they show is EU court decision is politically aligned and cannot be relied for any impartial decision , They would do what EU politician would tell them to do.

    I wasnt expecting EU court to any way say the sanctions are illegal so it comes as no surprise.
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    Post  Austin on Wed Mar 29, 2017 1:09 pm

    Russians in General and Russian Government is obsessed with European Market and all things European.

    They invest a lot of time and effort to please the Europeans even if that ends up with nothing in the end.

    Look at the kind of investment and effort put by Russians on Nord Stream-2 , There is little chance Nord Stream-2 will pass the test.

    Barring few countries most EU are extremely hostile to Russia so putting such time money and effort is all but in Vain.

    Russia should put similar effort in wooing China , India and Asia in General ......That is where the Growth and Demand is for next 30 years. This is market Russia will gain the most , they are friendly to Russia as well and see Russia as stabilising force.

    Hope the Morons in Chief lead by Putin realise that putting effort to improve relations with US and EU is a wasted effort , Rather put the same time money and effort in Asian countries and bear good fruit there.
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    Post  kvs on Thu Mar 30, 2017 1:18 am

    Austin wrote:Russians in General and Russian Government is obsessed with European Market and all things European.

    They invest a lot of time and effort to please the Europeans even if that ends up with nothing in the end.

    Look at the kind of investment and effort put by Russians on Nord Stream-2  , There is little chance Nord Stream-2 will pass the test.

    Barring few countries most EU are extremely hostile to Russia so putting such time money and effort is all but in Vain.

    Russia should put similar effort in wooing China , India and Asia in General ......That is where the Growth and Demand is for next 30 years. This is market Russia will gain the most , they are friendly to Russia as well and see Russia as stabilising force.

    Hope the Morons in Chief lead by Putin realise that putting effort to improve relations with US and EU is a wasted effort  , Rather put the same time money and effort in Asian countries and bear good fruit there.

    I agree 100%. Europe is an anti-Russian toilet that Russia should dump ASAP. The world is a bigger place than the EU and all the
    other NATO hyenas combined.
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    Post  Austin on Sat Apr 01, 2017 8:00 am

    Net capital outflow from Russia amounted to $ 19.2 billion in 2016 Interfax

    Central Bank revised the capital outflow figures for 2016 in the direction of its increase - to $ 19.2 billion from the previous estimate of $ 15.4 billion, according to the materials on the website of the Bank of Russia.

    Thus, the net outflow of capital in the last year has decreased three times compared to an outflow of 2015 ($ 57.5 billion).

    The decline in net capital outflow was the result of much less intensive reduction of external liabilities, the Central Bank said in a commentary.
    According to the Central Bank net outflow of capital will slow to $ 12 billion in 2017 and to remain close to this level in 2018-2019.
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    Post  kvs on Sat Apr 01, 2017 3:10 pm

    Austin wrote:Net capital outflow from Russia amounted to $ 19.2 billion in 2016 Interfax

    Central Bank revised the capital outflow figures for 2016 in the direction of its increase - to $ 19.2 billion from the previous estimate of $ 15.4 billion, according to the materials on the website of the Bank of Russia.

    Thus, the net outflow of capital in the last year has decreased three times compared to an outflow of 2015 ($ 57.5 billion).

    The decline in net capital outflow was the result of much less intensive reduction of external liabilities, the Central Bank said in a commentary.
    According to the Central Bank net outflow of capital will slow to $ 12 billion in 2017 and to remain close to this level in 2018-2019.

    As usual, reporting of a meaningless number without context. What fraction of the 19.2 was debt repayment by both the Russian government
    and private sector entities? I bet most of it was. All the flighty portfolio capital ran off in 2014-15.
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    Post  Austin on Mon Apr 03, 2017 1:19 pm

    Gold Bugs: Why Russia is Stacking Bullion Bricks Like There's No Tomorrow

    https://sputniknews.com/russia/201704011052199028-russian-gold-purchases-analysis/
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    Post  Austin on Mon Apr 03, 2017 1:44 pm

    James Rickards-Trump Didn’t Get a Honeymoon-He Got a Burning Bed

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    Post  George1 on Wed Apr 05, 2017 11:46 pm

    Russian Central Bank Chief: Economic growth rates to stabilize at 1.5-2%

    More:
    http://tass.com/economy/939449
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    Post  kvs on Thu Apr 06, 2017 1:14 am

    George1 wrote:Russian Central Bank Chief: Economic growth rates to stabilize at 1.5-2%

    More:
    http://tass.com/economy/939449

    So her target is the fake 2% CPI of the US that is the result of manipulations such as hedonics adjustments and
    various schemes to hide housing price increases. The actual US CPI is closer to 6%. This proves that Nabiullina is a fraud herself.
    Her monetarist crew at the CBR will be sabotaging the Russian economy with over 10% interest rates when the CPI has
    already stabilized around 6%. The result of this policy will be to reduce the GDP growth and create financial instability.
    As I posted already, for small businesses the borrowing costs translate into 30% price increases for the consumer. So
    the CBR and this witch will be fighting the inflation they are creating themselves.

    Putin needs to get a clue, ASAP.
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    Post  Svyatoslavich on Thu Apr 06, 2017 3:24 am

    To defend the Russian Central bank, they are doing the correct thing by stocking huge amounts of gold and (slowly but surely) getting rid of dollar and euro bonds. In the long run, this is way more important than interest rates, and will allow Russia not only to survive the terrible crash that is about to come, but also to become one of the strongest financial centers in the world. Perhaps Putin is more focused on getting them doing the right thing on this, which is more important.
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    Post  kvs on Thu Apr 06, 2017 6:11 am

    Svyatoslavich wrote:To defend the Russian Central bank, they are doing the correct thing by stocking huge amounts of gold and (slowly but surely) getting rid of dollar and euro bonds. In the long run, this is way more important than interest rates, and will allow Russia not only to survive the terrible crash that is about to come, but also to become one of the strongest financial centers in the world. Perhaps Putin is more focused on getting them doing the right thing on this, which is more important.

    What!? Interest rates affect the daily operation of the whole economy. The gold is only relevant during financial crises as
    a psychological tool. Gold does not generate GDP (give me an example where it does, Russia operates on fiat as do all modern
    economies because money is an abstraction not tied to some horde of treasure but to the volume of the GDP). Loan shark rates kill
    the GDP. Russia does not spend most of its time in financial crises so by definition the gold is secondary overall and even irrelevant to
    GDP growth.

    People need to do some research instead of using their gut feelings. As a consumer you may not need any loans, but this
    has exactly nothing to do with business operations. Companies cannot form and cannot function without loans. And
    business formation and dissolution is continuous. Russian companies do not have the luxury of bypassing the criminal actions
    of the CBR since they cannot raise venture capital on the stock market or from specialized funds.

    Putin is clearly not on the ball and his skills at power politics obviously do not translate to economics. He is undermining his
    own legacy of re-stabilizing Russia and putting it on the path to prosperity. Looks like it was lucky conjunction of events that
    did the job and not Putin's informed policy.
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    Post  Svyatoslavich on Fri Apr 07, 2017 3:37 am

    I agree with you, but if Putin and others in Russia and China think that a collapse of the dollar-denominated global economy is imminent, and that it will be the biggest crash ever since 1929 (or perhaps worse), than there is no higher priority than to be prepared to survive and (ideally) overcome it in a better position.
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    Post  Austin on Sat Apr 08, 2017 11:22 am

    Republican leader in the Senate is ready to support new sanctions against Russia

    https://ria.ru/world/20170408/1491809003.html

    "If they (the White House - Ed.) Feel that need additional sanctions, or we (in Congress - Ed.) Will be something that will support both parties, I am open to it"
    - said the Senator, in response to a reporter's question on possible sanctions against Moscow because of the situation in Syria.

    McConnell added that he intends to discuss with the chairman of the Senate Committee on Foreign Affairs Bob Corker.

    "I think good enough that the administration did not remove the sanctions we have not Russian friends I think they repeatedly show this.." - Republican said.
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    Post  Austin on Sun Apr 09, 2017 9:36 am

    Some interesting debate on PPP and Russian Military Spending

    http://themess.net/forum/military-discussion/47947-syrian-war?p=249405#post249405


    To get a clear understanding of the superiority of the PPP-based measurement, it is useful to consider military power. Let's take Russia. Practically all Russian military activity, that is procurement, building, employment, training and operations, are internal economic activity. Russia doesn't use dollars to pay its soldiers and even before sanctions the amount of military equipment imported from the West was miniscule fraction of the military budget. So the dollar (nominal) value of the military budget has very little meaning.

    What actually matters is how many soldiers, mechanics, engineers and so forth you can actually employ with the budget. This is the reality of the resources allocated to military. So on nominal terms a 10 billion dollar budget would be the same (resources) in United States and in Russia, but obviously this is not the case. This is where PPP shows its superior character as a measurement tool. In Russia the average monthly wage was 760 dollars in 2016 and in USA 4893 dollars. This means that for example with a 10 billion dollar budget you could employ about 170 000 soldiers in the US, but 1 100 000 in Russia. With this in mind it is much easier to understand why Obama repeatedly called Russia the second strongest military in the world (obviously just repeating what the US military told him). Including in October 2016 in a meeting with the Italian prime minister: "The bottom line is, is that we think that Russia is a large, important country with a military that is second only to ours".

    According to the current nominal GDP figures Australian economy is about the same size as Russia's, but it would be pretty absurd to think that Australia would have the resources to run the second strongest military in the world. However when you look at the GDP figures corrected by purchasing power parity and note that the Russian economy is about the same size as Germany's, it isn't so hard to imagine that it has the resources to maintain a very strong military, as it does. This is just an example to demonstrate the superiority of PPP over nominal as measurement of economic strength, as the US Intelligence community noted as well.
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    Post  kvs on Sun Apr 09, 2017 2:46 pm

    Austin wrote:Some interesting debate on PPP and Russian Military Spending

    http://themess.net/forum/military-discussion/47947-syrian-war?p=249405#post249405


    To get a clear understanding of the superiority of the PPP-based measurement, it is useful to consider military power. Let's take Russia. Practically all Russian military activity, that is procurement, building, employment, training and operations, are internal economic activity. Russia doesn't use dollars to pay its soldiers and even before sanctions the amount of military equipment imported from the West was miniscule fraction of the military budget. So the dollar (nominal) value of the military budget has very little meaning.

    What actually matters is how many soldiers, mechanics, engineers and so forth you can actually employ with the budget. This is the reality of the resources allocated to military. So on nominal terms a 10 billion dollar budget would be the same (resources) in United States and in Russia, but obviously this is not the case. This is where PPP shows its superior character as a measurement tool. In Russia the average monthly wage was 760 dollars in 2016 and in USA 4893 dollars. This means that for example with a 10 billion dollar budget you could employ about 170 000 soldiers in the US, but 1 100 000 in Russia. With this in mind it is much easier to understand why Obama repeatedly called Russia the second strongest military in the world (obviously just repeating what the US military told him). Including in October 2016 in a meeting with the Italian prime minister: "The bottom line is, is that we think that Russia is a large, important country with a military that is second only to ours".

    According to the current nominal GDP figures Australian economy is about the same size as Russia's, but it would be pretty absurd to think that Australia would have the resources to run the second strongest military in the world. However when you look at the GDP figures corrected by purchasing power parity and note that the Russian economy is about the same size as Germany's, it isn't so hard to imagine that it has the resources to maintain a very strong military, as it does. This is just an example to demonstrate the superiority of PPP over nominal as measurement of economic strength, as the US Intelligence community noted as well.


    A good start but flops in the end. This analysis misses the prices and only considers the wages. It also, incorrectly, assumes that the PPP
    calculations properly account for the military sector of the economy.

    1) The PPP evaluation is conducted based on comparisons of civilian activity since access to military prices is not readily available for
    "security reasons". This is true in the USA where the corruption is hidden behind an information wall. Accessing the the black budget
    items is impossible. Russia does not want everyone to know its true level either. This was a policy over most the last 18 years since
    it kept NATO hyenas thinking that Russia was not a "threat".

    2) The PPP evaluation is based on prices and I have posted numerous time examples where the price difference can be a factor of six smaller
    for big ticket items such as submarines. So the PPP GDP figure for Russia is very misleading and it has an economy substantially bigger than
    Germany. Germany can't afford to run the "2nd largest" military in the world. Russia can.

    3) The PPP $3.75 trillion estimate for 2016 by the IMF is off by at least 33% and the more reasonable PPP is $5 trillion USD equivalent.

    4) The size of the US GDP is misleading since it includes its massive extra-territorial footprint. Americans do not see this GDP but the
    accountants do. Then we have the US financial industry which accounts for 50% of US GDP. Clearly Russia has a much smaller financial industry.
    So the PPP cannot correct for differences in economic structure. Russia can do without the financial industry bloated to the scale it is in
    the USA. So comparison of the US GDP size with that of Russia (PPP corrected) is apples to oranges from the perspective of military capacity
    and even population welfare capacity. The income distribution in the USA is hyperbolic:




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    Post  Austin on Sun Apr 09, 2017 5:01 pm

    Thanks , Another thing to consider is Russian Mil Budget is around 3 Trillion Rouble and its export is ~ $15 billion , ~ 1 trillion rouble.

    So 1/3 of exports go to MIC every year
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    Post  Austin on Sun Apr 09, 2017 5:10 pm

    I hope this will make the Russian Government and CBR realise that Dumping USD from Forex or minimising it significantly is the best course of action and all the Bomhomie of Trump working with Russia etc etc quickly evaporated in 11 weeks

    Trump Considering Sanctions Against Russia, Iran for Supporting Syria


    https://sputniknews.com/world/201704091052467243-us-syria-trump-haley/
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    Post  Singular_Transform on Sun Apr 09, 2017 10:52 pm

    To express a country size in GDP dollars means that you evauate the given country based on its usefulness for the US.


    The US running the biggest trade deficit, this market access is the driving of the US world dominance.

    Export (trade surpluss) means investment opportunity to the US market. Investment opportunuty means green card and option to move from Sauid/china/russia to the US .

    Simple, isn't it?


    Example China before the opium wars, it accepted only silver as payment for goods, means that after a while in silver the Chinese economy was bigger than the whole word together - but in realy it was weaker than any small European country.

    If Russia running trade surpluss then Russia support the US empire.
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    Post  TheArmenian on Mon Apr 10, 2017 1:46 pm

    March 2017 car sales numbers are out.

    Total Russia market is up 9.4%
    Lada is up 13%
    GAZ is up 6%
    UAZ is up 3%

    The top 10 best selling cars are made in Russia.

    Heavy truck sales are not out yet. But Kamaz announced that its sales in Russia are up by 34% during the first quarter of 2017. Exports have increased by 11%.



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    Post  Singular_Transform on Mon Apr 10, 2017 7:55 pm

    Seems like the output of the Russian car plant slightly up from the first three month of the last year.

    The rolling 12 month flat.


    Seems like if the interest rate drop then the car manufacturing go up.

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    Post  storm333 on Tue Apr 11, 2017 5:04 am

    Russian President Vladimir Putin awarded state honors to executives at Glencore Plc, the Qatar Investment Authority, and Intesa Sanpaolo SpA months after the $11 billion deal to buy a minority stake in state oil company Rosneft PJSC.
    https://www.bloomberg.com/news/articles/2017-04-10/putin-awards-glasenberg-order-of-friendship-after-rosneft-deal
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    Post  Austin on Tue Apr 11, 2017 8:24 am

    If Russian CBR dumps USD from Forex where it keeps $80 billion in USD , what other options is available to her if not buying more Euro or Gold.

    Can he just replace the USD in its kitty with IMF SDR ?

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