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    Russian Economy General News: #6

    sepheronx
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    Post  sepheronx Tue May 24, 2016 2:58 pm

    So it seems demand for Rus euro bonds is $6.3B so far and so would mean exceeding the goal by $3.3B (since it was to be $3B to meet deficits).

    http://vz.ru/news/2016/5/24/812302.html
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    Post  JohninMK Tue May 24, 2016 4:13 pm

    Rmf wrote:ìts ukraine. russia would be in the plus by now.
    but there are at least 5 mill ukranians in russia who is giving them passports and jobs handouts like crazy , crimea with 5 mill more, and donbass 5 mill .
    its subsidising 15 mill people, thats 10% of russian population and that costs allot.
    big projects in crimea , military involment in donbass that costs too.
    but 15 mill is 30% of ukranian population, once putin finishes military reform he can take most of ukraine.
    Its not all bad, think it through, its f..ing brilliant!

    Russia is a huge underpopulated country that needs more young people to maintain and increase its growth and to insure against an ageing population. Suddenly it got an influx of millions of educated (in the main) Russian (in the main) speakers with the culture in them. Get the young people but leave behind the old population and the expensive, obsolete, decrepit factories and infrastructure.

    OK, Donbas is a problem, but it will be solved one way or another. Crimea is stunning, if nothing else consider its strategic position (perhaps the planned deepwater container port will still be built) and its rights to oil and gas under the sea.

    Think of it as one of the best investment opportunities the Russian state has ever or will ever make. Talk about a gift from heaven, you might almost think Moscow planned it that way. No wonder the RuA didn't move into Donbas, Russian strategic objectives came first.

    The leaders in the Kremlin must be thanking Washington from the bottom of their souls for their actions in Ukraine, it is absolutely not what the US wanted and is overlooked by most commentators who just see the downsides of the civil war and Crimea. This is just about as good an example of industrial grade, state sponsored blowback as we will ever see.

    Just imagine the 'gloating' possibilities that Lavrov would have had with Kerry. No wonder Putin sometimes looks so relaxed, he is no bear, he's the cat who got the cream.
    Viktor
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    Post  Viktor Tue May 24, 2016 9:33 pm

    Its done - for officials as of now  Very Happy  thumbsup

    Putin raised the retirement age for officials Details

    and a bit more abt Russian economy

    Putin 2000 – 2014, Midterm Interim Results: Diversification, Modernization and the Role of the State in Russia’s economy
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    Post  higurashihougi Wed May 25, 2016 5:09 am

    Viktor wrote:Its done - for officials as of now  Very Happy  thumbsup

    Putin raised the retirement age for officials Details

    May I ask for English translation of the paragraph below ? Somehow I cannot understand fully the content of that paragraph via GG Trans results.

    Наряду с увеличением возраста для назначения пенсии по старости Федеральным законом увеличивается с 15 до 20 лет (поэтапно до 2026 года) стаж, необходимый для назначения федеральным государственным гражданским служащим пенсии за выслугу лет, в связи с чем вносятся изменения в Федеральный закон "О государственном пенсионном обеспечении в Российской Федерации".
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    Post  kvs Thu May 26, 2016 3:51 am

    higurashihougi wrote:
    Viktor wrote:Its done - for officials as of now  Very Happy  thumbsup

    Putin raised the retirement age for officials Details

    May I ask for English translation of the paragraph below ? Somehow I cannot understand fully the content of that paragraph via GG Trans results.

    Наряду с увеличением возраста для назначения пенсии по старости Федеральным законом увеличивается с 15 до 20 лет (поэтапно до 2026 года) стаж, необходимый для назначения федеральным государственным гражданским служащим пенсии за выслугу лет, в связи с чем вносятся изменения в Федеральный закон "О государственном пенсионном обеспечении в Российской Федерации".

    The minimum employment period for full pension for government workers will increase from 15 to 20 years incrementally until 2026. In connection
    to this the law on government pension of the Russian Federation is being changed.


    So the period will increase by 1 year every 2 years in the next 10 years. The previous rules were from the good old days of the USSR including
    the retirement at 55 condition. Now this has been raised to 65 as it is in the west.
    higurashihougi
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    Post  higurashihougi Thu May 26, 2016 5:32 am

    I have a conspiracy theory, that is Siluanov always blah blah bleh about "we are out of money" so that Russian people will be mentally prepared for some slight "austerity" policies, which is neccessary for the growth and competitiveness of Russian economy ?

    Is it ? Question Question Question Question Question
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    Post  sepheronx Thu May 26, 2016 5:39 am

    No, just means he really isn't sure what he is talking about. There are a lot of incompetent people in governments everywhere. Russia isn't going to be some sort of exception to the rule.
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    Post  Austin Thu May 26, 2016 1:29 pm

    Putin marks steady trend towards improvement of GDP indicators in Russia


    MOSCOW, May 25. /TASS/. In Russia, there has been a steady trend toward improvement of GDP indicators and the task now is to keep it, President Vladimir Putin said at a meeting with representatives of French business circles.

    He mentioned the problem of decline in Russia’s GDP in 2015.

    "In the first quarter of this year, the reduction is still there, but it is twice less than last year (in the same period). That is a trend towards improvement of macroeconomic indicators, including GDP has been a steady and our task is to keep all this in the near future," Putin said.

    He added that at the same time Russia has one of the lowest levels of public debt which is about 12% while the level of foreign currency reserves is growing.

    According to him, the volume of Russia’s gold and foreign currency reserves has increased.

    "As of May 1 of the current year, the reserves totaled $391.5 bln." "Nevertheless, our goal is not to just fill up state coffers with reserves, but to create favorable conditions for working on the Russian market," Putin said.

    He noted that he recently discussed these issues at the meeting (the Economic Council session) with the representatives of government, business, regions, etc.

    According to the Russian Central Bank, Russia’s reserves grew by $1.8 bln in the week of April 29 - May 6 to $391.9 bln.

    Russia’s international reserves increased by $4.5 bln in April, month on month, to $391.5 bln.

    Russia’s international reserves are highly liquid foreign assets managed by the Central Bank of Russia. They comprise foreign currency, Special Drawing Rights (SDRs), a reserve position in the International Monetary Fund and monetary gold.

    More:
    http://tass.ru/en/economy/878167
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    Post  Austin Thu May 26, 2016 1:30 pm

    So public debt decreased to 12 % of GDP
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    Post  Viktor Thu May 26, 2016 2:02 pm

    Russian economy will be loosing abt. 200 000 workforce year on year because of the catastrofic liberal policies during 90ies. Thats why it was important to up retirement age.

    Huge imigration with population policies as well as upping retirement age are ment to offset negative concenquences of such policies.

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    Post  KoTeMoRe Thu May 26, 2016 2:51 pm

    Austin wrote:So public debt decreased to 12 % of GDP


    Eye watering from here...
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    Post  Project Canada Fri May 27, 2016 6:06 am



    Russia’s economic dilemma: Are higher oil prices a blessing or a curse?

    The growth in oil prices may impede Russia from kicking its oil addiction. However, more expensive oil would help reduce the country's budget deficit. But it would also stop the budding import substitution programs and the development of domestic production.


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    Post  GarryB Fri May 27, 2016 7:28 am

    I don't think the price of oil is relevant to import substitution...

    They are having to substitute Ukrainian and German engines because they are no longer able to be purchased by Russia... with the price of oil increasing leading to them having more spending money available wont change that.

    Equally the ban on food imports from the EU wont change if the price of oil goes up either.

    I disagree that the price increase of oil will be bad for the Russian economy... it should inject more money into the system that can be invested in infrastructure and promoting areas that need investment.

    The huge advantage is that any financial benefit from those investments will go back to Russia instead of some foreign investor and can be reinvested back into the system.
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    Post  Austin Fri May 27, 2016 7:57 am

    G7: Anti-Russia sanctions may be tightened if needed

    http://tass.ru/en/world/878456
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    Post  sepheronx Fri May 27, 2016 9:30 am

    I hear a lot of talk but what exactly are they going to do? As I said a million times before, they played their real only card too early - sanction on Russian banks and barring the access to foreign credit. There is absolutely nothing they can do other than forcing Russia out of SWIFT and forcing companies not to invest in Russia. But that wont end up doing them any good as a lot of the investments are coming in now and Russia is finding alternatives to the credit market through domestic means.

    As I said, a lot of barking but no bite. As well, Russia isn't a signature of the Minsk agreements, so it really doesn't matter to Russia. As Russian officials said - it is up to the west to decide for themselves regarding the relations. Russia will simply just keep moving on.
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    Post  Austin Fri May 27, 2016 10:10 am

    KoTeMoRe wrote:
    Austin wrote:So public debt decreased to 12 % of GDP


    Eye watering from here...

    http://russia-insider.com/en/politics/external-debt-russia-has-sunken-rapidly-good-sign/ri14507

    On one hand the experts see this as a positive trait — now the government has no problematically high debts abroad, on the other hand, such a situation indicates, that both Russians and foreigners have lost their trust in Russia's future.
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    Post  Austin Fri May 27, 2016 10:16 am

    sepheronx wrote:I hear a lot of talk but what exactly are they going to do?  As I said a million times before, they played their real only card too early - sanction on Russian banks and barring the access to foreign credit.  There is absolutely nothing they can do other than forcing Russia out of SWIFT and forcing companies not to invest in Russia.  But that wont end up doing them any good as a lot of the investments are coming in now and Russia is finding alternatives to the credit market through domestic means.

    As I said, a lot of barking but no bite.  As well, Russia isn't a signature of the Minsk agreements, so it really doesn't matter to Russia.  As Russian officials said - it is up to the west to decide for themselves regarding the relations.  Russia will simply just keep moving on.

    All these Threat from G-7 simply means Russia should try to wean away from these Bankrupt Crooks whose own economy would collapse sooner or later and try to de-dollarise its economy and move towards Gold and build its economy on internal market consumption and with Asian & CIS countries where the real growth is expected in 20-30 years be it china india or SE Asia.

    G-7 is just a Kitty party for the broken western oriented economy , Keep Partying till it last !
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    Post  Austin Fri May 27, 2016 10:17 am

    Sanctions Against Russia MUST Stay In Place.

    http://smoothiex12.blogspot.in/2016/05/sanctions-against-russia-must-stay-in.html
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    Post  sepheronx Fri May 27, 2016 10:26 am

    Didn't even know Smoothie had his own blog. Good to know. Regarding to your other post:


    http://russia-insider.com/en/politics/external-debt-russia-has-sunken-rapidly-good-sign/ri14507

    On one hand the experts see this as a positive trait — now the government has no problematically high debts abroad, on the other hand, such a situation indicates, that both Russians and foreigners have lost their trust in Russia's future.

    There is a problem with the last part - Eurobonds proved otherwise. Since Russia released first tranch of Eurobonds at $1.5B, interest in Eurobonds raised to over $7B:
    http://sputniknews.com/russia/20160524/1040191646/russian-eurobonds-foreign-investors.html

    In another link I am currently looking for, apparently Russian businesses are moving to the bond market as it has recovered greatly compared to the loan market.

    As for loans, high Interest rates means that Russians obtaining loans isn't a good idea. One investor, Volga Trader (whom I chatted with) stated most of his clients are getting loans at 20% interest rates! that is way too high. And this is what is hurting the whole structure. A debt economy isn't a real economy. It is living off of borrowed money and that isn't healthy.
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    Post  max steel Fri May 27, 2016 2:19 pm

    Well I've been talking to Smoothie for past 6-8 months. lol.. i've been following his blog too.
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    Post  Werewolf Fri May 27, 2016 3:25 pm

    max steel wrote:Well I've been talking to Smoothie for past 6-8 months. lol.. i've been following his blog too.

    Smoothie?
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    Post  max steel Fri May 27, 2016 4:10 pm

    Yup. He had served in Soviet Union Navy.
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    Post  medo Fri May 27, 2016 4:56 pm

    Project Canada wrote:


    Russia’s economic dilemma: Are higher oil prices a blessing or a curse?

    The growth in oil prices may impede Russia from kicking its oil addiction. However, more expensive oil would help reduce the country's budget deficit. But it would also stop the budding import substitution programs and the development of domestic production.



    Higher oil prices will be a new blessing for Russia as they will increase export incomes. Increasing the value of Rouble will not be so problematic as prices will also grow for others in the World. Russia will be still cheaper as they have all needed materials, energy, production capabilities at home and don't need to import and that means lower prices for production. Also Russia have very low debt, so the cost of the dept per product is far lower than on any other foreign product. Higher oil prices will also mean quicker paying off of their debts and enough domestic money for investments without foreign credits. When Russia will pay off its debts, than it will be fully free of any foreign influence and while other economies will crash under heavy debts, Russia's economy will be healthy in full strength.
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    Post  Project Canada Sat May 28, 2016 5:00 am



    3 ways out of Russia’s crisis: The plans on Putin's table

    Russian economists have proposed three programs to help the country get out of the crisis. They were presented to President Vladimir Putin at the session of the Economy Council on May 25. RBTH tries to understand the essence of each plan and how such proposals were realized in the past.

    Plan 1: Limit the income of the population

    Plan 2: Print money

    Plan 3: Reform the justice system


    I dont see how Plan 1 & 2 will help improve the economy.., Question


    EDIT: I just would like to add a comment from one of the readers in the page, his insights are pretty interesting



    Plan 1 shrinks the economy and reduces the population while aggravating the problems.
    Plan 3 is a distraction from the real problem: the non-Russian ruble system (fiercely defended by Kudrin).

    Plan 2:
    Printing money can be a solution only under conditions of National Credit. The Russian Central Bank should be cut off from the IMF / Federal Reserve agreements and set free to create credit according to the needs of the Russain economy. This means the ruble should be a Russian entity again. Thus: no bonds anymore, let the state create national credit and no new debt for the Russian people.

    By far the most troubling factor of the Russian economy is the monetary system: the ruble is NOT Russian. For every ruble in circulation there is a fee for the Federal Reserve. This is why the financial sanctions of the West do really hurt the Russian economy. It is strange that the Russians accept the chains of monetary slavery around their neck.

    The Federal Reserve status and policy:
    1. is 100% private.
    2. functions outside any democratic controls and serves only the private interests of its owners; creates money with the computer to lend at rates near 0.00% to the owners/friends who buy the world with it for nothing !!!
    3. it sabotages the interests of the American people since its inception in 1913 and after Bretton Woods it sabotages the interests of the whole world.
    4. there is no backing whatsoever for any US Dollar any more.

    The Russian Central Bank policy:
    1. for every ruble inserted in the Russian economy there must be some dollars/euros or gold as backing; this is a royalty paid to the Fed/ECB (the euro's must be backed by dollars as well, while the dollars are backed by the philosophicaly perfect NOTHING !!! ).
    2. in Russia labor, materials and machinery are often not utilised, necessary investments are not done because there are not enough rubles to put them at work to serve the society. That's why the Russian government is always searching for foreign capital as "investments" (selling Russia for fiat dollars e.g FOR NOTHING!!!).
    3. and there are not enough rubles because there are not enough dollars (euro's) or gold to back new rubles.
    4. there is no cover for the interest, neither in Russia nor in the world as a whole. That's why the debt grows faster than the liquidity (today the world debt is 3 times higher than the world GDP); the Fed NEVER issues liquidity to cover for the interest the physical economy is charged with.

    Thus as long as this Russian Central Bank policy is maintained, the Russian people will accept the Federal Reserve monetary slavery and will not be able to decide their own destiny.
    The amazing thing here is that only 1/4 of the Russian money supply is produced by Russian banks, the rest is produced by foreign entitities. And the "sanctions" prompted many such foreign players to reduce the money production for Russia. The Russians accept to stay in the financial cage where they were put by the private western central bankers and tolerate an artificial liquidity shortage to be the cause of their own economy contracting (and ensuing misery). They have massive unemployment, large natural resources, huge investment opportunities and blame the cash shortage for failing to spur development. While they can release as much cash as necessary from the Central Bank of Russia, the Nabyullina team refuses to do this.

    Russia should adopt a system of National Credit:
    - the state issues the base money to be used by the commercial banks;
    - the commercial banks produce money for the economy by leveraging the base money (fractional reserve banking) and they get interest for this;
    - the state issues interest compensation and injects it in the economy without incurring new debt or interest => The money circuit stays balanced, the available liquidity is enough to keep the total debt not rising.
    - the state terminates all sovereign debt FOR EVER!!!

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    Post  sepheronx Sat May 28, 2016 7:39 am

    Plan 1 - Makes little sense.  Major contributor of GDP growth is private consumption (The total spending on all final goods and services (Consumption goods and services (C) + Gross Investments (I) + Government Purchases (G) + (Exports (X) - Imports (M)) GDP = C + I + G + (X-M)).  So with the calculation at hand here, Consumption of goods and services are a major part of GDP growth and development.  So whatever the Ministry of Industry is pushing is either completely stupid or there is something I am missing here.  I read the Kommersant Article and it was a little hard to understand as well.  They mention it would go back to the concept of industrialization.  But that doesn't make much sense either since a company will stop production due to lack of sales (thus revenue drops, thus no more money to expand).  Lack of sales is accumulated to people saving and not buying goods.  This single idea would absolutely cause riots and mass protests due to the fact that people such as you or I go to work to make money, spend money and hopes to finding a new job that makes either more money or in terms of obtaining raises.  The idea that they are pushing sure sounds like it would simply cause an opposite effect - revenue would drop so no revenue left to expand production or use as investments.  They somehow think that the results would be the same now as they are in the future after making this dicision.  But instead, revenue would drop significantly.

    Plan 2 - Doesn't really work.  And wont work for Russia in the external market as even with strong control of markets with bullshit rating agencies countries such as US and UK, the concept of printing money isn't even really helping the economy.  It is the main drive to its GDP growth, but in reality, isn't a real economy.  It creates artificial economy and relies on debt.

    Plan 3 - Dunno to what really make of it. After reading it, it just talks about nothing. It states the usual "government is too big, too much control over market, Too large of authorities and their involvement in small companies, etc". But it really comes down to absolutely no specifics or ideas. To state that it requires an additional ~5M people is also a joke. All that is doing is pushing the consumption rate up with more people thus of course there will be growth. Outside of that, it doesn't bring to the floor anything that hasn't been heard a million times. But Kudrin was wrong again in his statements about importance of resources, as it has been already noted that industries not related have seen massive growth already. I think his only message was kind of a "wild west" for small businesses which I don't really disagree with.

    I figured current structure is fine and just continue to use government funds for investments via third parties - venture funds, banks, state run mega agencies (rostec), etc.

    This guy's comment was dead on:
    Russian Economy General News: #6 - Page 29 F5H35gV

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