Russian Economy General News: #1

Hannibal Barca wrote:Answer to Vlad79:

Sorry saying, probably the most ignorant post I came across in the 3 years I read this forum.

You said nothing about the links and the facts presented. Probably you are so preoccupied that you dismiss anything.

I have been reviewing some of your posts with other members...

No reason to keep arguing with someone who thinks that MiG-29 is a mini Su27.

I don't think you make the effort to read what I say. You just isolate quotes and give correct but irrelevant data.

Now I will speak as someone who holds a PhD in math..

No reason to debate. As I continuously say I am not here to argue for anyone or take sides.
I merely gather information and I give back some of my own to pay back when I can.

You are not here to argue because you take offence when someone doesn't answer you the way you want to be answered.  You are here to post your agenda.  I got that part.  However, this forum is for debate, not propaganda.  If you aren't willing to defend your position and berate everyone that doesn't agree with you, then you really don't have an argument. You are a Great Wall that gets insulted when someone steps on it.      

Anyway for the people that may care and read the unfounded rumors of Vladimir, 3 "points" that being repeated again and again
to look like they are different in each repetition   : and a stupid paradox that when mention you immediately know that the person in front of you
has no idea what he is talking about   

Well, I was a business analyst in Guangzhou for 18 months.  I imagine that is more knowledge than you have drinking CCP koolaid.  I have seen CPI double reported figures, gone over books of corporate assets for IPOs that don't exist, lived in a Tier 1 city with buildings and malls practically deserted.  For my own flat, out of a building with 500 units, only 46 were occupied in Tianhe.        

1) A hypothesized inter-banking debt of China. No evidence what soever pure speculation from pro Westerners and Communists who bite their tongue
for the new capitalist block buster China. Again from OFFICIAL American sources: http://www.usdebtclock.org/world-debt-clock.html
No public nor external debts. Obviously no private debt either in China. So what left for which we have no data? Oh yeah inter-banking debt!
So lets call it banking debt    like Kim Jong Un's dogs eating his uncle story:
http://www.reuters.com/article/2014/01/06/us-korea-north-jang-idUSBREA050DP20140106

Defunct debt clocks not including China and North Korean dog packs.  I don't want to hear anymore about irrelevant from you.  When calculating China public debt the inclusion of SOE debt must be included, it is owned by the government.  They owe 62% of a $9 trillion bank liability.  The new LGV audit shows $3 trillion debt and it only audited half the townships and institutions it did the last time.  Then there is shadow banking and wealth management products well into the trillions of USD unaccounted for.  Government liabilities are over Greek levels even by China's own accounting... which is horrible and deceptive in and of itself.                    

2) China copies technology. Indeed she lacks in some areas. If this was not the case she would be already the sole superpower given anything else being the same.
Given the money, the manpower and the industrial output and the fact that the most advanced producer aka US is in dire straights  this will not last for long.

It is more than technology.  It is the education, or lack of critical analysis that plagues them.  Chinese students learn by rote memorisation and not to challenge the status quo. They have a hard time innovating and marketing which is a problem not easily solved.      

3) Even if Russia will not involve in a war against US for China I find it hard to believe that France will nuke Russia to help US either.
Additionally, find it hard to believe that Vietnam or Burma hates China but loves US. Please, let us not be silly  

 

France and America fight together often.  They have a mutual defence treaty, we have nothing with China nor does China have any such pact with another nation.  The only country that would fight with them is Pakistan and only against India.  

The paradox: Either China has weak internal consumption or bubbles and inflation problem in it's economy. She can't have both in the same time. Yakies.
The answer is: She doesn't have inflation problem else her currency wouldn't appreciating. She doesn't have weak internal consumption else she would't have medium inflation despite her currency appreciation. She does have a reasonable problem of "heated economy" though.
Quite normal for an economy which hits 10% for 35 years now!

It isn't a paradox at all when the disposable income used for consumption goes to fixed asset investment which creates the bubble.  I kept my own log of CPI for a basket of goods over 18 months and the average inflation was 14%.  China doesn't weigh housing cost as the rest of the world because prices are hard to fathom.  China controls the value of the currency by pegging it to the USD and buying FOREX to offset it.  That is why they have trillions of reserves, too bad for them it is already leveraged so they can't use it or the currency goes out of control.    

Additional comments:

-Natural resources drain: crap

That is a very compelling argument but energy dependence does factor into the costs on the economy.  China is experiencing the cost adding to its massive pile of debt.  

-Being so reliant on others limits their strategic position: total crap. ridiculous to call a country with huge fiscal and trade surpluses with no debt and the biggest reserve deposits reliant to the country which has fiscal DEPOSIT, trade DEFICIT and one of the nastiest debts worldwide

Fiscal surplus?  They have the biggest spending deficit of any nation on earth. LGV debt over the last year equaled the total US deficit by itself.  Biggest reserves that can't be touched or watch the currency run out of control.    FOREX doesn't mean squat when it is used to peg it to another currency.  Watch RMB free float... that will be a trip!  

-RMB is pegged to USD so any fluctuation is minor and engineered: care to read the facts? the yuan APPRECIATING around 3% ANNUALLY FOR YEARS. How the hell is this happening if their where pegged?   

  you don't even know.  

-Fake GDP? All sources about China's GDP are Western sources which are biased AGAINST China.

Western investors are the biggest cheerleaders of the PROC and have been drinking the CCP koolaid for years.  It is only now they are starting to see Chinese debt going out of control.  

nuff said

You are not here to argue because you take offence when someone doesn't answer you the way you want to be answered.  You are here to post your agenda.  I got that part.  However, this forum is for debate, not propaganda.  If you aren't willing to defend your position and berate everyone that doesn't agree with you, then you really don't have an argument. You are a Great Wall that gets insulted when someone steps on it.

I don't have an agenda and I have no propaganda. I am curious to know what kind of agenda you think I have.
All I am saying is that I am not gonna create 30 posts to demonstrate that MiG29 and SU27 are not very much alike, if someone wants to make this an endless debate I am not gonna follow. I don't die to prove that I am correct and the others are wrong. I only keep reply when I fell that people may seriously misinformed when reading something and I only do this because I really think that this forum has a good level generally.

Well, I was a business analyst in Guangzhou for 18 months.  I imagine that is more knowledge than you have drinking CCP koolaid.  I have seen CPI double reported figures, gone over books of corporate assets for IPOs that don't exist, lived in a Tier 1 city with buildings and malls practically deserted.  For my own flat, out of a building with 500 units, only 46 were occupied in Tianhe.  

It does exist, it shows nothing.

Defunct debt clocks not including China and North Korean dog packs.  I don't want to hear anymore about irrelevant from you.  When calculating China public debt the inclusion of SOE debt must be included, it is owned by the government.  They owe 62% of a $9 trillion bank liability.  The new LGV audit shows $3 trillion debt and it only audited half the townships and institutions it did the last time.  Then there is shadow banking and wealth management products well into the trillions of USD unaccounted for.  Government liabilities are over Greek levels even by China's own accounting... which is horrible and deceptive in and of itself.    

What kind of auditing you supposedly doing and you tell me about SOE ?
Third party debt is what matter. You can reform or merge you companies debt the way you like in no time.
This is what US enterprises did in the 70-80's as well and had never faced a single problem by this.
Japan, Ireland and UK have 10 times bigger SOE with no development or inflation and nobody takes it serious either,
please no double standards.

It is more than technology.  It is the education, or lack of critical analysis that plagues them.  Chinese students learn by rote memorisation and not to challenge the status quo. They have a hard time innovating and marketing which is a problem not easily solved.  

So much of CNN propaganda. I just googled this: http://www.cnbc.com/id/101240945
I don't care to support Chinese students. You through anything and the kitchen because you don't have FACTS.

France and America fight together often.  They have a mutual defence treaty, we have nothing with China nor does China have any such pact with another nation.  The only country that would fight with them is Pakistan and only against India.  

Russia already start working like China's big hand in Syria, Iraq and Sudan and more will follow. When you have cash you have mercenaries. No reason to over-complicate things in your mind. By the way both in Vietnam and in Korea those two fought against US so again you ignore the facts.
Will ever France or Italy will go to a total war with India to save US? I am not so sure
Will ever Russian help India against US? More probable

It isn't a paradox at all when the disposable income used for consumption goes to fixed asset investment which creates the bubble.  I kept my own log of CPI for a basket of goods over 18 months and the average inflation was 14%.  China doesn't weigh housing cost as the rest of the world because prices are hard to fathom.  China controls the value of the currency by pegging it to the USD and buying FOREX to offset it.  That is why they have trillions of reserves, too bad for them it is already leveraged so they can't use it or the currency goes out of control.

http://www.tradingeconomics.com/china/inflation-cpi
As you see China's inflation rate is about 3%
You say 14%
Maybe we seriously need to stop it here? There is no point keep doing this.

Fiscal surplus?  They have the biggest spending deficit of any nation on earth. LGV debt over the last year equaled the total US deficit by itself.  Biggest reserves that can't be touched or watch the currency run out of control.    FOREX doesn't mean squat when it is used to peg it to another currency.  Watch RMB free float... that will be a trip!  

Please get you facts straight finally!
I strongly advise you to try to find links for your claims before you post any more of this.

Western investors are the biggest cheerleaders of the PROC and have been drinking the CCP koolaid for years.  It is only now they are starting to see Chinese debt going out of control.  

Please, let us be serious. All western investors and their governments care is to repatriate all the available capital to increase volatility and keep the interest rates dead zero in the same time in order to fight the debt and deficit problems without create mountains of inflation in the same time.
They succeed in doing this against the interest of BRICS in such degree that now have oceans of capital and no growth, that's why you see all this capital amazed on stock markets which sky rocketed despite the fact that real economy went busted.
Ever think of it? No
Ever thought why Russia grew 1% despite all the projects taking place? Now you got your answer
Some Russians like you are blissfully unaware of the game is talking place and backstabbing their allies.
That's why you lost cold war I and you keep doing the same mistakes in CW2.

Russian software exports reach 5.2 billion dollars in 2013

Who has good a article about Russia consolidated budget and what is it made of and if possible about its expenses and revenues? Tnx.

Viktor wrote:Who has good a article about Russia consolidated budget and what is it made of and if possible about its expenses and revenues? Tnx.

For 2011-2012 you can find here

http://www.gks.ru/free_doc/doc_2013/rus13_eng.pdf

Be Warned !

1930s-style debt defaults likely, says IMF research

Austin wrote:Be Warned !

1930s-style debt defaults likely, says IMF research

Easy to say hard to do, because along with debt the problem is also deficits.
eg USA runs with a 700 billion deficit annually. If they simply default the very next day they will have to lend again from the very same people they defaulted.
And this with a much much much worse credit rating.
If you have primary (before interest on debt) fiscal surplus and trade surplus you may think of defaulting else is not you but lenders that decide.
Same story for most EU countries as well.

Btw watch this video. Helps a great deal to realize how debt bomb works:

Hannibal what are your views on Russian Economy as it stands today ?

Is having low debt and balanced budget but low growth is the right thing to do ?

Should they increase their debt borrow and pump in more money in Russian Economy to get growth ?

Also is there a chance Rouble could become a strong contender for regional currency should USD and Euro collapse ?

The Russians along with Chinese are buying lots of gold since 2008.

Hannibal what are your views on Russian Economy as it stands today ?

I think that sooner or later huge investments and trade agreements with titans like Japan, China and India and why not Iran should start to pay off.
I mean if you see the REAL ECONOMY indicators like industrial production or exports of industrial goods or individual purchase power they still grow
with high single digit numbers or double digit numbers. In the same time inflation is finally relatively controlled.
It happens that you hear daily about mega deals. This is unthinkable for a country that grows with a miserable 1%
What happened is that a few factors combined together and shows a short term slow of growth that doesn't represent the real picture.
Namely the huge repatriation of Western capital who hit hard emerging countries with immature economies, namely Russia, Brazil and to a lesser extend India
and a step decline of the Ruble due to a huge flow of capital from the country (they should learn this from Japanese. Moneys that produced in Russia, should stay there)
and the weak status Russia has to the stock markets and the economic world.
Good thinks: Flow of capital managing effectively. Business friendly environment and legislation accelerating. West retreat of capital mostly occurred.
Big deals have yet to start paying back.  

I expect due to all this, at least at the second half of 2014 Russian economy to go back to 3% rates, if oil prices remain mostly stable as I expect them to be.
Long term, oil prices level is a cause of headaches. Big providers like Iran and USA will start purring in, and shale gas is a thing as well. Yet China and India will start consuming big time
which is mega news for their buddies, Russia, Iran and all.
Yet Russia needs at least a five year span before civilian industrial sector (eg aviation) to show the changes already happening.
If they remain dedicated I think they are on the right track, yes. But they need to remain disciplined as well. Russians (and Indians) consumers want too much too fast
and they may create nasty bubbles or private debt. Already real estate bubble is a pain. They should learn patience from the Chinese.

Finally banking sector is awful. Impossible to get a private loan. Ridiculous interests. Without small scale private lending you don't get start up companies so you don't get innovation.
They should take lessons from USA here.

Is having low debt and balanced budget but low growth is the right thing to do ?

Absolutely. No matter how tempting might be, no emerging country should make the mistake to open up. There is loads of western capital staying idle due to continuous stagnation
and this is ready to go in and vandalize the well managed emerging economies. But I don't afraid Russia or China to this. India and Brazil are much more prone to error here.
Cause if India get Europe scale loans (call them investments    ) will show some 20% short term growth. Very tempting indeed.

Should they increase their debt borrow and pump in more money in Russian Economy to get growth ?

Answered already. No. Let the others default or their debts and gain the profits. Create an investment bank and get involved big time in western countries that ate the dust.
This is the way to go. And in the same time keep surpluses to be independent  from foreign manipulation and trade surpluses to have favor economic relations with the rest of the world
and deposits for the turbulent times. This is what I think is happening, and it seems the right think to do.

Also is there a chance Rouble could become a strong contender for regional currency should USD and Euro collapse ?

No! Dreams side apart US and EU economies are about 18 trillion each. A little less in PPP gdp. Russia is one sixth of this. In any measure this is little.
Also Ruble has a bad status, Russia's banking sector is immature and Russia although has surpluses this is due to oil solely.
We should add to them a decreasing working force that is coming of age.
Obviously the big bully in town will be China at least in the beginning. Btw that's the reason why it took so much to create a BRICS bank and a BRICS IMF
because all this will be too China-centric.
India has the potential and it is expecting to close down considerably at the end of the first part of this century though.
Nevertheless, if EU fall apart, Russian economic influence independent or as trojan of BRICS economies should come prime time, at least certainly on Eastern Europe
and the PIGS who are desperate of cash.

Needless to say, with this come diplomatic and military influencee. Obviously if you are established for years as the most important economic partner of a country you
ultimate take the to your sphere of influence.
eg If this trend with Australia continue for a little more, and it will keep and manifestate further, then no chance
Aussies will continue backing US against the Chinese.

The Russians along with Chinese are buying lots of gold since 2008.

Yeah and India as well, the big giant that is still largely sleeping. It helps to have deposits. They will never again replace fiat currency cause the total amount
of  derivatives world wide is now in quadrillions!! but it will always help to back up your currency and manifest your surpluses.
Additionally many people still love this currency for gold idea, even people who really understand macroeconomics, mysteriously.

Thanks Hannibal , your presence on the economic board brings new insight.

BTW India gold imports are mostly in private hands and not by the government......Indian people love gold

Austin wrote:Thanks Hannibal , your presence on the economic board brings new insight.

BTW India gold imports are mostly in private hands and not by the government......Indian people love gold

Yes, India uses gold in industry (like China as well) and cosmetics. Gold is also an industrial raw material.
Yet the demand of India is so big that manipulate prizes worldwide.

I think the difference between Russia China and India buying gold is Russia and China central bank buy most of the gold but in India the gold is held by citizen in jewellary ornament they purchase. The Central Bank in India i.e RBI dont keep much gold reserves.

Yes.

Russia ready for oil fluctuation: Deputy Fin Min

Rapid growth of Russian nano-technology products

- 2011 - 30 million $
- 2012 - 375 million $
- 2013 - 1.5 bin $


Projections for:

- 2014 - 3 bin $
- 2015 - 9 bin $
- 2020 - 18 bin $

Chubais: Output in the nanotechnology industry in Russia in 2013. amounted to 50 billion rubles. Read full article: http://quote.rbc.ru/person/2014/01/14/34095869.html

The Board of Directors of RUSNANO approved the business plan and the company's strategy to 2020

Hannibal , Can Russian Economy be considered as economically backward just because its dependent on Raw Material Resources ......much like saudi or Kuwait etc ?

Shuvalov: share of public sector in the economy in 2018 should be reduced to 25%

Shuvalov said that currently there are different estimates of the share of the public sector in the Russian economy, but most analysts agree that the state controls about half of the economy.

"The important thing - that was not controlled by the government of the number of enterprises and the volume of the economy. And, of course, by 2020, this volume should be significantly reduced. Upon completion of this political cycle (2018 - Ed.) Should strive to ensure that no more than a quarter of the economy controlled by the state, "- said Shuvalov.

Its inevitable ....

Duma opposition opposes raising the retirement age in Russia

Uljukaev IEG will not offer to change the Finance Ministry fiscal rule

http://ria.ru/economy/20140115/989325756.html

On Tuesday, the Russian media reported that the Ministry of Economic Development proposes to revise the fiscal rule, increasing the budget deficit in excess of the limit of 1%

It is not our proposal, we did not make such proposals. This is meditation. And we will not make any formal proposals to change the rules," - he said. In this Uljukaev not exclude that in the future can be a discussion on this issue. "But now a fiscal rule should work in the form in which it exists," - said the head of the Ministry of Economic Development.

Siluanov: the federal budget deficit in 2013 amounted to 0.5% of GDP

http://ria.ru/economy/20140115/989322710.html

Replenish the reserve fund to 200 billion rubles, according to Finance Minister Anton Siluanov. He admitted that on the basis of the conditions that were in last year, it was necessary to replenish the fund is not 200 billion, and nearly a trillion rubles.

"In principle, the results of last year - not bad at first glance, because we have fulfilled all their plans, even exceeded the budget revenues compared to the plans. Deficit we have less than was originally planned - 0.5% of GDP by the facts developed, planned recall, we are 0.8% of GDP, "- he said, speaking at the Gaidar Forum 2014.

We are currently leaving the possibility of insurance - to get into the reserve fund to 200 billion rubles, but on the contrary, we do not climb, and by the end of the year its plan to replenish the same amount - 200 billion rubles," - said the Minister.

However, he admitted that on the basis of the conditions that were in last year, it was necessary to replenish the fund is not 200 billion, and nearly a trillion rubles. "Because that situation that was developing, saying that we need more money set aside, will not pass those oil and gas revenues, which came in the budget", - added Siluanov.

So its official Conservative won over Liberals   

Shuvalov called the growth of the Russian economy unsatisfactory

"The situation is extremely difficult for us in terms of economic growth. These rates We are certainly not satisfied," - said Shuvalov. He added that it does not go on the negative growth, but high energy prices are low growth are dangerous.   

"This, of course, very dangerous. Even depression helps more out of it than being in a prolonged state of equilibrium. It can be very dangerous for us," - said Shuvalov.

He recalled that the government conducted the debate over whether to stimulate growth by increasing government spending and use of accumulated reserves. A number of experts, he said, including in the government, said that due to these measures can increase the growth rate of the Russian economy to 3-5% per year. However, the discussion ended in victory for advocates of conservation reserves and adoption of a fiscal rule, which is rigidly enforced.  

According to Shuvalov before increase public spending, the government needs to focus on creating and upgrading the necessary institutions and to restore order in the use of public funds. He added that such a policy has already been initiated in respect of natural monopolies, which have been frozen indexation of tariffs, but the task of fully retain investment by improving the efficiency and the introduction of new procurement rules that are similar in terms of a federal contract system.

http://ria.ru/economy/20140115/989292691.html

Curtailing of US quantitative easing not to affect negatively Russian economy

Curtailing of quantitative easing program in the United States will not affect negatively Russian economy, Russian Finance Minister Anton Siluanov said at the Gaidar economic forum in the Russian capital on Wednesday.

“Curtailing of quantitative easing program in the United States may result in capital flight from developing countries. But we believe that massive sale of assets will not take place in 2014, as it happened in 2013 in view of only a statement about possible curtailing of this program,” Siluanov said. He added that all countries are already prepared for such turn of events. “We believe that the monetary policy, budgetary policy in Russia will not change as a result of curtailing of quantitative easing program in the U.S., we will not have any problems,” Siluanov added.

Makes Interesting Read

Russia heatedly debates two approaches to future economic growth

I think that state can keep the key role and still reforms and privatization follow.
The example is there and is called China. The problem is that people are very impatient in Russia.
It needs time to build strong civilian economy. Reality is that Russia might create nuclear power plants but still can't create a semi decent car
or a cell phone or a TV or a refrigerator or an oven. Even civil aviation just started projects after 20 years.
They still don't create civilian ships.

The standard of living of the average Russian improved tremendously the last ten years.
Much more than Russia's growth would indicate.
If they just allow more deficits they will simply take the money and consume _mostly abroad_ until they will have a debt problem once again.
Amazing how the average Russian wants to live the big life even though before 10 years he was eating from the garbage bins.

I think they should have bitten the bullet opted for cheap loans available abroad before QE goes and invested for next 6 years $50 each year in Infra and projects that would have given returns along with private investement.

That comes to $300 billion in 6 years .....quite affordable of that can give sustained 4 % Growth.