Russian Economy General News: #3

Thank you KVS for this chart, it opens my eyes to how hard hit many currencies are.

Global Markets Lose $1 Trln This Week on Cheaper Oil

Austin wrote:Global Markets Lose $1 Trln This Week on Cheaper Oil

I dunno about you guys (are petrol prices highly taxed in India Austin? Meaning has petrol prices dropped?), but I am kinda glad the price of oil is going down. Yes, it is hurting global economies, Russia pretty hard and others, but in the end, it will end up making us more reliant on production and competitiveness, as well as living within our means and possibly price drops over time. There is now mass amount of sales of homes in Alberta due to the amount of people losing jobs in the oil and gas industry (my parents neighborhood has seen at least 5 homes go up for sale in short time), and eventually, home prices will have to fall back to affordable levels unlike the heavily over inflated prices now.

I live in Alberta. It isn't going to be pretty.

sepheronx wrote:

Austin wrote:Global Markets Lose $1 Trln This Week on Cheaper Oil

I dunno about you guys (are petrol prices highly taxed in India Austin?  Meaning has petrol prices dropped?), but I am kinda glad the price of oil is going down.  Yes, it is hurting global economies, Russia pretty hard and others, but in the end, it will end up making us more reliant on production and competitiveness, as well as living within our means and possibly price drops over time.  There is now mass amount of sales of homes in Alberta due to the amount of people losing jobs in the oil and gas industry (my parents neighborhood has seen at least 5 homes go up for sale in short time), and eventually, home prices will have to fall back to affordable levels unlike the heavily over inflated prices now.

I live in Alberta.  It isn't going to be pretty.

Haha, you live in an oil exports dependent banana republic

In a year from now, I suspect you guys will be posting articles on the surging oil price, as a result of the cancelation of a lot of oil exploration projects currently under way.

Cyberspec wrote:In a year from now, I suspect you guys will be posting articles on the surging oil price, as a result of the cancelation of a lot of oil exploration projects currently under way.

That is a very likely possibility. Already there is a hiatus in the North Dakota oil field development.

http://www.startribune.com/business/285687401.html

Russia’s Unfazed by Falling Oil Prices

Good Watch

Global Change Keynote | Peter Schiff

Russia needs to throttle back oil exports. It can run a huge deficit and pull 3.5 million barrels from the market. What is
the point of selling 7 million barrels for $50 when you can sell 3.5 million barrels for $100?

There is no slack in the current oil market. Back during the 1980s Saudia Arabia had spare production capacity of several million barrels
and many producers had spare capacity. Today, the only increase of supply over the last four years has been from the USA
via unconventional deposits. Russia can nullify the US production increase.

It really is stupid to sell 7 million barrels for $50. Those barrels are gone forever. Selling 3.5 million for $100 gives you no
extra money, but it gives you 3.5 million barrels per day you can sell in the future.

The current oil price is clearly being manipulated by the west. It has no correspondence to the reality of supply. I find it
hard to believe that in the absence of a global financial meltdown like in 2008 the oil price could go lower. A mild recession
cannot explain a factor of two price drop. Given the constrained supply situation the price should go down to the $80 range
at the lowest. This constrained supply should allow Russia to restore the price sanity by creating an actual supply shortage.

(The Saudis cannot throw more than an extra 1 million barrels per day of heavy sour grade oil onto the market. The rest of
OPEC and the non-OPEC producers outside of the USA are all in decline).

kvs wrote:Russia needs to throttle back oil exports.   It can run a huge deficit and pull 3.5 million barrels from the market.   What is
the point of selling 7 million barrels for $50 when you can sell 3.5 million barrels for $100?

They cant do that to an extent of million barrel but few thousand barrel is possible as the Siberian Crude is said to freeze if they dont extract and there is no technology available to reverse that compared to getting Oil in desert.

The Goal of Russian State is to extract 500-530 million tons every year till 2035. So production is very predictable except for few less thousand barrel if they wish to reduce

There is no slack in the current oil market.  Back during the 1980s Saudia Arabia had spare production capacity of several million barrels
and many producers had spare capacity.   Today, the only increase of supply over the last four years has been from the USA
via unconventional deposits.    Russia can nullify the US production increase.

There is oversupply and even Putin said so in many words. Saudi wants others to cut down but other expect Saudi to do that , its like you do first.

It really is stupid to sell 7 million barrels for $50.   Those barrels are gone forever.   Selling 3.5 million for $100 gives you no
extra money, but it gives you 3.5 million barrels per day you can sell in the future.

Not really Oil will have its ups and downs , its part of game you may be selling $60 one year and the next $115

The current oil price is clearly being manipulated by the west.  It has no correspondence to the reality of supply.  I find it
hard to believe that in the absence of a global financial meltdown like in 2008 the oil price could go lower.   A mild recession
cannot explain a factor of two price drop.   Given the constrained supply situation the price should go down to the $80 range
at the lowest.  This constrained supply should allow Russia to restore the price sanity by creating an actual supply shortage.

Perhaps the current low price would indicate we would have a financial melt down soon.

Good replies Austin.

Let me add that even at $50 -60 price, Russia and the Opec countries are still making money selling the black stuff.

It is countries like Canada and the US shale oil/tar sand/fracking industries that are unprofitable at those prices.

So why should Russia or Saudi or Venezuela or Iran cut on production. Let the North Americans blink first.

And by the way, here is the part I liked the most in the article you posted earlier:

Ironically, Obama’s sanctions could have worse consequences for the US. If Russia ramps up production in order to raise revenues, that will lead to an even bigger fall in oil prices. And one of the primary victims will be US shale production. US fracking operations—which are more costly than conventional Russian (or Saudi) drilling—begin to get uneconomical below $70 per barrel. If the price drops to $60, many US unconventional wells will have to shut down and imports will rise once again. wrote:

Austin wrote:

kvs wrote:Russia needs to throttle back oil exports.   It can run a huge deficit and pull 3.5 million barrels from the market.   What is
the point of selling 7 million barrels for $50 when you can sell 3.5 million barrels for $100?

They cant do that to an extent of million barrel but few thousand barrel is possible as the Siberian Crude is said to freeze if they dont extract and there is no technology available to reverse that compared to getting Oil in desert.

Sorry but this is an urban myth.  Reservoir pressure is critical to the extraction of oil from the ground and shutting in production
preserves it while over-extraction can kill a field and lower its total lifetime output.   Atmospheric temperature has pretty much
f*ck all to do with it.   The ground permafrost can be melted from the top down rather quickly.   Thy just have to insert a heat
probe into the well to melt the frozen oil.  

The Goal of Russian State is to extract 500-530 million tons every year till 2035. So production is very predictable except for few less thousand barrel if they wish to reduce

Goals change.

There is no slack in the current oil market.  Back during the 1980s Saudia Arabia had spare production capacity of several million barrels
and many producers had spare capacity.   Today, the only increase of supply over the last four years has been from the USA
via unconventional deposits.    Russia can nullify the US production increase.

There is oversupply and even Putin said so in many words. Saudi wants others to cut down but other expect Saudi to do that , its like you do first.

Clearly you have done zero research on the supply situation.  Perhaps you should do some reading before pushing some line:



Where is this oversupply?  That's right it is in the USA.

It really is stupid to sell 7 million barrels for $50.   Those barrels are gone forever.   Selling 3.5 million for $100 gives you no
extra money, but it gives you 3.5 million barrels per day you can sell in the future.

Not really Oil will have its ups and downs , its part of game you may be selling $60 one year and the next $115

Clearly the current price is a major outlier given the history of oil prices over last 10-30 years.

The current oil price is clearly being manipulated by the west.  It has no correspondence to the reality of supply.  I find it
hard to believe that in the absence of a global financial meltdown like in 2008 the oil price could go lower.   A mild recession
cannot explain a factor of two price drop.   Given the constrained supply situation the price should go down to the $80 range
at the lowest.  This constrained supply should allow Russia to restore the price sanity by creating an actual supply shortage.

Perhaps the current low price would indicate we would have a financial melt down soon.

One has to precede the other.  This is an engineered price fall and Russia should act to secure its resources.
Selling them for some price that is much lower than the true market price is unacceptable.

Czech are gloating as Russian Economy is falling

Russia to fully enjoy the results of sanctions by the US and the EU in 2015. But the changes in the behavior of Moscow towards Ukraine can be expected only in the longer time horizon" - quoted the document online edition Ceske noviny on Sunday.

"The most obvious manifestation of the current situation in Russia is the depreciation of the ruble, limited access to financial markets and capital maintenance. Together with the decline in oil prices, this leads to a synergistic effect that causes significant damage to the Russian economy," - said in a statement.

In the Czech Foreign Ministry believes that the main result of the sanctions in combination with other factors will have an effect over the next year, when we can expect further growth of inflation, the real increase in prices and the continued care of foreign capital.

According to the authors of the document, in connection with the prohibition of access to Western financial markets in Russia to slow or stop the strategically important investment projects. With long-term effect of sanctions, while low oil prices, the domestic political dilemma arises: whether to support inefficient gosfirmy or carry out the necessary internal reforms and diversify the economy.

"The impact of sanctions on the change of Russian policy towards Ukraine is unrealistic to expect before a long-term time horizon," - said in the document and at the same time notes that "some of the manifestations of change" can already be seen.

http://translate.googleusercontent.com/translate_c?depth=1&hl=en&prev=search&rurl=translate.google.co.in&sl=ru&u=http://ria.ru/economy/20141214/1038178779.html&usg=ALkJrhh-v4qbpAvDrwgXMsisMyQExvNaWg

Austin wrote:Czech are gloating as Russian Economy is falling

I would not call out Czech people because all Chezch/EU media is entirely under CIA control.

Viktor wrote:

Austin wrote:Czech are gloating as Russian Economy is falling

I would not call out Czech people because all Chezch/EU media is entirely under CIA control.

It's interesting the left-wing govt. in the Czech Republic isn't openly hostile to Russia, the Czech news outlet just parrots U.S./British newspapers, as it's much easier to do than to actually engage in non-partisan journalism.

magnumcromagnon wrote:

Viktor wrote:

Austin wrote:Czech are gloating as Russian Economy is falling

I would not call out Czech people because all Chezch/EU media is entirely under CIA control.

It's interesting the left-wing govt. in the Czech Republic isn't openly hostile to Russia, the Czech news outlet just parrots U.S./British newspapers, as it's much easier to do than to actually engage in non-partisan journalism.

Washington's "soft" power is manifested in its infiltration of media around the globe. From South America, to Africa and to south-east Asia, we have
a chorus of parrots who repeat the same talking points and lies.

Washington dominates the public perception space around the world through its media proxies. People around the world are basically
unaware that the Kiev regime is slaughtering civilians by indiscriminate artillery and MLRS attacks 24/7. Instead they actually believe
that the Russian army is operating in the Donbas. Through the media, the voice of the people of the Donbas and many other people
around the world is stolen and the scumbags in NATO have a free ride to fulfill their ambitions.

Russia’s Ruble Speeds Past 58 to U.S. Dollar as Devaluation Accelerates

The Russian currency passed 58 against the U.S. dollar on Friday for the first time since the country’s 1998 crisis as global oil prices declined, extending this week's plunge against the greenback to around 10 percent.

The ruble fell sharply in late trading, touching an all-time record low against the euro in the early evening and finishing at 58.13 against the dollar and 72.3 against the European currency, according to data from the Moscow Exchange.

Amid volatile trading earlier in the day market participants said that the Central Bank was selling foreign currency in a bid to halt the collapse.

Pressure on the ruble has intensified in recent weeks despite the Central Bank announcing a one-percentage-point interest rate rise on Thursday and President Vladimir Putin's declaration of war against currency “speculators.”

The Central Bank, which has burned through about $75 billion defending the ruble since January, spent about $700 million Friday morning, according to Reuters news agency citing currency traders.

The Brent oil global benchmark slid to $62 a barrel on Friday, its lowest level for five and a half years, bringing its fall this week to 8 percent.

The drops in oil and the ruble were reflected by Russia's stock exchanges.

The dollar-denominated RTS Index, which is down over 40 percent this year, tumbled almost 4 percent on opening Friday, closing below the 800 mark for the first time since the 2009 global financial crisis.

The ruble-traded MICEX Index, which is buoyed by Russian currency weakness, closed up 0.3 percent.

The Central Bank last week re-started market interventions to defend the ruble for the first time since letting the currency free-float on Nov. 10. But the interventions have been relatively small and they have not prevented the ruble from weakening rapidly.

“Don't expect the Central Bank to ride to the ruble's defense,” Standard Bank analyst Timothy Ash said in a note to investors Friday, adding that Russia's priority now appeared to be conserving its foreign currency reserves rather than making a serious attempt to stop devaluation.

The ruble has fallen almost 45 percent against the dollar this year.

http://www.themoscowtimes.com/business/article/ruble-hits-yet-another-low-at-market-opening/513191.html

Hannibal Barca wrote:I have a tough question for you my friend. How you think they manage all this media networks around the world to play their game?
Via money? Their share of global gdp doesn't guarantees such a domination. Via what mechanisms you think they do it?

In germany you have to sign a contract before you can start which literally says "With my work i aggree to uphold the Transatlantik interests in all points", if you do ont want to sign this contract you are not allowed to work in mainstream media. This Contract is bound to Chancellor Pact, which every Chancellor here in Germany has to sign if he wants to become Chancellor, if he refuses he can not become. All german MSM have committes which are made of several groups, Parties like our one party system that is made of SPD,CDU,FDP,Greenies followed by Central Committe of Jews, followed by Economical Lobby parties, "Committee for Media Coverage" which is the censorship part who control what is "hate speech" and should not be shown meaning everything not in interest of Transatlantic Lobbyism, The Church (katholic/protestant) has also seats in this Committee and lot of small groups of lot unnecessary nonsense that have almost nothing of value to decide how or what is covered or in what manner in MSM.

There is no such thing as Freespeech of MSM here in germany like anywhere else in our western MSM, they are all controlled by all the same means.

People who decide to go contra are threatent with various of methods. They send police with warranty to search through your house as a symbolic statement that they have more power than you, this happened several times of quiters and whisteblowers, they go all on MSM rampage and demonize people personaly like Ken Jebsen who did quit this MSM nonsense now he is brented as "Anti-semit" which is the ultimate sledge hammer of argument here in germany to either shut up or destroy peoples credibility and drag him away from "serious journalism" so that anyone who might be interested in his coverage is disgust or mentally conditioned to distance himself of even hearing what that man has to say. That happens every single year here with all quiters or whisteblowers they can be the most left people they are called antisemite Right wingers, you can have some hippy flowerpower people they will be still called right wing nazis, that is the common strategy here to destroy someone in public by tellinge every single MSM show to all call him "Nazi,Antisemit and Conspiracy theorist".

The same methods are used in US and they even openly hunt them in all cases where they can not conceal or deny what came to light, like Assange, Snowden, Manning and lot of people before them.

Hannibal Barca wrote:Oh thank you extremely valuable Werewolf but why people comply so loyally especially now that most are educated and they also have internet?

They pay alot of money, membership in relative secret lobbistic groups, carreer is the only possible way how become journalist, because you can not found your own News agency without lot of capital. In germany the currently real invegastive journalists survive only through masscrowd donations, they do not earn any money that would give them any future, some even live on what they could safe up with their prior jobs. Ulfkotte descriped that you get lot of fancy stuff purchased for you from tax payers money and they act like this is just some gift, but obviously just baiting so that people become corrupt, they do it knowingly but pretent like this gifts are just some minor things not really what they would call "illegal". Journalists are bought whores nothing else and real journalists can bearly survive with what they earn.

Hannibal Barca wrote:I have a tough question for you my friend. How you think they manage all this media networks around the world to play their game?
Via money? Their share of global gdp doesn't guarantees such a domination. Via what mechanisms you think they do it?

I think it is easy. There is a very long history of western corporate ownership of business and land around the world. Also, during the cold
war the various elites in "developing" countries (e.g. Bolivia) aligned themselves with Washington in fear of the commies. There is also
a natural pattern of behaviour by 3rd world business to look towards the Mecca of business in the west. The media is a private business.
The owners of these media companies are aligned to Washington and to the west. Forget about China and the current situation. The
alignment established itself over centuries and decades.

Since media companies are businesses they hire and fire employees on the whim of the owner. There is no such thing as tenure for
journalists. Only academics have tenure. So journalists have to dance to the tune of their employer if they want a pay cheque. All
the yapping about "independent" media is a stupid joke. Is any employee at any company "independent"? The owners of these
media companies (e.g. Rupert Murdoch, and similar businessmen around the world), are by no means independent of the elites. They
are part of them and naturally serve their common interests.

That this media is not state owned is totally irrelevant to the claim of independence. In fact, if they were state owned they could
have been much more independent because the government would be worried about bad optics of "suppressing" journalists. Frankly,
media should be run like universities. Public money should be allocated and journalists should not be afraid of being fired if they do not
toe the owner's line. In addition, the journalists should work up the chain by establishing their credentials. They should not just be hired
off the street. Then we could talk about independence. But this will never happen because the media is a tool of power. The elites
will do everything to control it.

Regarding the ruble exchange rate. There is way too little devaluation given the stimulus Russia needs.

Go back to 1998 and the ruble went from 1:6 to around 1:25



This created a massive import substitution effect that directly led to the rebound of the Russian economy:



The blue line shows the surge in GDP growth.

I hear lots of talk about how much idle capacity there was back in 1998. This sounds like nonsense since it was not like whole
production plants with shiny new equipment were sitting waiting to be restarted. In fact, most of the Soviet production capacity
was in a full state of rot by 1998. Looting and sell offs rendered many of these production facilities useless. So the rebound in the
above graphs is much more complex and involves new investment of Russian money into the delivery of domestic goods and services.

Today there is supposedly much less idle capacity compared to 1998. But again, this is context free BS. The capacity to launch
new production lines and open factories is much higher today than in 1998. The domestic economy is much larger and in much
better shape than in 1998.

So the rebound today from a devaluation by a factor of four would be huge. The relative GDP growth rate would likely be smaller
since Russia has actually developed quite rapidly since 1998. (For example, wages went from $80 per month in 1998 to over $960
per month today. I am using dollars as a crude inflation adjustment.) But the nattering about Russia's economy melting down
from oil prices and ruble devaluation is retarded.

BTW, the oil price in 1998 hit $11 per barrel at one point. There was no massive oil price increase between 1998 and 2004.