Russian Economy General News: #3

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?

This is what I have learned from reading around here in Canada and the media here: USA invests money into other countries media. But they don't really do it entirely just "Here is money, now go". More like, they will either get one of their own media groups to purchase out another media companies in other country, or release a version for their country. For instance, my co-worker has a membership to mens health magazine and he gets all of their editions. He has ones from Germany, England, Norway, Denmark, India, Philippines, Czech Republic, etc. All the same magazine, but in multiple languages. Wouldn't be hard either. They can get a person or couple of people who speak the language and do the work there. Or open an office in these respective countries.

The other one is that they are not actually using their own story, but parroting a story from a specific article from another place. WSJ and The Economist, and a couple others are always parroted in many countries (even Russia).

kvs wrote: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.  

This is good.  As for the idle capacity, there was some, but there was actually work for these companies in other areas/methods.  For instance, Mikoyan was either servicing aircrafts or manufacturing cutlery (yes, spoons, forks, knives).  These days, they do have work, but not the amount that they were built to do.  For instance, Uralvagonzavod is capable to build 1000 tanks per year.  But they do not.  What they do produce instead in the meantime is trams, agricultural vehicles, construction vehicles, road making equipment, tools, etc.  Guaranteed that isn't the max capacity either.  Same thing with Sokol plant, etc.  Technically, many of these companies can be making other products too, besides just military vehicles.  Most of them just concentrate on military because that is the high demand.  But if lets say they need to make more funds in the future or see an opportunity, I imagine they can actually upgrade the facilities even more or hire more people to start a production line of something else, making more consumer end goods.  Heck, how the US did it in the past was car manufacturers were making tanks.  Initial competition for M1 tank was against Chrystler Automotives.  I can imagine they can make cars, trucks and what not.  Many Russian electronic producers still use components from China to make them, with the prices of the goods going up, I imagine there will be a demand for the Russian made equivalents.  There is a company in Russia who is making LED matrix's, so I imagine the displays for the TV's will be Russian made soon enough, so Rubin and Polaris will end up using Russian made Displays and mainboards with the proper CPU as those are made in Technopolis GS in Kaliningrad or Elvees Russia.

So while Russian companies have far more orders and production has increased significantly since 1998, there is still plenty of room for further production and most large enterprises (especially those from Soviet times) are not near full production rates. Hence why it is the larger companies opening up import substitution lines (they are also the only ones who can afford it at the moment due to high interest rates. These companies are floating in money already and import substitution lines are not expensive).

Ok the chatter is that Obama will impose additional sanction on Russia and Lavrov-Kerry meeting was for that and Lavrov mentioned we cannot be pressurised.

So it now clear Obama stated that Russia can be pressurised economically.


So how should Russia counter-sanction ? Should get out of ISS space co-operation and all space co-operation.

Nuclear co-operation.........Ban Boeing selling aircraft in Russia what else ?

Beyond that what is the souce of long term financing for Russia , the US sanction would easily last atleast 3 to 5 years.

Hannibal Barca wrote:

kvs wrote:

Context.  It is a useful thing.

Thank you mate, this was valuable.

It is. In more ways than one.

Now I know that now's a good time to buy Norwegian Krone and Canadian Dollars

Hahahaa... the Czech media think western sanctions are making Russia poor, but in actual fact it is making them look elsewhere for economic partners and less dependent on the west...

If people really think some sanctions will bring the richest country on this planet down than they are deluding themselfs. Cuba is completley sanctioned and has almost zero resources themselfs and still alive, poor but manage to stay alive. Iran sanctioned illegaly by US/EU and has only some minor deals and are rather prosperous compared to most ME countries today, Lybia and Syria were rather rich but now destroyed under imerpialists working zionazis dream of regional power. North Korea, poor with almost no resources upholds and withstands US imperialism and aggression pushings from US via South Korea and is still alive so don't lie to yourselfs to think that Russia would die off hungry with the biggest pile of natural resources.

Even if russia losses entire EU market who cares, they will not fall, they have resources all they need, it is the world that needs russias resources and that is why russia was and is and will be constentally attacked. Russia actually holds the biggest power to destroy US/EU economies and technological progress. Who are the main exporters of metallurgical products?

Russia,Kazakhstan, China, Brazil, Ukraine (which is almost dead), India, Peru and thats are already the biggest and in some minor minerals US actually exports but mainly imports, where entire EU only imports and almost nothingly exports which is comparable with their consumption incapable to meet their requirements for car,aviation, industrial machinery, tool, infrastructure, agricultural machinery, buildings etc pp.

Not to mention gems, precious metals, timber, gas, oil, coal and some other resources they consume more than they can produce and all those resources are lying in Asia, South America, Africa and Middle East/Caucasus.

It's like one grocery store owner tells the Farmer, with several hectar land, he will die of hunger if the one grocery store refuses to buy his Milk.

But then what happened during the 80s and 90s?

Hannibal Barca wrote:But then what happened during the 80s and 90s?

Artificial disintegration, economy was bad but not so bad that a country would disintegrate of that. Jelzin the drunk along with his oligarch jews let in CIA into Kreml, they made several laws, ukraine was founded and belarus which are both artificial countries. Fall of USSR is not a result of bad economy but a result of treason within.

Were you there at the time?
It was obvious that communism wasn't working and they were lagging behind. They had to try something and they probably failed miserably but that's not the point.
The point is that we all know now that Soviet Union had no better living standards than Africa.

Hannibal Barca wrote:Were you there at the time?
It was obvious that communism wasn't working and they were lagging behind. They had to try something and they probably failed miserably but that's not the point.
The point is that we all know now that Soviet Union had no better living standards than Africa.

Yes, but i was to young to really know.

There was no communism, same pseudo ideology like it is currently pseudo-democracy in the west, just did not exist and still is not.

The Soviet Union had better living standards than todays majority of US/EU and not such high amounts of homeless, jobless and who stand in modern breadlines aka Foodstamps. The living standards of Soviet Union were something people dream about, but of course with the severe propaganda of "poor russians" this is conditioned not to know. Even Chechnians in 70-80s had better living standards than todays US/EU.

Yesterday I was talking with my cousin from Russia. He lives in a rich countryside place.
120 km from Moscow and they have almost nothing meaty in the shops. Reminds deficit times, but there are no ques. He thinks Moscow started hoarding everything from Colgate to Kinders surprise. And what is worse and makes him pissed off is that THERES NO SALO. There's plenty of vegetables tho. Not sure if they were getting it from Ukraine or Polen, but it doesn't reach them anymore.
Meat which is sold is fricking expensive almost EU prices. Apart from that he said he feels no effects from sanctions and expects situation to come back to normal soon.

Regular wrote:Yesterday I was talking with my cousin from Russia. He lives in a rich countryside place.
120 km from Moscow and they have almost nothing meaty in the shops. Reminds deficit times, but there are no ques. He thinks Moscow started hoarding everything from Colgate to Kinders surprise. And what is worse and makes him pissed off is that THERES NO SALO. There's plenty of vegetables tho. Not sure if they were getting it from Ukraine or Polen, but it doesn't reach them anymore.
Meat which is sold is fricking expensive almost EU prices. Apart from that he said he feels no effects from sanctions and expects situation to come back to normal soon.

Thank you very much this is the kind of information we need.
+1


What is salo?

Are there farmer markets near his place? Tatarstan amd a couple other places opened up some and are apparently swimming in mears and veggies from all over Russia and world. Or is ot only the big name companies (who are probably putting moscow people as #1 priority for cheaper meats)? Seems rostov region is semi fine for meat.

Hannibal Barca wrote:

Regular wrote:Yesterday I was talking with my cousin from Russia. He lives in a rich countryside place.
120 km from Moscow and they have almost nothing meaty in the shops. Reminds deficit times, but there are no ques. He thinks Moscow started hoarding everything from Colgate to Kinders surprise. And what is worse and makes him pissed off is that THERES NO SALO. There's plenty of vegetables tho. Not sure if they were getting it from Ukraine or Polen, but it doesn't reach them anymore.
Meat which is sold is fricking expensive almost EU prices. Apart from that he said he feels no effects from sanctions and expects situation to come back to normal soon.

Thank you very much this is the kind of information we need.
+1


What is salo?

Salo is a pork byproduct. Really good but fatty.

Oh man. If I had the money right now, with actual experience in farming, I would be running a mass meat farm. Cows, pigs, chickens and goats everywhere. Would then sell them to the meat companies at prime age. I would be basking in the Rubles.

Although, my wife would kill me. So that is out of the question. Regular, is milk and cheese in abundant? Cause that is a nice alternative to get into: goat milk, cheese and butter.

How much money you would need? and what's wrong with your wife?

Hannibal Barca wrote:How much money you would need? and what's wrong with your wife?

She is Hindu. Vegetarian. No meat. She would be against it and happy wife is happy life.

I would need lots of money I figure. At least over $100,000. And I am poor.

There are lots good information here, I think one that gets missed is that Russia is part of the BRICS, so countries like India and China are going to be doing good(I don't know if it matters). I don't know why the BRICS countries don't expand and include Iran and Venezuela, then they can have some power on oil prices.

Rouble going to 62 man is there something seriously wrong with Rouble or CBR is not able to control its fall.

This way it will keep falling to even 70 or 100 ......Just today OPEC says its not interested if Oil Price fall to 60 or 40.

I suspect as Iran says the goal is to put Brent into 40 , In that case I bet rouble will go about 100 or slightly below it.


I just hope Russian dont Rush to the bank to convert Rouble to USD and I think it would be wise for Government to stop full convertibility.

Yeah, I was thinking same thing. A nation who produces a lot, has the fastest falling currency. Wonder what will be done?

Nothing. We observe the total de-westernization of the Russian economy. We go back to the Soviet era but with a solid basis. Like I said I don't afraid at all.

Hannibal Barca wrote:Nothing. We observe the total de-westernization of the Russian economy. We go back to the Soviet era but with a solid basis. Like I said I don't afraid at all.

Go back to Soviet Era what do you mean by that ?

In 2008 Rouble suffered a shock but CBR burnt $200 billion to save rouble.

BTW can Russian CBR start its own QE program like Fed did in 2008 when economy was falling , Like giving Loans at 0-1 % rate by increasing Public Debt to from 11 % to 25 % of GDP ?

Austin wrote:BTW can Russian CBR start its own QE program like Fed did in 2008 when economy was falling , Like giving Loans at 0-1 % rate  by increasing Public Debt to from 11 % to 25 % of GDP ?

While ago (two months ago at least) I think I posted on here the possibility of QE in Russia.

In 2008, they burned through forex to save ruble because everything was still imported from west and ruble was not free floating. Now is a different case. We shall see.

I mean that Western infuence and investments and cooperation and you name it to Russian economy will be pretty much zero like it was in Soviet era.
They will keep selling gas or oil or raw materials and rockets and fertilizers and reactors but if and only they are the best in the world and in a hugely competitive price.
They will be total enemies in everything else.

If they manage to engage India and China and Brazil and Iran and Kazakhstan and South Asia  and if they start producing something better than Polar TVs or Ladas or Dima Bilan
they should be able to break the falling Europe. If not and they stay a low productive, backwater economy they will lose again.
You can argue as much as you like but if you take a map and compare the size of Russia and Germany (or France, UK, Italy)
and also account for double the population you can't excuse the fact that Russian industry is a laughing stock compare to German and that Germany's PPP is still substantially higher.
They can't diversify no matter how hard they try and there are no excuses it's been quite a lot since they tried.


Yes they can start QE and that's precisely what they do. Problem is, they still can't decrease interest rates and they have to stop capital outflow. Why? Like it is now if you give me money
I will simply take them all, exchange them for dollars put them is a Swiss bank and they will just repay with interest due to devaluation and keep a nice profit as well....
It is so terrible that despite QE even the stocks collapsing!
Long story short, oil must stabilize first!!! If you can't wait just bomb Saudi Arabia, that's the way it is.
After oil go back to 100 in a year from now IMO and Ruble stabilize they should FINALLY DIVERSIFY!

But I am not overly worried, pretty soon countries like Nigeria or Libya or Venezuela will go bust and others like USA will shut their shale fields and Brent will start rising again.