Russian Economy General News: #3

sepheronx wrote:

The biggest money loss is beurocracy and social welfare. Cutting overall jobs will kill the economy (this is what US wants), so procurement has to stay the same.

sepheronx wrote:Cutting defense spending now would be a bad decision unless it does not effect modernization of the armed forces (procurement). As I mentioned before, MIC is 25% of the industrial industry of Russia and possibly more than half of the tech industry. What you are suggesting austin, would effectively help decrease GDP and long term budget overall as companies would lay off their employees (defense is one of the largest, if not largest, in terms of employment in Russia) and the amount of tax revenue will drop significantly as well increase poverty thus the increasing overall costs on social benefits. This his how it is all tied together. So if they cut procurements, then it will utterly destroy a huge portion of Russias industrial and manufacturing base, and leave plenty without a job.

So this is why they wont cut it. Although, professional soldiers wages should be cut, as they are one of the highest earners in the country. And Shelve some R&D for a while like the new destroyer. Simply concentrate on building newer vessels.

The biggest money loss is beurocracy and social welfare. Cutting overall jobs will kill the economy (this is what US wants), so procurement has to stay the same.

flamming_python wrote:

TR1 wrote:

sepheronx wrote:It all depends. Have they lost income and savings? They spent their own money on junk.

Uh yes. Income is not keeping up with inflation by a long shot. How about old people and their pensions? Once again, they get put out to the pasture like in the 90s.

Old people and their pensions got raised a lot in recent years.
All social benefits did.
It's a case of 1 step back, but a few steps forward were taken earlier on so no biggie.

Compare that to Europe and the austerity measures; most of South and Eastern Europe got hit hard; some of Northern Europe too. Pension ages went up, social benefits got cut-down. Family tax benefits nullified. Additional taxes levied. Regional subsidy cuts. Healthcare cuts. Lowering of minimum wages. Public sector employees laid off in their thousands.
That hasn't happened in Russia. Nothing like it. Not in 2008 either, during the GDP plunge. Actually more social support to vulnerable parts of the population has been introduced since then, raises in military pay, more pro-birth government support and some government programs for SMEs, innovative companies, etc... too

For sure Putin didn't create an economic miracle. But then what would you call Europe's situation over the last 5 years in comparison? Do you know what their unemployment levels are like? In Russia it's among the lowest of any major country in the world, growth or no growth.

Savings got kicked in the balls with devaulation and currency scrambles.

Unfortunately yes, but still it's not 1998. It's not even 2008. Actually, everyone's savings are more or less alright, considering that for now all that this affects is spending power on foreign imported goods, and holidays abroad. Of course there will be a correction, but its magnitude will rather depend on whether the Central Bank and Russian government can get the rouble under control. If they can, and stabilize it in the 50s to a dollar, perhaps the high 40s, then the impact won't be too great.

At the end of the day - savings are mostly about one thing - saving for property. Property prices haven't gone up, at least not any more than they've been growing in all the years before. If property prices actually end up falling, just perhaps, well then actually people's savings will end up being worth more than they were before. It's perfectly possible. Just goes to show that a little devaluation against foreign currencies is not the end of the world, nor the end of the economy.

As for spending on junk, most people care about that much more than Armata MBTs or supposed foreign policy independence. It is the same in any nations populations.

I care about Armata MBTs

Anyway, yes most people are apolitical, they don't hold any grudges against Europe or anything. But at the same time, there is a sort of understanding here, that the crisis is artificial and due to political tensions.

TR1 wrote:And who do you think will contract more next year, the big EU states or Russia?
Which population has lost more in real income? Savings?
Seriously, should we sit here and go "Well thank fuck Germany is barely growing this year, that really makes things better for us in comparison". Come on.

Think about it for a second. Their purchases from us are assured. They've put no sanctions on our exporters. And most of what they buy are raw materials that they need one way or the other. The value-added products we produce - may actually get more popular there as now they're cheaper due to the deevaluation.

When it comes to the other way 'round however, we find that in terms of them exporting to us; they've mostly either sanctioned themselves, been sanctioned, or been priced out of our own market.
All those multi-billion dollar deals Western oil/gas conglomerates secured in some of Russia's (and the world's) largest oil and gas fields - now they're all on hiatus due to the prohibition on selling oil-drilling tech to Russia. Stupid isn't it? What do you think is easier - for them to find other mega-gas & oil fields and win contracts in them, or for Russia to purchase tech/bring in partners from Asia and/or develop the neccessery technology by itself? In fact this is a synonym for most of the 'economic damage' that Europe has inflicted on Russia. Most of it has actually hurt itself more. Russia helped out with the agricultural bans of course. And as for the rest of the stuff, and Europe does export a lot of stuff to Russia; it's become a whole lot more expensive in Russia and people/companies will prefer Russian domestic alternatives instead more and more.
Russian companies win, European companies lose.
Russia is one of Europe's largest trading partners - they export over $100 billion in goods, and nearly $20 billion in services to Russia each year. Yet under US pressure and their own misguided policies; they're losing the Russian market.
Yet is Russia losing the EU market? No, not at all, in fact it might even strengthen its positions there.

The key factor is that Europe needs what Russia produces. But by and large, Russia doesn't need what the EU produces - given that there are alternative suppliers in Asia, and among its own companies in some cases. A lot of important stuff, Russia has encouraged to be set-up production for in Russia; wood processing plants, automotive plants, consumer goods production, etc... a lot of European companies have set up production in Russia, and now they will be even more encouraged to do so; given that the country is less keen on imports now and more keen on domestic production.

Or take the South Stream cancellation. So fine, Europe and the US pressured Bulgaria into creating problems for South Stream. The US wanted it to be cancelled, Europe wanted Russia to go along with the 3rd energy package. Result? Russia cancelled it, made a new pipeline deal with Turkey.
US got what it wanted. Did Europe? Hell no. Here they had a chance for their poorest members, to gain hundreds of millions of dollars yearly in transit fees from Russia. For Bulgaria, Hungary, Greece, Italy - to receive gas cheaper than via any other means. For thousands of jobs to be created in construction, local engineering enterprises to be involved, hundreds of European specialists to be trained and employed by Gazprom and other involved partners. And they blew it.
Now Turkey takes home the prize; they'll be controlling everything, and Europe will get more expensive gas. Gazprom's involvement will end at the Greek-Turkish border and they don't care what happens to the gas after it crosses into Europe. Russia loses a little, as it strengthens Turkey's hand (who is a competitor), and gives Turkey a discount - but Europe loses a whole lot more.

The main way that Europe hit Russia, is with the withdrawal of investment, bank loans, some high-tech joint-ventures, military-tech joint-ventures, etc... I mean these things hit the European partners as well, but it hit Russia too.
Otherwise - the bulk of the damage has been done by the US, and its oil price manipulation, speculation on the ruble and other financial instruments; rating downgrades of Russian assets and banks, controls on liquidity, anti-Russian economic propaganda for the investors by the US media machine, etc...
And the US is virtually not suffering at all. Its allies are. But not the US.

So yeah, between the US and Russia - the US is not going to feel it one bit. The EU though - has been doing nothing but shooting itself in the foot. And with their own mass-protests, lack of confidence in politicians, spying scandal with the US, and other internal problems; not to mention the economic issues; unemployment, continuing austerity, sliding back into recession - they're the ones who really can't afford a confrontation with Russia. Russia itself can hold out for years. Europe - nope.

Do I really need to go on?

No change can fundamentally happen while the country is ruled by a kleptrocratic elite, a brainwashed bought off population and an upper class of theieves.

You can say that about any country. Media is government-controlled, population is shaped by its own consumerist desire and what Putin says, the oligarchical elite are hopelessly corrupt and nepotism reigns supreme, etc... sure. My point is that you'll hardly find many countries to take examples from.

It is fundamentally incompatible with entrepreneurship and honest business. Please, don't post some token product as proof that Russia is moving up in the world.  

Russia did actually move up in the business rankings in recent years. There have been some measures to support SMEs.
Illegal practices and all sorts of law-breaking did start getting cracked down starting from 2008-2009 or so; across all of Russia's legal landscape - slowly, Russia's courts have begun to be taken seriously.

Maybe the tighter wallets of 2015 will make those have-nots rethink their feelings regarding who they support politically.

Certainly not Navalny & co. though. People know who secures their interests - and who doesn't.

Actually I am glad oil has plumetted. Time to wake up and see Putin's economic "miracle" for what it really is.

I'm glad too. It's a hell of a drug, but now's the perfect opportunity for Russia to diversify.

As for miracle - Putin actually did promise a miracle back in 2012. 6% economic growth. Like we're China or summit. Well I wanted to believe it. But of course it turned out to BS. And I do actually blame him - he hasn't done enough. He hasn't made the government do enough. He hasn't made the Central Bank be more flexible. He hasn't driven more reforms, or done more to improve foreign perception of Russia's investment climate. The man's not a reformer, he's a stabilizer. He has stabilized Russia, but it's time for Russia to enter a new era.

TR1 wrote:2015 is gonna be great. The government is being obstinate on any idea of cutting the military budget. They don't want to eat away at the entire reserve fund to cover the budget shortfall.

The military budget shouldn't be cut. One of the deputy ministers made the case against it earlier on. She basically made the point that to cut the program half-way through - would actually make the whole thing much more expensive later on, when the process of re-equipment and modernization has to be resumed from scratch or from hiatus. Because of course it will have to be resumed anyway - 60% of the Russian military's equipment is out of date, a far more critical situation than in any NATO country - and it isn't getting any newer. In that she's completely correct - continuing with the program in full is the most cost-effective option; rather than pausing and starting and pausing and starting and incuring huge costs.
Of course, when it comes to things like Aircraft Carriers, those can be put on the back-burner, but then there were never any real plans for them drawn up anyway; most of the big spending is down to modernization programs to equipment in dire need of it (MiG-31BM, T-72B3, Su-30SM, Kirov cruisers, Su-25SM, Kuznetsov carrier), while others are focused on next-generations of equipment that in many cases are replacing tech from the 70s completely (PAK-FA, Su-34, Kurganets/Bumerang, Armata MBT, Tornado MLRS, Gremyashyj corvettes, Gorshkov frigates, Mi-28N, new power generation/electronics/communications equipment, Tigr vehicles, Typhoon trucks). In some cases the old stuff was produced outside the USSR or otherwise can't be produced again at all and bringing in new generations is thus even more of a priority (PAK-DA, Sarmat, Ivan Gren, Iskander-M, Il-112, Voronezh EW radars, Yak-130, Military satellites & GLONASS).
Only a minority of programs really attempt to improve on newish tech or replace things that are already modern and capable (Pantsir-S1, Koalitsiya artillery, Volk vehicle, S-400, BMD-4Ms, Yars, Ratnik infantry set, Lada sub, Buk-M3).

The other point is that military spending is a driver of the economy, essentially its a way for the government to reinvest tax money back into the economy without incurring inflation. Just about all that money goes back into Russia, into Russian enterprises, many of which are securing export orders with the help of R&D and new developments that their cash flows from Russian MoD orders partially fund. Some of these enterprises are moving into dual-use technologies too, and making new products for the consumer markets. Of course government support forever is hardly a good outcome, but in this case the stimulus is temporary, until the winding down of the rearmament program in 2020 or so - and until then for the next 5 years, the military spending will help strengthen Russia's next breed of high-tech industrial companies.

One last thing. Whether we like it or not, agree with the politics, decisions or not - we all have to accept that the likelihood of conventional conflict, at least on some limited scale, between NATO and Russia - has gone up considerably. Already we have military tensions at the border - or rather in the airspace. That could extend to naval tensions as it did in Sweden. Then land border tensions. There has been a sharp increase in rhetoric - and mainly from the NATO side. Some NATO members are even openly calling Russia a terrorist state. Others are now getting as involved in the Ukrainian conflict, as Russia is; moving the whole thing closer to a proxy-war - right in the middle of Europe.
It's not excluded that the Baltic retard leaderships and their hordes of loyal nationalists won't start provoking ethnic Russians in their respective republics. Who knows what this could lead to.
But I am pretty sure that fully-equipped, very modern conventional forces, and enough of them to cover all of Russia's borders with Europe - are more important now than at any point since the collapse of the Berlin wall.

They need to spend money subsidizing Crimea now as well

Well I didn't see you or anyone else complaining - when they took it over.

which given old oil prices wouldn't have even been an issue, but now will eat away at pension fund.

Over 70% of the Russian population supported the Crimea reunification/annexation/etc... at least it was a decision of the people. I think they'll be honest enough, to at least blame themselves if they end up paying for it - a big part of the reason the Crimea was annexed is because Russian domestic opinion would have it no other way. And Russian domestic opinion, while mallable and faultable and only human, is genuine - and is actually a potent force in Russia, unlike in many countries in Europe and North America where it's simply either ignored, or manipulated to whatever the political elite decrees.

I wonder how long it will take for people to start getting angry when their government welfare and subsidies fall, or at best don't adjust for the inflation at all.

I don't think people will be angry at the government. Like I said, it's a fight we picked ourselves. I didn't support the annexation of the Crimea. But I did support helping the Donbass, and I standby that decision and am ready to answer for the consequences. Most of the Russian population supported the Crimea annexation. About half supported involving Russia further in the Ukraine; specifically the Donbass rebellion; perhaps more.
I doubt any opposition movement will ever rise to prominence - on the slogan of 'Putin led us into messing into Ukrainian internal affairs!'. The Russian opposition politicians who publicly voiced similar views have pretty much been disowned - not that Russian society is so nationalistic; it's just that their duplicity is astounding, and it's impossible to feel any sympathy with the Ukrainian side regardless; they're a bunch of retards and criminals.

If there's any anger against the government - it's the one coming from the other side - that Putin didn't do more to help the Novorussians. But they're not really a potent force for the moment either.

kvs wrote:

Kyo wrote:Some interesting economic data here:

http://sputniknews.com/columnists/20141231/1016436434.html

From the article:

Now let’s take a look at Russian fundamentals. Russia’s government debt totals only 13.4% of its GDP. Its budget deficit in relation to GDP is only 0.5%.  If we assume a US GDP of $16.8 trillion (the figure for 2013), the US budget deficit totals 4% of GDP, versus 0.5% for Russia. The Fed is essentially a private corporation owned by regional US private banks, although it passes itself off as a state institution. US publicly held debt is equal to a whopping 74% of GDP in fiscal year 2014. Russia’s is only 13.4%.

And Russia is the country that is supposedly messed up.  

magnumcromagnon wrote:If there was any question whether Lithuanian politics were dominated by delusional half-wits, question no more:

magnumcromagnon wrote:If there was any question whether Lithuanian politics were dominated by delusional half-wits, question no more: