Russian Economy General News: #5

Nice

Russia's international reserves rose by $ 3.6 billion

sepheronx wrote:Trade volume between China and Russia down 29% to $50 in January-September

So as much as China kept on talking about improving trade between Russia and China, doesn't seem to be really doing much.  I have a suspicious feeling it has to do with the fact that China is trying hard to re orientate the economy, and same with Russia.

Hopefully they will fix this, as trade turnover between the two is quite low at the moment.  Even though I have been reading many new developments, it isn't too surprising since China has reduced overall imports by quite a bit from everywhere and Russia did the same due to ruble devaluation.

It has everything to do with ruble's value, right? Russia is importing A LOT less. There's no way that it wouldn't be up otherwise (especially if Russia's economy would be growing, even a little). I remember reading that in many categories the actual amount of goods being traded is growing even now, it's just that their overall dollar value is down atm.

Looks like Saudi is gaining into Europe Oil Market

Russia faces battle with Saudi Arabia over European oil market share

https://www.rt.com/business/318847-saudi-arabia-russia-oil-dumping/

Kimppis wrote:

sepheronx wrote:Trade volume between China and Russia down 29% to $50 in January-September

So as much as China kept on talking about improving trade between Russia and China, doesn't seem to be really doing much.  I have a suspicious feeling it has to do with the fact that China is trying hard to re orientate the economy, and same with Russia.

Hopefully they will fix this, as trade turnover between the two is quite low at the moment.  Even though I have been reading many new developments, it isn't too surprising since China has reduced overall imports by quite a bit from everywhere and Russia did the same due to ruble devaluation.

It has everything to do with ruble's value, right? Russia is importing A LOT less. There's no way that it wouldn't be up otherwise (especially if Russia's economy would be growing, even a little). I remember reading that in many categories the actual amount of goods being traded is growing even now, it's just that their overall dollar value is down atm.

Exactly! The total volume is substantially higher but the value is denominated _still_ in dollars. The same old trick.

Austin wrote:Looks like Saudi is gaining into Europe Oil Market

Russia faces battle with Saudi Arabia over European oil market share

https://www.rt.com/business/318847-saudi-arabia-russia-oil-dumping/

Big deal, at this rate Saudi Arabia will become next Syria. Russia has normal economy to fall back on, all Saudis have is sand and psychopaths...

Syria effect on Russia’s economy

Austin wrote:Syria effect on Russia’s economy

Syria has a more positive effect than those 5th column morons at rbth can thing of. It.has made the Ruble performe a bit better, made Russian stocks more solid and has increased oil prices a bit/stabilizing them a tad higher. The long term effects are going to be even better as Syria will still be an allie to Russia, not a transport hub for Oman gas to Europe, and a buyer of Russian goods. As well, they will need to rebuild. And due to Russias support, who do yoi think will obtain those contracts?

Then there is the Iran part. Iran will be released reall soon from the sanctions and major industries are gonna want to be a part of that. And Russian Indiestries shown huge interest, especially Lukoil and Russias metallurgy industries.

The article mentions fall support from the gulf nations. Well, hate to break it to those rbth idiots but Russia already had poor relations with them. Yet it was them who asked Russia to join OPEC. As well, Egypt has shown massive support to Russia over their involvment in Syria.

Russian authorities are far more calculative than known or thought. As well, Countries like Turkey were heavily unreliable to deal with and Turk stream was under sever pressure prior to these events. But apparently contracts still stand. If they drop turk stream, well, there is still Nord 2 and PoS. As well, if they drop the nuclear powerplant program with russia, that is just 1 plant out of many others with new plants being negotiated with others, so they will easily replace that one. Turkey is actually in a bad spot compared to Russia and they need Russia, but are trying to act tough. Lets see how that long that lasts.

PapaDragon wrote:

Austin wrote:Looks like Saudi is gaining into Europe Oil Market

Russia faces battle with Saudi Arabia over European oil market share

https://www.rt.com/business/318847-saudi-arabia-russia-oil-dumping/

Big deal, at this rate Saudi Arabia will become next Syria. Russia has normal economy to fall back on, all Saudis have is sand and psychopaths...  

Meh. Saudi Arabia will be fine. US will protect it long before the authorities fall. This will just be a further eye opener to Russian's about the implications of oil and gas. Since Russians consume a lot of oil and gas as it is, and oil byproducts, it will mean more potential for further investments in making end products of this (various chemicals, petrol, plastics, other synthetic materials, etc) for the domestic and export market. This was quite inevitable that EU would make such a move and forget them. What will happen is that Saudi Arabia will grab them, pull them in till they become dependent on Saudi Oil, then prices will go up. EU knows this, so they will keep a balance of imports of oil. Hence why German industries are still sticking to Nord 2 pipeline.

Russia will still sell and increase sales of gas to China, but of course its value has dropped a lot. But that doesn't matter much anymore anyway as Russian industries have been, for both accounts (oil and gas) producing more now than before. So clearly there are buyers. Once Iran's market opens up, then there will be a problem. But Russian industries are heavily looking at Iran for further development.

I posted this in the oil and gas thread:

The new production center of the company "Transneft - Upper Volga" opened in Nizhniy Novgorod

More than 300 million rubles invested JSC "Transneft-Upper Volga" in the creation and production center in Nizhny Novgorod. As part of the import substitution program of OJSC "AK" Transneft "facility will produce advanced equipment for the oil and gas industry - cabinets line remote control and automation systems, which were previously purchased abroad. This equipment allows you to control the process of transportation of oil and petroleum products by pipelines of the country.

In 2015, the production center already has made in test mode 37 linear telemechanics cabinets. Currently, the factory has successfully conducted tests of the prototype information processing system (SDI) system for measuring the quantity and quality of crude oil (LACT). Under development of documentation and preparation for the tests to metrological certification of this system for commercial accounting.

In 2016, it planned to release more than 500 cabinets line of remote control and automation systems 24 units of measurement quality (BIC), 9 SDI SIKN 13 automation systems for boilers. In 2017 it is planned to build a prototype microprocessor automation system head NPC. By this time, it will create nearly one hundred new jobs for highly skilled employees, where the average salary is 75 thousand rubles.

The good thing is, and the right thing to do, is to remove dependency on all the little goods needed for the extraction, process and transport of oil and gas. Reason why I say this as it will not only reduce overall costs, but keep funds in the country and increase the revenue from oil and gas sales abroad as they wont need to take into account of the import costs of such needed goods.

http://tass.ru/en/economy/829595

And this is why you never trust S&P or moody's

Weak political institutions? What the hell does that mean?

It is clear and obvious that there needs more rating agencies not located in US.

I have a question if any one can answer , its any related to Russian Economy and Defence

Russia Budget for 2016
http://tass.ru/en/opinions/827738

Total budget expenditures increased to 15.94 trillion rubles ($258 bln) , In 2016, out of each 100 rubles the federal treasury will spend 19.2 rubles on defense, 12.7 rubles - on police officers, 27.6 rubles - on social protection, 15.9 rubles - on backing economy, 3 rubles - on healthcare, 3.6 rubles - on education, according to Vedomosti daily.

At 19.2 % of Total Budget Expenditure , Russian Defence Budget for 2016 stands at $49.53 billion
Police Expenditure at $32.76 Billion
Social Protection : $71 Billion.
Economy: $41 Billion
Health Care: $ 7.7 Billion
Education: $9.2 Billion

Question

1 ) From above figure the total budget expenditure if $258 Billion and Total for defence police etc is $212 billion , Where does the remaining difference $46 billion goes ?

2 ) Russia Finance Minister says by 2018 Reserve and National Fund wont have more than $2 trillion Rouble
http://tass.ru/en/economy/827511

If Reserve and National Fund goes away , Where will the money to spend on Budget Defict will come from ?


Also National Fund is made of pension fund what happens to Pension Money in there ?

Austin wrote:I have a question if any one can answer , its any related to Russian Economy and Defence

Russia Budget for 2016
http://tass.ru/en/opinions/827738

Total budget expenditures increased to 15.94 trillion rubles ($258 bln) , In 2016, out of each 100 rubles the federal treasury will spend 19.2 rubles on defense, 12.7 rubles - on police officers, 27.6 rubles - on social protection, 15.9 rubles - on backing economy, 3 rubles - on healthcare, 3.6 rubles - on education, according to Vedomosti daily.

At 19.2 % of Total Budget Expenditure , Russian Defence Budget for 2016 stands at $49.53 billion
Police Expenditure at $32.76 Billion
Social Protection : $71 Billion.
Economy: $41 Billion
Health Care: $ 7.7 Billion
Education: $9.2 Billion

Question

1 ) From above figure the total budget expenditure if $258 Billion and Total for defence police etc is $212 billion , Where does the remaining difference $46 billion goes ?

2 )  Russia Finance Minister says by 2018 Reserve and National Fund wont have more than $2 trillion Rouble
http://tass.ru/en/economy/827511

If Reserve and National Fund goes away , Where will the money to spend on Budget Defict will come from ?


Also National Fund is made of pension fund what happens to Pension Money in there ?

It isn't necessarily pension money.  Pension money is entirely derived in investments, not as simply to spend on (so lets say as a method to invest in a loan to an agribusiness as an example).  The rest ends up becoming public debt.  By 2018 though, they expect budget surplus.  Since economic matters happen on a daily basis and many changes are made daily, I imagine it is impossible to determine.  Deficit is paid for by the reserves at the moment rather than just collecting additional 3% debt.  So the debt is actually less but that is due to spending their own reserves.  Eventually they will just end up pulling at the CBR did by not using reserves and just increasing debt to help build up reserves, and then pay off the debt through other methods.  There will be a lot of banking schemes involved it seems.

As for my last statements: http://ria.ru/economy/20151016/1303304435.html

It seems that it got some people in the tiffle about the rating agencies and they mentioned it really makes no sense.

I cannot find much of a decent article on Russian pension plan, so I had to revert to the 5th column website RBTH, but it explains (with criticism of course) on how Russia was using the pension plan to invest in stock/bonds on companies investing in infrastructure (so investments in infrastructure).

http://rbth.com/business/2015/08/28/russian_pension_funds_invest_27_billion_in_infrastructure_projects_48835.html

Purpose of doing such a move is bring money as an investment and they get dividends or profits from stock/bond value which goes back to the pension fund. Or theoretically it does or the profits go elsewhere and the initial money goes back to the pension fund.

Russia should also prepare of sudden fall in demand for Oil as it happened in 2008 financial crisis.

We are into more than 80 months of business cycle since 2008 and all facts in past to business downside in 80-100 months business cycle.

A collapse similar to 2008 and worse is certainly on the horizon like it or not.

In such situation Oil might fall to $20 or $30 from current position of $50 which is already low.

And recession is expected to be longer compared to 2008 , In such situation Russia needs money to put into investment and with no access to financial market outside it would be very tough call for Russia which is into recession now and more or less in 2016

Austin wrote:Russia should also prepare of sudden fall in demand for Oil as it happened in 2008 financial crisis.

We are into more than 80 months of business cycle since 2008 and all facts in past to business downside in 80-100 months business cycle.

A collapse similar to 2008 and worse is certainly on the horizon like it or not.

In such situation Oil might fall to $20 or $30 from current position of $50 which is already low.

And recession is expected to be longer compared to 2008 , In such situation Russia needs money to put into investment and with no access to financial market outside it would be very tough call for Russia which is into recession now and more or less in 2016

Well, it is pure speculation.  If all of a sudden there is a drop in production, which most speculate by 2017 for Russia, US and some others (not really Saudi Arabia though), would raise prices.  But as evident on this site mentioned by others (I know it was posted somewhere here, just don't remember where exactly and by whom) but Russia has a growing export of oil byproducts.  And for countries like Russia whom produces a lot of petrol, would benefit in the fact that prices of petrol would drop and for other countries whom also produce it would find it is too costly to produce it compared to output, and Russia's larger production and reduced currency value, would be seen as a benefit to increase imports of the petrol as it would just be significantly cheaper.  Also, poorer countries whom had to suppress import of petrol due to various regions, would see it also benefit to import from Russia.

As for investment funds, well, like I said, it comes from Pension funds and such.  This money isn't a 1 time input and that is it.  It comes from peoples paychecks.  Same thing like in many countries.  For instance, it is taken out as (something here in Canada) as CPP per paycheck (twice a month for the most part).  So there is always input going into it.  And it is used for investments, thus they get money back via profits.  Which I don't know where any profit goes to, if it goes back into the pension (increasing pension fund outside from just peoples input) or if it goes to something else.

As well, Russia's input in the reserve and welfare fund isn't simply funds from oil and gas profits.  It actually comes directly from the extraction taxes as well.  So instead of business tax increase or other tax increases, it is simply a tax on the extraction.  This is actually found in countries like Australia as an example.  While prices will drop will eventually hurt in forms like taxation from companies in terms of overall profits, and with mass reduction in further investments in expansion of oil wells and infrastructure in the field.  So that also hurts too.

They will need to end up having to find alternatives for the funds.  One way is through taxation.  But this will end up hurting the average person as it will cut into their disposable incomes.  If a nation cannot borrow from other countries anymore, they will have to borrow from themselves. In other words, increase public debt.  This we have seen in countries like Germany prior to the second world war or Japan during the 80's to now.  That is not ideal but whatever.  The rest will be based upon what they can afford.  

Then, as well, last resort is what Russia was for 70 years before.... Controlled/planned economy.  So it really is that the government will control the central bank, print when needed, and what not.  This is where both economic parties fight over if it is right or wrong for the system.  But this is the last resort.

Russia will always have business.  This was evident even during soviet times.  But what makes this different than in Soviet times is rights for their own people.  What is different is that now the average person buys, and buys a lot.  And well, there is the demand from their own people.  This means that there is money to be made in making more end products.  And such goods are still sold abroad.  As well, it seems private companies are not entirely afraid of investing and building business in Russia due to cheaper labor (mostly in the fact of the devaluation of the currency).

There are other methods and what not.  Heck, why not push QE like US and EU does?  Print money to infinity!  But I do not prefer this as it would make Russia a fake economy like US and EU.

As well, don't count what the idiots in the west says about 2016. GDP growth for the most part is still viewed at around 0.6% or so. This is not recession at all but growth. And if it declines by 1% it really isn't neckbreaking or ballbreaking. One has to look at previous examples in Russias history of economic problems, and you will see that even a combination of trouble for two years is still less trouble than what happened in 2008/9. So before jumping to conclusions, you must be patient.

sepheronx wrote:There are other methods and what not.  Heck, why not push QE like US and EU does?  Print money to infinity!  But I do not prefer this as it would make Russia a fake economy like US and EU.

QE is not option for Russia as it would give to quick rise of inflation

EU and US currency are exported globally so they export inflation with QE , they can print money as much as they want and as long as they want , till some one keeps buying and it does not add to inflation at home

Austin wrote:

sepheronx wrote:There are other methods and what not.  Heck, why not push QE like US and EU does?  Print money to infinity!  But I do not prefer this as it would make Russia a fake economy like US and EU.

QE is not option for Russia as it would give to quick rise of inflation

EU and US currency are exported globally so they export inflation with QE , they can print money as much as they want and as long as they want , till some one keeps buying and it does not add to inflation at home

It may or may not.  Depending on how Russia controls its economy and currency flow.  But no one is willing to take that bet and I can understand why.

Canadian dollar for example is not a world currency, yet we keep inflation nearly 0 (impossible) with loans.  Those loans fall under public debt apparently.  So it brings question to the legitimacy of such theory.

If you have fears for Russia regarding being able to borrow money or not, then I wouldn't worry.  As I have mentioned to you more than once, just look at Iran's system for the last 30 years.  Economy isn't a science.  It is a set of schemes (these days).  Such systems are heavily susceptible to unscrupulous methods to gain money.  And there are going to be a growth in this.  Heck, hence why they are pushing for ideas for a BitRuble currency as well.

As well, QE is used as a method to throw money at the bond market.  In this case, Russia can do the same as the money isn't generally being thrown out in the open market (in theory) but to the bonds.  In Russia's case, the CBR can do it as a form of loans to provide to the banks themselves.  It would increase the public debt I would assume more so than inflation prices as it is once again not out on the open market.

QE actually is under a lot of scrutiny due to the concept of "simply printing money".  And US has done it 4 times in one year or more.  So this can lead to many issues for the west.  They won't have the money to give out in the future then.

Wanna know what I think they should do?  Anyone can question it or not or support it or whatever but!  I think that Russia should keep up with some form of austerity.  Spend within your limits kinda thing.  Re-orientate on the budget aimed specifically at oil being worth $10bbl.  Simply so that the budget stays low against the oil but so they eager to find alternative methods.  Like from taxes on certain things.  Maybe increase liquor and cigarette taxes.  Increase (but dont increase it much, maybe a 1% or two) of extraction tax.

Any additional income earned from the oil and gas industry thanks to having a low dependence on the oil and gas industry for the budget, should go straight to the reserves (like it did before).  Increase the reserves severely.   When it is increased so much, they could use it as a form of financing for investments in other industries that show potential growth.  In turn, these companies will increase income through taxation.  Plus they will end up obtaining the money back from the investments as well.  Win win.

As well, maybe sell none profiting companies (none strategic ones for sure) as many industries in Russia are still profiting due to poor management skills (this was what Avtovaz suffered for years).  Also, various villages/towns are not profiting but are a burden on social benefits.  Maybe it is time to close up surrounding villages (convince companies to purchase the land for agricultural purposes or rent the land out to the companies).  And move the people to the poorly performing towns, in hopes that people will end up building industries and private shops.  Or if that isn't successful, think of a business idea that government can fund that will end up profiting.  Something like food goods production like canning plant and bottling plant as examaple.  Or other ones like production of byproducts from oil and gas.  And fund infrastructure development.  Gets people working, new roads and railway systems would benefit society as well as costs of goods that have to travel far will be cheaper, and such.

There are plenty of ideas, it just seems little of them are actually viewed.  I know there are money being put in for monograds to expand.  But they need to increase the amount and also offer services/ideas to these regions like guaranteed contracts or what not for goods that are needed but no one is producing or low production compared to high demand.  Stuff like this.  That is considered central planning, yes, but if done right, it can be very effective during tougher times (but not total central planning of course).

Did you read interview of finance minister on debt and why Russia can't increase debt and gave example of Brazil like situation.

QE is not possible without run away inflation for Russia

Canada economy is just extension of US and they are lapdog of US n same for Japan

Austin wrote:Did you read interview of finance minister on debt and why Russia can't increase debt and gave example of Brazil like situation.

QE is not possible without run away inflation for Russia

Canada economy is just extension of US and they are lapdog of US n same for Japan

Nah, Finance minister isn't correct then.  Since Brazil debt isn't same as Russian debt.  That is obvious:

http://www.tradingeconomics.com/brazil/government-debt-to-gdp

http://www.tradingeconomics.com/russia/government-debt-to-gdp

Hell, look at India's: http://www.tradingeconomics.com/india/government-debt-to-gdp

As well, foreign debt and public debt are two different types of debt.

http://www.analystforum.com/comment/91212360#comment-91212360

And no, there is no actual evidence that QE would do that in Russia since it never happened as there was no QE instituted there.

Edit: Naah, pointless point of mine.

Smart Move: Russia Buys Gold and Wins

Cabinet approved a bill to raise the minimum wage

Irkutsk region creates new growth point

The Ministry of Finance will propose in the budget return of unused funds of state companies

Kuban budget revenues in January-September rose to 147 billion rubles

I think CBR needs to buy more gold , The Gold of CBR should be around 4000 Tons same as Germany has , Right now its very low at some 1500 + tons

sepheronx wrote:
Nah, Finance minister isn't correct then.  Since Brazil debt isn't same as Russian debt.  That is obvious:

http://www.tradingeconomics.com/brazil/government-debt-to-gdp

http://www.tradingeconomics.com/russia/government-debt-to-gdp

Please read and understand what he is trying to say , he explains the underlying factor of why money printing is bad and what consequences it can have on Public Debt.

Ofcourse he does not understand economy and Putin is just foolish to have him as his FM

Austin wrote:

sepheronx wrote:There are other methods and what not.  Heck, why not push QE like US and EU does?  Print money to infinity!  But I do not prefer this as it would make Russia a fake economy like US and EU.

QE is not option for Russia as it would give to quick rise of inflation

EU and US currency are exported globally so they export inflation with QE , they can print money as much as they want and as long as they want , till some one keeps buying and it does not add to inflation at home

This idiot appartchik is a monetarist drone. He is spouting off all the talking points of the monetarists. The problem is that none of them are valid.
It is a fact that Russian GDP growth is being suppressed by the high interest policy of the Trojan horse CBR (BTW, Gazyev is right about the
CBR). So actually there is a shortage of money supply in the Russian economy. Under such conditions QE cannot drive inflation since
the growth in the money supply would be balanced by the growth in the GDP. Also, Russia has had de facto QE for most of the last 15
years: 50% annual money supply growth. If the voodoo theories of the monetarists had any merit Russia should have had over 50% inflation
annually, in fact much more and under a hyperinflation regime.

Putin is failing badly in this area. He should get a clue and fire some of these clowns.

Austin wrote:

sepheronx wrote:
Nah, Finance minister isn't correct then.  Since Brazil debt isn't same as Russian debt.  That is obvious:

http://www.tradingeconomics.com/brazil/government-debt-to-gdp

http://www.tradingeconomics.com/russia/government-debt-to-gdp

Please read and understand what he is trying to say , he explains the underlying factor of why money printing is bad and what consequences it can have on Public Debt.

Ofcourse he does not understand economy and Putin is just foolish to have him as his FM

Link it then. What is the underlaying effects of public debt? I have given you numbers and Russias public debt is very low. India is doing quite fine and has a massive public debt. Brazil is a terrible example as Brazil faces issues due to high corruption and falsifying major industries value like Petrobras.

So it has temporarly worked for everyone, but a few billion in public debt extra for Russia is super bad? That doesnt make sense. You need to be careful on what the media proclaims what is being said by these fools. If you think the economic minister is never wrong, then go back through this thread amd see how he has so far been wrong on all his predictions on gdp growth and decline. He should have been fired before already but Putin keeps him cause there is no one else. CBR clearly wont help Russia.

I am not saying to increase public debt significantly. But I am saying a small public debt increase isnt really bad as they can finish said projects without postponing or canceling it altogether.

In the years to come, we will see Russia reduce its debt again and reduce its budget to reflect realities.  They wont rely on ideas like QE as we all know it is what is causing the economic rift in the world as it really isn't helping QE based countries economies besides superficial rating schemes like GDP.  I don't entirely share the idea that CBR is out there to harm Russia but their methods of economics is very similar to various liberal countries whom have more economic problems than not, due to said policies (the idea of austerity is good. But the effects seem to be a spiral downhill effect in practice) and this is what they all have learned in the "Moscow school of higher economics", which I believe all of them came from (head of CBR, current economics minister, deputy economy minister, Kudrin, etc).  And well, you are not gonna get a different economic system when all the economy ministers are cuts of the same cloth.  Introducing systems like religious banking systems (Islamic and Christian) are good ideas.  But their idea of keeping interest rates high to fight inflation is kinda archaic. We tried that here in the 80's in Canada with some pretty devastating consequences.  But its effect did drop inflation and eventually they dropped interest rates and it really helped their economy grow.

So the ideas if keeping it high will help lower inflation and help increase the average persons disposable incomes as prices increase wont be nearly as high.  With the introduction of all these new agribusiness as well, Russia may face a deflation in prices in meats and veggies.  So I can understand CBRs ideas but the issue is what KVS says, the high rates is helping stunt GDP growth.  All comes down to now businesses are cutting back and tightening their belts in order to keep revenue and profits the same. In turn, the companies may not invest in modernization or even new industries in fears of their investments going to waste and having to pay back a high premium, which would heavily eat into their profits.  KVS is semi right, the ideas are that they have been doing a QE concept for years but nowhere near the extent of what QE figures are now. Instead, it was the low interest rates that CBR was able to provide was through its form of QE (they print and loan to banks). Foreign loans were of course if lower interest so government, mixed in with private institutions obtaining it.  Now that is gone (not entirely gone. There are apparently joint Russian/Chinese banks whom are still involved in Russian economy, and same with some other institutions). So once the inflation drops and CBR can start lowering interests, then Russia can start borrowing from the CBR which increases the public debt.  In turn, when it is paid off, the money stays within the country. Goes back to CBR and Sberbank.  If course, the high interest rates now is not ideal for Russia to obtain loans from CBR.

So what are other methods? Well, Glazyev's idea was that CBR provides loans to the banks at 0% interest rates through its own form of QE, so that banks can then provide loans to others. But here is the catch, it COULD increase the inflation. But for some reason, in the west it creates a deflation. Something of that makes absolutely no sense. So obviously, the game is rigged. But the good thing is, people are slowly, but surely falling away form actually trusting the US economy (hence my comment about the printing money idea). Other methods is simply allowing inflation to increase, increase money supply greatly, then fight to lower inflation again. England did this for decades and worked for them.