Russian Economy General News: #6

FSB better be on their guard then cause Coka Cola is another corporation that funds instability in other countries to get political favors.

PapaDragon wrote:

sepheronx wrote:FSB better be on their guard then cause Coka Cola is another corporation that funds instability in other countries to get political favors.

I wouldn't go that far, Coca Cola just sell sugar water, plenty of other instability sources around...

I was reading on Russia Insider about companies involved in such activities, Coka Cola was mentioned.

They are also a multi billion dollar corp that owns major food corporations in countries like Russia and India as an example.

PapaDragon wrote:

sepheronx wrote:FSB better be on their guard then cause Coka Cola is another corporation that funds instability in other countries to get political favors.

I wouldn't go that far, Coca Cola just sell sugar water, plenty of other instability sources around...

Coca Cola has been a US Trojan Horse operation in Latin America for decades:

http://articles.mercola.com/sites/articles/archive/2010/11/04/the-dirty-truth-behind-coca-cola.aspx

And sugar water rots the brain.

@sepheronx

GDP accounting is voodoo. Foreign borrowing of money is actually considered a gain and not a loss. The "problem" in
Russia is that there are still a lot of "non market" prices and business arrangements. These have a significant physical
presence but are almost invisible in GDP accounting. Six Project 636.3 submarines for the price of one Japanese Soryu
submarine says a lot about Russia's price structure. Even PPP adjustments can't "fix" this "problem".

Russia's economy is not as small as it is made out to be and at the same time the US economy is not as big as it
made out to be.

sepheronx wrote:Oh yeah, no doubt.  For years I was trying to explain to people that price adjustments also count and their currency can still get them more there than cAD does here.  Noticed the price difference in video games now? $80 CAD for a digital download.  Disgusting.  Prices of food will be increasing harshly soon too.  Funny how so called economists are keeping quiet about our situation.


Typing on an overpriced LG smartphone that is an absolute POS isnt easy.

I feel your pain

I looked at some car prices recently and the Subaru Forester base price has shot up by $3000. What a joke!

kvs wrote:

sepheronx wrote:Oh yeah, no doubt.  For years I was trying to explain to people that price adjustments also count and their currency can still get them more there than cAD does here.  Noticed the price difference in video games now? $80 CAD for a digital download.  Disgusting.  Prices of food will be increasing harshly soon too.  Funny how so called economists are keeping quiet about our situation.


Typing on an overpriced LG smartphone that is an absolute POS isnt easy.

I feel your pain

I looked at some car prices recently and the Subaru Forester base price has shot up by $3000.   What a joke!

We are in a lot of trouble and I think it will rear its ugly head first in Alberta.  I am ready though to pack my bags and leave.

In other news: https://www.rt.com/business/326874-russia-iran-currency-deal/

Militarov wrote:

Austin wrote:Reserve Fund and NWF may be spent by 2019 at current expenditures level — Bank of Russia

Quite bad news generally speaking.

They always calculate it based upon same exact situation per year as previous year.  That is a very big problem as guesstimations cause more harm than good.  Even the woman in charge of the treasury made such a comment about people needing to learn to shut up and stop trying to predict the future.

I kept reading about forex depletion and yet they are purchasing gold (increasing forex).

Militarov wrote:

Austin wrote:Reserve Fund and NWF may be spent by 2019 at current expenditures level — Bank of Russia

Quite bad news generally speaking.

We are back to this reserve fund BS.

https://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

The game being played here is that the reserve fund is being deliberately mixed up with the CBR forex reserves. These
are not the same thing even if they are mixed up in the reporting. The CBR will maintain a minimum forex base, but the
reserve fund will be depleted if the federal budget remains in deficit for a long time.

https://en.wikipedia.org/wiki/Stabilization_Fund_of_the_Russian_Federation

https://en.wikipedia.org/wiki/Russian_National_Wealth_Fund

http://www.swfinstitute.org/swfs/russia-reserve-fund/

This is yet another example of NATO-sponsored liberast anti-Russian hysteria. I recall back in 2003 there
was doom and gloom being predicted because allegedly Russia would not be able to handle the large foreign
debt payments that year from various maturing obligations. That year came and went and nobody says a peep
about it. Now we have the totally retarded and/or malicious drivel about Russia "depending" on its reserve fund.
What a load of rubbish. The reserve fund is a perk and not the basis of Russia's economy. Jesus H. Christ what
inanity.

sepheronx wrote:

Militarov wrote:

Austin wrote:Reserve Fund and NWF may be spent by 2019 at current expenditures level — Bank of Russia

Quite bad news generally speaking.

They always calculate it based upon same exact situation per year as previous year.  That is a very big problem as guesstimations cause more harm than good.  Even the woman in charge of the treasury made such a comment about people needing to learn to shut up and stop trying to predict the future.

I kept reading about forex depletion and yet they are purchasing gold (increasing forex).

Very good point. The same linear extrapolation BS as with the population decline. They were forecasting Russia would
disappear by 2050. This is all pure anti-Russian fantasy masturbation.

Note that Canada, USA, and most of the rest of NATO does not have any reserve funds. And whatever forex reserves they
have (not the same thing) are very small. I don't hear how the budgets of these countries will fail because the reserves are
small.

This crap about Russia's reserve fund will keep on coming back like a zombie. For future reference, the only
thing that matters is the deficit level of the Russian federal budget and whether Russia can finance (i.e. borrow)
this deficit. The reserve fund is currently buffering the deficit and even if it is totally depleted, it is not
the only instrument to deal with the deficit:

1) Russia could raise taxes, specifically the ridiculously low 13% flat personal income taxes. If people want
western style social programs, they need to pay western style taxes and not Soviet fantasy taxes.

2) Russia can you know, like, borrow money to cover the deficit. This is what every other f*cking country
does.

Pretty much as you said KVS.  Two factors that hurt Russia is its low taxation system in corrispondence to what is provided in social benefits, and CBR's rate policy.  What is funny though is that no one is doing any calculations based upon what would happen if Russia lowered rates to lets say 8%.  A lot of additional funds can be accumulated through that part of taxation.  If they increased income tax to 15%, they would not even have to use the reserve fund.  And ultimately, if they decided to increase extraction tax, they would have a budget surplus.  What is funny is that the oil and gas companies are screaming about the tax portion of it but did you know that gazproms price comes out to currently $13per 1000cbm tax fees to which they sell it at over $100 per 1000 cubic meters? And that on current fields have already been paid for so most is pure profit?  They could be taxed to $20 per 1000cbm and still have profit while Russian gov will bring in a lot more, even if prices dropped.  But the companies, even if mostly state runed, are lobbying to not pay as much.  Gazprom was the only one willing to contribute more.  Rosneft did not.

The other thing to point out is 2019 is 3 years away.  In other words, anything can happen in that time frame: oil/gas could rebound, taxes could increase meaning more revenue for budget, increased taxes in other sectors like from energy sector could increase, Russias manufacturing sector could increase and exports drastically increase in none oil business ( example: PVC sales have drastically increased in Russia and its exports have jumped by 6x), more investors come in, new policy on budget that stipulates $20/bbl and that all additional funds goes straight to the reserves, etc.

In other words, predictions have, in every case regarding Russia (done so even by the economy ministry or the CBR) has been off mark.

http://www.fontanka.ru/2015/12/24/132/

The profit of Russian companies increased by 44.1% between Jan-Oct of 2014 and 2015.

This is interesting because ruble devaluation hit after October of 2014.

flamming_python wrote:

Militarov wrote:

Austin wrote:Reserve Fund and NWF may be spent by 2019 at current expenditures level — Bank of Russia

Quite bad news generally speaking.

Well it's certainly not good news.

But considering that most countries are running budget deficits and don't even have such funds, including the diversified economies of the West more than anyone; while 'gas station' Russia has suffered a collapse in the prices of the good that it's economy is supposedly 50% dependent on and has only a mild recession and possible budget deficit to show for it - it's really not all bad.

All I am hoping is that you guys find another method other than oil and gas profit taxes to fill the reserve fund.

Maybe the diamond market is one to go after.  Massive profits, little costs (initial investment for mining is easily paid off) and no lack of amount.  Maybe the whole jewelery market as Russia is also the only Amber producer and Amber is becoming sought after.

Neutrality wrote:

sepheronx wrote:
All I am hoping is that you guys find another method other than oil and gas profit taxes to fill the reserve fund.

Maybe the diamond market is one to go after.  Massive profits, little costs (initial investment for mining is easily paid off) and no lack of amount.  Maybe the whole jewelery market as Russia is also the only Amber producer and Amber is becoming sought after.

The food industry is going to boom in a few years. China cancelled its 1-child policy so they'll need mouths to feed.

My god.....China and India will be in the race again on who will hhave more babies.

Yeah, Russia may just gain even more from food.  Although, food is mostly factory made these days

Neutrality wrote:

sepheronx wrote:
All I am hoping is that you guys find another method other than oil and gas profit taxes to fill the reserve fund.

Maybe the diamond market is one to go after.  Massive profits, little costs (initial investment for mining is easily paid off) and no lack of amount.  Maybe the whole jewelery market as Russia is also the only Amber producer and Amber is becoming sought after.

The food industry is going to boom in a few years. China cancelled its 1-child policy so they'll need mouths to feed.

No. There will not be any surge in Chinese births and population. The policy was retired because it was no longer needed
and in fact detrimental. China over did it and now it will have a massive old age population and a much smaller working age
cohort that will not be able to support it in the future.

http://www.indexmundi.com/china/age_structure.html

India is a different story and it will keep on growing in the next 20 years. Assuming the water resources are there and that
is not at all obvious. Aquifers are being depleted like crazy and even the runoff from the Himalayas is declining.