Russian Economy General News: #8

Austin wrote:US Treasury has promised rapid sanctions against Russia
VedomostiFebruary 14, 21:26  
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The administration of US President Donald Trump is working on new sanctions against Russia. This was stated by the US Treasury Secretary Stephen Mnuchin at the hearings in the Senate.

Sanctions should be expected in the near future, said Mnuchin. He did not specify anything more.

In late January, Mnuchin had already promised new sanctions. This happened after the publication of the so-called "Kremlin report". This is a list of Russian officials and businessmen whom the US considers close to the Russian President Vladimir Putin. In the public report of only 210 people. The entry in this list is not subject to any restrictions or sanctions. However, some billionaires have already complained about the negative impact of the report.

miketheterrible wrote:Somewhere in Russia some oligarches is building some kind of University with all the bells and whistles.while I think they are assholes, at least the money will stay inside.

Karl Haushofer wrote:Russia sharply increased its investment in US government bonds: https://lenta.ru/news/2018/02/16/us_rus/

In 2017 Russian investments in US government bonds increased by 19%, to 102 billion dollars.

Russia is playing with huge risks.

Last Friday the bank lowered its benchmark lending rate 25 basis points to 7.50%.

And in a completely counter-intuitive turn of events, the ruble strengthened as a result.

But what is so noteworthy is how commonplace that reaction from the ruble to a central bank rate cut is.

It tells you just how starved the Russian economy is for its own currency. The ruble is supposed to drop on increased supply, which is what lower rates imply. When, in fact, the opposite occurred. Demand for the ruble rose to because borrowing costs were lower.

This speaks to just how much the Bank of Russia’s policies are holding back what should be a much more robust expansion at this point.

Overly tight interest rates are just as bad as overly accommodative rates. They both bias economic investment along the wrong points in the structure of production, by mis-pricing risk.

GunshipDemocracy wrote:


The Industrial Development Fund may reduce interest rates on loans to 3 - 4%

MOSCOW, February 16. / TASS /. The Industrial Development Fund plans to reduce loan rates for enterprises from 5% to 3 - 4%. This was in an interview with Business FM, Russian Industry and Trade Minister Denis Manturov said.

"We have already started moving in this direction, so reducing the rate to 4% or 3% as already the base for greater interest and motivation of entrepreneurs is definitely not far off, that is, in the coming year we will definitely drop [the rate]," he added that he did not undertake to say whether all programs would reduce.

The head of the Ministry of Industry and Trade recalled that this year the Industrial Development Fund launches a new program for developers in the field of the Internet of things (wireless technology that allows devices to transfer data to each other without human participation). Entrepreneurs will be able to get preferential loans at 1% per annum.

The Industrial Development Fund was established in September 2014 to support enterprises by issuing loans at a minimum interest. Loans are provided on a competitive basis at a rate of 5% per annum for up to seven years in the amount of 50 million to 500 million rubles.

Подробнее на ТАСС:
http://tass.ru/ekonomika/4967729

GunshipDemocracy wrote:

miketheterrible wrote:Agreed, this is great news. Although, I would disolve the national welfare fund, and put funds into this, as it is a guarantee growth along with having lots of money in form of investment.

That's true you need local source of money no tto beg on NY or London's SE.  But for this AFAIK Russia will fist need to
a) create large pension funds
b) financial instruments like obligations, securities and so on  

Then you can internally invest money in Russia for better return then in offshore banks. Besides you can attract small guys to invest - and Russia's population deposits is



Last line - Russian population banking deposits is about Ru 26,5 Trillions (~ USD 470 blns) .  For period 2017-18 deposits grew: from 23,3 to 26,5 trillions rubles.
Those are only deposits. Now imagine half  deposit holders  want to invest their money in economy. i guess this is the way Putin idea about development works.

http://www.cbr.ru/statistics/UDStat.aspx?TblID=302-21

GunshipDemocracy wrote:

kvs wrote:

If the CBR gets solid competition then Russian banks will sign on to such investment plans.    

The removal of the CBR's monopoly on rate control would be something else.   I bet we will soon start to see hysterical NATO
propaganda about Putin's "voodoo economics" threatening Russia's financial stability.   As if the CBR is not outright sabotaging it.

hmm and is there any other country where CB is not the only place with % rate control? or I misunderstood something?  Thi would be  voodoo economics
Myeducated guess is: Vova looks also on population social unrest prospects. People sure about stability in country are more likely to stay and invest locally. Especially when barriers are removed and conditions are created.

But ok we'll have to live to see it in making

Svyatoslavich wrote:

kvs wrote:In the west, central banks don't act to sabotage the economy.

Believe it or not, they do, Fed is not only sabotaging the US economy, but the global one. QE, negative interest rates and overdebt will cause the biggest financial blow in history. Paul Craig Roberts has many excellent articles on this.