Russian Economy General News: #8

flamming_python wrote:
This comment only shows your utter cluelessness  about how economies actually work.  Where do ridiculous people like you get idea that comprador oligarchs and foreign corps leaching all revenue out of businesses they own is beneficial to any country. How do you come up with such stupid ideas?

And where do you get your stupid ideas from that banning companies such as Boeing, which employs hundreds of qualified engineers in Moscow and buys masses of titanium sections from Russia - would in any way shape or form serve Russian interests or its economy?
What do you think all those specialists would do? They'll be given an offer to move to another country to stay with the company - and they'll take it. And Russia will be left without them, and without the tax revenues.

How about Coca Cola? Several plants across the country, thousands of workers in total.
Pepsi Co as well.

Ford?
Assembly plant in St. Petersburg, 3000 people employed there.
An engine plant in Tatarstan.
Are you going to give them all jobs?

Kofax. IT office in St. Petersburg, 150 highly-paid IT specialists.

Disney. Lots of joint ventures with Russian animation studios, loads of events organized here.

John Deere. Manufacturing facility in Domodedovo.

It's not just fast food restaraunts, sales offices and Starbucks here, matey.

par far wrote:Why is this happening to the Ruble? The oil prices are steady, I thought that when oil prices are steady, the Ruble means steady.

Will Russia be okay? Will Russia get through this?

Thanks guys.

Russia just needs to dump the US dollar and wean itself off the US dollar.

kvs wrote:The passionate discussion about capitalism vs. communism always goes polar before any substance can be discussed.
The USSR had serious problems under Gosplan which simply could not serve the stochastic optimization role of a market.
Even if the state enterprise money was not being siphoned offshore, the system was too ossified to respond to technological
and worthwhile demand trends.   The USSR had all the capacity to be an innovation leader, but was always playing catch-up.
The most absurd thing is that Soviet primary research enabled a lot of western technological advancement (e.g. cell phone
power component miniturization) that came to it much later.    

It is clear that modern Russia, in spite of all the privitization and oligarch pain has found a better model.   It is unfair to categorize
any private company in Russia as a crooked outfit existing solely for the offshore enrichment of its owners.   If that was true the
Russia would be a banana republic.    It should be clear that a lot of key industrial-technological assets (e.g. Almaz-Antey, UAC, etc.)
are not privatized entities but have been turned into market players like Canadian Crown Corporations.  

The monetarist voodoo really did lose out in 1998-99.  Otherwise we would have had more Yeltsinism after Putin took over.  That does
not mean that monetarist parasites are not trying to run the show and they have been allowed to gain control over the CBR and
the Ministry of Finance.    But they are not succeeding since Russia is showing technological advancement that is basically
leading edge.   Something the USSR could only do in Manhattan type projects.   This include the small business production of
consumer goods such as cheese.   These are not mere details of no consequence, they are directly link to the quality of life of
the population.   This was where the USSR failed.    Nationalization of every company will not result in a net benefit.   it will
overload the government with assets it does not know how to handle and assets it would taint.  

I will bring up again, the example of how the USSR treated trainloads of produce in Leningrad.   They would be "lost" in marshalling
yards and their contents would rot.   Then we had shortages of these goods in the produce shops.   This sort of bureaucratic
waste is simply intolerable.   It may not be in the category of profit offshoring, but it is by no means any better.   The net result
is the same: poorer population.    At least with some sort private ownership, the goods are somebody's keen interest and this
includes getting them to the stores before they rot.  

If Putin was privatizing for the sake of monetarist voodoo, then he would deserve absolute scorn.   But that is not the case and
Russia has found a new economic model that is clearly working for it.    The mess generated during the voodoo witchdoctor years
of the 1990s is going to take a long time to deal with.   But thankfully it was not as bad as in Ukraine, where it was basically terminal,
failed state rot.   Ukraine is an example where the oligarchs run the show like during the golden years of Yeltsin (according to Navalny).
Obviously Russia is not in this regime and Putin played the central role in putting the parasite oligarchs in their place.   The prince
of offshoring was Khodorkovsky and he served jail time and lost his assets.   It is a state run company, Rosneft that now owns those
assets.   Rosneft and Gazprom appear to be quite apt at adopting new technology and running their operations properly.  

par far wrote:Why is this happening to the Ruble? The oil prices are steady, I thought that when oil prices are steady, the Ruble means steady.

Will Russia be okay? Will Russia get through this?

Thanks guys.

Russia just needs to dump the US dollar and wean itself off the US dollar.

kvs wrote:Any real pain for Russia's economy means severing of ties to NATO states. As noted above this is a one-time event. So the more
NATO sanctions Russia, the more independent Russia becomes and the more immune to sanctions. NATO is operating on Obama's
delusion that "Russia doesn't make anything", that it is a banana republic, and think that sanctions exert a powerful coercive influence.
But Russia is not a banana republic and can adapt, which, by definition, means that sanctions are not effective.

kvs wrote:Any real pain for Russia's economy means severing of ties to NATO states.   As noted above this is a one-time event.   So the more
NATO sanctions Russia, the more independent Russia becomes and the more immune to sanctions.    NATO is operating on Obama's
delusion that "Russia doesn't make anything", that it is a banana republic, and think that sanctions exert a powerful coercive influence.
But Russia is not a banana republic and can adapt, which, by definition, means that sanctions are not effective.

miketheterrible wrote:

par far wrote:Why is this happening to the Ruble? The oil prices are steady, I thought that when oil prices are steady, the Ruble means steady.

Will Russia be okay? Will Russia get through this?

Thanks guys.

Russia just needs to dump the US dollar and wean itself off the US dollar.

No it won't. Russia relies 100% on USD and it's exchange rate is what kept it alive. Russia cannot weather this like Iran has because 10% of their companies rely on export and if they collapse due to no USD, then that is it. Oh, and Russians are heavy consumers of us products.

Why do you always ask such stupid questions?

miketheterrible wrote:The only major player to be hit hard was Rusal.

Because they rely on export to the west. Out of 3M tons of aluminum, only around or less than 1M tons is sold in Russia.

So there may end up being a sell off of the various plants to third parties and Rusal may end up entirely relying on domestic consumption.

Or auctions may work.

Hole wrote:

miketheterrible wrote:The only major player to be hit hard was Rusal.

Because they rely on export to the west. Out of 3M tons of aluminum, only around or less than 1M tons is sold in Russia.

So there may end up being a sell off of the various plants to third parties and Rusal may end up entirely relying on domestic consumption.

Or auctions may work.

But thanks to Trumps tarifs the aluminum prices have gone up, which is good for Rusal.

“There is currently no pressure to conduct exercises for the freedom of navigation in the Arctic, but… the US approach is that the Northern Sea Route should be open as an international water corridor for, let’s say, a transit passage – as we see this area is being cleared of ice,” Zukunft said, adding that at the moment there’s no certain plan for conducting any exercises in the area.

Alternatively, Rusal can sell some of it's plants (not company as a whole) to other parties from countries like China, Iran, Vietnam, India, etc. In this regard, the company can partially own it, same with the other countries companies who own stake in it, and it's not like US can do squats about it.