Russia and economic war by the west #3

Kiko wrote:It would seem that if our economy is growing at a rate higher than the global average, then we can only rejoice. It means that things are going well in the country. However, in real life it turned out that high growth can be a problem. And the name of this problem is inflation. In July, the Bank of Russia was forced to admit that the plans for inflation of 4.3-4.8% had gone to waste, and raised the forecast to 6.5-7%. This is the largest revision of the inflation forecast ever. No one expected such a turn of events.

Having the experience of the 90s, it seems more common that accelerating inflation usually accompanies a collapsing rather than growing economy. A collapse of GDP means bankruptcy of industrial and agricultural companies, high unemployment, shortages of goods and food products, empty shelves in stores - and from here inflation naturally begins to gallop.

But this is definitely not the reality of 2024. Industry is growing, we feed not only ourselves, but also the entire friendly world with food. The nature of the current inflation is completely different, and it is amazing. It is provoked not by negative trends, but by socially significant and good events. Thus, Russians' real disposable income is growing (by almost ten percent in the second quarter), they began to spend more in stores, buy apartments at super-low interest rates before the closure of some state programs, etc. It could not do without social injections from the state. Incomes are increasing due to the growth of the minimum wage, benefits, payments to large families, participants in the SVO, medical personnel, teachers, pensioners, etc. Salaries are increasing even in private companies, because there are simply not enough hands.

The country has a uniquely low unemployment rate, something that has never happened before. A real physical shortage of workers. At this rate, the word "unemployment" will soon disappear from the lexicon of our country. But this positive trend has become the second serious problem, which is not so easy to solve: even if an unexpected baby boom happens now, we will have to wait two decades for new hands to appear. The fastest way is to admit that our economy cannot cope without employees from neighboring countries. Migrants can help cool down the overheated economy and extinguish the inflationary expectations of the population and business, which significantly exceed inflation itself.

It turns out to be a vicious circle: Russians' incomes are growing, they are ready to spend more, production and sellers are trying to adapt and expand their supply, but there is no one to put to work "over the norm". Prices are growing in the end not because of a collapse in production and physical shortage, but because business does not have time to create more and more to satisfy demands, and an artificial shortage arises. Of course, a shortage from excess is much more pleasant, but no one has cancelled the negative effect.

It would be extremely dangerous to let this situation slide. Because it is possible to slide from a fast-growing economy into a crisis very quickly. As soon as inflation reaches double digits, it becomes difficult and costly for national reserves to stop and reduce it. That is why we have seen such a strong rise in the cost of money in Russia. The economic world has not come up with another way to cool the hot ardor of consumers, including in consumer and mortgage lending (along with the cancellation of some preferential mortgage programs). This is a problem for which an alternative solution would probably win a Nobel Prize.

This is how good deeds can lead to unexpected problems. A striking example is with preferential mortgage programs. Almost a million families were able to improve their housing conditions by taking out a mortgage at really low interest rates over the four years of the programs. At some point, Russia turned into one continuous construction site, and it was construction (along with agriculture) that greatly supported the Russian economy in the very first difficult year - 2022. But the other side of the coin - housing construction also contributed to the acceleration of inflation. It was very difficult for the Central Bank to stop the mortgage lending behind this, which showed record after record.

Mishustin spoke about plans to create a system for international settlements, 10.18.2024.

Mishustin: Russia expects to create a system for international settlements.

MOSCOW, 18 Oct — RIA Novosti. Russia expects to create its own system for international settlements, Prime Minister Mikhail Mishustin said in a video address to participants of the Moscow Financial Forum — 2024.

"We hope that through joint efforts - the government, the Bank of Russia, and the financial community - we will be able to create a domestic settlement infrastructure that is an alternative to foreign systems," he said.

The Prime Minister stressed that this is necessary to ensure international settlements based on fair principles.

"(To create. — Ed.) that (settlement system. — Ed.) that will ensure equality of countries, confidentiality of payments and will allow for instant transactions at minimal cost," Mishustin explained.

The head of government also expressed confidence that many interesting ideas and proposals would be voiced during the forum, and promised that the most relevant ones would be studied in detail by the government.

https://ria.ru/20241018/rossija-1978699406.html

flamming_python wrote:

The only thing vicious is our own government's stupidity. They managed to do everything right but then completely sabotage all these efforts by allowing elements of the government or oligarchs or whoever it was to fan nationalism against foreign workers, start organizing anti-migrant patrols and ultra-nationalist groups and then throw workers out of the country.

And I don't understand how 'no-one expected such a turn of events', when economic overheating against the backdrop of ever-lower unemployment figures, and the inflation spirals which result from such situations are by now a pretty well understood phenomenon and one that I was warning about several times in this forum over the past year - and I'm no trained economist.

Morons. Can't call these people any other name. And the people responsible for exasperating this situation in Russia should all be put under investigation.

caveat emptor wrote:You're not wrong in general terms, but current migration laws are very bad for the country in the long run. There's no need to hand passports to the immigrants like candy, work permits and some sort of permanent resident card connected with employment should be fine. Also, no reason to allow them to bring families over. They are using it to get social services that are nonexistent in their domicile countries.  Look at how ME countries did it. They are good example for Russia.
However, that doesn't solve problem of shortage that exists with qualified workforce, especially in industry, as workers from CE stans are pretty worthless in that regard.
That can be partially offset with more serious automatization and introduction of robots in  the industry and free retraining of people that get freed from doing menial work, that will be delegated to people from stans. That especially goes for robot density, as current usage was very meager at only11 robots per 10000 workers in 2023. Average number for the world is 151 robots per 10000 in 2022 and much higher for developed industrial nations.
Where will they find more qualified workers for industry remains open question, as global competition is fierce.
You mentioned possibility of recruiting foreign students in Russia.
Are there any analysis of what programs foreigners usually study in Russian universities and what percentage stays in Russia after finishing school?
Maybe Russia can attract middle tier talent from India and Pakistan, that atm mostly goes to work in ME?
It is systemic and global problem and solution will not be easy. Which means that wage inflation will continue.
You can import another 10 million people from stans, but vacancies for welders, CNC machinist etc. will remain open. That's not the solution.

flamming_python wrote:
And I don't understand how 'no-one expected such a turn of events', when economic overheating against the backdrop of ever-lower unemployment figures, and the inflation spirals which result from such situations are by now a pretty well understood phenomenon and one that I was warning about several times in this forum over the past year - and I'm no trained economist.

Morons. Can't call these people any other name. And the people responsible for exasperating this situation in Russia should all be put under investigation.

flamming_python wrote:

All of that, caveat emptor, if it needs to be re-examined, can wait until after the war is over, not during it

caveat emptor wrote:It makes a lot of sense that it is happening now, since anti-immigration forces, are also very involved with the help to the army and humanitarian work and their members go to fight en masse. They have much bigger audience and hold more weight than before the war started. Maybe, government would be able to keep this under the carpet if  Crocus city massacre and other attacks never happened. Also, lately there were numerous scandals around immigration and police officials that were on the take in various illicit activities connected with migrants.
Things were too lax, for far too long, and now the pendulum has swung in opposite direction.
In any case, according too Bastrikin, there are about 15 million immigrants in Russia atm, not including those that received passport (few millions in the last decade or so) and worker shortage in critical industries still persists.
As i already pointed, it is quite simple, importing cab drivers, simple construction labor, retail workers and hairdressers will not alleviate need for specialists.

caveat emptor wrote:
Things were too lax, for far too long, and now the pendulum has swung in opposite direction.
In any case, according too Bastrikin, there are about 15 million immigrants in Russia atm, not including those that received passport (few millions in the last decade or so) and worker shortage in critical industries still persists.
As i already pointed, it is quite simple, importing cab drivers, simple construction labor, retail workers and hairdressers will not alleviate need for specialists.

GunshipDemocracy wrote:
and if Russians kick out construction labour, cab drivers and hairdressers suddenly specialists shortage will disappear? or wages to attract specialists will rise?

GunshipDemocracy wrote:
and if Russians kick out construction labour, cab drivers and hairdressers suddenly specialists shortage will disappear? or wages to attract specialists will rise?

caveat emptor wrote:I think that majority of the people are for clear rules, because there's a lot of chaos and corruption atm. Criminal record checks were not done. I believe that one of the attackers in Crocus city had a criminal record in Tajikistan and still managed to enter the country. Many immigrants speak very bad or don't speak Russian at all. I personally witnessed that last time i was in Russia. Many don't even pass the test in Russian language and still obtain passport. I'll give you example, in 2021., '22. and first six months of '23. over 350k Tajiks alone received Russian passport. These are official numbers.
Not to mention, organization of underground fight clubs, mosques. You're bringing in droves, low educated people from tribal, religious and deeply conservative societies that even Soviet Union couldn't completely reform. I don't think anyone would complain if people from Vietnam or North Korea came instead.
I fail to  see what bringing another several million people from stans, together with their families, will bring qualitatively to the country and its economy. As i said, immigration system akin to Gulf countries should be a good model.
In one of the earlier conversations, i noticed that FP wasn't even aware what was going on in Tajikistan since the fall of Soviet Union. That country was basically divided by war lords and thousands got radicalized and fought in Afghanistan. It is a failed country without economy, that survives on remittances.
Setting some straightforward rules and not handing passport to any pissant that arrives over the border should do the trick. And, of course, no families and kick them out if they are caught in criminal activity.
I noticed that you are from USA. America is blessed that bulk of illegal immigrants to the country comes from Latin America and are Christians. No risk of terrorism and they adjust to new society very fast, even with language barrier. Muslims from stans are completely different beast. Not to mention that educated and secular ones from Kaz and Uzb don't come to Russia in high numbers.

Arrow wrote:Why is the US not self-sufficient in enriched Uranium? They produce so little of it. They made large quantities of enriched Uranium for thermonuclear warheads during the Cold War? They have no centrifuges, poor technology?

Arrow wrote:So Russia has the best Uranium enrichment technology. I read that they have a lot of enriched Uranium, the most in the world. First through gas centrifuges and second from dismantled thermonuclear weapons. The US has the problem that the fleet probably absorbs a lot of resources. Naval reactors often operate on HEU or medium enriched Uranium.