As we all know, Russia is now under economic sanctions from Europe, Canada, Australia, Japan, and the US for Russia's aggression in Ukraine. This thread is to monitor the resulting decline in Russia's economy. http://www.bbc.com/news/business-29848940 "Russia's central bank has raised its key interest rate to 9.5% from 8% as it seeks to tackle inflation. The 1.5 percentage point increase was higher than expected, with analysts having forecast a rise of 0.5 percentage points. The bank has already raised rates from 5.5% at the start of the year but the moves have failed to combat inflation." Russian interest rates have nearly doubled. Inflation runs rampant. I am looking for the Russian economy to move into recession within the coming months. "Jean-Jacques Durand, a portfolio manager at Edmond de Rothschild Asset Management, holds Russian hard currency debt and has been buying more in recent weeks. He is also watching the ruble level closely. “At some point it will be an interesting opportunity. But we need to see some evidence that the capital flight is stabilizing. With the low oil price and capital flight it looks like there’s plenty of downside,” he said. Meanwhile, the interest rate at 9.5% will take a toll on the economy, others said." http://online.wsj.com/articles/ruble-falls-ahead-of-central-bank-meeting-1414741209 Capital flight remains a problem for Russia. A one and a half percent increase is a huge interest rate increase and it will definitely put the breaks on the Russian economy. This is an emergency break move by the Russian central bank. Given Putin's intransigency and his ignorance, I don't see Russia's economy improving any time soon. Putin has embarked upon a downward course for Russia, it will be interesting to watch. Falling oil prices are also very problematic for Mother Russia. Mother Russia needs $100/barrel oil in order to breakeven. Currency oil is selling in the $80 range and may fall even further. That means big deficits for the Russian government. It's a pretty ugly picture for Mother Russia. We have seen a lot sabre rattling from Putin in recent days, but unfortunately for him, no one is paying him much attention, which is the whole point of sabre rattling. It's not much good to rattle your sabers if no one is listening. But given Putin is Putin, I expect the sabre rattling to escalate. Putin probably feels if he just makes enough noise someone will eventually hear him. I think Mr. Putin is in for another disappointment.
Well most of their fossil fuel sales are natural gas, I think. They just today signed 3-way deal that will be a big help to all three participants, especially Russia. Russia gets a little more than 3 billion dollars worth of payment for gas already delivered (mainly to Ukraine I think but not paid for) Also part of the EU guaranteed deal is that new gas is to be paid for, before delivery (or upon delivery - not exactly clear) - No more gas on credit. and at much higher price. - only slight discount from global prices, which I think are slightly rising. All in all this 4.6 billion dollar deal is a lot of anti-sanction help for Russia. Russia also gets some benefit in their dealings with China now that EU is also a market for their gas again. Here is a little of the details in just released video: http://www.bloomberg.com/video/russ...supply-disruption-9347bukyRPegKogLWD9l~A.html
Not being an economist and gaping at the inflation numbers: are gas exports going to help on the inflation side? I'm surprised they just don't hold Western Europe to ransom, frankly.
more text and another video here: http://news.yahoo.com/russia-gas-flow-resume-ukraine-pays-095753835--finance.html Including the new price for the gas: $378 per 1,000 cubic meters and when the 3.1 billion must be paid by (all by end of 2014 with 1.45 billion essentially now to turn on the gas flow.)
Natural gas sales will not save Russia from raging inflation. There are two components to inflation, excessive currency (demand) and limited goods and services. Russia is printing money at a pretty good clip and sanctions are limiting its supply of goods and services. So Russia is nicely set up for a round of hyper inflation. That is why the Russian Ruble has fallen through the floor. The reason Russia is not using its oil and natural gas to hold Western Europe hostage is twofold. First, it is a weapon that can only be used once. Western Europe has alternatives. It can obtain oil and natural gas from other sources, Canada, the US , Arab states, etc. or it can develop its own oil and natural gas shale reserves. And it will, if Russia attempts to hold Western Europe hostage. Two, an oil and natural gas embargo would effectively defund the Russian government, making its inflation problem exponentially worse. Russia's oil and natural gas exports fund most of the Russian government.
What rate is that? And how does it compare to 4 trillion dollars in slightly less than 6 years? What are those "good and services" in short supply? I only googled about chickens but beef sales are up too. Other suppliers, like Argentina, I bet are filling the gap too.
In the overall scope of things 3 billion dollars is nothing. Remember Mother Russia is or was a 2 trillion dollar economy.
So are the three questions I asked and you ignored with this comment - I asked for both data and context for your statements. Are you just making up claims again or do you have some supporting links you can give?
"This country has the world’s worst stock market — and that’s not going to change If Dr. Frankenstein went into his lab to concoct the worst possible stock market, which ingredients would he use? Maybe a plummeting currency; reliance on one commodity; a whimsical, autocratic government, and a court system lacking the rule of law. Would that be Argentina? Venezuela? Surprisingly, those are among the two best performers this year. Actually, it’s Russia, the single worst major global stock market of recent times, according to The Wall Street Journal. So far in 2014, the RTS Index has lost 26.2% and averages 8% annual declines over the last three years. Only Portugal approaches that dismal performance. Putin is taking no chances with discontent among Russia’s masses or even its oligarchs. And it’s not just because of Russia’s invasion of Crimea or its naked aggression in eastern Ukraine, which have prompted the U.S. and eurozone to enact sanctions against President Vladimir Putin’s regime. It’s the country’s utter dependence on oil, whose price is now plummeting. On Monday, Brent crude dropped into the high $80s a barrel, its lowest price since June 2012. Saudi Arabian and other Middle Eastern producing countries have vowed not to cut supply and fight for market share with a resurgent U.S. and Russia, which is pumping like there’s no tomorrow. Currency reserves are at a four-year low of $454.7 billion, down a whopping $57 billion this year, as the Bank of Russia tries desperately to prop up the sinking ruble, which has lost more than 17% against the U.S. dollar in 2014. The central bank’s head admitted this week it would be unable to stop further erosion in the currency’s value. Further, oil and gas exports comprise more than half of Russia’s fiscal revenues, and some estimate it needs oil prices of $117 a barrel to break even. Looks like barrels and barrels of red ink ahead. And the sanctions have created a credit crunch as companies scramble to pay off foreign debts." - http://www.marketwatch.com/story/this-is-the-worlds-worst-market-avoid-it-at-all-costs-2014-10-15
A little disingenuous don't you think? You keep modifying your post. I'll wait until you are finished. Please Register or Log in to view the hidden image!
no matter how much you love autocracy it can't change the fact that Russia has a third world economy. raw materials and food out manufactured goods in. i give russia maybe 20 or 30 years as a relevant economic power if they don't change the structure of their economy. china is smart and will move from fossil fuels quickly though it still remains to be seen how stable the chinese economy will be when the entire country is industrialized. there russia's main life line they lose china as a customer and that's it their economy tanks
" If you want to know the rate, look it up. I am not your lackey. Further, Russia has nothing to do with “4 trillion dollars in slightly less than six years”. Russia uses Rubles not dollars as currency. And where is your evidence the US money supply increased 4 trillion dollars? And no, I am not interested in your napkin calculations of money supply. As has been explained to you numerous times over the years money supply calculation is a little more complicated than your napkin calculations which you are so fond of. I am asking you for the real data from the Federal Reserve to support your statement. Two, the US and Russia are not in any way comparable. The US currency is the world reserve currency which creates demand for dollars beyond its borders. The US is also a much larger economy, 8 times larger. Further the economic problems faced by Russia are far different that those faced by the US. The US was in a liquidity trap. Russia faced and still faces some very serious structural problems. So the economic solutions, the appropriate monetary and fiscal policies for one are not appropriate for the other. And prices for those commodities in Mother Russia are up too, because of the shortages created for those commodities created by Putin’s self-imposed sanctions. So you have answered your own question. Below are some interesting articles for further reading. “Russian consumer prices rose by an annual 8 percent in August of 2014 compared with a 7.6 percent increase in July. The inflation rate accelerated for the second straight month to its highest since August of 2011. Year-on-year, tobacco prices recorded the highest increase (28.4 percent). Cost of food and non-alcoholic beverages rose at a faster 11.5 percent (10.1 percent in August) and prices of housing, water, electricity and gas grew 5.8 percent (5.1 percent in August), boosted by a 10.4 percent increase in housing rents and an 8.2 percent surge in cost of water and other public utility services. Transport prices increased 5 percent. On a monthly basis, consumer prices increased 0.7 percent, following a 0.2 percent rise in August. Food cost surged 1 percent compared with a 0.3 percent drop in the previous month and services’ prices grew at a slower 0.3 percent (0.7 percent in August). " http://www.tradingeconomics.com/russia/inflation-cpi “Russia’s money supply continued its “rapid” expansion last month, threatening to sustain fast inflation through next year, Citigroup Inc. said. Money supply growth of more than 30 percent in September is set to push up annual inflation to 9.2 percent at the end of the year and 7.6 percent in 2011, Moscow-based economists Elina Ribakova and Natalia Novikova wrote in a research note today. “Growing producer costs and the acceleration of money supply growth will add to inflationary pressures from the end of 2010 and into 2011,” the note said. “However, we expect the central bank will remain under pressure not to increase rates in order to support a greater issuance of government bonds.” Inflation accelerated for a second month in September to 7 percent after the country’s worst drought in at least half a century hobbled agricultural output and pushed up food prices. The central bank left its main interest rates unchanged last month, saying “inflationary risks, shaped by monetary conditions, are at an acceptable level.” Money supply expanded at an annual rate of more than 30 percent every month for the past seven months, rising 31.2 percent in September, according to Bank Rossii data. The ruble weakened 0.6 percent to 30.57 versus the dollar at 10:51 am in Moscow today.” http://www.bloomberg.com/news/2010-...growth-may-fuel-inflation-citigroup-says.html Below is an interesting piece on Russia from the IMF. http://www.imf.org/external/np/ms/2014/043014a.htm Russia probably has enough cash reserves to sustain it for a few years. So the immediate economic outlook is not as dire as the intermediate and long term outlook. A couple years down the road, the outlook gets pretty bleak for Mother Russia if the sanctions are not lifted. The IMF is assuming some accord will be reached in Ukraine and sanctions will be weakened and removed. I think the IMF is being a bit optimistic with those assumptions. I don’t see Putin changing his stripes and backing down and I don’t see the oligarchs overthrowing him either, at least not in the near term.
I think you are too kind. I give Russia 2 years before things get really dire inside the country. And it isn't really a relevant economic power even now. It's economy isn't that significant and it is almost exclusively oil dependent. The EU and the US have combined economies of more than 34 trillion dollars...compare that to Russia's 2 trillion and shrinking economy. You throw in the rest of the allied powers are you are looking at 50 trillion dollars...just to put things into perspective.
That is basically true, but all countries have a present built on their past. WWII was very good for the US - greatly expanded US productive capacity and even the work force as many a "Rosy the Riveter" decided they like working for pay out side the home and with EU land's productive capacity destroyed, US easily became the world's economic engine. Russia has the ill effects of WWII plus the inefficient error-prone planned economy history to over come. That planned economy could in limited, military areas (including space) lead the world and Russia is still blessed with natural resources, but not the skills to manage them well. Their fossil fuels will unfortunately see only increased demand for more than a decade. Thus, if Putin does not spend too much on military, Russia will be OK, economically. Currently it is following China's lead and hoarding gold - hard to tell the economic results of that only a few years from now.
More rusophobic threads from joepistole, as expected. But anyways Russia has plenty of resources and its economy has a very high chance of recovery from all the US inflicted sanctions by the Obama and his likes. Anyways Russia is currently diversifying its economy and will continue to provide gas to its customers and now to China. Now that China has surpassed USA as the worlds biggest economy, it is a very smart move by Russia. In addition to that USA is heading soon into an economic recession with its trillions of dollars of debt. Russia's debt? close to none. In fact USA owns Russia money. I will not be surprised if politicians in USA will beg Russia to be back into mutual cooperation once all the ***t is gone from White House. Here is the Index of Economic Freedom for Russia, notice the increasing Economic Freedom for Russia. Please Register or Log in to view the hidden image! http://www.heritage.org/index/country/russia Of course warmongeres like joepistole will surely bring up the despotic economic propositions for Russia future and tell us all how the country is heading into recession. But that is all bunch of negligent bull***t to be precise. Why? Because the same warmongerers were telling us how Russia will loose its population, it will break apart, and its economy collapse. That never happened. Russian population is increasing. Russia is remaining strong united and is gaining territories, not limited to Crimea, Abkhasia, South Ossetia, and now parts of the Arctic. and Russian economy is remaining strong, albeit US puny sanction attempts. So I tell to USA current government, go stuff your sanctions up yours.
The truth doesn’t make one Russo phobic nor does it make one a war monger. The only ones thinking Russia can pull out of the mess Putin has put the country in is Putin and nationalists like you. Russia has plenty of oil and natural gas, but little else. It will be impossible to diversify given the sanctions that have been place on Mother Russia by the Western world for its aggression in Ukraine. And has been pointed out to you numerous times, Russia doesn’t have the money or the technology to develop the oil fields need to fulfill its end of the China contract and it has zero pricing ability. So Mother Russia will take whatever China wants to pay for Russian oil if and when Russia is able to deliver any oil to China. China has options. Europe has options. Russia doesn’t. And the US is totally unaffected by Russian oil. By the way the US economy is 16+trillion dollars, simple math tells anyone that is much larger than China’s 8 trillion dollar economy. Further the US economy is growing at the fast pace in more than a decade and growing faster with each passing month. So like everything else, your assertions are just not in line with known fact and reason. As for your Russian debt assertion, you are wrong again. Russia’s national debt is about 11% of its GDP. That is far from “close to none”…especially when it is paying nearly 10% interest on that debt. As for the US owing Russia, you are being a little deceptive. Russians and that may include the Russian government, Russian companies and Russian civilians have purchased about 100 billion dollars in US Treasury notes (i.e. debt). That is a little more than the aid money the US provided Russia last year. But this isn’t about debt. The US can manage its debt. You, like Hitler, keep hoping beyond hope that some cataclysm will befall the US and you will be spared. It didn’t happen for Hitler and it won’t happen for Putin and Mother Russia. Eventually the hens are going to come home to roost for Mother Putin and Mother Russia. Putin can only keep the hounds at bay for only so long. Russia’s got problems, per the previously referenced materials. The IMF (International Monetary Fund) has issued an outlook which is based on the assumptions that sanctions will be lessened, and I just don’t see that happening. So I think the IMF’s dire forecast is too optimistic both in the near and longer term. Seriously…are you really that disconnected? If you are fine, you can deceive yourself for only so long before reality takes a bite. Two trillion and shrinking Russia is going to teach the 50 trillion dollar world a lesson. And per my previous post, Russia is taking quite a hit already. Per the previously referenced IMF report, Russia faces numerous long term economic structural challenges. Putin is flying his WWII bombers are around with their resupply aircraft and what happens? Nothing, no one is paying any attention. It’s about as attention grabbing as when Iran sent a destroyer to American waters with its resupply ship. And you think 140 out of 187 is good? Dude Mother Russia is at the bottom of the list. Mother Russia gets an F, that is a failing grade.
have you learned nothing from history. raw materials and food out manufactured goods in is not a recipe for a successful economy. it can last but unless they can be turned into goods internally that can be a valid substitute its not a healthy economy. for someone who is wonk on economics you seem to have a poor grasp of the histories of economic realities. go look at africa and south america yeah they got natural resources hows that done for them.
The Russian stock markets took a serious hit today, down a little over 4%. Russian airplanes continue to their unusual flight patterns over Europe. A Russian corvette (i.e. ship) invaded Portuguese territorial waters and was escorted out by Portuguese naval forces. In another move, it appears Putin appears to be targeting Russian oil companies now. He is investigating Russian oil companies for price fixing. If past is prologue, this may be Putin's first move in taking over the Russian oil industry. It may also help him politically. As long as Putin has enemies to blame, it keeps the blame off him. However, if Putin does nationalize the Russian oil industry, it will be disastrous for the Russian economy. Just the announcement of this investigation has caused the Russian Ruble to fall to new lows. And to make matters worse, fighting in Ukraine appears to be on the rise. Additionally, Russian aircraft have on multiple occasions have invaded Finnish territory. Putin is desperate for attention. http://www.bbc.com/news/world-europe-29932399 http://time.com/3558451/ukraine-russia-separatists-mariupol-war/ Frankly, I'm with Merkel. Putin has gone off the deep end.
It was yet another bad day for Mother Russia as Russian troops have been reported crossing the border again in support of Putin's mercenaries. http://www.theguardian.com/world/2014/nov/07/rouble-crashes-russian-economy-brink-recession-currency
