Its About the Russian Economy ......

[jone]

I remember reading, probably five years ago, how great the Russian petro dollars reserve fund was.  The reserve fund was established to bolster and stabilize the economy.  It was a backstop for difficult times.  Now, as  we read, the reserve fund is practically depleted.  Sometime, early in 2017, it will be gone.   

There are many factors that contributed to the decline of the fund.  A contracting economy is as good an explanation as any other.  Oil production is down and demand is also down with prices ranging from $35 to $50 per barrel.  The federal government has shifted resources to the military (which now uses at least 25% of the budget).  And the typical neighbors who might come to Russia's aid all have sanctions against Russia for its incursion into Ukraine and the idea that Russia has brought war back to continental Europe.

A couple of years ago, on this forum, posters were predicting the fall of the Russian government due to econonomic factors.  But Russia is known for its ability to weather through economic hardships.   Many of us who have been to Russia and interacted with the natives have a belief that the tougher things get, the more hardy the Russian spirit becomes. 

I have cogitated on these thoughts lately.  And I have a belief that the further the Russian economy contracts and is left behind by the rest of the world economies, the more economic stagnation will fuel a nationalistic spirit.  This, of course, is what Putin is counting on.  Rather than a revolt against a one party system and a revolutionary confrontation, I think we will see a slow emasculation of the Russian economy.  This will be punctuated by the best and the brightest leaving Russia for greener pastures.  The good news is that the gulags haven't been re-opened.  At least not yet.  But sending one of the Tatar leaders for psychiatric care is only one step away .......

http://themoscowtimes.com/articles/storm-clouds-ahead-putin-lacks-strategy-to-save-russias-economy-54956

[Gator]

And the typical neighbors who might come to Russia's aid all have sanctions against Russia for its incursion into Ukraine and the idea that Russia has brought war back to continental Europe.

Supposedly the average Russian blames Obama and the US for their plight.  They see Obama as the leader who pushed the most for sanctions and whose policies led to increased production of oil around the globe. 

I have cogitated on these thoughts lately.  And I have a belief that the further the Russian economy contracts and is left behind by the rest of the world economies, the more economic stagnation will fuel a nationalistic spirit.  This, of course, is what Putin is counting on.  Rather than a revolt against a one party system and a revolutionary confrontation, I think we will see a slow emasculation of the Russian economy.  This will be punctuated by the best and the brightest leaving Russia for greener pastures. 

Flight of money is happening now.  My wife's parents are planning to sell their dacha and they wish to send the proceeds to my wife. They do not use the dacha as much because both are in their 80s.    Nevertheless, they have owned this dacha for over 50 years, and it was the center of their life for half the year.  To sell it would be depressing, yet I sense they do not trust the future in Russia and would rather have the money secured safely offshore. 

[Slumba]

It's certainly the case that the Russian media have been educating (with a spin of course) the Russian people on e.g. the petrodollar recycling mechanism which is one of the ways that USD maintains its strength and remains the world's reserve currency.

[Muzh]

Simple. Let's invade Ukraine. That will take care of that pesky economy problem. 

[ML]

Flight of money is happening now.  My wife's parents are planning to sell their dacha and they wish to send the proceeds to my wife.

And what have you discovered about how to get money out of Russia ??

The top people in Russia can get their money out and into western banks, just as can the top people in Ukraine.

It is not the same for ordinary people in Ukraine, and I suspect for ordinary people in Russia.

[BillyB]

Although fossil fuel prices are down, Russia has a lot more available to them than the USSR did. Don't expect them to go bankrupt like the USSR did. Encouraging their buddy Iran to start a war in the Middle East can bring those prices back up.

[deccie]

Supposedly the average Russian blames Obama and the US for their plight.  They see Obama as the leader who pushed the most for sanctions and whose policies led to increased production of oil around the globe. 

Actually, I am getting the feeling here that Medvedev is being setup to take the blame. There are an increasing number of negative stories about him and some of his actions like his comments about teachers plus the pokemon gaffe are getting good coverage. That seems to fit the image he will be setup to take the blame.

Flight of money is happening now.  My wife's parents are planning to sell their dacha and they wish to send the proceeds to my wife. They do not use the dacha as much because both are in their 80s.    Nevertheless, they have owned this dacha for over 50 years, and it was the center of their life for half the year.  To sell it would be depressing, yet I sense they do not trust the future in Russia and would rather have the money secured safely offshore.

I'm expecting further rouble problems around November/December as the reserve fund probably expires.

[deccie]

And what have you discovered about how to get money out of Russia ??

The top people in Russia can get their money out and into western banks, just as can the top people in Ukraine.

It is not the same for ordinary people in Ukraine, and I suspect for ordinary people in Russia.

Paypal is a surprisingly effective way to get money out and into Russia if your prepared to do multiple transactions over time.

[deccie]

I have cogitated on these thoughts lately.  And I have a belief that the further the Russian economy contracts and is left behind by the rest of the world economies, the more economic stagnation will fuel a nationalistic spirit.  This, of course, is what Putin is counting on.  Rather than a revolt against a one party system and a revolutionary confrontation, I think we will see a slow emasculation of the Russian economy.  This will be punctuated by the best and the brightest leaving Russia for greener pastures. 

I  don't see the world economy as a whole to be that great. The problems of 2008 were never actually fixed and Europe is still a huge mess.  Deutsche Bank is at huge risk as is Credit Suisse. Russia has some additional issues but most commodity economies are really struggling. I was based for a number of years in Oman and their budget is also completely blown right now. At least they had the sense to stay out of Yemen. The funds we transfer out of here  certainly won't be held in European banks or in Euro!

[msmobyone]

Woke up this morning to find the ruble/gbp rate had slipped nearly 10 percent over the weekend in favour of the gbp ?

'worries' about Putin's comments about serious consequences for Ukraine for 'acts of terrorism in Crimea' ? !!

[BillyB]

I am getting the feeling here that Medvedev is being setup to take the blame. There are an increasing number of negative stories about him and some of his actions like his comments about teachers plus the pokemon gaffe are getting good coverage. That seems to fit the image he will be setup to take the blame.

The buck stops with Medvedev? At what point will Putin get some blame?

[alex330]

Paypal is a surprisingly effective way to get money out and into Russia if your prepared to do multiple transactions over time.

If under 20k for Americans, not an issue. If more than 20k in one year Paypal sends the IRS a nice letter and that will bite you.

[deccie]

Woke up this morning to find the ruble/gbp rate had slipped nearly 10 percent over the weekend in favour of the gbp ?

'worries' about Putin's comments about serious consequences for Ukraine for 'acts of terrorism in Crimea' ? !!

I suspect it suits Russia to keep Ukraine festering in the background. If they do it that way Europe won't do anything serious about the issue since they have their own worries.

[deccie]

The buck stops with Medvedev? At what point will Putin get some blame?

Prime Ministers have long been disposable here.

 It seems not so many realize the yearly "meet the people" video conference is a completely stage managed interface but generally speaking Putin still has far higher credibility with the population than Medvedev does. Things like the Pokemon gaffe hasn't helped him at all.

[mendeleyev]

Medvedev is as anyone else, always disposable, but not likely. He has proven his loyalty and is no threat to Putin. In making very significant changes in Kremlin posts recently, Putin knew that keeping the face of the government intact was important while he played musical chairs with others.

Sergei Ivanov, whom I identified as the second most powerful man in Russia last year, was demoted. Ivanov was a long time Putin ally, but recently had been asserting himself unlike before. There were some challenges between the two, and as Ivanov is in reality the man who directs the various security services, he had become a danger to Putin. I still assert that he remains the second most powerful man in Russia, perhaps now with an even bigger chip on his shoulder.

Medvedev is tame these days. He has the perfect image that Putin needs for the face of his government: nice wife, obedient son, faithful Orthodox, involved in civic causes, the name of his cat is known by many in the population, and of course he is the former president. I could be wrong, but I can see Medvedev around a long time as he represents stability, a trait necessary while Putin is stirring the pot underneath the surface.

As others here have noted, the economy is important, but nationalism is even more important--especially when the economy is tanking. Thus, Putin would like for the economy to improve, but frankly it is not as important to him as the buildup of the military and the image of Russia on the world stage. If he has to choose, and in many ways he already has, the economy can wait.

[deccie]

Medvedev is as anyone else, always disposable, but not likely. He has proven his loyalty and is no threat to Putin. In making very significant changes in Kremlin posts recently, Putin knew that keeping the face of the government intact was important while he played musical chairs with others.

Sergei Ivanov, whom I identified as the second most powerful man in Russia last year, was demoted. Ivanov was a long time Putin ally, but recently had been asserting himself unlike before. There were some challenges between the two, and as Ivanov is in reality the man who directs the various security services, he had become a danger to Putin. I still assert that he remains the second most powerful man in Russia, perhaps now with an even bigger chip on his shoulder.

Medvedev is tame these days. He has the perfect image that Putin needs for the face of his government: nice wife, obedient son, faithful Orthodox, involved in civic causes, the name of his cat is known by many in the population, and of course he is the former president. I could be wrong, but I can see Medvedev around a long time as he represents stability, a trait necessary while Putin is stirring the pot underneath the surface.

As others here have noted, the economy is important, but nationalism is even more important--especially when the economy is tanking. Thus, Putin would like for the economy to improve, but frankly it is not as important to him as the buildup of the military and the image of Russia on the world stage. If he has to choose, and in many ways he already has, the economy can wait.

I don't know what it is like for you in Moscow Mendy, but in the regions Medvedev is being ridiculed pretty much openly in social  media.

We have not noticed food prices increasing by huge amounts since probably March/April and now the local summer harvests are in you can buy a 10 kilo bag of potatoes for 100 rubles. However, once winter kicks in fully and the fresh stuff is imported only I'm sure prices will go up a lot. I am soooo sick of chicken though - I need a good steak! :-)