Economic Mournings

[kievstar]

economic mess is far from over.  companies are missing earnings and big layoffs are coming for 2009. 

[Makkin]

  It looks like a 24 month minimum now to see recovery at any great rate. Maybe if the world decides to become global without giving up it's nationalistic laws and the choice of self determination then we have a great chance.
  If those in power in Europe attempt to pull the world into a global economy then failure looms large in many ways. With Europe on the slump end of the economics due to food,oil,and a list of investments that cover the globe at an alarming rate we should see the European Union in for the worst of effects in the next nine months.
  Great Britain should be okay due to the private monies they use rather than the Euro but without GDP improvement they themselves understand the 24 month cycle to rebuild. They should do fine.

  Eastern Europe will have a host of problems associated with Russian oil and gas as well as production and GDP figures. How will this cause the Ukrainians to suffer? They will probably suffer due to the price of basic goods but they may not suffer a cold winter as they themselves invest in dollars and the price of fuel actually in purchased in dollars and they are able to gain a discount unlike the Euro Zone.
  It,s such a weird economic situation that tends to make one think that the exchange rate is false and rigged and anyone knows it always has been due to mainly speculation of interest rates and GDP as well as jobs etc... Who can actually say what one is worth against the other. The answer lies in production of goods in times like these and whomever produces gains on the monies exchange and thats plain and simple. If the Euro Zone fails to lower wages as it attempted before and somewhat failed then the complete collapse of the Euro Zone is possible and could happen in about 18 months time.

Makkin

[ambach123]

What would happen to the FSU marriage business, which is almost an industry in Ukraine.

You mean, no more trip reports?

[Makkin]

  Yes...Ukraine will suffer greatly and the average person will indeed.

  The fuel crisis in overstated as usual but there ya go..

Makkin

[BC]

Warez previously destined for US will arrive in EU instead.  I see prices here dropping dramatically for imported goods.  I just wish that UA and RU were geared up to compete with the more eastern countries.

Prices of food etc has been rising in UA/RU for a couple of years now, little chance for obesity and folks will go back to cheap staples and home/self grown.

Capitalism at its best. ???

[BC]

What would happen to the FSU marriage business, which is almost an industry in Ukraine.

You mean, no more trip reports?

A good potential of increasing.. but guess what.. most US guys will be thinking twice with reduced credit limits on their cards.. - maybe that's not so bad though.

[Jack]

You mean, no more trip reports?

Probably fewer trip reports.

What would happen to the FSU marriage business, which is almost an industry in Ukraine.

The amount of money bride seekers bring into Ukraine is a lot.  Men seeking brides for the most part are thrown into the "tourist" category. Tourist, tourism, is certainly a big part of many people's lives in Ukraine. From the local hotels in the center of Kherson or Nikolaev, Dnepropetrovsk or Kharkov, Lugansk and Zaporozhye, to the owners of restaurants in these same cities and many more, they DO and ARE feeling the financial crunch.

I have talked with many agency owners, with the people who work in the hotels who know me after using their services for many years, to even the taxi drivers, everyone I have talked to tell's me they can feel the effect of fewer men, fewer tourist.

And the one city where I hear this the loudest, the one city where I hear people are effected the most is,......any guesses?

It is Kiev. Tourism is really down and business is greatly effected if one can believe all the comments I hear. The only positive thing I can see so far (besides the dollar rising) is that the price of rental flats in the center have stopped rising and if their is no convention, exhibition or sporting event at the time we can even get better pricing for flats than we were paying 6-9 months ago.

[Makkin]

  Cash works fine and flights are cheap enough for most in USA.


   Maybe I'm in a not so effected part of the USA as there is little change here in southeast Texas except for the hurricane that gave me 15,000 for repairs to my home which myself and friends will complete for about 1/3 of the insurance payment.

   Americans do have more income to spend for some reason but lately they have stopped visiting Europe due to the costs being too high. Ukraine is not too high but many Americans realise that there are cheaper and much cheaper places than Europe.

   I suppose the tourist industry has been severly effected in Europe but getting the news out of Europe is sometimes hard to do. Many vending type people are out of business and about 3000 restuarants in France have closed in the past 12 months. Tourism is a "KEY" component of Europe but due to the global situation the spending has dried up and will take much much time to come back if ever on the same scale.

  Many countries out of Europe are suffering the same tourism blues but some not so much. The countries that are still getting the tourists are getting less spending from them... Europe may be happy in the long run of the loss of the Euro's power but guarantee of happy spending tourists is not a given and will take extreme measures to even have a shot at the past times.

Makkin

[Jumper]

hey riv..
you havnt been to the FSU yet ?? dang you are dragging your feet long enouyfgh already!shewsh!  lol

on Iceland,
search the archives , i said about 3 or 4 years ago?
that it  probably had the largest percentage of truly beautiful women,
and with the economies of the world shaking up ,
it might become the next big   MOB place

i think i even joked to Dan about getting  IWG or IWD.com   tied down..  lol

but if you think learning Russian is hard, try Icelandic?

[ambach123]

So I guess Sculpto's trip to Moscow is the last trip report we have seen for a while.

When I was in Kiev, I saw so many cars, I could hardly walk on the streets. Little did I know that no one actually paid for them, and ditto for flats.

Don't they have a repo man?

[Mishenka]

Speaking of economic mourning,,,

Egypt: tough choices in the pipeline - as reported by janes defence.   http://frp.janes.com/public/frp/index.shtml

Egyptian ambitions to export gas to European markets received a boost in September, when the governments of Syria and Jordan agreed to extend the Arab Gas Pipeline (AGP) into Turkey, where it could connect with existing gas transmission infrastructure to take Egyptian gas on to Europe. Two companies already export gas to Europe in the form of liquefied natural gas, but a pipeline would provide more options, including the export of gas to landlocked European countries such as Austria, Hungary and the Czech Republic. 

With Ukraine buying gaz from Turkmentistan and Europe buying from Egypt, it won't be long until they will be saying goodbye to Gazprom.  More economic woes in lost revenue for Putin

[OlgaH]

With Ukraine buying gaz from Turkmentistan and Europe buying from Egypt, it won't be long until they will be saying goodbye to Gazprom.  More economic woes in lost revenue for Putin

The EU and European companies are eager to help Gazprom develop its gas reserves sooner rather than later to meet Europe’s growing energy demands.

Merkel who has generally taken a harsher stance towards Russia than her Social Democratic predecessor, Gerhard Schroder, a buddy of Putin who now works for Gazprom, realised which side her bread is buttered on. 

http://www.neurope.eu/articles/90142.php

ROME, 26-SEP-08 (UPI) -- Russian energy monopoly Gazprom signed a deal with two Italian firms Friday to establish a consortium for natural gas deliveries through 2022.

13.10.2008
Gaz de France Takes Gazprom to CanadaGaz de France Suez, formed from the merger of Gaz de France and the Franco-Belgian Suez, Europe’s largest gas concern, has signed a development strategy with Russia through 2013, Jean-Francois Cirelli, deputy general director of the Franco-Belgian company announced on Friday.

KIEV, Oct 24 (Reuters) - Ukraine will start paying the market price for Russian gas in three years, according to a contract between the two countries' monopolies, published on a newspaper Web site on Friday. A source in Ukraine's state energy firm, Naftogaz, confirmed the authenticity of the contract between it and Russia's Gazprom published on the weekly Zerkalo Nedeli's Web site.
http://www.cnbc.com/id/27356710

[Mishenka]

Olga, don't worry, it will take 10 years before the Egypt and Turkmenistan pipelines are competed. Gazprom has a few years before the need to be concerned about loosing contracts. Until then, they can enjoy buying and selling with Euro partners who will eventually need more gas as the population grows in the future. When the pipelines are complete, the population might have increased enough to need more gas, maybe not. who knows? Either way, Gazprom will no longer have a monopoly on it. Prices have plunged.  They may be eager today but once they have better alternatives, this will change.

Regarding Ukraine, the prices of oil and gaz have fallen, lower than what they are paying now. Heating oil is at 1.95 a gallon, crude per barrel is at $62- 66 depending on where its coming from.  A far cry from 150 it was, removing the profit from sales. Natural gas prices have fallen with Oil at the same % rate.

The reason to mourn is the prices have fallen and to add insult to injury the Ruble is falling with it, 27ru to $1 

[Makkin]

  Oil prices drop daily and Russia stops cranes on work sites daily. I would imagine a stronger economic plan for a country other than being a one horse pony?

  I understand Putin is upset with economic conditions and is ready to blame the world but he must understand free enterprise better in my opinion. It's like a person with a 401K but Russia is the person and all they bet is that oil prices will rise and oil will last forever. Putin really is not the economist and probably never will be as it stands. Economic woes shall last another decade it seems.

Makkin

[OlgaH]

Olga, don't worry, it will take 10 years before the Egypt and Turkmenistan pipelines are competed.

Mishenka, I don't see any sense in worrying 

As OPEC's Secretary General Abdalla el-Badri has said:

The market was stabilising at the beginning of 2007. However, because of speculation - very extensive speculation - on the oil market and the labour market we now see a very high price.  However, this speculation came from the subprime mortgage in the U.S.  With the collapse of the subprime mortgage, they used oil as a financial asset. So they used that and pricing started going out of control.

The situation [in the financial market] has been created in the United States and should be solved in the United States.

What we want is to regulate the market, to watch the market and not allow excessive speculation and not to let the price go wild as happened in July this year

Russia is a very important oil producer with a lot of knowledge and experience. I don’t know if it wants to join OPEC or not, but if it does, it is always welcome

 

Yesterday Gazprom CEO Alexei Miller as well as Oil and Energy Ministers of Iran and Qatar announced setting up “the gas Group of Three”, which will lay the foundation of the future “gas OPEC”. It is planned to complete the founding of the new organization in Moscow on November 18. The main aim of the owners of the world’s largest gas reserves is their desire to prevent hydro carbon prices from plunging.
http://kommersant.com/p1045195/r_1/A_gas_OPEC_to_be_set_up/

MOSCOW, March 19, 2008 (Reuters) - Senior officials from Russia and Egypt on Wednesday discussed the entry of Russian natural gas export monopoly Gazprom  into energy projects in Egypt, the Egyptian Trade and Industry minister told Reuters.

Minister of Petroleum Sameh Fahmi noted that working teams were formed to activate a memorandum of understanding inked between Gazprom and Egypt's EGAS and discuss means of establishing joint oil ventures. Egypt also cooperates with Russia in prospecting for gold and other precious metals.
http://www.sis.gov.eg/En/EgyptOnline/Economy/000009/0202000000000000008470.htm

[Makkin]

Olga,

  Worry is the main thing to be found in the oil industry at this time. As you know the oil rich are not as rich and the price of goods is not in the favor of those with oil only economies.
  The reason the Saudis bought all the corn futures is not because they were cheap but because they do not produce food enough to feed the population.
  While Iran exports oil it also imports petrol to run machines and cars...I think a good economic plan for Russia is to not depend on oil as technology will prove to be the downfall and that's as close to a guarantee as it gets.
  What will be next if anything for Russia in say 15 years?

Makkin

[Mishenka]

Olga, he is wrong about Subprime lending, it was not based on oil spec at all it was based solely on real estate prices increasing as they have been for years.  I disagree with him and his propaganda for the media. I don't buy into it.  OPEC lost some control of setting prices because of Speculators in the market selling on high hopes, but this will noot be possible in the future.  By the way, its really a mix of things, not just oil and real estate. there are far to many things to cast blame to be so short sighted to choose only one. Oil is still based on the USD, and now that the Euro is low, it has come back to reality pricing and will continue to settle to a pre falsely inflated rate placed on it by oil investment speculators.

What has brought oil  prices down is that USA has been using 8% less this month ( September) , than they used in prior months. When the largest user stops buying trillions of barrels of oil, demand falls and prices fall., so now OPEC decides to drop production because of the Oil glut on the market sitting in ports with no place to go.  Still prices fall 5 dollar more. ???  Ok so, whats next?

[Misha]

When the largest user stops buying trillions of barrels of oil, demand falls and prices fall., so now OPEC decides to drop production because of the Oil glut on the market sitting in ports with no place to go.  Still prices fall 5 dollar more. ???  Ok so, whats next?

Well, the problem is that OPEC has a poor record of cutting back production when both demand is dropping and prices are dropping. The reason is that all the OPEC countries want their fellow OPEC members to cut production, while they talk the talk and cheat on their quotas. When all or most OPEC countries try to outfox their fellow OPEC members, this leads to further price cuts as an oil glut continues to build. OPEC is more successful when prices go up immediately after a production cut as the higher prices can compensate for lost revenue.

[Mishenka]

Makkin , the Saudi's also own Saudi American Bank who owns 30 % in Citibank, among other banks in USA, one of which is no longer with us, Lehman, is gone, and the Saudi's lost billions.

Da Misha, your post is so true,

Mishenka

[Ronnie]

What is happening right now is healthy.  Why do I say that?  Prices were overheated in real estate and in oil.  Both are falling and that is simply the market at work.  When home prices fall far enough, people will buy and lenders will lend with confidence.  When gas prices fall far enough, prices of everything will fall as there is an energy component in the price of everything. 

Airlines and cruise lines are dropping their fuel surcharges. 
Speaking of airlines, ironically for the first time in 17 years Southwest
Airlines reported a quarterly loss.  The loss was due solely to their options contracts having to be written off as worthless due to the fact that fuel costs less on the spot market than Southwest's option price was set at.

Here in San Diego, you can actually buy a condo now for under $100k.  More and more three bedroom homes are dropping below the $200k mark.  I saw gas for under $3/gallon today for the first time since January.  The recession won't last long at this rate.

One price that has not gone up has been the cost of money aka interest rates.  I 1980-81 our rates were at all-time high...about 20%.  We do not have that problem today and won't as the world is awash in capital.

As to Russia....  Or should I say Putin's Russia.  Putin says in September that the US is weak and irrelevant.  In October later he blames the USA for controlling Russia's economy.  He wants it both ways.. I'm not sure his people are buying what he's selling anymore.

[OlgaH]

I disagree with him and his propaganda for the media. I don't buy into it. 

I understand you 

What has brought oil  prices down is ...

which propaganda do you buy? 

Mishenka, while you prophesy a destiny for Russia, Russia discusses projects and makes the long-term contracts  with Europe, East and Asia...  Egypt, Japan, Korea and whatever   

Don't mourn over Russia beforehand.  Save your tears as I do 

[OlgaH]

Oh, OK OK I should not spoil your so heartfelt  mourning over Russia   

[Mishenka]

Olga, you know, I did not write the prophecy, it was written thousands of years before my time. We can not trust in contracts written for a future we have absolutely no control over. What is to be, we can not change.  I will always be concerned with the people I care for.  My eyes are on the whole world, not just one country. The writing on the wall, as I see it is a very grim forecast. The next 2 years will be hell on Earth for most people.  For many it already is or has been.  What I spoke about during and after the results of the Russian- Georgian conflict,  I was reading the writing on the wall, and to my expectations, it has come to pass only 2 months later. Oh,, how interesting such timing?  Not really, anyone could see it. For every action there is a reaction. It is not rocket science.

Just curious if you have a degree in economics?  It takes a lot of faith to believe in the future that has not happened yet. Galina tells me  "It is not wise to count your chickens before they hatch".  The same for Putin, he can not count on oil or gaz futures in contracts with Europe. There are far to many options on the table as Iraq is now selling billions in oil and gas to China, and Europe also     With so many sources to  choose for energy needs, they will take the lowest price.

I had high hopes for Russia, now I begin to wonder .......   I will save the sadness till after the new year.

Mishka

[Makkin]

Mishinka,

  Yes you are right on about Citi as it was the first time a country bought into an American banking institution as they were strapped for cash at the time and the US government allowed that to happen.
   Citi had new mark downs today at no real surprise and things are long to reach the bottom it seems.

   I believe from memory alone...may be wrong but in any case Citi has a large amount of 401K monies and has about a trillion in assets or something close in US dollars.

Makkin

[Makkin]

  Remember those television ads where they told ya they would guarantee you 2.99 gas for two years if you bought the new car?...lol Now it's as low as 2.05 here and those that took the deal lost the rebates of 2-4 thousand in another genius scam for car dealers.

Makkin