The Russian economy (catch all)

[OUTLAW 09]

Yes outlaw, the oil rout in recent weeks, especially the last days was indeed an amazing thing to watch. Show me the expert which predicted it at those levels and was not almost anytime wrong in the last ten years or so. This is why I try to avoid that area like the plague. I'm glad that I'm not long on commodities.

As I have been bearish on the Russian economy in the long run I have to especially careful not to overvalue short term events which support my view. Much depends on how long the oil price stays at such or somewhat higher levels.

P.S: Russia also suffered btw some losses when they exchanged hard dollars against soft gold.

firn---this whole trend was triggered by the almost unannounced Strategic l Reserve oil sale of 6m barrels months ago shortly after the Crimea annexation--that was when the price started to move.

Still not sure if in fact the KSA moves are targeting the US due to their coming online with light crude out of fracking which I doubt as the US crude from fracking is a very good quality light crude somewhere above WTI and under Brent or truly targeted against Iran their regional hegemon competitor and Russia for supporting both Iran and Assad.

[davidbfpo]

An Open Democracy article by a Russian and paints a dire picture:

I was amazed the machinery was working! They were harvesting the grain from under the snow!’Kholmanskikh was telling the truth..... in the Kurgan Region, for example, where 40% of the grain to be harvested is lying under snow...

Link:https://www.opendemocracy.net/od-rus...berian-harvest

[OUTLAW 09]

Ruble down this morning by 3% already.

Now Putin is trying desperately to protect the oligarchs income and yet it will destroy his own economy due to lost taxes that have to then come out of the pocket of the average Russian.

Putin frees Gazprom from taxes for 15 years, raises taxes on small business 7.5%
https://twitter.com/msvetov/status/539352807392808960 …

[OUTLAW 09]

With the de facto devaluing of the ruble current inflation rate is running about 41%.

Putin has about one week left tot make a critical decision as he cannot stop this spiral dance of fiscal death--go for a military victory in eastern Ukraine--- and risk even more sanctions or focus on his own economy?

No relief: Ruble takes another step down, to 53.17/$ and 66.28/euro

Ruble is following the exact drop rate as the price of oil---

[OUTLAW 09]

With the de facto devaluing of the ruble current inflation rate is running about 41%.

Putin has about one week left tot make a critical decision as he cannot stop this spiral dance of fiscal death--go for a military victory in eastern Ukraine--- and risk even more sanctions or focus on his own economy?

No relief: Ruble takes another step down, to 53.17/$ and 66.28/euro

Ruble is following the exact drop rate as the price of oil---

It just keeps on falling---and Putin just stated it is good though for the economy?

Hard to follow the ruble today. New low is 53.4109 against the USD.

[Firn]

In some cases you will reach success only through almost heroic effort, but if something makes little if any economic sense you have to ask yourself Pyotr Shumakov's question: 'Who needs this “heroic harvest?’

If you are forced to do heroic deeds very often in business to just tread water then you are doing something wrong or are in a bad spot in a bad business.

Kholmanskikh, Putin's envoy, no doubt would have enjoyed the heroic spectacle. But one of Omsk’s oldest farmers, Pyotr Shumakov, sees this heroism as destructive. ‘They are ruining people and equipment. What’s the point of harvesting grain from under the snow? To make it usable, they’ll have to run the grain through a dryer three or four times. And that costs money. And where do you find a dryer anyway?’ Indeed, the region is short of dryers and other equipment. Vitaly Erlikh admits that it’s not even a question of individual farms. For instance, there is not a single dryer in the whole of the Kolosovsky district, which covers an area of almost 5,000 square kilometres. ‘And if the grain is damp, the silos reduce their price per tonne by 1,000 roubles (£13). So you end up burning a lot more diesel. Who needs this “heroic harvest”?’

Pyotr Shumakov was still to begin harvesting his 18 hectares (45 acres) on 3 November. Waiting for the snow to melt and the fields to dry out, Shumakov had been measuring the moisture content of his grain on a daily basis. And all the other farmers he knew were doing the same. For them, it’s not a question of heroism: ‘We don’t need all this showing off. We need to survive.’

It has been also obvious for a while that not only the farmer in this area have a hard time to get a credit or to serve their old one. I remember that in a short piece from Moscow after the second round of Western sanctions they interviewed people in the market and then a farmer. The consumers were almost elated by the 'superior' quality of Russian food, making the switch to the rather gloomy small farmer even more marked. The latter talked pretty much about the same issues, lack of credit and thus little investment. While some with enough capital and possibly connections will expand production it will be hard for the small and medium farms to follow suite in similar fashion.

[OUTLAW 09]

In some cases you will reach success only through almost heroic effort, but if something makes little if any economic sense you have to ask yourself Pyotr Shumakov's question: 'Who needs this “heroic harvest?’

If you are forced to do heroic deeds very often in business to just tread water then you are doing something wrong or are in a bad spot in a bad business.



It has been also obvious for a while that not only the farmer in this area have a hard time to get a credit or to serve their old one. I remember that in a short piece from Moscow after the second round of Western sanctions they interviewed people in the market and then a farmer. The consumers were almost elated by the 'superior' quality of Russian food, making the switch to the rather gloomy small farmer even more marked. The latter talked pretty much about the same issues, lack of credit and thus little investment. While some with enough capital and possibly connections will expand production it will be hard for the small and medium farms to follow suite in similar fashion.

Seems the current Russia failed to remember the Soviet days that also failed for the exact same reasons it is now---massive corruption and planned state economic decisions.