Excellent article from the Saker about Russia's economic problems. Have you noticed that the disgusting Western media has been crowing over "Russia's collapsing economy?"
The problem is that they blame this collapse 100% on Putin! Then they complain that the Russian media doesn't say anything about the truth of the problem - all they do is blame the West. Well sure they do! Because that's the sensible thing to do! Russia's economic problems are 100% the fault of the West! Well the West and the Saudis, but the Saudis are in alliance with the West. The economy is in trouble due to economic sanctions and falling oil prices.
The Western enemies of the Russian people put those sanctions in and the Saudi enemies of the Russian people crashed the oil price. Both of these actions were done, in part, to destroy the Russian economy and force regime change in Russia. Of course it's the fault of the West! Of course it isn't Putin's fault!
As you can see below, the so-called economic crash is wildly exaggerated. Falling oil prices will hurt the US and its flinty-eyed Anglosphere allies the UK and Canada too. Further, I understand that all of Europe is in recession at the moment. Much of Europe, especially Germany, is hesitant to put further sanctions on Russia because counter-sanctions are hurting the Germans too much.
Furthermore a devalued ruble will have the advantage of making Russian exports cheaper and the products of Russia's competitors more expensive.
So surely there are economic issues presently and in the near future, but as usual, the lying Western media has dramatically exaggerated them at the same time they are lying about the cause of the problems.
The West is also crowing that Putin is in crisis and the Russian people are starting to turn against him. I am sure that lie is great for selling papers, except that it's not true. Yes, Russia is going through some difficult times, but that's been the case for the last year, and Putin's popularity has done nothing but skyrocket the whole time. There is no evidence that the Russian people are turning on Putin in any way. They know that the economic issues are not his fault and were caused by the Western Enemy. So in order to go against him, they would have to side with the US Enemy against the Russian Homeland. The Russian people are very patriotic and they have been through all sorts of horrific crises before. What about World War 2? That was so much worse than now and the Russian people never gave one inch then, so why should they now.
The Atlantic Integrationists are the pro-Western traitors in Russia. The Russian government is full of these traitors. Presently they are working for the West against their homeland in order to sabotage the state. The opposition to Putin is largely made up of these characters. The pro-Westerners have the support of maybe 10% of Russians. Most Russians despise them and refer to them as dirty traitors. One of the problems is that these sellouts and moles are partly running the country.
Dollars for Borsch
There is a lot of speculation about the economic health of Russia in the light of tougher sanctions, falling oil prices and tumbling ruble. Concerns are raised whether Russia can afford it's existence. However, those concerns are paper thin and are presented in more of a mocking spirit, because in most prediction acrobatics, actual revenues of Russian state are not considered at all.
Many sources, in their predictions for Russian economy, are repeating the same mistake over and over again. Roughly speaking - assesments are made under the assumption that Russians pay dollars for their borsch. In reality, Russia sells borsch for dollars. This is important point to consider, because Russia pays it's public sector expenditures (education, healthcare, pensions, police, army etc) in rubles!
As we all knew (those who didn't got it stamped in the face this year thanks to the good will of liberal media), Russian revenues are based on natural resources. Sales are conducted in FX (except for special agreements, some of which are still pending). So let's take a look how the purse of Russian state is being filled.
For the purpose of this article, rough numbers were taken from NASDAQ WTI chart for oil and XE USD/RUB chart for FX. Example will be based on average gas price for Germany in 2013, which was $366 (according to Bloomberg).
Oil Situation
As far as Russian Treasury is concerned, income from oil industry is just fine and is probably exceeding early 2014 estimates for next years budget. Even at tumbling oil prices, falling ruble is compensating more than enough - revenue rose roughly 12% year-over-year.
Gas situation
Let's take a look at this years picture using the same ruble prices from the oil chart. It is easy to see that ruble revenue almost doubled by the end of the year and averaged 31% more in year-over-year income.
Surprise, n***a!
On paper, Russia will have good fiscal numbers and a solid budget for 2015. This of course is just a cover image. Russia plans major investments for 2015 and onwards (with developments in the west, Russia needs "2020" to happen much quicker) and is most likely to tap it's floating currency mechanisms for issuing more rubles for those investments. I doubt that Russia will waste FX by selling them for rubles right off the bat if they can print the money against fresh FX holdings. The "big throw" will be reserved for later as we all know what happens to countries that dump dollar overnight.
Last thing Russia (and China, too) needs right now is another color/umbrella revolution being sped up. Equally importantly, one must not forget that Russian and Chinese financial systems combined hold trillions of US treasuries (it's insane to hold cash as bank deposits are guaranteed up to $250K, treasuries have no limit against bankruptcy) which they wouldn't want to deprecate before major swap and secure measures are in place. So unless the west comes in with guns, don't hold your breath for international ruble just yet. Instead, what Russia needs right now is a weak ruble that will force to dump imports and start thinking about substitution and better yet realizing Russias natural potential.
The plan is to force Russians to think about long-term local business, not just quick-buck consumerism. Russia must give a crude awakening slap to the late and advantage to the early wakers amidst decreasing foreign profits. Make the business to step up with own goods and technologies, initiate a cross-sectoral build up and stop companies siphoning money off-shore where it gets pocketed by western "asset managers".
Fate's Irony or Enjoy Your Bath
Ironically, weak ruble will also punish EU for doing dirty work for the US. Now it's for everyone to see that US waves the stick while the EU pays the price. Weak ruble will decrease tourism from Russia and exports to Russia. EU's agricultural sector is already sensing light, but increasing pain. Tech industry shall follow if Russia is to prolong the embargo and weak ruble combo. Yes, low ruble means less purchasing power abroad. Yet it also means competitive advantage for Russian goods in foreign markets and thus increased selling power - a signal for future development. Mercedes-Benz has announced that it plans to build several plants in Russia.
Volvo, Renault-Nissan and others are already there. If this will materialize - hello jobs for Russians and goodbye long awaited economic recovery for EU! Germany will be punished for it's ambition to monopolize the distribution of Russian gas by attempting to take Ukraine into its fold through post-coup privatization (now just a crushed dream), while actually opening Pandora's Box for US to exploit. Get ready for a triple whammy (must be some excellent German engineering)!
Firstly - US took Ukraine over and kicked Germany over the fence with Merkel compliantly shutting up. Secondly, EU's sales to Russia were decreasing and with tumbling ruble are guaranteed to decrease even more. South America, Turkey, India and China will be more than happy to fill the void. And thirdly, how's prospect of Turkey becoming major regional gas hub for you? Saxon greed has met its borders within the mauling paws of the bear while oldest nations of the world are economically invited to watch the show.
Crackdown on Brokeback Mountain
During the 18.12.2014 press Q&A session, when asked if he has confidence in the elites surrounding him, Putin replied that the biggest confidence stems from the overwhelming support of the Russian people. That was after some quite dangerous fifth column definition gymnastics and attempts to break Putin's confidence took place. Russia will use current economic situation not only to punish it's western "partners", but also will have the perfect excuse, once comfortable, to clean up its fifth column in the government and banking.
While low ruble will add pressure to European economy and steep central bank rate will stop predatory ruble trading, Putin will have a card up his sleeve to unleash the "wrath of Russian people" onto the traitors in the establishment responsible for "susceptibility to western sanctions", "unexpected currency dive" and "expensive financing".
Switching staff by popular demand will remove a lot of questions internally and give that extra legitimacy externally. "The Moor has done his work, the Moor may go" at its finest. However, lowering the funds rate at the central bank will probably not give any rise to ruble (because of foreign perception, not economic reality), but as previously laid out, that might be desirable all along - easier financing and boosted competitiveness is what the business always needs.
