8 ms·

Russia's economy is back on its feet

43 points by IdEntities 4y ago

CamperBob2 4y ago
It's early yet.
- mirntyfirty 4y ago
  Yes, it seems as though economics is measured in multi-year timeframes.
- syntheweave 4y ago
  The last analysis I looked at noted that a lot of perceived strength in the ruble was manufactured by lowering capital liquidity through controls and freezes. This sets the economy on a path to go haywire later. We'll see.
  - sofixa 4y ago
    Yep, even the chier of the Russian central bank says so herself, the "fall" is expected in Q3. Source with more information: https://threadreaderapp.com/thread/1522751751681904640.html https://threadreaderapp.com/thread/1522751751681904640.html
- nekitamo 4y ago
  This. American policy leaders have said they expect at least a year before the bite of sanctions is felt economically. It's too early to comment on their efficacy.
oxff 4y ago
I was told the `sanctions` would turn Russia into rubble, instead they ended up improving Ruble's performance, Russia's trade balance & current accounts.
- DevKoala 4y ago
  Amazing recovery on the rubble vs the dollar. It is trading at the best of it’s 2020 performance and it had been on decline since then. Now it is actually going back to pre-pandemic levels. I wish I had bought some back when the news were claiming Russia’s economy is finished. I would have doubled my money.
  - kqr 4y ago
    As a general rule, when the news say something, people will overcompensate so it's in your interest to act on the opposite. On the other hand, it's not enough to just be on the right side of the trade: after all, the markets can remain irrational for longer than you can remain solvent.
  - ido 4y ago
    It’s not just about how much money you can make though - buying rubles helps Russia continue policies (hopefully) considered ethically wrong, such as waging war in Ukraine.
    - oxff 4y ago
      I have yet to see the evidence that not-buying-rubles / sanctions have had an effect on the strategical and tactical goals Russia government and its armed forces have placed for themselves in Ukraine. This just seems to be assumed for some reason, as if Russia would see themselves as MBA Consulting Firm and simply drop the conflict when they get financially sanctioned. iow. the sanctions are ineffective in their stated / assumed purpose (deterring, that is, modifying Russia's behavior wrt. the war, I do not believe they've discouraged or hampered Russia in their war at all).
      - rich_sasha 4y ago
        Russia has to halt their tank production as they cant source the right components anymore. They were already struggling with military nets production before the 2022 sanctions, just based on the post-Crimea ones; a number of buyers refused to take delivery as jets came without key equipment that Russia could no longer make. It only got worse for them now.
pinewurst 4y ago
https://archive.ph/M1lqj https://archive.ph/M1lqj
durnygbur 4y ago
Russia with it's vast territory is surprisingly self-sufficient and resilient. Their consumers might have shortage of avocados, their oligarchs will have net worth cut from dozens of billions to single billions. They will evolve into something different and then Germany, Netherlands, Italy and others will again start pumping money into it. Unfortunately the true loser is Ukraine. Now they're completely dependent on the western world while being outside of its political and military unions, treaties, and organizations. Resentment of their population can lead back to oligarchy and corruption known from 90s and 00s and return to the vicious circle of misery.
mercy_dude 4y ago
This goes to show how inept and inconsistent western leadership has become in terms of policies. Not so long ago, “sanctions don’t work” was the mantra of the political class and Wall Street when there was a trade war with China. And now those same people argued for the most ludicrous types of sanctions that actually hurt their legitimacy long term. Why would countries with emerging market economies hold their reserves in UST and USD when it can be seized without due process? Rule of law was the last thing west has and the leadership across the board are going out of their ways to destroy its legitimacy. Another worrying symptom in much of the western democracy is how the court system is becoming complicit in all this. When individuals of Russian origins were getting their assets seized with no due process whatsoever , where was the court system in this? I have no sympathy for Russian oligarchs but law should apply for everyone equally. These types of blanket seize gives state powers to set the precedent which in the future they can apply against anyone. Canada already did this to their own people.
- Nevermark 4y ago
  I doubt that the US, working closely with many other countries, in opposition to an invasion, will move that needle much. But sanctions for lesser evils, sanctions taken more unilaterally, and sanction changes triggered by the revolving door of US politicians & parties, have given many countries heartburn.
- lostmsu 4y ago
  Frankly, you are just repeating Russian propaganda here. Pretty much nobody in the world cares about US seizing Russian USD because nobody important is planning a full scale invasion into a neighboring country. I bet you if the UN could vote on that, seizure would be approved almost unanimously.
  - ghufran_syed 4y ago
    Does that matter if it’s true? Or should we not consider the possible truth of it because we don’t listen to the “unbelievers”
    - 4y ago
techsin101 4y ago
to be fair most of trade today is overly interconnected for no good reason, i have seen scenarios mentioned where part is made in brazil, shipped to singapore, then assembled in thailand then shipped to usa. but it somehow comes cheaper than assembling in brazil and shipping to usa because of existing volume or something. but that's very shortsighted. Sure free market is efficient. But what it's not is forward looking. Govt can step in kick start reactions which leads to enough volume from brazil to usa to make that economical as well. but it'd have advantage of less fragile supply chain and more env friendly process....
- swagasaurus-rex 4y ago
  Seems like the low cost of ocean freight, especially compared to the infrastructural costs of rail or road, mean that it's often cheaper to trade with your oceanic neighbors than to even other parts of your own country. This isn't new, Mediterranean has throughout history linked the Middle East, Egypt, North Africa and Europe through ocean trade routes. These trade routes have, on occasion, collapsed to disastrous effect.
  - techsin101 4y ago
    I mean it happens organically that math works out that way. But there is an opportunity for govt to create geographically closer pipelines of trade in order to better the reliability of supply chain and environmental effect. For example, there is no reason for stuff to go from mexico to thailand just to be assembled. Only reason could be is that there is existing talent that is available to do it, but brazil lacks those skills. But if govt worked with brazil govt to train for those skills and kick-started industry, then the cost might be even more cheaper due to saving on the half the world trip.
awelkjlkrg 4y ago
- s5300 4y ago
  @dang this guy seems to be on a rampant throwaway spam spree tonight. Not sure if you can block him at the source.
  - aaaaaaaaata 4y ago
    Send email, they don't always see these comments. Just almost always ;D
riffraff 4y ago
The "back on it's feet" in the title corresponds to "it will not lose 15% of the GDP this year as some economists think, and central bank rate is still at 14% while capital controls are in place" in the body of the article. I invite everyone commenting to consider how a GDP loss of less than 15% mean that things are fine.
- droopyEyelids 4y ago
  The context for “fine” is that the western world did everything in its power to destroy Russia’s economy and send them into famine and destitution
  - HWR_14 4y ago
    > the western world did everything in its power to destroy Russia’s economy It most certainly didn't. ICBMs, for instance, could grind the Russian economy to a halt in 15(?) minutes. Also, there are still steps to cut off Russian oil and other products that haven't been done because it would cause a lot of suffering. I think the proper characterization would be that western governments have foregone profits and some convenience to break Russia's economy.
    - dmitrygr 4y ago
      > ICBMs, for instance, could grind the Russian economy to a halt in 15(?) minutes that will bring world GDP to zero rather fast. Suggest reading on mutually assured destruction and on second strike capabilities.
      - HWR_14 4y ago
        I didn't advocate for icbm usage. I'm just pointing out it's more effective. Although, while I wouldn't (literally) bet the world on it, I doubt that Russias nuclear arsenal has much second strike capability. Heck, I'm not sure they have functioning first strike capability to significantly damage the US.
kstenerud 4y ago
If by "back on its feet" you mean standing on two wobbly, splintered wooden legs infested with termites, then sure. This is how capital controls work: You control how your currency can be traded, and then of course it closes in on whatever value you've decided upon. Naturally, the value is meaningless and sweeps the underlying problems under the rug, but it makes for great propaganda. Russia has been a Potemkin village for a long time now in so many ways, and it's embarrassing how they've managed to fool the Western public so spectacularly. It feels like the late 80s all over again...
- jjtheblunt 4y ago
  > how they've managed Perhaps with help from Western propaganda, in turn funded by big Western industries?
poutineman 4y ago
I hope everyone realizes this thread is pure premeditated propaganda. These comments are repeating RT and Sputnik rhetoric which is aimed at muddying the waters. Makes sense to target HN since there are influential people who browse this site. There's nothing about Russia that is "back on its feet". Listen to absolutely any respectable geopolitical expert on the future of Russia and you'll get more or less the same depressing answer.
r721 4y ago
Thread: https://twitter.com/samagreene/status/1522751751681904640 https://twitter.com/samagreene/status/1522751751681904640 (Nitter version: https://nitter.eu/samagreene/status/1522751751681904640 https://nitter.eu/samagreene/status/1522751751681904640)
andy-x 4y ago
Official exchange rate is meaningless as you cannot transfer dollars into or out of Russia. Based on some internal sources (not super exact, but still indicative), I think cash exchange on black market is closer to RUR 150 per USD today.
- TMWNN 4y ago
  A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), occurs when a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina. Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars, whether via official or unofficial means.
akomtu 4y ago
TL;DR Putin is trying to look strong by fabricating the USD/RUB exchange rate, and that's understandable: with his army and even his own body falling apart, that meaningless number is the only thing he still can control.
sofixa 4y ago
There's this Twitter thread in response: https://threadreaderapp.com/thread/1522751751681904640.html https://threadreaderapp.com/thread/1522751751681904640.html TL;DR: the article is technically kind of correct, but actually very wrong on the substance

43 points by IdEntities 4y ago

CamperBob2 4y ago

It's early yet.

mirntyfirty 4y ago
Yes, it seems as though economics is measured in multi-year timeframes.
syntheweave 4y ago
The last analysis I looked at noted that a lot of perceived strength in the ruble was manufactured by lowering capital liquidity through controls and freezes. This sets the economy on a path to go haywire later. We'll see.
- sofixa 4y ago
  Yep, even the chier of the Russian central bank says so herself, the "fall" is expected in Q3. Source with more information: https://threadreaderapp.com/thread/1522751751681904640.html https://threadreaderapp.com/thread/1522751751681904640.html
nekitamo 4y ago
This. American policy leaders have said they expect at least a year before the bite of sanctions is felt economically. It's too early to comment on their efficacy.

oxff 4y ago

I was told the `sanctions` would turn Russia into rubble, instead they ended up improving Ruble's performance, Russia's trade balance & current accounts.

DevKoala 4y ago
Amazing recovery on the rubble vs the dollar. It is trading at the best of it’s 2020 performance and it had been on decline since then. Now it is actually going back to pre-pandemic levels. I wish I had bought some back when the news were claiming Russia’s economy is finished. I would have doubled my money.
- kqr 4y ago
  As a general rule, when the news say something, people will overcompensate so it's in your interest to act on the opposite. On the other hand, it's not enough to just be on the right side of the trade: after all, the markets can remain irrational for longer than you can remain solvent.
- ido 4y ago
  It’s not just about how much money you can make though - buying rubles helps Russia continue policies (hopefully) considered ethically wrong, such as waging war in Ukraine.
  - oxff 4y ago
    I have yet to see the evidence that not-buying-rubles / sanctions have had an effect on the strategical and tactical goals Russia government and its armed forces have placed for themselves in Ukraine. This just seems to be assumed for some reason, as if Russia would see themselves as MBA Consulting Firm and simply drop the conflict when they get financially sanctioned. iow. the sanctions are ineffective in their stated / assumed purpose (deterring, that is, modifying Russia's behavior wrt. the war, I do not believe they've discouraged or hampered Russia in their war at all).
    - rich_sasha 4y ago
      Russia has to halt their tank production as they cant source the right components anymore. They were already struggling with military nets production before the 2022 sanctions, just based on the post-Crimea ones; a number of buyers refused to take delivery as jets came without key equipment that Russia could no longer make. It only got worse for them now.

pinewurst 4y ago

https://archive.ph/M1lqj https://archive.ph/M1lqj

durnygbur 4y ago

Russia with it's vast territory is surprisingly self-sufficient and resilient. Their consumers might have shortage of avocados, their oligarchs will have net worth cut from dozens of billions to single billions. They will evolve into something different and then Germany, Netherlands, Italy and others will again start pumping money into it. Unfortunately the true loser is Ukraine. Now they're completely dependent on the western world while being outside of its political and military unions, treaties, and organizations. Resentment of their population can lead back to oligarchy and corruption known from 90s and 00s and return to the vicious circle of misery.

mercy_dude 4y ago

This goes to show how inept and inconsistent western leadership has become in terms of policies. Not so long ago, “sanctions don’t work” was the mantra of the political class and Wall Street when there was a trade war with China. And now those same people argued for the most ludicrous types of sanctions that actually hurt their legitimacy long term. Why would countries with emerging market economies hold their reserves in UST and USD when it can be seized without due process? Rule of law was the last thing west has and the leadership across the board are going out of their ways to destroy its legitimacy. Another worrying symptom in much of the western democracy is how the court system is becoming complicit in all this. When individuals of Russian origins were getting their assets seized with no due process whatsoever , where was the court system in this? I have no sympathy for Russian oligarchs but law should apply for everyone equally. These types of blanket seize gives state powers to set the precedent which in the future they can apply against anyone. Canada already did this to their own people.

Nevermark 4y ago
I doubt that the US, working closely with many other countries, in opposition to an invasion, will move that needle much. But sanctions for lesser evils, sanctions taken more unilaterally, and sanction changes triggered by the revolving door of US politicians & parties, have given many countries heartburn.
lostmsu 4y ago
Frankly, you are just repeating Russian propaganda here. Pretty much nobody in the world cares about US seizing Russian USD because nobody important is planning a full scale invasion into a neighboring country. I bet you if the UN could vote on that, seizure would be approved almost unanimously.
- ghufran_syed 4y ago
  Does that matter if it’s true? Or should we not consider the possible truth of it because we don’t listen to the “unbelievers”
  - 4y ago

techsin101 4y ago

to be fair most of trade today is overly interconnected for no good reason, i have seen scenarios mentioned where part is made in brazil, shipped to singapore, then assembled in thailand then shipped to usa. but it somehow comes cheaper than assembling in brazil and shipping to usa because of existing volume or something. but that's very shortsighted. Sure free market is efficient. But what it's not is forward looking. Govt can step in kick start reactions which leads to enough volume from brazil to usa to make that economical as well. but it'd have advantage of less fragile supply chain and more env friendly process....

swagasaurus-rex 4y ago
Seems like the low cost of ocean freight, especially compared to the infrastructural costs of rail or road, mean that it's often cheaper to trade with your oceanic neighbors than to even other parts of your own country. This isn't new, Mediterranean has throughout history linked the Middle East, Egypt, North Africa and Europe through ocean trade routes. These trade routes have, on occasion, collapsed to disastrous effect.
- techsin101 4y ago
  I mean it happens organically that math works out that way. But there is an opportunity for govt to create geographically closer pipelines of trade in order to better the reliability of supply chain and environmental effect. For example, there is no reason for stuff to go from mexico to thailand just to be assembled. Only reason could be is that there is existing talent that is available to do it, but brazil lacks those skills. But if govt worked with brazil govt to train for those skills and kick-started industry, then the cost might be even more cheaper due to saving on the half the world trip.

awelkjlkrg 4y ago

s5300 4y ago
@dang this guy seems to be on a rampant throwaway spam spree tonight. Not sure if you can block him at the source.
- aaaaaaaaata 4y ago
  Send email, they don't always see these comments. Just almost always ;D

riffraff 4y ago

The "back on it's feet" in the title corresponds to "it will not lose 15% of the GDP this year as some economists think, and central bank rate is still at 14% while capital controls are in place" in the body of the article. I invite everyone commenting to consider how a GDP loss of less than 15% mean that things are fine.

droopyEyelids 4y ago
The context for “fine” is that the western world did everything in its power to destroy Russia’s economy and send them into famine and destitution
- HWR_14 4y ago
  > the western world did everything in its power to destroy Russia’s economy It most certainly didn't. ICBMs, for instance, could grind the Russian economy to a halt in 15(?) minutes. Also, there are still steps to cut off Russian oil and other products that haven't been done because it would cause a lot of suffering. I think the proper characterization would be that western governments have foregone profits and some convenience to break Russia's economy.
  - dmitrygr 4y ago
    > ICBMs, for instance, could grind the Russian economy to a halt in 15(?) minutes that will bring world GDP to zero rather fast. Suggest reading on mutually assured destruction and on second strike capabilities.
    - HWR_14 4y ago
      I didn't advocate for icbm usage. I'm just pointing out it's more effective. Although, while I wouldn't (literally) bet the world on it, I doubt that Russias nuclear arsenal has much second strike capability. Heck, I'm not sure they have functioning first strike capability to significantly damage the US.

kstenerud 4y ago

If by "back on its feet" you mean standing on two wobbly, splintered wooden legs infested with termites, then sure. This is how capital controls work: You control how your currency can be traded, and then of course it closes in on whatever value you've decided upon. Naturally, the value is meaningless and sweeps the underlying problems under the rug, but it makes for great propaganda. Russia has been a Potemkin village for a long time now in so many ways, and it's embarrassing how they've managed to fool the Western public so spectacularly. It feels like the late 80s all over again...

jjtheblunt 4y ago
> how they've managed Perhaps with help from Western propaganda, in turn funded by big Western industries?

poutineman 4y ago

I hope everyone realizes this thread is pure premeditated propaganda. These comments are repeating RT and Sputnik rhetoric which is aimed at muddying the waters. Makes sense to target HN since there are influential people who browse this site. There's nothing about Russia that is "back on its feet". Listen to absolutely any respectable geopolitical expert on the future of Russia and you'll get more or less the same depressing answer.

r721 4y ago

Thread: https://twitter.com/samagreene/status/1522751751681904640 https://twitter.com/samagreene/status/1522751751681904640 (Nitter version: https://nitter.eu/samagreene/status/1522751751681904640 https://nitter.eu/samagreene/status/1522751751681904640)

andy-x 4y ago

Official exchange rate is meaningless as you cannot transfer dollars into or out of Russia. Based on some internal sources (not super exact, but still indicative), I think cash exchange on black market is closer to RUR 150 per USD today.

TMWNN 4y ago
A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), occurs when a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina. Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars, whether via official or unofficial means.

akomtu 4y ago

TL;DR Putin is trying to look strong by fabricating the USD/RUB exchange rate, and that's understandable: with his army and even his own body falling apart, that meaningless number is the only thing he still can control.

sofixa 4y ago

There's this Twitter thread in response: https://threadreaderapp.com/thread/1522751751681904640.html https://threadreaderapp.com/thread/1522751751681904640.html TL;DR: the article is technically kind of correct, but actually very wrong on the substance