3 ms·

I am not an expert, but this was noted elsewhere as being the reason why Russia's economy looked to be doing relatively well even after years of sanctions: the

I am not an expert, but this was noted elsewhere as being the reason why Russia's economy looked to be doing relatively well even after years of sanctions: the government was spending as a wartime economy, and so any loans, any sovereign wealth, and other measures to fund that spending all prop up an economy that might in future have many problems. (Not that they're really propping it up, but that GDP is a common proxy for an economy's health, it looks better than it is.) I'd be curious to know if people here with more insight than I would be keen to share.

mapt 1y ago
Russia has been selling large amounts of long-term sovereign bonds, going into debt, at an annualized interest rate in the mid 20%'s (!). While under a looming demographic crisis featuring very large numbers of elderly pensioners being supported per young worker. A non-negligible fraction of those young workers are fleeing the country or dying in Ukraine, which further deepens demographic issues. This is destabilizing for a variety of reasons. It's a bet on future growth that does not appear evident. It's also effectively a burden placed on the other oligarchs behind Putin, who would love to control a large chunk of a functional economy rather than controlling a large chunk of a banana republic undergoing stagflation and being heavily taxed for the privilege. What happens when strongman Putin goes away, and occasional defenestration is replaced with factionalism? Or even sooner than that - what happens if the market becomes confident in low oil prices?
- esafak 1y ago
  Not his problem!
- arctics 1y ago
  This is done to curb the inflation caused by military spendings and low unemployment rate. Yes, this is net negative for projected economic growth but considering historic record of oligarchs in Russia who would invest in foreign economies instead of Russia during peace time, I would argue for Russia it is net positive development assuming massive western sanctions stay in place.
- mamonster 1y ago
  >It's also effectively a burden placed on the other oligarchs behind Putin, who would love to control a large chunk of a functional economy rather than controlling a large chunk of a banana republic undergoing stagflation and being heavily taxed for the privilege. Russian oligarchs now have close to 0 political power. Those that do are related to army/secret services anyway and will have more to lose if the system goes away. All those oligarchs just ate massive drops in wealth and didn't do anything. This is by far the biggest misunderstanding that people in the West have: The Russian/Putinist system is now MORE stable than before 24 February 2022, not less.

mapt 1y ago

Russia has been selling large amounts of long-term sovereign bonds, going into debt, at an annualized interest rate in the mid 20%'s (!). While under a looming demographic crisis featuring very large numbers of elderly pensioners being supported per young worker. A non-negligible fraction of those young workers are fleeing the country or dying in Ukraine, which further deepens demographic issues. This is destabilizing for a variety of reasons. It's a bet on future growth that does not appear evident. It's also effectively a burden placed on the other oligarchs behind Putin, who would love to control a large chunk of a functional economy rather than controlling a large chunk of a banana republic undergoing stagflation and being heavily taxed for the privilege. What happens when strongman Putin goes away, and occasional defenestration is replaced with factionalism? Or even sooner than that - what happens if the market becomes confident in low oil prices?

esafak 1y ago
Not his problem!
arctics 1y ago
This is done to curb the inflation caused by military spendings and low unemployment rate. Yes, this is net negative for projected economic growth but considering historic record of oligarchs in Russia who would invest in foreign economies instead of Russia during peace time, I would argue for Russia it is net positive development assuming massive western sanctions stay in place.
mamonster 1y ago
>It's also effectively a burden placed on the other oligarchs behind Putin, who would love to control a large chunk of a functional economy rather than controlling a large chunk of a banana republic undergoing stagflation and being heavily taxed for the privilege. Russian oligarchs now have close to 0 political power. Those that do are related to army/secret services anyway and will have more to lose if the system goes away. All those oligarchs just ate massive drops in wealth and didn't do anything. This is by far the biggest misunderstanding that people in the West have: The Russian/Putinist system is now MORE stable than before 24 February 2022, not less.