Is Putin Getting Russia's Economy All Wrong?

[El Nikko + 2,145]

I just spent ages writing something on this but then decided not to post it because it sounded a bit nuts 🤣😂

My advice for most people would be to hibernate for the next month or two because it's going to be torture for those of us that are still in it. Traders ignore lol...some of you will make loads of money 😉

[0R0 + 6,251]

3 hours ago, surrept33 said:

Russia's finance ministry they can use rainy day fund to withstand low oil prices for a decade:

 

https://www.ft.com/content/4009472c-620e-11ea-b3f3-fe4680ea68b5

 

 

Which is why we should expect oil prices to go below that, as Saudi's purpose isn't to gain market share, but block Russian revenues. Not have Russian revenues fall in proportion to the oil price, but to not make deliveries at all as it is offering a "below Russia" quote everywhere Russia sells oil regardless of the nominal price. It is not a policy mistake on Saudi's part. Cuts to Saudi payments to their people will not be impossible. But Putin's redistribution plans to prop up demand in Russia would have to be put on hold. As so many consumer goods are imported into Russia, it is obvious that the low Ruble exchange rate will drub living standards in Russia just when Putin committed to expand incomes. 

As I read the charts, the Ruble will hit 100 and change to the dollar. That hurts Russian's living standards. Putin can not maintain incomes to compensate for the drop in the Ruble that has already happened. Not to speak of what remains ahead. 

If he does try to do something to maintain Russian incomes then the $1.7 B/yr amounts are going to be significantly expanded and reserves drained more rapidly than the Russian CB expects. And it is not an option for him. He can't get elected without an aggressive social spending program. Particularly to support working parents so that they can afford to raise children. Ongoing programs have been thoroughly raided by corruption so that the output end of the programs ended up being much smaller than target, while bureaucrats took off with the money and moved it out of the country.   

[0R0 + 6,251]

27 minutes ago, ronwagn said:

https://www.bloomberg.com/quote/USDRUB:CUR A ruble is now worth 7.51 cents. 

That is 75 per dollar or 0.0133 dollars

Edited March 9, 2020 by 0R0

[ronwagn + 6,290]

20 minutes ago, 0R0 said:

That is 75 per dollar or 0.0133 dollars

Thanks, I don't know how I did that. 

23 minutes ago, 0R0 said:

That is 75 per dollar or 0.0133 dollars

 

[ronwagn + 6,290]

https://www.themoscowtimes.com/2020/03/06/coronavirus-could-rock-russias-stable-isolated-economy-a69550

An independent economic analysis of Russia's predicament from an independent newspaper printed outside of Russia. 

[Jeroen Goudswaard + 56]

We have been in the WW3 for a while now. Rather than cooperating to solve the world's problems (overpopulation, water scarcity, future energy security), we fight trade wars, wars-on-terror and the current oil dominance one. Although wars historically have led to fast and life-changing technology developments, this usually went through death and suffering of millions. 

What we need is a G8 peace talk. But with the lunatics running the asylum, I believe we will have to just sit patient and hope for better times.

[Douglas Buckland + 6,308]

So far, the G8 have not shown that they could find their butts with either hand..

[entertenter + 24]

Putin is still very popular in Russia. That is why his elections have been more or less not rigged. What ordinary russian people remember and talk about is that Putin ended chaotic nineties and established some stability compared to nineties. Also, most of russians have pretty imperialistic views, they think that dissolution of CCCP was a great catastrophe. Russians still like to think of themselves as one of greatest world power despite poverty. And Putin fulfills his supporters dreams, like Taking back Crimea, showing power and might over small Georgia, playing on international arena, forcing Americans out of Syria, Making Chechenia part of Russia again, creating weapons that has no analogue in the world, etc. It all adds to feeling of being a great nation. That is also the reason, why celebrations of "9. May Pobeda" has become so great. It feeds that feeling of being a great nation and generous nation that won the war and cleaned world of nazis. Russians (most) think that Putin is making Russia great again, while self wellbeing could easily be pushed background in order to achieve greatness.

[ronwagn + 6,290]

10 hours ago, entertenter said:

Putin is still very popular in Russia. That is why his elections have been more or less not rigged. What ordinary russian people remember and talk about is that Putin ended chaotic nineties and established some stability compared to nineties. Also, most of russians have pretty imperialistic views, they think that dissolution of CCCP was a great catastrophe. Russians still like to think of themselves as one of greatest world power despite poverty. And Putin fulfills his supporters dreams, like Taking back Crimea, showing power and might over small Georgia, playing on international arena, forcing Americans out of Syria, Making Chechenia part of Russia again, creating weapons that has no analogue in the world, etc. It all adds to feeling of being a great nation. That is also the reason, why celebrations of "9. May Pobeda" has become so great. It feeds that feeling of being a great nation and generous nation that won the war and cleaned world of nazis. Russians (most) think that Putin is making Russia great again, while self wellbeing could easily be pushed background in order to achieve greatness.

I agree with much of what you say, but I think that your message represents maybe half of Russians. The rest want a real democracy not just a fake democracy which is really a fascist crony one. Putin is nothing but a dictator who kills, drives out, or imprisons those who oppose him. 

https://apnews.com/89c16e0f87b08ed022122194feb13cda

Putin backs term limit freeze allowing him to stay in office

By VLADIMIR ISACHENKOV and DARIA LITVINOVA24 minutes ago

 

 

[ronwagn + 6,290]

MOSCOW (AP) — Russian President Vladimir Putin revealed his tightly guarded political plans Tuesday and supported a constitutional amendment that would allow him to seek reelection in 2024 by restarting the term count.

The constitutional change would pave the way for the 67-year-old Putin to stay in office until 2036, if he desires.

A lawmaker who is revered in Russia as the first woman to fly in space proposed either scrapping Russia’s two-term limit for presidents or stopping the clock so the law wouldn’t apply to Putin’s time in office.

The Russian leader and the lower house of parliament quickly endorsed the proposal put forward by 83-year-old former Soviet cosmonaut Valentina Tereshkova. Kremlin critics denounced the move as cynical manipulation and called for protests.

Lawmakers also passed a set of constitutional amendments proposed by Putin that include defining marriage as a heterosexual union and language pledging homage to “ancestors who bequeathed to us their ideals and a belief in God.”

In a speech to lawmakers debating the package of amendments, Putin opposed doing away with the presidential term limit but backed stopping the count and restarting it in 2024, if the Russian Constitution is revised. Putin’s second consecutive six-year term ends in 2024.

A nationwide vote on the amendments is scheduled for next month.

Putin has been in power for more than 20 years, and he is Russia’s longest-serving leader since Soviet dictator Josef Stalin. After serving two presidential terms in 2000-2008, he shifted to the Russian prime minister’s office while protege Dmitry Medvedev served as a placeholder president.

After the length of a presidential term was extended to six years under Medvedev, Putin reclaimed the presidency in 2012 and won another term in 2018.

Observers had speculated that to retain the presidency, Putin could use constitutional amendments he unveiled in January to scrap term limits; move into the prime minister’s seat with strengthened powers; or continue calling the shots as the head of the State Council.

However, Putin had dismissed those suggestions, and it wasn’t clear until Tuesday what option he might use to keep power. The Russian leader finally revealed his cards after Tereshkova, a legendary figure glorified for her pioneering 1963 space flight, offered her ideas.

“I propose to either lift the presidential term limit or add a clause that after the revised constitution enters force, the incumbent president, just like any other citizen, has the right to seek the presidency,” she said to raucous applause in the State Duma.

After Tereshkova unveiled her proposal in an apparently choreographed move, Putin quickly arrived in parliament to address lawmakers.

He said he was aware of public calls for him to stay on as president and emphasized that Russia needs stability above all.

“The president is a guarantor of security of our state, its internal stability and evolutionary development,” Putin said. “We have had enough revolutions.”

However, he said that since the constitution is a long-term document, scrapping the term limit wasn’t a good idea.

“In the long-term perspective, society must have guarantees of regular government rotation,” he said. “We need to think about future generations.”

And only then did Putin drop the bombshell, saying he positively viewed Tereshkova’s alternate proposal to restart the term count when the revamped constitution enters into force.

“As for the proposal to lift restrictions for any person, any citizen, including the incumbent president, to allow running in future elections ... this option is possible,” Putin said.

He added that the Constitutional Court would need to judge if the move would be legal, although the court’s assent is all but guaranteed.

At the same time, Putin quashed speculation that the Kremlin might call an early parliamentary election for the fall, saying he considered it unnecessary. Moments later, the Duma’s speaker could be heard directing his deputy to ask the lawmaker who proposed holding the early vote to withdraw his motion.

Putin’s statement came as lawmakers were considering the amendments in a crucial second reading when changes in the document are made.

The Kremlin-controlled lower house, the State Duma, quickly endorsed the proposed amendments by a 382-0 vote with 44 abstentions. A vote on a third reading will be a quick formality. A nationwide vote on the proposed amendments is set for April 22.

Andrei Klishas, a senior lawmaker who co-chaired a Kremlin working group on the constitutional reform, told The Associated Press that the amendment allowing Putin to run again would be welcomed by many Russians who “worry they would lose certain things, including social security, after Putin steps down as president.”

Russia’s leading opposition figure, Alexei Navalny, mocked the proposed change.

“Putin has been in power for 20 years, and yet he is going to run for the first time,” Navalny tweeted.

A group of opposition activists called for a March 21 protest rally in Moscow that they expect up to 50,000 people to attend.

“The country where the government doesn’t change for 20 years has no future,” the activists said in a statement,

After the group announced the rally, Moscow authorities quickly banned outdoor events with attendance of more than 5,000 until April 10, saying it was part of precautionary steps to prevent the spread of the new coronavirus.

Late Tuesday, several dozen opposition supporters showed up outside the Kremlin for single-person pickets, which don’t require seeking advance permission. The pickets proceeded peacefully.

Putin’s approval ratings have remained high despite a recent drop amid Russia’s economic troubles and stagnant living standards. It’s unclear if the fragmented and disorganized Russian opposition can mount a serious challenge to the Kremlin.

The ruble’s sharp drop this week, caused by a steep fall in global oil prices in the wake of the collapse of OPEC’s agreement with Russia to control crude output, could herald deeper economic problems and hurt Putin’s popularity.

“It looks like this crisis situation has made Putin drop his mask and do something he had originally planned, and to do it quickly,” said Abbas Gallyamov, an independent political analyst.

In a speech to lawmakers, Putin vowed that the new coronavirus outbreak and plummeting oil prices wouldn’t destabilize Russia.

“Our economy will keep getting stronger and the key industries will become more powerful and competitive,” he said.

by Taboola

Trending on AP News

My topic on Russia https://docs.google.com/document/d/1TNLgFNBS_jURlZiqkdZfYjG6DoGiYbcwcdn1e-62rUM/edit

 

Edited March 10, 2020 by ronwagn
reference

[ErikS + 3]

I am someone that not very often writes a comment on any board.

Wrt the current drop in oil prices, which is unprecedented since the last few decades, I have been wondering what could be at play here...

1) it could be “game theory” in real life... Since Russia isnt willing to agree with the OPEC, this is a move from the OPEC to SIGNAL to Russia it needs to comply or face a situation of depressed oil prices. The fleet of vessels leased by SA is another signal showing it “aint bluff”. 

2) the MAIN question is why Russia is suddenly so eager to not comply with the OPEC. The lower demand, as the consequence of the totally overhyped Corona virus (which is just another flu actually), may be one of the issues... But dont forget that this can also be an OPPORTUNITY to attack the US Shale industry. It would hit the USA enormously if shale would be killed off due to low oil prices, In fact.., it may even kill off a lot of other green companies. How viable are electric vehicles and windmills when oil is at 30 USD or below? But in order to kill this “green” industry, it will likely need a few years of depressed oil prices...

3) Another complexity is the fact that russian elections will be held in short time. With the destabilizing Ruble and oil in freefall, Putin wont make many friends in politics...So he will need to come to some consensus.

My thoughts are that Russia (Putin) will go back around the table with the OPEC. This to find some way to still stabilize the oil price and also be able to attack the US shale. I think the best pricepoint for this to do will be an oil price of around 35 to 40 USD. It will slowly bring the shale industry to its knees (and other “green companies”). Lower than that will risk Putin to destabilize Russia.... 

[KeyboardWarrior + 527]

On 3/8/2020 at 11:49 PM, Meredith Poor said:

As is probably expounded on elsewhere, Putin seems to have it in for the US, or at least the current US administration. The idea is basically to run fracking companies out of business.

Russia could, in theory, do fine without oil revenues. This would simply require a massive expansion of other elements in the economy, elements that require a technological sophistication Russia doesn't apparently have. Putin and his economic advisers may see a way to the end of oil. They may as well work toward that end, since they'll have to face it sooner or later. More likely sooner.

It's certainly interesting to consider that Russia could generate enough electricity via wind power to power all of Europe. This would replace gas blackmail with electricity blackmail. They would have to find some source for the turbines, which appears at the moment to be problematical. They would also have to pave Belarus and Poland with transmission lines.

Oh yea I'm sure, since their competition is $.30 per kWh Russia can provide expensive electricity for a bit less. Maybe $.25 

Just got done checking out a solar project in my state. For some reason 100 MW installed costed them $180 M. Doesn't sound like a dollar per watt. 12 year payoff by the figures they gave. Remember, Minnesota is heavy duty when it comes to going green. 

Edited March 10, 2020 by KeyboardWarrior

[ronwagn + 6,290]

49 minutes ago, ErikS said:

I am someone that not very often writes a comment on any board.

Wrt the current drop in oil prices, which is unprecedented since the last few decades, I have been wondering what could be at play here...

1) it could be “game theory” in real life... Since Russia isnt willing to agree with the OPEC, this is a move from the OPEC to SIGNAL to Russia it needs to comply or face a situation of depressed oil prices. The fleet of vessels leased by SA is another signal showing it “aint bluff”. 

2) the MAIN question is why Russia is suddenly so eager to not comply with the OPEC. The lower demand, as the consequence of the totally overhyped Corona virus (which is just another flu actually), may be one of the issues... But dont forget that this can also be an OPPORTUNITY to attack the US Shale industry. It would hit the USA enormously if shale would be killed off due to low oil prices, In fact.., it may even kill off a lot of other green companies. How viable are electric vehicles and windmills when oil is at 30 USD or below? But in order to kill this “green” industry, it will likely need a few years of depressed oil prices...

3) Another complexity is the fact that russian elections will be held in short time. With the destabilizing Ruble and oil in freefall, Putin wont make many friends in politics...So he will need to come to some consensus.

My thoughts are that Russia (Putin) will go back around the table with the OPEC. This to find some way to still stabilize the oil price and also be able to attack the US shale. I think the best pricepoint for this to do will be an oil price of around 35 to 40 USD. It will slowly bring the shale industry to its knees (and other “green companies”). Lower than that will risk Putin to destabilize Russia.... 

My guess is that American shale oil can be produced at such a price or slightly higher because of our advantage of integrated production and distribution right here in the good old U.S.A. We have no shipping costs across the oceans and no loading and offloading. The administration is already looking for ways to help our oil and gas industry. 

[entertenter + 24]

It seems like Putin is fighting with US, not with Saudis. His main objective is to bankrupt US drillers. After that Oil prices can rise and production cut deals with saudis can be made.So, Putins hope is that it won't take too long. Also economic downturn is helping him.

[Dave Gilmour + 20]

I think that Putin should tell Gazprom to double the dividends. That will give him more money.

disclaimer I don’t own any Gazprom stocks. Especially not the 27.000 stocks that I am talking about. 

[Gregory Purcell + 94]

Yes, when the Ruble falls, then the price of imports rises for the Russian consumer, but the domestically produced goods and services become more price competitive,  and for exporters the cost of production has just been lowered in dollar terms. The 10% drop in the Ruble means a 10% cut to the cost of production for Russian oil and gas.   

 

fair notice: I am invested in Gazprom

[Geoff Guenther + 317]

15 hours ago, ErikS said:

I am someone that not very often writes a comment on any board.

Wrt the current drop in oil prices, which is unprecedented since the last few decades, I have been wondering what could be at play here...

1) it could be “game theory” in real life... Since Russia isnt willing to agree with the OPEC, this is a move from the OPEC to SIGNAL to Russia it needs to comply or face a situation of depressed oil prices. The fleet of vessels leased by SA is another signal showing it “aint bluff”.

I'll add one more part to the game theory you mention here. Russia has long been a dependable supplier to Europe. Dependable in a way that the US can never be because of its economic model and different interests. 

Russia also has long wanted to be a full partner at the European table and wanted to drive a wedge between the US and EU. Given that Russia has about the 4th or 5th largest economy in Europe it hasn't had the clout it desires, so uses oil rather than rubles for power.

At the moment the US/EU alliance is fracturing.  Is it possible this can be used a carrot to lure Europe further from the US?

[Gregory Purcell + 94]

4 hours ago, Dave Gilmour said:

I think that Putin should tell Gazprom to double the dividends. That will give him more money.

disclaimer I don’t own any Gazprom stocks. Especially not the 27.000 stocks that I am talking about. 

I do own Gazprom stock.

A couple of years ago the Russian parliament sent Putin a bill which said any 51% government owned company must pay 50% of net profits out in dividend.  Putin veto it's and suggested they change it to, "Any Russian owned company should pay 50% of net profit in dividend, and if they don't they need to formally explain why they are not, and when they will come into compliance with this directive"  The change was made because Gazprom was using profits to fund the construction of three new major pipelines.   

In May of 2019 Gazprom announced the dividend for 2018 would be doubled and be 23% of net profits and my ADR shares received 50 cents in August, (which is after the Russian 15% tax on dividends).   And they announced they would pay no less then 30% for 2019,  no less then 40% for 2020 and, no less then 50% for 2021.   Thus I know the dividend which I will receive in August  will be about 45 cents at the current value of the Ruble.

 

[Prometheus1354 + 178]

On 3/9/2020 at 9:06 AM, Guillaume Albasini said:

US shale benefited from certain preconditions not easy to gather in other parts of the world. And even with that endowment they failed to reach sustainable profits.

Now with US shale crumbling it would be difficult to convince the Europeans to rush in that direction. So forget about European shale. It will never happen.  To replace Russian gas Europeans could rather prefer carbon-neutral synthgas produced with renewable energy.

 No doubt the Russians & Saudis would love that too be the case.  Certainly there are companies that are in a bad spot financially; but so are plenty of others in a myriad of industries.  There's a number of companies that have significant loans coming due over the next 18-24 months.  A prolonged 'price war' won't help them when approaching the banks too either reconfigure those loans or get additional financing.  Which may very well be the objective Mr. Putin has in mind with his decision as it pertains to forgoing any production cuts.  He may well also try to bring too bear any leverage with the larger international banks thus further putting a squeeze on them.

The Left and by default the 'Eco' crowd here in the US  have been for quite some time (decades) trying to bring an end to the Oil industry. No doubt their counterparts in Europe have adopted a similar bent.  Here in California 'Green' is the intended game of choice for the Left.  Certainly Tesla has gained some market share. Others here in the state are poised to or have begun offering their wares. It will take some time before we see what if any the market supports long term.  The Governor has signaled his intent to halt any new exploration via Fracking and even wants an end too any production of petroleum assets within the states boundary.  

It is the stated goal of our legislative branch that California be 100% 'carbon neutral' with respect too energy production for our energy grid by 2045.  While an admirable goal; the technology that will be required for this to happen is still in the planning stages or its infancy. One area bandied about since the early 2000's has been Hydrogen fueled cars/trucks.  Of the millions of autos/trucks on our highways every day, less than 8000 Cars are Hydrogen fuel cell powered. A few hundred busses and trucks are available; though that number will certainly rise in the near term with LA Metro bus system switching to Hydrogen fuel cell and battery power solely. Most if not all the metro bus systems here in the state are Natural Gas powered.  Even that is deemed 'dirty' and must be or is being replaced with Carbon Neutral sources.

[Ward Smith + 6,615]

19 hours ago, KeyboardWarrior said:

Oh yea I'm sure, since their competition is $.30 per kWh Russia can provide expensive electricity for a bit less. Maybe $.25 

Just got done checking out a solar project in my state. For some reason 100 MW installed costed them $180 M. Doesn't sound like a dollar per watt. 12 year payoff by the figures they gave. Remember, Minnesota is heavy duty when it comes to going green. 

Solar in Minnesota is just plain stupid. They won't produce at all in the winter months, when the power is really needed. 

[Chris555 + 8]

On 3/9/2020 at 5:48 PM, Tomasz said:

Kazakhstan has 40% of the Russian population

No it has not. It has about 10% of Russia's population. 

 

On 3/9/2020 at 8:46 PM, Gerry Maddoux said:

since U.S. shale output has a lower production cost than Russian crude

Really? Why are the Russian companies massively profitable, then, while the U.S. shale companies on the brink of bankruptcy? I could reveal all your other lies as well but I just don't have the time for that at the moment. 

[ronwagn + 6,290]

8 hours ago, Geoff Guenther said:

I'll add one more part to the game theory you mention here. Russia has long been a dependable supplier to Europe. Dependable in a way that the US can never be because of its economic model and different interests. 

Russia also has long wanted to be a full partner at the European table and wanted to drive a wedge between the US and EU. Given that Russia has about the 4th or 5th largest economy in Europe it hasn't had the clout it desires, so uses oil rather than rubles for power.

At the moment the US/EU alliance is fracturing.  Is it possible this can be used a carrot to lure Europe further from the US?

Yes, like a trapdoor spider lures its prey. It is possible because of all the socialists in Europe who are useful idiots. 

[ronwagn + 6,290]

8 hours ago, Gregory Purcell said:

I do own Gazprom stock.

A couple of years ago the Russian parliament sent Putin a bill which said any 51% government owned company must pay 50% of net profits out in dividend.  Putin veto it's and suggested they change it to, "Any Russian owned company should pay 50% of net profit in dividend, and if they don't they need to formally explain why they are not, and when they will come into compliance with this directive"  The change was made because Gazprom was using profits to fund the construction of three new major pipelines.   

In May of 2019 Gazprom announced the dividend for 2018 would be doubled and be 23% of net profits and my ADR shares received 50 cents in August, (which is after the Russian 15% tax on dividends).   And they announced they would pay no less then 30% for 2019,  no less then 40% for 2020 and, no less then 50% for 2021.   Thus I know the dividend which I will receive in August  will be about 45 cents at the current value of the Ruble.

 

So, are you going to divest?

[ronwagn + 6,290]

4 hours ago, Prometheus1354 said:

 No doubt the Russians & Saudis would love that too be the case.  Certainly there are companies that are in a bad spot financially; but so are plenty of others in a myriad of industries.  There's a number of companies that have significant loans coming due over the next 18-24 months.  A prolonged 'price war' won't help them when approaching the banks too either reconfigure those loans or get additional financing.  Which may very well be the objective Mr. Putin has in mind with his decision as it pertains to forgoing any production cuts.  He may well also try to bring too bear any leverage with the larger international banks thus further putting a squeeze on them.

The Left and by default the 'Eco' crowd here in the US  have been for quite some time (decades) trying to bring an end to the Oil industry. No doubt their counterparts in Europe have adopted a similar bent.  Here in California 'Green' is the intended game of choice for the Left.  Certainly Tesla has gained some market share. Others here in the state are poised to or have begun offering their wares. It will take some time before we see what if any the market supports long term.  The Governor has signaled his intent to halt any new exploration via Fracking and even wants an end too any production of petroleum assets within the states boundary.  

It is the stated goal of our legislative branch that California be 100% 'carbon neutral' with respect too energy production for our energy grid by 2045.  While an admirable goal; the technology that will be required for this to happen is still in the planning stages or its infancy. One area bandied about since the early 2000's has been Hydrogen fueled cars/trucks.  Of the millions of autos/trucks on our highways every day, less than 8000 Cars are Hydrogen fuel cell powered. A few hundred busses and trucks are available; though that number will certainly rise in the near term with LA Metro bus system switching to Hydrogen fuel cell and battery power solely. Most if not all the metro bus systems here in the state are Natural Gas powered.  Even that is deemed 'dirty' and must be or is being replaced with Carbon Neutral sources.

California has more natural gas stations than any other state. It is not against natural gas. Los Angeles has very poor leadership and is going deep green. They will end up with many more blackouts and much higher energy prices. There will be a backlash. I spent half of my life in California and distributed petitions for Proposition 13 which has saved taxpayers billions of dollars. The mayor has disregarded his energy advisors and told them no more natural gas plants. 

I visit my relatives yearly and it will be fun watching the apocalypse. 

[KeyboardWarrior + 527]

6 hours ago, Ward Smith said:

Solar in Minnesota is just plain stupid. They won't produce at all in the winter months, when the power is really needed. 

Precisely. They're also shutting down coal plants because apparently "the wind turbines are keeping up". I also did research on our wind power output. About 1/3 of our installed capacity was the output in the last couple of years. Which is exactly what the "30% of rated output 30%" of the time equates to.