Is Putin Getting Russia's Economy All Wrong?

[Tomasz + 1,608]

Quote

 

Markets are in turmoil following yet another oil shock to the Russian economy. But Russia has made enormous progress since the last time oil prices collapsed in 2014 and the Ministry of Finance is sanguine about the outlook for growth and spending this year. bne IntelliNews crunched the numbers to see just how bad a $10 fall or more in oil prices is.

Russia aims to keep the federal budget in surplus and the economy growing over the next three years, despite the recent fall in oil prices.

Oil revenues are expected to slide significantly, but the corresponding fall in the value of the ruble will mitigate that decline to some extent. As the Russian budget calculates spending on the basis of oil revenues denominated in dollars but spends in rubles, the government is actually one of the biggest winners from the devaluation that comes with falling oil prices. Although there are less dollars coming into the budget from oil exports, they buy a lot more rubles and the spending allocations do not change even if those rubles are worth less.

Russia’s decision to free the ruble in 2014 has created a mechanism to cushion the economy from a really nasty oil shock and analysts are almost unanimous that the CBR has learnt its lesson from 2014: it will not burn through its hard currency reserves to defend the ruble in this crisis. In 2014 the ruble fell from circa RUB35 to dollar to a low of RUB80. This time round the ruble immediately dropped like a stone following Russia’s decision to withdraw from the OPEC+ deal on March 6, falling from circa RUB68 to the dollar to RUB75 as the market opened again the following Monday. But since then it has already clawed back some of its losses and was trading at RUB71.4 at the time of writing on the morning of March 12.

Russia has been making a big effort to diversify its revenue base away from oil but in 2019 budget oil revenues still accounted for 40% of the total tax take. According to the three-year budget plan now in place, that figure is supposed to fall to 35% by 2022.

However, the reduction in oil and gas revenues – despite the boost from the FX effect – will not be completely covered by the ongoing rise in non-oil revenues, largely driven by growing agricultural exports. Russia remains vulnerable to the drop in oil prices, but it has been careful to buy some protection in the form of reserve funds.

As part of the budget's makeover since a near-miss financial crisis in 2016, when a RUB2tn ($27bn) hole in the budget could not be filled, has been the hunt for new revenue sources. Deep reforms have been made to the tax service and new sources of income found, chief among them being an increase of 2pp to the VAT rate and a rise in the retirement age.

As a result of fiscal consolidation, federal budget spending in 2018 reached a 10-year low of 16.1% of GDP, while the tax take has grown by 20%, despite only a small increase in the tax burden.

Spending is set to rise over the next three years, according to the new new budget, thanks to the implementation of the 12 national projects. However, this spending hike will not be that dramatic, as much of the spending on the national projects will be financed by reallocating existing spending on other areas and will be supported by private sector spending. All in all, economists estimate the share of spending will rise to around 17% of GDP in the coming years. Already much of the spending on the projects in the first half of this year will be financed by funds allocated last year that were not spent on time.

And even if low oil prices persist, then the Ministry of Finance says it has enough in the National Welfare Fund (NWF) to cover a shortfall for up to 10 years.

The NWF contained $150bn as of the start of March, or circa 9% of GDP, and remains flat at a level of $42 for a barrel of oil. If oil falls below these prices the NWF can be used to fund the difference and if the size of the fund drops below 5% of GDP then spending from the fund is capped at 1% of GDP, or about RUB1tn per year, imposing an automatic austerity response if the fund begins to get too small.

In general, balancing the fund continues to be the priority of budget policy in the next three years, according to experts. At the same time, the question of how to replace the shortfall in oil and gas revenues in the future remains unanswered, according to Ilya Sokolov, an economist writing in the Economic Times.

NWF and non-oil deficit

The problem with the current budget plan is that the assumptions for both the oil prices and ruble exchange rate already look far too optimistic.

Oil prices plummeted from around $55 in February to $32 on March 10, although they had recovered somewhat to $37 for Brent at the time of writing. Analysts and the government are still assuming an average price around $55 for this year.

The value of the ruble also collapsed from RUB68 to RUB75 and is very likely to remain weak for at least the rest of the first half of this year.

Let’s dig into the numbers and see in detail what the budget will look like going forward. The key to the government’s plans to keep its boat afloat is the $150bn it has in reserve in the NWF.

In 2019 the government is expecting to collect a total of RUB20,174.9bn ($272.6bn) in tax revenues, of which RUB11,933.5bn ($161.3bn) is from oil, or 41% of the total. That is also equivalent to 7.6% of GDP, but this share is supposed to shrink steadily over the following years to 6% of GDP by 2022.

 

The NWF held RUB8,249.6bn ($123bn) as of March 1, which is the equivalent of 7.3% of GDP. The fund is fed by siphoning off excess tax revenues from oil sales from anything earned when oil is over $42.2, but this money is held on account by the Central Bank of Russia (CBR) and the accounts are reconciled periodically.

That is why the size of the fund stepped up so dramatically last summer and nearly doubled in size overnight. Taking this accounting quirk into account, as this year’s excess

 

On the face of it, the Russian economy looks pretty healthy and able to withstand the oil price shock for quite a while, thanks to the huge “rainy day” fund.

However, to better understand the true health of the economy it better to look at the “non-oil deficit.” This is the budget deficit Russia would have if all the oil magically disappeared.

Russia has always used its oil revenues to subsidise its spending and this is one of the reasons the Ministry of Finance has been able to keep income tax at 13% and corporate tax at 21% for the last two decades – amongst the lowest tax rates in Europe. During the boom years while the government ran a headline budget surplus, the non-oil deficit was consistently about -4% of GDP. Even though Russia Inc. was running at a profit, if you took out the de facto subsidy the Russian economy earns from just having oil, then it was running at loss if you look at it as a business.

The oil subsidy has been a huge boon and allowed Russia’s economy to make continuous progress ever since Russian President Vladimir Putin took over in 2000, when oil prices began to rise. It allowed the state to keep taxes low. It allowed wages to be increased by about 10% a year for a decade to bring public wages in line with private sector incomes. It allowed the Kremlin to completely modernise the military since 2012, while still meeting its social sphere and other public expenditure obligations. And it has paid for a total transformation of basic infrastructure to bring it more or less in line with the rest of Europe. Now that subsidy will help fund the RUB27tn ($400bn) spending programme for the national projects, while still meeting the social spending largess that Putin promised during his January 15 state of the nation speech.

During times of crisis the non-deficit blows up as the Kremlin digs into its reserves. During the 2008 crisis the non-oil deficit ballooned to 13% of GDP and spiked again in the 2014 crisis to about 9%. But since then the government has managed to bring it down to 5.7% in 2019 – almost back to normal levels – which is a considerable achievement. It says that Russia Inc. is almost back to “normal” after multiple shocks over the last decade and a half.

Going forward and the current budget sees the non-oil deficit starting to increase again, rising to 6% this year and 6.7% in 2022. With the collapse of oil prices, that is now almost certainly an underestimate.

The Kremlin had intended to ramp up the subsidies to the real economy in an effort to get the national projects into place in the coming years, but even at a level of 7% this is still a fairly modest increase compared to what was spent in previous crises. As always, Russia is trying to be prudent with its reserves.

The collapse of oil prices will screw up all these calculations. According to bne IntelliNews’ calculations, a fall of $10 in oil prices in 2020 will lead to a reduction in the size of Russia’s economy of 1.2%. Tax revenues would shrink by RUB1,445bn, reducing their share in the tax take from 39.1% to 36.9% and increasing the non-oil deficit from 6% to 7.1%. This fall is enough to put the budget into a deficit of RUB586bn, or 0.52% of GDP, from its current surplus.

But none of this is a disaster. A deficit of circa RUB500bn can easily be financed by just issuing more Russian Ministry of Finance ruble-denominated OFZ treasury bills, without tapping the NWF.

Even if the Ministry of Finance had to make up a RUB1.5tn hole in the budget each year, with RUB10,000bn in the NWF, the government can keep this up for seven years. That stands in stark contrast to 2016, when a RUB2tn deficit almost sparked a major financial crisis and forced the government to “privatise” a 19% stake in Rosneft, which later turned out to be a loan from Qatar.  

Indeed, last autumn the Ministry of Finance released its scenarios for the next ten years gaming out super low oil prices and found economic growth falls to zero only at $40, and only if it stays there for a decade. Even at sustained oil price rates as low as $25, thanks to the reserves Russia can still happily function for as much as ten years.

The bottom line is that the oil price shock currently underway will be painful for the Russian economy, but the Kremlin has done its homework and is well prepared for the coming storm. The Russian Ministry of Energy predicts that oil prices will recover to $40-45 per barrel in the second half of 2020 and $45-50 per barrel in 2021, Deputy Minister Pavel Sorokin revealed in an interview with Reuters. 

Accounts Chamber head Alexei Kudrin says with oil at $35 per barrel and the ruble averaging 72 to the dollar this year, the federal budget will lose approximately RUB3tn and run a deficit of just under 2% of GDP. The economy will experience nearly zero growth, not the 1.9% growth initially predicted by the economy ministry. If oil prices average $40 per barrel this year, the situation will be slightly better, Kudrin predicts, but GDP growth will still fall far short of initial expectations.

The key indicator is the non-oil deficit. Russia’s economy is still in transition and as it has failed to develop domestic institutional investors that provide a foundation of long-term money, its markets and economy remain very vulnerable to these shocks. But the non-oil deficit shows that each one of these shocks does less damage than the last one. Thanks to its huge reserves and the fact that corporate Russia has massively deleveraged since 2014, it is well placed to weather this shock with relatively little damage.

 

 

 

Edited March 13, 2020 by Tomasz

[Tomasz + 1,608]

Dear colleagues, no one in Russia after you broke the agreement not to extend NATO after 1990 will never believe the good intentions of the West or the US. Putin said this clearly in the Munich speech in 2007.

Russia's strategic ally is China, not the West, and with each successive day of the month and year this state is only strengthening.

West support for the Ukrainian Maidan was a milestone in breaking any cooperation.

The Russians see that they are surrounded by an enemy many times stronger alliance bombing Yugoslavia, Libya, Afghanistan, and Syria. They have no choice but to defend themselves by all means.
And it is not the Russians who are guilty here but the West who wanted to humble Russia take over  mineral resources for nothing and didnt care abut starving ordinary Russians in the 90s.

This is not forgotten and the Russians will not forget it.

If you wanted to have the support of ordinary Russians, then you had to give oligarchs ordinary thieves that fled to the West and not accept them with open arms and their billions in London called Londograd.

In addition, it would be useful not to surround Russia with NATO bases more and more tightly because every conscious man sees this and  Western propaganda that this only defensive alliance will do nothing.

So you can now give up all the anti-Russian and anti-Putin propaganda because really no one conscious in Russia will ever believe it anymore.

You can start with this text - lets compare 1990 and 2015.

Quote

 

Blue – approve of USA; orange – disapprove.

 

Around 75%-80% of Russians approved of the United States around 1990, versus <10% disapproval.

By modern standards, this would have put Russia into the top leagues of America fans, such as Poland, Israel, and the United Kingdom. It was also around 10%-15% points higher than contemporary US approval of Russia.

The blogger genby dug up a VCIOM poll from 1990 asking Russians – that is, Russians within the RSFSR, i.e. the territory of the modern day Russian Federation – what they thought about Americans.

The poll was redone in 2015, keeping the same questions, which allows a direct comparison between the two dates.

What in your opinion characterizes the United States?	1990	2015
High criminality and moral degradation	1	15
No warmth in people’s relations	1	15
High living standards	35	12
Large gap between rich and poor	5	11
Racial discrimination	1	9
Highly developed science and technology	15	7
Success depends on personal effort	20	7
Free society	13	5
Other	.	6
Can’t say for sure	10	12

I would wager Russian opinions on America were more positive c.1990 than the opinions of the average American on his own country today!

Is US government friendly or hostile to Russia?	1990	2015
Friendly	35	3
Not very friendly	40	32
Hostile	2	59
Can’t say	23	6

These results speak for themselves and hardly need more commentary.

Nowadays, of course, things are rather different. Suffice to say the numbers of America fans have plummeted, while the percentage of Russians with actively negative views emerged essentially out of nowhere to constitute majority opinion. According to other polls, Russian approval of the US rarely breaks above 30%, and the sentiments are quite mutual. Just 1% (that’s one percent) of Russians approved of US leadership by 2016. Although there were hopes that this trend would turn around after Trump, which seemed plausible in early 2017 and indeed seemed to be happening, this was in the end not to be.

What I think is more significant is that nobody likes to talk about it now, because it reflects badly on pretty much everyone.

Russians would have to acknowledge that they were naive idiots who threw away an empire centuries in the making to end up within the borders of old Muscovy in exchange for… jeans and “common human values.” These figures testify to the complete and utter failure of Soviet propaganda, which spent decades spinning tales about American criminality, unemployment, and lynched Negroes only to end up with a society with some of the most Americanophile sentiments in the entire world. It also makes it much harder to scapegoat Gorbachev, or the mythical saboteurs and CIA agents in power that feature prominently in sovok conspiracy theories, for unraveling the Soviet Union, when ordinary Soviets themselves considered America the next best thing since Lenin and the US government to be their friend.

For their part, Americans would have to acknowledge that Russians do not have a kneejerk hatred of America, and that the “loss of Russia” was largely of their own doing. The arrogant refusal to take into account Russian interests after the Cold War, instead bombing their allies, expanding NATO to Russian borders in contravention of verbal commitments made to the USSR, and for all intents and purposes treating it as a defeated Power, may have made sense when it seemed that the US would be the world’s dominant hyperpower for the foreseeable future and Russia was doomed to die anyway – as was conventional wisdom by the late 1990s. And from a purely Realpolitik perspective, the results have hardly been catastrophic; the US gained a geopolitical foothold in Eastern Europe, tied up further European integration into an Atlantic framework, and closed off the possibility of the “Europe from Lisbon to Vladivostok” envisaged by Charles de Gaulle. On the other hand, in a world where China is fast becoming a peer competitor – with the implicit backing of a resentful Russia – this may, in retrospect, not have been the best long-term play.

 

Edited March 13, 2020 by Tomasz

[0R0 + 6,251]

5 hours ago, Tomasz said:

Russia's strategic ally is China, not the West, and with each successive day of the month and year this state is only strengthening.

 

That may yet prove to be a mistake. China is losing ground in its aim at becoming a consumer led economy. The manufacturing economy is losing share abroad and even Chinese companies are moving production out of China. Incoming young low cost labor is a much smaller pool than its predecessor wave of 10 years ago. Putin should conduct a study of China's finances to compare to those of Russia in 2014 and make a better estimate of what it can offer as the main trading partner. 

The West is not rejecting Russia. It is Russia that keeps acting in a paranoid manner and conducting war against its neighbors, in particular Ukraine, from which thy carved a strategic chunk (Crimea) and funded armed and trained a secessionist war in Eastern Ukraine. Russia under Putin repeatedly earned Western disapproval and enmity.

The movement of the NATO border to the strip from the Baltics Poland to Romania was requested by those countries out of fear of being taken over by Russia again. As they were joining the EU, joining NATO was not a big deal other than in Russia's expansionist paranoia.  

5 hours ago, Tomasz said:

If you wanted to have the support of ordinary Russians, then you had to give oligarchs ordinary thieves that fled to the West and not accept them with open arms and their billions in London called Londograd.

 

It was hardly Western financier's business to keep Russian kleptocrats honest in Russia. Russia was the only country that could do it. 

Same goes for China's big money and their children living in London Sydney Paris, Vancouver, LA and San Fran and NYC. 

It is the job of their home countries to police their internal finances and keep sticky fingers from walking away with their people's wealth. Nobody in the West can do it for them..

[Chris555 + 8]

Gazprom Neft can work with $35 oil, the manager said, while Tatneft’s CEO Nail Maganov boasted that even $8 oil is not critical for the company, Russia’s Prime news agency reports.

https://oilprice.com/Energy/Energy-General/Russian-Oil-Giants-Prepare-For-A-Production-Surge.html

[Jumpinjdc + 4]

Shale is like the Hydra...cut off one head and two grow back...all thanks to US bankruptcy and corporate laws. Perhaps the Russian oil executives don't realize this. 

[Jumpinjdc + 4]

About these sentiments regarding the supposed lack of affection and love from the west toward the innocent Russian nation, decades ago: When exactly has Russia show itself to be a great friend of the US?

[specinho + 439]

On 3/10/2020 at 6:42 AM, 0R0 said:

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.

May be, they are just trying to find more leaders like Gaddafi............. and drop inflation caused by increment in oil price... a common but unnoticeable or under-reported figure of 100-200% or more + encourage internal economic growth as mentioned by Mr. Purcell.

On 3/11/2020 at 10:25 PM, Gregory Purcell said:

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.

 

20 hours ago, 0R0 said:

The poverty in .........

Regarding poverty........

The other day, someone posted a question in a forum somewhere:" But why Africans are poor(er) than Europeans...." .... An imbecile answered:" Africans might be too lay back and might have not started a war or anything like that, that leads to revolution like the Europe......... Europeans, many wars, since historical time......... "

He found a reason to introduce religions into poor countries too:

Matthew 10:34-36

www.biblegateway.com › passage

 

1.  
2.  

I have not come to bring peace, but a sword.

 

Muslims and Christians waged wars believing it's God's will...........

 

Therefore...........

[Chris555 + 8]

14 hours ago, 0R0 said:

That may yet prove to be a mistake. China is losing ground in its aim at becoming a consumer led economy. The manufacturing economy is losing share abroad and even Chinese companies are moving production out of China. Incoming young low cost labor is a much smaller pool than its predecessor wave of 10 years ago. Putin should conduct a study of China's finances to compare to those of Russia in 2014 and make a better estimate of what it can offer as the main trading partner. 

The West is not rejecting Russia. It is Russia that keeps acting in a paranoid manner and conducting war against its neighbors, in particular Ukraine, from which thy carved a strategic chunk (Crimea) and funded armed and trained a secessionist war in Eastern Ukraine. Russia under Putin repeatedly earned Western disapproval and enmity.

The movement of the NATO border to the strip from the Baltics Poland to Romania was requested by those countries out of fear of being taken over by Russia again. As they were joining the EU, joining NATO was not a big deal other than in Russia's expansionist paranoia.  

It was hardly Western financier's business to keep Russian kleptocrats honest in Russia. Russia was the only country that could do it. 

Same goes for China's big money and their children living in London Sydney Paris, Vancouver, LA and San Fran and NYC. 

It is the job of their home countries to police their internal finances and keep sticky fingers from walking away with their people's wealth. Nobody in the West can do it for them..

I see you cannot stop lying, miserable hired propagandist. It was the own population of Eastern Ukraine that started a civil war in order to get rid of the Kievi junta, which got in the power by an armed coup. Your other lies are just as miserable, even if I don't have the time to reveal each of them.

[0R0 + 6,251]

30 minutes ago, Chris555 said:

I see you cannot stop lying, miserable hired propagandist. It was the own population of Eastern Ukraine that started a civil war in order to get rid of the Kievi junta, which got in the power by an armed coup. Your other lies are just as miserable, even if I don't have the time to reveal each of them.

What you mean to say is that Russia's manipulation of elections in Ukraine was a friendly act resulting in a political movement to make Ukraine a Russian puppet state. While the Western sponsored opposition takeover by Ukrainian nationalists was an act of aggression against Russia.

You have it upside down. The former Soviet block countries are INDEPENDENT. That means that Russian political intervention in those countries is an act of war. It was their choice to join (or not) the EU. Their choice to join NATO, or not to. NATO could have rejected these applications. That would have been unprecedented in NATO history. It was not an imperial act against Russia. Nobody is working out detailed plans to plow through the plains to reach Moscow. Only Russia is constantly making plans to take over these countries they once controlled. Not only plans but actual active subterfuge in manipulating their internal politics and using Nat Gas and oil to extort concessions. 

Putin is very obviously intelligent, but his look back to the "glory days" of the Soviet empire is not a reference and guide to the future, but the anchor that prevents Russia from moving ahead. His actions are the sole cause for the E European states joining the EU and NATO. It is reciprocity to his saber rattling. Stop the paranoid behavior and you stop the paranoid response.

Russia has no more right to be secure than does Poland. Germany, Romania Ukraine or France, all of whom are on the wide open European plains. 

 

[Chris555 + 8]

1 hour ago, 0R0 said:

What you mean to say is that Russia's manipulation of elections in Ukraine was a friendly act resulting in a political movement to make Ukraine a Russian puppet state. While the Western sponsored opposition takeover by Ukrainian nationalists was an act of aggression against Russia.

You have it upside down. The former Soviet block countries are INDEPENDENT. That means that Russian political intervention in those countries is an act of war. It was their choice to join (or not) the EU. Their choice to join NATO, or not to. NATO could have rejected these applications. That would have been unprecedented in NATO history. It was not an imperial act against Russia. Nobody is working out detailed plans to plow through the plains to reach Moscow. Only Russia is constantly making plans to take over these countries they once controlled. Not only plans but actual active subterfuge in manipulating their internal politics and using Nat Gas and oil to extort concessions. 

Putin is very obviously intelligent, but his look back to the "glory days" of the Soviet empire is not a reference and guide to the future, but the anchor that prevents Russia from moving ahead. His actions are the sole cause for the E European states joining the EU and NATO. It is reciprocity to his saber rattling. Stop the paranoid behavior and you stop the paranoid response.

Russia has no more right to be secure than does Poland. Germany, Romania Ukraine or France, all of whom are on the wide open European plains. 

 

"Russian political intervention...is an act of war"

And how do you qualify American political and militar intervention, one-key?

 

 

[0R0 + 6,251]

7 minutes ago, Chris555 said:

"Russian political intervention...is an act of war"

And how do you qualify American political and militar intervention, one-key?

 

 

Tit for tat

You setup your puppet government, we take it down. You started the war, the counterattack is the necessary outcome. If it is "legit" for Russia, then it is automatically legit for anyone else as well. It is standard PR to claim that once you have conquered someone else then counter attack is ilegitimate. Since you are a client of Russian PR narratives, then either stand up as Russian or read up to get a broader view. Double speak does not make an argument.  

Edited March 14, 2020 by 0R0

[ronwagn + 6,290]

23 hours ago, Tomasz said:

Dear colleagues, no one in Russia after you broke the agreement not to extend NATO after 1990 will never believe the good intentions of the West or the US. Putin said this clearly in the Munich speech in 2007.

Russia's strategic ally is China, not the West, and with each successive day of the month and year this state is only strengthening.

West support for the Ukrainian Maidan was a milestone in breaking any cooperation.

The Russians see that they are surrounded by an enemy many times stronger alliance bombing Yugoslavia, Libya, Afghanistan, and Syria. They have no choice but to defend themselves by all means.
And it is not the Russians who are guilty here but the West who wanted to humble Russia take over  mineral resources for nothing and didnt care abut starving ordinary Russians in the 90s.

This is not forgotten and the Russians will not forget it.

If you wanted to have the support of ordinary Russians, then you had to give oligarchs ordinary thieves that fled to the West and not accept them with open arms and their billions in London called Londograd.

In addition, it would be useful not to surround Russia with NATO bases more and more tightly because every conscious man sees this and  Western propaganda that this only defensive alliance will do nothing.

So you can now give up all the anti-Russian and anti-Putin propaganda because really no one conscious in Russia will ever believe it anymore.

You can start with this text - lets compare 1990 and 2015.

Take away the aggressions in Georgia and Ukraine and relations would be far better. The Russian Bear keeps knocking on all the doors and showing its true intentions under Dictator for Life Putin the KGB man. His rotten deeds to maintain power are well known and consistently proven to all. He is good at buying gold with oil money though. The question is will the people ever benefit from it. He has to impress his Russian citizens, not the Western Press. They have turned against him to fight against President Trump. Russia is a fascist oligarchy and the people are just pawns with no voice. Russia has the economy of Spain now and will be lower on the totem pole soon. 

[Chris555 + 8]

10 minutes ago, 0R0 said:

Tit for tat

You setup your puppet government, we take it down. You started the war, the counterattack is the necessary outcome. If it is "legit" for Russia, then it is automatically legit for anyone else as well. It is standard PR to claim that once you have conquered someone else then counter attack is ilegitimate. Since you are a client of Russian PR narratives, then either stand up as Russian or read up to get a broader view. Double speak does not make an argument.  

"government, we take it down"

Then how comes that you not just failed to "take down" the Russian government, it is not just taking over the Middle East, but it - allegedly - intervenes even in the American politics as well? Maybe you are just wishful thinking, as it seems?

Ha ha ha

[ronwagn + 6,290]

37 minutes ago, Chris555 said:

"government, we take it down"

Then how comes that you not just failed to "take down" the Russian government, it is not just taking over the Middle East, but it - allegedly - intervenes even in the American politics as well? Maybe you are just wishful thinking, as it seems?

Ha ha ha

Another Russian troll to help out the others. 

[Chris555 + 8]

9 minutes ago, ronwagn said:

Another Russian troll to help out the others. 

Another deep state troll to help out the others.

 

[ronwagn + 6,290]

4 hours ago, Chris555 said:

Another deep state troll to help out the others.

 

I am the enemy of all the deep states. You are helping the Russian deep state. 

Globalism https://docs.google.com/document/d/1k8kNhtZJLuN66TpDuo67WBV1U2JhhZIvAefxeMNK0ls/edit

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

Edited March 15, 2020 by ronwagn
added reference

[Chris555 + 8]

12 hours ago, ronwagn said:

I am the enemy of all the deep states. You are helping the Russian deep state. 

Globalism https://docs.google.com/document/d/1k8kNhtZJLuN66TpDuo67WBV1U2JhhZIvAefxeMNK0ls/edit

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

If Russia is part of the Deep State, why all you can read about Russia in the corporate mainstream media is negative news, anti-Russian propaganda?

[ronwagn + 6,290]

1 hour ago, Chris555 said:

If Russia is part of the Deep State, why all you can read about Russia in the corporate mainstream media is negative news, anti-Russian propaganda?

Russia is not part of the deep state. Putin is the head of his own deep state. He runs Russia through the modern equivalent of the KGB. Look at my Russia stories if you haven't already. He is dictator for life while running a pretend democracy.

Russia is a crony fascist state. 

https://docs.google.com/document/d/1TNLgFNBS_jURlZiqkdZfYjG6DoGiYbcwcdn1e-62rUM/edit

And here is a new story https://mia.mk/putin-signs-sweeping-constitutional-changes-into-law/?lang=en

[Chris555 + 8]

43 minutes ago, ronwagn said:

Russia is not part of the deep state. Putin is the head of his own deep state. He runs Russia through the modern equivalent of the KGB. Look at my Russia stories if you haven't already. He is dictator for life while running a pretend democracy.

Russia is a crony fascist state. 

https://docs.google.com/document/d/1TNLgFNBS_jURlZiqkdZfYjG6DoGiYbcwcdn1e-62rUM/edit

And here is a new story https://mia.mk/putin-signs-sweeping-constitutional-changes-into-law/?lang=en

"Dictator" Putin has higher approval rates than any Western politician, one-key.

[ceo_energemsier + 1,818]

17 minutes ago, Chris555 said:

"Dictator" Putin has higher approval rates than any Western politician, one-key.

The Putinator is the one and only "Dick-tator" who supports other smaller "dick-tators" around the globe.

Have fun with those words!

[0R0 + 6,251]

20 hours ago, Chris555 said:

20 hours ago, 0R0 said:

Tit for tat

You setup your puppet government, we take it down. You started the war, the counterattack is the necessary outcome. If it is "legit" for Russia, then it is automatically legit for anyone else as well. It is standard PR to claim that once you have conquered someone else then counter attack is ilegitimate. Since you are a client of Russian PR narratives, then either stand up as Russian or read up to get a broader view. Double speak does not make an argument.  

"government, we take it down"

Then how comes that you not just failed to "take down" the Russian government, it is not just taking over the Middle East, but it - allegedly - intervenes even in the American politics as well? Maybe you are just wishful thinking, as it seems?

Ha ha ha

Much as I am sure most of the world would appreciate a regime change in Russia, nobody is willing to make the effort directly. What is possible - with much strife between US and Germany and other NATO members - is to choke Russia economically to the point of civil discord to reign in Putin and his oligarchs. Contrary to the Russian Oil company CEOs, their automatic hedge through the floating Ruble exchange rate has obvious costs. The expansion of Agricultural exports with the weak Ruble, is not useful to the people. It means that they pay more for basic food and can't afford to import fresh greens and fruit in winter. It threatens the demographic viability of the country. Eventually that means that labor rates must rise up relative to oil in rubles, thus increasing costs to converge with the dollar price. The oil companies can't survive if their workers can't.  

 

I am not going to claim a moral high ground for OPEC+, but I will say that the free market price of oil without effective cartel manipulation fluctuates from high levels that cover capital expenditures and low levels that barely cover cash costs. That volatility pushes structural changes in the broad economy to diminish reliance on oil. Those efforts rise during high price periods when oil capital investment is necessary, but their resultant diminution of oil demand remains with us. Once PHEVs are put on the road they remain for upwards of a decade. EVs and higher efficiency diesel and now CNG and LNG powered shipping, and large mining equipment. They don't go away because oil prices drop to cash lifting cost. That demand is gone forever. 

The cartel and its predecessor organizations provide a price floor that prevents the cyclical drop in oil prices to below cash costs. Thus allows long term capital investment to continue apace during low demand periods so that there is no supply disruption later on and the price spike is contained. As pointed out above, the price spikes are dangerous to the industry's long term demand, which will be under severe pressure from other energy sources while demand is constrained by declining demographics in OECD+China.

Shale is a swing factor as it is capable of rapid response to high prices within less than a year.  As opposed to offshore and large scale developments that take years to build. So the result of a price spike is always going to be a market share gain for Shale, a sharp rise in excess NG/LNG supply, and a price drop and further transition out of oil to NG and electrics. Russia, as an exporter of both oil and gas has an interest in avoiding price spikes in oil that result in oil demand destruction and lower NG prices. Though it seems less obvious to Russian oil CEOs, delaying their long term market share decline does not depend on shutting down shale, but on keeping shale at a slow expansion  that just about allows debt service. If they are successful in bankrupting Shale companies, then their bad leases and heavy debt will reduce costs permanently by up to $15/Bbl. Thus the current price war with Saudi is THE incorrect response for Russia. It is its oil that will remain floating on the ocean. And eventually one or more of their fields will have to shut down with an output cut agreement from OPEC+, or without it. 

[Chris555 + 8]

2 hours ago, 0R0 said:

Much as I am sure most of the world would appreciate a regime change in Russia, nobody is willing to make the effort directly. What is possible - with much strife between US and Germany and other NATO members - is to choke Russia economically to the point of civil discord to reign in Putin and his oligarchs. Contrary to the Russian Oil company CEOs, their automatic hedge through the floating Ruble exchange rate has obvious costs. The expansion of Agricultural exports with the weak Ruble, is not useful to the people. It means that they pay more for basic food and can't afford to import fresh greens and fruit in winter. It threatens the demographic viability of the country. Eventually that means that labor rates must rise up relative to oil in rubles, thus increasing costs to converge with the dollar price. The oil companies can't survive if their workers can't.  

 

I am not going to claim a moral high ground for OPEC+, but I will say that the free market price of oil without effective cartel manipulation fluctuates from high levels that cover capital expenditures and low levels that barely cover cash costs. That volatility pushes structural changes in the broad economy to diminish reliance on oil. Those efforts rise during high price periods when oil capital investment is necessary, but their resultant diminution of oil demand remains with us. Once PHEVs are put on the road they remain for upwards of a decade. EVs and higher efficiency diesel and now CNG and LNG powered shipping, and large mining equipment. They don't go away because oil prices drop to cash lifting cost. That demand is gone forever. 

The cartel and its predecessor organizations provide a price floor that prevents the cyclical drop in oil prices to below cash costs. Thus allows long term capital investment to continue apace during low demand periods so that there is no supply disruption later on and the price spike is contained. As pointed out above, the price spikes are dangerous to the industry's long term demand, which will be under severe pressure from other energy sources while demand is constrained by declining demographics in OECD+China.

Shale is a swing factor as it is capable of rapid response to high prices within less than a year.  As opposed to offshore and large scale developments that take years to build. So the result of a price spike is always going to be a market share gain for Shale, a sharp rise in excess NG/LNG supply, and a price drop and further transition out of oil to NG and electrics. Russia, as an exporter of both oil and gas has an interest in avoiding price spikes in oil that result in oil demand destruction and lower NG prices. Though it seems less obvious to Russian oil CEOs, delaying their long term market share decline does not depend on shutting down shale, but on keeping shale at a slow expansion  that just about allows debt service. If they are successful in bankrupting Shale companies, then their bad leases and heavy debt will reduce costs permanently by up to $15/Bbl. Thus the current price war with Saudi is THE incorrect response for Russia. It is its oil that will remain floating on the ocean. And eventually one or more of their fields will have to shut down with an output cut agreement from OPEC+, or without it. 

So going bankrupt is actually a method of cost-saving? One can always learn from you, one-key.

Ha ha ha

[0R0 + 6,251]

1 hour ago, Chris555 said:

So going bankrupt is actually a method of cost-saving? One can always learn from you, one-key.

Ha ha ha

Interesting interview touches on the subject of bankruptcies vs. debt zombies, and what the Russians should be aiming at. 

Bankruptcy is the difference between Ford and GM, where Ford remained hampered by large outstanding debts and pension obligations, while GM had discharged those through bankruptcy reorganization. 

E.g. GM vs. Ford stock price ratio  chart

You need some financial education to help your understanding of what is going on and to form expectations as to results. 

[pscoughlin + 8]

On 3/14/2020 at 2:01 PM, Chris555 said:

I see you cannot stop lying, miserable hired propagandist. It was the own population of Eastern Ukraine that started a civil war in order to get rid of the Kievi junta, which got in the power by an armed coup. Your other lies are just as miserable, even if I don't have the time to reveal each of them.

I was in Eastern Ukraine working with an orphanage in the early spring of 2014 when the invasion started. Today the town is about 3km from the front lines. It may have started as a civil war but the rebels could not have maintained there current positions without extensive help from Russian military. I'm ok with that because NATO is helping Ukraine with supplies as well. I just wish you Russians would admit what the rest of the world already knows. Personally I think Ukraine should abandon that area because I think it is more like Russia then Ukraine anyway.  Regardless I don't think Russia wants to take on the responsibility for bringing that area into the Russian Federation because they realize just like Ukraine does that it is an area that will take a tremendous amount resources away from the state budget.

As a side note, I'm curious why you chose the user name Chris555.  This is a site for professionals in the oil and gas business and the majority of us use our real names. It is obvious by your writing style that you are a native Russian speaker. Why the deception? 

[Chris555 + 8]

4 hours ago, pscoughlin said:

I was in Eastern Ukraine working with an orphanage in the early spring of 2014 when the invasion started. Today the town is about 3km from the front lines. It may have started as a civil war but the rebels could not have maintained there current positions without extensive help from Russian military. I'm ok with that because NATO is helping Ukraine with supplies as well. I just wish you Russians would admit what the rest of the world already knows. Personally I think Ukraine should abandon that area because I think it is more like Russia then Ukraine anyway.  Regardless I don't think Russia wants to take on the responsibility for bringing that area into the Russian Federation because they realize just like Ukraine does that it is an area that will take a tremendous amount resources away from the state budget.

As a side note, I'm curious why you chose the user name Chris555.  This is a site for professionals in the oil and gas business and the majority of us use our real names. It is obvious by your writing style that you are a native Russian speaker. Why the deception? 

I am not a native Russian speaker, though I speak Russian on a reasonable level, due to years of hard learning, as anyone else can do. As for the Ukrainian events in 2014, there was an armed coup against the elected president in Kiev to begin with, in case you have missed it.