Russia looking to avoid worst of economic downturn
Published: 19 May, 2010, 11:44
Edited: 16 October, 2010, 14:49
A volatile Eurozone sees Russia with almost no exposure to national debt, but with markets pricing in a wider contagion, Russia would be affected by a return to recession.
History of economics can be a wonderful guide. In focusing on this part of a foundation, Russia is quite unique. Mr. Putin and Mr. Mevedev have actually put into action many Good things resulting in positive happenings. It should always be remembered that Good things take time and bad things can happen quickly. As an example in the “Western World” we all saw what Naked Short Selling was allowed to do in their financial markets a couple of years ago. To the point, Russia probably is the only Country that has everything needed for a sound economy. You have a complete inventory of natural resources and people who are hard workers. Can anyone imagine as only one example once Mr. Putin and Mr. Medvedev modernize the Motor Vehicle situation (cars, trucks, motorcycles, motor scooters, etc.)? An idealistic situation is your Country's population alone would be able to support such a situation. This would include the natural resources needed, all from within your Country, the designing and manufacturing of such vehicles in your Country, the purchasing and financing of such vehicles in your Country, the Power source (gasoline, diesel, electric, or other proprietary protected methods) all from your Country of Russia. I am a “nobody” but can anyone imagine the potential growth of Russia in a Good way in the next ten years and on? The only thing that may be needed is careful monitoring, as Russia sells its natural resources to others and accepting only their "paper money".
The seeds for a sound Russian economic structure were sown 10 years ago, and now that effort is bearing good fruit for now and the future. The economic protection of solid assets in reserve are the cornerstone of any decent economy, and Vladimir Putin's determination to pay off national debts, and build a large reserve have protected Russia from the worst ravages of the current global crisis. Maria, you're right that Russia is selfcontained with a mix of natural resources, and ever increasing standards of technology, and manufactured goods. It's worth remembering that Russia is a new democracy, and the country has no history of democracy, so it'll take time to develop, in the Russia "way". As a briton living in Russia, i'd rather live here than in Britain, as the vibrancy and spirit of Russians is undimmed by years and years of onslaught by foreign "lifestyle" commodities. The same can not be said for Britain, and britons would do well to take a leaf from the book of Russian life. The future's looking bright for Russia, and i wish all its citizens good health, and happiness. Changing your political and economic systems almost overnight is a massive task for any country to take on, and even with some challenges along the way, it's my opinion Russia has done this successfully. The recent decision by Angel Merkel to ban short selling (a criminal activity disguised as financial creativity) is the start of a change across Europe, and i would hope the Russian government continue their strong monitoring of these financial weapons, and crush them as soon as possible. The attacks on the Euro and Rouble will continue from wall street and the city of london, we all know that, but i think it's time for Russian and Central Asian companies to switch from selling oil and commodities in dollars, to Euros, and Roubles. This move alone will fundamentally change the position of currencies in the world, and put more power back in the hands of those currency owners.
One thing is very sure. Global economies are decoupling from each other, as the first crisis meeting in London that pushed the world to STIMULATE created only deepening crisis. In Europe, battle cry to "stimulate" resulted in each government adding to its sovereign debt as a result. Then the same Wall Street banks that urged the world to "stimulate" turned in shock and horror by "discovering" increased sovereign debt burden in Europe. Greece was the selected target (could have been Ireland, Portugal, Italy or Spain), as it was the least politically tricky to attack. Europe and Euro had to come up with the massive standby guarantees, provided Greece does not deepen the debt any more. But, what if another country is "picked" and the same scenario is repeated? Germany led this time with sane solution: reverse stimulus, and begin cutbacks. So, while one side of Atlantic is continuing "quantitative easing", the other is tighening. Resource-rich countries on the other hand, need to worry about loosing markets, even if crisis pushes commodities prices up. China, in a class by itself, need to gradually prick the baloon of its huge dollar reserves, by spending them --- such as Greece's commercial port, shipping industry, tourism. Or buying worldwide hard assets. Russia, that still depends on commodities, needs to be prepared for reduction in revenue. This can be ONLY compensated by fast increase in small to mid scale manufacturing of products that are currently being imported. Primarily, increase is needed in processed foods, household goods, domestic construction materials and the massive increase in urban construction. Cars industry will not keep Russia afloat, as it depends on banks giving credits to purchasers, and any increase in indebteness is risky. The prolonged crisis can bring about even further erosion of incomes, so consumer lending is on shaky ground. However, increase in the real economy creates goods at "real' prices.










I think that difficulties in some European countries slowing down an exchange in the financial flow. Posibly, at this point of time, economies of this countries would benefit from the trading of the goods that "cheap and chearfull", and that is attractive for the bigger ammount of population who is most afected by the crises an lose of their jobs. Famouse "99 pence" stores are great input to the economies! And small buisnesses in food sector too! Maria Kuznetsova