Russia's economy is back on its feet | Hacker News Reader

Russia's economy is back on its feet

economist.com

43 pointsIdEntities76 comments

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...

> how they've managed

Perhaps with help from Western propaganda, in turn funded by big Western industries?

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.

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

> 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.

> 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.

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.

> I'm not sure they have functioning first strike capability to significantly damage the US.

Happy to suggest some literature to dispel your doubts.

Yes please! Information of the kind, considering the current and rare northeasterlies blowing over Europe, would be much appreciated. Happy Mondays everyone!

Please!

Although also please note I said "functioning". I have no doubt but they have the ICBMs to do so built, but I wonder about theirs maintenance status. As I understand it, you cannot just stick them in a silo and have them perform when needed.

https://sgp.fas.org/crs/nuke/R45861.pdf

Please do!

> the western world did everything in its power

the west for the most part didn't ban russian oil and gas, which is the only thing that would have impacted russia's economy massively, so no, of course they didn't.

90% of the sanctions impact specific people, not industries.

You can even still receive money in Russia from abroad, because not even the whole banking system has been disconnected from SWIFT.

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.

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.

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.

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”

I mean, is there any indication to the contrary apart from various "economist opinions"? Has anyone dumped dollar reserves since the seizure? Anyone switched to alternative currencies apart from few deals with Russia?

> nobody in the world cares about US seizing Russian USD

It's a sovereignty issue. Countries don't like to give other countries substantial leverage over them if it's possible to avoid it.

That said, I think the seizures are probably fine, just because there's no real alternative to the USD or EUR as a reserve currency. Doing anything beyond that (spending the frozen funds, for instance) would probably not be fine.

Frankly you are completely wrong: having touched private property, having violated funding principles of western values have only a meaning: the west can't be trusted. On contrary the fact that both Russia and China have talked stability that means they do their own interests like anyone else, but they are less unreliable than the west.

Western neoliberals have done so much damage to us westerner that we MUST jail them for life for crimes not different than the original nazi ones who happen to be payed effectively by the same cohort of people who rule us today, their crimes are much worse against us than those from others blocks at their own homes and neighborhoods.

Personally as an EU Citizen I have exactly ZERO trust in anything coming from neoliberals, especially from "English world" right now, and I'm not alone seeing the autarchic trend ongoing at any level, from States who try to reshoring to private people who look for as much autonomy as they can. That's in our terms have a name: high treason. Where civil servants act against their own people for saving/favoring a small cohort of rulers. It's nothing new of course, it happen every time in the history but that's is from the point of view of our Democratic values.

What exactly are the principles violated?

Confiscation and freezing of assets are standard and necessary tools in crime fighting in the West. To freeze assets, rather than confiscate for good, you typically only need a substantial suspicion of a crime, not a court order - which again is necessary.

This here is very similar. It is beyond doubt that Russia invaded a peaceful neighbour, likely it is committing atrocities. Various international courts are investigating these atrocities, with full legal process. The only immediate forum that could sanction Russia is the UN where Russia has a veto, and a massive majority of UN members, by count, population and GDP, condemned Russia in a separate resolution.

These sanctions also didn’t come out of nowhere. Russia was warned as nauseam that the will come if Russia will invade. And they came gradually, giving Russia a chance to back off.

Any country evaluating whether they are at risk of sanctions has to answer to itself: will I be pig-headedly invading a NATO partner with no regard for human rights and due diplomatic process after being repeatedly warned to not do so, and against a massive majority of UN members? If yes, hmm well better store reserves in crypto. Or CNY - China surely wouldn’t use their currency as leverage.

The only law under which these sanctions look questionable is the Russian one: I see, I take, none of your business.

> Confiscation and freezing of assets are standard and necessary tools in crime fighting in the West.

So for you confiscate assets from PRIVATE PEOPLE with no political nor military role in Russian Gov. is applying a tool to fight crime? That's not only violate westerners principles of private property AND innocence until proven guilty, but expose EU Gov. to EU Justice because such actions are illegal and unmotivated here and those who will pay rightful compensation to the angry owners are EU Citizens.

> This here is very similar. It is beyond doubt that Russia invaded a peaceful neighbour

Really? Following OFFICIAL, governmental entities, like https://www.osce.org/files/f/documents/e/7/233896.pdf the peaceful neighbor is actually an enemy, armed, trained and indoctrinated by USA an UK (mostly) intelligence, so the invasion, well warned in advance, is not only perfectly legit but needed to protect Russian territory. With a rightful excuse of acting to stop crimes committed by nazis militias against civil, witch is a better excuse than the Iraqi mass destruction weapons lie, talibans protecting bin laden lie, ...

> likely it is committing atrocities

They probably do, like any army have done in wars, surely if youb read official reports they are just responding to other atrocities committed against civil. It's not a moral justification, but certainly is on the international political scene.

> These sanctions also didn’t come out of nowhere. Russia was warned as nauseam that the will come if Russia will invade.

As Russia have warned ad nauseam they can't allow NATO at their own borders, like the USA have not allowed Cuba's missiles. And they give all the possible option to AVOID a war USA and UK government and private sector need, against NATO allies and their own people. Witch is actually an act of treason, by them. And also nothing new, if you re-read the recent neoliberal gov. history starting from the old "Operation Unthinkable" and "Operation Dropshot" to the recently released CIA report https://www.cia.gov/readingroom/docs/AERODYNAMIC%20%20%20VOL... on op. AERODYNAMIC or the far more recent coup https://doi.org/10.1111/j.1467-856x.2008.00343.x with the famous leak https://www.bbc.com/news/world-europe-26079957

Supporting such action by European Gov. is an act of high treason of our Constitutions (those anti-fascist JP Morgan CEO hate, the same JP Morgan co who have attempted a nazi coup in the 1930 in USA) by supporting nazi-alike actions ang government. From USA and UK people point of view is an act of high treason because their corporatocratic government act against their people interests to push their agenda's witch are themselves for the USA a violation of USA Constitutions and principle of Freedom.

Sorry, you just report NATO-neoliberal propaganda witch is as real as russian one, a neighborhood of zero.

Again, lots of text with no substance. What is wrong exactly with EU supporting the result of Ukrainian revolutions (not the process mind you, none of your links give any proofs whatsoever about EU or US organizing these events)? There's no indication of Nazi-specific support either.

No substance?! I link an OSCE official report who clearly state the NATO have financed nazi militia and a coup explicitly against Russia and there is no substance?

I read some of the documents you linked and they say nothing like what you claim. Quotes?

This is laughable. Confiscation of assets is not to be trusted, but invasion is?

I am sorry, but your comment is a wall of nonsense, that starts with a clearly false premise, and continues at the same level.

If you read my reply below to another users you'll see how officially westerner governments declare and admit that "the invasion" is perfectly legit and provoked by the NATO government as another step of a decade old strategy against Russia. Given that and the fact that Russia have alerted COUNTLESS times what it need to do to protect it's own legitimate national interests yes: confiscating PRIVATE assets basing just on anti-Russian (in the people sense) stanzas is not to be trusted, while an invasion well alerted and well avoided by any means for years by the invader who is finally forced to act is trustable.

So the wall of nonsense you see is just the wall of Bernaysian propaganda narrative we all know, not the real nonsense.

I was referring to specific claims. The new ones you brought are unrelated, and are about as substantiated.

You are not, sorry for being rude: you have stated clearly "confiscations vs invasion" as the confiscations are rightful and the invasion is not, I give below proofs from OFFICIAL westerners public bodies of the contrary. There is nothing unrelated.

First of all, no, I did not imply rightfulness anywhere. It is the opposite, the comparison of someone stealing from you vs someone invading you for no reason.

You claim stealing is bad. Is invasion worse? To me the answer is obviously yes.

Then you say EU and US are not to be trusted because they are "stealing", and that it's better to trust Russia. But Russia is invading. And since despite that you believe Russia is more trustworthy, I find your reasoning deeply flawed.

I do not even need to argue if it was stealing or justified arrest, because there's no need to prove the justification for your claim to be obviously false. Cause even unjustified stealing is magnitudes better than land invasion.

And the other countries already decided who is the trustworthy party after this: the US dollars are being bought in large quantities throughout the world as we speak as a hedge against the looming recession.

> vs someone invading you for no reason.

That's the first point you deny: Russia have COUNTLESS reasons to invade, reasons built by NATO for their proxy war they need. Why? Because us in the EU have started to accept friendly proposals from our fellow Europeans (geographically Europe arrive till the Urals, Russia is vast but Moscow is an European capital) to unite: we have the best tech in the world (while we keep demolishing it) they have the biggest natural resources.

UK knows being not an empire anymore, USA knows their power is just an industrial-military power in deep cyclic decline so they need to go to war, if they loose Europe they loose anything. If Russia and Europe form the long discussed EAEU we will be the first world power again and China and USA/UK can only kill themselves as we did in the '900 with WWI and WWII witch equal results: becoming satellites of the new old world power.

So, as written black on white on OUR and USA public governmental document, I cited some and invited you to read them, they create coups to put in power anglophone-élite friendly nazi militias managing to push Russia to react to stop an European renaissance and that's NOT Putin propaganda, that's written by EU OSCE and USA RAND public reports.

In that case the invasion is just a logic and well warned in advance consequence any country in the human history have done as needed, while stealing is an act of thief, pure and simple.

> Then you say EU and US are not to be trusted because they are "stealing", and that it's better to trust Russia.

Not really: it's better to choose reliable partners who what they say vs a neoliberal criminal nazi elite who keep devastating our world in various waves. Honestly my personal vision is: we from EU need to jail for life in so harsh conditions our ruling class from the public and the private part for high treason, crimes against humanity, embezzlement and many other crimes. We need to declare neliberals for what they are: criminals, son of those liberals who create nazism and fascism in the '900, banned for life from humanity, declare the actual USA, UK, Canada ruling class criminals against humanity to be jailed if they ever enter our territory, forming a real EU (that's already there in young people mind) annihilating the actual scam economy of private money and private-public partnerships and offering Russian fed. a partnership: we gives you tech, you gives us natural resources and we will push toward substantial democracy against formal ones. USA and UK peoples should revolt against their oppressors who made them poor and poorest for their own sake and start to form new governments, again from substantial democracy not formal one, seen their actual dire situation with a New Deal not green but Roosveltian ones.

Man, Russia still calls this war "a special operation" and jails anyone who calls it "a war". You are delusional.

Much of the "sanctions don't work" was looking back at the relatively toothless sanctions put in place before. The new sanctions are hardly toothless.

Furthermore, the post-2014 sanctions did actually bite quite hard. They weren’t designed to obliterate, rather to discourage further action. And they would have done, had Russia acted reasonably.

So the sanctions would of worked, except that they didn’t?

Sanctions are a tool of persuasion. Sometimes persuasion doesn't work?

They worked as an incentive to not continue.

Russia insisted in shooting itself in the foot.

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

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.

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.

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.

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

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.

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.

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.

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).

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.

You would have to provide some argument and evidence that (i) Russia has to stop tank production, and that (ii) this was due to sanctions, and that (iii) this will alter their strategic and tactical goals in Ukraine.

The third part is the most important part. Showing that these sanctions somehow have deterred Russia in its military posture. I find the idea ridiculous.

It’s not just about their ambitions but also about their ability. It seems so far that they are barely capable of winning against a much smaller force.

First two points: https://www.reuters.com/business/us-official-says-export-cur...

Russia seems hell-bent on going through with this war. Their losses already justify withdrawing, sanctions or not. The calculus for them is clearly not about a net cost-benefit calculation. PerhPs because it is a despotic kleptocracy? So an immediate reaction is not really the goal.

My point is that the Rubble/USD trade pair was used by the media as an indicator of Russia’s economic weakness, and it rebounded just like nothing.

Also, if you look at some of the top American financial institutions, they continued trading with Russia and you bet they made cash on a Rubble/USD pairing trade. Nevertheless, nobody is calling these financial institutions unethical or amoral. However, a middle class person trying to make a buck on the opportunity is somehow amoral.

https://www.reuters.com/business/finance/us-banks-will-keep-...

I absolutely call these financial institutions amoral.

See, that’s a difference between someone born in the USSR and someone born elsewhere. I, as person from the USSR, remember well how the offical rate of the ruble was a meaningless number. In theory, you could sell rubles at that rate. In practice, there would be a strict limit on the amounts, number of transactions and people allowed to execute these trades. You, my friend, would have lost all your money.

There are money markets that guarantee the trades at the market maker specified rates.

If I have a currency that has an 'official' rate different from it's rate on most markets, how does the market you mentioned replenish it's euros when I buy them with roubles?

You do not buy actual rubbles or sell rubbles for dollars. Instead you buy/sell some financial artifact that represents the trade pair. Those end up trading at the official market maker rate.

Try to transfer 30000 euro to some account in Germany... I did it once when I tried to buy some expensive domain. You will have the biggest troubles in your life and financial authorities will ask endless questions regarding your transaction and the money involved. Even in russia I think you have more financial freedom than in western. In Germany I also have to spend at least 20x more time for taxes than any developer from asia.

Lol, jesus. You are trolling so hard.

That's a KYC (know your customer) process and it has existed in all modern countries, Russia included, for a decade+ as a part of anti-laundering measures. If you were trying to transfer 30k from a country that doesn't implement KYC, you got exactly what it is designed for.

Amongst other multiple things which happened, this has helped Russia to move away from USD payments to their local currency. Given the chain of events like 40% of all USD printed in 2020, countries moving away from Petro-Dollar to their local currencies - It is a big red flag for USD (in my opinion)

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

It makes sense in retrospect.

Right now, it is more or less impossible for any Russian to a) use the US 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.

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.

It's early yet.

Yes, it seems as though economics is measured in multi-year timeframes.

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.

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

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.

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....

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.

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.

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.

There's this Twitter thread in response: https://threadreaderapp.com/thread/1522751751681904640.html

TL;DR: the article is technically kind of correct, but actually very wrong on the substance

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