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Questions You Should be Asking the World Around You

The Looting of Russia’s Pensions. “Why Isn’t Anybody Buying My Stuff”

I was reading an article on the Moscow Times about how the economy is being mishandled, then it occurred to me: everybody is doing similar things.

Here is the article on the Moscow Times.

https://www .themoscowtimes .com/2019/10/01/the-race-to-grab-russias-reserves-a67534

-The main debate in Russia’s economic bloc right now is how best to spend the super-profits from oil exports that are building up in the national wealth fund (NWF).

-In accordance with budget rules, oil revenues in excess of around $40 per barrel are channeled into the fund, and the threshold of 7% of GDP — above which the law allows the treasure chest to be opened up — will be passed by the end of this year.

-It turns out that a lot of money is even more of a disaster for the Russian economy than a lack of money.

-Federal budget spending is planned by the government through 2022 for the National Projects (a road map for Russia’s strategic development), social welfare, defense, and security. Because of this, for state capitalists, the surplus in the NWF is essentially becoming the only potential source of large tranches of state funding for private projects.

-Since the original function of the NWF was to ensure stability in the pensions system — a function that has only existed on paper since 2018, when oil revenues from the reserve fund were used to cover the budget deficit, and the rest of the fund was put into the NWF — it could only be invested in conservative financial instruments: securities issued by bodies with a high credit rating, other countries’ bonds, and bank deposits (the list of banks is determined by the government, and is not long).

-The world’s biggest sovereign wealth fund — Norway’s Government Pension Fund Global — mainly invests abroad to protect the Norwegian economy from oil price fluctuations. An analogous approach was suggested in Russia: to expand the range of the NWF’s investment instruments to foreign assets, and ban investment of the fund’s money in Russian projects.

-The Economic Development Ministry has suggested stimulating foreign demand for Russian non-oil and gas goods and services through export credits,

 

It led me to think:

Isn’t china doing the same by lowering the threshold for issuing permits to foreign investors?

And isn’t the United States doing a similar thing by shifting its manufacturing focus from China back to the United States?

Germany is also showing small signs of structural collapse export wise.  They aren’t selling anymore Volkswagens.

Iran’s economy is also in the gutter. Everyone’s pensions got wrecked.

The Saudis are also experiencing encumbered growth.

Canada is also treading water because they can’t sell tar sands.

Supply and demand

The supply is there. The demand is there.  People still need their daily cup of coffee. But the prices are so high that no one wants to spend any money. It appears that people are choosing to hoard their wealth, in preparation of a “major catastrophe,” and this stalls the economy on a world wide scale.  You can blame the news media for projecting their paranoias on TV and causing unwarranted fears across the population.

In short, optimism is needed to stimulate world economies.

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This entry was posted on 10/08/2019 by in EU, NA, Russia and tagged , , , , .

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