The government is building “the crematorium” instead of the economy
On the background of the election of the President of the United States begin to rise the dollar and the Euro against the ruble. On Tuesday morning, they added 4 kopecks, reaching 63,67 70,34 RUB and RUB, respectively, for “American” and “European”. In this regard, some have concluded that the ruble is “floated” and may again break through “the next bottom”.
However stabiliziruemost the price of oil, the main reason for this is called again passing the US presidential election and the “wait and see” position players. However, writing off all of the external shocks and the factors that our government does nothing to improve the situation, as a result, the economy rapidly deteriorating, the population is impoverished, the country continues to slide into the 90s. this and many other questions in an interview Накануне.RU said independent analyst, expert of the Moscow economic forum Vladislav Zhukovsky.
Question: against the backdrop of the US elections again, the ruble depreciates, he “floated” or is it a normal fluctuation?
Vladislav Zhukovsky: the Ruble is not a sufficient amount of or an independent financial asset. The ruble is a derivative of what happens in the commodities market in the world, what is happening to U.S. public debt and the dollar against the major currencies. Therefore, the strengthening of the ruble since February of this year to August-September coincided with General weakening of the us dollar, with the rise in energy prices from $27 to $52 per barrel.
The strengthening of the Russian currency was, however, that the U.S. Federal reserve raised the rate or spring, summer or in September and moved its rise, apparently, in December, and had faith that there will be agreement within OPEC to freeze oil production. Also played into this by our government as monetary and fiscal financial policy of “sterilization” of the money supply, the maintenance of overvalued nominal and real interest rates.
Plus – the failure of the budget, Refinansirovaniya a number of Federal programs, raising taxes, increasing debt at 350-500 billion rubles – it is also pulling money out of the economy. In addition, the sale of Federal loan bonds with a balance of the Central Bank of the country, other measures to “sterilize” the money in the economy has led to the fact that there was actually a strong ruble deficit, the ruble was concentrated exclusively in the 5-7 major banks, of which four state-owned banks. As a result, the ruble has arisen the hunger, and change in dollars was nothing special.
And, as far as I know, continue to operate the unspoken agreement with the major commodity exporters, which were sold for export and foreign exchange earnings, and government-owned banks was also agreement that they do not build up much currency position and maintain a balance in the market.
Question: And why did the weakening of the ruble?
Vladislav Zhukovsky: It’s all led to the fact that in a degrading economy, falling export GDP – and this is a record decline for the last 20 years – with 22-month-on-month drop in real income, the fall in investment more than two years, the fall of non-oil sector, we have a situation when the financial market inflated “bubbles”. That is, on the one hand, we have strengthened excessively-overbought ruble, and on the other hand, the MICEX index has updated the autumn highs, the government debt market yields fell from 10.5-11% at the beginning of the year to 8.5 to 8.3% in the moment, that is at the level of the first half of 2014.
We have seen a rebound in the ruble from 87 to 62-61,5 RUB with oil rising in price from $27 to $53 per barrel. The market is now “turning around”, and I think that the oil returns into the range below $42 per barrel and the ruble, most likely, in the near future will go on the mark of 67.5-68 rubles.per dollar.
Question: If you wait until price will rise again in oil, what are the metrics for the notorious stability? Are they attainable?
Vladislav Zhukovsky: To somehow make ends meet, at least to reach the parameters of the budget, which will be incorporated in the Federal law for the current year, a barrel should cost 3150 rubles per ton, today it costs about 2700 rubles. Recently adopted amendments to the Federal law on the budget for the current year for execution, and it turned out that we and the debt grew more than 300 bn and is expected to grow to 500 billion rubles [to the end], and the ceiling of loans increased from 8.8 to 9.8 trillion rubles, the budget deficit was 2.4, and 3 trillion rubles, and if [the shares] Rosneft does not sell, then the deficit will amount to 3.7 trillion rubles. This is a huge value, and it shows that in favor of a strong rouble, low inflation, some authorities are samotushenie economy and taking money from the population, the bleeding of the financial system and the suppression of effective demand. We get the mythical low inflation, but the economy will be like a scorched field. That is the economic policy of our government — it is the policy of building economic crematorium.
If we assume a living wage is fair, he is 21 thousand rubles – then we have poor exactly 75 million people, i.e. half of the country. But we will have painted a beautiful low inflation, low yields on public debt, and will “bubble” in the financial market. And that people is banal there is nothing, the business is suffocating from falling sales and lack of credit is not concerned neither the Central Bank nor the Finance Ministry, they have their own institutional interests.
Question: so this will continue into early next year, no changes should be expected?
Vladislav Zhukovsky: While we have the same people, the same conversations with the same goals, Outlook on life and “pocket” interests, and therefore the budget is adopted such that it seems that the government taxes does not increase, but we see that excise taxes on fuel will be increased by at least 2-4 of the ruble, we move to cadastral valuation of real estate, albeit still low with a reduced coefficient of 0.2, but it will grow to one. As a result, our payments will increase 3-5 times over the immovable property. And the Central Bank openly says that it will pursue moderately tight monetary policy, to maintain in a positive range of real interest rates, that is, cleared from inflation. And ordinary people need to think about what inflation will be, like, decline, rates will remain high, the Central Bank will thereby gently to encourage Russians to save more and spend less, and will drive investments here that supposedly create a wealth effect through inflation of bubbles in the financial market.
We did not create the conditions for economic growth, not provide cheap loans to businesses and do not cut the effective demand. We are a poor country, impoverished by 80%, normal lives 5% of the population, so just the demand from low-income could be a driver of import substitution and would support the economy, creating demand for goods and services produced by our Russian companies. But authorities have another policy – the main thing that was a kind of mythical financial stability, and then – the grass does not grow. And if the economy goes into a coma, would not be viable, well, then some American, Chinese, European investment will help her to get out of it.
Question: what about oil – what it will happen?
Vladislav Zhukovsky: as oil and the ruble, we risk to fall in a strong storm that we got him in 2014-2015 If the Americans raise interest rates in December if they failed – and they certainly will be failed negotiations on the freezing of production of OPEC and other countries, plus the fading China, plus the overall growth of the us dollar in the world, the problems in the global banking system, undetermined problem “Broksita”, it can be folded into the perfect storm and will be the trigger for a rate hike in the US as it was in December last year.
Then the Americans raised the rate, and they rolled a barrel from $42 to $27 dollars easily. And it could easily happen again. And I remind you that in America since the beginning of August, when oil rises in price, there is a record on the historical scale, drilling activity for development of new shale oil deposits. Actively a month and a half is a build-up of oil production, we saw last week, a record for 35-40 years jump in warehouse stocks of oil, they are just nowhere to go globally, oil reservoirs full. Now, as soon as rates will rise, OPEC will fail, and if the Americans will elect Donald trump President, it will be such a shock in the financial markets, such a fall that all begin rocking like in 2015
Therefore, there may be a combination of extremely adverse factors, the ruble will easily rise to 68 rubles to the dollar, and to 72, and everywhere – it all depends on oil, and it can easily fall and for $37, and $33 per barrel at the moment.
Question: the “mere mortals” what to prepare? What store, if you have something to store?
Vladislav Zhukovsky: the Ruble in relation to any reserve currency is extremely weak peripheral commodity currency, so in a situation, with 63 rubles per dollar store in rubles, I would not recommend anyone. I think that at least to around 72-77 RUB we will move in the coming months.
And about the recommendations – indeed, we have very poor, unfortunately. The middle class has greatly shrunk over the past three years. If earlier it was 22-23% somehow lived normally, today, in the most loyal estimates, no more than 12%. In the more rigid European standards, we have a middle class not more than 4,5-5%, with 0.2% of Russia’s population controlled 88% of the national wealth. And grandparents, the state amount is small, but at least they need to be able to save and to defer to someone on the education of children, medical treatment, grandchildren, but certainly not in rubles. Because, unfortunately, all of these “nest egg” be magic for 2-3 nights, as in 1998, 2008, in 2014-2015.
Remains to invest in yourself, in children, retraining, retraining in new skills. The best pension system in Russia for the next decade – our children and grandchildren. Pension reform failed. Retire in 9-10 thousand rubles to survive impossible. Pension savings they have been taken away yet in 2014, they will not return.
If there is a need to maintain liquidity, can be stored in dollars, euros, Swiss francs. The ruble will become cheaper every year, because the economy is deteriorating, even our Ministry of Finance and economy Ministry predicts stagnation up to 30-ies, That is, we will become less powerful and more dependent on what is happening in the global markets.
The balance of payments, the surplus on current account fell to $1.5-2 billion in the quarter. But two years ago it reached $15-20 billion, That is, he was 15 times higher. Today, the balance of payments and inflow of foreign currency through it on at least the second half of 1999 Is a disaster. We have a foreign debt of $550 billion – a figure depending on the import of critical. Withdrawal of capital is enormous. We walk on thin ice, and sooner or later fail. The only question is the timing.
Question: However, more recently, the Central Bank urged all to keep their money in rubles…
Vladislav Zhukovsky: It is an attempt to make the ruble a symbol of stability, great power and moguchest when openly Contracting the economy and impoverished the population. View to the region and the mass strikes and hunger strikes of doctors and teachers, the tractor recently to convey the truth to the President wanted. You can, of course, in this game and continue to play, but it will end very badly.
The ruble under the current economic policy and in these elites is doomed to slide down, breaking down all new bottom. All the time our officials will write off the problem to external shocks and external factors – sanctions, falling oil prices, rising interest rates in America, the normalization of monetary policy in the US, Europe, Japan, and the UK. But objectively, the ruble is strongly overbought.
Hold necessary. We are back, slowly crouching in the 90-ies Our goal is not to degrade, and to make all head, hands, feet, but, in General, viable environment is created by officials in the form of taxes, levies, Platonov, inventories, prices for housing, electricity, bread and so on. In this environment, will survive 10-15% of the population.
Question: the Other again “will not fit into the market”?
Vladislav Zhukovsky: Well, Yes, everyone believed that the situation will improve, but if you do exactly the same thing that was doing all these years – to cut the branch on which sit, and to think that the tree will flourish and become stronger, then it won’t. It is necessary to change people and programs, the strategy to create a competitive environment in politics and in the economy and in business. And we have one “General party line” is correct, but this “party line” is unacceptable in the lives of 90% of Russians.
