Before the judge turned on the camera, I told him that I was annoyed with him because he interfered with my writing on Monday night. He reacted with surprise and asked, “What have I done?” I told them that while I was writing my son was texting me insisting that I needed to watch the judge’s live appearance on Newsmax TV and it was distracting. It made me laugh out loud (which was my intention). Just to point out that the judge, based on his previous legal career, was very demanding to provide commentary and analysis on the forgery indictment of Donald Trump.

Anyway, we met virtually today to discuss my latest article analyzing how the war in Ukraine is likely to end. Judge, doing his expert pundit job after the live hit, switched roles and became the expert interviewer.

The perceived chaos in the Russian economy is the latest ray of hope by the West that Russia is on the brink of economic ruin. The New York Times reported in an article today, Drastic economic measures expose Russia’s wartime straitsHe:

On Tuesday, the bank’s long-serving and widely respected head, Elvira Nabiullina, took the plunge again, and announced the third-highest interest rate in a decade to boost the national currency, the ruble, and tame rising inflation. increase announced. Yet, this time, his aggressive moves had no immediate effect on the market.

The central bank’s actions underscored the perilous moment facing Russian economic officials as they try to contain the seismic forces emanating from President Vladimir V. Putin’s invasion of Ukraine. The war has left policymakers with a set of seemingly impossible tasks: maintaining economic stability and dealing with Western sanctions while funding the war machine; To control inflation without putting the economy into recession.

The bank increased the benchmark interest rate by 3.5 percentage points to 12 percent. Higher interest rates raise the cost of borrowing, which constrains spending. In turn, this slows economic growth and can curb inflation. But political views can push in the opposite direction, with lower interest rates that encourage spending and keep the economy moving.

The ruble corrected marginally after the announcement; It reached 97 on Tuesday after falling to 100 against the dollar on Monday.

The NY Time report makes a questionable assumption – Russia’s economic health depends on it being able to pay for imports of foreign goods. Nevertheless, due to Western sanctions, Russia’s imports of foreign consumer/luxury goods have decreased and the Russian standard of living has not declined significantly. In fact, Russia is now the fifth largest economy in the world in terms of gross domestic product (GDP). Purchasing Power Parity (aka PPP):

GDP by PPP

Russia’s performance has destroyed the myth that Russia’s economy as a country was a gas station. Despite this he has achieved this 50% drop in trade with European countries,

Russia trades with Europe

Even before the sanctions, China was Russia’s largest trading partner. yuan against the Russian ruble decreased by about 20% in the last six months. Yes, this has potential inflationary effects on Russian consumers, but the cheaper ruble provides little economic help to China, whose economy is struggling. The fall in the value of the ruble means that China can buy much-needed oil and gas for less money.

I am more optimistic than even the New York Times about Russia’s economic prospects. The war caused a huge uptick in the production of all things military in Russia. This is going to heat up the economy. Because Russia is self-sufficient in food and energy—significant expenses that can hurt a family—the negative consequences of inflation are less likely when it comes to Russian consumers.

I think the economic analysis presented by the NY Times is based on the assumption that Russia remains vulnerable to Western economic pressures. It is no longer a valid benchmark. During the past 18 months, Russia has been busy building new economic ties and establishing new trade dynamics with non-Western countries.

At home, wages for Russian workers have seen a rise and Russian factories are struggling to meet demand. Instead of closing factories, Russia is building new factories and dramatically increasing production of tanks, fighter aircraft, cruise missiles, hypersonic missiles, artillery ammunition and military vehicles. Russia has an advantage the West does not – it is virtually self-sufficient in essential commodities, rare earth minerals and energy.


Leave a Reply

Your email address will not be published. Required fields are marked *