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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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 Posted: Wed Sep 17, 2008 6:27 pm Post subject: Russia Economy |
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I went to the Russian Today website and what a POS of journalism.
MICEX has been closed and there is a credit crisis in Russia, the lead story is that NATO may use bases in Georgia to invade Iran. I guess this replaced the lead story that George Bush is really from Mars.
Russia is about to suffer its first major economic crisis in 15 years, but yet this is the lead news article?
Wow, can you imagine if the FTSE or NYSE was closed for two days , do you think that this article would be in the back pages of a newspaper. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Wed Sep 17, 2008 6:59 pm Post subject: |
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| Quote: |
Russia moves to bolster banking sector
CATRINA STEWART
The Associated Press
September 17, 2008 at 11:36 AM EDT
MOSCOW — The Russian government pumped more money into an increasingly stressed banking sector Wednesday and the stock exchanges suspended trading in turmoil that brought back bad memories of the country's financial collapse 10 years ago.
Russia's primary stock indexes, MICEX and RTS, plummeted for a third consecutive day, with banking stocks leading the way, prompting regulators to halt trading at midday. As of 5 p.m. (1300 GMT), trading had still not resumed.
In an emergency measure to shore up liquidity, the government said it would lend the country's three largest banks — Sberbank, VTB, and Gazprombank — up to 1.12-trillion rubles ($44.9 billion U.S.) for a minimum of three months, said the Finance Ministry in a statement.
“These are market-making banks capable of ensuring the liquidity of the banking system,” said the statement.
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“Essentially we're counting on them as core banks to be able to lend to small and medium banks,” Finance Minister Alexei Kudrin said in televised comments.
The government is racing to restore confidence in the banking sector after a tumultuous few days on the Russian markets, which have been driven down by margin calls and an exodus of buyers. The moves came a day after Russian stocks plummeted to their lowest level in nearly three years as tumbling oil prices and Wall Street turmoil focused concerns about Russia's commodity-driven economy. Since May, the RTS has fallen by more than 55 per cent.
First Deputy Prime Minister Igor Shuvalov said Wednesday everybody needs to “calm down,” and have faith in the government, the Interfax news agency reported. He promised more liquidity measures would be announced soon.
Nataliya Orlova, chief economist at Alfa Bank, said the situation was more serious than initially believed.
“The reason is a lack of trust,” she said. “A number of banks are trying to estimate which banks are facing losses.”
Boutique investment bank Kit Finance was poised to be the first victim in the crisis after the bank confirmed that it had defaulted on some short-term borrowings and was seeking a strategic investor.
Russia's investment climate has faced wider concerns about its health following a damaging corporate wrangle at Anglo-Russian oil venture TNK-BP, Prime Minister Vladimir Putin's attack on a mining company over allegations of price-fixing and Russia's recent invasion of Georgia.
The Central Bank has pumped in ever-increasing amounts into the banking sector in recent weeks through its twice-daily “repo” auctions. It provided a record 365-billion rubles on Wednesday, topping the previous day's record of 361-billion rubles. The Finance Ministry separately provided an additional 150-billion rubles on Tuesday, and said it would provide another 350-billion rubles to banks by Thursday.
The current situation is reminiscent of 1998 when many ordinary Russians saw life savings wiped out. Analysts, however, pointed out that small banking customers are now partially protected by deposit insurance and the government is a much healthier financial state than 10 years ago.
“Is this a repeat of 1998? Definitely no,” said Kingsmill Bond, a strategist at Troika Dialog. “In 1998, the government had a lot of debt and very limited reserves. Today the Russian government has no debt and huge reserves.”
Still, fears have mounted that the building crisis of confidence among investors and bankers could spread to ordinary Russians, prompting a run on banks.
“This is the most important question,” Ms. Orlova said. “At the current moment it's fine because Russians are not deeply involved in the financial markets, but I think this is the risk. ... This would be much worse than a confidence crisis between the banks.”
Russian stock indexes edged up in early trading, but then resumed their decline. The ruble-denominated MICEX fell by more than 10 per cent at one point, before climbing back to a 3 per cent decline just before regulators suspended trading on both exchanges at 12:10 p.m. (0810 GMT). The RTS fell 6.4 per cent before the suspension.
Shares in Sberbank and VTB fell on MICEX by 9.6 per cent and 15.7 per cent, respectively.
Regulators had announced that trading would resume by 5 p.m. (1300 GMT), but that deadline came and went without a resumption of trading and no explanation.
Fearing that Russia's economy could face a repeat of the 1998 economic crisis — which saw the ruble devalued, default on the country's sovereign debt, and widespread bank foreclosures — the government has promised to pump more money into the banking system.
Russian banks face a crunch period in October, when quarterly value added tax payments are due. They will also have to pay back the short-term money borrowed from the government. Banks have already started to hunker down, closing their doors to many third-tier and some second-tier borrowers.
RIA-Novosti reported that Mirax Group, a large real estate developer building Europe's largest skyscraper on a Moscow river embankment, announced it would put on hold all new projects because of the global crisis.
Banking officials tried to calm investor fears.
“The problem now is of a more psychological nature than a real danger,” Garegin Tosunyan, head of the Association of Russian Banks, told Ekho Moskvy radio. “If people begin taking their money and hiding it under the mattress, of course it will have a negative effect on the economy.” |
Trust has to be built.
Is Russia going to collapse? No, but it will be normalized and taught an economic lesson. It has relied on easy money based on resources, but the risk/reward ratio has put itself in danger.
Strengthen the credit rules and regulations of the nation. The days of easy credits with little rules is over.
Build a strong business sector relationships with foreigners , so if a foreigner invests in Russia, then they will know that their investment is reasonably secure. Things TNK-BP and Sakhalin Islands have tainted Russia's ability to attract outside investors. Many are willing to risk at $150 a barrel, but much fewer at $80 a barrel.
Start to invest in manufacturing industry. A fact that majority pipe and parts for the oil sector is build somewhere else than Russia. It is a loss of good manufacturing jobs that are higher paying to other countries. |
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gomer
WayToRussified
Joined: 30 Mar 2007
Posts: 445
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| Posted: Thu Sep 18, 2008 6:47 am Post subject: |
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| Last year, I saw a large Renault factory in Moscow. Anyone know if that factory is still operating? Renault did a lot of advertising on Russian TV, last year. The sound of a Formula 1 Renault, going by at full chat, was in the TV commercial. Lots of Lada TV commercials too. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Thu Sep 18, 2008 6:21 pm Post subject: |
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Russian stocks remain suspended, reserves sink
DMITRY ZHDANNIKOV AND OLGA POPOVA
Reuters
September 18, 2008 at 6:44 AM EDT
MOSCOW — Russian authorities pledged a further $25-billion (U.S.) in support to financial markets, but stock trading was shut for a second day after the worst losses in a decade while foreign exchange reserves fell by $13-billion.
Analysts estimated investors have taken about $36-billion out of Russia since early August, when a brief war with Georgia combined with a fall in oil prices and global financial turmoil turned Russian shares from must-have assets into toxic paper.
Worries persisted about Russia's banking sector after inter-bank lending almost ground to a halt and a mid-sized private brokerage was rescued by a state-owned fund.
“The single biggest priority right now is to prevent a run on the banks,” said Chris Weafer, chief strategist at brokerage Uralsib.
Lars Christensen, head of emerging markets research at Danske Bank in Copenhagen, said the outflow from Russia could accelerate if the situation worsens globally.
“We have been so bearish, but have still underestimated how bad it could get,” he said.
The fall in Russia's stock markets since May has been steeper than in other emerging markets, with many in the market attributing that in part to the increased political risk from Russia's military intervention in Georgia.
The domestic political impact has so far been limited because private share ownership in Russia is small, but some analysts say the pressure for greater state intervention in the markets could play into the hands of hawks in the Kremlin.
Russian Finance Minister Alexei Kudrin says trading on the country's stock markets will resume on Friday and added the country's top banks would lend $2.4-billion to market players.
President Dmitry Medvedev said the country's financial market will receive a total of 500-billion roubles of additional support, including half from the budget.
Russia's benchmark RTS is now down around 60 per cent from its peak levels in May and the country's authorities said the situation was extraordinary but mostly driven by the crisis of confidence rather than a liquidity crisis.
The finance ministry also said overnight it received assurances from United States Treasury Secretary Henry Paulson that U.S. decisions in the financial sphere were not driven by politics.
The statement sought to address the rumours that the exodus of foreign investors is a retaliation by the West against Russia.
The Russian central bank injected 186-billion roubles of one day funds via a repo auction – or less than half of the funds on offer – and money market rates fell to 8.0-8.5 per cent from 10.0-10.5 per cent.
The rouble stood firm versus the dollar/euro basket at 30.37 as dealers said the central bank sold a further $1.5-billion on Thursday to support the national currency. Russian reserves fell by $13-billion in the latest week as the government moved to protect the rouble from capital flight.
Despite Mr. Kudrin's assurance trading would resume on Friday, Russia's markets watchdog said it had indefinitely suspended margin trading, when investors effectively borrow money from the broker to do their trades, and short selling, or bets on a fall in an asset's price.
It earlier blamed both instruments for the market slump.
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vox16
WayToRussified
Joined: 01 Jun 2006
Posts: 349
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| Posted: Tue Sep 23, 2008 12:46 am Post subject: Re: Russia Economy |
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| Paul Holmes wrote: |
Russia is about to suffer its first major economic crisis in 15 years, but yet this is the lead news article?
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Second, counting 1998, but not counting all 1991-1992 transition. They just don't want to picture it as a total collapse, whether it is the one or not.
Last edited by vox16 on Wed Sep 24, 2008 1:23 am; edited 1 time in total |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Tue Sep 23, 2008 1:46 am Post subject: |
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Correct, sorry in 10 years.
It is not a total collapse, but it is a lack of trust of the market place and government of Russia.
The KGB tactics of Putin has pushed the foreign investment out of Russia. Even if you look at Visas, it is impossible to visit for a long time.
But look at the difficulty that USA gives an average Russia to visit the USA.
Look at Oleg Deripaska. He was denied a visa to the USA and he is worth 30 billion. Maybe they are worried that he will steal the towels. He paid Bob Dole to lobby for him to get a visa.
It just seems that battle between Russia and USA is between the gov'ts and it is the people who suffer. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Wed Sep 24, 2008 1:26 am Post subject: |
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| MrSpice1 wrote: | | Paul Holmes wrote: |
But look at the difficulty that USA gives an average Russia to visit the USA.
Look at Oleg Deripaska. He was denied a visa to the USA and he is worth 30 billion. Maybe they are worried that he will steal the towels. He paid Bob Dole to lobby for him to get a visa.
It just seems that battle between Russia and USA is between the gov'ts and it is the people who suffer. |
Deripaska has suffered, all right. Since Deripaska and other businessmen stole so much already, he probably does not need the towels. |
Yes, I agree, but if 30 billionaire have difficult in getting a visa, does it make others scared to try. Look at the other of this, He has been all around Europe without any problem, but when he tried to visit, he had difficulties to visit America. |
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Shadow
Frequent Guest
Joined: 14 Sep 2008
Posts: 10
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| Posted: Fri Sep 26, 2008 11:54 pm Post subject: |
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| Paul Holmes wrote: | | The KGB tactics of Putin has pushed the foreign investment out of Russia. |
It's not so bad. Russian economy doesn't need foreign investment. Energy incomes (oil and gas) are enough to sustain the economy.
Considering the recent events (the financial crisis) Moscow should control the financial market more strictly by making easy for foreign (and even local) investors to invest but more difficult to leave (the market). This will discourage the speculators (the gangsters) and bring to Russian market usefull investors interesting only in the long run.
Maybe, the market would be smaller than he could, but more safe.
Last edited by Shadow on Sun Sep 28, 2008 11:36 pm; edited 2 times in total |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Sat Sep 27, 2008 5:46 am Post subject: |
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| Shadow wrote: | | Paul Holmes wrote: | | The KGB tactics of Putin has pushed the foreign investment out of Russia. |
It's not so bad. Russian economy doesn't need foreign investment. Oil incomes are enough to sustain the economy.
Considering the recent events (the financial crisis) Moscow should control the financial market more strictly by making easy for foreign investors to invest but more difficult to leave (the market). This will discourage the speculators (the gangsters) and bring to Russia true investors interesting only in the long run.
The market would be smaller than he could, but more safe. |
Incorrect, check your reserves. At the present rate, there is only 17 years of oil in Russia as Russia changes its lifestyle, they will export less and use more. Tell me where a Russian oil company that has made s ignificant discovery of its own (without another foreign company) in oil.
Based on the present tax system, no one looks for new reserves and the economy of the gov't is based 40% of oil money, but this year was the first year that production has slipped and has continued to slip.
Money leaving your country is not foreign money, it is usually stolen first, but it is the Oligarch. If you restricted money leaving, they will not invest in the first place.
I stated that the Russian market was going to seriously hurt and it was. I also predict that if that serious changes are not made in the banking system and lending practices, then Russian will face a serious economic downturn. |
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Shadow
Frequent Guest
Joined: 14 Sep 2008
Posts: 10
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| Posted: Sun Sep 28, 2008 11:54 pm Post subject: |
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| Paul Holmes wrote: | | Money leaving your country is not foreign money, it is usually stolen first, but it is the Oligarch. If you restricted money leaving, they will not invest in the first place. |
I was talking about shares/equities. I wasn't talking about money.
Such regulation would concern any "huge investment" on the russian stock market. The aim is to make the stock market more stable. The rules should be applied, on the russian stock market, on both residents and non resident investors.
"small investments" don't need to be regulated more than they are. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Mon Sep 29, 2008 8:47 am Post subject: |
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By preventing the market to do what is suppose to do , will cause the issues. If an Investor is forced to keep his investment although the company is falling apart, then he will likely will examine risk as too high and not invest in the first place.
What is needed is clarity, consistency, fairness, and reliability. If Russia has this, then investment will boom in the country. |
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Shadow
Frequent Guest
Joined: 14 Sep 2008
Posts: 10
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| Posted: Sat Oct 04, 2008 5:36 pm Post subject: |
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Russia can also develop its economy by imposing the Ruble on the international market. The Kremlin could found a law like this: all imported goods that can be made in Russia (by russian companies) have to be paid in Ruble.
Such a law could be imposed to countries that depend much on russian oil and gas (like EU and China) and should be applied on all products including aircrafts (Airbus/Boeing...).
Any non russian manufacturer, having sold his products in ruble, will have to change its rubles not at the Bank of Russia, but at the Central Bank of its country. Thus, Russia could save money (oil and gas dollars) and promote its industry. |
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Ender
WayToRussified
Joined: 23 Aug 2006
Posts: 454
Location: Urals
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| Posted: Mon Oct 06, 2008 3:30 pm Post subject: |
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| gomer wrote: | | Last year, I saw a large Renault factory in Moscow. Anyone know if that factory is still operating? Renault did a lot of advertising on Russian TV, last year. The sound of a Formula 1 Renault, going by at full chat, was in the TV commercial. Lots of Lada TV commercials too. |
Are you talking about Avtoframos factory (Renault + Moscow government)? It is operating. As far as I know they have bought 25% of AutoVAZ shares. They want to use AvtoVAZ production lines in order to increase their output. They are producing Renault Logan cars. I don't know about Moscow but here at Ural Logans are being bought immediately on arrival. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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| Posted: Mon Oct 06, 2008 7:32 pm Post subject: |
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| Shadow wrote: | Russia can also develop its economy by imposing the Ruble on the international market. The Kremlin could found a law like this: all imported goods that can be made in Russia (by russian companies) have to be paid in Ruble.
Such a law could be imposed to countries that depend much on russian oil and gas (like EU and China) and should be applied on all products including aircrafts (Airbus/Boeing...).
Any non russian manufacturer, having sold his products in ruble, will have to change its rubles not at the Bank of Russia, but at the Central Bank of its country. Thus, Russia could save money (oil and gas dollars) and promote its industry. |
So maybe they should nationalize all the companies, have only one party where everyone joins, the people will own everything through the government, and the symbol will be a hammer &sickle with a red back ground. LOL
Do you have any education or you have been drinking?
Russia cannot impose its currency on anyone. It cannot push that all products have to be built in Russia, because companies will just not sell it there. |
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Paul Holmes
Lounge Wizard
Joined: 12 Apr 2005
Posts: 1054
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