tag:blogger.com,1999:blog-7303901362201842397.post2971215879557735078..comments2009-12-11T09:53:43.900+01:00Comments on Russia Economy Watch: VTB Bank Russia GDP Indicator Shows 1% Contraction In DecemberUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7303901362201842397.post-78913087198912166042009-02-15T15:09:00.000+01:002009-02-15T15:09:00.000+01:00Global crisis as Russians see itThe corridors in o...Global crisis as Russians see it<BR/><BR/>The corridors in office buildings have either pluses or minuses. Let’s not speak about minuses but about pluses. Everybody knows each other; you can hear helloes, greetings, goodmornings.<BR/><BR/>But the last few months silence dominates here.<BR/><BR/>Crowds of clients just disappeared, nobody enters and asks:”Sorry, where can I find?..” , there are no more strangers smoking in common rest rooms, girls from nearby offices don’t rush in asking to change money for a change. The director of real estate office drooped off, you can’t hear scissors and hairdryers from a hairdressing salon, and women from the office you never could spell its name frequently hang “Closed for today” card. People drink a lot in the offices and it’s impossible to breathe in smoking areas. Visits of Santa and parties had been cancelled this year.<BR/><A>http://ua-ru-news.blogspot.com/2009/02/global-crisis-as-russians-see-it.html</A>Alexhttps://www.blogger.com/profile/02981634320986169891noreply@blogger.comtag:blogger.com,1999:blog-7303901362201842397.post-32977547834359525602009-01-22T13:12:00.000+01:002009-01-22T13:12:00.000+01:00By the way, I don't know if you saw it. I posted a...By the way, I don't know if you saw it. I posted a link on your previous post to Krauthammer's editorial in the Weekly Standard, calling for a revenue neutral gas tax. There is a certain talk these days in the US to take advantage of the low gas prices and carry out a tax swap by imposing a sizable gas tax mirrored by equal tax cuts in payroll and possibly other taxes.Nobodyhttps://www.blogger.com/profile/09952955021226297401noreply@blogger.comtag:blogger.com,1999:blog-7303901362201842397.post-15782168550406042772009-01-22T13:07:00.000+01:002009-01-22T13:07:00.000+01:00Hi EduardFrankly the more I think about it, the mo...Hi Eduard<BR/><BR/>Frankly the more I think about it, the more I tend to think that this crisis owes a big part of itself to factors that are more psychological and behavioral than economic. The global economy was doing too well in the recent years and the US has got away too cheaply with the dot com bubble. This encouraged complacency on the part of governments and risky behavior on the part of financial institutions. I think it may be time to rethink our ideas about anti cyclical policies in general, economies need to go through full cycle. Downturns have a function to play in the economic life of societies. They deflate bubbles and bring people back to their senses. When a society gets used to uninterrupted growth, people eventually tend to lose the last trace of self restraint and start basing their plans and actions on unreasonable expectations. Downturns are necessary to puncture possible bubbles, and even more important, to deflate people's anticipations.Nobodyhttps://www.blogger.com/profile/09952955021226297401noreply@blogger.comtag:blogger.com,1999:blog-7303901362201842397.post-36098310055159905032009-01-22T12:51:00.000+01:002009-01-22T12:51:00.000+01:00Hello again,"How much of this would you attribute ...Hello again,<BR/><BR/>"How much of this would you attribute to purely external factors and how much to to the unwind effect you mentioned in comments of your previous posts?"<BR/><BR/>Very difficult to quantify. I guess that the oil price is the key in Russia's case, since if oil were over $100 they could manage easily enough, although they would, as I was trying to argue in my earlier stuff, still run into Dutch disease type problems.<BR/><BR/>But this and the demographic stuff is longer term in its impact. It means that whatever happens now there can be more problems in store, and they won't just go away.<BR/><BR/>But coming back to now, obviously if oil were at $100 then global demand would not be collapsing, since there is a reason why oil prices are so low. And the critque of Russian policy was always that they weren't making the institutional advances needed to handle an external issue on this scale. ie they were too oil dependent, and too laud back when it came to non productivity driven rising wages and inflation.<BR/><BR/>Of course, I will agree readily that hardly anyone could have seen the force of this global crisis, so you can't single out the Russian leaders as unique, but there were things they could have done to shore up the fortifications. <BR/><BR/>"Would you say that it's external factors that brought the economy down or the external influences punctured something developed locally?"<BR/><BR/>Basically, and in the light of what I say above, the latter. Again, taking Spain as my benchmark, almost everyone here believes that the problem is a global and not a Spanish one. But the Spanish construction bubble was always going to burst, it was just that the US sub prime set the whole thing off.<BR/><BR/>I think you could go round a lot of countries and find this pattern repeated.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-7303901362201842397.post-55724911335286676412009-01-21T15:06:00.000+01:002009-01-21T15:06:00.000+01:00How much of this would you attribute to purely ext...How much of this would you attribute to purely external factors and how much to to the unwind effect you mentioned in comments of your previous posts? Clearly Russia's economy was overheating in the last years and developing symptoms of a massive bubble. Would you say that it's external factors that brought the economy down or the external influences punctured something developed locally?Nobodyhttps://www.blogger.com/profile/09952955021226297401noreply@blogger.com