World Bank predicts that Russian RUBLE will depreciate in the short-run

The leading economist of theWorld Bank in Russia Jelko Bogetich when giving the interview to "Komsomolkaya Pravda", said tha the depreciation of Ruble is unavoidable and reasons behind are fundamental.

Reasons are:

• Russia is one of the leading countries in terms of export of OIL



• Oil prices are dropping, because of Global Financial Crises



• Russian economy depends on prices of oil significantely



• Value of Rubles depends on oil prices to the same extent



• Jelko Bogetich claimed: "When the prices for oil go up, value of Rubles rise,on the contrast, when the prices of oil go down,then value of Rubles drop"



• At the moment the situation is reflecting the second statement ,therefore the Ruble is going to depreciate.

But the ood news are according to the economist of the World Bank is that the rate at which russian currency is going to depreciate is smooth and stable. Also he said that the situation is not going to be anything like the defaukt of Ruble in 1998, because Russian economy is not in bad state,even comparing to some developed countries. Also, he stated that by looking at forcast of Russian economy, it is possible that Russia by the end of year 2009, can overcome the worst part of the finacial crisis.

I guess these are good news for Russians. Fingers Crossed!!!

Global Financial Crisis and Mr. Khazin's predictions for Russia in terms of the OUTCOMES.

Global Crisis started from US, and its a well known fact, therefore within the time has been spreading across countries,starting from Europe,then Eastern Europe,ASian countries and the rest of the World. This interview as was promised, from russian newspaper with Mikhail Khazin, scared big chunk of people in Russia. You will understand why when you read it.

Miikhail Khazin has been asked many questions during the interview for "Komsomolskaya Pravda", all of them were concerning Global CRisis, reasons behind it, outcomes for US and the world in general. Although, the most fascinating part of the article starts from Khazin's predicitons for Russians and specifically for oligharks.

He stated that the situation in Russia and especially in Moscow, as it is the biggest city in the country as well as the capital, is going to be dramatic and disastrouse. Khazin's estimations of the unemployment for Year 2009 spring(he thinks that this are going to be the hardest times of Financial Crisis in Russia) in Moscow are around 2.5-3 million people. Half of the million or even 1 million are going to be unskilled workers from post USSR countries,like Tadjikistan, Uzbekistan,Kazakhstan,Azerbaidjan and etc. Also, constructors from same countries who have lower than average income and majority of whom are illegal in Russia. Hence, according to Khazin, these unemployed people will start stealing,robbing and even killing in order to get any money,food etc. Also majority of them are considered to be "wild" and "uncivilized". These in its turn will lead to the increased rate of crime, therefore Khazin suggested that the Government would have deport them, although Mikhail Khazin was not sure in the interview that our Governmnet has an ability and more importantely willingness to do so. Also, he pointed out that the worst and hardest scenario would be when bankers,office workers and etc. would become unemployed. Because maajority of them are relatevely young,ambitiouse,educated people,who are used already to get paid thousands of $ just for the appearance at work. Therefore for these people it would be even harder to overcome the unemployment, hence much less money if any,standards of living would fall , what can lead to depression all over Russia. Moreover, Khazin's concern was that when they get unemployed,they will not be able to pay mortgages(many of them have),credits to the Banks etc. Thus,Banks would have to take apartments and other things instead of unpaid debts. Although, Banks could not act like this,because otherwise people would "destroy" them and Moscow as well. People in Russia can be very agressive in extreme situations like this.

Additionally, there are other concerns Khazin arose in the interview. He said that money which had been injected into the system and the Russian economy, are not going to help the overal situation, due to the fact that Russian Government is known for "steeling money". Therefore, he argued that if "we are lucky, untill spring, we can survive. Otherwise it is time for all population to start growing potatoes and prepare for Great depression",when he said "we" he meant Russians. Also, Khazin pointed out that Russian Government alway thought that we have enough money in the system to pay for everything, where as now, they realised that it is not even that we dont have much, it is not enough to cover all inbalances. Moreover, big corporations are asking money from Government, they need $50billion , banksAgricultural sector is asking for $100 billions, the car industry is begging $1billion,banks need $50 billions, otherwise not going to survive, oil people and oligharks are asking for $50 billion each and saying that do not have any other option to survive. These figures are scary, personally for me.

Also, concerning Oligarhs, Khazin said that he is not even sure that the majority of them would survive in next 3- years.

In conclusion he gave an advice for readers of "KP", saying that people should be aware that bad times came for a long period of time and according to this fact should live their lives.

When i read this article, i couldnt believe what i saw, in the national newspaper very well-know economist Mikhail Khazin, talking about US and saying that 11 of September 2001 was a "stunt" from US government to take people's minds away from upcoming financial crises. Also, him stating that Russian Government may "steel"injected money for recovery of the economy and lastly his predictions about oligarhs. What surprises me is the fact that the interview was not taken out from online since it was published 29/10/08

What else i can say, i dont know to be honest. I am going to hope that Khazin's predictions are not going to come true, but you know what they say "Be prepaired for worst and at the end you will be fine".

I wish everyone Good Luck and hope that the Financial Crises is going to go beyond us and our Families.

US may have Great Depression again

Mikhail Khazin is the Russian economist,who has written several books on economic situataions in Russia and all over the world. Things he has written in his books were and are coming true untill now. Also, he was the deputy head of the Presidential Economic Department in 1997.As he says in the interview, his first task back then was to prepare a report for former President Boris Yeltsin about the economic situation. After looking at the situation of the economy, Mr. Khazin realized that the crisis was anavoidable somwhere in late summer or early fall of 1998,unless country's economic policies were changed. Mikhail Khazin together with his group introduced the solution to avoid economic crisis of 1998, but higher echelons did not take any view of it at all, only Eltsin read it himself. Later, in the summer of 1998 Mr. Khazin and others were fired from presidential administration, because they tried to stop a business project called:"State Treasury Bills— Exchange Rate Corridor." This project was the most significant financial scheme of the post Soviet period. And, as he has predicted, the economic crisis gave way in August 1998. Even personally speaking, i do remember those times, majority of people lost everything, and others who were prepared, gained on the other hand.
Mikhail Khazin did not gave up after he was fired, and continued looking and searching for the reasons behind the crisis. Firstley, he started studyng the US financial system,and surprisingly enough found unprecedented parallel.
This parallel, the economist explained in such a way, that T-bill market had been sucking all the juices out of the Russian economy back then, the same way US financial market was sucking resources out of the whole planet.
And that is when after this parallel was noticed and explained, Mikhail Khazin published an article in 2000 summer in the magazine "Ekspert",which was called "Is the US digging for an Apocalypse". In which he has expanded his ideas about unavoidable economic crisis in the US,which would be like the financial collapse in Russia (1998).
Mr. Khazin in this interview also expalained his perception of the current Financial Global Crisis, which started from US. We, normal people, who are not involved that much into finance and economy, might think that it is strange that the Global Crisis started from US, because the standard of living there was always better, than in Russia for example, but the economist gives answers. Mr.Khazin states that US was coming closer and closere year after year to the financial collapse, because almost everyone in US has been livivng in dept for many years. Household debt now in US is more that $ 14 trillion. Wall street tried to postpone this crisis, but this was just a gasp for air before an inevitable death.
In 2000,Mikhail Khazin together with his team predicted this Global Financial crisis, which is taking place now, the only uncertainty they had was the timing. Back then Mr. Khazin estimated that 25% of US economy would dissapear due to the Financial crisis. Though,looking today at the situation, Khazin claimes that the number is closer to one third of the US economywhich may dissapear, if not more. If this estimations would come true, then it would mean that unemployment would rise uncontrollably, which would lead to horrible deppresion. US is trying very hard to rescue the economy, but Khazin thinks that all the efforts can be useless. As his last words in the interview was : "In 2-3 years, the US will face a crisis similar to the Great depression". This is frightening and disturbing, i personally think. I could say that i dont trust what Khazin is saying, but on the other hand, i know from my relatives and parents, that things/events he has predicted before in economy and financial markets, were and still are coming true.
My next post is going be about problems Russian Oligarchs are facing due to the crisis and which outcome they may face. This post is going to be based on interview with Mikhail Khazin as well.

What is going to become cheaper in Russia because of Financial Crisis

This image represents the fall in percentage for products which are going to be effected the most by the crisis in Russia. Property's prices are falling by 30%, car's prices by 10%, technological goods by 5%,food prices are going to be the same, petrol by 3% and fur coats (which are very popular in Russia, but sometimes are considered as luxury goods) by 10%.

Again, the article is not available in english, but i am going to explain everything , and if some people speak russian they can got to http://kp.ru/daily/24191/398342/ to read it .

The article was published on the 1st of november in "Komsomolskaya Pravda" and talks about the importance of the inflation for russians. Igor Nikolaev who is the representative of the Department of the Strategic Analyses in Russia, explains that prices are going down in our country, due to dicreasing demand,because of people getting redundant, salaries getting lower and banks do not give any more loans. Also, he states that it is arguable to consider deflation a better situation that the inflation. Because, inflation means that there are more demand than supply, therefore it shows that people in general have money. Where as, when prices are dicreasing , it can mean that there are enough goods, but there is much less demand, hence people are not ready to consume, therefore supply overweights the demand, which in its turn leads to the cut of employees, thus unemployment is going up.That is what had been happeng in 30's in US when Great Depression took place. Prices were falling dramatically, though did not solve main problems.

But Igor Nikolaev is more concerned with falling prices in Russia. He claims that prices for gaz and electricity are going to be stable, although, prices for luxury goods, like brand clothes, cars, jewellery are falling already and going to carry on like this. Also, other goods, such as described above are falling as well. Many shops have sales across Russia, because owners need ANY MONEY to pay rents, electrycity bills, tax etc. And they just do not have alternatives, as banks do not help anymore. Houses and apartments are on the market at 30-40% sales.

All this worries me a lot and , to be honest, i dont know what to expect from this situation in the future.

In my next post, i am going to write about the interview with Mikhail Khazin very well-known russian economist,which is available in english, though english version is not as big as russian, and explains the predictions for the future because of the Global Financial Crisis as well as reasons behind it. This interview is really fascinating and i hope you are going to get a lot of usefull information from it. It is going to be named:"US may have Great Depression again/Russian Oligarchs can loose everything"

How some russians are handling THE CRISIS!!!

The Global Financial Crisis has been affecting all the countries around the globe. And even though i am interested in the effects of it and outcomes globally, my first and prior concern is its consequences in Russian Federation, due to the fact that i am the russian. Unfortunately, i can not make the hyperlink for this post, as the information is taken from russian newspaper "Komsomolskaya Pravda", which is one of the most popular ones among economic, financial and political issues, and not all articles are available in english.

According to this article http://www.kp.ru/daily/24190/398000/ which was published recentely, on the 31st of october, many russians, especially those living in the capital Moscow, are trying to get rid of their pets, due to the fact that they need to be feeded. And the problem does not lie within the fact that russians do not have an opportunity to feed pets anymore, it is linked more to the fact that people are just in the panic for the unstable future and are not sure anymore, if they are going to be able take them to veterinarians. Pets food has not risen in Russia, but the costs of veterinarians, if they get sick, are relatevely high for the average person in the country. And, due to the fact that more and more people are getting redundant, this does make sense. Workers from pet pounds say that everyday, hundreds of people are calling only in Moscow, to give their beloved pets, to them. But, unfortunately, almost all pet pounds are at capacity. Also, according to the current statistics, there are now 35 thousand homless dogs in Moscow, which are getting agressive , because of the hunger.

All i can say now is that there are more outcomes from the global financial crisis, and this is just one of them. Follow my blogs to find out more.

Differences in Rescue Plans of US and UK

As I have been writting earlier, two major countries in the Financial markets: US and UK have applied their rescue plans for financial systems. In US it is Paulson's rescue plan which in general suggest US Treasury buying stakes in nine largest banks , where as in UK it is Brown's £37bn bail-out. As it has been stated by Financial Times, that the US plan is much more generouse than UK's one. It has also been argued that Paulson's plan is very similar to British ,which was announced last week. However, there are significant differences in these two plans. The first and the most crucial difference is that US authorities are kinder to banks than UK ones, in such a way that US preference shares being bought in US pay a 5 per cent dividend, which will rise approximately to 9 per cent after five years. On the other hand, UK's shares will pay at 12 per cent and participating banks will not be able to pay dividends, unlike in US.

Moreover, UK scheme mostly deals with banking system, where as, US is helping financial firms outside the conventioanl banking sector.

Therefore, looking at these differences, one can conclude that US's scheme is more effective, but there are still arguments as both plans have been critisized.

Global Financial Crisis

Global Financial Crisis started in 2008 effected all countries around the world. It started due to high oil prices , which in its turn raised food prices,an global inflation. A substantial credit crisis lead to the bankruptcy of large and well established investment banks as well as commercial banks in various nations around the world,also increased unemployment, and the final outcome is global reccesion. But, as we all know US economy and financial markets have major impact on economies of other countries, hence when US expirienced earlier this year subprime mortgage crisis and declining dollar value, it started to become clear for the US itself and countries around the globe, that the financial and economic crises this time is a seriouse one for the global economy overall. There has been debates in United States, which measures to take , and then after long overviews at variouse rescue plans Paulson's one has been announced to proceed. Hank Paulson is the Treasury Secretary of US and his $700bn financial rescue plan has been argued for and against for some time by the Congress.

At last ,though, Paulson's plan went systematic. Yestarday on Tuesday, 14th of October the US Congress announced that the rescue plan is going to proceed and hopefully will help US financial system, therefore the rest of the world. Almost at the same time , in UK Gordon Brown's bank rescue plan was taking actions with £37bn put into finacial system (BANKS). Also, European Central Banks, injected more than $250bn into financial markets in hope for rescue of the crisis which seems like an endless process.

To conclude, i would like to say that, this blog includes general info about Global Finamcial Crisis and some overview of rescue plans initiated by major countries. All the in-depth information can be found by the hyperlink.

In my following blogs, i will talk about the comparison of US and UK rescue plans and then gradually i will go into Financial Crisis in Russia, its effects, outcomes and plans for survival.