Sanctions on Russia

Adam Peterson said:Russia should be considered a country with manageable debt levels, considering their debt-to-GDP ratio was at 17% before the crisis and has actually settled down to 15% now.
For context, the USA is sitting at a debt level of 132%, while Japan is at 260% and Italy is at 130%.
Their foreign exchange reserves are nearly $600 billion.

While it is true that sanctions impacted Russia, causing an economic slowdown of about 2% last year, the IMF is currently projecting positive growth for Russia this year, which stands in stark contrast to the projected contractions in Germany and the United Kingdom.

Russia maintains a trade surplus in its international exchanges, a surplus in its balance of payments, and a relatively low fiscal deficit; from a macroeconomic standpoint, Russia remains a remarkably stable nation today.

The sanctions haven't achieved any of their intended goals, and if anything, they are driving oil-producing nations closer together, including Mexico. BRICS already has its own development bank and is actively pursuing the idea of conducting transactions outside of the Dollar and the Swift system, because after these recent sanctions, it has become clear to everyone that holding assets in dollars or via dollar-denominated accounts isn't always secure, nor is access to the Swift payment system guaranteed.

Relying on Russia's budget deficit as a point of concern won't change much, as it's not a unique issue; for instance, back in 2020, the USA saw a deficit of 14.5% of its GDP, followed by 10.8% the next year against a $24 trillion economy, and we certainly don't see them collapsing because of it.

And don't even get me started on North Korea!!! They're at 0%!

Everything is just blooming perfectly over there in "Free" Korea.

MechaLiver As expressed by...
You can only really start bragging about economic growth once the Russian GDP actually climbs back to where it sat in 2013... and honestly, looking at the math, if they wanted to see those good old days again within this current year, we'd be looking at a staggering 29% surge just to break even... which feels like quite a stretch, doesn't it...

And that’s just when the most productive segment of our population—the very people we actually need to drive this whole economic recovery forward—is being lost for absolutely no reason at all...

To all you fellow enthusiasts who find such strange comfort in tracking nominal GDP in USD, we might finally be seeing the end of that particular obsession... hopefully... It’s going to get a whole lot more difficult to pull those little statistical stunts when you're staring at the actual numbers from 2022...

I was just sitting here scrolling through some recent data on Statista regarding the GDP trends coming out of Russia, and it really got me thinking about how much the global economic landscape shifts when you look at those specific numbers... It’s quite fascinating, actually, how certain sectors seem to hold steady while others fluctuate wildly under the current pressure, which makes you wonder about the long-term implications for international trade and how much of this is temporary versus a fundamental structural change in their economy... I found myself drifting down a bit of a rabbit hole reading about the various industrial outputs, and it honestly reminds me of those old economic textbooks we used to study back in college where everything seemed so predictable, before the world became this complex web of shifting sanctions and supply chain disruptions that nobody could have truly anticipated... anyway, it's definitely worth keeping an eye on if you care about how the global markets might react in the next fiscal year...

I was just sitting here thinking about how much more there is to uncover, you know... it’s like peeling back the layers of an onion, only instead of making you cry, it just leaves you feeling incredibly curious and perhaps a little bit overwhelmed by the sheer scale of everything involved... if that makes any sense at all... I feel like we've only scratched the surface of this particular topic, and honestly, the deeper we go, the more I find myself wanting to explore those tiny, overlooked details that everyone else seems to rush past in their hurry to get to the conclusion... but there's such beauty in the process of slow discovery, isn't there? It reminds me of those long Sunday afternoons spent wandering through a massive library in Chicago, where you start looking for one specific thing and end up finding three other things you didn't even know you needed to know... anyway, I suppose I should keep digging, because there is definitely more to come... As quietviper0 says...
If you take an inflation rate of 12% from back in 2022 and combine that with a 2% dip in GDP, you're looking at a 14% hit to the economy, which sounds like just a number on a spreadsheet until you realize that for the average American living paycheck to paycheck, it’s nothing short of a total catastrophe... and honestly, even the big shots on Wall Street aren't exactly celebrating these numbers right now either...
I can't help but wonder exactly how much GDP is being swallowed up by those 15,000 or so vehicles destroyed in Ukraine, not to mention all the newly manufactured munitions that are just being fired off... It’s quite a thought, really, because when you consider a single missile costing anywhere from one to six million dollars, that amount is counted toward the GDP the moment it's paid for, yet it vanishes in a matter of minutes once it hits its target, which essentially drains such a massive portion of wealth away from the real economy... it's a heavy cycle, isn't it? But then again, I suspect the Americans and NATO likely have a much clearer grasp on the actual state of affairs than Putin does sitting in his bunker, since I imagine people are probably too terrified to give him the honest truth about how things are actually going... I was just watching a report about a factory producing three million aerial bombs a year, but honestly, who on earth is going to use all of that when there's such a glaring shortage of aircraft and trained pilots to fly them anyway...
Just imagine for a second if some nation—honestly, it wouldn't even matter which one at this point—decided to place a massive order with companies like General Dynamics and BAE Systems for, say, 2,000 Patria vehicles and 10,000 Abrams tanks at a price tag of $100 billion... it’s wild to think about how that would impact things, because you'd see the GDP skyrocket by something like 20% every single year just while all those machines are being manufactured and shipped out... and then, once the dust settles and those tanks are eventually decommissioned and sold for scrap metal, we'd be left facing the music... I mean, the government would still be on the hook for all that debt, which could lead to some pretty drastic consequences, like seeing our healthcare coverage vanish, social security getting slashed, or tax rates jumping up by 300% just to keep the lights on... it's a dizzying thought, really...

No, you don't simply tack inflation onto the GDP growth rate... honestly, if there are any other lingering doubts about how this works, it might be worth spending a little time brushing up on the fundamentals of economics before diving into deep discussions about macro trends...

Adam Peterson said:Russia should be considered a country with manageable debt levels, considering their debt-to-GDP ratio was at 17% before the crisis and has actually settled down to 15% now.
For context, the USA is sitting at a debt level of 132%, while Japan is at 260% and Italy is at 130%.
Their foreign exchange reserves are nearly $600 billion.

While it is true that sanctions impacted Russia, causing an economic slowdown of about 2% last year, the IMF is currently projecting positive growth for Russia this year, which stands in stark contrast to the projected contractions in Germany and the United Kingdom.

Russia maintains a trade surplus in its international exchanges, a surplus in its balance of payments, and a relatively low fiscal deficit; from a macroeconomic standpoint, Russia remains a remarkably stable nation today.

The sanctions haven't achieved any of their intended goals, and if anything, they are driving oil-producing nations closer together, including Mexico. BRICS already has its own development bank and is actively pursuing the idea of conducting transactions outside of the Dollar and the Swift system, because after these recent sanctions, it has become clear to everyone that holding assets in dollars or via dollar-denominated accounts isn't always secure, nor is access to the Swift payment system guaranteed.

Relying on Russia's budget deficit as a point of concern won't change much, as it's not a unique issue; for instance, back in 2020, the USA saw a deficit of 14.5% of its GDP, followed by 10.8% the next year against a $24 trillion economy, and we certainly don't see them collapsing because of it.

The SWIFT system is available to everyone—except, of course, terrorists.
That’s why over the last five or six years, Bank of America has been really leaning on citizens to sign all sorts of declarations and paperwork. This wasn't really a thing from 1990 until around 2017, when the Anti-Money Laundering Act was passed.
A guy might scribble graffiti on the street anywhere in Canada, but he wouldn't dare in Germany. There are laws and police there who will slap him with a fine of at least $300 just for marking the pavement in Germany.

A civilized, democratic world relies on laws and rules.
Without those rules, we basically turn into animals—something that little psychopath demonstrated in Buči and elsewhere.

Adam Peterson said:It is a given that Russia has been left short on cash, and there is really no debate there. When you eliminate trade and the flow of capital, the money disappears. While Russia did record a GDP contraction of 2%, they were actually projecting a growth rate of 5% for last year, which represents a massive blow and a significant loss. However, this isn't quite the crushing blow to Russia that the West was hoping for, mainly because the Russian economy has been underestimated when people compare it to something like Spain.
The truth is that Russia remains an export powerhouse because they supply strategically vital goods like food, fertilizers, energy, and metals.

It seems as though Russia and Europe are the only ones truly feeling the impact here, primarily because Europe lacks domestic production of those essential commodities, leaving them incredibly vulnerable. There is a very real possibility that the EU could slide into a recession this year.

It stands to reason that Europe and Russia engage in trade due to geographic proximity and competitive pricing, creating a situation that is mutually beneficial since the demand exists on both sides. So far, Europe's current behavior looks a bit like someone throwing a tantrum and accidentally cutting off their own lifeline.

Oil revenues for this March have plummeted by 43% compared to last March (though, if you look at the stretch from January 2022 to January 2023, it’s actually looking somewhat stable). Meanwhile, spending has surged by about 35% due to the war in Ukraine when compared to last March. Since oil and gas sales account for roughly 40% of the Russian GDP, the math is grim.
https://www.reuters.com/markets/comm...ue-2023-04-05/

The ruble continues its downward slide: https://www.xe.com/currencycharts/?from=RUB&to=USD
This trend is presenting an incredibly difficult landscape for the Federal Reserve equivalent in Moscow...

Russian imports are drying up (as anyone with eyes would expect): https://tradingeconomics.com/russia/imports

The Saudis are clearly pushing up the price of Russian oil—driving it even higher than the levels that typically trigger sanctions for carriers and importers:
https://tradingeconomics.com/commodity/urals-oil

Other oil benchmarks:
https://oilprice.com/oil-price-charts/

The sanctions are working. They are working in the long term, at least. And I suspect it will be an uphill battle for Russia to climb out of the hole they’ve dug for themselves...

The real priority should be hitting Russia where it hurts most: their demographics. We need to drain the human capital that’s fueled their constant expansion. That whole "they have endless people" trope needs to become a relic of the past. If sanctions are an effective tool for shrinking their population, then we shouldn't be pulling back—we should be doubling down.

The European Union would have the exact same demographic profile without sanctions or war, but honestly, we should be focusing on our own problems instead.

Noah Diaz said:The European Union would have the exact same demographic profile without sanctions or war, but honestly, we should be focusing on our own problems instead.

Except in the EU, people are actually moving in, while everyone who can get out of that Russian satrapy is running for the exits.

analogbear5 said:The Saudis are basically just trying to bail themselves out because that utopian megaproject they dreamed up isn't exactly cheap.

Which project specifically are we discussing?

Nancy Gomez26 said:Which project specifically are we discussing?

Saudi Vision 2030.

analogbear5 said:Saudi Vision 2030.

It appears they intend to reinvest their oil revenues domestically rather than dumping it all into US Treasuries. In theory, that isn't necessarily a bad move. However, I see an excessive obsession with pouring money into concrete and infrastructure projects, while the actual investment in manufacturing seems disproportionately thin.

Nancy Gomez26 said:It appears they intend to reinvest their oil revenues domestically rather than dumping it all into US Treasuries. In theory, that isn't necessarily a bad move. However, I see an excessive obsession with pouring money into concrete and infrastructure projects, while the actual investment in manufacturing seems disproportionately thin.

Arabs from the Middle East and the work🤦

The Saudi are trying to destroy "the West" while simultaneously building these massive, megalomaniac cities that rely entirely on the very Western tourists they despise. If the West collapses, who's going to visit these ghost towns?😁

It feels like everyone’s just chasing a quick paycheck in Dubai. You’ve got these experts who grind away for maybe five years at five times their usual salary, just so they can head back home with a fat bank account... nobody actually wants to move there permanently. Why would you want to settle down in that godforsaken desert kingdom where you can't even grab a decent beer or see a woman showing a bit of skin without it being an issue? Once they stop splashing that oil money around, the whole place is going to turn into a ghost town. Without constant, massive investment in upkeep, the sand is going to swallow those streets and degrade everything so fast it’ll look abandoned within a century. All those artificial palm islands and man-made wonders they built? They’ll just erode away without non-stop dredging and maintenance. Eventually, all that'll be left is goats. The only thing in that place that isn't a total financial illusion is the cash itself.
And now this idiot thinks they can just build some massive city in a straight line stretching out for hundreds of miles? I guess he just really loves lines, I suppose.

Linda Adams said:Arabs from the Middle East and the work🤦

The Saudi are trying to destroy "the West" while simultaneously building these massive, megalomaniac cities that rely entirely on the very Western tourists they despise. If the West collapses, who's going to visit these ghost towns?😁

Who’s actually going to do the work? The Chinese?

hiddeneagle98 said:It feels like everyone’s just chasing a quick paycheck in Dubai. You’ve got these experts who grind away for maybe five years at five times their usual salary, just so they can head back home with a fat bank account... nobody actually wants to move there permanently. Why would you want to settle down in that godforsaken desert kingdom where you can't even grab a decent beer or see a woman showing a bit of skin without it being an issue? Once they stop splashing that oil money around, the whole place is going to turn into a ghost town. Without constant, massive investment in upkeep, the sand is going to swallow those streets and degrade everything so fast it’ll look abandoned within a century. All those artificial palm islands and man-made wonders they built? They’ll just erode away without non-stop dredging and maintenance. Eventually, all that'll be left is goats. The only thing in that place that isn't a total financial illusion is the cash itself.
And now this idiot thinks they can just build some massive city in a straight line stretching out for hundreds of miles? I guess he just really loves lines, I suppose.

Dubai doesn't rely on oil anymore, and you can grab a beer just fine—plus, finding a little cleavage is even easier. If you've got the cash, of course...

This.
If there's smoke, there's fire. Hopefully, the European Union will finally come to its senses.

Nancy Gomez26 said:It appears they intend to reinvest their oil revenues domestically rather than dumping it all into US Treasuries. In theory, that isn't necessarily a bad move. However, I see an excessive obsession with pouring money into concrete and infrastructure projects, while the actual investment in manufacturing seems disproportionately thin.

I'm not even getting into whether the investment makes sense—that's beside the point. The real issue is looking at the numbers putting massive pressure on their budget. Which means—and I'll say this again—they aren't cutting production to help out the Russians like the post I'm replying to suggests; they're doing it for their own sake.

Not sure where you got the idea that the Saudis are buying up U.S. Treasuries when they’ve actually been selling them more than buying them lately. Just for context, Ireland holds about 2.5 times more U.S. Treasuries in its fund than Saudi Arabia does.

nimbleviper3 said:This.
If there's smoke, there's fire. Hopefully, the European Union will finally come to its senses.

And how exactly is the European Union supposed to "wake up"?

Linda Adams said:Arabs from the Middle East and the work🤦

The Saudi are trying to destroy "the West" while simultaneously building these massive, megalomaniac cities that rely entirely on the very Western tourists they despise. If the West collapses, who's going to visit these ghost towns?😁

If the West fails, the Saudis lose everything regarding their investments in bonds denominated in Western currencies—the very surpluses they’ve scraped together from oil sales. If they finish these massive projects, all they will have left are empty skyscrapers, perhaps filled with travelers from elsewhere, maybe from the East. I don't see tourism becoming a cornerstone of the economy in KSA unless there is a fundamental shift, which, realistically speaking, seems highly unlikely. They remain a largely insular society; there are internal forces working hard to ensure it stays that way. Introducing true freedoms would fundamentally alter the nation's character, something the leadership simply cannot tolerate. MBS is reminiscent of Gorbachev; he wants to modernize the state without actually changing the underlying system... but reality doesn't work that way. Once the pressure becomes too great, the reforms will grind to a halt.

analogbear5 said:I'm not even getting into whether the investment makes sense—that's beside the point. The real issue is looking at the numbers putting massive pressure on their budget. Which means—and I'll say this again—they aren't cutting production to help out the Russians like the post I'm replying to suggests; they're doing it for their own sake.

Not sure where you got the idea that the Saudis are buying up U.S. Treasuries when they’ve actually been selling them more than buying them lately. Just for context, Ireland holds about 2.5 times more U.S. Treasuries in its fund than Saudi Arabia does.

And how exactly is the European Union supposed to "wake up"?

I was the one who posted that, and I honestly think it’s a solid answer!

analogbear5 said:I'm not even getting into whether the investment makes sense—that's beside the point. The real issue is looking at the numbers putting massive pressure on their budget. Which means—and I'll say this again—they aren't cutting production to help out the Russians like the post I'm replying to suggests; they're doing it for their own sake.

Not sure where you got the idea that the Saudis are buying up U.S. Treasuries when they’ve actually been selling them more than buying them lately. Just for context, Ireland holds about 2.5 times more U.S. Treasuries in its fund than Saudi Arabia does.

And how exactly is the European Union supposed to "wake up"?

I’m definitely curious about this too! Count me in.
This war is actually the perfect opening to pivot toward petro-yuan. The Ferengi won't miss a single chance to push that agenda whenever they can—strictly to serve their own interests, of course. At the end of the day, nobody really wins from this transition except for China.
What can the European Union even do about this? Should they try slapping sanctions on China or Brazil just because they’ve decided to stop settling payments in dollars or euros? It feels like a bit of a stretch, doesn't it?

Once this war finally wraps up, Russia will be facing a massive crossroads: they can either integrate with the European Union or become nothing more than China's lapdog. Honestly, that second option is a total nightmare for the Russian people. I truly believe Putin is aggressively pushing them right down that darker path as we speak.

analogbear5 said:I'm not even getting into whether the investment makes sense—that's beside the point. The real issue is looking at the numbers putting massive pressure on their budget. Which means—and I'll say this again—they aren't cutting production to help out the Russians like the post I'm replying to suggests; they're doing it for their own sake.

Not sure where you got the idea that the Saudis are buying up U.S. Treasuries when they’ve actually been selling them more than buying them lately. Just for context, Ireland holds about 2.5 times more U.S. Treasuries in its fund than Saudi Arabia does.

And how exactly is the European Union supposed to "wake up"?

Moves like these are always made for one's own sake, never for anyone else's. It’s simply a question of where the self-interest lies. If Saudi Arabia is seriously reconsidering its strategic partnership with the USA—which seems entirely plausible at this stage—then the US is finally facing the consequences of its past obsession with finding weapons of mass destruction and toppling Saddam Hussein in Iraq. I expect some domestic upheaval within Saudi Arabia soon that will shake up the status quo. Perhaps an assassination, an act of sabotage, or a sudden minor skirmish with Iran. Some kind of escalation designed to force a policy shift. Saudi Arabia isn't exactly known for being a rock-solid monarchy, and the rules regarding succession remain incredibly murky.

The way Saudi Arabia acts like some kind of partner is an absolute disgrace to any alliance of democratic nations—honestly, the sooner they ditch us for the camp of autocratic regimes, the better.

I’m all for a bipolar world.