The SPIEF has transformed from a place where black caviar is eaten with spoons and escort girls dance into the country's main opposition event this year to a much gloomier event.
Putin's Minister of Economy says that the country is on the brink of recession. Gref notes that the economy is worse than expected. Deputy Makarov speaks directly about triubles in the investment climate. And that's not all.
For the first time at this level, everything that Vladimir Milov was talking about for weeks is being voiced by Putin's cohorts. Against this background, Putin looks inadequate, who, perhaps, was the only one at the entire forum telling how wonderful everything is.
The problems are only growing, and there is simply no way out of them. Money is running out at an incredible speed, there is nowhere to get new resources.
The only opportunity looming on the horizon for Russia is the rise in oil prices due to the war between Israel and Iran, but even here, things are not so simple. A short-term rise in prices could lead to an even more serious decline in the global economy - and a sharp drop in oil prices in the long term.
This - and much more - is covered in the latest economic report with Vladimir Milov.
YouTube channel of Vladimir Milov: @Vladimir_Milov
Support Vlad's work:
Patreon: / milov
Crypto: http://milov.org/donate.htm /
Vladimir Milov on other social media:
Telegram: https://t.me/team_milov
Facebook: /milov.vladimir
Twitter: / v_milov
Instaghram: /milov_ru
English translation by PrivateerStation
Original video in Russian: https://youtu.be/Y6uKrm6xgqY
--------------------------------------------------
Privateer Station on Spreaker: https://www.spreaker.com/show/privateer-station-war-in-ukraine
PS on Rumble: https://rumble.com/c/c-1582435
PS on YouTube: https://www.youtube.com/c/privateerstation
PS on iHeartRadio: https://www.iheart.com/podcast/53-privateer
Putin's Minister of Economy says that the country is on the brink of recession. Gref notes that the economy is worse than expected. Deputy Makarov speaks directly about triubles in the investment climate. And that's not all.
For the first time at this level, everything that Vladimir Milov was talking about for weeks is being voiced by Putin's cohorts. Against this background, Putin looks inadequate, who, perhaps, was the only one at the entire forum telling how wonderful everything is.
The problems are only growing, and there is simply no way out of them. Money is running out at an incredible speed, there is nowhere to get new resources.
The only opportunity looming on the horizon for Russia is the rise in oil prices due to the war between Israel and Iran, but even here, things are not so simple. A short-term rise in prices could lead to an even more serious decline in the global economy - and a sharp drop in oil prices in the long term.
This - and much more - is covered in the latest economic report with Vladimir Milov.
YouTube channel of Vladimir Milov: @Vladimir_Milov
Support Vlad's work:
Patreon: / milov
Crypto: http://milov.org/donate.htm /
Vladimir Milov on other social media:
Telegram: https://t.me/team_milov
Facebook: /milov.vladimir
Twitter: / v_milov
Instaghram: /milov_ru
English translation by PrivateerStation
Original video in Russian: https://youtu.be/Y6uKrm6xgqY
--------------------------------------------------
Privateer Station on Spreaker: https://www.spreaker.com/show/privateer-station-war-in-ukraine
PS on Rumble: https://rumble.com/c/c-1582435
PS on YouTube: https://www.youtube.com/c/privateerstation
PS on iHeartRadio: https://www.iheart.com/podcast/53-privateer
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Budget is seriously storming. Business is on the verge of
mass bankruptcies and non payment crisis, and all those who
are talking about it are threatened the risk of being
taken by Siloviki, by the Putin's power agencies from their
(00:21):
economic forms. So today video will be dedicated to the
crisis situation in Russian economy and things that were brought
to light and the conflicts between the top level of
Puttin buocrats on the Saint Petersburg International Economic Forum that
just finished, and this is the main economic victorine of
(00:45):
Putinism of his rule. We thought this is all that
they can say about it, but during the last day
of this forum, they actually opened the flat gates. I
think they said so much that they would have earned
several criminal prosecution efforts by Puddin's authorities based on what
(01:07):
they were talking about. And this forum was so rich
that we just couldn't skip that day. We could not
not talk about it. You got to see that, and
the level of amazement was very well sound by Xenia Subchak,
who was in one of these sessions, who took the
(01:28):
mic to say that she feels that she ended up
being at another nude party comparing Petersburg Economic Forum with
the Socialites and singers nude party that caused outrage in
the media and basically one step away from the nude party.
The way I feel after listening to all your speech,
as fellows here, that was a snippet from the breakfast
at that forum, and this was her reaction to the
(01:48):
speech of Macaroff, who is the head of Duma Committee
on Budget and Taxes. Our regular viewers already know him.
He's a well known figure who is allowed from pretty
high tribunes to describe rather honestly the difficult and the
terrible situation in Russian economy. We'll get back to him
(02:09):
in a minute now. Talking about the forum at large,
this is probably the most impressive Saint Peter's Burg Forum
of all that I've seen, and this indeed is something
that is symbolizing the sunset of an empire. Literally. On
one hand, nobody really came to visit Puttin on this forum.
We remember earlier ones were visited by some key figures
(02:32):
like Sidjean Pin and like today China's and not even
the representative of she but some vice prime somebody. For
this forum. You can look at the lists of the guests.
It was also attended by the advisor to Bahrain, Amir
(02:54):
and a visitor from South African Republic. Among the bigger figures,
there was maybe a president of Indonesia. This is not nothing,
but one can tell that top leadership of China, for example,
completely ignored this one because why spend money on your colony. Essentially,
that's what put In turned Russia into. Putting himself is
(03:18):
demonstrating complete detachment from reality. He was talking again about
Russia being economy number four in the world and first
economy in Europe. And what's interesting is that he did
not even add his usual asterisk that it is in
recalculated purchasing ability parity index. Don't even go there. This
(03:42):
is some artificial, fake book type index that was invented
by Putting's economists that basically says one ruble equals roughly
twenty dollars. Well, show me where I can buy an
iPhone for these recalculated numbers, and then I may start
believing it. But he didn't even make a reference to
(04:05):
that index. He was just said, yeah, we're the first
in Europe, no matter Britain, France, Germany, who are much
bigger than Russia. Economically. So while putting brings completely detached
statements from life, everybody else with the frightening frankness, we're
talking about how everything is seriously bad in reality. This
(04:27):
is an interview with German Greff, head of a Spur Bank.
We are seeing significant issues with economy. We're basically seeing
the disruption of the main investment cycle. We are the
biggest bank financing investment projects in Russia. We have about
(04:47):
sixty to seventy percent of this market. And for the
first time since the beginning of this year and we're
already in the middle of it, we have not funded
any new single projects. We're just finishing the investments into
the old existing projects. That tells us basically that for
the last twenty eight months that the high rates are prevailing,
(05:10):
they're killing the economy. You're not funding these projects because
you do not get new requests or you're seeing more
risks than usual. Well actually both, but in practice, the
flow of asking for new money, the demand for new
money is almost gone, basically gone. The behavior of business changed.
(05:33):
When the economy is overheated, it's difficult, but when it's
overly cooled down, this is horrible and another snippet from
his breakfast at this forum. Today, we see there is
a correlation between the amount of free money available to
the companies for investment and the volume of percent payments
(05:57):
that they have to pay for borrowed money. Is reaching
crisis stitching the critical threshold. Beyond that we may find
ourselves in a very serious crisis. And it is difficult
not only to companies, but also to those who are
operating this economy, the operators of a higher level. Today,
for example, we see that the companies who have issues
(06:20):
with money, they also birth difficulties for the companies who
haven't had these difficulties before. So, going back to summarizing
these discussions, the whole overall mood of them was significantly
grim and it was also underlined by the clip of
Spurbank artificial intelligence generated video clip that spur Bank has created.
(06:47):
They are fans of AI and they've been doing quite
a bit of visuals for these forms. And check out
what they have produced this time, even their AI has
already figured things out. The clip is pretty creepy and
it's basically saying that three years after beginning the full
scale invasion into Ukraine, everything is crystal clear that Russia
(07:11):
is not really pulling it through and situation is cracking
apart under the weight of everything. And here's the clip.
But the country is facing new challenges on the backdrop
of huge inflation. Bank of Russia went to the record
high refinancing rate, which is making difficult for businesses to survive.
(07:37):
The constraints of the labor market is another constraint. Financial
state of the companies is dwindling. Investment plans are being delayed,
growth is being stunned. More risks and concerns about non
payments and recession are entering our parlance. Yet we still
(07:59):
face that asks of technological transformation sharply as ever, how
do we avoid systemic recession? How do we develop under pressure?
What can drive our new growth? These topics will be
discussed at the annual breakfast of Spear Bank today. So
this was the point of view of the artificial intelligence
(08:21):
a clip generated by this Spear Bank. And let's also
look at some of the quotes of the participants of
this conversation. You probably will agree that this is anything
but description of some nice, well developing economy that has
no effect in it from many sanctions, that sees a
good path forward more likely this is a description of
(08:43):
the economy of a third world country that is in
a very deep crisis. Yes, indeed, we are in a
state of controlled cool develop economy, attempting to go back
to the potential that we have two way to realize it,
and this is painful for today. Our main issues are
with crediting, as you saw, and with votes here of
(09:06):
everybody present and TV viewers as well. Huge refinance rate
does not allow us to continue development of high technology production.
Needs better margins. Only ecosystem altogether can help us solve it.
(09:27):
Just big corporations cannot provide for the coherent growth of
the overall high technology development. They need smaller and medium
sized businesses to support that effort, and those companies are
significantly suffering with high bank rates. And we need to
solve this task as soon as possible. So you know,
(09:51):
when we hear the thesis coming from the main economists,
we believe I'd rather hear them seeing saying that we
see because right now we're seeing the lowering of all indexes.
We see complete disconnect between the current inflation rate the
(10:11):
huge rate of growth that we actually observing. And we're
also the scariest part what we're seeing is that extensive
capabilities and reserves that we had that we could use
to grow our economy, they're basically done with. Everywhere where
we could step in into the places of the foreign
(10:33):
companies that left, all these niches are already taken. And
for new investments, for new projects, we need long investments,
we need serious planning, horizon investments. And here I think
we'll need to talk again about institutes. That's what German
(10:54):
Graf also mentioned, because without institutes, without protection of rights
of the investment, we cannot talk about any long term
investments under any bank rate. Another interview of the attendees,
it means that the real rate change, a difference between
the real inflation and official inflation is huge. It's at
(11:15):
least fifteen percent. And with such a big difference, of course,
all investors, all people with capital, they choose deposits instead
of investing. You don't need to go to the market,
figure out difficult instruments and ways to work with them effectively,
you just put your money onto deposit. There is a
(11:38):
ruble that is fortifying, and if it continues, you can
get twenty percent and there is no other industry that
can offer you that profitability. So in these conditions there
are no motives and stimuli for investors to develop new production,
to develop manufacturing. They're just none. There are no financial stimuli.
(12:05):
And of course, if the level of rate will continue
to remain high for an extended period, then the number
of restructurizations that we'll see among the companies leading to
defaults will be increasing. This is as if you inhale
and take a big breath of air before you dive.
If you need to stand the water for ten or
(12:25):
twenty seconds, not a big issue. We've seen that before.
We had a growth rate and then it goes down
drastically to bring back everything. But now we've been under
water for a long time, and imagine you're underwater for
thirty seconds for a minute and a half. So, however
much air you inhaled before you went down, you still
(12:45):
want to breathe a lot. So you're saying that the
oxygen reserves of business are aware. You know, whatever number
I give you now I will be wrong, But I
sincerely hope that we will have a chance soon to
take a breath of fresh air when the rate will
go down. Another forum, speaking of the overall Russian machine manufacturing.
(13:15):
We joined our ranks. We figured that we can produce
a lot of things in the home market. But this
year our Atlass has really shrunk because the high bank
rate is really pressing on us. Oh not just to
you guys with the manufacturing. Yeah. Oh, I'm sure that
each of you sitting at this table can say a
lot about this high rate. We're all pretty diplomatic, but
(13:36):
describing it, I want to say that the Atlass hasn't died.
Shrunk is very We need to do a lot to
make sure his back doesn't break. So pay attention, dear
viewers that there were a lot of things mentioned on
this forum that big industries in Russia are going into
a deep recline. Coal industry is facing a magnificant crisis,
(14:01):
actually one of the harshest, and coal regions cannot even
get out of the economic pitfall. We talked about that
in our other videos about regional economies, and there'll be
another one coming soon. Metallurgy is also in a significant decline.
The head of sever Style Chevelov, was making headlines and
(14:24):
this forum with his words that because of the issues
they're facing, they will have to start stopping metallurgic factories
and this is reality. These are the things that you
don't do because it's nearly impossible to restart it again
after without refitting the production. But he's talking about shrinking
(14:45):
the production by thirty percent because there is no demand
for what they're making. And before the forum, the head
of fishing industry Government Zverev also gave an industry that
the industry is stormy, and also leaders of agriculture came
(15:07):
out and said that everything is so bad that we
don't even want to talk about it. They actually that
the topic of agriculture was moved to the shadows. There
were no official statements or anything planned for agriculture blog
because agriculture is already in deepest crisis. We've been talking
(15:30):
about that in our reviews with Michael Nak and my
videos about regions. I might make another video about agriculture
later this month, but the crises are marching in any
segment that you take. Small business in Russia is just
collapsing under the way to hold these economic problems. As
(15:53):
the head of a Pillar of Russia association, Kalinin said
that whatever small business is meeting today in Russia can
be described eloquently with the phrase Valley of Death. Here's
a snippet of an interview with him. We see that
in the first quarter we experience demand shrinking for steel
(16:13):
by thirteen percent. The construction is dwindling by fourteen percent.
How significant this follows for your company? I think this
is serious, not only for our company, it is serious
for the industry at large. Indeed, the construction that is
forming about seventy five percent of demand for our product,
(16:35):
when it falls down by fourteen that's a significant factor. Overall,
the prognosis for this year is pessimistic because the dynamic
we're seeing in the last four or five months, we
can project that the demand for steel will go down
this year by at least ten percent. And the ruble
rate is a significant factor. We are seeing that the
(16:58):
exchange rate for ruble is artificially inflated, and what it
leads to is that the export oriented industries like metallurgy
cannot export our product because this is not economically profitable.
Ruble rate is stifling our ability to make money. And
(17:20):
we also do not have access to European markets and
due to sanctions to many other usual markets, so we
have to transport our steel to unusual, faraway places. And
strong ruble just doesn't allow us to cover the transportation
or intermittent changes for most metallurgy companies. That's why we
cannot rule out stopping of certain factories on our country,
(17:45):
because that would be needed to balance the supply. Another
interview with the continuingal A Bachova, president of X five Group.
We are seeing the cool down of economy. We have
seen for the first time shrinkage of economy sector in
(18:06):
food segment. We can see the inflation affecting things and
basically this is affecting growth. We look at what is
specifically interesting for me. Do we actually experience the fall
of food production in our country? It actually exists, It started,
(18:27):
It is correlated with inflation. There is a small growth
that is within the inflation parameters, but there is no
real growth. So raw materials are also experiencing the pressure.
Our key expert goods are metal and gas and oil,
(18:48):
and we're facing the decline of about ten percent in
these experts. Coal industry is facing twenty seven percent decline
and compared with more difficult logistics because of the sanctions.
It creates significant issues for our basic industries. What else
is happening now we can look at the railroad and
(19:12):
this is one of the railroad representatives speaking of the forum.
Due to the situation in the world and the way
they are being charged and the economic situation in the world,
we can see that there is a significant decline in
transportation demand for Russian railroads. We're seeing twenty three percent
(19:34):
on various goods, eighteen percent on oil, and this is
a significant decline. Also, we do face a significant shrinkage
of available cargo capacity and it is related to limits
of imposed limits on us by the various railroad segments
(19:58):
that we're trying to use more. And also some of
the wagons are getting old. Yeah, another interview. I'm seeing
that the market is really cooled down. The effect of this,
the real effect of this will be two to three
years down the road. We are solving the inflation right now,
but we are deferring a bigger problem by two to
(20:21):
three years. What does it mean. It means that people
will not be able to buy apartments, to buy homes.
Small business has a credit line of thirteen trillion rubles
right now that has never been before. This is a
huge number. A small business is servicing most of this debt.
(20:43):
German was already saying that up to seventy percent of
the floating rate. In the last two and a half years,
half of the small businesses have closed. The value of
death is a good descriptor to what we're seeing on
the automabile market. To seventy percent of Russian vehicles were
always sold on credit terms. It's usual a practice. It's
(21:06):
easier for people to buy up to sixty percent of
their vehicles on credit. With the current exchange rate, they're
not going to do that. No bigger purchases, I don't know, TV, refrigerator, vehicle.
People are not taking credit. Meantime, the returns on deposits
(21:27):
are pretty high, so why would I take credit for
something I can maybe buy vehicle next year. This year,
I'll put this money on the deposit and let just
money grow and make some money there. That's why after
Vas Russian automobile manufacturer is seeing decline of thirty percent
demand this year. And by the way, they're most successful
among the manufacturers in Russia in vehicles, so the others
(21:50):
are facing more declines. Oh yeah, we're also concerned by
Chinese refreshing their models. If you understand, Germans usually refresh
their model lines every three years. Chinese are changing their
lines every year, and it's not just restyling or facelift,
that's significant engineering changes that they're implementing. And of course
(22:12):
we are working with all business segments but small and large,
and the current exchange rates significantly affect the demand. I
apologize I came a bit late to this roundtable. I
was in traffic jam at the entry to this forum
and I did not see a single Russian vehicle at
(22:33):
the entrance. Oh we came here on ours. Oh I'm sorry,
I am not rich enough to afford this vehicle. Well, no,
I'm not talking about myself, but in general, yeah, still
haven't seen anyone. I would rather see a lot more
Moskovich and Lada Russian produced vehicles in this forum to
be used by participants, but today I've seen none. So
(22:54):
there is another problem that was talked a lot, the
Kadri deficit, and almost everybody who had a mic was
referring to this problem, how significant and sharp it is.
I did not even include that into the economic review
with Michael Lucky because I think you can understand that
situation is dire, and not even every other speaker, but
(23:20):
every speaker mentioned that country situation is trashy and they
did not see a way out. Nebuliana commenting that companies
are seeing crisis with workforce. Griff highlighting that the inadequacy
(23:41):
and high prices high costs of new labor are significant
issues on the Russian market and what is seriously being
missed is a qualified workforce for specific qualifications and also
the question of how to not only find them, but
(24:02):
how to offer them something competitive in terms of salaries.
So we're missing qualified managers, qualified engineers, qualified technicians. German Griff,
in one of his statements today outlined that CODRI and
labor resources are significant issues for our economy today and
(24:27):
we cannot change anything here without changing bigger economic motors.
And as the speaker also highlighting the deficit in countries today,
small business employees about forty percent of people in Russia
of those who actually work, and what we are seeing
(24:49):
is that we a significantly lack human resources on the
market and without migrants we probably cannot get by. There
is a new law in our Duma suggesting to organize
specific groups of employees from nearby countries and to try
(25:10):
to make it unnecessary for them to take the exam
in Russian language, which used to be mandatory. Here's example,
I brought some Vietnamese constructor construction workers to Sahaleen and
they failed to pass Russian tests. Who wins from that?
We already have to pay double for usual mason worker
(25:33):
on Sahaleen, and now we have to deport this labor
back because they didn't pass the Russian exam. So if
we don't find a way to fight, the situation will
not be able to conquer some elements of this inflation.
So what do you want? After Putin's war? Mass mobilization,
mass outflow of specialists from Russia to neighboring countries and
(25:57):
far beyond. Of course, their labor market is going to suffer.
I don't know where these military analysts are finding thirty
thousand contractors that they're talking about, supposedly on paper that
Russia gathers monthly. We talked about that in details in
one of the recent videos, that they're nowhere near that number.
That there is nobody to continue fighting. And one of
(26:19):
the sharp discussions on this forum is that all the
representatives of bureaucracy and business, they're basically demanding to stop
requesting migrants to learn Russian language because with this regulation,
with this rule, they just cannot bring anyone to work,
even on construction, even on more simple tasks. And there
(26:43):
is another review that was published by Central Bank Monitoring
of Companies as of June twenty twenty five. They highlight
that countery and human resources at the lowest supply this
year that has never been at this low before in
recent history. Russian Forbes is also writing about that that
(27:04):
candy issue is still the sharpest one for Russian companies
and it's not looking to disappear anytime soon. And another
consequence of Putin's war that the head of X five
Retail Group, continuing Albatchova, was saying that the fact is
(27:25):
that the numbers of labor capable workers in Russia are
falling and this is not surprising at the backdrop of
the losses that Putin is suffering with his army in Ukraine.
How many Russians are dying, how many Russians fled the
country related to this war and his policies, And the
(27:46):
head of X five Retail group is talking about the
consequences of this. Here is the interview. So what is
the situation with the employees in your industry? In retail. Oh,
we are seeing a deficit and it's growing. By twenty
eight we are prognosticating to not have up to half
(28:07):
a million people, to miss half a million people in retail.
You notice that we already suffering from the dwindling labor
market that were capable people. Our numbers are horrible in Russia.
And what we're telling here about in this stream is
that in Putain's corrupt, monopolized, oligarchic system, when Russia is
(28:30):
cut off from the civilized world, from technologies, from international corporation,
no import replacement can carry it out. And German Graff
is talking about the problems with components for Russian aviation
that very often they end up being times more expensive
than foreign analogs, and Russian jets turn out to be heavier,
(28:55):
and because of that they can fly on shorter distances
with smaller number of passengers. Over all, their performances puning
and I liked I forgot the name of this Minster
Minister of the Arctic and Far East. I think Minister
Chicken Coov, right, we quote him sometimes, and he was
(29:15):
presenting at the session of the Gas s Applies to
the East, and he acknowledged that I was visiting different
gas pipes and places where we mine all these materials
in Komi Republic and such, and I'm horrified by how
nothing works because we're not bumping gas to Europe anymore.
(29:39):
Here war speeches from Forum, German griff is saying that
the production of jets in Russia can cost up to
seven times more than the same equivalent that can be
manufactured by Western competitors. And what's another significant is that
our jets are too a half times heavier than the
(30:01):
Western jets. That's why it cannot fly as far. And
here's the Minister of Resources. Yeah, we're facing an issue
that the gas that were pumping to Europe before all
these facilities that were engaged. It really is saddening when
you walk in the mining areas along the pipes where
(30:25):
half a billion cuba meters were shipped every day every
twenty four hours along these pipes. Now they're standing empty,
and we're facing huge matters of how do we convert that,
how can we use it? And there are significant regions
where there's nothing else but these industries. I was impressed
(30:47):
by the number of one hundred and seventy five billion
cubic meters that used to be flown in the Utah
pipes and now it's almost nothing. Speaking of import replacement.
An interesting note that was pronounced by the head of
gasprom Oil, Duke Of. He is one of the putt
In oligarchs. He said that our country is very crafty.
(31:12):
We can make an exclusive restaurant, but we are always
going to fail to build a well functioning network of restaurants,
chain network restaurants. And this is an important story because
it outlines that we do have talent in the country,
but we are liking effective system that could organize people
and create working systems in different segments of economy. Putting
(31:35):
failed to create systemic aspect that all successes are driven
in by individuals and his economy is based on his
friends who are getting big slices of it. And here's
Alexander Duke of talking about that. Yeah, we can create manufacturing,
we can create new technologies if we want to, but
(31:58):
when we have to serialize it, that's where we fail.
Because we are a crafty country. We can open exclusive restaurants,
we can set up some exclusive project, but we will
usually fail to standardize to create a chain to serialized products.
And the main idea in this forum was that there
(32:20):
is no exit. There is no easy exit from this situation.
So a big elephant in the room is that you
need to stop the war, you need to restore your
relations with civilized world. You need to dismantle put in oligarchic, monopolistic,
non transparent system that is not reporting anything to society,
not responsible to a society. But this is not acceptable
(32:45):
for forums. But here a few things were still spilling
over and central bank was the usual culprit to blame
on this forum because of the high rates. We're not
going to support central bank and this decision. But it's
a significant symptom. That high rate is basically an index,
(33:08):
an indicator that Russian economy is in difficult place because
it was cut off from the world and all the
money that are being invested or going in the pockets,
they're not going into development. There is no international cooperation.
There is now access to the world financial market and
cheap money. The markets of China, India and other countries
(33:29):
of the global South remain closed. Everything is being stolen
by putting scorre oup monopolies. Under these conditions, manufacturing cannot develop.
Any influx of money into economy will end up just
increasing prices and those who are waiting the exchange rate
to go down as some panacea. On one hand, the
(33:54):
vice president of VTB Piano Office saying that one needs
a significantly long signal to bring the rate down to
change something. It's not enough to bring the rate down
from twenty to eighteen percent. But at the same time,
(34:14):
don't expect ten percent. Nobody is talking about that. And
in the current data end situation, when we have limited resources,
we cannot produce more resources. We cannot produce more supply.
Putain's economy is just not a producing economy. Even if
you increase or change the exchange rate or refinance rate,
(34:39):
it'll lead only to fluctuations in pricing. Because Russia failed
to learn how to serialize production, how to produce more,
how to make more goods in the country on its own.
So all that hope that central bank might eventually bring
the exchange rate the refinance rate down, nothing is going
to happen in the near future. This is just some
hope that they're trying to grasp on. But this is
(35:02):
an indicator. This is not a disease, so our Here's
another a snippet from an interview. Our rate went down, Yeah,
by one percent, So do you think that that can
affect the economy somewhat on the exchange rate of ruble? No, No.
In my view, this is two minor one percent from
(35:23):
twenty one to twenty percent. That's nothing for the economy.
Even that drop could have helped if there was a
significant signal that this is a new vector. But since
the signal was that future decisions are undefined and everything
can go either way and depends on inflation and other factors,
(35:48):
that doesn't inspire for businesses, for banks, for manufacturers that
they can project what to do just because of this
one percent. Another piece of this forum, we are seeing
the trend to the inflation slow down, but we need
more time to see to verify that this is indeed
(36:10):
strong vector. And we can say that the prices do
not grow high if economy isn't good. Potential is in
good place. Yet the prices last year we're growing very significantly,
and that indicates that those resources that allow us to
grow our economy they're significantly limited. And that's why in
(36:32):
this situation, even if you drop the refinance rate, it
will not change anything, but the prices probably and here's
one of the main problems we're coming to here, coming
to that Andre Mcaroff that impressed singing Sbchuk and she
had flashbacks from the nude party for Wisue was slapped
(36:55):
by a lot of media and society for participating. So
what Macaroff was saying is that investments are the keystone
of economy, that the private business needs to be comfortable
to bring the money to invest in the economy because
government never has enough money to do that. Successful countries
that achieved any growth of economy, they all figured a
way to invest more investors. Here's the chart Europe, United States,
(37:20):
EU countries of bricks. China brings without China and Brazil,
Canada and Russia is the last one in that list.
This is in the number of investment money. Russia is
at the bottom of the stable and in more than
three years of full scale aggression against Ukraine, Russia lost
(37:40):
three hundred billion money worth of foreign investments. These are
the money that fled from Russia. Even China diminished their
investments into Russia during this war because Russia is not attractive.
There are huge risks, no laws are correctly functioning, there
(38:01):
is no way to easy defend your rights in court.
Even for Chinese investors, it's difficult for them to fight
for their rights. They have to get special permissions from
the government to take money out of Russia after making
money in Russia, they have to put them on some
specific account wait for permission that government commission needs to
(38:22):
give them. So why would Chinese want to invest money
in Russia with all these strings attached? So investment money
is fleeing and you cannot change that with change of
bank rate. If the capitals and companies do not see
friendly atmosphere, they run. And this was the topic of
(38:44):
drimakaras speach on this forum. So about the next year,
how do we survive to the next breakfast at this
economic forum? Mister mccarth Okay, yeah, let me not say
what I think, because I do want to live to
(39:05):
the next breakfast. But one business is not talking about
investment climate as the main problem, and the lack of
institutes that's a big issue. Institutes give you a chance
to go to a court system. If something was violated,
you can go to court then and expect to have
(39:27):
just decision, regardless of whom you're arguing with. This is
the right of ownership defense that is provided by these
institutions that is not warranted by your relations to the government.
I'm not meaning any specific person in government, but as
a system, this is just respect to ownership, to the
(39:50):
right of ownership. We're lacking that. Recently we learned finally,
thank god, now it's clear that I always wanted to
have some clear on that. We figured that the terms
of crime or terms of problem, they start the countdown
(40:10):
not from the event happening, but from the time when
a district attorneys the prosecutor's office has learned about it,
and not just when they learned about it, but from
the time when they did not like it. So now
we know how it works, and that's why perhaps businesses
stopped talking about investment climate and as they said, you'll
(40:32):
bring up very serious economic questions here. But recently, questioning
economic mechanisms and economic issues very often ends up in
people looking for I don't want to say enemies of
the people, but enemies, as if there are some enemies
hiding somewhere that want to harm business, harm the economy,
(40:53):
harm the country. Mostly it is related to very new
excitedness of those who are looking for these answers, who
cannot offer anything but printing more money, and want to
ascribe all these problems to the presence of some imaginary
enemies and without reference to our too far away past.
(41:16):
I want to say that we have passed through all
these things before, and I hope we do remember how
it ended up last time. Excuse me, I need to
interrupt it here. German Graft comes up. What do I
need to stop? Oh? No, please continue? Why do you
have such an expression on your face as if they
(41:38):
already came for me and I'll be escorted out right now. Yeah,
So there is almost a confrontation happening that Graff couldn't
take it anymore and had to jump and intervene. That
there'll be a police coming to this session and arresting everybody.
But this is an interesting moment. This is the thing
we are talking with you about here, about the finality
(41:59):
of Putton's about them being depleted. Very often people accuse
us of being too pessimistic that put In will be
able to fight this war forever and he has enough resources.
Here official people of his system acknowledging it openly that
they're out of resources. And what's interesting, Andrey mccaroff is
during the same peril here that we usually draw in
(42:21):
our streams parallels with the end of Soviet Union. That
Soviet system was built with the assumption that they will
always have resources, that the resources will be forever, but
there was no private business to generate resources to create
added value. At the end, they just aid through all
(42:43):
the resources they had, and the socialist system of Russia crushed,
of Soviet Union crushed. Continuation of his speech, this is
called the main economic law of socialism, maximal satisfaction of
growing demands of labor force. And I want to upset
(43:04):
you and everybody in the room that the demands of
labor force will continue to be growing, will continue to grow,
and the government does not have money to satisfy continuously
growing demand. Socialism collapsed only because it could not fulfill
(43:26):
it's main economic law. And we here have not even
started writing our main economic laws. Thank you. You can
see how actual the parallels with Soviet Union are today,
and that is pushing me to start a new media cycle,
(43:50):
a new cycle of streams between the Putin's regime and
the end of Soviet regime. Uses are we'll talk about
that in other streams. We made a couple of last year,
how will Putinism be over with? And there are a
lot of similarities that can be drawn between that and
the crash of Soviet Empire. But explosive budgetary deficit that
(44:12):
was one of the significant factors that sunk the USSR.
Here Minister of Finance Anton Soilanov actually talked to that topic.
I think for the first time. He's usually rather diplomatic. Yes,
we will figure it out, don't worry, everything is under control.
(44:33):
Here he was very blunt. He said, the budget is stormy,
and everybody will have to be more modest in their
wishes and to measure their appetites. So Anton, with this factor,
by the end of this year, will go looking for
(44:54):
new ways to fund our demand. Somewhere in the budget.
Do you think the budget it will increase the taxation
of business to get more money? Well, you know, with
these conditions, indeed, everything is stormy, not only in economy
in general, but in our ecept or two. How can
we provide financial stability. We can try being more modest
(45:16):
in our aspirations in these conditions, that's for sure. So look,
this is a very pinnacle moment here where we are
right now here almost live. We can observe the sunset
of an empire, another Russian empire sunsetting about which their
representatives are not even hiding their thoughts. I like this forum.
(45:39):
The main summary of this forum is that there is
no exit. They do not have recipes to somehow move forward.
They're like fools, keep running around with an idea that
central Bank will be lowering the percent rate. But Nabiulina
and we showed that in a previous video that look
(46:02):
two years ago the rate was seven and a half percent,
much lower, and what your manufacturing of locomotives started better. No,
this is not the case. It's obvious, and they're just
a collection of intellectual dwarves. They do not have ideas
(46:22):
to move the country forward. And the clock is ticking.
The clock is ticking and speeding up. This is exactly
what was at the end of Soviet Union, and Dyma
Karoff addressed that as well. Why did the country collapse?
Because everybody thought that Soviet Union will have endless resources
(46:42):
to support this ineffective system, and resources started to run out.
Back then everybody started running like cockroaches and discussing the program,
program of reforms. They did not make a decision right
on time, and it ended up leading to the entry collapse.
There is no alternative to the market, and exactly that
(47:06):
is being voiced again now in Peter's Petersburg Economic Forum
and also the most corrupt elements, archaic elements of Putchin's system.
They're still resisting, They're still trying to pretend that everything
is fine, even though it's more and more difficult for
them to pull it through. And yet still they spill
(47:30):
a little bit about their model and their ideals that
they want to build on. This breakfast of was Burbank,
where Griff and Makaroff and the others had a pretty
sharp conversation about these There was one Putchin's bureaucrat, Killie
old Mitriev. He's a husband of Putchin's friend and you
(47:53):
might have heard about him for participating in some negotiations
with Trump. So he's part of the Putin's family. He
doesn't want to change anything. He's a horrible, disgusting dude,
and if you listen to his speech, he's also dumb.
He's talking about some stupidities and one of the things
(48:16):
that he mentioned the fact of acknowledging what is the
ideal of Putin's system. It would be so great if,
like in the Middle East, because we had monarchies. Monarchy
is the speed of making decisions. You don't need to
all the democratic procedures. You just agreed with the king
(48:36):
or prince and that's it. You shook hands and everything
is done. And that's the ideal model that Putin's gang
aspires to build in Russia. I would remind our viewers
that Middle East monarchies are some of the worst kingdoms.
(48:57):
Just look at the World rating of freedoms. People do
not have rights, people have no elections. As properly objected
on this forum by an absolutely loyal Putinist and FSB
functionary in the pharmaceutical industry, alexey ad Epic, who was
also making a statement in this forum, he said that
(49:20):
I want to argue a little here that Saudi Arabia
is okay, but it's a very low baseline for us
because just a few years ago that they allowed their
women to drive cars. Before that it was forbidden. So
even Putin's loyal representatives, they're saying that this is too much.
(49:41):
Saudi Arabia is not a good comparison for us, and
they all, as we saw in this forum, they wanted
more freedom, that Putin and his gang wanted to be
like Saudi Arabia with limited rules, and those who do
not agree with you can chop their heads off. But
even their close bureaucrats are already saying that no, we
(50:05):
actually do want more rights. We don't want it to
be like Saudi Arabia. Here's that poutin schoon. Monarchy is
a very functional system that allows to make decisions faster,
and it also can draw a lot of talented people
from other countries to work there. Well, no long, here's
an opponent saying that long leave our friends from Saudi Arabia.
(50:25):
But it's ill advised to compare us to Saudi Arabia,
where they just in twenty thirteen allowed people allowed women
to drive cars. So this actually looks like a continuous
progress there, and we're perhaps a little more spoiled. We
want to be compared not with Saudi Arabia, but with
(50:47):
some other countries. This all arguing is quite interesting to watch.
We had interesting discussion with Maximrisnik. He was a guest
of our channel, where we talked about why Putinists always
start looking for references in history and they try to
convert that in a perverted way that supports their ideas.
(51:10):
Same thing here, they want to be monarchs. They of
course have a lot of things in common with that
later Russian monarchy Russian Empire the end of nineteenth beginning
of twentieth century, where the whole idea was basically about
keeping monarchy for the sake of monarchy, so that the
(51:32):
upper level rulers could do whatever they want with the
country and not lose the power and not share it,
and that's what led to the crash and catastrophe. There
is another set of videos on my channel about that,
and they are behaving in the same vector they essentially
already expressing. That's what the media have acknowledged in Petersburg forum.
(51:56):
They want to rule Russia like Saudi Arabia, the country
that is named by the name of the family that
organized that, by the Alsoud's family. So I don't know
if they'll rename Russia into Puttunland. But what we can
(52:16):
see from this forum is that they are at a
standstill at the dead end of the economic road. And
as German Geff and his finishing remarks on this forum
is stating, all rivers are leading us in a wrong
direction that we wanted to if we will float down
(52:39):
these rivers that are floating here. It's sadly that all
the rivers here are floating in to a wrong point
where we all want to find ourselves. And yes, dear Ghira,
the soul leads to a very wrong place, not where
you want to. Because history cannot be turned and reversed.
You try to, you ended in a very significant storm
(53:03):
and a very bad dead end that you are acknowledging. Now.
I really loved this forum. I you know, I've warned
you a lot. We talked about these things in our
channel and other streams where I make statements and prognostications.
(53:25):
I was saying for a while that you'll soon hear
from Russian officials the acknowledgment of what we already know,
that Russian system does not work and sinks deeper and
deeper into the crisis of huge proportions. And now we
are seeing that live the sunset of Putin's empire. Of course,
(53:47):
the clock is still taking and they have a little
bit of time. Again. Everybody's waiting that the crash may
come tomorrow. No it won't come tomorrow, but before each
nineteen seventeen they had nineteen fifteen, nineteen sixteen, when from
pretty high pulpits all the projections were said, like pival
(54:09):
Melukov said, this is the stupidity of treason back in
Zarist Russia in nineteen sixteen, or what in nineteen eighty nine,
the Congress and People's Deputies were saying, including Dimitya Sakharov,
who are acknowledging the processes happening in the Soviet Union.
So the moment we start hearing these things in the
(54:30):
upper echelons of power, that are good indicators that the
Empire is going into a sunset. And we can see
in this economic form that they have no ideas how
to pull it. Everything they have, like and Drey mccariff said,
is to print more money to lower the bank rate
refinance rate, and that can somehow keep them afloat for
(54:54):
a little longer. But there is no way for that
to replace manufacturing. This is only the road to hyperinflation,
by an example of many other countries. There are other ideas.
Things don't work. The Empire is sunsetting and is German
Greev acknowledged all of these rivers are taking us in
a wrong direction. Good formulation, this was love, and we
(55:16):
are continuing to observe the end of that story. But
this Petersburg Economic Forum that happened in June was a
very good element and statement of the current state of affairs.
Budget is seriously storming. Business is on the verge of
mass bankruptcies and non payment crisis, and all those who
are talking about it are threatened the risk of being
taken by Siloviki, by the Putin's power agencies from their
(00:21):
economic forms. So today video will be dedicated to the
crisis situation in Russian economy and things that were brought
to light and the conflicts between the top level of
Puttin buocrats on the Saint Petersburg International Economic Forum that
just finished, and this is the main economic victorine of
(00:45):
Putinism of his rule. We thought this is all that
they can say about it, but during the last day
of this forum, they actually opened the flat gates. I
think they said so much that they would have earned
several criminal prosecution efforts by Puddin's authorities based on what
(01:07):
they were talking about. And this forum was so rich
that we just couldn't skip that day. We could not
not talk about it. You got to see that, and
the level of amazement was very well sound by Xenia Subchak,
who was in one of these sessions, who took the
(01:28):
mic to say that she feels that she ended up
being at another nude party comparing Petersburg Economic Forum with
the Socialites and singers nude party that caused outrage in
the media and basically one step away from the nude party.
The way I feel after listening to all your speech,
as fellows here, that was a snippet from the breakfast
at that forum, and this was her reaction to the
(01:48):
speech of Macaroff, who is the head of Duma Committee
on Budget and Taxes. Our regular viewers already know him.
He's a well known figure who is allowed from pretty
high tribunes to describe rather honestly the difficult and the
terrible situation in Russian economy. We'll get back to him
(02:09):
in a minute now. Talking about the forum at large,
this is probably the most impressive Saint Peter's Burg Forum
of all that I've seen, and this indeed is something
that is symbolizing the sunset of an empire. Literally. On
one hand, nobody really came to visit Puttin on this forum.
We remember earlier ones were visited by some key figures
(02:32):
like Sidjean Pin and like today China's and not even
the representative of she but some vice prime somebody. For
this forum. You can look at the lists of the guests.
It was also attended by the advisor to Bahrain, Amir
(02:54):
and a visitor from South African Republic. Among the bigger figures,
there was maybe a president of Indonesia. This is not nothing,
but one can tell that top leadership of China, for example,
completely ignored this one because why spend money on your colony. Essentially,
that's what put In turned Russia into. Putting himself is
(03:18):
demonstrating complete detachment from reality. He was talking again about
Russia being economy number four in the world and first
economy in Europe. And what's interesting is that he did
not even add his usual asterisk that it is in
recalculated purchasing ability parity index. Don't even go there. This
(03:42):
is some artificial, fake book type index that was invented
by Putting's economists that basically says one ruble equals roughly
twenty dollars. Well, show me where I can buy an
iPhone for these recalculated numbers, and then I may start
believing it. But he didn't even make a reference to
(04:05):
that index. He was just said, yeah, we're the first
in Europe, no matter Britain, France, Germany, who are much
bigger than Russia. Economically. So while putting brings completely detached
statements from life, everybody else with the frightening frankness, we're
talking about how everything is seriously bad in reality. This
(04:27):
is an interview with German Greff, head of a Spur Bank.
We are seeing significant issues with economy. We're basically seeing
the disruption of the main investment cycle. We are the
biggest bank financing investment projects in Russia. We have about
(04:47):
sixty to seventy percent of this market. And for the
first time since the beginning of this year and we're
already in the middle of it, we have not funded
any new single projects. We're just finishing the investments into
the old existing projects. That tells us basically that for
the last twenty eight months that the high rates are prevailing,
(05:10):
they're killing the economy. You're not funding these projects because
you do not get new requests or you're seeing more
risks than usual. Well actually both, but in practice, the
flow of asking for new money, the demand for new
money is almost gone, basically gone. The behavior of business changed.
(05:33):
When the economy is overheated, it's difficult, but when it's
overly cooled down, this is horrible and another snippet from
his breakfast at this forum. Today, we see there is
a correlation between the amount of free money available to
the companies for investment and the volume of percent payments
(05:57):
that they have to pay for borrowed money. Is reaching
crisis stitching the critical threshold. Beyond that we may find
ourselves in a very serious crisis. And it is difficult
not only to companies, but also to those who are
operating this economy, the operators of a higher level. Today,
for example, we see that the companies who have issues
(06:20):
with money, they also birth difficulties for the companies who
haven't had these difficulties before. So, going back to summarizing
these discussions, the whole overall mood of them was significantly
grim and it was also underlined by the clip of
Spurbank artificial intelligence generated video clip that spur Bank has created.
(06:47):
They are fans of AI and they've been doing quite
a bit of visuals for these forms. And check out
what they have produced this time, even their AI has
already figured things out. The clip is pretty creepy and
it's basically saying that three years after beginning the full
scale invasion into Ukraine, everything is crystal clear that Russia
(07:11):
is not really pulling it through and situation is cracking
apart under the weight of everything. And here's the clip.
But the country is facing new challenges on the backdrop
of huge inflation. Bank of Russia went to the record
high refinancing rate, which is making difficult for businesses to survive.
(07:37):
The constraints of the labor market is another constraint. Financial
state of the companies is dwindling. Investment plans are being delayed,
growth is being stunned. More risks and concerns about non
payments and recession are entering our parlance. Yet we still
(07:59):
face that asks of technological transformation sharply as ever, how
do we avoid systemic recession? How do we develop under pressure?
What can drive our new growth? These topics will be
discussed at the annual breakfast of Spear Bank today. So
this was the point of view of the artificial intelligence
(08:21):
a clip generated by this Spear Bank. And let's also
look at some of the quotes of the participants of
this conversation. You probably will agree that this is anything
but description of some nice, well developing economy that has
no effect in it from many sanctions, that sees a
good path forward more likely this is a description of
(08:43):
the economy of a third world country that is in
a very deep crisis. Yes, indeed, we are in a
state of controlled cool develop economy, attempting to go back
to the potential that we have two way to realize it,
and this is painful for today. Our main issues are
with crediting, as you saw, and with votes here of
(09:06):
everybody present and TV viewers as well. Huge refinance rate
does not allow us to continue development of high technology production.
Needs better margins. Only ecosystem altogether can help us solve it.
(09:27):
Just big corporations cannot provide for the coherent growth of
the overall high technology development. They need smaller and medium
sized businesses to support that effort, and those companies are
significantly suffering with high bank rates. And we need to
solve this task as soon as possible. So you know,
(09:51):
when we hear the thesis coming from the main economists,
we believe I'd rather hear them seeing saying that we
see because right now we're seeing the lowering of all indexes.
We see complete disconnect between the current inflation rate the
(10:11):
huge rate of growth that we actually observing. And we're
also the scariest part what we're seeing is that extensive
capabilities and reserves that we had that we could use
to grow our economy, they're basically done with. Everywhere where
we could step in into the places of the foreign
(10:33):
companies that left, all these niches are already taken. And
for new investments, for new projects, we need long investments,
we need serious planning, horizon investments. And here I think
we'll need to talk again about institutes. That's what German
(10:54):
Graf also mentioned, because without institutes, without protection of rights
of the investment, we cannot talk about any long term
investments under any bank rate. Another interview of the attendees,
it means that the real rate change, a difference between
the real inflation and official inflation is huge. It's at
(11:15):
least fifteen percent. And with such a big difference, of course,
all investors, all people with capital, they choose deposits instead
of investing. You don't need to go to the market,
figure out difficult instruments and ways to work with them effectively,
you just put your money onto deposit. There is a
(11:38):
ruble that is fortifying, and if it continues, you can
get twenty percent and there is no other industry that
can offer you that profitability. So in these conditions there
are no motives and stimuli for investors to develop new production,
to develop manufacturing. They're just none. There are no financial stimuli.
(12:05):
And of course, if the level of rate will continue
to remain high for an extended period, then the number
of restructurizations that we'll see among the companies leading to
defaults will be increasing. This is as if you inhale
and take a big breath of air before you dive.
If you need to stand the water for ten or
(12:25):
twenty seconds, not a big issue. We've seen that before.
We had a growth rate and then it goes down
drastically to bring back everything. But now we've been under
water for a long time, and imagine you're underwater for
thirty seconds for a minute and a half. So, however
much air you inhaled before you went down, you still
(12:45):
want to breathe a lot. So you're saying that the
oxygen reserves of business are aware. You know, whatever number
I give you now I will be wrong, But I
sincerely hope that we will have a chance soon to
take a breath of fresh air when the rate will
go down. Another forum, speaking of the overall Russian machine manufacturing.
(13:15):
We joined our ranks. We figured that we can produce
a lot of things in the home market. But this
year our Atlass has really shrunk because the high bank
rate is really pressing on us. Oh not just to
you guys with the manufacturing. Yeah. Oh, I'm sure that
each of you sitting at this table can say a
lot about this high rate. We're all pretty diplomatic, but
(13:36):
describing it, I want to say that the Atlass hasn't died.
Shrunk is very We need to do a lot to
make sure his back doesn't break. So pay attention, dear
viewers that there were a lot of things mentioned on
this forum that big industries in Russia are going into
a deep recline. Coal industry is facing a magnificant crisis,
(14:01):
actually one of the harshest, and coal regions cannot even
get out of the economic pitfall. We talked about that
in our other videos about regional economies, and there'll be
another one coming soon. Metallurgy is also in a significant decline.
The head of sever Style Chevelov, was making headlines and
(14:24):
this forum with his words that because of the issues
they're facing, they will have to start stopping metallurgic factories
and this is reality. These are the things that you
don't do because it's nearly impossible to restart it again
after without refitting the production. But he's talking about shrinking
(14:45):
the production by thirty percent because there is no demand
for what they're making. And before the forum, the head
of fishing industry Government Zverev also gave an industry that
the industry is stormy, and also leaders of agriculture came
(15:07):
out and said that everything is so bad that we
don't even want to talk about it. They actually that
the topic of agriculture was moved to the shadows. There
were no official statements or anything planned for agriculture blog
because agriculture is already in deepest crisis. We've been talking
(15:30):
about that in our reviews with Michael Nak and my
videos about regions. I might make another video about agriculture
later this month, but the crises are marching in any
segment that you take. Small business in Russia is just
collapsing under the way to hold these economic problems. As
(15:53):
the head of a Pillar of Russia association, Kalinin said
that whatever small business is meeting today in Russia can
be described eloquently with the phrase Valley of Death. Here's
a snippet of an interview with him. We see that
in the first quarter we experience demand shrinking for steel
(16:13):
by thirteen percent. The construction is dwindling by fourteen percent.
How significant this follows for your company? I think this
is serious, not only for our company, it is serious
for the industry at large. Indeed, the construction that is
forming about seventy five percent of demand for our product,
(16:35):
when it falls down by fourteen that's a significant factor. Overall,
the prognosis for this year is pessimistic because the dynamic
we're seeing in the last four or five months, we
can project that the demand for steel will go down
this year by at least ten percent. And the ruble
rate is a significant factor. We are seeing that the
(16:58):
exchange rate for ruble is artificially inflated, and what it
leads to is that the export oriented industries like metallurgy
cannot export our product because this is not economically profitable.
Ruble rate is stifling our ability to make money. And
(17:20):
we also do not have access to European markets and
due to sanctions to many other usual markets, so we
have to transport our steel to unusual, faraway places. And
strong ruble just doesn't allow us to cover the transportation
or intermittent changes for most metallurgy companies. That's why we
cannot rule out stopping of certain factories on our country,
(17:45):
because that would be needed to balance the supply. Another
interview with the continuingal A Bachova, president of X five Group.
We are seeing the cool down of economy. We have
seen for the first time shrinkage of economy sector in
(18:06):
food segment. We can see the inflation affecting things and
basically this is affecting growth. We look at what is
specifically interesting for me. Do we actually experience the fall
of food production in our country? It actually exists, It started,
(18:27):
It is correlated with inflation. There is a small growth
that is within the inflation parameters, but there is no
real growth. So raw materials are also experiencing the pressure.
Our key expert goods are metal and gas and oil,
(18:48):
and we're facing the decline of about ten percent in
these experts. Coal industry is facing twenty seven percent decline
and compared with more difficult logistics because of the sanctions.
It creates significant issues for our basic industries. What else
is happening now we can look at the railroad and
(19:12):
this is one of the railroad representatives speaking of the forum.
Due to the situation in the world and the way
they are being charged and the economic situation in the world,
we can see that there is a significant decline in
transportation demand for Russian railroads. We're seeing twenty three percent
(19:34):
on various goods, eighteen percent on oil, and this is
a significant decline. Also, we do face a significant shrinkage
of available cargo capacity and it is related to limits
of imposed limits on us by the various railroad segments
(19:58):
that we're trying to use more. And also some of
the wagons are getting old. Yeah, another interview. I'm seeing
that the market is really cooled down. The effect of this,
the real effect of this will be two to three
years down the road. We are solving the inflation right now,
but we are deferring a bigger problem by two to
(20:21):
three years. What does it mean. It means that people
will not be able to buy apartments, to buy homes.
Small business has a credit line of thirteen trillion rubles
right now that has never been before. This is a
huge number. A small business is servicing most of this debt.
(20:43):
German was already saying that up to seventy percent of
the floating rate. In the last two and a half years,
half of the small businesses have closed. The value of
death is a good descriptor to what we're seeing on
the automabile market. To seventy percent of Russian vehicles were
always sold on credit terms. It's usual a practice. It's
(21:06):
easier for people to buy up to sixty percent of
their vehicles on credit. With the current exchange rate, they're
not going to do that. No bigger purchases, I don't know, TV, refrigerator, vehicle.
People are not taking credit. Meantime, the returns on deposits
(21:27):
are pretty high, so why would I take credit for
something I can maybe buy vehicle next year. This year,
I'll put this money on the deposit and let just
money grow and make some money there. That's why after
Vas Russian automobile manufacturer is seeing decline of thirty percent
demand this year. And by the way, they're most successful
among the manufacturers in Russia in vehicles, so the others
(21:50):
are facing more declines. Oh yeah, we're also concerned by
Chinese refreshing their models. If you understand, Germans usually refresh
their model lines every three years. Chinese are changing their
lines every year, and it's not just restyling or facelift,
that's significant engineering changes that they're implementing. And of course
(22:12):
we are working with all business segments but small and large,
and the current exchange rates significantly affect the demand. I
apologize I came a bit late to this roundtable. I
was in traffic jam at the entry to this forum
and I did not see a single Russian vehicle at
(22:33):
the entrance. Oh we came here on ours. Oh I'm sorry,
I am not rich enough to afford this vehicle. Well, no,
I'm not talking about myself, but in general, yeah, still
haven't seen anyone. I would rather see a lot more
Moskovich and Lada Russian produced vehicles in this forum to
be used by participants, but today I've seen none. So
(22:54):
there is another problem that was talked a lot, the
Kadri deficit, and almost everybody who had a mic was
referring to this problem, how significant and sharp it is.
I did not even include that into the economic review
with Michael Lucky because I think you can understand that
situation is dire, and not even every other speaker, but
(23:20):
every speaker mentioned that country situation is trashy and they
did not see a way out. Nebuliana commenting that companies
are seeing crisis with workforce. Griff highlighting that the inadequacy
(23:41):
and high prices high costs of new labor are significant
issues on the Russian market and what is seriously being
missed is a qualified workforce for specific qualifications and also
the question of how to not only find them, but
(24:02):
how to offer them something competitive in terms of salaries.
So we're missing qualified managers, qualified engineers, qualified technicians. German Griff,
in one of his statements today outlined that CODRI and
labor resources are significant issues for our economy today and
(24:27):
we cannot change anything here without changing bigger economic motors.
And as the speaker also highlighting the deficit in countries today,
small business employees about forty percent of people in Russia
of those who actually work, and what we are seeing
(24:49):
is that we a significantly lack human resources on the
market and without migrants we probably cannot get by. There
is a new law in our Duma suggesting to organize
specific groups of employees from nearby countries and to try
(25:10):
to make it unnecessary for them to take the exam
in Russian language, which used to be mandatory. Here's example,
I brought some Vietnamese constructor construction workers to Sahaleen and
they failed to pass Russian tests. Who wins from that?
We already have to pay double for usual mason worker
(25:33):
on Sahaleen, and now we have to deport this labor
back because they didn't pass the Russian exam. So if
we don't find a way to fight, the situation will
not be able to conquer some elements of this inflation.
So what do you want? After Putin's war? Mass mobilization,
mass outflow of specialists from Russia to neighboring countries and
(25:57):
far beyond. Of course, their labor market is going to suffer.
I don't know where these military analysts are finding thirty
thousand contractors that they're talking about, supposedly on paper that
Russia gathers monthly. We talked about that in details in
one of the recent videos, that they're nowhere near that number.
That there is nobody to continue fighting. And one of
(26:19):
the sharp discussions on this forum is that all the
representatives of bureaucracy and business, they're basically demanding to stop
requesting migrants to learn Russian language because with this regulation,
with this rule, they just cannot bring anyone to work,
even on construction, even on more simple tasks. And there
(26:43):
is another review that was published by Central Bank Monitoring
of Companies as of June twenty twenty five. They highlight
that countery and human resources at the lowest supply this
year that has never been at this low before in
recent history. Russian Forbes is also writing about that that
(27:04):
candy issue is still the sharpest one for Russian companies
and it's not looking to disappear anytime soon. And another
consequence of Putin's war that the head of X five
Retail Group, continuing Albatchova, was saying that the fact is
(27:25):
that the numbers of labor capable workers in Russia are
falling and this is not surprising at the backdrop of
the losses that Putin is suffering with his army in Ukraine.
How many Russians are dying, how many Russians fled the
country related to this war and his policies, And the
(27:46):
head of X five Retail group is talking about the
consequences of this. Here is the interview. So what is
the situation with the employees in your industry? In retail. Oh,
we are seeing a deficit and it's growing. By twenty
eight we are prognosticating to not have up to half
(28:07):
a million people, to miss half a million people in retail.
You notice that we already suffering from the dwindling labor
market that were capable people. Our numbers are horrible in Russia.
And what we're telling here about in this stream is
that in Putain's corrupt, monopolized, oligarchic system, when Russia is
(28:30):
cut off from the civilized world, from technologies, from international corporation,
no import replacement can carry it out. And German Graff
is talking about the problems with components for Russian aviation
that very often they end up being times more expensive
than foreign analogs, and Russian jets turn out to be heavier,
(28:55):
and because of that they can fly on shorter distances
with smaller number of passengers. Over all, their performances puning
and I liked I forgot the name of this Minster
Minister of the Arctic and Far East. I think Minister
Chicken Coov, right, we quote him sometimes, and he was
(29:15):
presenting at the session of the Gas s Applies to
the East, and he acknowledged that I was visiting different
gas pipes and places where we mine all these materials
in Komi Republic and such, and I'm horrified by how
nothing works because we're not bumping gas to Europe anymore.
(29:39):
Here war speeches from Forum, German griff is saying that
the production of jets in Russia can cost up to
seven times more than the same equivalent that can be
manufactured by Western competitors. And what's another significant is that
our jets are too a half times heavier than the
(30:01):
Western jets. That's why it cannot fly as far. And
here's the Minister of Resources. Yeah, we're facing an issue
that the gas that were pumping to Europe before all
these facilities that were engaged. It really is saddening when
you walk in the mining areas along the pipes where
(30:25):
half a billion cuba meters were shipped every day every
twenty four hours along these pipes. Now they're standing empty,
and we're facing huge matters of how do we convert that,
how can we use it? And there are significant regions
where there's nothing else but these industries. I was impressed
(30:47):
by the number of one hundred and seventy five billion
cubic meters that used to be flown in the Utah
pipes and now it's almost nothing. Speaking of import replacement.
An interesting note that was pronounced by the head of
gasprom Oil, Duke Of. He is one of the putt
In oligarchs. He said that our country is very crafty.
(31:12):
We can make an exclusive restaurant, but we are always
going to fail to build a well functioning network of restaurants,
chain network restaurants. And this is an important story because
it outlines that we do have talent in the country,
but we are liking effective system that could organize people
and create working systems in different segments of economy. Putting
(31:35):
failed to create systemic aspect that all successes are driven
in by individuals and his economy is based on his
friends who are getting big slices of it. And here's
Alexander Duke of talking about that. Yeah, we can create manufacturing,
we can create new technologies if we want to, but
(31:58):
when we have to serialize it, that's where we fail.
Because we are a crafty country. We can open exclusive restaurants,
we can set up some exclusive project, but we will
usually fail to standardize to create a chain to serialized products.
And the main idea in this forum was that there
(32:20):
is no exit. There is no easy exit from this situation.
So a big elephant in the room is that you
need to stop the war, you need to restore your
relations with civilized world. You need to dismantle put in oligarchic, monopolistic,
non transparent system that is not reporting anything to society,
not responsible to a society. But this is not acceptable
(32:45):
for forums. But here a few things were still spilling
over and central bank was the usual culprit to blame
on this forum because of the high rates. We're not
going to support central bank and this decision. But it's
a significant symptom. That high rate is basically an index,
(33:08):
an indicator that Russian economy is in difficult place because
it was cut off from the world and all the
money that are being invested or going in the pockets,
they're not going into development. There is no international cooperation.
There is now access to the world financial market and
cheap money. The markets of China, India and other countries
(33:29):
of the global South remain closed. Everything is being stolen
by putting scorre oup monopolies. Under these conditions, manufacturing cannot develop.
Any influx of money into economy will end up just
increasing prices and those who are waiting the exchange rate
to go down as some panacea. On one hand, the
(33:54):
vice president of VTB Piano Office saying that one needs
a significantly long signal to bring the rate down to
change something. It's not enough to bring the rate down
from twenty to eighteen percent. But at the same time,
(34:14):
don't expect ten percent. Nobody is talking about that. And
in the current data end situation, when we have limited resources,
we cannot produce more resources. We cannot produce more supply.
Putain's economy is just not a producing economy. Even if
you increase or change the exchange rate or refinance rate,
(34:39):
it'll lead only to fluctuations in pricing. Because Russia failed
to learn how to serialize production, how to produce more,
how to make more goods in the country on its own.
So all that hope that central bank might eventually bring
the exchange rate the refinance rate down, nothing is going
to happen in the near future. This is just some
hope that they're trying to grasp on. But this is
(35:02):
an indicator. This is not a disease, so our Here's
another a snippet from an interview. Our rate went down, Yeah,
by one percent, So do you think that that can
affect the economy somewhat on the exchange rate of ruble? No, No.
In my view, this is two minor one percent from
(35:23):
twenty one to twenty percent. That's nothing for the economy.
Even that drop could have helped if there was a
significant signal that this is a new vector. But since
the signal was that future decisions are undefined and everything
can go either way and depends on inflation and other factors,
(35:48):
that doesn't inspire for businesses, for banks, for manufacturers that
they can project what to do just because of this
one percent. Another piece of this forum, we are seeing
the trend to the inflation slow down, but we need
more time to see to verify that this is indeed
(36:10):
strong vector. And we can say that the prices do
not grow high if economy isn't good. Potential is in
good place. Yet the prices last year we're growing very significantly,
and that indicates that those resources that allow us to
grow our economy they're significantly limited. And that's why in
(36:32):
this situation, even if you drop the refinance rate, it
will not change anything, but the prices probably and here's
one of the main problems we're coming to here, coming
to that Andre Mcaroff that impressed singing Sbchuk and she
had flashbacks from the nude party for Wisue was slapped
(36:55):
by a lot of media and society for participating. So
what Macaroff was saying is that investments are the keystone
of economy, that the private business needs to be comfortable
to bring the money to invest in the economy because
government never has enough money to do that. Successful countries
that achieved any growth of economy, they all figured a
way to invest more investors. Here's the chart Europe, United States,
(37:20):
EU countries of bricks. China brings without China and Brazil,
Canada and Russia is the last one in that list.
This is in the number of investment money. Russia is
at the bottom of the stable and in more than
three years of full scale aggression against Ukraine, Russia lost
(37:40):
three hundred billion money worth of foreign investments. These are
the money that fled from Russia. Even China diminished their
investments into Russia during this war because Russia is not attractive.
There are huge risks, no laws are correctly functioning, there
(38:01):
is no way to easy defend your rights in court.
Even for Chinese investors, it's difficult for them to fight
for their rights. They have to get special permissions from
the government to take money out of Russia after making
money in Russia, they have to put them on some
specific account wait for permission that government commission needs to
(38:22):
give them. So why would Chinese want to invest money
in Russia with all these strings attached? So investment money
is fleeing and you cannot change that with change of
bank rate. If the capitals and companies do not see
friendly atmosphere, they run. And this was the topic of
(38:44):
drimakaras speach on this forum. So about the next year,
how do we survive to the next breakfast at this
economic forum? Mister mccarth Okay, yeah, let me not say
what I think, because I do want to live to
(39:05):
the next breakfast. But one business is not talking about
investment climate as the main problem, and the lack of
institutes that's a big issue. Institutes give you a chance
to go to a court system. If something was violated,
you can go to court then and expect to have
(39:27):
just decision, regardless of whom you're arguing with. This is
the right of ownership defense that is provided by these
institutions that is not warranted by your relations to the government.
I'm not meaning any specific person in government, but as
a system, this is just respect to ownership, to the
(39:50):
right of ownership. We're lacking that. Recently we learned finally,
thank god, now it's clear that I always wanted to
have some clear on that. We figured that the terms
of crime or terms of problem, they start the countdown
(40:10):
not from the event happening, but from the time when
a district attorneys the prosecutor's office has learned about it,
and not just when they learned about it, but from
the time when they did not like it. So now
we know how it works, and that's why perhaps businesses
stopped talking about investment climate and as they said, you'll
(40:32):
bring up very serious economic questions here. But recently, questioning
economic mechanisms and economic issues very often ends up in
people looking for I don't want to say enemies of
the people, but enemies, as if there are some enemies
hiding somewhere that want to harm business, harm the economy,
(40:53):
harm the country. Mostly it is related to very new
excitedness of those who are looking for these answers, who
cannot offer anything but printing more money, and want to
ascribe all these problems to the presence of some imaginary
enemies and without reference to our too far away past.
(41:16):
I want to say that we have passed through all
these things before, and I hope we do remember how
it ended up last time. Excuse me, I need to
interrupt it here. German Graft comes up. What do I
need to stop? Oh? No, please continue? Why do you
have such an expression on your face as if they
(41:38):
already came for me and I'll be escorted out right now. Yeah,
So there is almost a confrontation happening that Graff couldn't
take it anymore and had to jump and intervene. That
there'll be a police coming to this session and arresting everybody.
But this is an interesting moment. This is the thing
we are talking with you about here, about the finality
(41:59):
of Putton's about them being depleted. Very often people accuse
us of being too pessimistic that put In will be
able to fight this war forever and he has enough resources.
Here official people of his system acknowledging it openly that
they're out of resources. And what's interesting, Andrey mccaroff is
during the same peril here that we usually draw in
(42:21):
our streams parallels with the end of Soviet Union. That
Soviet system was built with the assumption that they will
always have resources, that the resources will be forever, but
there was no private business to generate resources to create
added value. At the end, they just aid through all
(42:43):
the resources they had, and the socialist system of Russia crushed,
of Soviet Union crushed. Continuation of his speech, this is
called the main economic law of socialism, maximal satisfaction of
growing demands of labor force. And I want to upset
(43:04):
you and everybody in the room that the demands of
labor force will continue to be growing, will continue to grow,
and the government does not have money to satisfy continuously
growing demand. Socialism collapsed only because it could not fulfill
(43:26):
it's main economic law. And we here have not even
started writing our main economic laws. Thank you. You can
see how actual the parallels with Soviet Union are today,
and that is pushing me to start a new media cycle,
(43:50):
a new cycle of streams between the Putin's regime and
the end of Soviet regime. Uses are we'll talk about
that in other streams. We made a couple of last year,
how will Putinism be over with? And there are a
lot of similarities that can be drawn between that and
the crash of Soviet Empire. But explosive budgetary deficit that
(44:12):
was one of the significant factors that sunk the USSR.
Here Minister of Finance Anton Soilanov actually talked to that topic.
I think for the first time. He's usually rather diplomatic. Yes,
we will figure it out, don't worry, everything is under control.
(44:33):
Here he was very blunt. He said, the budget is stormy,
and everybody will have to be more modest in their
wishes and to measure their appetites. So Anton, with this factor,
by the end of this year, will go looking for
(44:54):
new ways to fund our demand. Somewhere in the budget.
Do you think the budget it will increase the taxation
of business to get more money? Well, you know, with
these conditions, indeed, everything is stormy, not only in economy
in general, but in our ecept or two. How can
we provide financial stability. We can try being more modest
(45:16):
in our aspirations in these conditions, that's for sure. So look,
this is a very pinnacle moment here where we are
right now here almost live. We can observe the sunset
of an empire, another Russian empire sunsetting about which their
representatives are not even hiding their thoughts. I like this forum.
(45:39):
The main summary of this forum is that there is
no exit. They do not have recipes to somehow move forward.
They're like fools, keep running around with an idea that
central Bank will be lowering the percent rate. But Nabiulina
and we showed that in a previous video that look
(46:02):
two years ago the rate was seven and a half percent,
much lower, and what your manufacturing of locomotives started better. No,
this is not the case. It's obvious, and they're just
a collection of intellectual dwarves. They do not have ideas
(46:22):
to move the country forward. And the clock is ticking.
The clock is ticking and speeding up. This is exactly
what was at the end of Soviet Union, and Dyma
Karoff addressed that as well. Why did the country collapse?
Because everybody thought that Soviet Union will have endless resources
(46:42):
to support this ineffective system, and resources started to run out.
Back then everybody started running like cockroaches and discussing the program,
program of reforms. They did not make a decision right
on time, and it ended up leading to the entry collapse.
There is no alternative to the market, and exactly that
(47:06):
is being voiced again now in Peter's Petersburg Economic Forum
and also the most corrupt elements, archaic elements of Putchin's system.
They're still resisting, They're still trying to pretend that everything
is fine, even though it's more and more difficult for
them to pull it through. And yet still they spill
(47:30):
a little bit about their model and their ideals that
they want to build on. This breakfast of was Burbank,
where Griff and Makaroff and the others had a pretty
sharp conversation about these There was one Putchin's bureaucrat, Killie
old Mitriev. He's a husband of Putchin's friend and you
(47:53):
might have heard about him for participating in some negotiations
with Trump. So he's part of the Putin's family. He
doesn't want to change anything. He's a horrible, disgusting dude,
and if you listen to his speech, he's also dumb.
He's talking about some stupidities and one of the things
(48:16):
that he mentioned the fact of acknowledging what is the
ideal of Putin's system. It would be so great if,
like in the Middle East, because we had monarchies. Monarchy
is the speed of making decisions. You don't need to
all the democratic procedures. You just agreed with the king
(48:36):
or prince and that's it. You shook hands and everything
is done. And that's the ideal model that Putin's gang
aspires to build in Russia. I would remind our viewers
that Middle East monarchies are some of the worst kingdoms.
(48:57):
Just look at the World rating of freedoms. People do
not have rights, people have no elections. As properly objected
on this forum by an absolutely loyal Putinist and FSB
functionary in the pharmaceutical industry, alexey ad Epic, who was
also making a statement in this forum, he said that
(49:20):
I want to argue a little here that Saudi Arabia
is okay, but it's a very low baseline for us
because just a few years ago that they allowed their
women to drive cars. Before that it was forbidden. So
even Putin's loyal representatives, they're saying that this is too much.
(49:41):
Saudi Arabia is not a good comparison for us, and
they all, as we saw in this forum, they wanted
more freedom, that Putin and his gang wanted to be
like Saudi Arabia with limited rules, and those who do
not agree with you can chop their heads off. But
even their close bureaucrats are already saying that no, we
(50:05):
actually do want more rights. We don't want it to
be like Saudi Arabia. Here's that poutin schoon. Monarchy is
a very functional system that allows to make decisions faster,
and it also can draw a lot of talented people
from other countries to work there. Well, no long, here's
an opponent saying that long leave our friends from Saudi Arabia.
(50:25):
But it's ill advised to compare us to Saudi Arabia,
where they just in twenty thirteen allowed people allowed women
to drive cars. So this actually looks like a continuous
progress there, and we're perhaps a little more spoiled. We
want to be compared not with Saudi Arabia, but with
(50:47):
some other countries. This all arguing is quite interesting to watch.
We had interesting discussion with Maximrisnik. He was a guest
of our channel, where we talked about why Putinists always
start looking for references in history and they try to
convert that in a perverted way that supports their ideas.
(51:10):
Same thing here, they want to be monarchs. They of
course have a lot of things in common with that
later Russian monarchy Russian Empire the end of nineteenth beginning
of twentieth century, where the whole idea was basically about
keeping monarchy for the sake of monarchy, so that the
(51:32):
upper level rulers could do whatever they want with the
country and not lose the power and not share it,
and that's what led to the crash and catastrophe. There
is another set of videos on my channel about that,
and they are behaving in the same vector they essentially
already expressing. That's what the media have acknowledged in Petersburg forum.
(51:56):
They want to rule Russia like Saudi Arabia, the country
that is named by the name of the family that
organized that, by the Alsoud's family. So I don't know
if they'll rename Russia into Puttunland. But what we can
(52:16):
see from this forum is that they are at a
standstill at the dead end of the economic road. And
as German Geff and his finishing remarks on this forum
is stating, all rivers are leading us in a wrong
direction that we wanted to if we will float down
(52:39):
these rivers that are floating here. It's sadly that all
the rivers here are floating in to a wrong point
where we all want to find ourselves. And yes, dear Ghira,
the soul leads to a very wrong place, not where
you want to. Because history cannot be turned and reversed.
You try to, you ended in a very significant storm
(53:03):
and a very bad dead end that you are acknowledging. Now.
I really loved this forum. I you know, I've warned
you a lot. We talked about these things in our
channel and other streams where I make statements and prognostications.
(53:25):
I was saying for a while that you'll soon hear
from Russian officials the acknowledgment of what we already know,
that Russian system does not work and sinks deeper and
deeper into the crisis of huge proportions. And now we
are seeing that live the sunset of Putin's empire. Of course,
(53:47):
the clock is still taking and they have a little
bit of time. Again. Everybody's waiting that the crash may
come tomorrow. No it won't come tomorrow, but before each
nineteen seventeen they had nineteen fifteen, nineteen sixteen, when from
pretty high pulpits all the projections were said, like pival
(54:09):
Melukov said, this is the stupidity of treason back in
Zarist Russia in nineteen sixteen, or what in nineteen eighty nine,
the Congress and People's Deputies were saying, including Dimitya Sakharov,
who are acknowledging the processes happening in the Soviet Union.
So the moment we start hearing these things in the
(54:30):
upper echelons of power, that are good indicators that the
Empire is going into a sunset. And we can see
in this economic form that they have no ideas how
to pull it. Everything they have, like and Drey mccariff said,
is to print more money to lower the bank rate
refinance rate, and that can somehow keep them afloat for
(54:54):
a little longer. But there is no way for that
to replace manufacturing. This is only the road to hyperinflation,
by an example of many other countries. There are other ideas.
Things don't work. The Empire is sunsetting and is German
Greev acknowledged all of these rivers are taking us in
a wrong direction. Good formulation, this was love, and we
(55:16):
are continuing to observe the end of that story. But
this Petersburg Economic Forum that happened in June was a
very good element and statement of the current state of affairs.
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