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Sinking Fortunes: Putin’s Russia Facing Economic, Demographic Collapse

As expected, Putin blames the U.S. and doubles-down on his statism.

by
Kim Zigfeld

Bio

October 8, 2013 - 12:00 am
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The economic fortunes of Vladimir Putin’s Russia have collapsed dramatically. Once hailed as a great oracle of finance, Putin instead has led his country to the precipice of a double-dip recession. Of course, the gushing about Putin’s financial leadership was entirely wrong from the start, ascribing Russia’s oil windfall to good management by Putin. Now, problems in Russia are so dire that the price of oil is no bulwark against collapse.

Writes financial advisor James Beadle:

Investment in productive capacity declined from 17 percent in March 2012 to minus 4 percent today. 2013 is only the second year of Putin’s six-year term, and the investment community is already entrenched in discussions about whether or not he will stand again.

Similar comments from advisor Christopher Weafer:

Economic growth over the first eight months of this year was only 1.5 percent, while the macro data report for August showed a fall of 3.9 percent in capital investment on a yearly basis. Retail sales growth, which averaged almost 6.5 percent in 2012, is now on course to average about 4 percent this year.  How did we move so quickly from the optimism of spring to this dread-filled fall?

Also sounding the alarm is Russian Prime Minister Dmitry Medvedev:

Output growth is supported almost exclusively by large investment projects financed by the government and state-owned companies. We are at a crossroads. Russia can continue going forward in slow motion, with economic growth close to zero, or it can take a serious step forward.

According to the Kremlin’s own newspaper, the true inflation rate over the past year was a breathtaking 22%. A family of three needs a minimum of 76,500 rubles per month to get by, up from 62,500 a year ago, whereas the actual average income for such a family is 66,000 rubles monthly.

As if to set a tombstone on Russia’s economic grave, last week the Wall Street Journal reported that Russia was about to lose its position as the world’s top producer of oil and gas to the United States.

Putin’s responded bizarrely to this news. He announced a crackdown on foreign investment in Russian tech firms, perhaps the only economic sector outside of fossil fuels that might hold some interest to foreign money. Then, he pressed forward with a campaign to massively increase military spending while cutting social services.

The social cuts come at a time of new reports of demographic disaster. As with the economy, it had been widely reported that Putin was able to staunch Russia’s plummeting life expectancy and birth rates, staving off a population collapse. But reports claim that Russian life expectancy suddenly stopped improving last year, and the Russian baby boom also appears to have been temporary.

The latest polls show Russians know they are being manipulated. Putin has taken a major hit over the collapse of his economic policies. When asked about Putin’s actions and personal qualities five years ago, over 70% approved on both criteria. Now, he has slightly less than a majority in both. His overall job performance approval figure has fallen by 25% in that time.

Does Putin imagine he can get away with so much failure? He does. He has two strategies for doing so.

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Top Rated Comments   
Yes and it's value doesn't come from free health care and other entitlements. It is valuable because of personal freedom, free market economics, property rights, equal opportunity, maintenance of basic law and order and limited government accountable to its people. All the things that are under attack by this administration.
42 weeks ago
42 weeks ago Link To Comment
You can dress them up but you can't take them out. And that goes for our fearless leader too. I still have a soft spot for Vladimir. He did a good job at eating BHO's lunch in Syria.
42 weeks ago
42 weeks ago Link To Comment
All Comments   (23)
All Comments   (23)
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my best friend's half-sister makes $72/hour on the internet. She has been laid off for 7 months but last month her pay was $17065 just working on the internet for a few hours. view it now........ WWW.Rush64.COM
42 weeks ago
42 weeks ago Link To Comment
Liberalism is to socialism is to communism, is all the same ideology, and Putin is no different than Obama. When the moot hits the fan, it is always somebody else's fault. Responsibliity is a word that is not in their dictionary, only the words "fault" and "blame" work for them.
42 weeks ago
42 weeks ago Link To Comment
This sentence, ".... He will seek to destabilize the Middle East and cause the price of oil to soar so he can profit while Americans suffer...." seems to contradict,".....As if to set a tombstone on Russia’s economic grave, last week the Wall Street Journal reported that Russia was about to lose its position as the world’s top producer of oil and gas to the United States."

Well now, maybe it'll be a case of timing, but who cares if the Middle East is further de-stabilized, if that's possible; when we Americans are to be the world's top producer of oil and gas? ....as we were some few decades ago.

Then it would seem to be in our advantage for us to further create even more de-stabilization in the Middle East.

Aside from the innate, inbred nastiness of trans-national Muslim-ism, if we had a sensible approach to exploiting our own known oil and gas reserves we could encourage all of the Middle East, every last bit of it, to go and get choked on all of their sand.

So again and again I keep saying, "Contain, Contain, Contain" Islam on the same scale as we did the Soviets and the Red Chinese.
42 weeks ago
42 weeks ago Link To Comment
So in the final analysis, he is Russia's Vladimir Obama Obamavich?
42 weeks ago
42 weeks ago Link To Comment
A few years ago I happened to see an article in National Geographic that showed pictures of life in a village not too far away from Moscow, and contrary to all of the propaganda about the old U.S.S.R. and its modernity, progress in science, medicine, and technology, the Moscow subway, their space program, etc., with pictures to match—here was this run-down, rickety, all wooden village, full of small, crooked little houses covered in toxic fly ash from the local plant, with its mostly old, gap-toothed, very wrinkled, haggard citizens dressed in layer after layer of ill-fitting, dark, nondescript clothes sitting on slapped together wooden benches outside their wood-heated houses that looked like it was a picture of the life of Russian peasants in the 19th century, and outside of a few major cities, this was supposedly typical throughout much of the old U.S.S. R.

Perhaps most of us have read somewhere about the rampant unemployment, alcoholism, divorce, abortions, and declining rather than increasing birth rates and life expectancies in Russia.

There are also the occasional stories of widespread environmental pollution due to out of control industrial production formerly run by Communist bureaucrats, who gave no thought of its effects on the environment.

Some of us, as well, have probably read about various “dead zones” in the U.S.S.R., the results of various Soviet nuclear experiments and accidents at “military cities,” nuclear experimentation stations, and storage sites that have contaminated nearby places where people had once lived, making them dangerous, uninhabitable places that, deliberately, are not listed on maps.

Finally, in doing some research on the problems of mail order brides coming here to the U.S., I ran across a multiplicity of such mail order bride/introduction/date/matrimony sites based in the old U.S.S.R., offering “introductions” to hundreds, at any one time cumulatively perhaps thousands of potential “brides”—many often very young and gorgeous women, but sometimes also mature “brides” with advanced professional degrees—female engineers, doctors, academics, lawyers, dentists--who were apparently desperately trying to get out of several of the countries of the former U.S.S.R.

So, given all these things, do I believe the “death spiral” talk about Russia? You betcha.
42 weeks ago
42 weeks ago Link To Comment
Yep. And it's still that way. The big cities may look deceptively modern but go outside of the center and you find early 20th century lifestyles. I was in Bashkortostan this summer and it is as you describe. This reminds me of a joke:

How many Orthodox priests does it take to change a lightbulb?

Answer: No one knows. They all stand around contemplating, "Change? We can't change."
42 weeks ago
42 weeks ago Link To Comment
Is Putin still doing doughnuts in Barry's front yard?
42 weeks ago
42 weeks ago Link To Comment
All EU countries are clients of Russia's natural resourses. If Russia goes, then so will Germany.
42 weeks ago
42 weeks ago Link To Comment
New York and Miami (as well as London, Switzerland and the Cote d'Azur) are the beneficiaries of Putin's folly. Russia is being drained of capital by Putin's kleptocrats. The fanciest real estate in all these places is being snapped up by Russians. One Russian billionaire parked his yacht (the world's largest) in New York harbor while his girlfriend was expecting, so their child could enjoy the most valuable privilege on earth: US citizenship.
42 weeks ago
42 weeks ago Link To Comment
Yes and it's value doesn't come from free health care and other entitlements. It is valuable because of personal freedom, free market economics, property rights, equal opportunity, maintenance of basic law and order and limited government accountable to its people. All the things that are under attack by this administration.
42 weeks ago
42 weeks ago Link To Comment
And the former USA is in a better place? Don't make me laugh.
42 weeks ago
42 weeks ago Link To Comment
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