Thread by @Prune602

‼️ The Russian Debt Thread: Part 5

(You might want to bookmark this)

If you’re seeing this and don’t know where Part 1….

It’s right here!

I keep going back to talking about the Russian Economy being an ecosphere. And that it should NOT bet equated to the health of the Russian Government’s budget.

I also want to point out that…Russia is having problems, but they are also trying to SOLVE those problems

None of these situations are static. They are always changing. Sanctions aren’t stopping, the weather isn’t stopping, etc.

Of top of that, things are going on elsewhere in the world that may impact what options/resources that Russian may or not be able to access.

What we’re doing is looking at the PROBLEMS Russia has to solve, and perhaps if there are any solutions Russia *might* choose to try to solve those problems.

But ultimately, that’s the decision Russia has yet to make.

And they don’t have to choose just one way to deal with it.

I will remind you a few things to think about when contemplating data and what option Russia may (or may not) have available moving forward.

Most of them go back to the simple points that I know I keep repeating.

- You can’t just compare Russia to other countries. They do not operate the same way

- Russia is currently operating outside of its own “normal”

You need to examine everything. That will be very important moving forward.

One very obvious thing will be when looking at comparisons from 2024 to previous years and saying, “well actually they’re up a little bit”

Did you consider the MASSIVE jumps in real inflation?

This is an example of the increase in prices people are seeing.

Sorry, it’s time for a tangent. That chart looks bad, but the reality is even worse. And this actually helps explain another point I’m going to make.

The Russian government has the power to do things that other governments just don’t.

And as time goes on, they keep heading backwards to old Soviet Methods that did not work in the past.

I covered one example of how this works in this giant agriculture thread. (And there are a lot of worrying things in it)

Here’s the deal: there is a “Consumer Basket” of goods that the government uses to calculate “official” inflation. I think you’ll find that the list is much shorter than other countries and VERY basic.

The government just has to keep THOSE prices low.

For farmers they’re getting his multiple ways. The government sets an export quota. That means if the farmers have given a limit of how much they can export to possibly take advantage of higher market prices.

Beyond that the government takes the vast amount of the revenue.

That means, depending on how low the government sets this quota, the farmers themselves will see little to no benefit from the international market prices, because the government will take it.

🇷🇺: Increased Revenue! 🤑

On the flip side, the domestic market is flooded with product driving the prices down. The Russian Government had been increasing the amount they took from the farmers to fund their increasing war expenses while also trying to keep “official” inflation low

But someone does NOT fair well in this situation

👨‍🌾: BLYATT!

The small farmers are really struggling. The labor shortages are increasing the farmers expenses. They’re making some short term decisions to stay afloat that could be very bad…

Take a moment to consider just how bad THIS could be 👇

You know, assuming the farmers do go bankrupt before then.

This is a problem the Russian Government *could* step in and solve before it becomes crisis….but are they? I’m watching it, and I haven’t seen any sign that they are yet. In fact things are getting worse.

Subsidies are getting cut in an effort to reduce the deficit.

So that means, preferential loans may not be available to farmers. And they may not have additional savings because last year when they had record crops IN RUSSIA, the government pocketed much of those funds.

And this year has been a very bad year for agriculture.

Putin tells everyone that they’ll solve labor shortage problems through mechanization. But, one of the best places to reduce labor cost is in agriculture.

The farmers can’t buy new equipment. How are you going to talk about robotics in industry when you can’t solve THIS problem?

🇷🇺: We have ideas!

🤦‍♀️

And the equipment producers are worried. (And this article from back when the Key Rate was *just* 16%)

And things have gotten worse since this assessment.

How do you think Russia’s plan is going to go to tax people even MORE in 2025, when this is happening?

People often focus on the Russian Government’s Oil and Gas Revenues, but maybe people should be watch NON-Oil & Gas Revenues. It’s the yellow line on the chart below. And in effort to meet their ever increasing expenses, they’re squeezing everyone. There are consequences!

Ok…so all that bad stuff is happening, but at least the Russian Government was able to keep the food prices low right?

😂 No….it gets worse

To be continued in Part VI

(Is anyone taking bets on how long this goes?)

Here’s Part 6