Thread by @Prune602

‼️ The Russian Debt Thread: Part 3

(You might want to bookmark this)

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

It’s right here…

https://twitter.com/prune602/status/1845617033288757662

I was doing so well when suddenly my thread got deleted. Now i have to remember my train of thought!

*sigh* back to the NWF.

Sorry if this next bit is a bit scatter brained.

The Russian Ministry of Finance uses the National Welfare fund for a lot of things, including INCOME.

This is an example from August 2024. You can see a list of some of the “illiquid” assets listed. One of items listed are share in Russian Railways

In July the Russian Government told Russian Railways to pay out dividends.

https://twitter.com/prune602/status/1811918563705249989

Down here you can see how the Ministry of Finance took those revenues from the NWF and then used them for the Federal Budget.

Thus, the NWF hasn’t really had any opportunity to grow off its own investments. Everything gets spent! It’s not going to last forever.

But people keep acting like it’s still going to be there.

Remember, a lot of there reasons for this, is because Russia can’t get anyone else to finance it!

https://twitter.com/prune602/status/1810907065839182030

And honestly, after the way Russia has treated businesses, do you think they’re going to come back and invest in these projects if the Russia somehow managed to get the sanctions lifted?

I guess fools are born everyday but hope they aren’t the majority.

So that’s the NWF fund which is like Russia’s savings and investments. They can choose to use part of it to fund the deficit.

But the costs keep increasing.

Everyone read the thread I told you to read in Part 1 right? The one that explained the phases the Russian Economy went through since the 2022 invasion.

If not…go back and read it

If you have read it, you’ll know that the government has been desperate to find income. And like I’ve said before, they’re squeezing everyone as much as they can to try to reduce the deficit

I covered some of this here. Some businesses are not doing well.

https://twitter.com/prune602/status/1843460379122569598

Russia made some choices in how to deal with some problems (that were actually a result of their own actions). Those choices also have consequences.

Sometimes they were in a tough situation, and there were no good options. Other times they made the worst possible choice

Russia has continued to burn bridges. In this newest decision, straight from Putin himself, they’ve decided to take at least 95% of the value of assets of businesses that want to leave Russia.

Why would you ever bring new assets IN to Russia in this scenario?

https://twitter.com/prune602/status/1844474050548285796

Again, even if the war ended and Russia somehow managed to AVOID falling apart, who would invest money there knowing that the current government was perfectly fine taking all your stuff to fund the government.

In addition, one of ways they tried to fix their problems was to make it hard for Russians to take their money out of the banks and out of the country.

In this scenario…why would they ever put it IN to the bank in the first place? It makes finding capital very tricky!

https://twitter.com/prune602/status/1747735439992086608

In fact, Russians are very aware of the high costs of inflation and the rising costs are everywhere (even if not reflected in “official’ inflation. In this scenario it makes more sense to spend your money than it does save it. And that’s what they’re doing.

Here is an example: The Russian government announces that they’re going to hike the price of the recycling fee on cars significantly on October 1.

🇷🇺: MORE REVENUE!!!

Everyone races out to buy cars before the price skyrockets.

Russia puts out a headline like: Cars sales in Russia are skyrocketing! The economy is doing great!

Meanwhile the Russian Central Bank goes: STOP LOANING PEOPLE MONEY!!! JUST STOP!!!!

Russian Banks:

This then leads to more key rate increases. Which restarts the cycle of spending. And the government keeps reverting back to the old Soviet methods did not work out well in the past. 😂

And there are Russians who remember that too!

People will often miss obvious signs that Russia doesn’t operate like other economies, and thus you shouldn’t try to compare it to other economies!!!

When you start trying to justify things with all the loopholes… “but actually in Russia” THAT’S WHY NORMAL RULES DON’T APPLY

One example of this is the mortgage rates. Imagine having mortgage rate of 22% (or higher) and considering that the key rate is likely increasing on 25 October 2024…this is probably a limited time offer.

Now what are a lot of people going to say to counter this?

https://twitter.com/prune602/status/1838661924977885419

“BUT PRUNE…that mortgage rate isn’t the one people really pay…preferential mortgages!”

AH-HA!!!

But here’s the kicker. The government needs to make budget cuts. If they going to keep the deficit down. Some of these preferential lending programs are already getting cuts.

The high price of lending is already causing problems, as well as the reductions in available subsidies (remember, subsidies to rate the interest rate from 10% down to 4% are much different that take in the rate from 22% down to 4%…it doesn’t stretch as far)

There’s more problems…a LOT more problems…believe me, it’s going to get much worse

To be continued in Part IV

Here is part 4

https://twitter.com/prune602/status/1845669924812779832