So how is Russia doing these days? Tyler Cowen points us to a paper from the Yale School of Management that says the Russian economy is in terrible shape:
Our team of experts, using private Russian language and unconventional data sources including high frequency consumer data, cross-channel checks, releases from Russia’s international trade partners, and data mining of complex shipping data, have released one of the first comprehensive economic analyses measuring Russian current economic activity five months into the invasion, and assessing Russia’s economic outlook.
From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy.
Among many, many other things, the authors say that consumer spending is down about 20%; auto sales have collapsed; industrial production has been cut back across the board thanks to sanctions that prevent the import of crucial components; inflation is running at nearly 20%; and Russian oil is selling at a huge discount. Naturally you'd like to see all this in charts. Here you go:
How bad would it have to get before it would have any impact on the ruling oligarchy? I'm guessing we are a long way from that bad.
Also too, the ruble completely recovered.
Stopped by to post something similar, but you beat me to it.
What, in precise terms, does "catastrophically crippling" mean, and what does that translate into in terms of Russia's ability to continue this war (or the Putin regime's ability to hold onto power).
Three months? Thirty months. I sure hope it's the former.
Those are the only questions that matter. Are the sanctions harming Russia's ability to continue the war? Nothing in these charts about their economy proves that they are. Putin is unlikely to be forced out of power no matter how bad he economy becomes. Other countries have faced much worse without changing their leadership: North Korea and Iran are examples.
I agree that Putin is unlikely to be forced out, North Korea and Iran were/are not good examples. Russia was a part of the global economy to a degree that neither Iran or North Korea has ever been. Also Russia's situation changed over the course of months not years. The abruptness will affect the citizens view of what is happening.
Conversely although Russia is often called a gas company with an army, that is an oversimplification. Due to Russia's vast size across many different geological and meteorological zones it theoretically has the ability to be more self-sufficient than a country like the DPRK -- but putting those systems in place will take time. Although Putin will not be ousted his ability to get things done may be affected.
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Well based on the best estimates I've seen, Russia has enough artillery shells (~10 million) stocked up until March of 2023 at the pace used in June of 2022 if they make 0 more. This already takes into account that most of the stockpiled shells are rotten.
So their ability to wage war will degrade a lot but they will be able to fight a dumb war for a long time. However assuming we can keep the Ukrainian economy alive Ukraine's qualitative advantage will be vast and as we've seen they are able to use it.
Shells may be plentiful, but you need tubes and tanks to fire them. The loss rate on launchers is going up as the US sends more advanced counterbattery systems to Ukraine
Artillery barrels are good for about 1500 rounds before they wear out. Ukrainian drones have managed to photograph Russian artillery pieces that have suffered catastrophic barrel failure. One estimate suggested the Russians are firing 50,000 rounds a day; that would imply a need for 33 new cannon barrels every day, and it appears that even if the Russians have that many new barrels they aren't getting them up to the front in a timely fashion.
A strong currency only has value if other countries will trade you stuff you need or want for it. In this case, the strength of the ruble is a symptom of something very bad for the Russian economy: their imports have collapsed. Russian imports are down by about 50% over a year ago. Russia can sell lots of oil, albeit at about $35 a barrel less than other countries can sell similar oil for. It's demanding that it get paid in rubles. So, those rubles accumulate in Russian banks, and they cannot be used to buy anything. Effectively, this means that there is an artificial scarceness of rubles in the open market. But Russia has no way to take advantage of it.
The important consideration is not whether the oligarchs feel a serious pinch, though that would certainly be nice. It lies in those cratering import numbers. While Russia produces a lot of commodities, it doesn't produce much in the way o manufactured goods. It doesn't produce a lot of high grade steel. It doesn't produce a lot of machine tools.
As a consequence, parts of the economy are collapsing. Russian airlines rely upon imports for spare parts, so their airfleets are falling apart. More and more planes are grounded, and they are cannibalized for parts. And what is flying is becoming more rickety. Don't be surprised if there are aviation accidents start happeing.
Their auto industry is all but shut down. Remember all of the problems that U.S. automakers have had because they aren't getting enough microchips? Russia's imports of chips, which they also don't make, have fallen close to zero. Consequently, thy aren't making cars.
The most relevant shortages are in military goods. It's estimated that Russia has fired off 60-70% of it prewar inventory of precision ground attack missiles. Without chips, they can't make any more of them. They have been reduced to using air defense missiles to strike ground targets, which is hideously inefficient. Their military aircraft are probably in better shape than civilian airliners, but that's a low bar.
Even on the civilian side, they are facing severe pressures. The Russians have taken very high casualties in this war. The Ukrainians have, too, but they have mobilized to a full war footing, something Putin has refused to do. He's trying to generate new battalion tactical groups by ordering governors in oblasts that are not primarily ethnically Russian to raise them. Consequently, anti-Russian feeling is rising among non-Russians, like Buryats and Dagestanis, and their are signs of resistance. Consumer shortages aren't going to help that.
This is a nice corrective to Jasper Massachusetts's more even-handed but still this is bad news for Democrats variation on the recovering Republiqan Rick Jones style. Still, might be a little rosy... especially if the GQP retakes Congress on the aftereffects of American Biden Inflation that is even worse than Russia's, then acts to remove the US from the sanctions regime & pulls back US support to Ukraine.
They can't unt 2024. Lend lease automated a lot of that stuff so until DeSantis takes over from Biden, Ukraine will be fine. Though Kaja Kallas admitted the Europeans are free riders and can't support Ukraine without us.
Oh, goody! Another great move for Ronny D.
Wonder if he'll dispatch the pardoned Eric Robert Rudolph to Russia to assist the Putinite Army with explosives training.
Good analysis. I think that even maintaining and replacing old-tech weapons systems like rocket and tube artillery, and armored vehicles will get increasingly difficult - the machine tools needed to make them and their replacement parts, themselves need replacements for worn and damaged parts, and those are likely hard to obtain.
How bad would it have to get before it would have any impact on the ruling oligarchy?
Masque of the Red Death?
The ruble hasn’t recovered, because it is no longer freely convertible.
Do Work At your Home And Make Money From Home …
Open This Link …>𝐫𝐢𝐜𝐡𝐬𝐚𝐥𝐚𝐫𝐲.𝐜𝐨𝐦.
As I see it, Russia and Trump are strangely linked. Russia has about 3 more months before their economy comes crashing down. Trump has maybe 3 more months before he is indicted in several jurisdictions. Let them crash.
As I see it, Trump is Putin's wrecking ball. Putin was/is quite aware of the effect Trump has on internal American polarization, and hopes that it leads to the breakup of the United States, or at least the neutralization of American influence. He was therefore naturally disappointed that his efforts were not enough to keep Trump from losing the election. Perhaps that is why he invaded Ukraine.
Trump himself is probably not consciously aware that he is this tool. He is quite eager to destroy American unity as revenge for losing the election. Putin does not care one whit that Trump does this only because his massive ego will not let it go, he is Putin's wrecking ball in any case. Putin could not hope to find a better one.
I like the visual of Trump as Putin's wrecking ball - a curled up Trump hanging from a chain swinging toward the Capitol.
Yes, it would make a good political cartoon image. How do we get this to a prominent political cartoonist?
Google "Trump wrecking ball Miley cyrus".
Then pour bleach in your eyes.
Both the post & all of the comments give me hope for the Ukrainians, and for all the people suffering for lack of Ukraine's agricultural exports.
Also, the use of Ukraine's colors is appreciated. 🌻
Hooray! And here’s hoping that traitor basketball player comes home and is arrested for treason. What a useless human being. The evil Russians and their enablers need to go.
You can just say queer on this blog.
Kevin Drum is an antikancelltarian champion of unlimited free speech, so he won't mind. & if he did, Bari Weiss & Conor Friedersdorf would burn a cross on his lawn.
Also: speaking of kancellation, is Kevin Drum going to open fire on the Loony Left for forcing Procter & Gamble to remove the ethnically cooptive & offensive Choco Taco from the free market?
More to the point, though, was this gustatory kancellation a two prong effort by restive non-white replacement citizens in the far left & neliberals in the Biden-Harris regime to boost Michelle Obama's ongoing fitness fascism Let's Move initiative? Did "Dr." Jill Biden include the clunky reference to breakfast tacos in her San Antonio speech to stoke taco conversation, assured in the fact that doing so would eventually redound to Choco Tacos, & leading to their inevitable unfoodening?
Shh. He's busy writing up a 1000-word post about GDP, NBER definition of recession, the Fed raising rates, and the futility of it all.
Nothing to say about her being lesbian or whatever. It’s about her being a Russian whore.
It's about you being a vicious thug, Here's a suggetion: you volunteer to take her place. A worthless troll would be fair exchange, plus we'd get the extra bonus of not having to listen to the ravings of a a misogynist asshole.
👍👍👍👍👍
It’s about this despicable person entertaining Russians who murder children.
Yes, I admit it, I play the balalaika.
Putin may be rolling the dice and hoping for lower than normal temperatures in Europe this winter. He really just needs to hold on until the first cold snap.
I think "General Winter" is only effective when Russia is trying (and failing) to repel and invasion.
General Winter is a terrifying force against any enemy that is not ready for it. I think the Ukrainians are ready for it. It's worth noting that back in 1940-41, General Winter didn't help the Russians against the Finns, who were every bit as prepared for cold weather fighting as the Russians, and were apparently quite a bot better at it.
Actually, a "harsh Russian winter" is the last thing the Russian military needs in Ukraine. It would strongly favor the Ukrainians on their home territory if the invading army were also struggling to stay warm and fed in sub-zero temperatures in bombed out cities with no electricity or fuel.
Russia spewing oil where ever they can sorta makes wa!l street elitists wrong.........
I assume the numbers are not adjusted for inflation! (Not that it'd paint a better picture or anything)
I think "General Winter" is only effective when Russia is trying (and failing) to repel and invasion.
If there's one thing I wouldn't bet against, it's the willingness of Russian citizens to endure incredible deprivations to prosecute a war. Now the thing is, they were once willing to sacrifice to defend their homeland in war against the Nazis. Stalin didn't need to sell that as an existential threat. The question is, how long can Putin's propaganda machine keep the average Russian convinced in this day and age that the war in Ukraine is an existential threat similar to Nazi Germany that requires a similar sacrifice of treasure and blood? It seems to be working for now, but we'll see.
They already know from Russian State Media that Vladimir Zelenskyy is as much a National-Socialist genocidaire as George Soros is.
& never mind that Soros's rival Viktor Orban just came out in favor of racial purification.
One of the reasons for the fall of the Kerensky government in WWI was its decision to continue to prosecute the war, which was unpopular with both civilians and the troops. The Bolsheviks negotiated an unfavorable cessation of hostilities, and were bailed out when the Western powers defeated the Triple Alliance.
If I recall correctly, the western companies that pulled out of Russia due to the war committed to keep paying their employees, at least for awhile.
The situation is bad in Russia--but people still are for the most part going about their business in major cities. It may end up like Cuba during the cold war, being propped up by China once Russia's reserves are used up.
Ethnic tensions could cause problems as mentioned above....
Not just China. Don't forget India.
Modi is Hindi for Orban.
If you're looking for a point in time where the Russian economy gets so bad that it forces Putin to end his war, I don't see that as a driving factor, on account of nationalistic support for his war that is resistant to a bad economy. This is not the US; Russians and the media are not free.
Agreed, and see also jte21 above-- outside of a few big cities, people in Russia have very little experience as modern consumers, haven't relied on consumer goods for very long, and have an unbroken history and experience for many centuries of living through material deprivation and horror far beyond the imagination of most of us in North America.
I don't like saying this because it's so close to just labeling them barbarians, but that's what the evidence is telling me. The only part of Russia's historic pattern than offers a way out of this war is resistance to the state coming from urban and industrial organizers. Putin's doing his best to make sure they won't have the tools to do anything.
This war may be his best method of keeping imperial control over the provinces and central control of the economy. If it's a smaller economy, what does that matter as long as it's his to direct? Megalomania just means the ego is big-- the field it has power over doesn't have to be that big, or even economic. Just think how impressive this new Russian empire looks on a map.
The other way is awakening the sleeping giant in Ulaan Baator.
A Genghis is with whomever I'm steppe'n... got the muthafuckin' weapon, it's kept in...
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The prospect of sitting outdoors through another winter while being shelled without hope of victory or purpose they can believe in may be too much even for Russian soldiers.
Inevitably many of them will start thinking surrender is a better option.
The link Kevin provides takes you to a 118 page document (pdf)
There is a crisper, 48 page slide deck (e.g. Powerpoint-style) available here:
https://yale.app.box.com/s/7f6agg5ezscj234kahx35lil04udqgeo
Both papers have the *complete* yellow arrow on the CPI chart (which is mysteriously absent on the chart in Kevin's post).
Thank you for reporting this. It won’t be long before Russian oil production is severely crippled on a long-term basis. Russia simply does not have the technological resources to keep production going, and a large number of its wells are not only aging but only marginally productive. They will be shut down.
As for gas exports, Russia does not have additional pipeline capacity to sell to China or India and also lacks facilities for export of liquefied natural gas.
We are seeing peak Russian power. In a year, they will be heading toward Venezuela’s fate.
The Russians will be just fine even if their economy collapses. They've been through this how many times?
Winston Churchill visited Moscow during World War II. While being driven across Red Square in a heavy snowstorm, he noticed a long line of people waiting. He asked his interpreter about it. He was told, "It's the ice cream ration." His reply, "Those poor Nazis."
Yes, but during that, and on most previous occasions, Russia was being invaded. Now, Putin has to claim this is a "special military operation". When a Russian feels the economic bite today, it will not be as easy to use patriotic feelings to dull the pain. It will be easier to finally see that Putin is emulating Hitler..
This time it will be THEIR army who will face the problem of resupply during a harsh winter in a foreign land.
Red Aryans don't support the war. It's why Putin won't mobilize Leningrad.....err Petersburg, the most richest part of Russia. The economic monster the Aryans created on the back of southern Asiatic people. The point, those "southern" Russian is the one pushing for this war.
The head editor at RT thinks the world will change its attitude towards Russia once the famines start to take hold everywhere. He may be right, and that may explain why Russia's economic woes may matter very little in the end -- Russians will back their government, and their government will sink as low as it needs to.
Story here: https://www.newsweek.com/famine-force-west-lift-sanctions-putin-ukraine-war-russian-state-tv-host-1717544
Actually, it was Margarita Simonyan, who later admitted that ‘the sanctions will never be lifted’: https://www.express.co.uk/news/world/1645225/Putin-news-Margarita-Simonyan-sanctions-invasion-Ukraine-Rossiya-1-video-vn
Our intelligence agencies have leaked propaganda to promote this war from the start. How convenient that Yale has "Our team of experts, using private Russian language and unconventional data sources including high frequency consumer data, cross-channel checks, releases from Russia’s international trade partners, and data mining of complex shipping data,"
Everything we read is put out by someone, people wanting to prolong this war put out unsupported "data" like this. Some contrary propaganda.
https://www.cnbc.com/2022/07/22/russia-slashes-key-interest-rate-by-150-basis-points-in-shock-move.html
https://www.nakedcapitalism.com/2022/07/some-quick-thoughts-about-russias-resilience-and-americas-malaise.html
? The CNBC article is hardly contrary - it reports inflation is over 15% (that’s a Bad Thing). Cutting interest rates is what central banks do when an economy is slowing down (another Bad Thing). Those two Bad Things aren’t supposed to co-occur.
Yves Smith speculates without evidence that Russia has large inventories of goods due to not implementing JIT, and can therefore hold out longer. One ought to factor in the long history of falsified production numbers, diversion of goods out of the legitimate market, and other corrupt practices …
The conventional wisdom in the West before 24 February was that Russia would defeat and occupy Ukraine within a few weeks. Why would the West promote war, with that outlook?