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Apr 4, 2021
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Are we forbidden to invest in the economy?

One of the key topics this week is the forecast for the second quarter of 2021 published by Saxo Bank. According to analysts, the rise in commodity prices has become more synchronous in all three sectors – energy, metallurgy and agriculture. At the same time, something strange will happen to world currencies – the growth of world profitability and commodities will become a “negative signal” for them. Observer Yuri Pronko discussed the forecast of Danish experts, current trends in the economy and other issues in the studio of the First Russian with economist Mikhail Khazin.

Yuriy Pronko: – Let’s start with the Saxo forecast Bank. On the one hand, we learned from it that in three sectors of the global economy, so to speak, “risk appetite” has increased. Indeed, prices in energy, metallurgy and agriculture have been growing for several months, as have the net profits of companies operating in these areas. But on the other hand, here is the forecast for the ratio of the ruble to world currencies:

By mid-2021, the US currency will rise to the Russian one to 80 rubles per dollar, as well as the European one – the ruble will drop to 96 rubles per euro. Increased volatility in financial markets and the threat of new sanctions from the United States may also exert pressure on the ruble.

And at the same time, oil is expected to be traded at $ 68 per barrel. What do you say about this?

Mikhail Khazin: – Have you traced all the words that were spoken there? My roof has gone. It is absolutely impossible to understand the logic when a lot of words are pronounced, in different, sometimes opposite, directions. And I don’t read Bloomberg forecasts, let alone speculators from Saxo Bank. I read the forecasts of the Khazin Foundation, especially since I write them myself.

Any adequate analyst should show the basic idea. And it sounds like this: inflation has begun in the world. And this is a global trend: the economic recession in the world economy continues, inflationary trends are growing, and because of this, the real disposable income of households is falling. What does this lead to? Here’s an example: the drop in income for American households was 6%. And this is a record for the last 60+ years. And if real disposable incomes fall, then demand also falls, especially if the supply is excessive.

Today, the main problem is that the liberal economy is on the sidelines, the incentive mechanism no longer works. The money, these crazy millions, which are printed by the Fed, the ECB and others, does not go to the real sector. In the best case, they will scroll there, in the worst case, they immediately fall into the speculative market. That is, the mechanism of the circulation of money in nature has ceased to work. And if this cycle does not exist, then a frenzied rise in inflation begins.

– But what does this mean for us?

– And for us it means the following. First, oil prices will indeed rise. But since our key problem is the lack of investment, there is no need to talk about economic growth.

We cannot engage in import substitution, because for this we need domestic investment loans. The Central Bank can move the key rate up or down, but if banks do not issue loans, it is impossible to build new production facilities. It will also not work to increase production at the already existing facilities – there is nothing to buy raw materials and components for.

And it turns out that prices for imported goods rise, people do not have the money to buy them, and those goods that could be created domestically are not produced, because producers do not receive money from banks. Banks, in turn, explain it this way: The Central Bank allowed us to issue loans only on collateral. And if you do not have new pledges, and the old ones have already been pledged, then you will not receive money.

– So it turns out, it doesn’t matter how much the oil will cost and whether the OPEC + agreement will be prolonged?

As for the devaluation of the ruble, I am almost sure that certain comrades will do everything possible to make the ruble weaker further, so that our purchasing power decreases and prices rise.

“The super profits from oil are immediately sent to the West. But even if they remain in Russia, the Minister of Economy, Mr. Anton Siluanov, is doing everything to prevent this money from entering the economy, as we know from the results of previous years.

– It turns out that we have artificially created such a situation: if the situation is favorable, then this does not affect our life in any way, it does not lead to an increase in the well-being of households. And the same thing happens in crisis situations. And if on the scale of the state everything is, in general, comfortable, then on the scale of the household – that very “oops”.

– Quite right. Because we are prohibited from investing in the development of our economy. One hope is that President Vladimir Putin will say on April 22 that he is organizing an all-Russian emergency commission to combat sabotage and counter-revolution, where counter-revolution refers to opponents of investing in the Russian economy.

– And if he doesn’t say what it will mean?

– And if he doesn’t, then it will be difficult for him in the near future, because half of the country’s population has already reached the poverty level.

Our catastrophe, against the background of their Western normal life, is the dream of the West. And in a catastrophe situation, they overthrow Vladimir Putin, put Alexei Kudrin or Navalny as president of Russia, and it doesn’t even matter who, and continue to implement the scenario that they laid down for us in the early 90s – the disintegration of Russia into small states.

But they also have a crisis in the West, which is coming in all directions. Therefore, all this analytics from Bloomberg or Saxo Bank has become a propaganda tool. And they cannot tell the truth.

– Yes, this is the situation, this is the reality in which we live. Let’s talk about other challenges facing our country.

– Foreign investors are leaving the Russian government debt market. Since the beginning of March, non-residents have dumped Russian government bonds for 1 billion 300 million US dollars, according to ING.

Exit from ruble assets is accompanied by stop-losses in the money market. Investors are forced to close positions due to losses. By March 29, investments of non-residents in OFZ fell to approximately 3 trillion 40 billion rubles, their market share renewed for at least five years. And nominal investments returned to the level of June last year.

The decline in foreign presence in the Russian debt market may also be a positive trend, analysts say. First, it will soften the blow in the event of new sanctions. And secondly, space is saved to increase investment.

– We have repeatedly in this studio talked with Mikhail Khazin about the ill-conceived, to put it mildly, policy of the Ministry of Finance and the Central Bank of Russia, including in terms of raising public debt, carry-trade operations, and so on. Could this flight of foreign investors mean that foreigners are given the opportunity to leave the Russian market and only then the promised sanctions will be enforced? Or is it such a conspiracy theory?

– I do not know what is happening in the speculative markets. Let’s put it bluntly: investments are investments in fixed assets. All foreign investment in this sense is speculation. And speculative capital usually behaves this way, comes and goes.

To count on this money is, of course, a kindergarten. So you need to be quite indifferent to this. We need to restore internal sources of investment, which we do not have. And we have not had foreign investments for a long time. From this point of view, what difference does it make whether they got out of these bonds or not. We can even win a little on this.

– But Mr. Siluanov continues the placement. He issued Eurobonds last year with a yield of 1.85, maturing in 2032. Why is he doing this?

– Well, how – in the same place, friends.

– For whom and friends, but not for me. Therefore, I cannot help but notice what is happening. Here is one of the theses that are usually voiced by the government and the Central Bank: they say, in this way, by letting in non-residents, risks from new sanctions are hedged. Is it really so?

– I don’t know at all, but what do they want? What do we want? Are we buying or selling? What is our goal? We have no purpose. The government has no program, no one has it.

By the way, I remembered a very funny story. 12-15 years ago, the liberals tried to write the so-called “Program 2020”. How much noise was there while they were writing it, discussing it at some of their “liberal” parties. But then all this turned out to be zilch. Because what they wrote could not be shown to anyone. And so, as they say, by the end of May, the “Program 2030” should appear. What do you hear about her?

– They are writing their opus, they are still writing.

– I know some of these people personally from the 90s, I participated in their gatherings when it all just started. Therefore, I can say: all their activity is purely PR. What they write cannot be accepted, not even shown.

– Maybe they really don’t know how to write, but they know how to master money for sure – hundreds of billions of rubles.

Mikhail Khazin, Yuri Pronko



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