Vlad crying, losing hope.
Unless you've been living under a rock for the past calendar year, you've likely heard/read about Russia and its vainglorious dictator's erratic campaign to, literally, fuck his own (country's) face.
Presumably feeling neglected for attention, Vlad — in a series of inexplicable fits and starts — decided to take a ride on the post-WWII global order's third rail: Annexing another country's territory using force.
Per history, bloodshed indeed followed and the West (the E.U. and the U.S. leading the charge) has done precisely what anyone with an IQ exceeding room temperature predicted: Squeezed Vlad and his country's "economy," chiefly through direct economic sanctions, paired with quietly amassing a coalition (of parties who don't typically play nice) to undercut the deeply defective "foundation" of Russia's economy: OIL PRICES.
But if you've been keeping up with current events, chances are that you've heard time and time again that Vlad remains unconcerned with the pesky West.
More news sources than I could possibly hyperlink to have gone even further, reporting that Vlad very well may be in the midst preparing to further quench his new-found thirst for territory that belongs to other countries.
For months and months now, Vlad has blustered away, contending that nothing can or will negatively impact the Russian economy — not sanctions, not his currency's worthlessness, and certainly not the price of oil.
See, e.g., NYT (Oct. 2, 2014): "President Vladimir V. Putin did his best to paint a rosy picture of the Russian economy in a speech to business leaders on Thursday, saying the country remains 'open to the world' and has a plan for growth in spite of American and European sanctions."
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Yet over the past three months, global financial and political trends and data have (quietly) revealed that Vlad's blustering is simple drivel, utterly divorced from reality.
Here's precisely why Vlad is presently crying, losing hope:
According to the Financial Times (Oct. 15, 2014): "Oil and gas account for half of Russia’s government revenues” (emphasis added).
Common sense would suggest that a dramatic decrease in the price of oil would hurt the Russian economy, right?
Well, good thing for Vlad that was just one day, right?!
Negative, ghostrider; worse news: Brent Crude has fallen nearly 30% over merely the past three months:
While the cratering price of oil certainly isn't good news for Russia, Vlad continues to maintain the sky's not falling.
Presumably citing the definition of the term "profit" (revenue > costs), Vlad argues that the declining price of oil is NBD as long as Russia can sell a barrel of oil for more than it costs to manufacture that barrel of oil.
Yeah . . . about that whole revenue must > cost issue: Recent Deutsche Bank research reveals that Russia's break-even price for a barrel of crude is $115 (Oct. 15, 2014) — very nearly double the current price.
And then there's this: OPEC announced less than a week ago that they have no intention of cutting production (Nov. 27, 2014), which, obviously, further depressed the price of oil.
Meanwhile, the Russian Ruble remains in total free fall, down over 35% against the USD over the past year:
"Rabble rabble, Western propaganda, rabble rabble," says Vlad. "Russia's economy is projected to grow by 1.5% in 2015. Russia: recession-proof!" he proclaims.
Don't look now, Vlad: Reality may be catching up.
From the NYT today, "Russia Forecasts a Recession in 2015, Signaling a Toll From Sanctions and Oil Prices":
[Russia's] Ministry of Economic Development, which publishes the government’s economic outlook, on Tuesday revised its forecast for 2015 to show a contraction of 0.8 percent, compared with a previous projection of 1.2 percent growth. . . .
In another worrying sign, Russians have been bulking up on consumer items as the ruble depreciates, converting savings into durable goods lest their savings become worthless. Appliance stores in Moscow have had runs on refrigerators, washing machines and televisions. It is a pattern seen before previous ruble crashes, indicating evaporating faith in the currency.
“I expect inflation to go to double digits early next year,” said Vladimir Tikhomirov, chief economist at BCS Financial Group.
“The only reason people haven’t started changing their savings into currency in larger amounts is because it happened so fast,” he added. “It caught them off guard.” . . . .
Mr. Putin did not address the projected economic decline publicly on Tuesday.
Hum. That sounds . . . problematic.
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TRIGGER WARNING (Cynicism): It's almost as if the sensationalist, click-bait-addicted media is manufacturing a fake boogeyman from whole cloth to attract eyeballs, sell dead trees, and quietly collect the associated advertising revenue.
So I'm asking this sincerely: Has the West really collectively forgotten in less than a single generation that the U.S.S.R.—with Russia as its heart and soul—collapsed thanks (in large part) to stacking one failed economy policy atop another failed economy policy?
"B-b-b-b-but! Crimea!” the sensationalist media exclaims.
About that: Lest we forget the sorry state of the Russian military.
The Admiral Kuznetsov, Russia’s only aircraft carrier, was launched in 1985 and joined the fleet in 1991. Since then the 55,000-ton, fossil-fuel-powered flattop has managed just four frontline deployments—all of them to the Mediterranean, and all of them just a few months in duration.
By contrast, American flattops typically deploy for at least six months every two years. The nuclear-powered USS Enterprise, commissioned in 1962, completed 25 deployments before leaving service in 2012.
One of Admiral Kuznetsov’s major problems is her powerplant. The vessel is powered by steam turbines and turbo-pressurized boilers that Defense Industry Daily generously described as “defective.” Anticipating breakdowns, large ocean-going tugs accompany Admiral Kuznetsov whenever she deploys. . . . .
English Russia summed up the Russian aircraft carrier’s fundamental limitations succinctly. “Actual aircrafts visit this ship pretty rarely.”
. . . .
India’s experience has been even worse. In 2004 New Delhi inked a $1.5-billion deal for the 1982-vintage Russian flattop Admiral Gorshkov. In Russian service, the 45,000-ton vessel had carried a few helicopters and small Yakovlev jump jets; the Indians paid to have the flight deck expanded and a bow ramp fitted to accommodate up to 16 MiG-29 fighters.
Renamed Vikramaditya, the flattop was due to enter service in 2008. But the poorly-managed Russian shipyard was overwhelmed by the scale of the refit. The cost doubled and trials were bumped back to September 2012. And when the crew pushed the conventionally-powered ship to her theoretical top speed of 32 knots, her boilers overheated.
“India didn’t want to use asbestos as heat protection for the boilers,” Defense Industry Daily explained. “Instead, the boilers’ designer had to use firebrick ceramics. Which, as we see, didn’t work so well. Especially on a ship that Russia put up for sale in 1994, after a boiler room explosion.” Our emphasis. . . .
[I]n late 2013, . . . Vikramaditya was expected to enter active service in India in the spring of 2014. “Active service” being a relative term. If Russia’s own experience with its crappy carriers is any indication, the Indian ship will spend most of her time in port being repaired between brief forays into near waters.
You just can't make this shit up.
So. I have a simple request (though I know it won't be heeded):
Can we all please stop pretending that Russia is anything but a festering third-tier toilet; a deft demonstration of the rentier state thesis; and a certifiably failed state with a pitiful military, led by a megalomaniac caricature? Thanks.
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