{"id":182991,"date":"2015-04-18T18:53:00","date_gmt":"2015-04-18T23:53:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/04\/18\/those-sanctions-are-working-out-just-ducky\/"},"modified":"2015-04-18T18:53:00","modified_gmt":"2015-04-18T23:53:00","slug":"those-sanctions-are-working-out-just-ducky","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/04\/18\/those-sanctions-are-working-out-just-ducky\/","title":{"rendered":"Those Sanctions are Working out Just Ducky"},"content":{"rendered":"

It looks like the Russians are managing lower oil prices and US and EU sanctions reasonably well<\/a>:<\/p>\n

It’s been fascinating to watch the Russian economy adjust to sharply lower oil prices. With a little help from the central bank, the country’s recession might not be as bad as previously thought.<\/span>

<\/span>After an initial period in which the ruble plummeted and inflation surged — with food prices up 15.4 percent from a year earlier in December — the Russian central bank’s response is turning things around. A sharp increase in short-term interest rates, currently at 14 percent, has stabilized the ruble and might even be getting consumer prices under control.<\/span>

<\/span>The episode has taken a toll on Russian living standards. In the first quarter of 2015, inflation-adjusted incomes were down 1.4 percent from a year earlier. Retail sales dropped 6.7 percent — and individual stores, such as the M Video electronics chain, reported even steeper declines. Imports were particularly hard hit, thanks to the impaired buying power of the ruble: In January and February, they were down 37.9 percent from a year earlier. The government’s finances haven’t fared well, either. Standard & Poor’s predicted Friday that Russia’s fiscal deficit will rise to 4.4 percent this year, higher than the 3.7 percent the government predicts.<\/span>

<\/span>Still, there are signs that a cheaper ruble might be helping some Russian producers compete with imports. True, industrial production was down 14.6 percent in the first quarter from a year earlier, with the garment industry — which depends heavily on imported inputs — taking the steepest plunge. Yet Russian food production was up 3.5 percent, suggesting that import substitution might not be just President Vladimir Putin’s pipe dream. <\/span><\/p><\/blockquote>\n

Those sanctions are working so well. <\/p>\n

It’s gotten to the point that the Russian Central Bank governor has suggested that they will be lowering interest rates to keep the Ruble from appreciating to much.<\/p>\n

One important thing to note here is that Russia has some advantages over other sanctions targets, specifically a captive market for natural gas in Europe, and a central bank that has dealt with these problems very<\/b> competently.<\/p>\n

I would argue that much of the reason that the bank has handled this so well is because of their relative lack<\/b> of independence from the Russian government.<\/p>\n

Because they have not been allowed to indulge in free market navel-gazing they have responded aggressively to Russia’s crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"

It looks like the Russians are managing lower oil prices and US and EU sanctions reasonably well: It’s been fascinating to watch the Russian economy adjust to sharply lower oil prices. With a little help from the central bank, the country’s recession might not be as bad as previously thought.After an initial period in which …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1080,973,964,985,1033],"tags":[],"class_list":["post-182991","post","type-post","status-publish","format-standard","hentry","category-currency","category-economy","category-foreign-relations","category-regulation","category-russia"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/182991"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=182991"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/182991\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=182991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=182991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=182991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}