When waiting for a new world economic crisis? Responsible analyst Stepan Demura
90 years ago, October 29, 1929, in the United States occurred on “black Tuesday”: on the new York stock exchange completely collapsed the stock market. This event was the beginning of the great depression, which officially ended only ten years later. Whether to wait for the world to the new crisis of this scale? The good news is that the crisis will likely not happen next year, as predicted by some analysts. Bad in the fact that the crisis is inevitable anyway and wait for it remains not for long. What are the reasons for a new crisis when to wait and how it will affect Russia, reflects in an interview Znak.com financial analyst and trader Stepan Demura.
“The 2008 crisis in comparison with what awaits us — promotional video of the film”
— A number of economists believe that next year will happen the global financial crisis, comparable in scale with what was in 2008. In particular, recently, former Bank of England Governor Mervyn king predicted a new “financial Armageddon”. How seriously you should treat these forecasts?
— Also recently, the UN Secretary General urged countries to deal with the impending crisis. In fact, sociodynamics, the science of the behavior of the crowd that steers the markets suggests that when all know, it never happens. In 2007, the unit talked about the fact that there is a coming crisis. And still less could it matter to describe. Now, wherever you spit, experts say the crisis of the world economy. Therefore, I believe that in the next year the crisis will not happen. At least that’s what it was in 2008. But it will take a year and a half, all over again believe in “the sacred power” of Central banks, and that’s when you hit a crisis.
Then why experts vying to frighten us crisis, it is necessary to someone?
I don’t see these news of some conspiracy. Most likely, these people are just idiots. In reality always the opposite is happening in relation to what they have to say. There is Occam’s razor: if something can be explain with the least additional hypotheses, then these explanations are correct. No there is no conspiracy. Just have the people functionaries without proper education, they behave like the crowd that economists, bankers. As a rule, they always know the latest about the crisis. But we are told that it is a great mighty people who rule the world. This is not so, it is enough to look at the dynamics of yield on a 30 – or 90-day U.S. T-bills and look at the rate of the fed. I have the impression that few people watch such graphics. But it is clear that the same great fed just follows the market, not ahead of it.
Wang Ying / Xinhua
A good example on the topic of crowd behavior, that’s what. If you look at the number of bulls (traders who are playing on the increase) at the top of markets, it will be over 90%. Of course, the market turns around, most are wrong again. On bottoms of markets “bears” (people who play on the slide), they are also 90%. That is, the market, in the opinion of the absolute majority, should continue to fall, in fact it is the bottom and it unfolds. So don’t wait for a crisis right now, because talk about him a lot. When things calm down, and then it will start the crisis.
In addition, I would note two points regarding the future of the crisis. First. The 2008 crisis in comparison with what awaits us is a commercial for a feature film. Second. In all this time since the last crisis, the global establishment has not made any structural changes to prevent another crisis. The only thing that happened is terrible, the pumping duty of China. Our patriots love to watch the US national debt. Now these fools want to recommend to look at the national debt of China, which is two times higher than the US national debt in GDP is 30-40% lower than in the US. And China has really inflated GDP. Debt load, which took over China, really pulled the entire world economy. That is, the volume of lending, volume of debt, the volume of corporate debt has increased tremendously. But no structural changes in the economy was not done. Therefore, since the imbalances in the world economy and financial system at the moment, much more than in 2007, when it all began, respectively, and the fall will be much deeper. The farther took the pendulum from the centre of equilibrium, the farther in the other direction it passes the center of balance.
— What kind is this crisis?
— It will be another credit crisis. The credit cycle has its own growth phase and its phase of decline. Just now, we will adjust this credit cycle since 1913 when the fed was formed and began pumping systems unsecured money. The whole story we have to adjust, while the accumulated debt is, in principle, cannot be maintained. Accordingly, there will be defaults of banks, companies and States.
Just look at the banking system of Europe, from her nothing left. DeutscheBank was all over, CommerceBank floats belly up. View on the Swiss and French banks, they too are virtually all bankrupt and ready to emerge. I’m not talking about the Italian and Spanish banking system. If we talk about the bankrupt countries, a bright example — Greece. And this despite the fact that, by and large, markets are still at their historical highs and yet not slowing down.
Moreover, Europe and Japan are now all zero and negative yields and negative interest rates does not help the economy and is slowing down. As it shows the same example of Japan or the Scandinavian countries, in which negative rates have been in place for a long time. Yes, there was an outburst within one to two quarters after the introduction of negative rates, but then the contraction of the economy continued. And other tools of Central banks have not.
In General, anything that led to the crisis of 2007-2008 has not been changed. But then the crisis was on one dimension smaller than now. Accordingly, the process of destroying debt would be much smaller.
Anna Sergeeva / ZUMAPRESS.com
— What role in the new crisis will play a trade war between the US and China?
— There is no war. Just the US President, in my opinion, the best US President in the last hundred years, decided to restore the status quo. China has developed as a potentially huge consumer market. There were pumped huge investments. There postponed production because there are no laws for the protection of the environment, social security and similar not. Until recently, the workforce there was cheap enough. Accordingly, in China everything was done to quickly develop the Chinese consumer, he began to consume Western goods. Was done any favors to the Chinese specifics, things like compulsory licensing (stealing technology), nedopusk foreign companies into the banking business. Today, Chinese intellectual property theft is a huge problem. But the Chinese do not care, they through this live. Trump and other economists estimate the damage to the United States from such a policy of China in the $500-600 billion a year. Then the question was raised about the customs barriers that China has established for foreign producers. The Chinese had clearly said that either you play by the rules, how to play everything or we’ll just soak. Well, here they are soaked.
Again, China is the waste product of cows. The cow in this case is the United States. Therefore, this dried cow dung can not fight with where she went. Bessie just brought the hoof, and all the Chinese had to go back down. China’s economy is not that in a state of collapse, but, for example, falling of sales of cars is reduced by 16% from month to month. When you have the economy 70 trillion just slows down, because the credit cycle has turned, it can be called anything — trade wars, international tensions and other “reasons”.
“Our oil and gas sector and the banking system generally do not Shine in a crisis”
— How the new economic crisis will affect Russia? What are the sectors he can hit?
— We have two sectors. The first is oil, gas and other minerals. The second Bank. The banking sector is now collapsing because of the credit bubble, especially consumer, I’m not talking about corporate. The banking system is not recovered by the crisis of 2007-2008. Yes and since its inception we have developed the banking system, and the seven bankers. Our banks — it’s just a vacuum cleaner that is sucking money out of investors and allowed on their projects. Governor, I want to ask: where trillion rubles, “lost” in deliberate bankruptcy of the banks? Bankers, whom you supposedly sanitized, took a trillion rubles, but where is he? Why isn’t confiscated, why is no one sitting? Recently Gutseriev agreed. Relatively speaking, had 400 billion, and agreed to 200. Did not understand, but what about the other 200 billion? That Gutseriev has no more assets? Is.
So we do not have any banking system. Even the Agency SnP last year said that the skill level of the Central Bank of Russia raises serious questions. They also recognize that the proportion of bad assets on the balance sheet of the banking system is 25-26%. I am inclined to estimate that figure is much higher, somewhere in the 35-40%. But no matter, this is such a hole that cannot be covered, if you just compare the volume of the banking system, the size of assets and the GDP of Russia.
Anton Belitsky / Global Look Press
As for the oil and gas sector, we have missed the shale revolution, we were told that all this is nonsense and American layout. With regard to geo-strategy, the “Nord stream-2” we are lost. What’s with the “South stream” is also unclear. With Ukraine quarreled. And the other route of gas transportation to Europe, and it is more than 90 thousand billion cubic meters, only through Ukraine, no. And the contract for gas transportation expires in December 2019. United States and Qatar and will gladly take a share of Gazprom on the European market.
As it turned out, shale gas was cheap. Built facilities to receive LNG in Europe. Yes, as long as the volumes are not large, not more than 20-25 billion cubic meters a year. It’s probably a tenth of what Gazprom supplies. But in the next year or two this will grow significantly.
Therefore, our oil and gas sector and the banking system generally do not Shine in the event of a crisis. That is, they are waiting for the sad future, especially taking into account the debt burden and the level of management of “Rosneft” and “Gazprom”. I’m not talking about everything else that is “hanging” on oil and gas and banking sectors. Here we have all without a chance. And if the crisis of 2007-2008, we soon passed, then a new crisis will last for many years. The same Great depression was formally from 1929 to 1939. A new crisis with the accumulated imbalances in the economy, I believe, can last a decade easy. This does not mean that all ten years will be the bottom. There will be periods of minor improvements and drop back to the bottom. But in General, it will stagnate.
— Ministry of economic development has developed a conservative forecast for five years just in case of the global financial crisis. If you are familiar with it, as it is estimated?
— I don’t waste my time reading various nonsense. Like I can write myself one day, free of charge. Take over the last ten years, the predictions of the Ministry of Finance, the Central Bank, other agencies and analyze how they came true. It appears that they came true exactly the opposite in the period from 6 to 12 months. So for me it’s all an empty ring.
Recently Finance Minister Anton Siluanov said that Russia has taken measures to minimize damage in the event of a fall in oil prices. Russia “is quite satisfied with the current price of oil”? How should trust his words?
The question is, what will be the duration of the fall in oil prices. As we know, almost all the funds that were supposed to protect us and to protect in case of a fall in oil prices, was quickly spent. As they say, pilfered the common Fund. Now money from the government, there is less than it was. We had the national welfare Fund, then the Fund for future generations, then they were renamed and merged, to date from them almost nothing left. Even at the expense of a hell of taxes and other fleecing of the business population failed to reach the level of 2008. There is even what is, by 40-45% already somewhere invested. The President needs to justify his existence, so he makes such statements. But they do not correspond to the real numbers.
Anton СилуановKremlin.ru
— How justified in terms of the coming crisis is the practice of placing the “extra” of Russian money abroad, in those countries, whence should come the crisis?
If we open up Federal law on the Central Bank. The ruble? The ruble is secured by the assets of the Central Bank. What we have in assets? Foreign currency. He could not just keep. We must try at least some percentage of money. Therefore, investments in certain government securities, or highly rated securities, depend on the proportions of the currencies in the assets of the Central Bank. Before it was the dollar so invested in us treasuries. Then the part was transferred in euros. But this year, Nabiullina has performed well and at the most inopportune moments was buying the yuan and the Euro. The result for the year the Central Bank lost on such operations in the region of $ 9 billion.
Of course, the same Finance Ministry said: why do you need to market borrowing to take a big bet and then invest their funds at a lower rate. Do only idiots. Roughly speaking, you come to the same Sberbank, put at 5% ruble Deposit, say, a thousand rubles, and then the savings Bank take out a loan at 12%. But there are other reasons. With such a surplus, also take money on credit, in my opinion, unwise. But we have a Central Bank dramatically overstates the value of money. Only now they say they will lower the rate. And the cost of credit in our country makes any business competitive. Even compared to Chinese goods, where the cost of logistics is higher. But we have the lowest inflation. But Elvira does not understand that inflation is low not because of high interest rates, and due to the fact that falling real income. The economy began to fall with the end of 2012. Accordingly, the purchasing power is reduced, those who had done two to three end to the resale of goods, now doing one. The economy begins to collapse.
So, economy is the opposite compared to normal. A specific example. We live in kudrimoti, so it can be called lasciviousness created by Kudrin. When a crisis occurs, the banks and corporations need the money. What do the Central banks of Western countries? They lower rates, they give money. What makes our Central Bank? He abruptly raises the stakes and dramatically takes money out of the economy. Isn’t that idiocy?
“The government still will not leave you alone and will sharply increase levies, fees, tariffs, taxes”
In the United States out of the crisis, stimulating consumer demand. It is known that one of the principles of the Russian Ministry of Finance is a shortage of money, therefore people today, on the contrary, are looking for ways to save on goods of daily consumption. How do you assess this long-term policy of the Ministry of Finance?
— As I said, we have not the economy, and codenomicon. Accordingly, we will not be lowering and raising rates. Instead of filling the economy with cheap money, we will have an withdrawal of funds from the economy. Why they would do so, and not as in economically developed countries, it is a question to experts in narcology and psychiatrists, not a financial analyst.
— Will there be visible world crisis on the bulk of Russians, because the standard of living already reduced from 2014 and all used?
To fall there is much more. If you had a salary of 30 thousand will be 15, and then all left without a paycheck. However, the government still will not leave you alone and will sharply increase levies, fees, tariffs, taxes and the like. You see, because of the sanctions have “friends” dropped a significant income abroad. They need something to fill. So they make up for the expense of the citizens of the Russian Federation. The money goes to national projects, which involved just the guys who had income and assets. That’s what they will continue to go on with it, when there is a new crisis. Why? Because people remain silent. Probably, he likes it.
Anton Belitsky / Global Look Press
— If you had the chance to correct the activities of the Ministry of Finance, what would you’ve changed?
— The Ministry of Finance is one of the symptoms of the disease and decay of the system of power and administration in Russia. Here, as in the joke, not the pipe needs to be changed, and the entire system. Moreover, this system as was formed in 1917, so she still lives with different variations. Or, scientifically, it is called the Asiatic mode of production.
— Do you have any idea how this crisis might affect the political situation in the country?
All.
The coincidence of the crisis and the elections of the state Duma in 2021 and President in 2024 will not affect politics?
Elections in this country is long gone. Understand Putin is a household name. Behind him is a mafia regime. Such systems as ours, can exist forever. They die only because of external influence, either because of Palace coups. Last I do not exclude. Coups happen when there is a shortage of food. We are seeing today. Hence all the alleged fight against corruption, planting, redistribution of property and markets of influence. But you and that does not help.
And then, let’s remember who’s the most implacable fighter against the regime? Bulk! You think if Navalny comes to power, something will change? No, it is the same people who are now in power. He just promoted a puppet, like a number of other opposition leaders. An excellent example is the Ukrainian Maidan. Came Poroshenko and company. Has anything changed? No. These men represented the same constituency. The real revolution in Ukraine did not happen, because the main question of every revolution is the question of ownership of the means of production.
As for external influence, while the patient is in remission, it will not be touched. Although, given the weakness of our army and our economy, we’ll make it through the month. Washington is well aware of, but do not want to get involved, because it makes no sense.
— A number of economists and entrepreneurs believe that the impetus for the development of the Russian economy will be given when she gets off the “oil needle”. Maybe the chance just came?
— At us the system is tuned for oil, gas and predatory banking system. Anything else we have. And how to get off the “oil needle” in the current circumstances, I don’t even know. What is a drug worth taking to seriously talk about such things? Russia is a raw materials colony, which should serve the interests of the metropolis, and to the point. There’s so much we need to change in order to achieve a qualitatively different state, but there are no political forces that would be interesting. And if anyone could begin to change the situation, he often waved his hand and simply went abroad.
— What advice would you give to ordinary Russians on the threshold of a new economic crisis? If someone has extra money, what to do with them, so they do not lose in value in the coming years?
— Tip one: sell everything that moves, and invest in dollars and gold and also to invest in health, education and knowledge. Read more the Outlook for the dollar, the ruble, gold and oil I give here. If interested, view.
We thank the company “city Class” for mediation to arrange an interview.
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