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Monday, October 24, 2016

Poverty is not a Vice, but a “credit” of the government

Rosstat has summed up financial and economic results of the first half. Please they can’t. In July, real income declined by 7%. Note that in the past year, the well-being of Russians failed on all 10%. All, of course, blame the inflation. Although this year its pace slowed down by almost half, but she continues to eat into our wages. And they almost do not increase. You need to understand that the price increase is calculated in a geometric, not an arithmetic progression. Without going into mathematical details, in other words, over the last two years we were poorer by nearly a quarter, and not, as some might think, 17%. But the latter figure is appalling.

photo: Gennady Cherkasov

The last time our government always tries to appease its citizens. Supposedly a year ago the Russian economy, plunging to the bottom of the crisis, after all, reached the bottom and started to successfully emerge. At least, it constantly says the Minister of economic development Alexei Ulyukayev.

In some ways he is right. In 2015, the GDP decline amounted to 3.7%. And for the first six months — only 0.9%. This gives at least a little, but confidence in the future.

But the economic decline continues, and it is in geometric progression (that is, the percentage of collapse of GDP are much higher if compared to the 2014). So, we are getting poorer at a higher speed than stated by Rosstat.

Why falling GDP? The answer lies on the surface — oil economy has died, and nothing else to offer the world we can’t. At least for now.

So from the bottom we pushed off. GDP continues to sink, and the ability to push it to the surface there. This is corroborated by the fact that Rosstat reported that in July compared with June, our industry has fallen by almost 1%.

This means that any chance to raise wages there. As well as pensions. By the way, this does not work for 21 consecutive months.

But then the economy will not work in normal mode and the GDP will continue to fall. If you do not raise salaries, they work better and will not — work when in your purse every day more and more holes, no one will. It is already clear that middle-class people beginning to save on the last — food, clothing, medications and the like. That is, the GDP growth can be forgotten, and for a long time — no demand, no proposals.

According to a report by the HSE, if the Russian GDP in 2016 will be only 1.3% higher than in 2008, in 2018, it will be possible to say that the country has lost a decade.

This means the worst. Over the last 10 years is not something that we have not moved forward, and dramatically rolled back. These results suggest that our economy is uncompetitive.

How to get out of this impasse and to achieve a sustainable wage increase?

Obvious solutions do not exist. The more that Western sanctions still hamper our economic growth.

Of course, you can argue themselves hoarse. Apparently, the proposal of the Central Bank on reducing inflation, and then the key rate to 4% per annum, apparently, is the last “lifeline”, which will really allow you to float our economy on the surface.

If you’re not lucky, you will have to use the offer of the assistant to the President Sergey Glazyev and unleash the printing press at full capacity. But this is not the way. Again it will spin up inflation, and we again will return to normal — the price increase is, and the higher wages there.

Financial crisis. Chronicle of events

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