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economy

Daily Economy Thread

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Woolfsmck   Paws Up 695
Woolfsmck

u can make cuts to military and allocate it somehwere else like infrastructure which also helps the economy and creates jobs

and the cuts to military dont have to be sudden. it can be gradual cuts over a period of a few years

If the US slashed military spending in half they would still have the largest military by far

:coffee:

largest in terms of spending budget. Technology development and the types of weapons produced by the U.S. far exceeds any other.

Numerically, north Korea has more men than the U.S... China as serveral times the number of soldiers than the entire NATO alliance.

Edited by Woolfsmck
like a cat in a sil, I watch life, moving&still, proceed across my face, I leave no trace.My words give a clue,look inside to see whats true

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Sebastien   Paws Up 16
Sebastien

Really scary about the Canadian banking risks. Do you think this situation could make them hold off on raising interest rates; is there a connection between the two?

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Economy   Paws Up 6,250
Economy

Really scary about the Canadian banking risks. Do you think this situation could make them hold off on raising interest rates; is there a connection between the two?

for sure. Canadas Central Bank already said they could delay rate hikes

Real Estate and Oil is what gave Canada strength while the rest of the developed world struggled

But both may be hitting peaks as oil is depressed in prices and the housing market is overheating big time

Of course Canadian Banks are well financed and have very high cash reserves

It would have to be a bad housing crash and many defaults from oil companies for banks to fail

Also the weaker Canadian Dollar and improving USA should help non-energy exports especially in Central Canada (Ontario and Quebec) which are high in manufacturing

That should help stabalize the economy even if housing and energy sector go into decline... Hopefully :MANiCURE:

jesse_batista

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Computer   Paws Up 9,973
Computer

17% :shocked: I can't even imagine living in a world like that. The inflation must be out of control.

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People don't understand how risky bonds can be. I dont understand the draw of them. Maybe a little for diversification since they move out of sync with equities but many act as if an all-bond portfolio is safer than an all-equity portfolio and I would argue that it's not, it's just different.

Edited by Computer
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Economy   Paws Up 6,250
Economy

17% :shocked: I can't even imagine living in a world like that. The inflation must be out of control.

---

People don't understand how risky bonds can be. I dont understand the draw of them. Maybe a little for diversification since they move out of sync with equities but many act as if an all-bond portfolio is safer than an all-equity portfolio and I would argue that it's not, it's just different.

not all bonds are risky...

 

bonds from stable Countries on average are yielding like 2% cause they are considered safe. Bonds from Well established Corporations that are considered safe will yield like 3% to 4%

 

but any unstable Country or high risk company, people are compensated for their rist taking with returns of 7% to 10% and in some cases even higher

 

if u invest in a high bond yield fund that spreads them out in a bounch of junk bonds (high risk bonds) even if a few default over-all u get strong gains

 

Of all the bond funds my bank offers, the high yield bond fund is the one with the most long term growth.

 

Of course, if interest rates ever rise sharply, or if theres a financial crisis, high yield bonds are very risky. the default rate for those types of bodns when things go sour is very high :manicure:

-------------------------

 

On a side note, those Russian Bonds at market value must have dropped a lot in price. that means if ppl want their principal back garanteed they gotta hold it till maturity... but by then inflation would of eaten away its value so they still arent getting their money back anyway

 

If i was Russian id put all my savings into foreign assets in order to protect my wealth from the inflation :shrug:

Edited by Economy
jesse_batista

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Economy   Paws Up 6,250
Economy

How long do you think the ruble will keep freefalling?

i dunno. despite the low oil prices and sanctions and possible recessions, the fall is already over-done. it doesnt justiofy being as low as its fallen

 

so i think a lot of it is panic driven not from fundamental reasons. A lot of investors fear Russia and are pulling out investments... and Russians themselves are probably selling their rubles and buying foreign currencies or assets further fueling the drop in currency. its a vicious cycle

 

its bound to end eventually but when its hard to say

 

the ruble should be falling in theior present bad condition, but certainly not as much as it has :shrug:

jesse_batista

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Woolfsmck   Paws Up 695
Woolfsmck

i dunno. despite the low oil prices and sanctions and possible recessions, the fall is already over-done. it doesnt justiofy being as low as its fallen

 

so i think a lot of it is panic driven not from fundamental reasons. A lot of investors fear Russia and are pulling out investments... and Russians themselves are probably selling their rubles and buying foreign currencies or assets further fueling the drop in currency. its a vicious cycle

 

its bound to end eventually but when its hard to say

 

the ruble should be falling in theior present bad condition, but certainly not as much as it has :shrug:

The Russian economy gets a large percentage of its growth from energy sales to Eastern Europe...the drop in oil demand and the recession in Eastern Europe, combined with US sanctions over the Ukrain crisis will cause them to contract for a while.

like a cat in a sil, I watch life, moving&still, proceed across my face, I leave no trace.My words give a clue,look inside to see whats true

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Economy   Paws Up 6,250
Economy

The Russian economy gets a large percentage of its growth from energy sales to Eastern Europe...the drop in oil demand and the recession in Eastern Europe, combined with US sanctions over the Ukrain crisis will cause them to contract for a while.

yeah but were not talking about deep contractions

 

even the worse estimates put Russia at a 2% contraction for 2015 given Russia has reserves to spend and stimulate the economy

 

a 2% contraction doesnt justify a currency falling over 40%. Thats suppostu happen during a meltdown

 

So like i said... although in their deteriorating condition devaluing currency is normal, its being blown out of proportion by investors. The Ruble is undervalued at this point

 

it may keep falling as long as the public has a negative perception of them, but as soon as things stabalise, i think the Ruble will actually surge in value

 

It may take months tho seeing as oil prices are expected to stay below $60/barrel till at least spring and sanctions wont be lifted for a while

 

Here in Western Canada they panicking also over low oil prices. Alberta especially has some huge deficits to deal with and our surplus for 2015 was downgraded to a small fraction of what it was innitially expected to be :manicure:

jesse_batista

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Luc   Paws Up 3,167
Luc

They should continue adding new sanctions tbh. The biggrr Russia's recession, the less power for Putin in the future.

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Economy   Paws Up 6,250
Economy

They should continue adding new sanctions tbh. The biggrr Russia's recession, the less power for Putin in the future.

u dont wanna over do it tho

 

a default by their government or severe recession is the last thing we need. especially in a country close to Europe which is still in extreme weakness :manicure:

jesse_batista

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Luc   Paws Up 3,167
Luc

u dont wanna over do it tho

 

a default by their government or severe recession is the last thing we need. especially in a country close to Europe which is still in extreme weakness :manicure:

Ukraine is the one in the worst situation though. They didn't have that much money and they were the first european xountry to ask money to the IMF in 2008, they have a CCC- rating now and the war is halting their economy so muh. War with Russia is bad because it's their main export/import partner, and the stagnation in the EU isn't helping either. Russia will be fine, you just need to put them under pressure. Sad thing is, Putin will be president/PM tipl 2028 and the Crimea will stay annexated because Putin will lose voters if he gives it back, making the Russians feel like they lost the war which can't happen.

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bumblebee   Paws Up 2,468
bumblebee

They should continue adding new sanctions tbh. The biggrr Russia's recession, the less power for Putin in the future.

 

This is false. I mean if you are talking about Putin's power in Russia, then this is false. Trust me as someone who is currently based in this country, this is getting the "western" world nowhere in case the aim of the sanctions is to lessen the power of Putin in the future in his own country. Please note that the following is not my opinion, but just a summary of the general, so-called average opinion. I do have a very broad circle of friends here, from sportsmen to university professors, so I believe it is kind of representative. It will be a long post, so thank you for reading. 

 

The vast majority of Russian people see the sanctions as the latent economic war the USA has declared on their country. They have the idea that sanctions are just a game the USA plays in order to change Putin's regime and get closer to the oil and gas resources of Russia. That is why they see sanctions as a threat to the future identity and even sovereignty of their country, and nothing unites people here stronger than a fear of even latent war or a threat coming from another country. Russian people have a very strong memories of the Second World War: almost in each and every family there was an ancestor who either fought at the battlefields or served in the hospitals or worked on the plants helping to produce the weapons to fight the Nazi forces. Many people believe that this time Washington is just trying to destroy Russia, but in a way Hitler could never think of, using economic tools instead of weapons, so that is why they indeed very approve of their president who is showing strength in defending the national interests of Russia. I know this is kind of crazy but this is what the majority of people think  :spin:

 

If sanctions pressure continues to grow, the majority of people here will see it as a bigger threat and will stick even closer to Putin and his allies.

 

Most "adult people" here remember the horrific 90s when the shelves in the product shops were empty, there were no pensions or any social payments from the government, the inflation made the prices of the products rise every day and the wages were not paid for months sometimes. That is why the so-called recession means almost nothing to them, because they have very clear memories of much worse days and will have patience to withstand all the possible results of the sanctions. 

 

When it comes to younger guys, I would say that it depends very much on their social background. I suppose about 25% of the younger generation (those aged less than 30) consider themselves in opposition to Putin and to the government. However even those people are not certain, because third of them don't like Putin but approve of the government, third of them approve of Putin but do not approve of the government and third dislike both, Putin and the government.

 

That means that the opposition mood is not yet formed here, and is unlikely to form in case the USA and EU will continues to prefer the policies of sanctions. The biggest "opposition" TV channel here has just 40% more followers than Lady Gaga fan community in Russia biggest social network :lolgaga:  Only about 26 million people here would really vote in favor of another candidate during the next presidential election, out of over 112 million registered voters  :toofloppy:   And in case people would continue to fear that sanctions are really a geopolitical instrument which Washington and Brussels are trying to use to put pressure on Russia, then the number would be even less than that. 

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