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Daily Economy Thread

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Luc   Paws Up 3,167
Luc

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.

That's sad. But how else are countries supposed to show how they disagree with Russia annexating the Crimea and funding rebels in East Ukraine?

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Woolfsmck   Paws Up 695
Woolfsmck

The oil industry in any country doesn't have any thing to worry about. Production and profitability are in question for some sources due to lower demand and price reductions. Supply and demand dictate and most of the oil companies have been at it for a long time...ups and downs are nothing new. Wether Canadaian companies can out last American ones isn't really a factor since the demand for oil will never vanish. The overall supply vs. overall demand will regulate the market. winners and losers will be determined by how the individual managers handle the price fluctuations. Worst case scenario, drilling stops, and current producing wells are capped till needed.

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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bumblebee   Paws Up 2,468
bumblebee

That's sad. But how else are countries supposed to show how they disagree with Russia annexating the Crimea and funding rebels in East Ukraine?

 

That's a question! Again, I am trying to a--lyze from the perspective of Putin and his allies. 

 

First of all I would like to emphasize the fact that there was only one main reason for the Crimea "annexation". When the change of government took place in Ukraine, it was clear that, aside from being not the most constitutional and lawful one, it brought to power some people in Ukraine who were against the political cooperation with Russia. I think Putin and his allies realized that the new people which appeared in the government in Ukraine would never allow Russia to continue using Crimea and Sevastopol as the Base for the Black Fleet (Crimea has been a permanent base for Russian Black Sea fleet since 1997). That is why Putin decided to take Crimea back to Russia.

 

Which is why the question of Crimea is an issue where Putin will seek no compromise at all. His position is unlikely to change at all, so using sanctions here to make him re-consider or even have talks over Crimea status is useless. In such a case European leaders need to admit that the sanctions are not a tool to get EU and Russia to negotiations, but an instrument of punishment for the illegal actions of Crimea annexation.     

 

What is important: EU politicians need to publicly state, whether or not the sanctions will be cancelled if Russia participates actively in the peace process in the Eastern Ukraine. I believe this is what keeps Putin allies from actions there right now: there is an idea that sanctions are the punishment for the Crimea referendum, and will only be cancelled once Russia publicly dismisses the results of referendum - which is close to impossible. In case they (EU politicians) will give a clear sign the sanctions will be cancelled once Russia participates actively in the work of the so-called Minsk contact group, in the establishment of peace in the Eastern Ukraine, then I believe we will sea peace in the Eastern regions of Ukraine a lot sooner. 

 

I think the issue of Crimea better be left aside. The legal battles over whether or not the referendum there was lawful could take years, because there were many observes at the referendum, even from the European Parliament. Certainly they were from mostly the far-right parties, but, still, they were the members of the European Parliament. To stop the war is more important than to argue over the Crimea status, where the referendum was shockingly peaceful.  

 

 

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Economy   Paws Up 6,252
Economy

The oil industry in any country doesn't have any thing to worry about. Production and profitability are in question for some sources due to lower demand and price reductions. Supply and demand dictate and most of the oil companies have been at it for a long time...ups and downs are nothing new. Wether Canadaian companies can out last American ones isn't really a factor since the demand for oil will never vanish. The overall supply vs. overall demand will regulate the market. winners and losers will be determined by how the individual managers handle the price fluctuations. Worst case scenario, drilling stops, and current producing wells are capped till needed.

one thing is for sure... If these prices were to persist, some small companies would be wiped out because u can temporarily choose to stop drilling if its not profitable but they still have debt payments to make which many small companies have a large amount in relation to earnings and size

The US has more small companies still cuz the boom in the US is more recent

That being said, when prices rebounded, production can increase faster in the US than in Canada just cause in oil sands each area is more work. Takes longer and more money to develop fields but last longer

So the cycle would be much slower in Canadas oil sands. In US shale production can both increase and decrese faster. Thats an advantage for the US can it gives u the ability to respond to changes in the demand faster

One advantage we do have over the US tho is our companies have more cash reserves and less debt. Lets see how this plays out :popcorn:

jesse_batista

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Woolfsmck   Paws Up 695
Woolfsmck

one thing is for sure... If these prices were to persist, some small companies would be wiped out because u can temporarily choose to stop drilling if its not profitable but they still have debt payments to make which many small companies have a large amount in relation to earnings and size

The US has more small companies still cuz the boom in the US is more recent

That being said, when prices rebounded, production can increase faster in the US than in Canada just cause in oil sands each area is more work. Takes longer and more money to develop fields but last longer

So the cycle would be much slower in Canadas oil sands. In US shale production can both increase and decrese faster. Thats an advantage for the US can it gives u the ability to respond to changes in the demand faster

One advantage we do have over the US tho is our companies have more cash reserves and less debt. Lets see how this plays out :popcorn:

A large part of the 'smaller' companies cost is start up and equipment expense...after the first year or two, they start to make back their investments. Profit realization estimates will have to be lowered ....

The large companies spend a large amount of research and discovery, these two segments will be underfunded or eliminated during price fluctuations... Since a lot of the reserves we need right now have been discovered, it's a matter of supply for them to spend on their development. I can't see the oil industry folding until there is 0 demand ... Heh. Like that'll happen any time soon

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 6,252
Economy

A large part of the 'smaller' companies cost is start up and equipment expense...after the first year or two, they start to make back their investments. Profit realization estimates will have to be lowered ....

The large companies spend a large amount of research and discovery, these two segments will be underfunded or eliminated during price fluctuations... Since a lot of the reserves we need right now have been discovered, it's a matter of supply for them to spend on their development. I can't see the oil industry folding until there is 0 demand ... Heh. Like that'll happen any time soon

ur talking about an industry as a whole tho

 

Keep in mind, the over-whelming majority of places in the world can produce oil MUCH cheaper than in north America. Oil Sands or even fracking cost a lot more than simply drilling into the ground

 

Oil companies in most countries are still turning a profit... many companies in north America are selling at a loss in relation to the money they spent to get these fields up and running. and they have to pay back the money they spent on development which some cant do if oil remains at these prices

 

Some companies will get wiped out during a correction in the supply and demand... and i hate to say it, but North American companies are the most vulnerable because we are the highest cost producers in the world

 

That being said, prices have to remain this low for a long time to wipe out North American production. Only small companies with the hardest formations are truly in trouble atm. 80% of companies will be fine even if this persists for another 6-12 months

jesse_batista

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Luc   Paws Up 3,167
Luc

Llllllithuania is joollining the Eurozone in a few days, after Estonian and Latvia recently joined.

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Economy   Paws Up 6,252
Economy

Llllllithuania is joollining the Eurozone in a few days, after Estonian and Latvia recently joined.

slay :gaga:

Ill add that in later :yes:

The Euro should really be the new reserve currency due to size. But a change in reserve currency is a delicate process with many complications

jesse_batista

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Woolfsmck   Paws Up 695
Woolfsmck

ur talking about an industry as a whole tho

 

Keep in mind, the over-whelming majority of places in the world can produce oil MUCH cheaper than in north America. Oil Sands or even fracking cost a lot more than simply drilling into the ground

 

Oil companies in most countries are still turning a profit... many companies in north America are selling at a loss in relation to the money they spent to get these fields up and running. and they have to pay back the money they spent on development which some cant do if oil remains at these prices

 

Some companies will get wiped out during a correction in the supply and demand... and i hate to say it, but North American companies are the most vulnerable because we are the highest cost producers in the world

 

That being said, prices have to remain this low for a long time to wipe out North American production. Only small companies with the hardest formations are truly in trouble atm. 80% of companies will be fine even if this persists for another 6-12 months

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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Woolfsmck   Paws Up 695
Woolfsmck

Production cost is lower, but ther customer base is North America, and now China, so they're dependent on our economic health overall...lower oil prices will help other segments of the economy her fore creating a capital reserve to divest on domestic production as the market changes....also, domestic production means that refined products have a short distance to go to be consumed, hence lower shipping costs....small upstarts who rose during the boom will likely be the first to fail should there be a total collapse...

The issue of Iran and Russia losing approx 20% of their GDP further impacts two economies struggling with sanctions on top of it...I still see this as a political/economic battle aimed at the reducing their military funding ... they are promoting the shale/tar sands production as competition, but to me this is a smoke screen for the underlying strategy here.

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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Luc   Paws Up 3,167
Luc

slay :gaga:

Ill add that in later :yes:

The Euro should really be the new reserve currency due to size. But a change in reserve currency is a delicate process with many complications

Possibly, yeah!

A big problem is that people dont believe in a common currency anymore... they should really make it harder for countries to join the Eurozone. Italy and Greece were a mess, and they never gave a fine when exceeding the 3%..

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Woolfsmck   Paws Up 695
Woolfsmck
Llllllithuania is joollining the Eurozone in a few days, after Estonian and Latvia recently joined.
to me this is another complete of the discontent in many eastern block countries...Communist Socialism is force upon them.
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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Luc   Paws Up 3,167
Luc

to me this is another complete of the discontent in many eastern block countries...Communist Socialism is force upon them.

Estonia, Lithuania and Latvia have very healthy economies, estonia perhaps the healthiest in Europe right now.

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Economy   Paws Up 6,252
Economy

Production cost is lower, but ther customer base is North America, and now China, so they're dependent on our economic health overall...lower oil prices will help other segments of the economy her fore creating a capital reserve to divest on domestic production as the market changes....also, domestic production means that refined products have a short distance to go to be consumed, hence lower shipping costs....small upstarts who rose during the boom will likely be the first to fail should there be a total collapse...

The issue of Iran and Russia losing approx 20% of their GDP further impacts two economies struggling with sanctions on top of it...I still see this as a political/economic battle aimed at the reducing their military funding ... they are promoting the shale/tar sands production as competition, but to me this is a smoke screen for the underlying strategy here.

i dont think its just a "smoke screen". Its true neither the US and Saudi Arabia are fans of Russia or Iran and that may encourage them to push for low prices

But we have an oversupply atm so prices would have fallen regardless. And OPEC has good reasons not to have cut production seeing as they have a smaller market share than they used to and if they cut production they would simply support prices for booms elsewhere and loose even more market share

I believe the whole killing Russias economy incentive is just a cherry on the top. OPEC still wouldnt have cut production regardless of Russia and the energy boom in North America is also irrelevant.

For simple market and economic interests, prices of crude would have fallen regardless :shrug:

Edited by Economy
jesse_batista

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Economy   Paws Up 6,252
Economy

Estonia, Lithuania and Latvia have very healthy economies, estonia perhaps the healthiest in Europe right now.

Europe disapoints me even some countries outside the Euro

Even Switzerland thats suppostu be so competitve just lowered their interest rates all the way down to 0% like really?

Sharing 1 currency and 1 monetary policy when each economy is in a different state is plain dumb. The cons vastly outway any trade benefits within Europe

Countries with weak economies are forced to use a currency thats too strong for their uncompetitive economies to handle, and healthier economies have to be stuck with interest rates that are too low for them (like Germany)

Its not healthy :shrug:

Edited by Economy
jesse_batista

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