Alex Nicholson has reported on Bloomberg.com that Russian Prime Minister Vladimir Putin has come out against printing money to battle the economic hard times.
Nicholson’s article “Putin Warns Against Printing Money to Cover Deficit (Update 3)” reports that Putin made his comments to the Russian Cabinet in Moscow.
The key factor in any adjustment is the fact that originally Russia presumed $95 per barrel of oil and now has had to rethink what oil will bring on the tougher “buyer’s” market” presuming only $41 per barrel.
Putin’s position is that they (Russia) will take care of it by taking loans at current rates as well as using current reserves to tackle any deficits.
With the revised budget projection Russia expects to have to borrow about $12.3 million and their deficit can also be defined as 7.4% reduction of the initial projection.
Overall Putin’s message was one of conservatism in a socialist economy. He warned for state agencies not to “terrorize business” and I’m sure that is aimed at other countries to not try and benefit from Russia’s change in plan.
Russia’ recent movement in Georgia was aimed to obtain and at least protect additional oil sources.
Of interest is that the government will pick and choose which companies it will protect from bankruptcy. Companies that don’t play some role in defense will probably not be saved.
As of right now, Russia has enough reserves to cover their deficit.
A couple of things are, in my opinion, worth looking at.
Russia, as usual is not trying to be “all things to all people.” Our country has a habit of doing that.
I would like you to look at Russia’s goals:
For the next year they will be trying to accomplish a “seven-point plan.” They are social welfare, maintaining industrial capacity, boosting domestic demand, promoting small business, tackling corruption, supporting the financial system and laying the groundwork for long-term development.
This plan they feel is possible without printing money and in fact can be attained at worst by current “market loans.”
Is it my imagination or could their goals be ours? Or is it possible that our goals could be theirs?
There would have been no chance of this being possible in the 1950’s.