Russian Interest Rates and Economy

[Orchid]

I have just come back from Russia.
There are so many changes in a country since I left it five years ago!
Moscow airport was empty. Not many travelers at all.
Russian people were patriotic and proud of Putin from the beginning of conversation, but later all of them were complaining about quality of life.
For now Russia is a poor country, but it is very close to poverty.
People are under stress and very nervous.
Life is more expensive then in the US.

Moscow has always been known to be very expensive - was it better or worse in the regional cities and oblasts - Russia has always had a tradition of Dachas to grow and can fruits and vegetables to survive hard times when there is no money - like the late 90s or even WWII - is it really that bad in the provinces as well as Moscow?

I was in the South of Russia.
I have never seen Moscow airport so empty. It was always crowded!
From Moscow to my city I usually use train. Only about 5% of train was occupied. Before it was always difficult to buy tickets.
There is no more deficit in housing in Russia. In the streets I saw mostly very good cars.
I visited some my friends. They also bought new houses and cars. Like other Russians they took a credit from bank.
Now they are struggling to pay credits. Some lost jobs, sales dropped, salaries reduced. They can lose everything if this crisis continues.
My friends have dachas to rest. They do not grow fruits and vegetables. They prefer to have a good job and buy everything.
Another sign of crisis: my bank pays me 12% per year on my ruble account and 3% per year on dollar account. It means that they are very short of money.

[andrewfi]

I can't speak directly for the rest of your post, but the last bit - poppycock.
Who suggested this to you, because I am sure that you did not think of it for yourself.

Interest rates are not about people or companies being 'short of money'. The interest rates offered to savers are a reflection of the interest rates of the central banks. The Russian Central Bank interest rate is currently 11.5%. Sberbank is only offering 8.05% on deposits in excess of 2 years. They are not encouraging savers. They don't want savers money! CLICK HERE!

For the dollar, again you are being offered good rates, above the market. Dollar savings in excess of 1 year, market rate is about 1%.
Again, the banks don't want your money! CLICK HERE!

By the way, which train were you on? For example, if traveling from Saint Petersburg to Moscow you will have noticed a significant fall in occupancy rates on trains. That's because, in addition to the normal trains there are now 9 Sapsan services per day. The number of available rail seats has increased hugely.

[Orchid]

The Russian Central Bank interest rate is currently 11.5%.

Do you want to say that it is normal?
Have you ever seen such interest rate in the US or UK?
I do not want to argue about theory. May be I have chose not very accurate words. I am talking about facts.
Even for 3% per year the whole world should bring savings to Russia. But nobody hurries because tomorrow we, probably, will not find some banks with our savings.
Another fact. Retired people have $80-200 per month. Majority has $80 per month, and only some of them have up to $200 per month.

[Manny]

The Russian Central Bank interest rate is currently 11.5%.

Do you want to say that it is normal?
Have you ever seen such interest rate in the US or UK?

November 1979 to June 1980 - 17%

In the 80's and early 90's double digits, circa 10-11% was quite normal.

1-Aug-1984   10.5   DOWN
1-Sep-1984   10.5   SAME
1-Oct-1984   10.5   SAME
1-Nov-1984   9.5   DOWN
1-Dec-1984   9.5   SAME
1-Jan-1985   13.88   UP
1-Feb-1985   13.88   SAME
1-Mar-1985   12.88   DOWN
1-Apr-1985   12.38   DOWN
1-May-1985   12.38   SAME
1-Jun-1985   12.38   SAME
1-Jul-1985   11.38   DOWN
1-Aug-1985   11.38   SAME
1-Sep-1985   11.38   SAME
1-Oct-1985   11.38   SAME
1-Nov-1985   11.38   SAME
1-Dec-1985   11.38   SAME
1-Jan-1986   12.38   UP
1-Feb-1986   12.38   SAME
1-Mar-1986   11.38   DOWN
1-Apr-1986   10.38   DOWN
1-May-1986   9.79   DOWN
1-Jun-1986   9.79   SAME
1-Jul-1986   9.79   SAME
1-Aug-1986   9.79   SAME
1-Sep-1986   9.79   SAME
1-Oct-1986   10.88   UP
1-Nov-1986   10.88   SAME
1-Dec-1986   10.88   SAME
1-Jan-1987   10.88   SAME
1-Feb-1987   10.88   SAME

1-Nov-1978   12.5   UP
1-Dec-1978   12.5   SAME
1-Jan-1979   12.5   SAME
1-Feb-1979   14   UP
1-Mar-1979   13   DOWN
1-Apr-1979   12   DOWN
1-May-1979   12   SAME
1-Jun-1979   14   UP
1-Jul-1979   14   SAME
1-Aug-1979   14   SAME
1-Sep-1979   14   SAME
1-Oct-1979   14   SAME
1-Nov-1979   17   UP
1-Dec-1979   17   SAME
1-Jan-1980   17   SAME
1-Feb-1980   17   SAME
1-Mar-1980   17   SAME
1-Apr-1980   17   SAME
1-May-1980   17   SAME
1-Jun-1980   17   SAME
1-Jul-1980   16   DOWN
1-Aug-1980   16   SAME
1-Sep-1980   16   SAME
1-Oct-1980   16   SAME
1-Nov-1980   14   DOWN
1-Dec-1980   14   SAME
1-Jan-1981   14   SAME
1-Feb-1981   14   SAME
1-Mar-1981   12   DOWN
1-Apr-1981   12   SAME
1-May-1981   12   SAME
1-Jun-1981   12   SAME
1-Jul-1981   12   SAME
1-Aug-1981   12.69   UP
1-Sep-1981   14   UP
1-Oct-1981   15.13   UP
1-Nov-1981   14.56   DOWN
1-Dec-1981   14.38   DOWN
1-Jan-1982   13.88   DOWN
1-Feb-1982   13.63   DOWN
1-Mar-1982   13.25   DOWN
1-Apr-1982   13.13   DOWN
1-May-1982   13.13   SAME
1-Jun-1982   12.63   DOWN
1-Jul-1982   11.63   DOWN

[andrewfi]

You made a claim as fact. Your claim is incorrect.

You are now asking about a different matter: is having a  central bank interest rate of 11.5% unusual?
The answer is 'no it isn't', much less usual is the interest rate regime in the U.S. The rate of the Russian Central Bank has been set to meet the macroeconomic needs of Russia. it has nothing at all to do with whether 'people' are short of money.

As for the 'whole world' going to Russia for 3%?

No, that would be foolish.
There's all sorts of tax issues for overseas savers, but the chances are that one can get a better rate of return on other investments in one's own country. One will not go to Russia and open a savings account to save a thousand dollars or so. If one is investing large amounts there are other, better, choices.
For example, it looks as though the median pension fund return expectations in the U.S still exceed 4%. On that basis, no 'ordinary' USAian would deposit cash, in dollars, in Russia.

However that was not the point you were trying to make, was it?

Somebody has been misleading you I think.
Remember people living in Russia do not go shopping with dollars do they?
What currency do they use?
Yesss, that's right, they use the ruble.

The average pensioner in Russia gets over 10,000 rubles per month. In January, in dollars that was about $150. Today that same figure, in dollars is over $160. Rather different to the numbers that you have been told, yes?

Are pensioners in Russia rich?
No they are not but at the same time they live somewhat different lives to pensioners in your new paradise.
For example, they don't pay for healthcare.
Housing costs are a fraction of those in the U.S.
Energy costs are much lower.
Many have a place in the country where they grow their own foods and preserve them - not so much in the U.S.
City folks don't need cars, whereas in the U.S they are a necessity.
Many foods are a small price in comparison to the U.S, but then USAians, even pensioners can find a range of foods unavailable in Russia.

Actually, relative to the population as a whole, Russians aged 60 (retirement age there) tend to be better off than pensioners in the USA with a lower poverty rate than in the U.S. (yes, that surprised me too!) CLICK HERE!

So, comparing just money is not the best way to understand differences. The person to whom you have been listening does not understand that and, to make matters worse, she or he got the basic numbers wrong as well.

[Orchid]

November 1979 to June 1980 - 17%
In the 80's and early 90's double digits, circa 10-11% was quite normal.

I am really surprised if you are talking about UK. I bet it was not the best time in UK economy.
There is a very strong connection between state of economy and interest rate.
I remember the worst time in Russia the rate was about 45%.
I was lucky to have some money at that time and easily tripled them. Property was cheap.
The same happens now. Interest rate goes up and property price goes down.
Another impression about Russia: crisis after crisis. I thought that nothing can be worse than what I have already went through.
But Russian people are fighting for just normal life again.
You cross the border and see... stability and confidence.
What is interesting about Russians? They never say "enough is enough".
They prefer to have false belief and justify a dictator.
God help them!

[Orchid]

You made a claim as fact. Your claim is incorrect.

I made my claim as a fact.
My claim is incorrect, but the fact is correct!!!

[Orchid]

As for the 'whole world' going to Russia for 3%?

No, that would be foolish.

I don't think so.
It would be very smart if economy is stable. It is foolish if you are not sure in outcome.
From experience I can say that the easiest way to make money is to use a crisis.
Problem is that it is a poker. The person who is bluffing is Putin.
I play this game. I keep some money in Russia in rubles.
For every million I will have about 120,000 of profit at the end of year.
It is about $2000 profit for every $15000 during one year.
Question is what is going to be a ruble/dollar rate.
I will tell you later I won or lost.

[Orchid]

Are pensioners in Russia rich?
No they are not but...

Your "but" drives me crazy.
Is there any person except you who believes that is is possible to live in Russia for $150 a month???

[Texan77]

As for the 'whole world' going to Russia for 3%?

No, that would be foolish.

I don't think so.
It would be very smart if economy is stable. It is foolish if you are not sure in outcome.
From experience I can say that the easiest way to make money is to use a crisis.
Problem is that it is a poker. The person who is bluffing is Putin.
I play this game. I keep some money in Russia in rubles.
For every million I will have about 120,000 of profit at the end of year.
It is about $2000 profit for every $15000 during one year.
Question is what is going to be a ruble/dollar rate.
I will tell you later I won or lost.

I think that this is likely to be a good investment. I think the price of oil has stabilized and should even rise a little so this very might cause a rise in the ruble also. So hopefully you will make the 12% plus more.  Good luck on a great investment idea.

[Orchid]

No they are not but at the same time they live somewhat different lives to pensioners in your new paradise.
For example, they don't pay for healthcare.
Housing costs are a fraction of those in the U.S.
Energy costs are much lower.
Many have a place in the country where they grow their own foods and preserve them - not so much in the U.S.
City folks don't need cars, whereas in the U.S they are a necessity.
Many foods are a small price in comparison to the U.S, but then USAians, even pensioners can find a range of foods unavailable in Russia.

Meds are very expensive! To treat a flu for one person will cost minimum 1500 rubles. About the same in the US.
Patients pay to all doctors. My Russian girlfriend had gallbladder removed. She paid $500 to surgeon as a bribe.
She also pays for every visit 500-1000 rubles depending of health problem.
Housing is only half of US price.
Foods are at the same price in Russia and USA in average. But salary in the USA in much higher.
You are right about energy cost. It is low.
If you think that grow own foods and preserve them is normal I have nothing to say. It is not a Stone Age outside. Have you noticed?
Are you sure that city folks don't need cars? Really??? 
Just wait until Russians will get taste of guns!!! I am sure you will write that they are saint! Almost like me! 
Russians are crazy about good cars!!! Even Gogol wrote "Какой русский не любит бысрой езды?"
How to explain traffic jams?
One day we spent three hours in traffic jam! It would be more if my friend did not know another way to get home!!!
Finally, about "Many foods are a small price in comparison to the U.S".
I am back. My husband is tired of fast food. I went to store and bought a chicken on sale for 49 cents a pound.
He is going to have chicken noodle soup and Kiev's kotlet for dinner.
I am not sure that it is possible in Russia to cook dinner for two for 3 dollars.
There is a big difference between theory, false belief, and real life, my dear.

Like any Russian woman I have a weakness for idealists like you. 
Like any Russian woman I have a real view of life. 

[AvHdB]

Andrew,

Refresh our memory, when was the last time you were in Russia? How fluent are you in the Russian language?

Oddly enough this summer together with Julia we met two women who emigrated from Russia with there Russian husbands, Julia and the other women spoke at length in Russian. While I did not ask for a detailed translation it seems the relatives in Russia, Ufa to be specific were also struggling.

While addressing this thread I think you owe something an apology to Orchid for being so rude and ill bred in questioning her observations. As I recall one is not so callous to our female members of RUA.

Av

[Orchid]

I think that this is likely to be a good investment. I think the price of oil has stabilized and should even rise a little so this very might cause a rise in the ruble also. So hopefully you will make the 12% plus more.  Good luck on a great investment idea.

Thank you, my dear.
If I have this profit, I would be more than happy to have a dinner with you and celebrate a life.
Stabilized price of oil is important. but at this time the price of war in Syria is more important.
Also, it is important who is going to pay this price. Government, retired people or business?
We will see...

[AvHdB]

Manny do share with the readers what the percentage rate of inflation was during the 80's and 90's time period.

[WestCoast]

November 1979 to June 1980 - 17%
In the 80's and early 90's double digits, circa 10-11% was quite normal.

I am really surprised if you are talking about UK. I bet it was not the best time in UK economy.
There is a very strong connection between state of economy and interest rate.
I remember the worst time in Russia the rate was about 45%.
I was lucky to have some money at that time and easily tripled them. Property was cheap.
The same happens now. Interest rate goes up and property price goes down.
Another impression about Russia: crisis after crisis. I thought that nothing can be worse than what I have already went through.
But Russian people are fighting for just normal life again.
You cross the border and see... stability and confidence.
What is interesting about Russians? They never say "enough is enough".
They prefer to have false belief and justify a dictator.
God help them!

Orchid on this issue Manny is correct. In Canada, during the '80s at the times of highest rates the banks were asking 20% for a home mortgage, even higher if you had a poor credit rating. Home sale prices were depressed because few could afford a mortgage.




Savings account and other types of savings were paying well over 10% at times. This was a common occurrence at least in North America and Europe. 

http://www.tradingeconomics.com/canada/bank-lending-rate select the MAX button to see above graph

[Orchid]

you owe something an apology to Orchid

Nobody owes anything to me.
Life is tough. I will stand it until I can.
I am sure you can say the same about your wife.
FSU women truly appreciate every sunrise, every meal, every happy day.
The most they appreciate presence of real gentlemen next to them.
So do I. Thank you.

[Annushka]

I was in the South of Russia.
I have never seen Moscow airport so empty. It was always crowded!
From Moscow to my city I usually use train. Only about 5% of train was occupied. Before it was always difficult to buy tickets.
There is no more deficit in housing in Russia. In the streets I saw mostly very good cars.
I visited some my friends. They also bought new houses and cars. Like other Russians they took a credit from bank.
Now they are struggling to pay credits. Some lost jobs, sales dropped, salaries reduced. They can lose everything if this crisis continues.
My friends have dachas to rest. They do not grow fruits and vegetables. They prefer to have a good job and buy everything.
Another sign of crisis: my bank pays me 12% per year on my ruble account and 3% per year on dollar account. It means that they are very short of money.

Orchid, even my son said the new crisis we've been through! It also has a loan for a foreign car. In rubles! No problem for the monthly payments. Is ahead of schedule.

[Annushka]

The Russian Central Bank interest rate is currently 11.5%.

Do you want to say that it is normal?
Have you ever seen such interest rate in the US or UK?
I do not want to argue about theory. May be I have chose not very accurate words. I am talking about facts.
Even for 3% per year the whole world should bring savings to Russia. But nobody hurries because tomorrow we, probably, will not find some banks with our savings.
Another fact. Retired people have $80-200 per month. Majority has $80 per month, and only some of them have up to $200 per month.

So I - a young pensioner, then let me make a clarification. Russian pensioners to retirement have everything! In keeping with its status. A good proverb: "He who does not work shall not eat!"
And, of course, we do not look at the dollar and euro! WE LIVE IN RUSSIA!!!

[Annushka]

November 1979 to June 1980 - 17%
In the 80's and early 90's double digits, circa 10-11% was quite normal.

I am really surprised if you are talking about UK. I bet it was not the best time in UK economy.
There is a very strong connection between state of economy and interest rate.
I remember the worst time in Russia the rate was about 45%.
I was lucky to have some money at that time and easily tripled them. Property was cheap.
The same happens now. Interest rate goes up and property price goes down.
Another impression about Russia: crisis after crisis. I thought that nothing can be worse than what I have already went through.
But Russian people are fighting for just normal life again.
You cross the border and see... stability and confidence.
What is interesting about Russians? They never say "enough is enough".
They prefer to have false belief and justify a dictator.
God help them!

I bring to your attention the recent changes to the Criminal Code of Russia. I would highly recommend to remove the word "dictator" from your vocabulary. In accordance with the new trends, you will face, at best, a heavy fine. О Боже, спаси Америку!
I'm not talking about how to keep small personal savings in the bank. At all times, they invest in real estate! With the subsequent surrender of surplus rent!

[Annushka]

No they are not but at the same time they live somewhat different lives to pensioners in your new paradise.
For example, they don't pay for healthcare.
Housing costs are a fraction of those in the U.S.
Energy costs are much lower.
Many have a place in the country where they grow their own foods and preserve them - not so much in the U.S.
City folks don't need cars, whereas in the U.S they are a necessity.
Many foods are a small price in comparison to the U.S, but then USAians, even pensioners can find a range of foods unavailable in Russia.

Meds are very expensive! To treat a flu for one person will cost minimum 1500 rubles. About the same in the US.
Patients pay to all doctors. My Russian girlfriend had gallbladder removed. She paid $500 to surgeon as a bribe.
She also pays for every visit 500-1000 rubles depending of health problem.
Housing is only half of US price.
Foods are at the same price in Russia and USA in average. But salary in the USA in much higher.
You are right about energy cost. It is low.
If you think that grow own foods and preserve them is normal I have nothing to say. It is not a Stone Age outside. Have you noticed?
Are you sure that city folks don't need cars? Really??? 
Just wait until Russians will get taste of guns!!! I am sure you will write that they are saint! Almost like me! 
Russians are crazy about good cars!!! Even Gogol wrote "Какой русский не любит бысрой езды?"
How to explain traffic jams?
One day we spent three hours in traffic jam! It would be more if my friend did not know another way to get home!!!
Finally, about "Many foods are a small price in comparison to the U.S".
I am back. My husband is tired of fast food. I went to store and bought a chicken on sale for 49 cents a pound.
He is going to have chicken noodle soup and Kiev's kotlet for dinner.
I am not sure that it is possible in Russia to cook dinner for two for 3 dollars.
There is a big difference between theory, false belief, and real life, my dear.

Like any Russian woman I have a weakness for idealists like you. 
Like any Russian woman I have a real view of life. 

It is not the first time your messages, orchid, I suggest. You're not from Russia! You are, at best, from the CIS!
Several years ago I had a cholecystectomy. Completely free of charge, in accordance with the Russian legislation. The postoperative period was in the sanatorium, also free of charge. Therefore, I am limited in movement as a tourist.



Discuss what essentials in southern Russia worth a penny, I think is not appropriate.
By the way, in Tatarstan are very cheap tours. I plan to meet with his son, who is studying in absentia in Kazan, in the university,  on a budget for the January holidays.
It is necessary to invest money in education!





Bye-Bye!

[msmoby]

When you see a retired military translator sweeping up - to supplement her pension - I wonder at those who suggest times aren't hard.

SC bought a new car and had to queue for ages to get her number plate for the  car..[ licence tags] ... not because of so many new cars being registered... but because of the second hand cars changing hands. If new car sales are down - the economy is not doing well.

Manny, I cannot believe you'd offer up interest rates from 20-30 years ago when comparing Russian rates of today.



The big jump was in Dec 2014 - the central bank rate was only 5 percent - it is still over two times that and the Rouble responded - but fell back to the low, the interest rates were put up to 17 percent to 'protect'... Let's compare interest rates in most western countries.. What does that tell you, if you understand the the use of interest rates ?


The irony is that while Russians don't use Dollars to shop - any one honest about the tough situation knows Russians STILL regard it as a safe option for saving - and the 'black economy -   know the daily exchange rate and think in Dollars re large expenditure/ acquisitions - even in personal life.

I expect andrewfi will not answer your question about how many times he has been to Russia, recently ... judging by his 'advice' in another place - that was roundly pilloried-  on the use of 'bankomats' - it must therefore have been a paid trip by a third party..

[Manny]

Manny, I cannot believe you'd offer up interest rates from 20-30 years ago when comparing Russian rates of today.

Orchid wondered if interest rates in the UK had ever been so high. They have, and I demonstrated it.

What we forget is interest rates impact people who borrow. If you borrow little and save instead, high interest rates are OK. If inflation is high, buy stuff instead.

I remember getting 9%+ on savings. Happy days. The news used to say inflation was high, I never noticed.

Stuff costs what it costs. Can't afford it? Don't buy it. Feel poor? Work harder (or smarter). Most Russians I have met seem to think like that.

[andrewfi]

Orchid, I think you are not Russian. If you were then you'd know that what you are writing is factually incorrect. Health care in Russia is free of charge and not just for pensioners (your original,  incorrect, point) ,  but as in other civilised countries one can choose to purchase private health care.

You keep making specific factual points that are incorrect and when your knowledge deficit is pointed out you choose a new point and,  again,  you are incorrect.

Why do you do this?

If you have a point to make why not make sure that it is factually correct before bashing the keyboard? Whoever is telling you this stuff is very poorly informed and as you are the bearer and also claiming to  be a Russian it is becoming hard to give credibility to even the latter point.

[Orchid]

I bring to your attention the recent changes to the Criminal Code of Russia.
I would highly recommend to remove the word "dictator" from your vocabulary.
In accordance with the new trends, you will face, at best, a heavy fine.

[Personal insult removed]
All you both can do is to intimidate!!!
Nobody afraid of your new old trend.
It is crystal clear that this trend will bring Russia to isolation from the world.
It is already half way done.

[Orchid]

Orchid, I think you are not Russian.

And who the hell you are to decide my nationality???
Think about yours, Пустомеля !!!