O/T:- Ukraine [Incorporating 'Congrats to Russia' thread]

[Jampie]

I’m just pointing out the facts. No need to act sore.

Russian economists actually put Russia’s contraction at ~3% so I went with the higher western figure.

Heh. How many years in the gulag do they get for discrediting the Russian economy if they don't report Kremlin approved figures? Or do they just have an "accident"?

Regarding facts, I am honestly not sure you could pick one out of a lineup at this point.

As for Ukraine not needing a working economy to win the war because they’re being supplied by everyone else, well that may well be in jeopardy too. The soon to be House majority leader in the US said ‘no more blank cheques for Ukraine’... and Hungary just put the kibosh on the EU loaning/gifting Ukraine any more money, including releasing funds that have already been promised. How does this impact your assessment?

It basically doesn't. After the Red Trickle, the pro-Russia wing of the Republican party look like having very little power. When the new Congress sits in January, Republicans will have at most a rather narrow majority. All of that aside, they won't be able to cancel Lend Lease which means support for Ukraine will continue for likely the rest of Biden's presidency. Under Lend Lease terms, Congress have no say over what's sent, but Ukraine will need to eventually pay it all back, which is not ideal for their postwar economy.

And that's just US aid. Most other nations involved are more committed now than they were previously, not the other way around. Ukraine's enormous successes on the battlefield have virtually guaranteed continued aid into the future.

Hungary stonewalling Ukraine aid is basically situation normal. They will need to negotiate because Hungary itself needs aid. So I think it's likely that impasse will be resolved.

You also say that 100s of thousands of Russians have left the country. That’s true! But meanwhile Ukraine has lost ~7.6 million people, with ~2.85m of them going to... Russia!

And as for Western countries not going into recession... yikes, you really haven’t been following the news, have you?

As many thoughtful analysts have long predicted - Russia will sooner destroy Ukraine than see it join NATO. To be honest, I don’t think the ‘collective west’ really cares if Ukraine gets destroyed.

Where do you get 2.85m going to Russia from? Sounds high.

And most of the people Ukraine has "lost" will be refugees who are likely to return post war. Anyone who's gone to Russia might have trouble returning in future of course because it's a totalitarian hell hole desperate to keep any population it can... but they've been unable to stop their own people leaving so far, so there's hope there.

Regarding NATO: Once the war ends, bilateral security agreements, specifically Ukraine - US and Ukraine-UK (and others), or perhaps a multi-nation security agreement to protect them while NATO membership gets sorted, are very likely.

While Russia obviously has no say in who joins NATO or not, I would expect Hungary and Turkey to stonewall for ages and slow it down, so a separate security agreement in the immediate postwar period is likely.

Regarding Russia destroying Ukraine: With what? Short of strategic nuclear weapons, they have no such capability.

And I find it interesting that you've essentially given up trying to convince anybody that Russia isn't massively losing the war, and you've pinned your hopes on economics instead. That would be a good tactic if only you had the faintest comprehension how economics works.

The negative economic conditions afflicting the developed world (outside of Ukraine and Russia) are predominantly caused by supply-restriction inflation. That is to say, the availability of certain essentials (in this case oil and gas) is lower than demand, driving up prices, which is inflation. While that's certainly nasty and annoying in the short term (12-36 months), the benefit of a free market economy is that high prices drive supply increases, so the condition is almost always temporary.

In this case, while oil and gas have production capacity issues, energy itself does not, and every (intelligently run) developed economy is currently accelerating the transition to energy sources that have no practical capacity constraints and whose long term costs will be much lower and trending down.

As a result, while some countries will enter recession (2 or more consecutive quarters of negative growth), this will be a temporary setback and the long term outlook is very positive. Furthermore, in most cases I would expect that recession to be relatively low magnitude. The inflation itself is actually going to be more problematic for most households.

On the other hand, the economic conditions afflicting Russia right now are far more serious. The sanctions, which aren't going away any time soon, will have deep, long term impacts limiting production capacity of everything more complicated than raw materials. Even their oil production is likely to suffer significant supply issues due to a lack of specialist knowledge and equipment, much of which always came from "the west". And lot of Russians who know how to operate stuff have now left. More are likely to follow.

On top of that, the long term prospects for Russia's two major exports are absolutely dire. Their pipelined gas exports have already crashed and most of their customers have already moved on. For Oil, particularly from 2025 onward (although it could start at late as 2030, but this war is accelerating the process), demand for oil is expected to fall, and keep falling for a very long time, as it will no longer be competitive for transport energy against other sources (mostly electricity). This is going to be an abject disaster for oil producing nations, and the condition will be permanent. OPEC will transition from being able to set the global price of oil (because they control enough of the production to restrict supply) to having to compete with each other to fulfil dwindling demand. That will crash the price of oil down to a level where it can compete as a transport fuel again.

While that isn't smashing news for any oil-exporting nation, it's particularly terrible for Russia as they already have a higher average production cost than their soon-to-be competitors in the middle east. And without western knowledge or technology, their production costs are likely to trend up. So I would say the prospects for Russia's economy in the latter half of this decade, and the next decade, are "likely economic collapse."

I would love to see them evade this issue but I hold out little hope for it. Putin has doubled down on everything that leads to Russia's collapse, and right now to me this is like watching a slow-motion train crash.

On the other hand, obviously falling energy prices, including transportation energy prices, will be hugely beneficial for everyone else, and the likely economic conditions for other developed nations are quite positive during the same period.