"All of Vlad's forces and all of Vlad's men, are out to put Humpty together again." (12 Viewers)

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I have been thinking of the economic impact of the war on Russia. Interest rates are at 21% and warnings have been made that this is only likely to increase. The vast majority of Russian volunteers have been signing on not because of a allegiance to the cause but because of the huge (by Russian standards) signing on payments and rates of pay. They could be accurately described as mercenaries as they are not regular army soldiers who join for a career, or as conscripts who have been told to fight, or patriots who joined because they believe in the cause. They joined for the money.
With these rates of interest, the value of these payments, if actually paid, will soon erode and this will impact the appeal of people to sign up. Which in turn leads to deals such as N Korean troops.

In addition a high proportion of the 'new' vehicles and armoured tanks and APC's are refurbished rusting stock which are running out, or at least are taking longer to refurbish. This in turn means that to replace the losses will involve a lot of investment in production facilities, which will need more money which at rates of 21% is not feasible. They also need more men in the workforce, which will mean having to pay them more as they might be induced into the military again driving up the cost. However they need those interest rates to keep the lid on inflation as it stops people from spending.
Its a quirk of the Russian mentality that you don't often see women in the factories in peace time and from what little I have seen, even in todays war situation in Russia.

In short, the only way to increase production is to cut interest rates, which will need a significant cut in government spending, but the only way to proceed with the war is to increase the spending which is a direct contradiction of requirements. They also need to keep the rates high to limit inflation which if it gets out of control could easily see the people start to complain and support for Putin collapse.

It has to be said that the leaders of the Russian banks and economy have done a remarkable job keeping the economy going in the face of very significant restrictions, but the time must be coming where the elastic band is going to break.

I am old enough to remember the UK interest rates n the late 1970's which reached 17% and getting over that was B----y painful. A key component of that was going to the IMF and getting a huge loan which I truly hope will not be an option for Putin.
 
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Glider said:
I have been thinking of the economic impact of the war on Russia. Interest rates are at 21% and warnings have been made that this is only likely to increase. The vast majority of Russian volunteers have been signing on not because of a allegiance to the cause but because of the huge (by Russian standards) signing on payments and rates of pay. They could be accurately described as mercenaries as they are not regular army soldiers who join for a career, or as conscripts who have been told to fight, or patriots who joined because they believe in the cause. They joined for the money.
With these rates of interest, the value of these payments, if actually paid, will soon erode and this will impact the appeal of people to sign up. Which in turn leads to deals such as N Korean troops.

In addition a high proportion of the 'new' vehicles and armoured tanks and APC's are refurbished rusting stock which are running out, or at least are taking longer to refurbish. This in turn means that to replace the losses will involve a lot of investment in production facilities, which will need more money which at rates of 21% is not feasible. They also need more men in the workforce, which will mean having to pay them more as they might be induced into the military again driving up the cost. However they need those interest rates to keep the lid on inflation as it stops people from spending.
Its a quirk of the Russian mentality that you don't often see women in the factories in peace time and from what little I have seen, even in todays war situation in Russia.

In short, the only way to increase production is to cut interest rates, which will need a significant cut in government spending, but the only way to proceed with the war is to increase the spending which is a direct contradiction of requirements. They also need to keep the rates high to limit inflation which if it gets out of control could easily see the people start to complain and support for Putin collapse.

It has to be said that the leaders of the Russian banks and economy have done a remarkable job keeping the economy going in the face of very significant restrictions, but the time must be coming where the elastic band is going to break.

I am old enough to remember the UK interest rates n the late 1970's which reached 17% and getting over that was B----y painful. A key component of that was going to the IMF and getting a huge loan which I truly hope will not be an option for Putin.
Click to expand...
We need to add inflation rates to this topic. Current inflation rate in Russia is about 9.5% (Source: https://www.reuters.com/markets/eur...es-95-this-year-weekly-data-shows-2024-12-25/). That HAS to start impacting the average Ivan on the street.

Look at the discontent in the West over "cost of living" increases. In Russia, inflation has been consistently above 7.4% this year, with the trend increasing in the last 6 months of the year up to the latest rate of 9.5%.

I wonder how long it will be before people in Russia find they can no longer afford basic staples, and what reaction will ensue?
 
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