RT: Bank bailouts and refocusing budgets - do you think the newly-approved anti-crisis plan will help the Russian economy?
Patrick Young: Well, let’s put it this way. I mean rumors of the death of the Russian economy have been strictly exaggerated so far. There is no doubt there is a problem out there; we are looking at the possibility with oil prices where they are of two and a half possibly five percent retrenching in the economy, and recession during the course of this year. What’s come out today has been an initial offering; it’s a plan from Mr. Medvedev’s office which is trying to provide a degree of a security blanket, a cushion, perhaps a mattress if you want to think about it in this way, underneath the most important parts of the economy in order to keep the wheels of economic action still going. What we are looking at is something where there is not enough money to underpin every single aspect of the Russian economy, but significant critical aspects of it are going to receive support.
Therefore there is targeting towards banks, particularly larger banks that are lending to all aspects of the Russian ‘corpocracy’. We are also seeing some measures that are coming in to help smaller businesses like agriculture and so on. And also indeed because of inflation that’s been let loose recently there seems to be some increases in pensions, so that therefore the average Russian retiree is not going to be suffering too much hardship as the result. All around, net-net, this is a safety blanket; it’s something to try out a little bit of a smoothening to stop ruffling the feathers of the Russian economy and help things come to a balance.
RT: Just several days ago the S&P credit rating agency downgraded Russia's status to junk. The agency has faced criticism in the past. It was sued for fraud, accused of market manipulation and political bias.How much do international investors rely on these ratings in their decisions?
PY: The ratings agencies provide a standard bench mark indicator in order to help investors decide on what they are going to invest in. But at the same time what you’ve said is absolutely correct. Over the course of the last five or six years rating agencies have taken a buffeting. Part of this may have been a result of their own actions, they may have been too eager to try and give people that sort of ratings that they ultimately wanted, including, it has to be said, governments. Ultimately there has been a follow-through after the course of the property crushing.We are seeing at the moment rumors coming through perhaps indeed this agency S&P is going to settle for about 1.5 billion claims against them in relation to all of the US property issues of 2007-2008, the junk mortgage debacle and so on. But at the same time ironically the politicians were most apoplectic in Europe when the rating agencies had the temerity to downgrade their own ratings. Where does this leave Russia? Ultimately it was inevitable we were on the course towards seeing probably a junk rating for Russia once S&P and the other rating agencies put in place earlier maneuvers over the course of the last couple of months. What does it actually mean for Russia per se? Look, people know Russia is an emerging economy, it is therefore more speculative, and it is always going to be slightly more risky than a country with very little borrowing.
Complete story at - ‘SWIFT is archaic, doesn’t stand up to modern digital age’ — RT Op-Edge
Patrick Young: Well, let’s put it this way. I mean rumors of the death of the Russian economy have been strictly exaggerated so far. There is no doubt there is a problem out there; we are looking at the possibility with oil prices where they are of two and a half possibly five percent retrenching in the economy, and recession during the course of this year. What’s come out today has been an initial offering; it’s a plan from Mr. Medvedev’s office which is trying to provide a degree of a security blanket, a cushion, perhaps a mattress if you want to think about it in this way, underneath the most important parts of the economy in order to keep the wheels of economic action still going. What we are looking at is something where there is not enough money to underpin every single aspect of the Russian economy, but significant critical aspects of it are going to receive support.
Therefore there is targeting towards banks, particularly larger banks that are lending to all aspects of the Russian ‘corpocracy’. We are also seeing some measures that are coming in to help smaller businesses like agriculture and so on. And also indeed because of inflation that’s been let loose recently there seems to be some increases in pensions, so that therefore the average Russian retiree is not going to be suffering too much hardship as the result. All around, net-net, this is a safety blanket; it’s something to try out a little bit of a smoothening to stop ruffling the feathers of the Russian economy and help things come to a balance.
RT: Just several days ago the S&P credit rating agency downgraded Russia's status to junk. The agency has faced criticism in the past. It was sued for fraud, accused of market manipulation and political bias.How much do international investors rely on these ratings in their decisions?
PY: The ratings agencies provide a standard bench mark indicator in order to help investors decide on what they are going to invest in. But at the same time what you’ve said is absolutely correct. Over the course of the last five or six years rating agencies have taken a buffeting. Part of this may have been a result of their own actions, they may have been too eager to try and give people that sort of ratings that they ultimately wanted, including, it has to be said, governments. Ultimately there has been a follow-through after the course of the property crushing.We are seeing at the moment rumors coming through perhaps indeed this agency S&P is going to settle for about 1.5 billion claims against them in relation to all of the US property issues of 2007-2008, the junk mortgage debacle and so on. But at the same time ironically the politicians were most apoplectic in Europe when the rating agencies had the temerity to downgrade their own ratings. Where does this leave Russia? Ultimately it was inevitable we were on the course towards seeing probably a junk rating for Russia once S&P and the other rating agencies put in place earlier maneuvers over the course of the last couple of months. What does it actually mean for Russia per se? Look, people know Russia is an emerging economy, it is therefore more speculative, and it is always going to be slightly more risky than a country with very little borrowing.
Complete story at - ‘SWIFT is archaic, doesn’t stand up to modern digital age’ — RT Op-Edge
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