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Putin for Pensions?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Greg Bryanski of Thomson Reuters reports that Russia's Putin sees economy boost from higher pensions:
Russian
pensioners who will have 46 percent more money in 2010 than this year
will provide a much needed boost for the flagging economy as they
spend, Prime Minister Vladimir Putin said on Wednesday.
'Our
decision to increase pensions may contradict (the goal of maintaining
macro stability). But at the same time it is a stimulus. It is
consumption,' Putin told a pensions conference in Moscow.
Putin
said the pensioners, who spend 80 percent of their meagre income on
consumption, shun expensive imported goods and tend to buy domestically
produced ones.
Russia, hit harder by the economic crisis
than most other major emerging economy, is very slow to recover due to
the very weak domestic demand and Putin has vowed to continue stimulus
policies, helping the demand recover.
Russia
is raising pensions by 35 percent in 2009 and plans to raise them
further in 2010, envisaging to spend a staggering 10 percent of GDP on
pensions and other social benefits.
As a result of the
increase, the average pension will rise to 8,000 roubles ($277.4),
breaching the minimum subsistence level and achieving a replacement
ratio of 39.7 percent on the average post-crisis salary.
The
pensions increase will also bring an eight percentage points hike in
social security taxes to 34 percent of income from 2011, a move
generally opposed by businessmen.
So what gives? Did the Christmas spirit strike Vladi early this year? Or could it be that polls are showing support for Putin and Medvedev is falling:
Prime Minister Vladimir Putin's approval rating has fallen to an
eight-month low, a poll said on Wednesday, as faith in Russia's leaders
is tested by an economic crisis that has put more than one million
people out of work.
Despite a sharp deterioration in the economy,
Putin and ally President Dmitry Medvedev have enjoyed high ratings
since they took up their posts last year. But polls have shown their
public approval fall steadily in recent months.
Public trust in the
work of Putin fell from a peak of 72 percent in mid-October to 65
percent on November 22, the lowest point since March, according to
weekly poll figures posted on the site of the Public Opinion Foundation
on Wednesday.
Medvedev's rating stood at 54 percent, down from 62 percent in October.
"This
is extremely serious for the government," Moscow Carnegie Centre
analyst Nikolai Petrov said. "In the absence of any stable political
institutions, Putin's popularity is the foundation of the country's
political stability."
He said the fall was clearly caused by the
economic crisis, and government decisions to raise pensions and scrap a
controversial transport tax were efforts to stem the fall.
Russia
remains mired in a deep economic crisis, with GDP contracting 8.9 pct
in the third quarter from a year earlier. Unemployment has climbed by
more than a third, from 4.1 million in May last year to 5.8 million in
October.
Trust in the prime minister's office fell from 80 percent in
August to 73 percent in November, according to rival pollster VtSIOM. A
third poll from the Levada centre registered a fall in trust in Putin
from 66 percent in August to 60 in November.
"Putin and Medvedev's
ratings are not directly dependent on what they do and say, they
reflect the general situation in the country," Levada Centre analyst
Denis Volkov said.
"We have seen a steady fall, but no collapse."
Public trust in Medvedev fell from 58 percent in August to 51 percent in October, according to the Levada Centre. The
Kremlin-aligned
analyst Sergei Markov warned against reading too much into the poll
ratings, saying ratings always fell as Russia's long, grey winter.
"They'll get better again in May when the sun comes out," he said.
Regardless of the reasons, I think Putin is onto something. Now, if only we can figure out a way to redistribute income from Wall Street crooks back into the pensions they keep plundering.
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Finally, a world leader does something intelligent.
IMHO This is the first intelligent thing (in the context of the misnamed credit crisis) that has been done since the Yen carry trade started unwinding in (about) March 2007.
In a crisis situation, this is a stimulus that stabilises.
1) "Pensioners" built their countries. Giving the pensioners a bit of capital to improve their lives a notch can set loose tremendous creative and productive energy?
2) If the popularity of a politician is going down, it means that the leader is not effectively meeting the expectations of the people. So, Putin responds to the needs of Russians and he is considered odd? Gee, maybe it would be nice if democratically elected people would try this "listen to the people a bit" strategy.
3) Russian borrowing money of behalf of its citizens and then giving them the (their) money sounds like a rather sensible idea? Those running dog commie capitalists might be onto something?
How will ObamaEtc respond? By taxing pensioners? And a $250 cheque in the USA (14 trillion GDP) is almost insulting after the pension funds have been raided via "derivatives"?
IMHO this whole mess was about raiding the pension funds in the USA. Get the ratings agencies to give AAA to garbage and make sure that your bribes (lobbying) get to the right people. It didn't matter if a bank gave out a neg-am liar loan - they would flip the whole value of the mortgage out of a pension fund within minutes. And, so far, they succeeded.
Anyway, it would seem that there is still hope for a peaceful resolution to this crisis. This will really put Team Obama on the spot?
all the best from
Namke von Federlein
Putin out the fire with gasoline is not going to work
Laugh and mock Russia, but who are the bigger dupes? I would say the Americans as they cough up billions that are being handed over to the banks while they lose their homes and their jobs.
This is a smart move by Putin. He understands the pensioners will put the money he gives them right back into the local economy. The same can't be said for the big American investment banks.
Increase to $277 and increase taxes too? My what a softy. Stupid for increasing taxes. The Chinese figured that out.
Da
--what problem? All they do is through a couple more reporters and ethnic minorities on the pyre and turn up the heat.
"Prime Minister Vladimir Putin's approval rating has fallen to an eight-month low, a poll said on Wednesday, as faith in Russia's leaders is tested by an economic crisis that has put more than one million people out of work."
Well, in US there 7+ million people out of work, and Obama ratings felt to 45, so it looks not so bad for Russians
Yeah, if the USA had done this instead of giving the Rothschilds all the taxpayers' money, maybe the USA economy would be in better shape now.
He may be a quasi-dictator, but you got love how he handled the oil oligarchs who crossed him. Jail in Siberia. I wonder if we can do the same with the financial oligarchs on Wall Street. Also, notice how in the US the government hands out money to banks and corporations. At least in Russia, they are handing the money out to pensioners!
Ok, but it's hardly as if he did this out of some moral outrage at their actions, or in order to benefit the Russian people. He was simply eliminating threats to his own political hegemony. Maybe some or even all of them simply sought to replace Putin's despotism with their own, or that of a puppet, but even so it seems likely to me that unintended consequences of their actions would have made genuine democracy in Russia more likely, not less. Would you really be so thrilled to see bankers who were critical of Fed policy imprisoned, however collectively guilty they might be, while the rest remained free and favoured?
Fuck genuine democracy and all the bullshit that's associated with it.
Bankers who were critical of Fed policy? Care to share a few names with us? Most of the bankers I know love borrowing money at zero and lending it out at prime+ or as is more often the case, investing in every risky asset imaginable to capture higher yields. Too much power concentrated in the banks is undermining the American democracy. They are thieves, manipulating the system and politicians to get a free lunch wherever they can.
I'm not suggesting there are or were any. My point is that what Putin is doing is not analogous to simply punishing bankers - either en masse or an arbitrary selection thereof. He is specifically targeting opponents of his despotic regime. Locking up Ron Paul is not a fair analogy either - again, being opposed to Putin does not necessarily make someone one of the good guys - but it is arguably closer to the mark. I completely agree that increased pensions are a less bad form of fiscal stimulus than most, but if fiscal stimulus is not affordable in the medium term you should not be doing it.
Let me be clear: I am not a communist, Marxist or pro-Putin, but I got to hand it to him, this is a smart opportunistic move on his part. Can Russia afford it? If oil goes over $100 in the next six months, which I think it will, then they will fill their coffers up fast and easily pay out these increases in pensions.
"Can Russia afford it?" That is so last-century --- nothing is ever ever paid off --- we can 'afford' anything we want!
Oh, sure. This is a shrewd political move by a shrewd political operator, no argument there. Given that the alternative to $100 oil is probably global economic collapse (which he could blame on decadent, irresponsible westerners) it's hard to see how he loses on that front.
Good point #144690
That's the Administration's plan here in the U.S. The Climategate Czar Holdren knows rationed health care will get life expectancy below retirement age. And the survivors will get the wonderful benefits of Social Security.
We already have rationed health care. The difference is that currently lots of people make lots of money by making certain that people die from the rationing.
It's called bonuses from blood money.
It's easy to figure out a thousand ways.
But getting Congress, TheBamster, and his henchpersons to do it, since they are shadow employees of Goldman Sucks and the other primary dealers, the Rothschilds (Bauers, really)
and assorted other Men behind the curtain (MBTC), is about as likely as convicting Ron Goldman's killer.
"a staggering 10 percent of GDP" spent on pensions may not be so staggering because the average male life expectancy in Russia is 59
49 for 1960+ generation.