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Old 12-16-2014, 11:40 AM
 
3,337 posts, read 3,132,410 times
Reputation: 2337

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Who loses if Russia implodes?

No one wins if Russia's economy falls apart.

Its trading partners -- countries and businesses -- are watching with concern as Russia scrambles to tackle a deepening economic crisis, sparked by plunging oil prices and punishing international sanctions.

The ruble has been in free fall and is already hurting earnings at global companies with operations in Russia.
Here are some of the biggest victims of Russia's deteriorating economy:
Germany: Europe's largest economy is most exposed to Russia. Last year, Germany's trade relationship with Russia was worth more than €76 billion ($95.4 billion). Tough Western economic sanctions over the Ukraine crisis have already taken a toll on exports and companies have put the brakes on investment.
Last month Germany said "geopolitical crises" had contributed to a sharp cut in its growth forecasts for this year and the next.
Related: Putin puts a chill on German economy
Trouble in Germany is the last thing the eurozone needs -- the currency bloc relies heavily on the economic heavyweight.
Rest of Europe: Russia buys plenty of goods from other European countries.
Moscow retaliated against Western sanctions in August by banning imports of fruit, vegetables, meat, fish, milk and dairy products from Europe, as well as the United States, Australia and Canada.
It was unwelcome news for European producers who export a great deal of fruit, cheese and pork to Russia. Some 10% of EU food exports -- worth about $15 billion -- were delivered to Russia last year, making it Europe's second biggest customer.
Europe had to set aside around $156 million to compensate producers.
Related: Russia's slide toward economic crisis: Why it matters
Energy companies: The deteriorating ruble has taken a chunk out of earnings at companies that do business with Russia.
BP (BP) has warned that the tough sanctions would hurt. BP owns a large stake in Rosneft, Russia's biggest oil company, which is subject to U.S. trade restrictions. Shares of the company are down 25% this year as crumbling oil prices slug profits.
France's Total shelved plans for a shale exploration joint venture with Russia's Lukoil due to Western sanctions, crimping possible future earnings for the company. Other energy companies like Exxon Mobil (XOM) also have significant ties with Russia.
Automakers: U.S. auto giantFord (FOVSY)is one of the biggest carmakers in Russia and it has warned that the weaker ruble is hurting sales.
Volkswagen (VLKAF) blamed political tensions for an 8% drop in car sales in Russia in the first six months of the year. The German automaker's shares are down more than 12% this year.
France's Renault (RNSDF) too said that sales in Russia were suffering, while Peugeot Citroen warned in October that the sagging ruble was hurting the company.
Related: No panic yet on Moscow's streets
Banks: Societé Generale's second quarter profits from its Russian unit fell 36%. Other banks that have sizeable exposures are Dutch lender Rabobank and Italy's Unicredit.
McDonald's, Adidas and other brands: Frosty relations between the U.S. and Russia is believed to be behind a crackdown on McDonald's (MCD) in the country. Regulatory authorities forced the temporary closure of 12 restaurants over accusations of sanitary violations. But the move was widely believed to have been politically motivated.
German sportswear company Adidas is shutting stores and scaling back expansion in Russia as tensions in the region hit consumer spending and the decline in the ruble dented profitability. Adidas slashed its 2014 earnings forecast by 20% to 30%, partly because of Russia.
Carlsberg, the Danish beer maker has issued two profit warnings this year on slowing Russian demand.
Coca-Cola (KO) too has suffered. Shares of Coca-Cola HBC, which bottles and distributes beverages in Russia, have tanked 32% this year.
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Old 12-16-2014, 11:41 AM
 
3,337 posts, read 3,132,410 times
Reputation: 2337
The story of the great American oil blob

U.S. Energy Boom: America is No. 1

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Old 12-16-2014, 11:43 AM
 
3,337 posts, read 3,132,410 times
Reputation: 2337
The U.S. gets most of its imported oil from Canada — Iraq is in the top 5 too



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Old 12-16-2014, 11:47 AM
 
3,337 posts, read 3,132,410 times
Reputation: 2337
Quote:
Originally Posted by NYer23 View Post
You should read the below article I linked. It is educational and will help you understand NYC Real Estate Market (specifically from a foreigners perspective).

Why New York Real Estate Is the New Swiss Bank Account -- New York Magazine
[url=http://nymag.com/news/features/foreigners-hiding-money-new-york-real-estate-2014-6[/url]

Please help summarize the key points of this lengthy article...
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Old 12-16-2014, 12:14 PM
 
1,978 posts, read 1,239,273 times
Reputation: 1182
Quote:
Originally Posted by leoliu View Post
Please help summarize the key points of this lengthy article...

Apartments are commodities in a global market (especially in NYC). Foreigners receive many advantages to buying property here (to list a few):
1. Tax abatement (cheap monthly/yearly expense to hold the property)
2. Privacy with legal entity structure (difficult to know who owns the property)
3. Hedge risk against downturn in country they are citizen of (whether it because the economy is bad or political fall out in which the government wants to take your money from you)
4. NYC has high rental value and appreciation of the property over time

The above list leads to the comparison of owning a condo in Manhattan is like having a Swiss bank account for a foreigner (such as how US citizens try to avoid paying taxes by hiding assets oversees).

The original poster i quoted tried to paint foreigners as some evil entity, but the reality is that US companies (Developers, Real Estate Agents, Lawyers, Bankers, etc...) are the ones actively trying to sell them this product (NYC Real Estate) as a attractive investment for foreigners. This was part of Bloomberg's vision of NY, where the wealthy across the world will want to live and own property.

Side Note: This scenario has already happen to London and they proposed to tax wealthy foreign home buyers (in order to reduce the incentives they have).

Last edited by NYer23; 12-16-2014 at 12:26 PM..
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Old 12-16-2014, 01:02 PM
bg7
 
7,698 posts, read 7,645,830 times
Reputation: 14991
Quote:
Originally Posted by leoliu View Post
Who loses if Russia implodes?

No one wins if Russia's economy falls apart.

Its trading partners -- countries and businesses -- are watching with concern as Russia scrambles to tackle a deepening economic crisis, sparked by plunging oil prices and punishing international sanctions.

The ruble has been in free fall and is already hurting earnings at global companies with operations in Russia.
Here are some of the biggest victims of Russia's deteriorating economy:
Germany: Europe's largest economy is most exposed to Russia. Last year, Germany's trade relationship with Russia was worth more than €76 billion ($95.4 billion). Tough Western economic sanctions over the Ukraine crisis have already taken a toll on exports and companies have put the brakes on investment.
Last month Germany said "geopolitical crises" had contributed to a sharp cut in its growth forecasts for this year and the next.
Related: Putin puts a chill on German economy
Trouble in Germany is the last thing the eurozone needs -- the currency bloc relies heavily on the economic heavyweight.
Rest of Europe: Russia buys plenty of goods from other European countries.
Moscow retaliated against Western sanctions in August by banning imports of fruit, vegetables, meat, fish, milk and dairy products from Europe, as well as the United States, Australia and Canada.
It was unwelcome news for European producers who export a great deal of fruit, cheese and pork to Russia. Some 10% of EU food exports -- worth about $15 billion -- were delivered to Russia last year, making it Europe's second biggest customer.
Europe had to set aside around $156 million to compensate producers.
Related: Russia's slide toward economic crisis: Why it matters
Energy companies: The deteriorating ruble has taken a chunk out of earnings at companies that do business with Russia.
BP (BP) has warned that the tough sanctions would hurt. BP owns a large stake in Rosneft, Russia's biggest oil company, which is subject to U.S. trade restrictions. Shares of the company are down 25% this year as crumbling oil prices slug profits.
France's Total shelved plans for a shale exploration joint venture with Russia's Lukoil due to Western sanctions, crimping possible future earnings for the company. Other energy companies like Exxon Mobil (XOM) also have significant ties with Russia.
Automakers: U.S. auto giantFord (FOVSY)is one of the biggest carmakers in Russia and it has warned that the weaker ruble is hurting sales.
Volkswagen (VLKAF) blamed political tensions for an 8% drop in car sales in Russia in the first six months of the year. The German automaker's shares are down more than 12% this year.
France's Renault (RNSDF) too said that sales in Russia were suffering, while Peugeot Citroen warned in October that the sagging ruble was hurting the company.
Related: No panic yet on Moscow's streets
Banks: Societé Generale's second quarter profits from its Russian unit fell 36%. Other banks that have sizeable exposures are Dutch lender Rabobank and Italy's Unicredit.
McDonald's, Adidas and other brands: Frosty relations between the U.S. and Russia is believed to be behind a crackdown on McDonald's (MCD) in the country. Regulatory authorities forced the temporary closure of 12 restaurants over accusations of sanitary violations. But the move was widely believed to have been politically motivated.
German sportswear company Adidas is shutting stores and scaling back expansion in Russia as tensions in the region hit consumer spending and the decline in the ruble dented profitability. Adidas slashed its 2014 earnings forecast by 20% to 30%, partly because of Russia.
Carlsberg, the Danish beer maker has issued two profit warnings this year on slowing Russian demand.
Coca-Cola (KO) too has suffered. Shares of Coca-Cola HBC, which bottles and distributes beverages in Russia, have tanked 32% this year.

No one wins?
How about Ukraine? They are already tickled pink by Russia's self-wrought disaster.
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Old 12-16-2014, 03:06 PM
 
Location: NYC
2,724 posts, read 2,868,906 times
Reputation: 4685
http://seekingalpha.com/article/2759...-bond-strength

This is a pretty technical article about why the Saudis are allowing the price of oil to drop. Right off the bat, you should realize it costs them less than $10 to produce a barrel of oil.
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Old 12-17-2014, 02:41 AM
 
64,756 posts, read 66,247,630 times
Reputation: 43142
The real danger is not only has much of americas recovery been energy and oil related but the high yield bond market is about 30% oil related companies.

Massive defaults are on the horizon for all these smaller companies.

That can freeze the credit markets all over again taking us right back to 2008 all over complete with job losses.

while lower energy prices look good on the outside ,to low can be quite damaging. even gas stations can start closing since their profits are based on a percentage of the resale price .

next to housing ,energy is the 2nd biggest factor weighted in the cpi index's. deflation in that sector can be almost as harmful as the deflation in housing was to the general economy.
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Old 12-17-2014, 03:53 AM
 
367 posts, read 308,970 times
Reputation: 375
Quote:
Originally Posted by Bronxguyanese View Post
You worry a lot about NYC, but all great western cities come to an end of dominance. This has happened to Athens, Alexandria, Rome, Constantionople, Venice, Paris, London and some day NYC, other cities also suffered similar fates such as Jerusalem and Baghdad, sadly all these cities still exist but lost their former prominent roles on world stage to a certain degree. These cities prospered off of trade, arts and knowledge.
Some day? It's already happening now.

Shanghai, London and other rising global cities are now eating new york's lunch.
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Old 12-17-2014, 07:30 AM
bg7
 
7,698 posts, read 7,645,830 times
Reputation: 14991
Quote:
Originally Posted by MarineBlue View Post
Some day? It's already happening now.

Shanghai, London and other rising global cities are now eating new york's lunch.

And as you can see from the list London is up then down then up then down throughout history. Likely will be the same for NYC.
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