Michael Delyagin: "It’s Almost Impossible to Buy a Palace in London or Austria Not Having Eventually Plundered Us”

- According to the Ministry of Economic Development and Trade, growth of consumer prices by the end of 2012 will reach 7% and in 2014-2015 it will make 4-5 percent. What do you think, if these figures are real? Or it is necessary to expect bigger inflation and increase in prices?

- Taking into account already begun unpunished because of total corruption speculation, caused by drought and as a consequence of ruble weakening, official inflation in 2012 will, possibly, reach 7%. As soon as it’s possible to judge, real inflation will be, as usual, twice as high.

While one shouldn’t expect decrease in inflation in one and a half in 2-3 years. After all tribalism-based kleptocracy owning Russia is eating now up the last possibilities of our inertial development. Sociopolitical destabilization which started in December of last year is constantly urged on by efforts of the ruling offshore aristocracy and consequently will accrue as a whole (though with the periods of recession). If it won’t break us into system crisis by 2014-2015, disorganization of economy by that moment will inevitably get the scales at which we will have only to rave about fading of inflation, the more so by 4-5%.

- Oil, the Ministry of Economics considers, will become cheaper - this year it will cost 109 dollars per barrel, in 2013 and 2014 – 97 and 101 dollars. While gross domestic product will grow this year by 0,1 percent higher than it was expected - by 3,4%. According to the Ministry of Economic Development and Trade, there is no “development pause” and “depression”. Do you agree with this statement?

- Moderate reduction of the cost of oil is plausible: on the one hand, “slate revolution” will develop in the USA and global crisis – constrain its consumption, on the other – pumping of key economies of the world with money will support global speculative markets and first of all of the most speculative from them – oil market.

Moderate attenuation of economic growth is also probable: after 4,4% in the first half of the year, it really can fall approximately to 2,4% (but not below!) in the second, because of it following the results of the year it can really make 3,4%. For the time it is possible to hope for a little higher rates - which, however, are also absolutely insufficient for maintenance of sociopolitical stability.

At the same time statements about absence of “development pause” have emotional and may be even political character: it’s not clear what development they are talking about? 10 years ago Yavlinsky's formula “growth without development” seemed metaphor, but already in the middle of “corpulent zero years” it entered lexicon of the most conservative sell-side analysts. If there is no development – there is no pause.

There’s also no depression: by the mere meaning of the word it doesn't provide economic growth, but it waits for us, as well, however, as all mankind. Global economic crisis will inevitably end in long depression against which the Great Depression of 90-years prescription would seem street fight against world war. However it is possible to believe with high degree of confidence that there will be no falling into depression this year.

- The Ministry of Economic Development and Trade however thinks that situation with ruble exchange rate will worsen. The Ministry expects mid-annual dollar exchange rate in 2012 be 31,3 rubles instead of 29,2 rubles, in 2013 — 32,4 rubles instead of 29,7 rubles, in 2014 — 33 rubles instead of 30,5 rubles, in 2015 — 33,7 rubles instead of 31,5 rubles. What’s happening in your opinion? Export decreases, capital outflow grows? Perhaps, it depends on reduction of oil price?

- At more than one and a half billion dollars of the international reserves insignificant fluctuation in oil price can't seriously influence rate of the national currency.

The reason – in frailty of corruption model of the Russian economy aggravated with accession to the WTO on obviously crushing terms. Development is being blocked almost in each point, almost at each level of management - simply because by its nature it disrupt plundering of the country and its people by the ruling party. Weakening of ruble is the only way of revival of economy and maintenance of acceptable environment without development. Declared reference points of this year are plausible; its weakening during next years, possibly, will have more large-scale character.

- What should we expect from such ruble weakening? Whether inflation will raise? Or prices will grow? May be in different percentage ratio, not in that one which the department predicts? What will be with tariffs of housing and communal services?

- Tariffs of housing and communal services will grow regardless of ruble exchange rate: simply because of the fact that the state even in principle doesn't try to bridle arbitrariness of monopolists, including municipal ones. It is logical: if they don't price out – how would they pay bribes? After all it is impossible – at least for the official - to buy a palace in London or a lock in Austria without having eventually plundered us and arbitrariness of monopolies is the main tool of such robbery.

Weakening of ruble leads to rise in price of import. As development of production is blocked by all policy of comprador kleptocracy, scales of import substitution will be insignificant - and weakening of ruble will lead to rise in prices. However official inflation will not increase much higher: it’s official and it shouldn’t spoil the mood of the rulling offshore aristocracy which actually is not interested in the destiny of Russia.

- How will it reflect the growth of incomes of the population?

- The rise in prices leads to impoverishment of the population, I think you note it even on your own family. There are no additional incomes because of the lack of development.

- What the Russians should do? To buy up currency? To spend rubles for necessary purchases, that is to invest money in some business or goods?

- The Russians should prepare for system crisis studying and getting organized. For no stocks – either gold, or currency, or even I-phones – will help, if distemper reaches such scales that, for example, as it happened in Kazakhstan at the beginning of the 90th, million cities will remain without heat and gas. Or without water and sewerage? Without light?

It is necessary to strengthen friendship and to bring up children correctly at the individual level.

It is necessary to buy – not now, already before entering system crisis - necessary and subject to long storage import goods: medicine, sanitary products and other. However, it is necessary to take into account that rise in price for import goods leads narrowing of its range - so some medicine will appear in Russia simply inaccessible; sometimes such thing happens already now.

In business plan I advise you to transfer ruble accumulation to dollars, you can do it slowly, without panic and losses (better not into hundred-dollar notes), gold investment coins and RMB (but only if you have possibility to sell them fast at a market rate). If you keep your money in bank – let it be the state bank and the size of the deposit doesn't exceed 700 thousand rubles.

Unfortunately I don’t see now guaranteed types of business available to the ordinary person now. Jewels or goods of long using lose in price in crisis.