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Friday, May 05, 2006

More Signs of Russia's Coming Economic Apocalypse

Interfax reports:

MOSCOW. May 5 (Interfax) - The differentiation in Russia's incomes widened slightly in the first quarter of 2006. The Federal State Statistics Service reported on Thursday that the wealthiest 10% of the population earned 29.7% of overall cash income, compared with 29.6% in the first quarter of 2005. The least well-off 10% of the population earned just 2% of overall revenue, down from 2.1% in the first quarter of 2005. Total cash income for the Russian population was 3.34 trillion rubles in the first quarter of 2006, up from 2.79 trillion. Cash spending amounted to 3.46 trillion, up from 2.88 trillion.
Taking up her calculator, La Russophobe determines that since Russia has 145 million people, the top 10% of its population consists of about 14.5 million Russians holding 29.7% of 3.34 trillion rubles each quarter. This means about 992 billion rubles in income divided by 14.5 million people, resulting in an allocation of about 68,000 rubles to each person per quarter or about 275,000 rubles per year . Now mind you, these are Russia's SUPER rich. Only one in ten Russians can dream of having an income like theirs. At 27 rubles to the dollar, 275,000 rubles per year is roughly $10,000 per person per year. Now, to be sure, not every person in the group is an actual wage earner. For example, if we had a family of four with a househusband and two young children, we'd logically have a wage-earning wife bringing home about $40,000 in her paycheck. Superich? Of course, at the same time, we'd have any number of millionaires in this group and a few billionaires, so we'd also have a goodly number of folks well below the superrich average.

How about the others? There are 130.5 million people left to divvy up the remaining 70.3% of the 334 trillion rubles -- in other words, the tidy sum of 2.35 trillion rubles divided by 130.5 million people. That works out to almost exactly 18,000 rubles per person per quarter, which at 27 rubles to the dollar translates to $666 per person per quarter or about $220 per person per month in cash income -- truly the Devil's wages. It's less than $1,000 per month for a family of four. It's 90% of the population.

And leave us not forget, dear reader, Interfax's admonition: The bottom 10% earns only 2% of the cash income. So that's another 14.5 million people divvying up just 2% of 3.34 trillion rubles, or the paltry sum of about 67 billon rubles. Divide 67 billion rubles by 14.5 million people and you get a frightening 4,600 rubles per person per quarter, or at 27 rubles to the dollar $170 each -- just $56 per person per month. And getting poorer every day, according to Interfax, as the gap between these folks, "living" on less than $2 per day, and the "superrich" grows ever wider.

Perhaps not surprising then to learn from Interfax that despite being flush with oil revenues Russians still spent 120 billion rubles more than they took in, so as to make ends meet no doubt -- quite a trick in a country where credit cards are hard to come by.

Now for the really scary thought: What if the price of oil wasn't $70 a barrel?

Now for the even scarier thought: These are the Kremlin's numbers were talking about. Can you imagine how grim the real ones are?

Now for the scariest thought of all: If you hadn't read this post, you probably would have thought that a quarterly increase in Russian cash incomes from 2.79 to 3.34 trillion rubles (that's nearly 20%! wow!) was significant, wouldn't you have? Hmmm . . . I bet that's why you never see this kind of analysis of these kind of numbers when they come out of Russia, isn't it?

PS: And don't let those dirty Russophiles turn your head with their talk about "purchasing power parity." They'll tell you that since things cost less in Russia, $40,000 in Russia is more like $80,000 in America. Even if it were, that's not superrich, now is it? But it's NOT. Because only a few things cost less in Russia, and those things mostly suck. Things like incompetent medical care and corrupt police protection and radioactive milk and polluted fish and really dirty, rude hotels and restaurants are cheap. Good things like Sony TVs and Levis cost the same everywhere. Sure, Russia has one or two great things that are cheap, like the Mosscow and St. Petersburg subways for example. But that doesn't change the fact that purchasing power parity is an absurd fiction, no different from Santa Claus. And of course, you can double and triple and quadruple $2 per day and you still have nothing but grinding, crushing poverty.

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