"Russia ruined oil"

The American financial analyst watched Russian television for seven days and felt the conflict of two hemispheres of the brain

Vitaly Katsenelson was born in Murmansk. He was 18 years old when his family left the USSR in 1991. Now Vitaly lives in Denver and has become one of the most famous financial analysts in the United States. His articles are regularly published by Financial Times, and the book “Active cost investing”, which received high marks of specialists, has recently been translated into Russian.

For 20 years, Vitaly did not watch Russian television, but after the start of the war in Ukraine, I decided to figure out how the propaganda mechanisms work and why, contrary to common sense, a significant number of Russians continues to support Putin’s policy. For seven days he watched only the programs of the first channel and set out the results of his observations in the article "Putin's World." "I considered the Internet an unstoppable democratic force, which would always allow the truth to slip through the cracks even in the strongest wall of propaganda. I was wrong. After watching Russian television, you do not want to read the Western press because you are convinced that it is lying. And more importantly, Russian TV is so powerful that you do not even want to watch anything else, because you have the undertaken ones that you have at your disposal. The facts, ”says Vitaly Katsenelson,“ Russian propaganda works, forcing your right hemisphere of the brain (emotional) to prevail over the left (logical), at the same time clogging all your logical filters ... Russian television is not interested in the facts. Heads and stops questioning the presented information. "

In an interview with Radio, Freedom Vitaly Katsenelson shared the results of his observations and talked about what was happening on the oil market.

The American financial analyst watched Russian television for seven days and felt the conflict of two hemispheres of the brain

- You turned on the first channel after a huge break. Watching Russian television is a difficult test or exciting activity?

- You see the information from a completely different side. When the situation with the Crimea occurred, I still understood why Russian people perceive it calmly and allow Putin to do this, since Crimea used to belong to Russia. That is, I do not think that this is right, but it is logical, I could understand how Russian people allow Putin to do what he does. When the situation in Ukraine went further, I could no longer understand this. I could not understand how Russian people could agree with this, so I began to watch Russian television. And I saw a completely different picture than I see from America. Here we see how the Russian army is fighting with the Ukrainian army in eastern Ukraine, and it shows that there is no Russian army there, but the war was beginning with America. For a week I watched Russian television and did not watch American and realized that Russian people get completely different information. Honestly, I myself have doubts. The right hemisphere of the brain begins to control the left: the emotions that you see on TV begin to block filters that help to reason. When you watch Russian television, you think that the Nazis manage Ukraine. I watched the program "Man and the Law", which, in theory, should not have anything to have to do with politics, and they began to show the Bandera how they killed Jews and Russians during the war, and then committed terrorist attacks. In the end, they say that these people are now managing Ukraine. It seems that in Ukraine there are a huge number of fascists.

- You probably also drew attention to the fact that the Ukrainian topic dominates Russian television, and Russian affairs are put into the background.

- And this is visible. In America, a dozen television channels where I can find out the news, and in Russia all the media controls the Kremlin. In theory, our conversation was supposed to begin with this. Russians receive all information from one source, from the state. Information is replicated by the state in order for it to help the state achieve what it wants to achieve, that is, there is no freedom of speech there. Russian television is a direct report from the Kremlin. Therefore, everything you see must filter and understand that what the state does does not check the reporters, all the information comes out of one source. In my article I brought a list of things that I found out when I watched Russian television. For example, that America spent five billion dollars to destabilize Ukraine. I could not understand where they took this figure. I found on the Internet that one of the assistants to the US Secretary of State in December 2013 said that America gave Ukraine five billion dollars, but that was over the past 23 years. And Russian television simply took this figure and announced that America had given five billion dollars over the past three months to destabilize Ukraine.

-Vitaliy, I think that you as a business analytics interested the question of sanctions against Russia. How are the causes of sanctions and their influence on the Russian economy presented on Russian television?

- This is the most interesting. Since the Russians believe that the Americans and Europeans started the war in Ukraine, they look at these sanctions, as if America forced Europe to introduce them. Such a spirit of patriotism: "You will not crush us." These sanctions made Putin more popular. The problem is that Putin took his people hostage. Because when Russia said that they will stop buying products from Europe, it hits Russia much more, and a blow to Europe is very small. Russians spend three times more on products than we spend in America. When they stop importing European products, prices grow very much. It is interesting that it seems that the worse life in Russia, the less people will support Putin. But I think this is not so. Because Putin has control over information, and this control gives him great power, he can always translate problems from himself to America or Europe. That is, when in Russia there will be economic problems that will be associated, by the way, not only with sanctions, but with a drop in oil prices, Putin will represent this as problems created not by a weak Russian economy, but by America and Europe. Therefore, its popularity is unlikely to fall.

- In Russia, conspiracy theories flourish that the drop in oil prices is the result of a conspiracy in order to bring down the Russian economy. What are the genuine reasons for this decrease?

- There are three reasons. Demand for oil falls, because the Chinese economy is very slow, because due to the China economy, oil prices have risen like that. In China there was a huge economic soap bubble, which now bursts. Demand decreases, and the amount of oil increases, because in America we began to produce much more oil. And thirdly, the dollar is growing. It is growing not because we are so good in America, just things in Europe are worse than in America. And these three factors lead to lower oil prices.

- That is, it has nothing to do with the situation in Ukraine at all?

- No. It is very difficult to manipulate oil at the global market. Now there are sound reasons from an economic point of view why these prices are falling.

- Do you think this is a long -term process or then everything will return to the previous prices that Russia really liked?

- Every day when I come to work, I have to decide whether to buy me shares of oil companies or not. Because if oil prices increase, now there are a lot of cheap companies. I look at China: in China, problems will only worsen, I believe that the demand will fall. I look at oil production in America - it only increases. These two factors definitely work against oil. Therefore, as an investor, I decide not to buy shares of oil companies. I believe that oil prices can fall much lower before they go up.

- What do you think about the impact of sanctions on the Russian economy?

Life in Russia improved not because Putin came to power, but due to the fact that China’s economy began to grow very much

- I believe that oil prices are much more important than sanctions. In this case, not so much oil prices are important, but the ratio of the ruble to other currencies. If you look at Russia's loans, then it is in a good position, they have quite large reserves in dollars. But many Russian companies have huge dollar loans. 150 billion dollars should be re -financed after a few years. If the price of oil falls, then the ruble will fall too, if the ruble falls, then the Russian economy will have problems, they will not be able to re -financing their loans. As far as I understand, due to sanctions, Russian companies will be more difficult to borrow money outside Russia-this will also complicate this process. When I left Russia, I believed that the future of Russia would be pretty good, because people had a very good education, there was publicity, a market economy became. But I believe that oil has destroyed Russia. Because the price of oil was so high that it did not allow other industries in Russia to develop. If you think that Russia exports today-with the exception of weapons and vodka, it is very difficult for me to call any Russian products that we use in America or in Europe. So high oil prices did not allow other industries to develop. The reasons are very simple. When you export oil and gas, your currency rises, which makes your product less competitive in the international market. If Russia, for example, made good bicycles, these bicycles would be less competitive in the world market because they would be too expensive. At the same time, capital goes to where he will receive the largest return. The largest return was obtained in the oil and gas industry. Therefore, investments were not made in industry that would support Russia afloat when oil prices are falling. Analyzing the Russian economy, I understand that all that you need to know is gas prices and oil, and this will tell you where the Russian economy will be in 3-5 years.

-Do you think, Vitaly, at least something of what you said now, understand the audience of the first television channel that you watched, or have other ideas about what is happening in the Russian economy?

Putin took people hostage. When Russia said that they will stop buying products from Europe, it hits a lot more in Russia

- No, because they look at Putin and say: when Putin came to power, our life has improved. And this is true. But it improved not because Putin came to power, but due to the fact that China’s economy began to grow very much, and this raised oil prices, gas, metal, and fertilizers. Not because of Putin, but because of China. And people look at Putin and think that he has made the right decisions over the past 15 years. By the way, many decisions that he made since 2002 were correct. For example, he made a taxation system, which is even better than in America. Some Kremlin decisions were very good. But the largest factor that helped the economy was oil, not Putin. I think that many people do not see this.

- And what happens to the housekeeper of China, why did it slow so much that it collapsed oil prices?

- What I tell you will be ridiculous to hear from the capitalist. In China, there was not enough socialism. In America and even in Russia there is a social network. In America, when there was a recession and people lost their jobs, they received unemployment benefits. This is not in China. The Chinese state was interested in the Chinese economy to always grow. Because when the economy is growing, unemployment is small. If the economy begins to fall or slow down, unemployment will grow. And for the economy to grow, it tried to stimulate this growth. You stimulate growth, and when it slows down, you begin to build. Soap bubbles arose in China in the construction of houses, in the construction of offices, in the construction of infrastructure. When you build roads, at home, you need cement, you need to build factories that will make cement, that is, you consume a lot of oil, gas, energy, and a lot of metal. This growth raised prices for all this to a very high level. But in China, a huge number of houses are now empty, because people invest in houses instead of investing in banks or just put in the bank. This cannot happen for a very long time. Therefore, now a slowdown begins, which can end pretty badly. Something similar to the problems that were in America in 2007. We had a soap bubble in housing construction, and they had a soap bubble in housing construction and in other industries too. The problem with these soap bubbles is that when they burst, the banking system begins to burst too. Therefore, usually the results are very difficult. Not only people lose money on homes, but also banks begin to go bankrupt.

- That is, a coincidence with events in Ukraine, in Crimea completely random?

- It can be considered random. And we can say that Putin, seeing that oil prices are falling, that the Russian economy is slowing down, tried to use Ukraine to distract people's attention from the economy. Maybe I overestimate Putin, but this is one of the theories, at least.

- Vitaly, you are passionate about the study of Russian television, or was it an experiment for seven days and you will not turn this channel more?

-I lived in Russia for 18 years and, although I lived most of my life in America, still what is happening in Russia, I am interesting because I am from there. Will I watch Russian television? Maybe sometimes to see what is happening in Russia and in the world, from a different point of view. But it will take very little time.