More Bad News for Russia

[Muzh]

Russia Is So Screwed


Well, it looks like Russia is in for a long, cold, and economically devastating winter.
With its currency stuck in a disastrous freefall thanks to Western sanctions and plunging oil prices, the country’s central bank announced around 1 a.m. last night that it would jack up its key interest rate from 10.5 percent to 17 percent. This was a desperate decision. The country was already hurtling toward a recession, and the rate hike—the biggest since 1998, when a financial crisis eventually forced it into default on its debt—was sure to make the pain far worse. But the hope was that, with higher interest rates, investors would finally stop pulling their money out of the country—that, as the New York Times's Neil Irwin put it, keeping money at a Russian bank would simply be “too good an offer to refuse.”
 
It wasn’t. Today, the currency plunge has continued, with the ruble at one point falling 35 percent, at 80 to a dollar. It has rallied a bit since then. A dollar is now worth about 70 rubles, which only looks good compared to the absolute crisis earlier in the day.
 
A crashing currency is a problem for a number of reasons. For one, it makes imports more expensive and stokes inflation. This is especially a problem for everyday Russians, since their country depends on imports for an outsized percentage of its food. At the same time, it's becoming harder for Russian businesses and financial institutions that borrowed in dollars to pay off their debts, which are getting ever more expensive, and dangerous, as the ruble slides.
 
But at this point, it’s not clear that Russia has any good options left at its disposal to stop the ruble from tumbling. It could start unloading its own foreign currency reserves to stanch the bleeding, but as Jennifer Rankin of the Guardian argues, those could drain away fast. And such a move wouldn't fix any of the underlying problems that have pushed Russia to the breaking point. The ruble is collapsing, in part, because oil prices are in the pits. Cheap crude is bad for Russia’s economy. It’s terrible for its government, which gets half its tax revenue from oil and gas. And it's terrible for the ruble, specifically, because as the value of a country’s exports plunge, so too does the value of its money. At the same time, Western sanctions have largely cut off Russia’s banks and oil companies from the credit markets by preventing financial institutions from lending to them for more than one month at a time. In other words, Russia’s economy is basically radioactive. Increasing interest rates further won’t cure it and bring the money back.
 
What will? Perhaps nothing. But some, like Bloomberg View’s Leonid Bershidsky, say that it may be time for capital controls, which are basically rules meant to at least keep money from fleeing the country. There’s some precedent for this; Malaysia used them to save its economy from a meltdown during the emerging markets currency crisis of the late 1990s. But currency controls are also tricky, because the second anybody starts seriously talking about them, there’s a risk that investors will start trying to get their money out the door before it slams shut. Plus, the sorts of billionaire oligarchs who dominate Russia don’t like being told where they can and can’t send their money.
Also, they just might not work. “The Russians are more skillful at escaping capital controls than anybody else in the world,” Anders Aslund, a senior fellow at the Peterson Institute for International Economics, told me. I asked Aslund what Russia could do at this point to save itself. “The only thing Russia can do is to have the sanctions ended,” which would restore some normalcy to the financial system, he said. “I don’t see any other options.”
 
Of course, that would require giving in to the West’s demands regarding Ukraine, which seems unlikely, to say the least.


http://www.slate.com/blogs/moneybox/2014/12/16/russian_currency_crisis_putin_has_no_good_solutions.html

[AkMike]

Russia Is So Screwed
Anders Aslund, a senior fellow at the Peterson Institute for International Economics, told me. I asked Aslund what Russia could do at this point to save itself.  “The only thing Russia can do is to have the sanctions ended,” which would restore some normalcy to the financial system, he said. “I don’t see any other options.”

Of course, that would require giving in to the West’s demands regarding Ukraine, which seems unlikely, to say the least.

http://www.slate.com/blogs/moneybox/2014/12/16/russian_currency_crisis_putin_has_no_good_solutions.html

Oww I bet that'll leave a mark! Maybe a bad taste in their mouths for years to come also.

[fathertime]

Looks like we are screwing ourselves in the process...another crazy day in the stock market...the end result... down another 100+ points again today, after being up 250 at one point...Our economy is showing some frailness, although I do think/hope it will recover.


Fathertime!   

[JayH]

He's made those claims repeatedly. Suppose he was only lying about how or why he can't control them. It's quite possible Putin can't control the monster he unleashed. He wants the West to think he's in control. Russian forces are in Ukraine but, it may not be Putin keeping them there. Putin likely isn't in control of his own Army. There are a number of factions in the Kremlin, all tied to money and power with many assorted interests. The idea that Putin is in control or total control may just be a fallacy.

It is a real possibility . Are you referring to top of tree -or on the ground?Do you have any more than a suspicion on this?Certainly for some time it has been clear to me that simply removing Putin will not solve Ukraines problems--removing Russia is THE problem.
I read(did I post link??) yesterday that the Russian military special forces have been systematically "removing" the hired thugs.in the east.Part of that has been attributed to covering tracks and distancing the Kremlin from events in Ukraine-- and that could have quite a few reasons-I posted earlier in this thread about some prospective future events.
The hired thugs have got used to being all powerful as they exploit the area of occupation-- and that does not sit well with bigger picture plans of the Kremlin

[sleepycat]

Looks like we are screwing ourselves in the process...another crazy day in the stock market...the end result... down another 100+ points again today, after being up 250 at one point...Our economy is showing some frailness, although I do think/hope it will recover.


Fathertime!

How is this relevant to the topic of this thread?
Maybe start a new thread called 'Bad news for US economy' to write mumbo jumbo there?

[JayH]

Looks like we are screwing ourselves in the process...another crazy day in the stock market...the end result... down another 100+ points again today, after being up 250 at one point...Our economy is showing some frailness, although I do think/hope it will recover.


Fathertime!

 

[fathertime]

How is this relevant to the topic of this thread?

Thank you for asking!


I think it is relevant to realize that by attempting to damage the Russian economy we could also damage our own. It is certainly debatable.   It will be hard to say what the long-term consequences will be, after the dust settles in Ukraine. If I were to guess though, one byproduct of this whole thing will be less trust in the US dollar by non-aligned nations. I don't think any nation wants to feel they have to tow the US line or possibly be subject to sanctions.  I realize that you and JayH are giggling down in Australia so it is of little consequence to you if our economy winds up suffering. 


Fathertime! 

[Chelseaboy]

I realize this doesn't fit in with your World view fathertime,but the most likely byproduct of this whole thing is that  countries will have  less trust in Russia .

I don't think any country will want to feel that if they don't tow the Russian line they will be invaded by Russia and have their land stolen.

That much isn't debatable....and i don't have to do any guessing either.

Your predictable attempt at deflecting from what is happening in Russia isn't working.
 

[fathertime]

I realize this doesn't fit in with your World view fathertime,but the most likely byproduct of this whole thing is that  countries will have  less trust in Russia .

I don't think any country will want to feel that if they don't tow the Russian line they will be invaded by Russia and have their land stolen.

I'm afraid I have to agree with you on this one...Russia will also suffer from distrust  from many of its neighbors....I don't know why that wouldn't be a part of my worldview.   


Fathertime!   

[JayH]

Thank you for asking!


I think it is relevant to realize that by attempting to damage the Russian economy we could also damage our own. It is certainly debatable.   It will be hard to say what the long-term consequences will be, after the dust settles in Ukraine. If I were to guess though, one byproduct of this whole thing will be less trust in the US dollar by non-aligned nations. I don't think any nation wants to feel they have to tow the US line or possibly be subject to sanctions. I realize that you and JayH are giggling down in Australia so it is of little consequence to you if our economy winds up suffering. 


Fathertime!

Your ignorance and understanding of the world seems to have no bounds. Australia is part of WORLD economy- so events everywhere impact== and it is that very point that Putin does not get. No country can isolate itself in this era ( not if they want to remain effective) from the world-if you like-- no country is an economic island . What affects the US-affects all other countries.
There was always going to be a cost (to the rest of the world) of Putins stupidity in invading Ukraine-- and in this context I am referring to economic issues. The cost to Ukraine-is of course much higher in all terms.
As a poster here--you repeatedly show you have little understanding of world affairs-- and most disgustingly little empathy for the situation Ukraine is in-- and in particular the loss of life and injuries ,the hardship created by the brutality of of a war-- and why Ukraine needs help and support.

[sleepycat]

...Russia will also suffer from distrust  from many of its neighbors....

Another win/win?

[JayH]

Five Russian banks came under sanctions Switzerland


12/16/2014

W veytsariya financial constraints imposed on thirteen individuals and five companies to prevent them bypass Western sanctions stosvno Russia. On Tuesday, December 16, -  informs Radio Liberty.

Included in the list of five Russian banks now need to obtain special permission to use long-term financial instruments in Switzerland.

According to the publication, the list -  Sergei Kozyak, who led a breakaway Election Commission "FSC" the so-called elections in Donbass 2 November.

Listed entities are prohibited to enter into contracts with financial intermediaries in Switzerland. The purpose of limitation -  the possibility to block the transfer of capital to the country, located outside the European Union.

In March Switzerland acceded to the EU sanctions imposed in connection with the Ukrainian crisis, but do not violate them.

According to agency Reuters, referring to the Swiss authorities, through their country held about 75 percent of transactions with Russian crude oil exports, and banks in Switzerland -  as of 2012 year  -  remained more than $ 15 billion of Russian investors.

[JayH]

Sanctions not working? Maybe the message is starting to get through!!

Russians suddenly got out online and kryyut Putin in everyone - Russian journalist

Chief editor of "New Region" Alexander Shchetinin described the mood of Russians due to the falling speed of the ruble

The mood has changed dramatically, he said on the air Espreso.TV .

"No one expected this, because the Russians lived sense of stability and there is a shock. That's yesterday look different groups, forums on the Internet and the Russians suddenly got out online and kryyut Putin in everyone. It's amazing where gone stability, where the 86% who unconditionally supported the Russian president, who chanted "Crimea ours!" - now they have a completely different mood ", - said Alexander Shchetinin.


Note now  the Central Bank of Russia assessed the situation on the foreign exchange market as critical.

Recall,  the Russian ruble has sold 100 rubles per euro and 80 rubles per dollar .

http://espreso.tv/news/2014/12/16/rosiyany_raptovo_vylizly_v_internet_i_kryyut_putina_po_vsyakomu

[southernX]

There is also another thought that not many on these boards seem to recognize, know or give any credence and that is, possibly Putin can't control the events and actions of the Russian military in Ukraine. Perhaps all is not as it seems?

FP
yes it is possible this may be occuring ,

however if it was occuring ,  given the history of russian revolutions its more likly if putin has lost control of the military/other bodies the new person/person emerging would be more vivible by now id think

thats not to say it isnt / cant or wont happen though

the other worse case is if putin is pushed even further from forces within the kremlin /duma , he may resort to even more unpredictable /desperate measure to either  reassert control or threaten the outside world , if he remains in control

this makes the situation very unpredicatble and dangerous for all imo

SX

[fathertime]

Your ignorance and understanding of the world seems to have no bounds. Australia is part of WORLD economy- so events everywhere impact== and it is that very point that Putin does not get. No country can isolate itself in this era ( not if they want to remain effective) from the world-if you like-- no country is an economic island . What affects the US-affects all other countries.
There was always going to be a cost (to the rest of the world) of Putins stupidity in invading Ukraine-- and in this context I am referring to economic issues. The cost to Ukraine-is of course much higher in all terms.
As a poster here--you repeatedly show you have little understanding of world affairs-- and most disgustingly little empathy for the situation Ukraine is in-- and in particular the loss of life and injuries ,the hardship created by the brutality of of a war-- and why Ukraine needs help and support.

I was feeling like many of your comments have been ignorant and/or hypocritical.  You may be all in an uproar over this conflict in particular while ignoring or indirectly promoting a dozen others.   I've come to realize you are not too up on things worldwide.  I don't see Russia as pure evil in regards to this conflict...so naturally I'm going to disagree with the USA further fomenting the unrest  any more than they already have.  Perhaps from Russia's viewpoint, they are doing what they have to do....and if they suffer from it, so be it. 


Fathertime! 

[JayH]

The Russian people will see clearly for a long time - Nemtsov

Russian opposition politician Boris Nemtsov believes that Russia waiting for hard times, but people will not soon rise

He expressed this opinion in the air Espreso.TV .

"I think the events in Russia will develop in a negative scenario: a deep economic crisis will be double-digit inflation (perhaps 20%, 30%), will continue to weaken the ruble, Putin will not change its policy. Gradually, very slowly, people will of seeing, understanding that he led the country to a standstill, but it will not be fast enough and take great time "- he said, adding that the Russian government still denies any guilt.

"During this time, unemployment will rise, will be the social protests grow dramatically and drastically the number of poor people, but he (Putin - Ed.) Will all blame on you, these bastards are Ukrainian, Europeans, Americans, and he did not," - Russian politician said.

Nemtsov also warned Ukrainian rejoice collapse of the ruble, after seeking the extreme, Putin most likely find their place in Ukraine. This can greatly speed up the full-scale hostilities.

"Do not rejoice Ukrainian falling ruble, as the financial crisis just pushes him (Putin - Ed.) Before the war. For war is fog. You see, when a peaceful country destroyed the national currency and rising prices, all questions to the government and the president, and when the country is at war, all questions to the aggressor or, to the one who fights with you - backstage world, the "Bandera" and so on. Therefore it in order to explain why the Russian economy collapsed, he just this war is necessary. The chance of war is increased, "- said Boris Nemtsov.




http://espreso.tv/news/2014/12/16/rosiyany_raptovo_vylizly_v_internet_i_kryyut_putina_po_vsyakomu

[JayH]

I was feeling like many of your comments have been ignorant and/or hypocritical.  You may be all in an uproar over this conflict in particular while ignoring or indirectly promoting a dozen others.   I've come to realize you are not too up on things worldwide.  I don't see Russia as pure evil in regards to this conflict...so naturally I'm going to disagree with the USA further fomenting the unrest  any more than they already have.  Perhaps from Russia's viewpoint, they are doing what they have to do....and if they suffer from it, so be it. 


Fathertime!

One last time---- this is not about the USA. That is pure Kremlin BS on a large scale .Even if you actually are an American-- the USA is part of the world-as I said above.It is neither an economic or political island-- there are many mutually benefiicial agreements in place  and as such--the US not only has the right to get involved--it has the obligation.\
Your isolationist thoughts were outdated a century ago-- so repeating them now is really too ridiculous.

[JayH]

FP
yes it is possible this may be occuring ,

however if it was occuring ,  given the history of russian revolutions its more likly if putin has lost control of the military/other bodies the new person/person emerging would be more vivible by now id think

thats not to say it isnt / cant or wont happen though

the other worse case is if putin is pushed even further from forces within the kremlin /duma , he may resort to even more unpredictable /desperate measure to either  reassert control or threaten the outside world , if he remains in control

this makes the situation very unpredicatble and dangerous for all imo

SX

It certainly adds another factor for sure.
I wrote yesterday of a growing confidence in Ukraine about their own ability to handle the situation militarily( I am more hopeful than confident on that point-- saying that with total respect for the Ukrainians).
Russia is positioned to escalate dramatically- and uncertainty at the top could lead to anything happening.

[southernX]

The Russian people will see clearly for a long time - Nemtsov

Russian opposition politician Boris Nemtsov believes that Russia waiting for hard times, but people will not soon rise

He expressed this opinion in the air Espreso.TV .

"I think the events in Russia will develop in a negative scenario: a deep economic crisis will be double-digit inflation (perhaps 20%, 30%), will continue to weaken the ruble, Putin will not change its policy. Gradually, very slowly, people will of seeing, understanding that he led the country to a standstill, but it will not be fast enough and take great time "- he said, adding that the Russian government still denies any guilt.

"During this time, unemployment will rise, will be the social protests grow dramatically and drastically the number of poor people, but he (Putin - Ed.) Will all blame on you, these bastards are Ukrainian, Europeans, Americans, and he did not," - Russian politician said.

Nemtsov also warned Ukrainian rejoice collapse of the ruble, after seeking the extreme, Putin most likely find their place in Ukraine. This can greatly speed up the full-scale hostilities.

"Do not rejoice Ukrainian falling ruble, as the financial crisis just pushes him (Putin - Ed.) Before the war. For war is fog. You see, when a peaceful country destroyed the national currency and rising prices, all questions to the government and the president, and when the country is at war, all questions to the aggressor or, to the one who fights with you - backstage world, the "Bandera" and so on. Therefore it in order to explain why the Russian economy collapsed, he just this war is necessary. The chance of war is increased, "- said Boris Nemtsov.




http://espreso.tv/news/2014/12/16/rosiyany_raptovo_vylizly_v_internet_i_kryyut_putina_po_vsyakomu

YES ,id agree with a lot of nemtsovs thoughts here ,
the situation becomes more unstable as russia finances /economy falters

SX

[Muzh]

Looks like we are screwing ourselves in the process...another crazy day in the stock market...the end result... down another 100+ points again today, after being up 250 at one point...Our economy is showing some frailness, although I do think/hope it will recover.


Fathertime!

Our economy is showing some frailness?


You definitely are a shill for the Kremlin.


Please, explain to me how is our economy showing some frailness.

[JayH]

YES ,id agree with a lot of nemstovs thoughts here ,
the situation becomes more unstable as russia finances /economy falters

SX

I have always felt that we need to be careful what we wish for-in relation to Russian system collapse. While prima facie I would rejoice total political and economic disruption in Russia ( in effect to free Ukraine of a war and disruption-and get it's borders returned)-- it could create far greater chaos.
With effective political opposition suppressed -- and having little influence-- I doubt that there is enough strength in the potentially sensible alternatives in Russia to be able to get control  . More likely we could get more lunatic extremism running Russia.

[Muzh]

How is this relevant to the topic of this thread?
Maybe start a new thread called 'Bad news for US economy' to write mumbo jumbo there?

Don't give him a podium, please. Just ask him simple questions like "please explain" so he looks like a fool.

[calmissile]

Don't give him a podium, please. Just ask him simple questions like "please explain" so he looks like a fool.

Or like many of us, just put him on Ignore.  He can talk to himself.     

[Muzh]

Thank you for asking!


I think it is relevant to realize that by attempting to damage the Russian economy we could also damage our own. It is certainly debatable.   It will be hard to say what the long-term consequences will be, after the dust settles in Ukraine. If I were to guess though, one byproduct of this whole thing will be less trust in the US dollar by non-aligned nations. I don't think any nation wants to feel they have to tow the US line or possibly be subject to sanctions.  I realize that you and JayH are giggling down in Australia so it is of little consequence to you if our economy winds up suffering. 


Fathertime!

Listen Greenspan, have you consider that the Hryvna may out-perform the "Rubble?" To intricate for you to understand?


Please debate this.


Edit: Let me add this. Consider that crude is exchanged in US DOLLARS. Do you know what that means to the Russians?
Let's see how smart you are.

[JayH]

Don't give him a podium, please. Just ask him simple questions like "please explain" so he looks like a fool.