More Bad News for Russia

[msmobyone]

You continue to not get it!

Says the guy discussing Dollars received by the nation whose currency is the rouble and whereby a conversion is ultimately made...

For the point I'm making it wouldn't matter if the Ruble was 100 to 1.  It is being BYPASSED when Russia receives dollars for oil they can convert those dollars directly to whatever currency/country they are dealing with! 

My very simple calculations prove otherwise..

Even if - by a miracle - oil stayed at 30/usd and the rouble was 100 to 1 - the Kremlin would be receiving less - nearly 20 percent- than two years earlier...

Most of us realise that the fall of the rouble is linked to oil prices.

That said, I was never arguing that the declining Ruble was a positive for Russia, because not everything is abou oil/dollars...BUT since most of the world's currencies are also going down pretty fast too oil dollars do MITIGATE the negative effect for Russia since it receives a lot of dollars which it can then spend, with the ruble being out of the equation.   


Fathertime!

But it is receiving a lot less strong dollars ...

Plus, interest rates are higher, credit is more expensive ..

Spin on..

[msmobyone]

I've explained my reasoning...YOU have not. 

Tut, tut, FT - Have you succumbed to fibbing.. the arithmetic used to burst your daft assertion was that of a 7/7 year old level

  The strong dollar is paid to and then ued by Russia for their oil, they are then able to use that strong dollar to buy from other countries a lot more than their own Ruble would otherwise get them...should be simple, except for a few here!

It seems you need reminding.

2014 - pre Crimea
oil 100/ barrel, rouble at 35/ 1 usd  =3500 roubles

2016 - being generous for you with pricing/ exchange rate

30 usd barrel, rouble at 79 = 2370 roubles

At some point these dollars become roubles - continue to delude yourself that they are going further ..

Any way you spin it Russia is a nation too reliant on oil/ gas revenues and they are less - way less - than 2 years ago ..'strong dollar' or not ..

[fathertime]

Says the guy discussing Dollars received by the nation whose currency is the rouble and whereby a conversion is ultimately made...

Who says the Dollar is converted into Rubles after the dollars are received by Russia?  Why would they go through the hassle of converting dollars to Rubles? Especially since the dollar is way more marketable...it certainly makes sense for them to bypass Rubles.

Even if - by a miracle - oil stayed at 30/usd and the rouble was 100 to 1 - the Kremlin would be receiving less - nearly 20 percent- than two years earlier...

When oil goes down it is not only Russia's currency that tanks, it is a boatload of nations currencies that also go down.  If you look around the world at the moment you will see for yourself, many nations have currencies at rock bottom verses the dollar.  Those that have dollars can get more for less of them. 

Most of us realise that the fall of the rouble is linked to oil prices.

I agree..there is clearly a link.

But it is receiving a lot less strong dollars ...

Plus, interest rates are higher, credit is more expensive ..

Spin on..

Less dollars, but it takes less dollars to make purchases elsewhere...it doesn't make up for everything, but it does MITIGATE some of the damage...which continues to dovetail into the overall point that a strong dollar is better for RUssia than a weak dollar.   
I don't know who is loaning to Russia right now...Are you sure they are even a large debtor nation?


What is this garbage about 'spinning'.  You were making reasonable points until you started in on the silliness.


Fathertime!   

[fathertime]

Tut, tut, FT - Have you succumbed to fibbing.. the arithmetic used to burst your daft assertion was that of a 7/7 year old level

 

You are one of several that fail to get what should be an obvious point (Or at least pretend not to).  It is you that is proving to be daft.  I already suspect that most DO get it though, although maybe not...doesn't really matter but don't be too surprised wondering why Russia hasn't gone bankrupt when you think they should. 


 Your math figures are not important when the Ruble is bypassed...the strong dollar goes much farther than a weak one will...Check around the world's currencies, and where they are in terms of dollars currently, compared to where they have been historically. 


Fathertime!   

[fathertime]

At some point these dollars become roubles - continue to delude yourself that they are going further ..

Not necessarily.  Why would they become Rubles if they don't need to? If you can show me that the oil dollars become Rubles prior to be used abroad, I will concede the point...but i don't think you can....because it isn't happening.  Will that mean that YOU deluding yourself? 

 
Any way you spin it Russia is a nation too reliant on oil/ gas revenues and they are less - way less - than 2 years ago ..'strong dollar' or not ..

Don't get me wrong, the low gas prices are obviously harming Russia overall as it is many other nations.   The strong dollar relative to other currencies helps Russia a little though...mitigates the harm at least to a certain extent...which has been the point I've been harping on.  Ironically if the dollar were to tank, AND oil prices were to remain low, it could be devastating to Russia...but that isn't likely to happen. 


Fathertime!   

[msmobyone]

Who says the Dollar is converted into Rubles after the dollars are received by Russia?  Why would they go through the hassle of converting dollars to Rubles? Especially since the dollar is way more marketable...it certainly makes sense for them to bypass Rubles.

My ggodness, are you really putting such daftness in print ....

When oil goes down it is not only Russia's currency that tanks, it is a boatload of nations currencies that also go down.  If you look around the world at the moment you will see for yourself, many nations have currencies at rock bottom verses the dollar.  Those that have dollars can get more for less of them. 

Yes, but THIS  thread is about Russia and you already have had it pointed out that the worst effected currencies are those over-reliant on selling oil and that receiving payment in 'strong dollars' is not helping..

I agree..there is clearly a link.

Great... now all you have to do is the maths and understand that in Russia - things get paid for in the national currency

Try going into the local supermarket, or paying for electricity or petrol [ 'gas' ] in dollars and watch the reaction - before you are pointed out they accept ROUBLES...If you use ones non local bank card the conversion will be made from Roubles

Have you even BEEN to Russia..

Less dollars, but it takes less dollars to make purchases elsewhere...it doesn't make up for everything, but it does MITIGATE some of the damage...which continues to dovetail into the overall point that a strong dollar is better for RUssia than a weak dollar.   
I don't know who is loaning to Russia right now...Are you sure they are even a large debtor nation?

Ask the Chinese who are supplying much of the capital to build the pipelines that will supply .. China.

You still seem to be ignoring your simple maths lesson - it renders your assertion - now- as pure ignorance

What is this garbage about 'spinning'.  You were making reasonable points until you started in on the silliness.

..
Fathertime!

Well, how would you describe your repeated ignoring the simplest demonstrations of your very of 'silliness' ..the only conclusion can be it is wilful ..hence 'spin'..

[msmobyone]

You are one of several that fail to get what should be an obvious point (Or at least pretend not to).  It is you that is proving to be daft.  I already suspect that most DO get it though, although maybe not...doesn't really matter but don't be too surprised wondering why Russia hasn't gone bankrupt when you think they should. 


 Your math figures are not important when the Ruble is bypassed...

 

ok, I'll bite.... Please tell us how Russia and Russians pay to live - day to day..Tell us in which currency the Police, Customs officials and other civil servants are paid.. What is the main source of Russian revenue and who pays in Roubles....

[fathertime]

My ggodness, are you really putting such daftness in print ....

Don't blame me for your own ignorance!   

Yes, but THIS  thread is about Russia and you already have had it pointed out that the worst effected currencies are those over-reliant on selling oil and that receiving payment in 'strong dollars' is not helping..

No.  You are becoming illiterate, as well as ignorant now!

Great... now all you have to do is the maths and understand that in Russia - things get paid for in the national currency

Try going into the local supermarket, or paying for electricity or petrol [ 'gas' ] in dollars and watch the reaction - before you are pointed out they accept ROUBLES...If you use ones non local bank card the conversion will be made from Roubles

Internal businesses...I.E. One Russian to another Russian...different subject that I was never addressing.  My assertion is, the dollars Russia receives are spent abroad to bring needed goods/services in.

Well, how would you describe your repeated ignoring the simplest demonstrations of your very of 'silliness' ..the only conclusion can be it is wilful ..hence 'spin'..

[/size]

If it were spin it would be disingenuous, which it isn't.  As far as I'm concerned, all you have demonstrated is an inability (or unwillingness) to understand the point.  I'm only repeating, because people like yourself are interested in engaging.  Yeah, the strong US dollar does unintentionally mitigate some of Russia's financial pressures. 


Fathertime!   

[fathertime]

ok, I'll bite.... Please tell us how Russia and Russians pay to live - day to day..Tell us in which currency the Police, Customs officials and other civil servants are paid.. What is the main source of Russian revenue and who pays in Roubles....

In Rubles of course. 


Oil of course!


Here is a nice flowchart for you to review


OIL------Dollars------imported goods (Purchased in dollars)---------Russian Consumer (Paid in Rubles)....
                                                OR
Russian produced consumer goods------Russian Consumer (Paid in Rubles)


Lets see your flowchart. 




Fathertime!   

[Slumba]

If it were spin it would be disingenuous, which it isn't.  As far as I'm concerned, all you have demonstrated is an inability (or unwillingness) to understand the point.  I'm only repeating, because people like yourself are interested in engaging.  Yeah, the strong US dollar does unintentionally mitigate some of Russia's financial pressures. 


Fathertime!

It may mitigate a portion of it.  You seem unwilling to admit that this mitigation is only *partial* however.  Otherwise an exchange rate of 1000 RUB : 1 USD would be even better, right?

Just because, instead of losing $1, you only lose 75 cents, doesn't mean that there was no loss.

[calmissile]

Don't blame me for your own ignorance!   

No.  You are becoming illiterate, as well as ignorant now!

Internal businesses...I.E. One Russian to another Russian...different subject that I was never addressing.  My assertion is, the dollars Russia receives are spent abroad to bring needed goods/services in.



If it were spin it would be disingenuous, which it isn't.  As far as I'm concerned, all you have demonstrated is an inability (or unwillingness) to understand the point.  I'm only repeating, because people like yourself are interested in engaging.  Yeah, the strong US dollar does unintentionally mitigate some of Russia's financial pressures. 


Fathertime!

Your attacks on Mendy shows just how ignorant you are.  He is probably the most honest, sincere, transparent, and best informed member we have on Russian affairs.  Most of us listen to what he says and accept his journalism as factual. 

For you enlightenment, Mendy has been and still appears to be very pro-Russian (people), but anti-Putin for what he has done to the Ukrainian people and the Russian people based upon Putin's actions.  I think (opinion) most of us were neutral or somewhat pro-Russian prior to Putin's "little green men" confiscating Crimea.  Now that we have seen the true character of Putin and his people (subjects) endorsing his actions, many of us would not be disappointed to see him eliminated.

If you support tyrants like this, please don't pass yourself off as a normal American.  We have higher values than you have and some of us would be happy to contribute to a one-way ticket for you to leave the USA and join Comrade Putin!

[calmissile]

FT, here is a goodnight melody for you from comrad Putin.

http://www.youtube.com/watch?v=IV4IjHz2yIo&feature=youtu.be

[msmobyone]

In Rubles of course. 


Oil of course!


Here is a nice flowchart for you to review


OIL------Dollars------imported goods (Purchased in dollars)---------Russian Consumer (Paid in Rubles)....
                                                OR
Russian produced consumer goods------Russian Consumer (Paid in Rubles)


Lets see your flowchart. 




Fathertime!

FT, I'm sure you're a great bloke in the bar, but I'm not playing any more .... I don't like on-sided anti-Russian or anti-American stuff, but at least most posters I 'chew the fat with' know when to quit when behind..

For the sanity of the board, I'm also putting you on ignore.

Your daft notions about how things work - particularly in Russia where - apart from the govt / oligarchs who are matey with

[sleepycat]

And here comes the inevitable 80.....

http://news.yahoo.com/russian-ruble-slides-record-low-112216305.html

A wheelbarrow to cart your rubles around anyone?

[Wayne]

One thing that I find unusual is that in Russia and Ukraine you can have a bank account in US dollars. You can do all business in US dollars. When people buy or sell property, the transaction can be in US dollars. If you have a mortgage, it can be in US dollars. All large, important transactions can be in dollars.
 
True, is you buy food and other products, you pay in the local currency. However, there is usually a place very close to the store where you can exchange dollars.
 
Say, you hire a private car with driver for a certain amount of days, you would probably pay him in dollars.
 
You can wire money to Russia and Ukraine in US dollars. Also true for Western Union and MoneyGram.

[fathertime]

It may mitigate a portion of it.  You seem unwilling to admit that this mitigation is only *partial* however.  Otherwise an exchange rate of 1000 RUB : 1 USD would be even better, right?

Just because, instead of losing $1, you only lose 75 cents, doesn't mean that there was no loss.

Well Slumba, obviously there is a loss.  I was merely saying the dollar mitigates a part of that loss.  All along I agreed with what  you wrote above.  It has been interesting watch certain individuals blow gaskets though because I had the audacity to point out this fact!


Fathertime!   

[fathertime]

Your attacks on Mendy shows just how ignorant you are.  He is probably the most honest, sincere, transparent, and best informed member we have on Russian affairs.  Most of us listen to what he says and accept his journalism as factual. 
 
 

Obviously you want to believe that I 'attacked' him first without reason...Demonstrates your bias... 

FT, I'm sure you're a great bloke in the bar, but I'm not playing any more .... I don't like on-sided anti-Russian or anti-American stuff, but at least most posters I 'chew the fat with' know when to quit when behind..

For the sanity of the board, I'm also putting you on ignore.

Oh no another 'ignore' poster...If I had a nickel for every time somebody promised to put me on 'ignore' I'd have 100 dollars! 


I don't care what you 'like', and it isn't 'anti american' to say that the dollar is strong against a smorgasbord of currencies...which means that those that have those dollars (Russia in this case), can get a lot of bang for their buck.


Fathertime! 

[ML]

One thing that I find unusual is that in Russia and Ukraine you can have a bank account in US dollars. You can do all business in US dollars. When people buy or sell property, the transaction can be in US dollars.

Not entirely true anymore for Ukraine.

Current rules require that real estate transactions be only in UAH.

Large companies adhere to this rule.

Perhaps with private transactions, the rule is broken . . . but it may get harder and harder to register such transactions in the future.

[calmissile]

Not entirely true anymore for Ukraine.

Current rules require that real estate transactions be only in UAH.

Large companies adhere to this rule.

Perhaps with private transactions, the rule is broken . . . but it may get harder and harder to register such transactions in the future.

The bank rules keep chaning in Ukraine.  Prior to my wife arriving in the USA, I was transfering USD to her account in Kiev.  For some reason she was allowed to only withdraw money in Grivna.  When I am there in Kiev, I can go into the bank and withdraw USD from my American debit card after showing my US passport (assuming theyhad any USD on hand).

Don't know if this has changed, but it is how it was a little over a year ago.

[fathertime]

The bank rules keep chaning in Ukraine.  Prior to my wife arriving in the USA, I was transfering USD to her account in Kiev.  For some reason she was allowed to only withdraw money in Grivna.  When I am there in Kiev, I can go into the bank and withdraw USD from my American debit card after showing my US passport (assuming theyhad any USD on hand).

Don't know if this has changed, but it is how it was a little over a year ago.

All sorts of money rules changed in Ukraine when they instituted capital controls, due to their currency dropping like a rock.  They are attempting to limit the use of foreign currency. 


Fathertime!

[AkMike]

Perhaps with private transactions, the rule is broken . . . but it may get harder and harder to register such transactions in the future.

 True! When I was buying this house the seller demanded USD and refused the same amount in Hyrivna.  Aval bank said later that all real estate transactions are required to be in Hyrivna. 


 Other parcels from larger companies were handled in Hyrivna.

[JayH]

For those that still dont get it-- this is putting incredible pressure on Kremlin. They don't have the cash to support the currency and whatever they do-chances it will be the wrong move.
For the dummies who do not get why any of this matters--it will create serious instability within Russia. ( yes-I do need to spell it for some here-- who dont seem to get the connection!!)

1.00 USD   =   84.0299 RUB
US Dollar   ↔   Russian Ruble
1 USD = 84.0299 RUB   1 RUB = 0.0119005 USD


Oil at $26

Added-

nearly 86 now !
http://www.ft.com/fastft/2016/01/21/rouble-meltdown-dollar-breaches-rbs85/

[AkMike]

Unless the state starts taking steps quickly Russia may have a meltdown by Valentines Day. 

[BC]

Unless the state starts taking steps quickly Russia may have a meltdown by Valentines Day. 

I think the key will be controlling inflation and capital flight.  If that is kept under control in the long run it might not be so bad.  Yes prices for imported products will obviously go way up in short order, but that will likely cause more demand for local products, a side benefit of low exchange rates.  RU may impose price controls for the basic necessities.

Remember that for a long period of time the USD was artificially kept low against other foreign currencies to fight the trade deficit. Near zero interest rates will also have a cost going forward. Obviously the decline of the RUB and oil prices is a huge heads up showing the need for the RU economy to further expand into other non-energy production and industries.  Also remember that RU has experienced such crisis in the past.  One should not underestimate the resiliency of their internal economy.  Yes, at least for a while luxury items will come at a premium and it will take some time to adapt to recent dramatic changes.  But one thing is sure, they have resources and will adapt. 

I highly doubt RUB will fail and am confident they have the will and capacity to recover.

Just a matter of time IMHO.

[fathertime]

Unless the state starts taking steps quickly Russia may have a meltdown by Valentines Day. 

I've heard the 'meltdown' talk before a few dozen times.  I really don't think so.  As was already pointed out, when imports go up too much they won't be purchased as often, if at all. 


In Cuba families live on 20USD a month! They do not live well, but life goes on.  Russia will not be subjected to that type of money shortage, but I have serious doubts they will ever be choked off.  They have enough resources to make most of what they require....and the strong dollars they continue to receive for oil does give them cash for purchases on the open market. 




Fathertime!