Posted on 12/27/2014 6:06:20 AM PST by Kaslin
In Russia, the overnight lending rates between banks has soared to 19%, a sign of widespread and warranted mistrust between banks, as one bank has failed. To stabilize the situation, Putin is considering bank deposit insurance up to an amount equivalent rate of about $26,000.
Meanwhile, and although Russia is still burning through currency reserves, the value of the Ruble has been rising.
CNN Money reports Russia Empties the Vault to Prop Up Ruble.
So far this year the central bank has burned through more than $110 billion in foreign currency supplies. That's more than a quarter of what it has in reserves right now.Spotlight on the Ruble
Spending has ramped up in the last few weeks. Since the start of December, the central bank has blown through more than $21 billion.
That, along with a series of other measures to support the banking sector, has helped to stabilize the ruble.
[Mish comment: Actually, blowing through reserves is destabilizing, but other measures such as the huge hike in interest rates is indeed stabilizing]
Russia is working on a plan to pump one trillion rubles ($18.6 billion) into Russian banks next year, and wants to establish deposit insurance to guarantee savings up to 1.4 million rubles ($26,000).
The ruble climbed nearly 6% against the U.S. dollar on Friday.
Still, Sberbank CIB chief economist Evgeny Gavrilenkov said the central bank's strategy of spending down foreign reserves was "not ideal," and pointed to stresses elsewhere in the financial sector.
[Mish Comment: Once again, I highly doubt the "strategy" is to spend foreign reserves to prop up the ruble. Rather, spending of foreign currently reserves is needed due to declining oil revenues. I suspect there are some seasonal influences in play as well.]
"The liabilities of banks and servicing [refinancing] debt is very costly now, so the banking system is vulnerable," he said.
Last week a local bank collapsed, and the rates Russia banks lend to each other have jumped. Overnight rates are now nearly 19%, indicating just how serious the funding crisis has become.
Is that Putin’s throne room?
probably just a TV backdrop. it looks insubstantial when filmed from a wide angle, but a close-in shot of Putin would only have him and the flags in the field of view.
during the gulf war when Rumsfeld held his press biefings at the Pentagon, they took place at the end of a large hallway, on a raised platform that stuck out 4 ft from the wall. covering the wall was a curtain. on the stage was a lecturn and two flags. to the tv viewing audience, it looked fairly impressive. but when seen in person, a fairly unremarkable hallway.
Get the hell out of Ukraine!
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