Western Banks Cut Off Liquidity To Russian Entities

As Zero Hedge first reported today, shortly before noon one (and subsequently more) FX brokers advised clients that any existing Ruble positions would be forcibly closed out because "western banks have stopped pricing USDRUB", over concerns of Russian capital controls. Ironically, it was this forced liquidation of mostly short RUB positions that pushed the RUB higher, which in turn had a briefly favorably impact on energy commodities and risk assets, as the market had by then perceived the Ruble selloff as excessive. Of course, since nothing had actually changed aside from a temporary market technical, the selloff promptly resumed into the close of trading once the market finally understood what we had explained hours previously.

And unfortunately for the bulls, various falling knife-catchers, and those who hope the Russian situation will stabilize imminently with or without capital controls, it appears things in Russia are about to get a whole lot worse because as the WSJ reports, the next driver of the Russian crisis is likely to come from within the banking system itself because "global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis."

The Kharkiv Pact created a lease for what Russia had already owned for centuries before Kruschev gave it to the Ukrainian SSR. And that lease would have meant nothing to the new Kiev government if it has joined NATO.

Owned? I suggest you inform yourself about Ukrainian history. Occupied is a better description of how the Russians, along with other foreign powers, treated Ukraine. Are you aware that the Ukraine was one of the founding members of the UN and had a separate membership outside of the USSR?

There was no movement to make Ukraine part of NATO and I have no idea where you come up with the assertion that the lease would have been abrogated if Ukraine joined NATO.

The current economic war against Russia and the steady war drumbeat are very real provocations. I am happy for Poland and other nations that are now free of Communism - and that includes post-Soviet Russia - but I am not interested in taking sides and fighting for or against any of them. There is no ideological threat in Europe today, only a mercantilist struggle masquerading as old Cold War antagonists.

Economic war against Russia? Who is waging it and why? The Russians violated another nation's territory and seized part of it. They are sending weapons and troops into Eastern Ukraine killing innocent people along with Ukrainians trying to defend their country. You describe the Russians as the aggrieved party. There would be no economic sanctions if Russia had not committed aggression against one of its neighbors.

We are a member of NATO. We have a vested interest in the security of Europe and the alliance. Article 5 requires that the alliance come to the aid if one of its members is attacked. Ukraine is not part of NATO, but Poland and the Baltic nations are. If the Russians decide to invade a NATO country, it will precipitate a war.

There is a military threat posed to Europe by the Russians under Putin. He is taking some very provocative actions in international airspace and territorial waters.

There is no mercantile war between Europe and Russia. Europe is heavily dependent upon Russian exports of oil and gas, which comprise the bulk of Russia's exports. The EU is Russia's biggest trading partner.

Russia enjoys a trade surplus with most of the countries in the EU.

The EU is the most important investor in Russia. It is estimated that up to 75% of Foreign Direct Investment stocks in Russia come from EU Member States (including Cyprus).

Perhaps that's true. It might also be that Russia won't think it will be suicide. There is no evidence that post-Soviet Russia has any interest in projecting power globally, but there is evidence that Moscow is pursuing regional alliances and that it wants to be left alone at home. And it is evident that NATO is intent on pressing against Russia's borders.

Post Soviet Russia lacks the resources to project power globally. If Russia wants to left alone, then why did it seize part of Ukraine and invade the country? What threat does NATO pose to Russia. It is a defensive alliance composed of democratic countries that does not have any territorial ambitions towards Russia or anyone else. The military capabilities of Europe have been declining every year as the welfare state consumes more and more of their budgets. Most European countries spend less than 1% of GDP on defense.

All of those statistics are true, and Russia might well descend into the economic toilet. But many Russians have lived only slightly above the toilet and can handle scarcity a lot better than higher living Westerners. And if it does sink into the toilet, it will be with the world's largest arsenal of nukes.

We can't allow naked aggression in Europe to go without a response. We can't have any more Sudetenlands rewarding aggression. Putin must suffer the consequences for what he has done.

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