Posted on 12/15/2014 10:12:57 PM PST by elhombrelibre
A funny thing happened on the way to Vladimir Putin running strategic laps around the West. Russia's economy imploded.
The latest news is that Russia's central bank raised interest rates from 10.5 to 17 percent at an emergency 1 a.m. meeting in an attempt to stop the ruble, which is down 50 percent on the year against the dollar, from falling any further. It's a desperate move to save Russia's currency that comes at the cost of sacrificing Russia's economy. So even if it "works," things are about to get a lot worse.
It's a classic kind of emerging markets crisis. It's only a small simplification, you see, to say that Russia doesn't so much have an economy as it has an oil exporting business that subsidizes everything else. That's why the combination of more supply from the United States, and less demand from Europe, China, and Japan has hit them particularly hard. Cheaper oil means Russian companies have fewer dollars to turn into rubles, which is just another way of saying that there's less demand for rubles—so its price is falling. It hasn't helped, of course, that sanctions over Russia's incursion into Ukraine have already left Russia short on dollars.
(Excerpt) Read more at washingtonpost.com ...
"And this is only going to get worse. Russia, you see, is stuck in an economic catch-22. Its economy needs lower interest rates to push up growth, but its companies need higher interest rates to push up the ruble and make all the dollars they borrowed not worth so much. So, to use a technical term, they're screwed no matter what they do. If they had kept interest rates low, then the ruble would have continued to disintegrate, inflation would have spiked, and big corporations would have defaulted—but at least growth wouldn't have fallen quite so much."
Don’t think it’s funny.
Remember what cornered rats do.
Uh! ........December 7, 1941?
FDR sanctions on Japan!
“Tighten your belts, comrades!”
“We can live with less, for the glory of mother Russia!”
“We’ll break a few of you, for the common good”
What is happening in Russia is what happened in Germany between WWI and WWII. Loose monetary policy, which devalued the ruble.
WWIII, anybody?
~“Tighten your belts, comrades!”
“We can live with less, for the glory of mother Russia!”
“We’ll break a few of you, for the common good”~
Yep, I just feel how excited you are over possible revival of communism in Russia.
So ‘conservative’ of you.
Possible revival nothing, Putin has been on that path for a long time.
Revival of communism? Vatnik, your country is run by "former" communists and KGB agents. Communism never left. It just lost the facade of Marxist-Leninism, leaving behind the kleptocracy and murder it was really all about to begin with.
Actually, the opposite is happening. The Russian central bank is not flooding the market with fiat Rubles to shore it up, they are allowing it to fall in value and pumping up interest rates.
I doubt it will work well, but its much closer to the US Fed in the early 80s tight money policy that caused skyrocketing interest rates.
We are doing the opposite with tidal waves of quantitative easing.
One of us will prove wrong.
The Russians only real move is to price their gas in a gold based trade currency, and become the main oil supplier to China. But this is all a very bad game and a lot of people will suffer over this. People in many places.
Putin has no where to go and to cash to go there.
He can’t support an army in any of the former Soviet republics and if his army steps foot in a NATO country, he and his third world dictatorship will be flattened.
And he doomed it, on purpose. And he and his cronies got some nice kickbacks in the process.
http://www.bloombergview.com/articles/2014-12-08/putin-breaks-first-law-of-petropolitics
“So far, Putin has turned to patriotism to forestall such a course correction, calling on Russians to stoically tighten their belts so the Motherland can hold on to its geopolitical ambitions.”
Exactly. Some of the attitudes and comments shock me.
Putin has no where to go and no cash to go there.
He can’t support an army in any of the former Soviet republics and if his army steps foot in a NATO country, he and his third world dictatorship will be flattened.
And we'll be there soon, too.
Yep, I just feel how excited you are over possible revival of communism in Russia.
What do you think Russia will do to escape their internal strife and threats of secession and territory snatching from the East, decide to have their military quickly destroyed by NATO?
It is good that you comfort a poster that says he is currently serving in Russian Special Forces, Hillary suggests that you empathize with our enemies.
broken window theory on a national scale.... break our army please.... so we can apply for foreign aid.
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