A few months ago about 36 Rubles equaled 1 Dollar now it's 70 Rubles equal 1 Dollar. Not too sure about the global implications of it all, but it's certainly an interesting story to see develop. Russia is toast when you couple that with the fact that oil prices are likely staying below 60 for awhile.
In a closed society with no free press I doubt it brings down Putin. As a trader you might go back and look at the Russian Flu of 1998. Can you trade Russian domestic potato futures? Because that's all they are going to have to eat. Russia’s Central Bank needs to support the rouble. Since the beginning of the year it has spent more than $70bn to do so. Russia has $420bn in reserves, and a significant portion of these are in dollars. While still vast, nearly $100bn have been burnt through the past 12 months. http://www.theguardian.com/world/datablog/2014/dec/11/russia-oil-inflation-prices-putin
Russia is simply being hammered economically by the sanctions and the vastly reduced price of crude. In a way, that really concerns me. It reminds me of the circumstance Japan put herself in prior to Pearl Harbor. Her brutal actions in China and the region brought about economic sanctions from the United States that really, really hurt, particularly sustaining her military capabilities at the time and into the future. So the mad rulers of Japan decided that war with the United States, Britain and her Commonwealth, the Netherlands, and France was preferable to dialing back her aggressive and brutal actions. Which brings us back to Putin's Russia. I hope Putin doesn't get so desperate that he begins to view threatening a war with NATO as a better option to get what he wants, which appears to be the track he's on now. Not yet. The risk of threatening war is that a real shooting war can break out quickly. All it takes is a miscalculation. I don't think Putin is where Japan found herself in 1941. Actually attacking the United States and other major powers because her ruling clique decided that it was the best option to preserve the Empire and save face. Putin's been busy painting himself into a corner. We'll see if he decides to come to terms with reality, or if he's truely mad enough to risk a major war to save his seat in power. In my opinion.
with respect, i think you over-estimate the role sanctions played in the japanese attack on pearl harbor. planning was well underway by the time the US froze japanese assets and cut off oil exports. moreover, the tripartite pact was signed a year earlier, and given the US active support for both englad and china, war w/ Germany and Japan was inevitable. but, asuming you feel sanctions pushed the japanese into a corner, and that there's a potential parallel to russia today, what would you propose? you seem to be arguing simultaneously that sanctions have been effective, and have also made putin more dangerous. so what now?
It's not like Japan because Russia doesn't need more land or natural resources. The only people he could actually reach are his markets, cut off trade with Europe and his oil is worth half again less. He will cut all spending but the military. He will put the full court press on supplying China and India. Life will be even bleaker for the average Russian. I really believe he won't relent on Crimea and probably won't back off Eastern Ukraine.
Well actually some of the current devaluation in the ruble is done on purpose by Russia. http://www.bloombergview.com/articles/2014-12-01/putin-gambles-on-a-weak-ruble
Geesh you really need to update your thinking or perhaps reading material. It is not 1965. The Cold War is over though American neo-cons have never given up the hope. PS I realize you are not a neo-con but one of the dwindling number of Cold War liberals.
Cold War is irrelevant. Russia has the population and armory of the US but the cultural and economic influence of Mexico. There will always be mutual resentment with Western Europe and disparate enough heritage and values for their interests to be misaligned.
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Thinking Chavez is still alive is outdated. Russian rouble in free-fall despite shock 17% rate rise 16 December 2014 http://www.bbc.com/news/business-30492518 Russia's rouble went into free-fall in Tuesday trading, falling repeatedly to record lows, despite the central bank's dramatic decision to raise interest rates from 10.5% to 17%. Russian oil giant Rosneft's decision to issue 625bn roubles ($9.9bn) worth of bonds late last week at lower rates than Russian bonds has been blamed by some for exacerbating the currency's decline. But Rosneft denied it was trying to dump roubles, saying "not a single rouble" would be used to buy foreign currency."
http://www.economist.com/blogs/butt...tebook (The Economist: Buttonwood's notebook) Geopolitics and oil The Red Army sell signal Nov 21st 2014, 19:01 BY BUTTONWOOD Timekeeper THREE times in the last 35 years, Russian military forces have crossed international borders - in Afghanistan in 1979, Georgia in 2008 and the Crimea earlier this year. As Simon Derrick, the currency strategist at BNY Mellon points out, each occasion coincided with a peak in the oil price. And each incursion was followed by a very sharp fall in the price of crude (see chart). Now of course, one can't say the Russian actions caused the oil price fall. However the oil price peaks, by boosting the economy, may have bolstered the confidence of Soviet/Russian leaders and thus encouraged the military action. The subsequent declines simply show that the Russian government has very bad timing. Indeed the weakness of oil in the 1980s (and the sapping effect of the Afghan conflict on morale) played its part in the downfall of the Soviet empire; this time round, the Russian economy is already showing signs of crisis. If the previous episodes are any guide, oil has a fair way to fall.
Will the rate rise work? http://streetwiseprofessor.com/?p=8996 Even if the rate intervention works in the sense of stabilizing, or even reversing, the collapse in the currency, this will come at a cost. As I noted, the effect of the rate rise will be highly contractionary. The government had already been predicting a recession. That is now a certainty, and it is likely to be a severe one. Especially if oil continues doing the limbo. The RCB action reminds me of a fox chewing off its snared leg. The best of some very bad options. - See more at: http://streetwiseprofessor.com/?p=8996#sthash.0JFV6D0X.dpuf
I guess this is what war between superpowers looks like in the nuclear age. When you meet an out of work oil executive be sure to thank him for his service. Not original to me but: This is a perfect setup for Bain Capital to come in an buy Russia. Mitt gets to be head of a nation!
I heard somewhere yesterday that the market cap of Apple is now higher than the market cap of the entire Russian stock market. At the rate of current decline, this may actually be possible soon enough!
