The result of the Russian Central Bank’s hike in interest rates turned out to be worse then my worst nightmares: it reversed the downward spiral of the Ruble for only about half an hour, then the Russian currency resumed its collapse. Rumor has it that the Central Bank might begin buying Rubles next, which I personally don’t see as useful at this point.
I have asked for expert opinions and I hope to get them soon. In the meantime, here is my own take on this which, caveat emptor, is backed by ZERO personal expertise in these matters. Still, for whatever it’s worth, my own speculations:
1) The Ruble is falling due to three completely separate reasons:
i) The recession in the West which triggers a drop in oil prices
ii) The AngloZionist pressures on OPEC not to cut production
iii) The impact of western sanctions
2) None of the above are enough to explain what is happening. The real problem is the lack of credibility of the Russian Central Bank and the Kremlin. Thus the key factor in the fall of the Ruble is distrust of the Russian authorities.
3) This distrust is fully deserved. The head of the Central Bank is a notorious 5th columnist which Putin failed to fire, arrest or otherwise remove from that position. But there is worse:
4) Putin personally is not trusted either, at least not on economic matters. Dmitri Orlov put it very well:
Some people are starting to loudly criticize Putin for his inaction; but what can he do? Ideologically, he is a statist, and has done a good job of shoring up Russian sovereignty, clawing back control of natural resources from foreign interests and curtailing foreign manipulation of Russian politics. But he is also an economic liberal who believes in market mechanisms and the free flow of capital. He can’t go after the bankers on the basis of ideology alone, because what ideological differences are there? And so, once again, he is being patient, letting the bankers burn the old “wooden” ruble all the way to the ground, and their own career prospects in the process. And then he will step in and solve the ensuing political problem, as a political problem rather than as a financial one.
Orlov, as always, is spot on here. Let me explain, as this is crucial:
First, yes, Putin is an economic liberal. I hate to admit it, but I am convinced of it. So while he is “socialist” in a sense of supporting a social state, which helps the poor, needy, sick or old, he also is a “market capitalist” in the sense that he believes that market forces should be left free to maximize the competitivity of an economy. This might be a result of seeing a (pseudo-) socialist system fail or because he sincerely admires the competitivity of US and other (pseudo-) capitalist economies, I don’t know. But there is no doubt in my mind that he is an economic liberal.
Second, it would be typical Putin to let the “Atlantic Integrationist” 5th column to fail so badly as to make their removal a political demand of the Russian people. The problem with that is that this strategic can take a huge toll on the Russian people and economy.
Right now the situation is so bad that the value of some high visibility Russian stocks has begun to plunge. As does the Ruble. As does the price of Brent.
I am not much of an economist, much less so a trader. But I have to agree with the markets here: the current Putin+Nabiulina combo is not one deserving trust and if I had to speculate, I would speculate against Russia right now.
Maybe I am naive or primitive but I see only one way to reverse this death spiral: not only to fire Nabiulina, but to fully nationalize the Central Bank, fire the totality of its current top management and to appoint a new team with Sergei Glaziev as it’s director with a rank of Minister of Finance. Then Russia must take the strategic decision drop the current system of backing each printed Ruble with purchased US Dollar and instead back the Ruble with either energy or metals or a combo of real-word resources. My own vote would go for gold.
The Saker
Russia’s economy is collapsing because of his actions in Ukraine that you loudly championed with you ideological garbage.
What did you think would happen when Russia annexed the Crimea and threatens to annex Eastern Ukraine and perhaps the Baltic states?
Backing the Ruble with gold is a declaration of war to the USA…
I hope they find a solution. It is not fair to receive such a punishment for trying to break away from the dollar mafia.
http://www.zerohedge.com/news/2014-12-16/usdrub-pair-will-be-discontinued-due-recent-instability-russian-ruble
Saker
This is the kind of event that makes taking the action you describe possible and “reasonable”.
It has to get bad before you have a good excuse to act.
Removing incompetent officials and reforming the system after a disaster on their watch is the name of the game.
Don’t panic, Saker. In the worst case, Russia could still get financing from the BRICS bank (of which Russia is co-owner), rather than the IMF (as Russia had to do in 1998). If need be, they could also impose currency controls to stop speculators. Malaysians did this in 1998 and were the first country to recover from the crisis.
Maybe they should emulate the PBOC, China’s central bank never fully joined the cabal of the IMF,etc. The Chinese do what is best for their own affairs and remain connected only loosely to the global system.
They protected the yuan from manipulation and speculation.
Putin inherited this mess and the dangerous positioning. He does not have the levers the Chinese have. And it isn’t that he won’t act. He can’t act until the impact is a question of national security.
That is getting close.
But he needs prayers to help him and Russia get through this assault by Saudi Arabia on the oil price and London and the speculators and hedge funds and oligarchs who have enormous levers over these sectors of Russian economy.
You can’t fire grads at the Forex.
as a blog writer,you need to comment the new development immediately.
lets wait a day or two to see what is really happening with Russian Central bank .
This was expected. and there are countermeasures as well in the pipeline.
As Einstein said – one can not solve the problem with the same mind set that created the problem at the first place.
so lets see what creative solution Russia has this time as, expecting the solution to be a good one.
Stop panicking! This is a western financial system so of course they can hurt anyone.
Do you really believe, that these western machinations can force Russia to submit?
And that Putin with his advisors doesn’t know what to do about it?
If Putin fails, lets hope that the Russian Communist Party will take over and re-create the Soviet Union. Russian communist Party remains a genuine communist party committed to socialism although with patriotic elements.
It is the 2nd largest party and lost the 1996 elections by fraud.
If the Russian communist party was led by capable men then that idea would not look so crazy. Unfortunately though, Zyuganov would be a massive step down from putin.
Now that you mention it, I remember when the Western press were rejoicing about Putin’s first electoral victory in 2000. There were claims of ballot rigging back then as well. I don’t know if true.
Don’t forget currency speculators. They can gang up to destroy a currency. The only defence is exchange controls, which Russia must hasten to introduce.
Sending the likes of George Soros to his Maker would be a useful early step. It is an act of war on people, not trading in a market.
“jack said…
Russia’s economy is collapsing because of his actions in Ukraine that you loudly championed with you ideological garbage.” etc bla bla Zionazi bullshit
16 December, 2014 14:13
******************************
Time to put up the “Schlomo filter” don´t you think? These circumcised tribalist freaks are trolling for shekels, no need to pay their salaries..
If you look at the Russian economy you see great natural resources, oil and gas, in huge reserves, tremendous military equipment and jet and missile and rocket engine technology, plenty of gold, and strong software and scientific intellectual property and producers.
Those don’t get diminished because of the ruble.
Their value is evident in the hundreds of billions of dollars in deals Putin arranges everywhere he travels.
The Russian ruble was a weak sister all along.
They need to switch to the yuan, ditch the ruble for now and get stability in the financial system.
This sector of the economy has been in the hands of the West from the getgo. It hasn’t been Russian for a minute. It’s a Western asset controlled by the West.
Time is close for fumigation. The moment of change is upon us.
Don’t lose sight of the positives.
No nation can remain sovereign without issuing its own currency. Adopting the Yuan is a non-starter.
I tend to agree with what you are claiming there. The financial so called free markets are the exclusive domain of the US the UK and to a lesser extent France, Switzerland, Japan and a little bit the benelux and Germany. There is no way for Russia to compete with the west on their patch. Russia must find ways to fund her economy without the west having any part of it. In fact your suggestion that Russia should adopt the yuan seems like a very interesting and doable idea.
What about Mercouris? What´s his take?
/Mikhas
@Anonymous:Time to put up the “Schlomo filter” don´t you think? These circumcised tribalist freaks are trolling for shekels, no need to pay their salaries..
Are you suggesting that I delete every stupid or ugly post?
Maybe, dunno.
I might.
I need to ask the community.
As for Jack, I don’t think that he is a real paid troll
Rather a moron pissed at the success of this blog
No biggie, really.
Anyway, have a great day!
Cheers,
The Saker
Marilw wasIvan said…
Stop panicking! This is a western financial system so of course they can hurt anyone.
Do you really believe, that these western machinations can force Russia to submit?
And that Putin with his advisors doesn’t know what to do about it?
16 December, 2014 14:31
++++++++++++
That is it.
We can imagine how some people cried “The sky is falling” when Hitler was before Moscow…
Anglo-Zionist financial system has not defeated Cuba, Iran …and will not defeat Russia.
.
Economics is politics, politics is economics. You cant really separate the two today.
You can’t have true (political) sovereignity if someone else controls your monetary system and how you spend your money, so to speak. Which is why most of Europe is not sovereign.
Russia has tied it currency and economy to the US dollar. Americans control the dollar and those same people want to bring Russia to heel. The solution is to break the link with the US dollar and fix the value of the Ruble on a purchasing power basis. Select a basket of internationally available goods and get their price in all major countries. For example, the basket costs £100 in the UK and 6000 Rubles in Russia. The £/Ruble exchange rate would be £1 = 60 Rubles. This basket costs $150 in the US and 6000 Rubles in Russia, the US $ / Ruble exchange rate would be $1 = 40 Rubles.
If inflation in Russia is greater than the UK, then the cost of this basket will rise in Rubles and the £/Ruble exchange rate will adjust automatically.
The Ruble should not float freely, that just puts Russia in the hands of Soros and Goldman Sachs.
The Ruble does not need to be backed by gold. Rubles are needed to pay Russian taxes and to buy Russian goods. There is a natural demand for Rubles.
My feelings are you are just about right.
Unfortunately, since the war is very much on the economic front, a lot of articles become utterly incomprehensible to someone with a science background.
One other country worries me very much (I don´t worry much about Russia, because I do believe this economic circus will eventually enable mr Putin do get rid of the 5th collum):
Venezuela!
I see Venezuela even more than Cuba as the moral compass of latin America, even as mr Chavez and mr Maduro make their mistakes, just like any leader does. This country is not ready for this crisis, and the US has just issued mild sanctions for violations of human rights. (washing away the taste of vomit reading this requires several pallets of listerine).
The independent world would loose a lot more than a few rubles if Venezuela would fall (it would mean the fall of the continent imo). It must be difficult for the Russians to support these governments, but I believe this is extremely crucial.
When it would become necessary, I would go there and fight the enemies! (if they could use a 61 year old without training:(((
You are in fact right. Russia is in serious trouble but if president Putin takes the right steps then Russia will come out stronger. But Venezuela is really under extreme pressure for the time being. It is quite conceivable that the bolivarian movement will be drowned by the pro-American fascists in Caracas.
Poroshenko wants to attack Crimea
just a little bit,,,8 kilometeres
http://translate.google.com/translate?hl=en&sl=ru&u=http://www.newsli.ru/news/ussr/politika/11712&prev=search
The situation gets crazier by the hour. According to the Moscow Times, the devaluation was authorized by Putin. The heads of the budget committee of the Duma, members of All Russia Party, have voiced their backing for nabullina.
As it stands, she will try to reach the USAian embassy, a lamp post or hara kiri is her fate.
Ben Aris: Contagion
Most worryingly, Russia’s problems are starting to spread. Ukraine has been in deep trouble all year and it is now teetering on the edge of collapse; its hard currency reserves dipped below $10bn earlier this month, or about 1.3 months’ of import cover. The hryvna is down by some 40% since the start of the year and the only thing holding it up now is the promise of more international bailout money in the new year.
Kazakhstan devalued the tenge in February by 18%, but all the wiggle room it created has now been used up. Fears of another devaluation are mounting fast, as Kazakhstan’s economy remains closely tied to Russia’s as well as being a major oil exporter.
The falling currencies are no longer just hitting countries that are tied to Russia and the contagion is spreading out, leading some to start talking about a repeat of 1998 when oil prices fell to $10. Last week the Turkish lira sank to its lowest levels against the dollar for a year, despite the fact it is one of the big winners from falling oil prices, as it is heavily dependent on oil and gas imports. Likewise, China, another major energy importer. has watched its currency fall by 26% since May, and 7% since the end of October alone.
Collapsing currencies around the world, coupled with the “death spiral” of selling in the oil markets, is sparking worries that we are coming to the point where things could spin out of control – and not just for Russia.
http://www.bne.eu/content/story/moscow-blog-picking-through-ruble
Also, as others have pointed out, the 1st January approaches and with it the Eurasian Union, which allows just two weeks to destroy the Russian economy……
Where did you read about the Chinese currency being devalued? The Chinese yuan is pegged to the US dollar like a leech. It can only move up or down by very small amounts. It has mostly been moving up for the past few years.
I’m with the ‘stop panicking’ group, even though I really don’t understand the play of economics here. I do feel something is going on at the other end of the string – that is, on the investment end – and here’s a post from that side of things this morning:
http://www.nakedcapitalism.com/2014/12/imf-world-bank-halt-lending-ukraine-franklin-templeton-4-billion-ukraine-bet-goes-bad.html
Another post on the same site has the information that investors are having fits trying to find investments that make sense outside of Russia. This tells me that sure, fine, Russia IS hurting as the western oligarchs pull out, but where are they going to go?
Economically speaking, it seems this is similar to the Nato-at-your-back-door tactics, and chickens do come home to roost eventually. Capitulation to western pressures on this front seems as much a no-win tactic as it was when Russia was being tempted to invade with all flags flying and thus initiate the mother of all wars.
Who wants that? Probably not even the frenzied oligmafia, but they in their own midasminds have no choice but to do what they are doing.
Stand back. Let them crash. It’s the only way forward.
Ben Aris, one thing I know. These are NOT “Russia’s problems”!
They are the problems of western criminal economic activity – go back and read Naomi Klein’s “Shock Doctrine” and you will find the Chicago Boys at the very heart of this black hole manner of conducting international affairs. You break it; you own it was the underlining mantra and so they did.
These are NOT Russia’s problems!
Once again Putin showed weakness in the military field after Odessa and even more on the economic.I’m not a specialist,but I read a lot about economics since 200.I knew this was going to happen,as EAP in the Daily Telegraph told us in sept.This guy is an intelligence agent,he is rarely wrong.
It is just a new kind of war.
Only option left for Putin is to show force,but really big force.Being on the financial field and or on the military one.
They will not stop their attack,till Crimea is back in Ukraine.It is not even about the Donbass anymore.
They just want regime change in Moscow,even if they at first sight loose trillions,they will get them back after if they can seize all russians energy reserves which is their only target.
Breaking: The Russian Ruble Is Hereby Halted Until Further Notice
http://www.zerohedge.com/news/2014-12-16/russian-ruble-hereby-halted-until-further-notice
I would not be surprised to see some kind of Maidan soon.
Now there is a real reason(panic)this was not the case earlier during this year.
Juliana has it right.
They break it and then swoop in and buy it cheap.
Shock Doctrine is a must read, even though Klein is a diehard leftist from Canada, double whammy.
I know very little with regards to Economics, Currency Trading, and the Stock Market, but I do have a few opinions on some of these things.
I do occasionally read News Articles on what Experts are saying, but I do not understand the more difficult aspects, but we know that ants do not use Money, and yet they accomplice all that is needed for themselves and their territory, because they practice Fairness, Justice, and Equity among themselves, and toward their own colony.
There is a practice of going short or long on a Company or commercial situation, and I do not know if that applies to Currency Trading in certain Countries at http://en.wikipedia.org/wiki/Short_(finance) , and at http://www.businessdictionary.com/definition/going-long.html .
I do not believe that going short or betting against some businesses or currency should be allowed, because it is Terrorism in another form.
This is because the Terrorist Vultures Conspire against good businesses who Employ People, and then some of those People lose their jobs, and the Economy of that Country suffers, and we all know of the Asian Financial crisis of 1997-1999.
Investors and those who buy Shares on the Stock Market should only be allowed to Profit the Proper Way, and that is Only on the Merits of that commercial situation.
They say that if you want to be a successful Country, then you should Copy the best aspects of successful Countries, and I would include how Malaysia acted during the Financial crisis, and the former Socialist Yugoslavia, and other some Countries.
Several things that you missed off your list of reasons:
Russia’s economy has been in reverse long before Ukraine. Scroll back to mid 2013 and the downturn in the Russian economy was on the cards.
More importantly, 70% of exports from Russia is commodities. Under Putin whilst the country has made progress, it’s failed to invest in other industries in particularly manufacturing. But the right type of manufacturing. Investing heavily in arms/weapons is a misuse of wealth that the country has.
The saying ‘all your eggs in one basket’ springs to mind. Hopefully Russia will take note and diversify in the coming years, but it’s going to be a few years in the winter before things change. Or oil radically picks up.
forget conspiracy theories about Ruble or oil.
Oil is volatile. That it is traded in long term contracts and stays stable for long periods of time only makes it more volatile when it breaks out. Low short term volatility is sacrificed for sudden massive movements.
While the oil prices continues to collapse, no one will touch the rouble, and the central bank would be well advised not to do so either.
The worsening ruble of the past two weeks is only the consequence of the oil price which has fallen much further to new lows.
Wait for the bounce – once oil stabilises the rouble will too.
To buttress my comment at 16:23, here is the assessment of Yves Smith at nakedcapitalism.com of what may be in store for western markets:
“Yves here. While the odds of commodities-triggered 2008 style meltdown is still not the most likely outcome, recall that that pessimists like yours truly assessed the likelihood of Seriously Bad Things Happening as of early 2008 at 20-30%, which I then saw as dangerously high. In other words, tail risks are bigger than they appear.
Some of the things that favor worse outcomes than one might otherwise anticipate is investor irrationality, or what one might politely call herd behavior. For instance, a major news story today was how investors are dumping emerging markets assets willy nilly, when many are not exposed to much if any blowback from lower commodity prices and quite a few are seen as net beneficiaries. The offset is that central banks have been conditioned to break glass and overreact when banks start looking wobbly. But the Fed may be slow to get the memo, since it sees recent data (the last jobs reports and retail sales data) as strong, and is also predisposed to see its medicine as working even though it is really working only for those at the top of the food chain.”
That last statement tells me why lower interest rates are ‘working’ in the US. For the money boys only. They are not working for the rest of us. And that business of ‘jobs and retail sales strong’ is hokum.
Everyone wants actions that do not strengthen the underlying currency problem. Firing someone or forcing capital controls does not bring capital flows to stabilize the currency.
In order for currency to stabilize there has to be a belief that no matter what happens you could get your money out of that country. Put yourself in the shoes of any businessman whom would deploy $5-10 million for a period of 3+ years, he wants to make sure that his capital (in real terms not nominal) can buy more after it is deployed in a risky situation such as a business especially if you take on foreign currency risk.
The plane here is not dollar or ruble but purchasing power of an individual once, through, and after capital is deployed. Any individual. Look at all the prices in Russia they are tied to the dollar and yet the local purchasing power is not, so any devaluation is real for every resident in local currency. In order for wage-price spirals to stabilize you need to push through real wage hikes through the entirety of the private sector or some other things but they are unlikely to occur. It is theoretically possible to demand and force a country wide wage hike to the tune of devaluation the outcome of this would adjust things but the flows of capital would stop completely.
The ruble is weak because:
(a) too many have been printed (nearly a trillion this week to finance Rosneft with many further such deals likely in the weeks to come) and;
(b) foreign demand has contracted by around one quarter of a trillion rubles a week due to the decline in the price of oil.
A gold-exchangeable ruble would cure inflation by ending the printing of money. Instead of being printed, money would have to be mined (at great expense).
The problem for Russia is that a period of reckless inflationary finance has coincided with the collapse in oil price. There is no magic solution. Only austerity.
Advise from one of the best Franco/Russian economist
Jacques Sapir @russeurope ·
The CBR played but lost. A 17% hike is clearly not enough. Times ripe for capital controls the sooner the better. @PutinRF_Eng @ENabiulina_
@ Anon:
According to the Moscow Times, the devaluation was authorized by Putin.
LOL. Putin really is a superman.
But money markets are not directed by government fiat. If they were, they would not be markets. The ruble, as a convertible currency, is subject to the vagaries of the market. At present, market conditions are extremely unfavorable to the ruble and will only improve when supply and demand for the ruble come into balance.
At present, there are many foreign currency loans to Russian corporations coming due. That means many rubles have to be sold to acquire the necessary foreign currency, which drives the value of the ruble down.
There are three things that would strengthen the ruble:
(1) Massive central bank intervention that in effect would mean using Russia’s foreign currency reserves to pay off corporate foreign currency debt.
(2) Massive return of Russian capital from abroad. This presumably is what Putin is hoping for, and certainly for an oligarch in London, Paris on New York, if your gonna return home, now’s the time when you can buy Russian assets for half what they’d have cost a month or two ago.
(3) The price of oil recovers, which is not likely to happen in the next month or two.
But contrary to thoughts expressed by some here, the ruble collapse is not primarily due to evil foreigners, although John McCain must be laughing.
I have followed the blog for a while now. Great site.
However i think i just stumbled on the key from a link posted here. Russia is a member of the FED.
This makes this whole thing just another horse and pony show. Russia like all the west the Govt is just administrators, they dont control there boarders there money or anything else. They do as the controllers of the fed say or all other members gangup on them weather they want to or not.
Russia has only 2 chioces they can submit or close down the FED all else is the pony show.
Putin has the vote he needs to make his decision. The FED wont go down without a fight.
We the rest that also have a FED will do as were told even though we know were next.
we in chear on the color revolutions while never undersanding that our own elections are also rigged.
Unfortunately, few are doing the numbers here….
Collapse of the Rouble is due to longs exiting the FOREX market. The amount of FOREX traded, most particularly the amount of open positions far exceeds the physical stock of Roubles, BOE, or anything else.
This is only possible because the Electronic Rouble is a faceless commodity. Were the Electronic Rouble a security, as is the case with the physical paper Rouble, the RCB could control the volume of Rouble sales, and most importantly would know the amount of Roubles held outside Russia.
Of course, were Russia to demand immediate prepayment of all exports in Roubles, demand for Roubles would sky rocket, drying up speculative selling.
INDY
Don’t panic!
I’m sure that every one who has open eyes and mind must have expected such attack on Russia currency. And I really doubt that the guys responsible for strategic decisions in the russian government haven’t prepared any response to such scenario that would have taken into account all these events we are experiencing in the recent days.
You fools.
Do you think they play from day to day?
read this
http://fortruss.blogspot.cz/2014/12/rouble-vs-dollar-games-from-perspective.html
They don’t call it the petrodollar for nothing.
The US military owns the middle east and thus the can cat’s paw the Saudis into pumping at full throttle. This is good for the West and thus they can hold out as long as oil producers are willing to take it on the chin.
The question now becomes one of pre-Sochi. Allow the multi-polar order to come into being or continue the dominance of the West?
The West snubbed Putin then (a mere year ago) and wants him gone. The other nations of world will be the jury: China, India, etc. Are they ready to stand up for a multi-polar order by backing Russia, or will they stand idly by and ensure Western dominance for at least another generation?
It’s a moment of truth.
Sergei Glaziev has laid the case as to what is to be done to protect the ruble and the Russian economy in his recently published policy manifesto: Stupidity is worse than theft that Saker published on this site a week or so ago.
This important document is a must read.
We should all refer to it.
BTW it is funny to see the reaction.
When people, women and small children were killed, people starving, war raging … nobody paid so much attention and fell into depressions.
Now there is money issue and everybody is panicking.
Is this not strange? Guys, think a little bit more.
Now
Saker, I don’t think the reasons you mentioned are really important. What really counts at the moment is perception. And although you believe that Russia has a quite strong economy outside oil it is clear that the market doesn’t belief that. And that leads to the belief that the ruble is bound to fall more.
The rise of the interest rates was meant to hit the speculators. Speculators usually are highly leveraged. Say they borrow a million in rubles, then they immediately change those for dollars or euros. A week later – when the ruble has fallen yet more – they change them back and pay off their loan. It is an old trick: it is the way Soros got rich.
Making borrowing more expensive can be a good way to counter that game. If the ruble rises and the interest rates too those speculators can suffer huge loses. And usually that is enough to have them stop their play.
It is a very high stake game where tens of billions can be at stake. It looks like the Russian Central Bank miscalculated.
Remember that Russia has increased oil production. So one shouldn’t put all the blame on OPEC. My impression is that the OPEC countries calculate that keeping the oil price low for some time will kill a lot of new exploration projects (see http://www.ft.com/intl/cms/s/0/b3d67518-845f-11e4-bae9-00144feabdc0.html?siteedition=intl). That creates room to keep the oil price on an acceptable height for the coming years.
Hello from Norway:
Inspired by the dramatic fall in the Russian ruble (accompanied by a quite strong fall in the Norwegian krone btw), I dug up some old material from around 1998, about the SE Asian crisis and Malaysian PM Mahathir’s response with capital controls. At the time I was on a sabbatical in Sydney and followed Mahathir’s politics with interest and enthusiasm.
The Bank Negara (the M. central bank) measures were at that time put on my Web site, and are still there. See
http://www.itk.ntnu.no/ansatte/Andresen_Trond/malaysia/bnm.html and http://www.itk.ntnu.no/ansatte/Andresen_Trond/malaysia/ecmnotic.html
The US with Saudi Arabia as accomplice, is now waging economic war against Russia. Also hitting Iran and Venezuela. And Norway, which masochistically and subserviently supports the US/EU sanction policies.
Putin should follow Mahathir’s example and institute capital controls. The only two tools allowed in neoliberal dogma of buying foreign currency or interest rate hikes do not work.
See also this article today: http://www.bloombergview.com/articles/2014-12-16/is-russia-ripe-for-capital-controls and the Dani Rodrik article referred to there, http://www.hks.harvard.edu/fs/drodrik/Research%20papers/Malaysia%20controls.PDF
Keep up the good work, Saker!
regards
Trond Andresen
control systems teacher
Norway
From the Saker:
I have asked for expert opinions and I hope to get them soon. In the meantime, here is my own take on this which, caveat emptor, is backed by ZERO personal expertise in these matters. Still, for whatever it’s worth, my own speculations:
1) The Ruble is falling due to three completely separate reasons:
i) The recession in the West which triggers a drop in oil prices
ii) The AngloZionist pressures on OPEC not to cut production
iii) The impact of western sanctions
The first reason given by the Saker is wrong. The second reason is wrong as well. The third reason is as wrong as the previous two.
===============================
Explanations follow here:
https://houseofmaedhros.wordpress.com/2014/12/16/finance-this-stranger/
Guys this one is for the long haul. No need to panic every time a mortar round hits close to home.
Chill out and watch some ANNA Syria combat videos on Youtube. See how cool those SAA dudes are under fire?
Beating up on Russia’s financial economy will not destroy its real economy. Russia is not collapsing.
What is happening is akin to the stock price of a company with very strong fundamentals falling under speculative attack. There will be a strong correction, because the fundamentals are strong. The value is still there, Again the Russian economy has strong fundamentals. There are issues with policy and organization, but they are not fundamental.
Saker has asked many times of those claiming Putin will betray Donbass: Given Putin’s record up till now is there anything there to suggest he will do that.
Similarly: given Putin’s record up till now is there anything to suggest he will betray the Russian economy.
I’ve said it before and I’ll say it again, Russia is superbly led. Far more ably led than the US/EU/NATO. But that does not mean that it won’t take any hits. Even the best led armies take casualties in battle. Ask Marshall Zhukov. Where Putin is, there is where victory lies ;)
Like I had commented earlier, I suspect Putin is giving the 5th column enough rope to hang themselves. Then he will act.
To all those not understanding the central bank problem.
The director of the CB is approved by the State,but cannot be fired!.
The term of office can only be brought to an end prematurely by illness,death or indictable offences,proposed changes to central bank legislation must be submitted to the bank for ‘their’ approval.
All the above is written into the Russian Constitution,and requires a large majority vote to alter.
To create Roubles the CBR must hold dollars at a ratio of 3000-100
their system was designed by the US ‘experts’ for western interests.
When a country becomes a member of
the IMF they are not allowed to tie there currency to gold.
Switzerland had the most respected currency,it was compelled to join and sell lots of it’s gold reserves, perhaps you will remember the AIPAC charges of stealing the assets of holohoax victims.
Forget what Lagarde says,the IMF is based in Washington and does as it is told.
For Russia to regain financial sovereignty it can only be achieved by quitting the IMF and nationalizing the CB.
Who controls the state Duma??.
BTW little britain has some coal,lead and tin and very litte else.It is not self sufficient in any way yet someone suggests an exchange rate of 1GBP = 60 roubles?
cheers.
” to fully nationalize the Central Bank, fire the totality of its current top management and to appoint a new team with Sergei Glaziev as it’s director with a rank of Minister of Finance”
This is what must be done, but for the City (anglozionist), THIS is the real Casus Belli, the worst situation for them and a good enough reason to go for planetary suicide, methink.
A fourth factor that I should have mentioned, among those that could stabilize the ruble, is a decline in imports. With the price of a Mercedes or a BMW up around 100% since the summer, imports will subside, which will help balance the loss of oil export revenue.
This is, obviously, a good time (or anyway a much better time than recently) for anyone, not just exiled oligarchs, to invest in Russian assets, e.g., through exchange traded funds such as RSX.
Things are escalating quickly. Now most of western banks have halted rouble trade. This happened exactly at lowest possible point where strong bounce should be expected as traders should cover their shorts (and some sideline traders would like to buy some roubles cheaply). You can’t bet against the house, folks. This is coordinated speculative attack on rouble. Someone shorted the hell out of rouble and then traders who would like to take the opposite side were blocked ‘by decree’. If you still believe this is properly working market then I have a bridge for you I can cheaply sell. We are in the midst of severe financial war so hot that rules and contracts are now being broken by westerners – just like in Mistral case where Russia likely won’t see either Mistrals nor money. On one hand potential damage to Russia is huge. On the other side this looks like sign of desperation. Should Russia withstand this siege (which I think it should), West will be out of tricks (except for going to [suicidal] war). Russia now has to start up its own version of SWIFT (it’s being tested as we speak) and disentangle from western financial system. Political incentives for doing so have been building up for some time and since Monday will only accelerate. So don’t panic. Push hard for replacing incompetent idiots sabotaging Putin’s work – strong popular support for purging 5-th column is what VVP needs right now. Some folks from Starikov party are already at this, picketing in support for Putin to replace crooks.
Or, if you prefer to be laid back about it:
http://fortruss.blogspot.co.at/2014/12/rouble-vs-dollar-games-from-perspective.html
Sure enuf–details on the cardboard cutout al ciad’uh operative monis aka Willie Wonkers.
note how far back he was groomed & run, far longer than even the several years of the Sandy Hoax (hook) actors!
Tony Cartalucci (LD) : As predicted, the suspect amid the “Sydney Siege,” has long been on the radar of Australian law enforcement, as well as a frequent visitor to Australia’s court system.
Before that, however, he came to Australia as a political refugee, an opponent of what he called the “Iranian regime,” and was even interviewed by Australia’s ABC network in 2001 as part of an ongoing anti-Iranian propaganda campaign.
http://nsnbc.me/2014/12/16/who-created-cartoon-character-man-haron-monis-behind-sydney-siege-circus/
Comment from Zero Hedge:
Stumpy4516’s picture
Vote up!
4
Vote down!
-6
Previously many posted that a weak RUB was a help to Russia and showed how Putin was playing chess.
Over the past weeks they continued to post that Putin was protecting Syria and would never let it fall. Blind to the destruction and that jets now fly to the outskirts of the capital and bomb targets.
The talk about how Putin could destroy the US by going to a gold standard. But he doesn’t. Yet they also talk about how NOW he’s mad, NOW he gonna do something. Going to a gold standard has too many land mines, Putin will not do it and it will not wipe out the US. Otherwise, why has he not done so?
They claim the new SWIFT alternative will be equal to SWIFT. The alternative will handle Russian funds, at some point it may do so well, but I not do not see global impact.
No matter what they claim Putin is wiinning, the appearance of inaction and loss is just Putin playing chess.
No matter what they claim NOW Putin is going to do something big.
Putin works for the elite in Russia. They took easy profits instead of making Russia stronger over the past 10 yrs. The SWIFT alternative should have been built at the same time as SWIFT. The pipelines to China and an alternative route around Ukraine should have been in place years ago. Putin never forced the reinvestment in Russia’s economy but allowed the elite to rake in greater profits. These volatile movements show Russia’s internal ecomomic stability may become very bumpy. There are signs covert act of terrorism are increasing in Russia, we will see if that continues.
Putin does not act. Putin is working to slow the decline enough that the west will negotiate with him and the elites to allow them to maintain political control while the west ravages the resources of Russia or to allow them safe haven (and their riches) if Russia collapses once again.
The fact that Russia in in this position and so far behind building it’s alternative and ecomomic strength shows Putin is not a master chess player. When times were good they put extra profits in their pockets, now they are weak and it may be too late.
Iraq1, Iraq2, Libya, Syria, Iran, Serbia, Kosovo, Cyprus, Ukraine and on and on. I fear Russia’s new friends in South America are in for trouble soon as well.
This kind of reminds me of the two guys that tried to rob Chuck Norris at knifepoint. He was reported to have said to them ‘are you serious?’ It didn’t end well for them.
OK, ruble vs Eu/$ tanks: fewer purchases from those states and Russia forced to more development internally. Also good opportunity to pay off Eu/$ debt.
I cant beleive that Nabiullina acted completely of her own accord or that VV was taken by surprise by this.
“We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,” the bank chief said in a televised address Tuesday.
http://rt.com/business/214779-russia-ruble-drop-record/
Someone just threated to stab Vlad with a pocket knife,what do you think he’s going to do? There are some amusing possibilities.
Russia is not really fighting the oil and Ruble fall, as it is better in the long run, to wait until the private energy companies go broke in need of dollars, and then buy both the oil companies and rubles, when both the Ruble and the oil price flattens out.
We know that Angela Merkel’s Political Party did not receive a Majority at the last German Election.
This means that the combination of the Social Democratic Party, the Left, and the Greens have a Majority in the German Parliament.
There could be Parliamentarians in the Social Democratic Party (SDP), who do not want to be in such a Coalition, and there could be Parliamentarians in the Left and the Greens, who do not want Germany to be a Nazi Country, and they might support a Minority SDP Government.
The way a Minority SDP Government for Germany would work is for the Left and the Greens to always support the Minority Government on Confidence motions, and on a Non Nazi Foreign Policy, and on Most or All Spending, Budgetary, and Revenue matters.
The other Legislation and Government Business would be decided by a Majority of the Parliamentarians in the German Parliament.
…”- Our country has a stock of dollars
– The currency of our country – roubles – is held by other countries
– We – Russia – are planning to sell oil for roubles in the future
– Everyone who buys oil from us in the future will have to look for these roubles to buy oil
– The harder it is to look for them, the more expensive they will be
Naturally, the task is simple – we need to drop the ruble to the maximum, and then buy all that we can, giving away the dollars that are no longer needed and not guaranteed by anything. This will help concentrate all of the roubles inside the country and to assign their price independently, while holding and then releasing more money to the market…”
http://fortruss.blogspot.com/2014/12/rouble-vs-dollar-games-from-perspective.html
Iran lived under sanctions for many decades, and still managed to develop Nuclear weapons to protect itself against aggression from the US and its western cronies…Last time i look, Iran is still on the map along with countries like North Korea, Cuba etc…Russia economy and power are many times over the size of these countries. To think Russia will fold all of a sudden after some currency losses is just absurd. Putin and other BRICS economy know the WAR (including economic,pshcological etc) has started long time ago…its only the ignorant who dont know this yet. Any government will take counter measures. Of course there will be losses on both sides, but businesses, government and co-operation that act against Russia will definitely bear the brunt of counter-measures.
Iran lived under sanctions for many decades, and still managed to develop Nuclear weapons to protect itself against aggression from the US and its western cronies…Last time i look, Iran is still on the map along with countries like North Korea, Cuba etc…Russia economy and power are many times over the size of these countries. To think Russia will fold all of a sudden after some currency losses is just absurd. Putin and other BRICS economy know the WAR (including economic,pshcological etc) has started long time ago…its only the ignorant who dont know this yet. Any government will take counter measures. Of course there will be losses on both sides, but businesses, government and co-operation that act against Russia will definitely bear the brunt of counter-measures.
Dear The Saker,
I think your knee jerk reaction is exactly what the AZ cabal want everyone to do – panic – people need to stay calm and be patient. It will get worse before it gets better.
I note Medvedev has called a meeting with CB and the economic ministers – will be interesting
http://itar-tass.com/en/economy/767287
to see what comes out of that. Looks like a statement has just been made:
http://sputniknews.com/russia/20141216/1015912179.html
The CB has the tools to deal with this – if they don’t – I predict heads will roll and the Govt. will take back control of the CB and then the speculators will have no more impact or the Bankers and Co.. Anyone with any common sense can see that there is no way the USD is so strong – $19 trillion and rising debt etc. vs an economy in the black and with reserves – doesn’t add up.
Anyway, all new deals are in local currency not USD – so should help. At the same time the ECHR has gone against Russia vs Yukos. See Russia’s response:
http://itar-tass.com/en/economy/767308
It is so obvious this is a co-ordinated effort/attack on Russia from various angles along with sanctions on Crimea etc. It will all come back and bite these idiots – the boomerang effect.
Rgds,
Veritas
The conflict between Russia and the West is not over the Ukraine, it is over the value of the dollar and US bank hegemony over Russia. This is ECONOMIC warfare, which is good if it keeps us from having a nuclear war. The US state department managed the coup in the Ukraine in retaliation for Russian attack on the US dollar. Putin attacked the dollar by saying the US government will never be able to pay and by investing in gold. As Russia organized the BRICs to drop the dollar in trading, the US retaliated by sending oil prices lower by telling its vassal Saudi Arabia to pump all the oil it could. The US banks are able to manage or rig most markets because of its ability to print as many dollars as they want. Russia should have been ready for this economic attack as this is exactly what the US did in the 90s to put the old Soviet Union on the ropes. Why weren’t they ready for this? The gold should help. Actually, this could be the crisis that motivates Russia to reform it banks and currency by backing the currency with gold. I think this is what needs to be done. Back the ruble with gold and oil.
Bottom line – Russia should use this crisis as an opportunity to back their currency with gold. I would say gold and oil, but oil is currently being manipulated down. This would send huge shock waves through the banking system as all other currencies are fiat currencies backed by “the good faith and credit of the US government.” They are actually just numbers in computers.
Don’t call me a hurray patriot, but surely we didn’t think the West was going to stand back and let Putin de-dollarize unchallenged.
Is this crisis existential or real? In the near term?
Time for action. No paralysis by over analysis.
Nationalize the CB!
Evgeny Fedorov:
https://www.youtube.com/watch?v=VT085isnyB0&channel=NewInsightSubs
@ Saker / 15:07,
Be steadfast! Censor only the impolite. Let the trolls be part of the debate. There is something to learn from every expression. Those seeking truth should not be insulated from folly, but rather inoculated against it.
Excellent recommendation Saker.
Russia should definitively nationalize its banks. It needs to implement state capitalism. China keeps control of its banks but allows foreign capital and investments.
To be a free market liberal today means endorsement of casino capitalism and the whole fraudulent derivatives market that led to the worldwide recession caused by the US in 2008. So how could Putin possibly think “free market” works? The US government has had to end up printing money to back the banks. Russia would have to follow that “free market” policy.
Putin does deserve some fierce criticism around this. What about Russia’s communist party? What do they say?
@ Ivan,
You are 100% right, just most cannot see the forest from the trees.
Another wild thought, please take it with grain of salt. What if Putin actually wants rouble to be severely devaluated ? Surely this does not mean he wants such fireworks as we’ve seen lately, yet steady but HUGE devaluation might actually be a plan. I’m thinking about Euroasian Union, Customs Union, etc. At 30RUB/USD rate simple opening borders to customs-free trade would ruin russian citizens the same way NAFTA (and subsequent wave of outsourcing to China and India) ruined american citizens and local businesses. It created huge imbalance – ‘Giant sucking sound’ as Ross Perot eloquently described it. Russians would come to a conclusion that they need to adjust their economy somewhat before opening borders to such countries as India or Vietnam. It might be painful at first but later on it will bring profits in a form of general competitiveness of domestic producers. Given that russian authorities mostly gave up on integration with the West, chasing western salaries (and accompanying high cost of living) might be a problem rather than benefit. Having lower salaries accompanied with even lower costs of living (lower prices of everything) and more work opportunities due to better competitiveness (= less unemployment) might be actually more attractive for people who are able to look past simple number on their pay check. American salaries might be high but due to absurd costs of basic services it makes life miserable for most citizens.
See https://www.youtube.com/watch?v=6WsHL0AldqA (german) for more background knowledge about the economic war against russia.
German transcript, first 16 minutes:
Die Wirtschaft als Waffe gegen Russland
Es ist ja nicht das erstemal, dass zu dem Thema Ukraine und EU hier gesprochen wird. Wir haben dieses Jahr schon 2 Veranstaltungen dazu. Eine zum EU-Assoziationsabkommen, über das der Jankukowitsch gestolpert ist, aber auch zum Konflikt mit Russland um den Besitz der Ukraine um: gehört die Ukraine zum Westen oder darf Russland beanspruchen, dass es sein nahes Ausland ist und deswegen ihm ein Vorrecht zusteht.
Es ist schon 2x darüber geredet worden.
Jetzt ist die Absicht es heute mal anders anzugehen. Nämlich lassen wir die Sache einfach mal stehen. Ja, es findet jenseits der Begründungen warum Russland das nicht darf und der Westen das darf und der Würdigung der Begründungen, jenseits dessen befassen wir uns mal mit den Mitteln der Auseinandersetzung.
Lassen wir einfach stehen, ja, es findet ein Kampf um den Einfluss und die Herrschaft auf und die Herrschaft über Osteuropa statt. Es gibt eine Auseinandersetzung um die Frage, gehört die Ukraine zum Westen oder gehört sie zu Russland oder darf Russland da auf einen besonderen Einfluss bestehen.
Der Kampf findet statt von Russland aus mit der Besetzung der Krim mit dem Schüren des Aufstands im Osten der Ukraine, im Donbass und vom Westen her mit der Unsterstützung, mit der Rückendeckung für die Kiever Regierung und ursprünglich auch mit dem vom Westen unterstützten und arrangierten Umsturz in der Ukraine.
Auch mit dem militärischen Aufmarsch rund um den russischen Machtbereich herum. NATO-Manöver in der Ukraine, NATO-Truppen im Baltikum, im schwarzen Meer und mit dem allgemeinen Aufrüstungsbeschluss den die NATO gefällt hat.
Der Hauptpunt des Kampfes im Augenblick ist allerdings, der sogenannte Wirtschaftliche. Die Regierung in den USA und Deutschland vor allen Dingen, die sind die Vorreiter, aber auch die übrigen EU-Staaten, die dort mit dran sind, haben gesagt, sie wollen, was sie für das Werk der russischen Waffen erklären, nicht mit eigener heißer Kriegsführung beantworten, sie wollen nicht zu den Waffen greifen, sondern sie wollen Russland bestrafen und es mit Wirtschaftssanktionen zu dem Rückzug aus seinem Interessensbereich nötigen, den Russland freiwillig nicht bringt.
Es ist so, dass Wirtschaftssanktionen als Kriegsersatz diskutiert wird. Man will mit Wirtschaftssanktionen was erreichen, was eigentlich nur mit Waffen zu erreichen ist – ein Rückzug Russlands aus Osteuropa. Einen Rückzug auf den Raum der russischen Förderation und dem Aufgeben der Machtansprüche über das sogenannte nahe Ausland, was von Russland selbst neansprucht wird.
Dem will man begegnen mit Wirtschaftssanktionen.
Interessant ist, dass die Mächte, die das tun, also im wesentlichen die EU und die USA, dass diese Mächte ihren Wirtschaftssanktionen die Aufgabe stellen, aber auch die Leistung zutrauen, sowas herbeizuführen, den anderen Staat so zu schwächen, dass er sein aussenpolitisches AUftreten, was er für sein Recht hält, nicht mehr leisten kann.
Mit diesem Wirtschaftssanktionen, mit den ökonomischen Kampfmassnahmen, stossen die Regierung im Inland auf wenig Widerspruch. Speziell Leute, die früher oder heute noch den Grünen anhängen, haben überhaupt kein Problem damit, den Zweck der Kampfmassnahmen zu billigen bloss weil die unblutige Wirtschaftskriegsmittel daherkommen.
Krieg würden sie ablehnen, aber Wirtschaftskrieg, damit haben sie kein Problem damit. Da muss man auch nicht so kleinlich prüfen, ob man den ZWeck eigentlich billigt oder andersherum: der Zweck ist sowieso gebilligt, der einzige Einwand wäre ja sowieso nur der Aufwand, die Kosten des Krieges gewesen, die Risiken die damit verbunden sind.
Part 2:
Und so wird an der Stelle mal was gemacht, wo man wirklich mal sagen muss: schauen wir uns das mal genauer an. Was die Grünen vor 20 Jahren gefordert haben, Außenpolitik mit Mitteln von Wirtschaftssanktionen, statt mit Bomben und Granaten. Friedliche AUßenpolitik, dieses Experiment wird durchgezogen. Kann man Kriegsergebnisse oder sowas ähnliches wie ein Kriegsergebnis mit Mitteln der wirtschaftlichen Strafmaßnahmen herbeiführen.
Protest gibt es halblaut nur, man will ja nicht unpatriotisch sein, von Seiten der deutschen Wirtschaft. Muss man erstmal sagen: kein Wunder. Die haben ja die Lasten dieser ökonomischen Kriegsführung zu tragen. Ihre Wachstumseinbußen, ihre geschäftlichen Verluste, sind ja gerade kalkuliertes Kriegsmittel bei der ganzen Geschichte.
Also von der Seite und vom Handelsblatt, dem Sprachrohr dieser Richtung, da gibt’s einerseits sehr viel Verständnis für Russland und andererseits den Vorwurf, was hier geschehe wäre ein Missbrauch der Wirtschaft. Missbrauch der Wirtschaft für politische Zwecke.
Aber nur halblaut, so richtig Front machen gegen die Sanktionspolitik wollen sie auch nicht. Deswegen heute das Thema.
Wie funktioniert das eigentlich, dass die Wirtschaft, der Waren und Kapitalverkehr zwischen den Nationen, also das, was man eigentlich als den friedlichen Verkehr kennt, dass das als Waffe Verwendung finden kann. Und in wessen Händen ist es eine Waffe und gegen welchen Gegner welcher Art funktioniert diese Waffe.
Das weitere, was dabei geprüft werden soll ist die Frage: ist dieser Gebrauch der Wirtschaft als ökonomisches Kampfmittel, wie manche beklagen, wirklich ein Missbrauch der friedlichen Wirtschaft? Oder anders: was sagt der Gebrauch der Wirtschaft als Waffe, über den internationalen Austausch von Gütern und Geld, von dem die Welt nachwievor mit Ricardo meint, es sei eine Art internationale Arbeitsteilung, wobei sich jedes Land auf das konzentriert, was es am besten kann.
Dazu jetzt eine erste These:
Der Gebrauch der internationalen Wirtschaftsbeziehungen als Waffe, ihr Umschmieden zu Waffen, gibt’s nur, weil sie vorneherein welche sind. Die Wirtschaftsbeziehungne werden nicht erst durch Abbruch und Entzug, das ist ja das, was man mit Sanktionen macht, durch Abbruch und Entzug zum Machtinstrument von Staaten, sondern sie sind von Anfang an Machtinstrumente.
Fangen wir mal vom Phänomen her an: was sind denn Sanktionen? Sanktionen sind der Gebrauch der friedlichen Wirtschaftsbeziehungen zur Schwächung und Schädigung des Partners, des Handelspartners und zwar dadurch, dass man ihm die Beziehungen entzieht – dass man den Wirtschaftsverkehr abbricht, teilweise oder ganz.
In sofern ist klar, einen anderen Staat kann man mit Wirtschaftssanktionen nur schädigen, wenn man in wirtschaftlichen Beziehungne steht. Es ist direkt trivial, während der Zeit des kalten Krieges gegen den Ostblock oder heute gegen Nordkorea hilft sowas nichts. DIe haben nicht viele Beziehungen, die kann man auch nicht groß schwächen durch den Abbruch.
Nur Staaten, die sich zu diesem kapitalistischen Weltwirtschaftssystem bekennen, die sich einordnen in die Ordnung, die in der durch die Benutzung des Weltmarkts durch den Austausch mit anderen durch die Benutzung der Reichtumsquellen anderswo und dadurch, dass sie ihre eigenen zur Verfügung stellen, nur solche muss man erstmal sagen, nur solche Staaten kann überhaupt damit treffen.
Darauf setzen die Europäer und die USA, wenn sie gegenüber Russland und den Verkauf von auch militärisch nutzbaren Dual-Use-Gütern verbieten.
The ideal financial future for Russia is one where its currency is the freely emitted debt-free creation of the state, backed by all the resources at its command, including a store of gold, and redeemable for gold from the central bank on demand. That will in one natural swoop solve the various problems that exercise Soviet-style Rube-Goldberg economic minds such as Orlov and Glaziev.
Getting to that happy position happens to be against the IMF rules that govern the Russian central bank, a parasitic entity transplanted into Russia at a time when it was most vulnerable. To change the charter of the central bank in accordance with law requires a legislative supermajority. That is the final piece of the puzzle. The replacement for the SWIFT system was due in a few months, but last week it was reported that it was about to become operational by now, ready for testing in select banks. The user interface is the same as with the SWIFT system, so it will be painless for banks all over the world to adopt. Getting the change of the central bank charter needs a severe crisis, well-managed. Putin has already promised something adequate as a response to the next round of sanctions. Let us pray it is handled well.
The dollar is in a death-dance, taking other fiat currencies along with it. A gold-backed rouble will be an anchor of stability for more than Russia alone. The end of the dollar will be hard for everyone, but the end of dollar seignorage will, if anything will short of Armageddon, put paid to America’s military adventures.
sarz
Was wird eigentlich bei Sanktionen benutzt? Es wird die Abhängigkeit, die sich andere von einem geben, dadurch, dass sie in Benutzungsverhältnisse eintreten, die Abhängigkeit in die sich andere von einem begeben, die wird als dessen Schwäche ausgenutzt. Dass sich das andere Land an die Beziehungen gewöhnt hat, dass es die Lieferungen braucht, dass es die Exporte, die laufen, nötig hat für die Reproduktion der eigenen Wirtschaft und damit des eigenen Landes, das wird als dessen Schwäche benutzt und das ist erstmal nichts, was erst im Wirtschaftskrieg wirksam wird, sondern was von Anfang an die immer begleitende Seite der geschäftlichen Nutzung anderer Länder ist.
Wenn Staaten sich in den Geschäftsverkehr begeben, dann wissen sie, dass sie sich auf Abhängigkeiten einlassen und sie wissen, dass sie Abhängigkeiten stiften. Andere brauchen dann ihre Leistungen und Lieferungen und was auch immer.
Und dass sie Abhängigkeiten stiften ist gewollt und bezweckt und dass sie Abhängigkeiten eingehen ist immer das begleitende Problem internationaler Geschäftsbeziehungen. Im Wirtschaftskrieg wird eigentlich das ganze Verhältnis nur geständig, was im Wirtschaftsfrieden die dauernde Begleitung des Waren- und Kapitalverkehrs ist.
Und es ist ja auch kein Wunder, schließlich sind Staaten höchste Souveräne. Die stehen nicht wie ein Geschäftsmann in einem kapitalistischen Land unter dem Gesetz des Landes, sondern sie sind selber höchste Sourveräne. Sie lassen sich auf einen verkehr mit anderen bloß ein, um sich selbst zu nutzen. Also um dem eigenen Land, um der eigenen Nationalökonomie einem Zuwachs an Reichtum an Geldverdienen zu sichern und damit sich selbst als Macht gegenüber anderen Mächten zu stärken.
In 2012 Gar Alperovitz in an Opinion piece published in the NY Times wrote the following which I have excerpted which is a call for nationalism of banks that are too big to regulate:
“Simons (a hero of the libertarian idol Milton Friedman) was skeptical of enormity. “Few of our gigantic corporations,” he wrote, “can be defended on the ground that their present size is necessary to reasonably full exploitation of production economies.”
The central problem, then as now, was that very large corporations could easily undermine regulatory and antitrust strategies. The Nobel laureate George J. Stigler demonstrated how regulation was commonly “designed and operated primarily for” the benefit of the industries involved. And numerous conservatives, including Simons, concluded that large corporate players could thwart antitrust “break-them-up” efforts — a view Friedman came to share.
Simons did not shrink from the obvious conclusion: “Every industry should be either effectively competitive or socialized.” If other remedies were unworkable, “The state should face the necessity of actually taking over, owning, and managing directly” all“industries in which it is impossible to maintain effectively competitive conditions.”
http://www.nytimes.com/2012/07/23/opinion/bankshttp://www.nytimes.com/2012/07/23/opinion/banks-that-are-too-big-to-regulate-should-be-nationalized.html-that-are-too-big-to-regulate-should-be-nationalized.html
Supply & Demand – There is only one cause for a falling Ruble. Supply and demand.
From:- Increased imports, reduced exports, capital transfers, our global Ruble reserves being placed into the market. You can choose what you want to believe, but the answer is supply and demand.
A currency’s long term value is determined by its underlying economic trade. It is suicidal to attempt to hold a currency’s value above its natural level (But you can hold it down by buying and storing forigne currency, as is happening in china).
Capital transfers and releasing global reserves can only have a temporary effect, look to the underlying trading position, thats ALL that matters.
Pushing interest rate high is also suicidal. Its has no effect on underlying trading position, signals panic, and damages domestic economy. This is s clear sign the central bank are incompetent or corrupt.
Let the Ruble fall to its natural level, whatever that may be. It may not be pleasant but trying to stop it will burn up your capital reserves and achieve nothing.
Forget the nonsense of gold reserves, people who don’t understand money get confused by this. Money does not get its value from shinny metal.
Would this be an effect of falling oil prices, are oil values determined by contract or spot market.
@ Maedhros says…
You make great sense, elegantly understandable/effective/astute.
Your “1) Create a State Bank for Economic Development, whose ONLY activity is to provide loans to every domestic non-financial enterprise, for investment and working capital purpose, and to families, for the purchase of the home or flat where to live,…”.
I hope and suspect this is already in progress.
Your “2) Forbid by law any short sale (i.e. the sale of what you DO NOT HAVE, in unlimited quantities, …”.
Yes, indeed. However may be impractical as lack any controls over foreign transactions and Currency Exchanges.
A “Rentenruble” or 2nd currency for domestic use only, would permit easier control of foreign Ruble transactions.
A “‘Rentenruble “, backed by hard assets as you mention, would be quickly accepted by Russians internally. It would temporarily replace the Ruble, thus Rubles would not be available at any central-bank mechanism so the Ruble would not have convertability, only the Rentenruble [which would not be recognized legal tender outside Russia and thus stops foreign speculation attacks.
Re Glaziev, very hazy/unclear/uncertain on remedies. Here I quote Hjalmar Schacht for clarity:
From Account Settled, Hjalmar Schacht 1949
“. . . By the autumn of 1923 the unrestricted depreciation of the currency had reached such a pitch that it threatened to break up the whole structure of Germany’s national life. Wage-earners’ wives were in despair. Whenever they went out to buy food they were involved in a hopeless struggle against the depreciation of the mark. The wages of their menfolk ran through their fingers like water even when, as was finally the case, they were paid daily, In this extraordinarily difficult situation the authorities called upon me to put a stop to the depreciation of the mark and stabilize the currency. . . .
All in all, this struggle with the speculators over the rate of exchange lasted eight months. It was waged with vigour and determination, and private interests were ruthlessly ignored in the interests of the community as a whole. My victory did not make me popular . . .
Even the experts did not always grasp my methods, which contradicted every classical theory, and the great mass of the people naturally failed to understand the significance of what was taking place. . . It was in this period that the press first dubbed me a ‘Financial Wizard’, because in money matters in particular the simple and the natural is the most difficult to grasp.
…But everything depends on initiative, on the ability to seize an opportunity, on vigorous action. All those currency projects which embody new ideas and suggestions for establishing automatically functioning principles are fruitless. It is not a question of the percentage of gold or bills behind the notes in circulation, or of note control, or the discount rate, but simply and solely a matter of the temperature and the pulse of economic life. In monetary policy, just as in medical therapy, correct diagnosis is the secret of successful treatment. All that is required after that is vigour and determination in carrying out the recovery plan. “
So yes, the remedy should be boldly simple, clear and easy to implement.
That is guidance for all who hope to cure a problem.
from Rick the vincible.