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by Soviet Haaregrad » Tue Dec 16, 2014 4:21 pm
by Calimera II » Tue Dec 16, 2014 4:22 pm
Arkolon wrote:Pantokrators wrote:Can someone explain to the ignorant people in economics is this caused by the recent US sanctions or by something else?
Russia relies heavily on petrol. The US is expanding its fracking operations, and now pumps out 9.1 million barrels a day. Saudi Arabia pumps out only a little more. Saudi Arabia is upset because all of this petrol means it has to cut prices to stay competitive: it having great influence in OPEC helps in this regard. Thus Saudi Arabia slashed prices trying to run the Americans out of business, and the Americans are still pumping all they can just to stay competitive and to challenge the Saudis. It's a very interesting modern phenomenon.
Caught in the crossfire is Russia, whose currency has become worthless as a result of worthless exports. The US sanctions did minimal damage in this regard.
by United Marxist Nations » Tue Dec 16, 2014 4:23 pm
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Sebastianbourg » Tue Dec 16, 2014 4:23 pm
Soviet Haaregrad wrote:I'm curious if Crimea was worth the cost.
by Calimera II » Tue Dec 16, 2014 4:24 pm
Informationland wrote:I am very glad for this.
by Laerod » Tue Dec 16, 2014 4:25 pm
United Marxist Nations wrote:In a more serious follow-up to my previous post; what exactly do the supporters of sanctions hope they will achieve? I mean, if the goal is to remove Putin from power, Putin's opposition isn't pro-West either.
by United Marxist Nations » Tue Dec 16, 2014 4:25 pm
Soviet Haaregrad wrote:I'm curious if Crimea was worth the cost.
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Informationland » Tue Dec 16, 2014 4:28 pm
by Laerod » Tue Dec 16, 2014 4:29 pm
United Marxist Nations wrote:Soviet Haaregrad wrote:I'm curious if Crimea was worth the cost.
Sevastopol Naval Base is very important for Russia, both strategically and symbolically; Russia did not think it would be acceptable to lose it, and the highest members of the provisional government in Kyiv had openly stated for a long time that they intended to not renew the lease. Russia felt that, if it didn't act decisively against this, then its international reputation would be crushed.
by United Marxist Nations » Tue Dec 16, 2014 4:34 pm
Laerod wrote:United Marxist Nations wrote:Sevastopol Naval Base is very important for Russia, both strategically and symbolically; Russia did not think it would be acceptable to lose it, and the highest members of the provisional government in Kyiv had openly stated for a long time that they intended to not renew the lease. Russia felt that, if it didn't act decisively against this, then its international reputation would be crushed.
Russia's international reputation is crushed. Look at how Putin got shunned at the G20 summit.
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Korva » Tue Dec 16, 2014 4:37 pm
by United Marxist Nations » Tue Dec 16, 2014 4:38 pm
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Sebastianbourg » Tue Dec 16, 2014 4:38 pm
by Second Blazing » Tue Dec 16, 2014 4:42 pm
by Occupied Deutschland » Tue Dec 16, 2014 4:46 pm
Second Blazing wrote:It wouldn't be that surprising really. A total collapse of the Russian economy is a desirable outcome, at least from an American foreign policy stand point. It weakens Russia to the point where they may being willing to end their support for Syria and abandon their claims to the Crimea. I honestly hope we are behind this. Although that raises more questions about why we've been paying 3.50-4.00+ a gallon for this long if we can control the price of oil like this.
by Gauthier » Tue Dec 16, 2014 4:49 pm
by United Marxist Nations » Tue Dec 16, 2014 4:51 pm
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Ashmoria » Tue Dec 16, 2014 4:53 pm
Len Hyet wrote:Hoo boy, this one is gonna be rough.The Russian currency crashed past 100 against the euro Tuesday, the latest milestone in a currency rout that has rapidly gained momentum despite a huge emergency rate hike from the Central Bank.
One ruble became worth less than one euro cent at 3:13 p.m., according to data from the Moscow Exchange. At the same time, the Russian currency plummeted to 80.1 against the U.S. dollar.
The crash took the ruble's fall Tuesday to 20 percent, the largest one-day currency movement since the financial crisis of 1998 and compounding a 10 percent tumble the previous day.
The ruble later reduced its losses, and at 9 p.m. had stabilized around 8 percent weaker against the greenback at 70 and 11 percent down versus the euro at 89.
The Russian currency has now fallen 55 percent against the dollar since the beginning of the year, making it the worst performing currency in the world in 2014.
"The Central Bank's credibility is in tatters,” said Timothy Ash, an emerging-markets analyst at Standard Bank, in a note to investors Tuesday.
Earlier Tuesday, the ruble jumped sharply, strengthening as much as 10 percent to 58.1 rubles against the dollar, following an overnight announcement from the Central Bank that it was increasing interest rates to 17 percent from 10.5 percent.
But the gains were short-lived, as oil price weakness and sentiment once again intensified pressure on Russia's tumbling currency.
Brent crude dropped below $60 a barrel, reaching $59.02, a level not seen since 2009 on Tuesday.
Prime Minister Dmitry Medvedev convened a meeting to discuss the financial situation Tuesday, according to a government press release.
The gathering was attended by Deputy Prime Minister Igor Shuvalov, Kremlin economic aide Andrei Belousov, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Central Bank chairwoman Elvira Nabiullina, the press release said.
Ulyukayev said after the meeting a set of measures to stabilize the situation had been discussed, including measures to boost access to hard-currency liquidity from the Central Bank and legislative initiatives to support banks and empower the regulator, according to news agency RBC.
With its largest interest rate hike since the 1990s, the Central Bank bet Tuesday that a higher return on deposits and savings would make the ruble more attractive, easing the pressure exerted by a declining oil price and Western sanctions on Moscow imposed as a result of the Ukraine crisis.
Central Bank chairwoman Elvira Nabiullina said Tuesday that Russians that they should get used to living in a “new zone,” according to an interview on state-owned television channel Rossia-24.
The Central Bank, which has already spent over $70 billion of its foreign currency reserves this year defending the ruble, will likely be forced into market interventions, analysts at Sberbank CIB said in a note to investors Tuesday.
“Meaningful currency interventions must follow the huge Central Bank rate hike,” the analysts said.
Despite speculation of intense political pressure on the Central Bank to try to tame the ruble without frittering away Russia's currency reserves, President Vladimir Putin has not commented on the currency's dramatic recent decline.
The market turbulence was caused by “emotions and a speculative mood,” Putin's spokesman Dmitry Peskov said Tuesday, according to Russian news agency RIA Novosti.
The ruble's tumble in recent days has sparked heavy criticism of Russia's authorities from investors and lawmakers.
"The fall of the ruble and the equity market is not only a reaction to the low price of oil and sanctions but to a distrust of the government's economic measures," former Finance Minister Alexei Kudrin wrote on Twitter in the early hours of Tuesday morning.
Others said that the Central Bank and her chairwoman Elvira Nabiullina had disastrously miscalculated the situation.
"Lack of action had left the stability of the very financial system at stake. I am not sure whether Nabiullina can survive this," analyst Ash said.
“It has only to be a matter of time before the rating agencies respond with ratings downgrades, likely to junk status.”
Siggity Source
This one is gonna hurt people. We're looking at a 1998 style tumble of the ruble, maybe worse. The Russian economy may not be far behind.
Thoughts oh ye armchair economists of NSG? Is the ruble doomed? Will it recover? What's going to happen to the Russian economy?
Me? I'm a little scared. Putin has acted out when the economy has taken a hit before, and with him already taking a big old bite of the Ukraine I'm concerned that a serious hit to the Russian economy might end up with some seriously unforeseen consequences.
Edit: For shiggles, here's an opinion piece predicting the collapse of the Russian Banking System because of the freefalling ruble.
A Russian Bank Manager predicts the collapse of the Banking System of Russia.
by Laerod » Tue Dec 16, 2014 4:57 pm
by Ashmoria » Tue Dec 16, 2014 4:58 pm
Weronus wrote:I'm going to Russia as a Dutchman in one week, should I be glad or worried?
by United Marxist Nations » Tue Dec 16, 2014 4:59 pm
Laerod wrote:United Marxist Nations wrote:Until imperialism is gone, it is just denial of the reality of international relations to think of it as anything but the natural order of how nations operate.
Russia is arguably the only nation and certainly the only European nation that has acted in this matter in the past few decades. To call it the reality of international relations and the natural order of how nations operate is to lie.
The Kievan People wrote: United Marxist Nations: A prayer for every soul, a plan for every economy and a waifu for every man. Solid.
St. John Chrysostom wrote:A comprehended God is no God.
by Pantokrators » Tue Dec 16, 2014 5:00 pm
Arkolon wrote:Russia relies heavily on petrol exports. The US is expanding its fracking operations, and now pumps out 9.1 million barrels of petrol a day. Saudi Arabia pumps out only a little more, and it is the global market leader. Saudi Arabia is reasonably upset because all of this petrol means it has to cut prices to stay competitive: it having great influence in OPEC helps in this regard. Thus Saudi Arabia slashed prices trying to run the Americans out of business, and the Americans are still pumping all they can just to stay competitive and to challenge the Saudis. It's a very interesting modern phenomenon, and it's giving all of us really cheap petrol.
Caught in the crossfire is Russia, whose currency has become worthless as a result of worthless exports. The US sanctions did minimal damage in this regard.
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