The Collapse of the Ruble?

[Baltenstein]

But Russia and Venezuela need every single petrodollar they can get. If they reduce their oil export, they'll end up hurting themselves anyway.

But Putin is a master of politics, this does not compute.

When Saddam Hussein found himself in a similar situation with Kuwait refusing to lower its oil production a couple of decades ago, he invaded the place. Unfortunately (for Putin that is) Russia is in no position to invade Saudi Arabia. So, since local Saudi-Arabian self-defense forces with inexplicably Slavic faces and weapons from the corner store are out of the question, he will have to think of something else.

[Constantinopolis]

I meant "Novorossiya". Collapse of the social infrastructure, criminal gangs taking over, increasing hostilities both between and inside the various people's republics (There are now separatist break-away republics inside the separatist break-away republics) and other nasty stuff like that. Considering that Russia's economic woes will likely lead to Russia drastically reducing/cutting its financial support to the region, things are going to become really bad (as if they weren't already) for the local populace.

Fuck, this pretty much means the Atamans are back now.

EDIT: for those who may not be aware, the Atamans were the Cossack warlords of the olden times.

It doesn't mean anything. Some military commander in a town right on the front line wants to declare his own tiny little Cossack republic (yet, strangely, he does this while being very nostalgic for Soviet times, more so than the Novorossiyan authorities).

This sort of thing happens frequently in civil wars - local commanders, who were acting more or less independently from central command anyway, declaring political autonomy or independence. After the war is over, they always get absorbed back into the larger political entity on their side.

[Valica]

Fuck Putin. Let's hope Russia's second death comes swiftly so they can rebuild quickly.

[Baltenstein]

Fuck, this pretty much means the Atamans are back now.

EDIT: for those who may not be aware, the Atamans were the Cossack warlords of the olden times.

It doesn't mean anything. Some military commander in a town right on the front line wants to declare his own tiny little Cossack republic (yet, strangely, he does this while being very nostalgic for Soviet times, more so than the Novorossiyan authorities).

This sort of thing happens frequently in civil wars - local commanders, who were acting more or less independently from central command anyway, declaring political autonomy or independence. After the war is over, they always get absorbed back into the larger political entity on their side.

Provided said larger political entity

A) has the military capability to bring the mischief-makers back in line
B) can guarantee its own economic and administrative stability
C) is not under threat from its civil war enemy anymore

None of those things are necessarily true for Novorossiya. The Cossacks form a significant part of Novorossiya's overall forces (therefore militarily disciplining them could become difficult), the continued infrastructural and economic support of Novorossiya through Russia is very uncertain, and the Ukrainian army is still actively preparing to reconquer the separatist regions.

[Constantinopolis]

It doesn't mean anything. Some military commander in a town right on the front line wants to declare his own tiny little Cossack republic (yet, strangely, he does this while being very nostalgic for Soviet times, more so than the Novorossiyan authorities).

This sort of thing happens frequently in civil wars - local commanders, who were acting more or less independently from central command anyway, declaring political autonomy or independence. After the war is over, they always get absorbed back into the larger political entity on their side.

Provided said larger political entity

A) has the military capability to bring the mischief-makers back in line
B) can guarantee its own economic and administrative stability
C) is not under threat from its civil war enemy anymore

None of those things are necessarily true for Novorossiya.

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Basically, there are two possible outcomes to this war: Either Novorossiya wins and remains independent from Ukraine on some territory, in which case it will be able to absorb the mischief-makers back into itself. Or Ukraine wins, in which case the mischief-makers are dead anyway. Either way, they won't be a long-term presence.

[The balkens]

Provided said larger political entity

A) has the military capability to bring the mischief-makers back in line
B) can guarantee its own economic and administrative stability
C) is not under threat from its civil war enemy anymore

None of those things are necessarily true for Novorossiya.

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Wishful thinking.

[Galloism]

You're talking about "net income". When a person uses the term "Income" without modifiers, it is generally assumed to mean gross income, which is about 2.77 trillion dollars.

If you meant NET income, then your statement was absolutely nonsensical. I can find any pirate in Somalia with a net income higher than the US federal government.

Thus, "Interest exceeds our income" is not so much of a prophecy of doom, but equivalent to an excited exclamation that the sun is actually sort of hot.

Notice the word total before income in my original post, but In any case, income in macroeconomics is equated with surplus.

Thus, your original post was wrong. "Total yearly income", to any reasonable person, is gross income before expenses and offsets.

This figure, for the federal government, is about 2.77 trillion dollars.

Also notice the negative before the income in my 2nd post. I didn't say that US net income is high. I said that US net loss is high. Negative numbers are always lower then positive ones, even if their absolute value is higher...

Its not just the interest exceeding income. Its Interest exceeding income and interest being payed from new loans, along with need for new loans to keep the economy running. That's a debt spiral.

Hence my statement: your complaint is either totally and hideously wrong, or an absolute truism which no one should be excited about.

I pay out more in interest in a year than the US government's net income. So the fuck what?

[Constantinopolis]

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Wishful thinking.

Well Putin has made it very clear that he won't allow Novorossiya to fall, and Ukraine is obviously not going to lose any more significant chunks of territory at this point, so how else could the war end, if not in stalemate?

[Baltenstein]

Provided said larger political entity

A) has the military capability to bring the mischief-makers back in line
B) can guarantee its own economic and administrative stability
C) is not under threat from its civil war enemy anymore

None of those things are necessarily true for Novorossiya.

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Basically, there are two possible outcomes to this war: Either Novorossiya wins and remains independent from Ukraine on some territory, in which case it will be able to absorb the mischief-makers back into itself. Or Ukraine wins, in which case the mischief-makers are dead anyway. Either way, they won't be a long-term presence.

Or scenario three: The region becomes a depressive, destabilized clusterfuck where neither Kiev nor the people in Donezk will have much control over the shenanigans of local gangs and militias with living standards and social stability collapsing into a black hole. Hence, "White Somalia".

[The balkens]

Wishful thinking.

Well Putin has made it very clear that he won't allow Novorossiya to fall, and Ukraine is obviously not going to lose any more significant chunks of territory at this point, so how else could the war end, if not in stalemate?

Russia falling into economic collapse. Putin backpedaling and pulling out of Ukraine. Crimea will likely stay under the Russian Boot, but hey, more Sanctions for that i suppose.

[The balkens]

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Basically, there are two possible outcomes to this war: Either Novorossiya wins and remains independent from Ukraine on some territory, in which case it will be able to absorb the mischief-makers back into itself. Or Ukraine wins, in which case the mischief-makers are dead anyway. Either way, they won't be a long-term presence.

Or scenario three: The region becomes a depressive, destabilized clusterfuck where neither Kiev nor the people in Donezk will have much control over the shenanigans of local gangs and militias with living standards and social stability collapsing into a black hole. Hence, "White Somalia".

And this.

[Herargon]

Or scenario three: The region becomes a depressive, destabilized clusterfuck where neither Kiev nor the people in Donezk will have much control over the shenanigans of local gangs and militias with living standards and social stability collapsing into a black hole. Hence, "White Somalia".

And this.

Already is the case, look at krokodil for example.. wait, what?

[The balkens]

And this.

Already is the case, look at krokodil for example.. wait, what?

BRAW HAHAHAHAHAH!

Pretty much.

[The Seleucids (Ancient)]

Correct, but they will be true after the war with Ukraine ends, either by a peace treaty or (much more likely) by the fighting simply stopping and the front line becoming the de facto border.

Basically, there are two possible outcomes to this war: Either Novorossiya wins and remains independent from Ukraine on some territory, in which case it will be able to absorb the mischief-makers back into itself. Or Ukraine wins, in which case the mischief-makers are dead anyway. Either way, they won't be a long-term presence.

Or scenario three: The region becomes a depressive, destabilized clusterfuck where neither Kiev nor the people in Donezk will have much control over the shenanigans of local gangs and militias with living standards and social stability collapsing into a black hole. Hence, "White Somalia".

Meh, i doubt it, Russia is pretty good when it comes to building up pro-Russian states...
Though, as always, anything is possible.

[Laerod]

Or scenario three: The region becomes a depressive, destabilized clusterfuck where neither Kiev nor the people in Donezk will have much control over the shenanigans of local gangs and militias with living standards and social stability collapsing into a black hole. Hence, "White Somalia".

Meh, i doubt it, Russia is pretty good when it comes to building up pro-Russian states...
Though, as always, anything is possible.

Eh? Name some Russian-sponsored breakaway territories that are in "pretty good" shape.

[Korva]

Meh, i doubt it, Russia is pretty good when it comes to building up pro-Russian states...
Though, as always, anything is possible.

Eh? Name some Russian-sponsored breakaway territories that are in "pretty good" shape.

Maybe he means "Russia is good at financing civil wars and undermining the autonomy of former Soviet subjects in such a way that makes it impossible for these nations to fully assert their autonomy and/or join international organizations such as NATO".

[United Marxist Nations]

Eh? Name some Russian-sponsored breakaway territories that are in "pretty good" shape.

Maybe he means "Russia is good at financing civil wars and undermining the autonomy of former Soviet subjects in such a way that makes it impossible for these nations to fully assert their autonomy and/or join international organizations such as NATO".

South Ossetia had broken away from Georgia fair and square, it was not Georgia's to rule over.

[Soldati Senza Confini]

First, you must realize that all the mainstream financial news outlets are propaganda organs for the west. The lie about most every financial number coming out of the USA to try to con the world into trusting in the US economy, and thus the hegemony of the US dollar.

Second, you have always heard that a country is in better shape when its currency is relatively weak compared to its trading partner, causing its exports to be cheaper and imports more expensive, and so it can export more and import less. This causes a country’s trade balance to be positive.

However, in the case of the USA, its financial condition has deteriorated to the point where increasing its trade balance is less important than reducing its debt payments to a manageable number. The USA is in so much debt at this point that it must try to keep a strong dollar, even at the expense of its trade balance. If the dollar were to lose strength, the US bonds would have to fall in price and so the interest earned, or yield, would go up. This yield, or interest, whatever level it is any particular moment, is transferred to the US treasury because the treasury is constantly creating new bonds to replace maturing bonds, and also creating new bonds to cover the continuously rising deficit, which is about a trillion dollars per year now.

In summary, the USA has reached the end game of its business life cycle. Its debt burden is so great there is no mathematical way to escape it. It is an Enron. It is a ship that has struck an iceberg and the band is playing but the ship is sinking and the deck is awash…it won’t be long now until it slips below the surface forever. It is an airplane that has lost all engines and is in a flat spin accelerating towards the earth and complete obliteration. The odds of saving the USA financially now would be like trying to save a person that has jumped off the empire state building and is half-way to the ground before anyone even noticed. There is no chance to save the US economy at all, and if you understand economics to any appreciable degree, you will have embraced this eventuality as fact. The US will default on its debt, and this is not an opinion, it is a fact based on math. The politicians know this, the only question is when it will happen. If the dollar can be maintained strong, the cost of the interest will be low, however should the interest the US treasury have to pay on its debt ($18 trillion) rise by just one percent, the US debt market would break because of math…it simply cannot afford to pay any more debt. The rate the treasury pays on its debt cannot even go back to its historical norm, nor no where near it or collapse would be immediate. Incidentally, $18 trillion equates to $56,000 per person and $154,000 per person that actually pays taxes (about one in three). What chance do you think there is that every single person in the USA will ever be able to pay $56,000 more dollars to the treasury so the treasury can pay off the debt? The work force of the USA is down to under 50% of the population…

Before looking at Russia, note that the European economy is about in the same shape as the USA economy. The debt to GDP ratio is on the same order of magnitude…the debt itself is about the same value…give or take a few trillion.

Now let’s look at Russia. Russia does not have a lot of debt (way less than one trillion dollars). Although it has a smaller economy than the USA or Euroland, its debt to GDP ratio is only 17%, which compared to the USA and Euroland is quite low…by a actor of 4 or more. Another way to put it is that Russia is a smaller business that has only ¼ the debt-to-revenue ratio of its bigger competitors. In an economic downturn, would you rather be an employee of which of these businesses? Russia of course.

But more to the point, if you don’t already know what the definition of “Current Account” is, you need to educate yourself before making a one-off comment or shallowly thought-out opinion of what “Pain” Russia is currently experiencing.

Here is a link to what Current Account is:
[link to http://www.investopedia.com]

Before I get into details, just look at the following details of Russia’s Current Account, and pay attention to the list of countries and their respective Current Accounts:
[link to http://www.tradingeconomics.com]

Do any of the countries in the list with positive Current Accounts have something in common? Hmm…seems that most of them are accumulating or repatriating gold. Why?

When a country has a positive Current Account, it is selling more than it is buying, so it is accumulating foreign currency/bonds in its banking system, also referred to as foreign reserves. China is by far has the most positive Current Account. Germany is a biggie, along with Saudi Arabia, Japan, the Netherlands, a host of other oil exporting countries, and also Russia. Upon actually studying the situation, instead of listening to propaganda being released by the Wall Street Journal, and other financial prestitutes, you will see that Russia has had a very nice Current Account for a long time.

When a country has a positive Current Account, not only is it building foreign reserves, it is actually fulfilling the “Savings” side of the banking equation. Or in other words, it is “Loaning” money to its trading partners. Another way to word it is to say, we will sell you our merchandise in exchange for your bonds.

Ask yourself, if Russia has a disproportional amount of other countries’ currency, what happens if its own currency goes down a little…or even a significant amount? Remember, on balance, Russia is taking in other countries’ money, not paying rubles out. So until/unless the Current Account goes negative, Russia continues to accumulate other nations currency/debt.

As I stated in the outset of this post, a relatively weaker currency will strengthen exports to your trading partner and lower imports from your trading partners. This has the effect of moving your Account Deficit in the positive direction. Look what has happened to China in the past several years. China’s Current Account is so strong that with its level of US foreign reserves only, it has the power to collapse the dollar overnight if it decided to sell all that US debt at once…or even just threatened to do so.

People in Russia are panicking? Sure, they are panicking to BUY things that are imported before they go up in price! Apple stalled sales there…why? Because Apple was losing its shirt on the deal…they were getting less for their computers, by the same ratio as the ruble has depreciated. Obviously over time prices of imports will rise to make up the difference, but the people in Russia are consuming very nicely in response to their currency’s strength, just like the time-tested theory states it will, and that is good for their economy.

As an illustration, Russia’s central bank just raised it’s interest rate on debt from 10% to 17%. Wow, you say, that will break them for sure! Really? 17% on $650 billion of debt is only $45 billion more than the cost of the debt at 10%. In comparison, the USA’s debt is $18 trillion, which by the way is 18,000 billion, or about 28 times Russia’s debt. And the USA’s Current Account is in a serious deficit mode to the tune of $-100 billion per quarter versus Russia’s Current Account surplus of $11 billion per quarter. So over a year the Current Account provides Russia with about $44 billion, or about the same amount of money as will be needed to service the increase in the interest rate they are offering on the debt. Hmm…Russia is so strong they will be able to service their debt with the “extra” money the get from their Current Account surplus?

If a crisis were to hit the USA and the interest rate went up 1 little percent, the US treasury would have to come up with $180 billion dollars more to service the debt. Wait a minute, that is 18% of the current yearly budget deficit. So if some real problem presented itself and the world started to get worried about the value of the dollar, and if that caused the USA to have to raise the interest rate by 5%, that would basically DOUBLE the USA’s deficit. I hope you can see through this illustration why the USA defends the petrodollar with bombs, bullets.

Holy fuck.

This is such a mindfucking post. And utterly wrong on how debt works at the national level.

[Harkback Union]

Notice the word total before income in my original post, but In any case, income in macroeconomics is equated with surplus.

Thus, your original post was wrong. "Total yearly income", to any reasonable person, is gross income before expenses and offsets.

This figure, for the federal government, is about 2.77 trillion dollars.

Also notice the negative before the income in my 2nd post. I didn't say that US net income is high. I said that US net loss is high. Negative numbers are always lower then positive ones, even if their absolute value is higher...

Its not just the interest exceeding income. Its Interest exceeding income and interest being payed from new loans, along with need for new loans to keep the economy running. That's a debt spiral.

Hence my statement: your complaint is either totally and hideously wrong, or an absolute truism which no one should be excited about.

I pay out more in interest in a year than the US government's net income. So the fuck what?

Look, There are 2 kinds of numbers: (actually, There are many kinds of numbers, but all rational and irrational numbers can be categorized into these, except for 0)
Positive.
Negative.

When your "Net Income" is positive, you make profits.
When your "Net income" is negate, you lose money or aquire debt.

The US has a huge Negative net income, or a huge loss, Each year ranging from Trillions Hundreds of billions. Now, when we talk about a big negative number, It means that its absolute value is big, not its relative value, which should be clear to any reasonable person.

It is true that somali pirates have more net income then that, in fact the US government has the lowest net income on the planet. It needs Shiploads of money every year to stay afloat and to pay off interests... Its pretty clear that rates will rise soon for the US as people stop buying US bonds and using the dollar, which is already happening. Oil trade is increasingly done using Chinese, Russian and EU currency + the Fed is printing money like there is no tomorrow. If it wasn't for china and Japan buying US bonds, Us interest rates would skyrocket while the dollar collapses due to the massive trade deficit that built up in the last decade (along with the reckless money printing).
More:
Even Though I hate this site

Basically, The US Imports a lot of things and exports little. It pays for the imported stuff with dollars, which are then traded on the financial markets for other currencies and somehow end up in the hands of investors who then buy Treasury bonds. If the cycle breaks, the value of dollar deflates and Interest rates must go higher to get new investors to buy the bonds.

[The Seleucids (Ancient)]

Meh, i doubt it, Russia is pretty good when it comes to building up pro-Russian states...
Though, as always, anything is possible.

Eh? Name some Russian-sponsored breakaway territories that are in "pretty good" shape.

Compared to Somalia? All of them.

[Laerod]

Eh? Name some Russian-sponsored breakaway territories that are in "pretty good" shape.

Compared to Somalia? All of them.

That's hardly a reasonable comparison and you know it.

[Harkback Union]

Compared to Somalia? All of them.

That's hardly a reasonable comparison and you know it.

How about Haiti? Or Colombia?
Or Panama, Perhaps?
Mexico?
Chile?

Sure, There is Israel, But I wouldn't be proud of that.

[Korva]

Compared to Somalia? All of them.

That's hardly a reasonable comparison and you know it.

It is pretty telling when one must compare Russian aligned states against Somalia in order to look good.

[Herargon]

TL;DR to be honest

[Laerod]

That's hardly a reasonable comparison and you know it.

It is pretty telling when one must compare Russian aligned states against Somalia in order to look good.

Comparing them to the countries that they're legally part of is arguably a decent comparison. Other than the limitations based on size, the circumstances are virtually the same and thus the development would be comparable.