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re: Update pg 23: Russia,IMO, will default on its sovereign debt within six months
Posted on 12/19/14 at 10:24 am to TOKEN
Posted on 12/19/14 at 10:24 am to TOKEN
quote:What do you think that would do to his popularity with the people if he did that, Mr. Potter?
Why doesn't Putin prohibit the pulling of money from the banks?
2
Posted on 12/19/14 at 10:30 am to LSURussian
Fallout from Russia hitting its trading partner, Belarus. LINK
quote:
MINSK, Belarus (AP) — Belarus has imposed a 30 percent fee on currency exchange transactions in an effort to contain panic that has spilled over from neighboring Russia.
The Belarusian National Bank announced Friday that it was mandating the fee for both businesses and individuals using Belarusian rubles to buy foreign currency.
Posted on 12/19/14 at 10:42 am to LSURussian
An economist from Russia's biggest bank is warning that the government's recent actions to rescue the Russian banking sector may have unintended consequences which will lead to a wide scale banking crisis.
quote:LINK
"If the Central Bank of Russia continues to provide refinancing in exchange for non-marketable securities that banks can generate in almost unlimited amounts, the system will gradually ramp up to full-scale banking crisis," Gavrilenkov said.
That is, the emergency measures undertaken by the central bank to pump liquidity into the country's banking system in order to prevent widespread defaults could end up coming back to bite it.
In essence he thinks that banks may prove unable to pay back loans from the central bank with interest rates now set at 17% and the collateral that they pledge in exchange for it may not be of sufficient quality to cover the losses.
He estimates that servicing over 7.3 trillion rubles of debt at current interest rates will cost the banks somewhere in the region of 1.2-1.3 trillion rubles ($20 billion) a year.
Posted on 12/19/14 at 4:37 pm to LSURussian
It's a double edge sword I know, but he could possibly limit the amounts taken out?
I see him pulling something like this to protect the banks before long.
I see him pulling something like this to protect the banks before long.
Posted on 12/19/14 at 5:46 pm to LSURussian
The only viable action Putin has left is to collaborate with OPEC and reduce crude production to prop up prices.
The only problem is the last time this scenario popped up Russia promised OPEC production cuts but actually raised production behind their backs.
There is no trust and Russia will have to cut production first at the risk of being left out to twist in the wind by OPEC. Not exactly where they want to be as OPEC's largest producer is pissed at Putin for propping up Assad, as well as OPEC's desire to increase market share at the expense of anyone, including Russia.
Translation: They fricked
The only problem is the last time this scenario popped up Russia promised OPEC production cuts but actually raised production behind their backs.
There is no trust and Russia will have to cut production first at the risk of being left out to twist in the wind by OPEC. Not exactly where they want to be as OPEC's largest producer is pissed at Putin for propping up Assad, as well as OPEC's desire to increase market share at the expense of anyone, including Russia.
Translation: They fricked
Posted on 12/19/14 at 6:37 pm to LSURussian
quote:
In essence he thinks that banks may prove unable to pay back loans from the central bank with interest rates now set at 17% and the collateral that they pledge in exchange for it may not be of sufficient quality to cover the losses.
No shite! If banks are already facing liquidity problems and the economy is in the shitter, where the hell does the Central Bank think this extra liquidity is going to come from to pay this high rate? The magical cash fairy? Maybe I am missing something but to charge 17% interest to keep your banks afloat seems like mutually assured destruction.
Posted on 12/19/14 at 6:49 pm to LSURussian
What's the fix for this? I can't see OPEC bailing Putin out as this is one of their intended goals. Does this situation just float along unless large corporations pull their money? When does collapse become unavoidable? What's the most viable option to avoid it?
Posted on 12/21/14 at 8:44 am to LSURussian
quote:
Russia has more than $600 billion in debt, far exceeding its reserves. Without the ability to refinance, an economic collapse has always been in the cards.
Nevertheless, the exceedingly fast drop in energy prices (Russia now sells its oil at about $60 a barrel, while its budget assumes $100 a barrell) has accelerated events.
Now, Russia’s banking system may very well be insolvent and a full-scale economic meltdown appears imminent.
Forbes Magazine, 12/21/14
Posted on 12/21/14 at 8:50 am to LSURussian
Do you agree with how he thinks Putin reacts?
This post was edited on 12/21/14 at 9:00 am
Posted on 12/21/14 at 8:51 am to LSURussian
LSUR:
Did the Crimea invasion have anything to do with this, and if so how?
Also, Is this collapse due to the drop in oil prices or was it just accelerated by the drop in oil?
Did the Crimea invasion have anything to do with this, and if so how?
Also, Is this collapse due to the drop in oil prices or was it just accelerated by the drop in oil?
Posted on 12/21/14 at 9:08 am to bamarep
quote:Yes, it caused the first of the economic sanctions on Russia by Europe, Canada, Australia and the U.S.
Did the Crimea invasion have anything to do with this, and if so how?
quote:It magnifies Russia's financial problems. Oil and natural gas are almost the only things Russia exports for hard currency (along with a little Russian brand vodkas). So the Russian government has taken a huge "pay cut" from the drop in oil and nat gas prices.
Is this collapse due to the drop in oil prices or was it just accelerated by the drop in oil?
Posted on 12/21/14 at 9:12 am to LSURussian
So, in other words: a typical utopic socialism failure?
Posted on 12/21/14 at 9:21 am to LSURussian
quote:Pretty sure you've been saying things very close to this for a while.
Like a drunk poker player, at each stage Putin has consistently doubled down on his bets while facing a decreasing expected return. When the crisis began, his aim was to create a Eurasian Economic Union to rival the EU. Today, he’ll be lucky to avoid a complete collapse of the Russian economy, if not his own government as well.
So Putin’s options now are very limited, but they will likely get better in time. No one knows what will happen in six or twelve months. It is quite possible, even likely, that an opportunity will present itself and Putin is looking to pounce.
He will also, if history is any guide, overreach once again and the story will go on.
Posted on 12/21/14 at 9:37 am to bamarep
quote:That's probably an incorrect political viewpoint of what happened.
So, in other words: a typical utopic socialism failure?
Putin misjudged what the West would do when he sent his "little green men" into Crimea to annex it back into being a part of Russia. (Remember, Crimea was a part of Russia for centuries until Khrushchev signed it over to Ukraine in the 1950's to mollify some political dissent in Ukraine back then.)
Then he misjudged again when he provided troops and military munitions to the ethnic Russian rebels in eastern Ukraine.
But what probably was the last straw for Europe was when the rebels shot down that Malaysian airliner killing citizens from many European countries using a Russia provided anti-aircraft missile. The Dutch especially were incensed since they lost numerous citizens because that flight originated in Amsterdam and many Dutchmen were on the plane flying to Malaysia for vacation. One of the Dutch leaders even tried to convince NATO to retaliate militarily against the rebels when that happened.
Putin thought Europe's dependence on Russia's natural gas to power their industries and heat their homes would force them to look the other way when he invaded a neighboring European country.
So, IMO, it's not a "socialism" issue, it's an example of a nouveau-dictator wanting to make his place in the long annals of Russian history by trying to re-establish the Russian Empire. He truly wants to go down in Russian history known as "Putin the Great."
Unfortunately, I don't think Putin's aggression is over. He may call a timeout for a while, but as long as he's in power, he will be a threat to the countries which were part of the Soviet empire and to other countries as well.
Remember, Putin once said, "The breakup of the Soviet Union was the greatest geopolitical tragedy of the 20th century." LINK
This post was edited on 12/21/14 at 9:44 am
Posted on 12/21/14 at 10:24 am to LSURussian
Posted on 12/23/14 at 10:08 am to LSURussian
quote:LINK
Russia instructs 5 big companies to help ruble out
MOSCOW (AP) — Russia has ordered five of the country's major state-controlled exporters to sell excess currency reserves in its latest attempt to shore up the ruble, which has endured big losses this year in the wake of sliding oil prices.
The Russian government published an order on its website Tuesday, instructing gas giant Gazprom, oil companies Rosneft and Zarubezhneft and diamond producers Alrosa and Kristall to reduce their foreign currency assets to October levels and to not raise them again until March.
Major desperation on the government's part....
Posted on 12/23/14 at 10:27 am to LSURussian
Curious about what you think of this:
Russia Under Attack: Letter from CEO of Genoil to CEO of JPMorgan Chase on US Foreign Policy Blowback
Basically the guy's point is, as weak as Russia is, we really shouldn't frick with Putin because he still holds pretty big hammer......
Russia Under Attack: Letter from CEO of Genoil to CEO of JPMorgan Chase on US Foreign Policy Blowback
quote:
It is important to note that this type of crisis is like the plague. It is contagious. A free falling ruble is essentially shutting out all exports from the EU and the west to Russia. If the currency goes down 2/3, then the price of western goods triples. Therefore, all EU exports to Russia and those of the rest of the west are stopped in their tracks. This Russian agricultural sanctions are as nothing compared to these new currency sanctions based on the concerted attack on the ruble. As the EU economies are in many areas in tribulation with 25% unemployment such as Spain, etc. and rising in most cases everywhere, the EU is suffering reciprocal damage for their attack on the ruble. The western attack on the ruble essentially blocks all imports into Russia forcing them into a German self-sufficiency as in 1933, or Russia under Stalin in 1937.
quote:
the international financial system will collapse if Russia unilaterally ceases to supply energy to Europe in the form of natural gas and oil
Basically the guy's point is, as weak as Russia is, we really shouldn't frick with Putin because he still holds pretty big hammer......
Posted on 12/23/14 at 10:34 am to LSURussian
They should just mint a couple trillion dollar coins, deposit them with their central bank and crisis over!
Posted on 12/23/14 at 10:36 am to ironsides
It's essentially economic mutually assured destruction. Putin isn't pushing the button first.
Neither is China vis-a-vis them holding our debt.
Neither is China vis-a-vis them holding our debt.
Posted on 12/23/14 at 10:41 am to LSURussian
quote:
Russia has more than $600 billion in debt
All this over such a paltry number.
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