Europe Goes "All In": Will Sanction Rosneft, Gazprom Neft And Transneft

Tyler Durden's picture

Until this moment, the main reason why everyone mostly dismissed Europe's sanctions against Russia is that despite all its pompous rhetoric, Europe consistently refused to hit Russia where it would hurt: its energy titans Gazprom, Rosneft And Transfneft. The reason is simple: by imposing sanctions on these core energy exporters, Europe would directly threaten the stability of its own energy imports (Russia accounts for up to 30% of German gas imports), and as winter approaches with every passing day, playing with the energy status quo would seem like economic suicide. This all appears to have changed last Friday, when as the FT reports from a leaked copy, Europe's latest sanctions round will boldly go where Europe has never dared to go before, and impose sanctions on the big three: Rosneft, Gazprom Neft and Transneft.

 

This is what is known in game theory terms as a major defection round.

It also means that suddenly the stakes for Russia, and thus Europe, just got all too real, as Putin will now have no choice but to really ramp up the retaliatory escalation, which following the food ban can only mean one thing: a staggered reduction in gas flow to Europe.

 

It also means something else: recall that it was just ten days ago when we reported that Gazprom would begins accepting payment for oil in Ruble and Yuan.

If today's news is confirmed, Europe's dramatic shift in sanctions strategy means that Europe's embargo of both the US Dollar and the Euro will accelerate as Russia further intensifies its shift away from both the west and the petrodollar. The only and clear winner here: China, which will almost certainly step in to provide the funding Russia needs however on Beijing's terms in effect making the symbiotic link between Russia and China even stronger, forcing Moscow to rely almost exclusively on China for trade and funding relations, and suddenly give Xi Jinping all the trump cards.

What China's president will do, now that he has all the leverage in the world to call shots both to the West, the East, and of course, Africa, remains unknown, although those thousands of tons of gold imports that mysteriously enter the country and are never heard from again, may provide a hint.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ThroxxOfVron's picture

"USA must drain USD drastically immediately"

HOW?

Draining liquidity domestically will crash the markets, revealing the underlying rot unadressed by the system manamement.

It would destroy the whole status quo/msm reflation/recovery wealth effect meme.  

One cannot make claims of economically provident trickle down/wealth effects during an emission/additive phase and then discount the reciprocal economically inprovident trickle up/poverty effect during a remit/extractive phase.

Of course The FED could just buy the indecies directly and put the pilfered shares in it's pocket -I mean in an SIV...  Equity expropriation to protect the balance sheet from embedded credit risk.


What mechanisms exist for draining US$ liquidity internationally?  

Default on Treasuries?  Fiat negation of bank balances at chartered institutions? ( Hmmm.  Even where the legal protections for domestic deposits exist the FDIC might take awhile to actually pay out to certain foreign entities and allow certain institutional CDS stacks melt in the heat a while?  ...thinking about AIG...still under FED control? )

7.62x54r's picture

There is no mechanism for "draining" the USD.

And if the Fed and the Treasury fuck up hard enough, holders of US Dollars will want out of them yesterday. If no one wants them, they have to be used in the US to buy shit.

So all the Dollars come home, and all that inflation we have been exporting comes home to roost.

Winter is coming.

lasvegaspersona's picture

7.62x54R

don't bring a WW2 weapon to a WW3 fight

Calmyourself's picture

Oh yes, always bring a Mosin to the fight, you may have to paddle, never know..

 

http://7.62x54r.net/MosinID/MosinHumor.htm

ThroxxOfVron's picture

"if the Fed and the Treasury fuck up hard enough, holders of US Dollars will want out of them yesterday. If no one wants them, they have to be used in the US to buy shit.

So all the Dollars come home, and all that inflation we have been exporting comes home to roost."

 

IMHO, such a scenario would imply that DEEPLY negative interest rates are imminent.   Who pays to borrow if Trillions are flooding in looking for income streams?   Earnings per $ will totally collapse.  A mass repatriation such as you suggest wouldn't be based on fundamentals or productivity and would involve corporations leveraging up and laying off employees.  Short term this would be an economy based on even more eggregious levels of .GOV encouraged speculation and rampant misallocation.  

Can inflows simply be blocked via the FedWire and/or the major FX desks?

For that matter, .GOV simply expropriates cash all the time.  Sometimes there is no option to actually fight to reclaim your expropriated funds.  ...& if you want it back you have to prove where you got it from!

"Dollars?  Yeah, we do use them.   EU/Asian/Brics/etc. Foreign and say you have lotsa dollars, huh?   NO -You can't just bring your 'dollars' in here and spend them freely.  Take a number and sit in the big room with the other people with big fat duffel-bags of money that haven't shown us where it all come from -and we'll call you eventually..."

 

Treasuries will either rise in price and collapse in yield dragging rates into the abyss -or Treasuries crash and rates rocket blowing up The FED's balance sheet and multiplying the rolling vig on the UN-REPAYABLE National Debt.

 

ekm1's picture

Financial system is not edible, neither can it be used to fuel a car.

Debt is self destructive via defaults or expiry

 

Issue is RESERVES, not debt.

There is $60+ trillion around. Too much. $20 trillion has to be extinguished.

 

Issue is WHOSE $20 TRILLIONS?

ThroxxOfVron's picture

Where is the NOT-U.S. Dollar currency to pay for dissolving all the assets that those US Dollars are already sitting in?

For the international Dollars to come back to the domestic US the assets in which they are presently allocated must be sold.

The foreign held Dollars are often in US Treasuries.  Do you expect them all to be sold so that the owers of those Dollars can go to the United States with cash in hand to buy what exactly?

 

For $20 Trillions to be removed from an asset class there has to be a buyer for those assets?

WHO is going to pay in WHICH Currency to fuel the global liquidation of Dollar denominated assets which must rationally precede a domestic repatriation?

ekm1's picture

Same as with Lehman and Bear stearns.

 

Shutdown a couple of primary dealers and shutdown a couple of offshore banking centers.

Like in Cyprus.

 

Gone

ThroxxOfVron's picture

"Same as with Lehman and Bear stearns."

Lehman is still being dragged around in the courts in Manhattan these seven years later.

The losses and remaining assets still have not been allocated.  I'm not even going to ask questions about criminality, statutes of limitations, etc...

ekm1's picture

Yes it can.

 

Sell bonds

 

Sell gold

 

Shutdown a bank

 

And: Even taxation extinguishes dollars.

 

ThroxxOfVron's picture

"Even taxation extinguishes dollars."

The obvious answer if this is your position is to tax accrued wealth and capitol gains rather than labor.

Production is what drives an economy; not hoarding, rentier skimming and productivity theft.

ekm1's picture

No.

I was explaining what extinguishes usd

ThroxxOfVron's picture

"Sell bonds"

The FED sell bonds?   How does this 'extinguish' dollars?  

The Federal 'debt' is NOT going to be paid down no matter how many Bonds are bought or sold by The FED.  

Selling US Dollar denominated bonds requires that someone with US Dollars buy them.  Or print the US Dollars out of thin air and buy them.  ALL I see in either case is a transfer of US Dollars and bonds at best and the creation of counterfeit currency and purchase of perpetual .gov instigated rentier streams.

AGAIN: The Federal 'debt' is NOT going to be paid down no matter how many Bonds are bought or sold by The FED.

 

"Sell gold"

How does this 'extinguish' dollars?    The Dollars end up in the hands of the Gold seller.  ZERO extinguishment of dollars.

 

"Shutdown a bank"

How does this extinguish dollars?

In the last wave of major banking failures the bad debt was bought up by The FED and US Treasury -with newly printed out of thin air US Dollars.  Dollars were NOT extinguished.  Dollars were created against already defaulted, known to be fraudulent, and non-existant collateral !

 

"And: Even taxation extinguishes dollars."

I understand the textbook argument for making such an assertion; but, has it ever actually been done?  Taxation does fund a certain amount of government programs.  I have never heard anyone assert that taxes received by the IRS are literally destroyed and I would like to see any actual evidence of this ever having occoured...

When has taxation actually been used as a tool to diminish the outstanding money supply?  

ekm1's picture

You have the typical confusion of DEBT vs RESERVES.

 

I am talking about reserves, not debt

 

When the Federal Reserve receives USD, then USD is extinguished by law. The Fed is like a blackhole of USD by law

ThroxxOfVron's picture

I could as easily say:

"You have the typical confusion of LAW vs. POWER.

I am talking about power, not law."

 

Go ahead and tell me what You think reserves are and how they can be sequestered and why they should be destroyed.

 

 

WHY would The FED Banks want to be rid of reserves that they are being paid ( legally questionable -see that power vs. law issue ) 100% risk free interest for parking at the FED.

Everyone acts as if reserves are actually not invested in something or other.  

Where is all this 'money on the sidelines' stacked?   I feel like driving by and taking pictures of the heaps of trillions in 'idle' money...

 

Even IF the law were being stringently follwed by The FED, FED cartel, and Treasury; HOW would the FED attract $5t in US dollars out of the system and into it's clutches, and WHY would it destroy the money instead of -at worst- simply remitting it to the US Treasury?

TheReplacement's picture

Are they not already buying the indices?

Maybe they could buy back the ferner reserves with gold... hahahahahaha

ekm1's picture

Easy peasy

Unwind QE or call margin on Barclay's and Deutsche bank same as to Lehman and bear Stearns

 

Economy improved immediately after Lehman up to when started QE which reversed the economic gain.

We need a triple Lehman in order wipe out multiple claims on real assets.

After triple Lehman, econony improves quickly but bank lobby will be decimated which is good

ThroxxOfVron's picture

"Unwind QE or call margin on Barclay's and Deutsche"

 

Unwind QE?  WHO is buying up all the worthless MBS and defaulted AIG shit, etc.....& WHY?

The 'excess reserves' that have been earning interest at the FED will just disappear; but the Treasuries will be made available to the Banks at wonderful new cheap valuations with fat new rates -real positive rates vis-a-vis inflation?

One hitch is that the loss on the FED balnce sheet will be paid for by taxpayers: effectively another round of subsidies and bailouts to the captured failures run by most of the same criminals that were in charge in 2007...

 

 

"After triple Lehman, econony improves quickly but bank lobby will be decimated which is good"

Liquidation is the historically acceptable manner of dealing with defaulted debt.  There should have been no bailouts.

 

Calling margin on DB and Barclay's is all well and good unless it means recapitalizing BAC & JPM & AIG, etc. at levels a hundred fold larger than the 2007-2009 bsailouts after their derivatives stacks collapse to the tune of multiples of the DB's and Barclay's performing assets.

ThroxxOfVron's picture

Cyprus didn't emit the world's reserve currency.

The derivatives stack put in play during the Cypriot event was insignificant compared to what a genuine Primary Dealer cull or the collapse/demise of Deutche and Barclay's would entail.

I also seem to remember that many institutions and persons seemed to be fully aware of what was coming in Cyprus and got theirs out.  Insiders got clear of that mess to a large extent.  How is more of this kind of unbalanced corrupt selective purging of bad debt and accrued reserve going to bring the system to order.  

Allowing some out of the exits and trapping others in the demolition is not a recipie for stabilization..  

 

Oligarchy itself must be destroyed where ever possible.  Merely wiping out a portion of the feudalist wealth in some kind of political consolidation while totally impoverishing millions is not the answer.  

 

WHAT OF THE 'DEBTS' OF GOVERNMENTS?  WHY NOT DEFAULT?

RESET.  

Jubilee.  End the feudalism.  

Destroy the modern model of slavery perpetuated by corrupt governments.

End the perpetual slavery aka generation and sale of taxpayer productivity streams disguised as government debts.

TheGardener's picture

Margin call on Deutsche Bank my bet to set off a financial weapon of mass destruction. Just the name `Deutsche` makes for a perfect fall guy.

If her time comes don`t be surprised, she`s been set up for a long time and all the rats have left ship already.

bid the soldiers shoot's picture

The Can Will Be Kicked Down The Road

There's a lot of cash on the sidelines, but those sidelines aren't in the U.S. They're overseas—in tax shelters.

According to a new report from ISI Research, U.S. S&P 500 companies now have $1.9 trillion parked outside the country. Now, some of that is just multinational corporations profits overseas—yada, yada, yada, globalization. But a big part of it is tax avoidance. 

http://www.theatlantic.com/business/archive/2014/03/the-em-trillions-em-...

The memo will go out. Corporations will sell their foreign currencies and repatriate their dollars to put in the New York Stock Exchange. Stock splits will flourish. The DOW will break 20,000. Nothing else counts.
lasvegaspersona's picture

ekm1

No

a deflationary collapse calls attention to the Fed. Hyperinflation will look like a disease that has come in from Africa. Besides hyperinflation feels good at first, the people will applaud.

Deflation, in a purely fiat system simply will not be allowed. Collapse of the currency is surely the plan. It has been done many times (and deflation in a fiat system has never happened) and unto itself will not be the end of the world or the US.

ekm1's picture

If deflation not allowed, then world will accelerate USD avoidance and Saudis will execute bank lobby oligarchs one by one at daylight

ThroxxOfVron's picture

"Saudis will execute bank lobby oligarchs one by one at daylight"

WTF are they waiting for?  

Saudi Arabia has regular beheadings and I have heard of not ONE bankster or bankster stooge top hat toppled.

 

Oh, wait. U.S. is busy busting up or side-lining or sanctioning other Oil producers or would be Oil producers such as Iraq, Libya, Iran, Russia...  Price is held high and market constricted.  ...& a happy flush OPEC means banksters and bankster stooges tip their top hats at one another on their way to and from meetings with the Sovereign Wealth Funds...

ekm1's picture

This is not a matter of just drain dollars.

 

This is mostly a matter of WHOSE DOLLARS are going to be drained or extinguished via:

 

-QE unwind

-shutdown of a couple of insolvent primary dealers (almost all of them are insolvent)

ThroxxOfVron's picture

"This is mostly a matter of WHOSE DOLLARS are going to be drained or extinguished"


ALL things being equal: WHY should the WHO matter in a goddamned insolvency liquidation?

IF YOU LOSE THE HAND YOU DON'T LEAVE WITH ANY MONEY FROM THE KITTY, DAMMIT.  LOSSES ARE JUST THAT: LOSSES.

Any other discussion is a discussion amongst criminals; exactly why this mess is a fucking mess in the first place...

 

 

The problem with euthanizing insolvent primary dealers is that there won't be any.  

WHO is gonna buy Treasuries then without exposing the actual nature of the Treasuries as feudalist perpetual income streams created not by selling debt meant to be paid back but by selling the productivity of the Citizenry?

 

Anything left of the PD system will only be left because of political machinations anyway.  

Where is a Goldman Sachs bank branch?  GS is a bank holding company, right?

More Oligarchy.

 

Default them ALL.  

RESET.  

FUCK THE CORRUPT DEAD SYSTEM.

ekm1's picture

All human made systems are corruptible and self destructive

 

There is no way around elite.

Civilization is elite rule by definition.

 

People choose leaders to rule over them so people don't have to think hard.

ThroxxOfVron's picture

"Civilization is elite rule by definition."

I refuse to accept any definition of 'civilization' which is predicated upon my enslavement.

IF the 'elites' of your so-called civilization deem that I have no value to them outside of my productivity then I have no higher aim than destroying your 'civilization'.

The world is changing.    

Concepts like democracy, social welfare, retirement, self actualization, etc.: these were relatively unknown a few generations ago.   The French and Russian and American revolutions showed that the rule of the 'elites' is flawed acceptance of it is waning.

The way that 'civilization' is managed will have to change as well lest it become reviled and purged along with the corrupt and insatiable elites and their corrupt sycophants.

Parasites eventually get jettisoned and/or killed off.  

These self-annointed 'elites' are just a class of parasites; the world will indeed continue to spin if we stop feathering their opulent nests with our productivity and turn them out to work for their own bread..

ekm1's picture

Only heaven offers freedom.

Here on earth, we choose elite to rule over us. That's just how it is.

ThroxxOfVron's picture

"People choose leaders to rule over them so people don't have to think hard."

People who choose leaders to rule over them so that they don't have to think hard are precisely the sort of people who have no right in forcing such choices on anyone else.

There is no reason that people chosen to rule by people who choose leaders to rule over them so they don't have to think hard should by one sanction be granted some blanket sanction over anyone who did not choose them to rule over them.

IF YOU want a mommy YOU can keep YOUR mommy.  

I do NOT need and do NOT want -and will NOT accept- a mommy appointed by a bunch of sheep and children.

 

 

"Here on earth, we choose elite to rule over us."

I'm not part of your 'we' no matter how many times you try to claim that I am.

The conditions that YOU choose are yours.  Trying to impose YOUR decisions as to who should manage YOUR affairs onto MY affairs might result in you and your affairs and the managers thereof -being destroyed.

Get this through your fool head: YOU are not ME.  The rules YOU chose to rule YOU have no jurisdiction in my life and dealings.

I am ThroxxOfVron.


ekm1's picture

I am explaining 4000 years of documented  history. That is all I am doing

ThroxxOfVron's picture

"I am explaining 4000 years of documented  history. That is all I am doing"

Old history.  Dead ideas in discredited books.  The world is not flat.

For most of those 4,000 years most people lived short brutal ignorant lives.  In some parts of the world a magnificent industrial and technological revolution has changed the way billions of people live: how long, how comfortably, how freely.  

4,000 years is over by a few hundred.  We aren't going back there unless the mommy-elites that some child-sheep have demanded for themselves blow the world up trying to mommy-fuck ALL of us with their hubris and greed and condescension bullshit..

Fuck that history.   Fuck those elites and the baby-sheep that give up their rights and their lives for the false security the elites provide at the highest costs they can possibly charge for it...

That 4,000 years of history is not today.  It is over.   Finished.  

What You and I DO NOW HERE TODAY is what matters.  

IF History proclaims me a slave to someone else's insecurity complexes and cultural baggage then that History can go fuck itself.

 

 

Anusocracy's picture

Man's social hierarchy is corrupt as designed because those who are drawn to it and operate it are congenitally psychopathic.

ThroxxOfVron's picture

By the way, ekm1 : I did not down-vote You a single time.

I perceive that You are attempting to be honest to whatever extent possible and I am still trying to understand You.

Some charts or links might help You to dispell the apparent (?) confusion over what we are discussing...

 

I don't believe the bureaucrats.  I think The FED lies.  I think the IRS lies.  I think the Congress lies.   I think Obama lies.

Telling me what the LAW is means nothing as I have no way to know that the law is being followed and every time I find that it has not and is not being followed no one is held to account for it.  IF the govenment cannot be held to account to it's own laws then discussion of legalisms are semantic at best.  

Selective enforcement of laws by the bureaucracy is base treason and negates the right of the bureaucracy to claim legitimacy for any activity whatsoever: from enforcing the laws against others to picking up their fucking paychecks...

When a cop breaks the law, even if it is to enforce the law; he destroys his right to not only enforce the law but forfeits his right to equal protected under the law himself.

TheGardener's picture

Never bought the deflation meme. But by the way liquidity
got flushed down every back alley and except food and energy
massive inflation failed to take hold today`s Havensteins might have been up to something so far.

Should have been hyperinflation and gold 5000 4 years ago.

Central bank global central planning adding zeros
keeps things running.

robertocarlos's picture

The ELITES have ALL the gold so WE all lose again. Your few coins mean nothing.

XRAYD's picture

The cease fire is being interrupted by occasional shelling - reportedly both sides!

So what will Merkel do?

7.62x54r's picture

Yup. The ethnic Russian militias aren't going to stop until the Ukes inside their country surrender.

forrestdweller's picture

Stupid, stupid, stupid europeans.. Stop listening to the U.s.a. And start cooperating with russia and China.mthis will bring more prosperity for your future.

aleph0's picture

Some of us are fully aware.
It's those clowns in Brussels under NSA(Neocon)  'guidance' from Washington.
.. either that , or they are all complete imbeciles.
.. or both , probably.

bullchit's picture

The fly-over permissions to Russian territories....don't forget them....
Ouch.

 

StupidEarthlings's picture

So what exactly does 'leaked sactions' mean.? 

The real question is WHY they were 'leaked'? 

Again..this is just for public consumption.  Its a show boys n girls. Get your popcorn.

bid the soldiers shoot's picture

The leaked threats we read about in the papers don't mean a thing.

The private concessions and bargaining we don't hear about are all that count. 

TheGardener's picture

"The private concessions and bargaining we don't hear about are all that count. "

Like Kissinger meeting Putin , giving further instructions and the play must go on ?

bid the soldiers shoot's picture

 

THE SHOW MUST GO ON

I prefer Freddie Mercury and Queen to Kissinger and Putin.

https://www.youtube.com/watch?v=t99KH0TR-J4

luckystars's picture

Europe slits own wrists.

Victor999's picture

Around 80% of Russian crude goes to Europe - esp Germany, Netherlands, and Poland - but most countries in Europe purchase Russian crude and its products to some degree.  To cut back on those exports might well put a hurting on Europe, and perhaps even cause a rise in the price of crude, offsetting somewhat the costs of the sanctions on Russia.

This could get interesting.

luckystars's picture

I'm surprised Norway is buying gas from Russia.

SDShack's picture

Also Oil is much easier to ship by tanker than NatGas, which is why oil "flows" easily to whoever wants it, wherever in the world. I don't know Russia's oil shipping terminal capability, but suspect it can be ramped up in short order. If the EU doesn't want oil, someone else will, especially at a discounted price. I suspect Russia isn't worried at all... "The spice must flow." I guess the USSA has convinced EU that it is really best for them to have a Depression so the USSA can avoid it and remain last man standing. Stupid Europeans is all you can say.