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Be Careful What You Wish For: 5 Ways Russia's Demise Could Spread Around The World
Authored by Larry Elliott, originally posted at The Guardian,
Russia matters. It mattered in 1998 when the shock waves from its debt default reverberated around the world. And it would matter again should the plunging oil price lead to economic collapse. That’s despite the fact that Russia is a massive land mass with a relatively small economy. It accounts for only 3% of global GDP and it is dominated by an energy sector that is responsible for 70% of exports.
To an extent, the structure of Russia’s economy should mitigate contagion risks. Lacking a modern manufacturing sector, it is not vital for global supply chains and, in theory, any other energy producer could make good the disruption to oil and gas supplies in the event of a deep and damaging recession.
But there are at least five ways in which a crisis for Russia could spread.
Russia’s immediate problems have been caused by the sharp drop in the price of crude and it is not the only one to be suffering. Venezuela and Iran are finding it hard to cope with oil down at $70 a barrel. If Russia goes, it will be a case of: who’s next?
Second, Russia still has close economic links with eastern Europe, so a collapse would have serious consequences for countries such as Poland and an already imploding Ukraine. Western Europe, too, would be affected if for any reason gas supplies through Russia’s pipeline were cut off.
Third, confidence would be hit. Germany’s weak economic performance since the spring can, in part, be attributed to the gloomier economic mood. The slowdown in the rest of the eurozone has probably had a bigger impact on German activity but the tension between Moscow and Kiev has certainly not helped. Russia might be enough to tip Germany into recession, which in turn would be enough to ensure that the European Central Bank began a quantitative easing programme.
Fourth, nobody is quite sure how Vladimir Putin would respond to the most challenging economic circumstances since 1998. Any confidence effects from an economic crisis would be exacerbated by the knowledge that Russia is controlled by a president able to make felt his country’s still considerable geo-political and military clout.
Finally, the assumption is that financial market exposure to Russia is relatively limited given that overseas banks had $209bn (£134bn) of loans to Russia when sanctions were imposed in March. On the face of it, western investors do not look all that vulnerable and have had time to get their money out. But that was also the assumption in 1998, when Barclays had to set aside £250m to cover its Russian losses. Financial trades are now so complex and leveraged, it is impossible to know for sure how big losses might be this time.
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Be careful what you wish for...
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Putin's speech: An interpretation of some key points
http://failedevolution.blogspot.gr/2014/12/putins-speech-interpretation-...
Putin won't fall without bringing America down with him - Not to mention the Dragon has his back, not Uncle Sam's
Won't find Putin hiding in a hole.
Won't need to look for Russian WMDs, as they'll find you.
An American, not US subject.
"Knesset Resolution 758"
Putin will not take too kindly when his own cronies revolt. Stalin might be referenced.
US is planning war against Russia. Total media blackout!
http://www.globalresearch.ca/america-is-on-a-hot-war-footing-house-legis...
Here's the resolution:
https://www.congress.gov/bill/113th-congress/house-resolution/758/text
>>his own cronies revolt.
This is closer to the truth. Too many Russians have too much to lose to continue to let the Ruble slide. If Vlad does not fix this soon, there will be someone else sitting in his seat. Russians wont let him mess around with the US and lose everything
He also went on TV recently begging for Russian oligarchs to bring their money back.
Putin is sweating balls (as he should be for pissing off Saudis)
useless talkings
I agree comrade... it is too much of the useless talkings! Not enough of the vodkas! If everyone drank more there would be world peace (or was that smoked?) oh well back to my Vodka.
I hate to say it, my grandparents were from Russia (actually White Russia), but the country looks to be finished. First, Russia has a dying population. It's AIDS infected, alcohol addicted and run by a very corrupt oligarchy. Other than really excellent military aircraft (which are all being illegally copied by the Chinese), the country produces almost nothing. In a poll taken about 10 years ago, most Russian teenage girls expressed a desire to become prostitutes--so much for the society's moral fiber. Siberia will be effectively annexed by China (has probably already happened), and the big European banks will take Moscow and St. Petersburg. To the patriots who say Russia has never been conquored--it's happened more than once, and it's happening now.
"the Dragon has his back"
You can go from somebody "having your back" to somebody "putting a knife in your back" very quickly. China has long standing claims on most of Siberia. Remember the Hitler Stalin pact?
cos Chine knows who is next if they don't...
chines copy, not invent
they have two ways:
cooperate wth Russia
try keep stealing tech from west which is not enough to face west alone long run
Vlad's not powerful enough to 'bring America down with him'.
However, he can probably muster a pretty loud fart as he's expiring. That'll fix us!
All Vlad has to do is label Saudi Arabia a terrorist state and a member of the AXIS OF EVIL. Then they can bomb their oil infrastructure to dust like the USA did to Iraq, and we saw what happened to oil prices then. Whats the USA going to do about it, take on Russia and go nuclear??
You talk alot...but not capable of predicting anything as concerns VV Putin or Russia..
Southstream cancel is example.
Russia does not communicate ahead like west, or your bs...
btw, Dollar has dropped well over the years in real terms 1913 $ buys 2 pennies now.
You payout more in higher prices continues....but obsess with Russia economics
better worry about your own country
Bob, we all 'talk alot'. This is a blog, dumbass. :-)
Now, as to your education (if such a thing is possible):
Putin Threatens Currency Speculators; Six Ways to Know a Currency is in Deep TroubleHere’s a lesson about various ways to spot a currency that is in deep-deep trouble.
Ruble Analysis
Let’s check those six measures starting with today’s report Putin Threatens Crackdown on Currency Speculators.
1. Putin Blames Currency Speculators
Vladimir Putin threatened to crack down on speculators against the rouble as he called on Russia to put its economic house in order to fight what he called an attempt by outside enemies to bring the country to its knees. “We have asked the central bank to take measures to make sure that speculators can no longer take advantage,” Russia’s president said in a speech on Thursday. “We know who those people are, and we have the means to rein them in. It’s time to use these instruments.”
2. Putin Blames Foreigners and Plays Hitler Card
“Hitler with his misanthropic ideas tried to destroy Russia and throw us back behind the Urals. Just remember how that ended,” Mr Putin said. “If [Russia’s annexation of Crimea] had not happened, they would have found another excuse for holding Russia back and Russia down. This has been happening for centuries — every time the west thinks Russia is getting too strong, they use these policies.”
3. Measures to Stop Capital Flight
“We need to reverse the history of capital flight from our country, we need to end this era,” Mr Putin said.
4. Amnesty for All
Putin promised an amnesty for offshore capital returning home, saying Russians bringing back money from abroad would not have to prove where they got it from….
Two things:
1. This weekened Hollande made a suprise visit in Moscow to see Putin. Not being widely reported.
http://rt.com/news/212139-hollande-putin-moscow-visit/
I watched a good Cross Talk on RT on Saker's site. 3 guys were on Alexander Belecouris and a German guy and a Greek or European guy in Greece. Belecouris said South Stream is dead and the Europeans need to deal with it. Putin is going to Turkey and it is a done deal. The Europeans were saying well it could be revived. The point is that a LOT of big European companies and countries have been hurt by the cancellation. Poor Bulgaria is screwed.
2. I read in one or two places that Turkey may be let into that trade group that Russia, China and others have. The Eurasian trade zone or something. I forget the name. This is a pretty big deal if true.
Also good stuff here with an interview with Putin economic adviser Kazin. You can turn on English captioning in YouTube.
http://www.vineyardsaker.blogspot.com/
a falling gas price will only hasten a move to gold and silver trade notes for the BRICS. these trade notes will become the standard, and EVERYONE will be scrambling to find PMs. the blame and recriminations will be loud and angry, and the petro dollar will quickly move to extinction.
the price of oil will then be measured in grams, not dollars.
Bob, the price of oil will never be measured in grams. You brain mass, however...that's another thing altogether.
my best friend's mother makes $82 /hr on the internet . She has been without work for five months but last month her pay check was $20842 just working on the internet for a few hours. browse around this website... www.yelptrade.com
My money "Gold & Silver" is on Putin.
Let's see a REAL Currency Vlad !
Vlad appreciates your vote of confidence, but he's more concerned with who'll be manning his suicide watch tonight.
Are you available?
Just waiting to get his bollocks together and drop on __,with nukes.
Will Putin sit on his hands and watch Saudi Arabia destroy Russia again at the behest of its masters in Washington? Saudi Arabia caused the collapse of the Soviet Union by dropping the price of oil to $10 a barrel in 1986.
It would be no surpise if pipelines in Saudi Arabia were to be suddenly disrupted.
Back in 2006 oil was at $45 and Russia had 4.5% growth. Lets not get too carried away with the CNN Russia in trouble over oil nonsense here.
But only if you really believe those GDP numbers!
>>no surpise if pipelines in Saudi Arabia
I kinda think direct conflict with the Saudis is really his only card to play
You can't tell the dumbass politicians or bankers anything. They think they can print away any problem because they believe their own lies. This is going all the way because the people in the West causing the problems do not believe there are any consequences in WW3.
Likely TPTB do not fear WWIII because they will all be safely esconced somewhere other than the USA, which to them is just a remote-control drone. If it crashes and burns in a nuclear war, who cares? The US are mostly Goyim anyway...
Why would Russia be worried .... all they have to do is demand 25% Gold for their energy exports - the Russians can kill 2 birds with one stone;
Transfer Paper Gold short equity to Russia almost instantly.... while boosting Gold prices into orbit at the same time.
When a plane crashes they don't look for winners, they look for survivors.
meh
The only solution for the next "wave" of freedom is full-scale nuclear committment from both sides. That is no great solution but it is the only one given what has been done. It ls like puking your actual guts out, going to the hospital, being on a respirator and going into a coma and waking up to be a gimp. Gimp is a good future though - it beats being a slave (now or anytime). Actual slavery is where it will go but it is nice to have a wet dream once in a while that something will actually fix all of this, at any cost.
the west needs to be very mindful of history, especially stalingrad. vlad will provide buku rockets up the sockets if need be.
The Nazi's didn't take Stalingrad because Hitler sent his armor away, check your history. Hitler fucked himself in Russia.
did hitler take away snipers also?
If the armor would have been there to begin with like they were originally supposed to have been the snipers would not have been an issue. The Russians brought troops in over a long time period which would not have happened had Nazi armor been there to do there job on day one. If you don't want to understand then never mind.
Glad you brought this up. I've been waiting for someone to debunk that whole story about "the largest tank battle ever" between the Germans and the Russians.
Debunk what?
That "largest tank battle ever" has nothing to do with Stalingrad. It happened at Kursk.
uh, not what I was talking about. That happend in it's own right.
Actually I think Hitler gave the war away at Dunkirk when he allowe a quarter million British swine to slither back to England. After all the misery the g/d Limey's dealt Germany after WWI and he allows these cretins to walk !! Nice guys finish last. The General Staff should have placed Hitler under house arrest and taken over at that point, they would have knoced UK and the Old Bedwetter Churchill out of the game and then had a free hand to destroy Communist Russia.
He gave the war away several times. That's what happens when you let a drug addict run the show from a Berlin Bunker. You either trust your generals or cut bait.
You've been watching too many Histroy Channel/Nat Geo "documentaries". Hitler was golden as a politician/statesman but, I agree, a lousy general, on a par with say Chruchill or even Stalin. Otherwise, he was a really bright, honorable chap that broke the slavery of Versailles, as it should have been, and threw off the starvation politics of the French and English. AND - no there was no "Holocaust" (a term invented by U Now Who in the 70's for the feeble minded Goyim to obsess over).
I see you get your info from the Aryan nation.
Brits main push by War criminal Churchill and Poles were used..as always.
It was about economic. All wars are bankers wars.
They had to have war cos Germany economy was outperforming and freeing itself.
Germany had to fight sooner or later...
There is also about German premptive to beat planned Soviet attack
Well known that Pearl Harbor was allowed to happen after oil and steel cutoff to provoke Japan.
Remember Soviet was never a Russian construct.
Germans and Russians should never have fought.
So why did he do that? The reality was the banksters were running the show on both sides.
The General Staff or German Army should have arrested the SS/SA and Hitler and his goons early on. To the Germans credit, they tried to take him out a few times. there were some men of honor in the German Army like Rommel. Still - the whole war like almost every war is a creation of banksters.
That is like saying Japan fucked themselves at Midway. If Nazis had won at Stalingrad, they would have been stopped at some place further east.
In the end, the outcome would have been the same.
well, of course. We are taking about what Really happened though. And Japan fucked themselves thinking they could beat American industry and manpower. THEY never had any chance.
Germany fucked themselves thinking they had vastly superior weapons than the Soviets. The T34 was a rude shock, as the effectiveness of the Stalin organ (cheap and hard to knock out since the Russians would fire and boogie out...
"The biggest tank battle" Kursk was lost because Hitler had to wait for the new Tigers tanks to be ready which would "win the war" - they were vastly over-rated, and delayed the Kursk campaign enough to make a Nazi victory almost impossible as they Soviets had ample time to prepare and set a trap.
The kill ratio by German tank crews was much higher. The current Russian Grad MLRS is even nastier than Stalins organ. It is a rocket launcher that deploys smart parachute style bomblets. Tanks and ground troops are toast. I have no idea how they came up with that one. If you are an American - get your kid out of the military. These evil NeoCons/NeoLibs want war.
Back to WW2. The Germans also had fuel problems. FYI - throughout the war - American oil companies were supplying the Germans with fuel. Like almost EVERY war it is about the banksters making money. They create the wars. The Red Shield makes money on both sides.
Exactly, and the industry and labour is in China now.
Good luck USA
It was terrible cold, they weren't even close to the Urals yet...
There is another world beyond Urals. Siberians are toughest.
"What is death for the German, is good for the Russian"
There were fundamental flaws in Hitler's approach to war with Russia:
1. The German forces were very well trained and equipped, but battle losses could not be replaced with troops of like quality.
2. The German approach was based upon "lightning war" - quick and overwhelming concentration of forces, and avoiding stalemates such as the trench warfare of WW1. The German forces were not designed to cope with long, drawn-out battles with large "wastage" of troops and material. While Russian military learned from their defeats and developed effective battle tactics over the years of WW2, Hitler took power from his generals and often either stifled any changes to German tactics, or stuck disastrously to impossible positions.
3. 1941: Hitler delayed the onset of "Barbarossa", the invasion of Russia, and underestimated the distances and logistic difficulties involved. He famously counselled his Generals that the defeat of Russia would be quick and easy: "All we need do is kick in the front door and the whole rotten edifice will come crashing down." He underestimated the Russians' resilience, industrial and scientific capabilities, and capacity for absorbing losses.
4. Barbarossa stalled at the doorsteps of Leningrad and Moscow when logistical difficulties, bad Russian roads, the oncoming winter, lack of winter preparedness of German troops and equipment, and Russian counterattacks combined to stop the German advances, then drove them back in what was very nearly a catastrophic rout of the German forces. The Germans prevented a rout but were left severely weakened, and in a stalemate which they were not prepared to carry.
5. 1942 - 1943:Hitler recognized that, in the long term, Germany could not survive without food from the Russian steppes and oil from Baku and the Caucasus further south. Again, this was a lesson Hitler took from WW1 in which the defeat of Germany depended largely upon the successful blockade of Germany by the Allies. In Operation Blau, he took the risky course of splitting the German forces in southern Russia, sending half his forces to take Ukaine and Stalingrad and half south to take the oil fields. The German forces were unable to carry the load alone, so they had to rely upon Italian, Hungarian, Rumanian, and other less-well-trained and poorly equipped armies. The Russians were taken by surprise, expecting the Germans to resume their advance toward Moscow, and Operation Blau started extremely well, with the Russian southern front nearly collapsing. The advances on Stalingrad and Baku were delayed by fuel, ammunition, and other shortages, and desperate rear-guard delaying actions by the Russians, and the advance on Baku arrived only to find the oil fields and refineries in flames. The Russians held on doggedly in urban-guerilla warfare in Stalingrad, for which the German blitzkrieg tactics and tanks were ineffective. After some two months of stalemate, the Hungarian and Rumanian armies guarding the German flanks fell to counterattacks north-west and south-west of Stalingrad in Novermber 1942, and the German 6th army was surrounded. Hitler refused to allow a retreat by the 6th army, the attempt to supply it by air was ineffective, and a relief column of tanks sent to relieve it was turned back. The 6th army suffered huge losses and ultimately surrendered in February, 1943. Russian advances to the west in January-February 1943 threatened to cut off the German forces at Baku, so they were forced to retreat pell-mell. The Germans managed to stop the Russian advances in the Kharkov area, with von Manstein executing masterful counterattacks to retake Kharkov in March, 1943, stabilizing the German lines, with Russia left holding a bulging salient around Kursk. The German forces were left badly mauled and short of replacement troops and weapons. Frantic efforts were made to replenish the German forces, stripping home industries of men, transferring troops from France and other sectors, and extending the draft to ever-older and younger men, but these new recruits never received the training that earlier German troops had.
6. June-August 1943: The Russian salient at Kursk presented a tempting target to the Germans, and Hitler wanted a victory to improve his chances of negotiating an armistice that would leave Germany with its territorial gains. The Russians learned of the German plans to attack the Kursk salient, and Stalin was persuaded by his generals to take a defensive posture there. The Germans delayed their attack for far too long and the Russians prepared extensive defensive works and assembled massive forces for a decisive slugging match. The German forces suffered a decisive defeat in the Kursk operation, and were on a defensive retreat for the rest of WW2. Hitler had high hopes for his new tanks at Kursk, but these were untested and poorly prepared, and often proved to be unreliable and vulnerable. The Russians were well equipped with their battle-proved T-34 tanks and their monster KV tanks, Katyusha rockets, massive artillery, and extensive air force of bombers and Sturmovik ground attack aircraft. The new German tanks and mobile guns could knock out the Soviet tanks, but as noted the new German weapons were unreliable and often broke down or fell to infantry attacks, so the overwhelming numbers of Russian tanks and other forces won the battle. By mid-August, the Russians had retaken Kharkov.
The US and its EU/NATO sock puppets would never even make it to the outskirts of Stalingrad/Volgograd.
What American kids with an IQ above 30 would fight for Obama, McCain and Soros/Zio-Cons? Hopefully not many.
Drudge has something tonight on the US Military being totally demoralized. The Pentagon, Military, intelligence agencies do not give a shit about America or Americans.
I agree, Vlad needs to be mindful of history.
The ruble has failed many times in the past and it's about to fail again.
Russia broke free from the claws of the empire.
Sure can't let that happen.
Have to break them again,install the right parts(debt) and enslave them again.
Fuck the n. w. o.
I'm torn here.
If ZH is now bearish on Russia, then it makes sense to go long with both hands.
However, may be fluff before the coming Putina consession speech. If that is the case, then nothing is going to stop the economy from really going off the cliff.
The new, American reworked Deutch person is busy importing valuable Somalis and Syrians into their cramped nation, a la Swedes, so they will have the brainpower to weather any future crises.
Syrians are generally good people. Somalis are a cancer that can destroy any country.
The Syrians and Syrian Army are bravely fighting against the NWO scum.
Shocker.... ZH pimps Russian interests yet again!
Shocker, Heywood2/Whitebear still misses the days of his Bolshevik ancestors slaughtering millions of Russians and Ukrainians.
I would be inclined to feel more empathetic about that if hollywood made some pitiful self serving cinematic account of it every few years.
Russia has been a Christian country for 1,025 years. The USA is no longer a Christian country.
The takeover of Russia in 1917 was by dual citizen types from New York City and Europe.
The same evil dual citizen people who ru(i)n the USA, Ukraine and Europe today.
False flag...purposely caused event...or another contrived and well planned distraction from the crashing economy?
http://mycatbirdseat.com/2014/12/fuel-crisis-forced-shut-down-of-biggest...
I am loaded to the gizzards with everything wrong this year; OGZPY, gold, silver, mines. All sucketh every day. OGZPY is like buying money at a 90% discount unless our ZOG-inspired, hijacked govt. socceeds in sparking ww3 which they appear to be trying to do real, real hard.
We hope the Dragon has his back. Xi has a poker face.
ya know, that's true.
The dragon will bring the eagle down
And allow the bear to put the eagle out of its misery.
if the fed somehow did raise rates with oil at $66/bbl i would LMFAO
There isn't going to be a Russian demise without an American demise. The whole premise of this article is BS.
or, there will be an american demise with any russian demise.
Or the fed will print demises for everyone.
It amazes me how puerile the comments are, on zerohedge!
Can be, Magus, can be... but only most of them, just need to do a sort as with most things. There's still a lot of valuable insight, expertise, and insider knowledge here, it's just rather diluted. I read another poster who said this started after Rush Limbaugh linked an article here; sounds like an all-too-plausible explanation. *sigh* "twas ever thus.
Russia won't fall. It's too late for the Saboteurs.
They have plenty of energy, technology, and now, new trade partnerships (IND and CHN - now backing each other) thanks to NATO/EU Sanctions.
I'd keep an eye on:
IND - Pakistani / Australian pressure (since the AUSsies' Right Wingers have been worried (and writing) about IND's intentions for over a decade now);
CHN - TWN, JPN-Front of Hegemon_USA, South China Sea. CHN's Territorial Claims/Disputes and TWN/HKG/SGP's Democracy_Powerplay may be aggravated; and
IRN - ISR-USA-GBR-KSA's Takedown Target, and CHN-IND-RUS's Energy Trade Partner. Now that CHN is sending their PLAN Assets, IRN is "beefing up its defenses and options".
How is it that no one talks about the death of the Petrodollar and they keep trumpeting that the $60+ oil price is implied as a US directive. I'm sorry but that line of BS is just that BS. No one is getting more hurt than the US marginal suppliers of shale oil. The whole big oil with its junk bond financing of this industry is seeing major implosion. The Russian's have nowhere near the issues the US shale industry is facing. Evident from the just announced 100's of job cuts at BP! For Russia not to cut output does not ring some funny bells to anyone? For Saudi not to cut back (market share is simply BS) does not ring funny bells considering their fields are well past peak production?
The Putin noveaux Soviet regime is in for rough times.
Godspeed to even lower oil prices and even more painful dollar/ruble and euro/ruble exchange rates! Putin needs to pay a heavy price for his lawless aggression.
2015 is going to see Russia's currency reserves continue to precipitously bleed away. Russia won't be able to intervene so flagrantly in currency markets in vain attempts to prop up the failing ruble.
Instead, we can all watch it crash - yet again - and then watch (hopefully) decent Russian people turn him out of office.
Putin won't pay anything from lower oil prices, Amercan parrot. He will continue to do what he thinks is best.
Ha! american parrot.
That's good.
Repeating a noise with no comprehension of what it means.
Vlad's already paying the price, Bob - you're just too dumb to know it. :-)
Currency controls are next.
Amerikan Patriot --
Russia is not neo-Soviet. There is no question of restoring the dicatorship of the proletariat, the leading role of the party, the expropiration of private property or official atheism.
The Soviet Union was the embodiment of the One, True Doctrine of Marxism-Leninism. That's all it as. That's why it collapsed like a house of cards when the ideology was demolished (by Solzhenitsyn).
Sovietism is finished. It is not coming back.
Soviet was never a Russian construct.
Well if things stay bad then the US military and spy agencies, working against the best interests of the American people for the NWO, will not be able to launch new spy satellites.
The military cannot launch them without Russian rocket engines. I think they have some in inventory. Let em eat cake.
fewer words not any more intelligent though. LMAO
NEW YORK — Woe to Russian consumers who like Swiss watches with their Italian suits — or even furry Australian boots with their Chinese disposable fashion. The ruble has lost more than 40 percent of its value in the past year, including a drop of about 8 percent so far this week, and the slide shows no signs of slowing. But with President Vladimir Putin offering ideas that are dubious at best, does Moscow even want to stop the rot?
Earlier this year, Russia's central bank took heroic measures to prop up the ruble. It spent $40 billion of its foreign reserves between January and May - about 8 percent of the total at the time - on its own currency to raise the ruble's price in global markets. Then, though the ruble continued to slip, the central bank was quiet . . . . for months.
What happened? In all likelihood, the central bank realized that it might need its reserves to strike a decisive blow against an all-out speculative attack by currency traders on the ruble - the kind of attack that crippled the Thai baht in 1998. If the Russian government wanted to defend its currency, it would have to take a new approach. This time, the strategy would rely on Russia's biggest export, crude oil.
Exporters of oil in Russia ultimately turn the dollars they receive into rubles. At lower oil prices, they don't receive as many rubles, and the demand for the currency falls. To stop the exchange rate from dropping, Russia has to export more goods and services. Right now, that means more oil.
At the moment, Russia is probably shipping 5 to 6 million barrels of oil abroad every day. That's as much as one-third more than it exported last year. Its daily oil production is holding at around 10 million barrels, with no cuts in sight; unless domestic consumption were to spike - unlikely with the Russian economy on the verge of recession - those bumper exports will continue.
But will they be enough? At current prices, Russia's exports of crude oil could be worth close to $140 billion a year. Yet in 2013, when oil prices and the ruble were both much higher, the total came to $174 billion. Even at booming production levels, the value of Russia's exports in dollars is still down by 20 percent.
This is why cutting production now, as the Organization of the Petroleum Exporting Countries (OPEC) wanted, would have been so dangerous for Russia. The idea of the cuts was to push oil prices higher in the medium term, but a temporary dip in the value of Russia's exports would have left the ruble exposed.
No, Russia must keep pumping to keep the ruble afloat on a sea of oil. But by doing so, it guarantees that prices will stay low for longer. It's also depleting another kind of reserves - its oil reserves - in the worst possible way by selling more, not less, when prices are low. And it hasn't even solved the problem.
In the meantime, the central bank has returned to the markets to buy rubles, spending as much as $350 million a day since October. But there's a limit to how far it can go; its reserves of foreign currencies were already down by close to 20 percent for the year when buying began, reducing the safety net for both currency attacks and credit crises like the one that hit in 1998. Investors are already warning that the country's credit rating may soon be in jeopardy.
With the central bank increasingly hamstrung and oil production already straining its limits, what else can Russia do to bolster the ruble? In his state of the nation speech, Putin suggested a no-questions-asked amnesty for foreign funds returning to Russia. Such a move would bring in some foreign currency but also allow unfettered money laundering and tax evasion - perhaps something his cronies would appreciate. Argentina tried this in 2013, and it didn't stop the peso from crashing earlier this year.
Unfortunately, the composition of Russia's economy leaves few other options. In most countries, a weaker currency can be a self-correcting problem. It makes goods and services cheaper to foreign buyers, stimulating demand. When enough new demand reaches the market, the currency stabilizes. But Russia's dependence on oil means it isn't most countries - and oil isn't most exports, either.
Oil prices are set in a global market where Russia's share is probably below 10 percent. When the ruble loses value, oil prices to foreign buyers don't change. The buyers need the same amount of their own currencies to purchase each barrel, so they have no incentive to consume more. This wouldn't be such a problem, except that more than two-thirds of all Russian exports are in the energy sector.
The same problem affects another mechanism that often works to settle a struggling currency: bargain-hunting. With the ruble at such low levels, investors might have been expected to flood Russia with foreign cash in a rush to grab assets at low prices. But most of the valuable assets in Russia's economy are, once again, in the energy sector - currently unattractive, and often unavailable to foreign buyers, anyway. Even if higher oil and gas prices arrive, this dynamic won't be of much help, either.
Of course, there is one big thing Russia can do to save the ruble: end the crisis in Ukraine. With sanctions lifted, some of the tens of billions in foreign money that left Russia might return, boosting the ruble and the economy at the same time. Yet this option doesn't seem to interest many people in Moscow - at least not many people named Vladimir.
You should explain why the rouble must be saved and from what.
The Chinese yuan is weak. It helps to manufacture and sell cheaply almost everything around the world.
The US dollar is strong. It's very difficult to sell anything Made in USA.
Bob, the ruble must be saved so that ordinary Russians are able to buy, sell and save - much as any other country does.
Did mama have any children that lived? :-)
You are assuming Russians are as weak and effeminate as you are and need to buy baubles and immediately tell their effeminate friends about it on facebook.
I'm affraid all the Jewish gifts to their adopted homeland, e.g. Hollywood, MSM, Wall Street, the Fed, Agenda 21, Academia, "Common Core" and Political Correctness, which have rotted out the US and Western soul, have not yet extended into Russia enough (not for lack of NWO/Zionists effort) to rot out the Russian soul.
For the US, importing Mexicans will actually help a little bit as many of these are good, hard working, God-fearing people, but it won't help enough...
As the rest of the World's central banks engage in a race to devalue their currencies to gain export competitiveness, wouldn't it be ironic if the devastation of the Ruble gave Russian exports an advantage.
Yuanis pegged to the USD.
Meanwhile, Putin shores up Russia's position. The European Commission was obstructing the South Stream gas pipeline project from Russia through Bulgaria and Hungary, apparently to force Russia to let the West have control of Ukraine, and to force Russia to let Ukraine have free natural gas. Putin just cancelled the South Stream plan and signed a deal with Turkey to put a pipeline into Turkey and then to the border of Greece instead. The southern Europe markets for gas can be served by Russia through pipelines in Greece. The EC's plan to bring non-Russian gas through Turkey seems to have crumbled.
Russia's foriegn debt is not large, and Russia has sufficient reserves to cover it. No doubt the Ruble is suffering from speculators betting on its further fall, and Russia seems more intent on managing its fall than in stopping the fall for now. Russia continues to receive hard currency for its exports of oil, gas, uranium, and other resources, and to increase its Gold reserves. The price of oil has fallen, but the prices for natural gas and uranium are steady. Russia remains the lowest-cost supplier of natural gas and uranium for Europe. At the same time, Russia is decreasing its imports from Europe and the Western nations as a result of the sanctions war, so its high-priced imports are tending to fall. The real death-blow to Germany will come when Russia bans the import of European-made cars, trucks, and high-tech manufactured goods. China is already leaping into the breach. Western oil majors that are blocked from participation in Russian resource development may well see their concessions cancelled for failure to proceed with exploration.
In the meantime, Russian businesses are said to be smacking their lips at the prospects of manufacturing replacements for lost imports. Turkey is already supplying Russia with some lost imports. Russia has signed big pipeline deals with China, which will stimulate the Russian economy during construction (largely financed by China) and will be a solid source of income starting in 2018 or so.
Russia may well suffer some privations for some years, but its forced pivot to the BRICS and Shanghai Cooperation Organization nations, the diversification of its economy away from European goods, and turn to the non-Dollar world financial system, may leave Russia stronger in the long run. In the meantime, Europe circles the drain. The US Dollar is higher thanks to the flight of capital from the rest of the World as investors see World-wide recession coming, and flee to the apparent safe returns of US assets, but the underlying fundamentals of the US economy are weak and debt-laden, and the fall in the price of oil threatens to devastate the shale-drilling business and cause a collapse of the high-yield bond market. The near future does not look very rosy for anyone except the 1%.
Saker of the Vineyard web site had a link to a Cross Talk on RT. I mentioned this before. The Euuropean guys were saying oh that South Stream is not dead yet. One guy was a German. South Stream was going to create a lot of jobs, investment, business and trade. Big European companies and the countries are going to lose big especially Bulgaria.
The Russian guy in London Alexander Belcouris was saying essentially - guys - it is dead. The EU killed it. You waited too long. He even said lots of Europeans are still in denial about it and think Putin will resurrect it.
The economies in Europe are awful and this project created trade, jobs,business and investment. Fools.
China, Iran and others know that they can be next on the hit list and that they should band together against the ZWO.
STFU stupid.
all you prove is that you can cut and paste.
quality of pasted material is marginal.
but somebody else's opinion is all you've got. LMAO
Well after one Russian revolution that goddam jewish creation of Communism was visited upon the world at large...
Russia should just buy gold with the fresh dollar earned from oil sales, how to kill USSA and USD for dummies.
Russia is doing just fine as it's a Globalist player like the U.S.
Russia Helps Belarus Into World Trade Organization Through U.N. Fund……Communism For All
Russia’s Globalist Connections – U.N.’s Michael Moller
1945 British National Archives Document Calls For New World Order Now
Gazprom Signs For €390M Credit Line With Italy’s UniCredit
Australian Tigers Realm Says Thier Coking Coal Mine in Russia Up and Running in 2015
http://newworldorderg20.wordpress.com/
Who's to say the Rooskies and Shoddy Arabia don't have a joint plan to break the back of U.S. shale and thus protect their respective market shares?
The Shoddy's are plenty upset with the U.S. for not living up to the grand petrodollar bargain between the U.S. and the Shoddy regime - U.S. was supposed to protect the Shoddy's against all its enemies and the Shoddy's were supposed to anchor the petrodollar to global bedrock.
The U.S. has utterly failed the Shoddy's - didn't take out the Iranian regime, didn't take out the Assad regime, CIA created ISIS and is picking the lint outta its bellybutton instead of really hammering ISIS. I could go on....
I'll bet you the Rooskies brought these facts up in their recent slew of mtgs with the Shoddy's just before the oil price got hammered on the global markets. I think there's a secret new deal - Rooscha and Shoddy.
Terms of the new deal:
1. Russia and Saudi cooperate together to kill U.S. shale. China will stockpile oil while price is low.
2. Russia throttles Iran and Syria to ensure they will pose no real threat to Saudi regime - Putin will provide tangible evidence that Saudi can audit.
3. Let the U.S. play around with ISIS for now - but if ISIS isn't bugsplatted to Saudi satisfaction, Russia will provide weapons and engage in military ops against ISIS to degrade it to the point where it is a manageable threat.
4. Russia and China will sell weapons (including nukes) to Saudi and bolster the regime, guaranteeing its survival.
5. Saudi will secretly work with the anti-petrodollar axis to undermine the petrodollar and replace it with gold-backed ruble and yuan, transitioning over the next 2 years. Both parties will join new SWIFT counterpart in the East to immunize themselves against U.S. economic warfare. Saudi will bring the other Sunni regimes along the same path.
6. Saudi will kick out all U.S. bases from it's territory and marshall the other Sunni regimes to do same.
I'm telling you that if this isn't already underway as a secret deal it will become a reality very soon.
Russian President Vladimir Putin is trying to make the best of a tough geopolitical situation, and one NATO member is seeing big benefits.
Russia scrapped plans for a pipeline into Southern and Central Europe, and instead announced this week a new pipeline to carry discounted natural gas into Turkey. Moscow has already spent $4.5 billion on the so-called South Stream project, which would have seen Gazprom transport its product under the Black Sea and potentially all the way to Italy by way of several countries.
Turkey will be getting gas at what some have suggested may be a double-digit discount, while furthering its aspirations to be a regional energy hub."Turkey is looking out for itself," said Lauren Goodrich, senior Eurasia analyst at global intelligence and advisory firm Stratfor. "It's good for Russia to have a country that has a stake in Ukraine and a stake in the Black Sea and a NATO member that isn't putting sanctions on Russia...Turkey is standing on its own and they're going to reap the benefits from it."
Following Russia's announcement it was abandoning the project, some European politicians have already suggested that the South Stream project could be revived.
Gazprom has reported that discounts could be about 6 percent for Turkish customers, Goodrich said, but Russian energy minister Aleksandr Novak reportedly said an arrangement could settle on a 15 percent discount.
"Turkey is in a very interesting position," Goodrich said. "They see an opportunity that the rest of the world is kind of against Russia right now, so if they work with Russia they can get a better deal."
Russia previously announced a gas deal with China that many have said favored Beijing because of the geopolitical pressure on Moscow from Europe and the United States.
Still, experts stressed that those deals do not mean Russia is desperate, but simply playing its cards as well as it possibly can.
Putin's Monday announcement of the $30 billion South Stream pipeline's cancellation marked the culmination of increasing difficulties for the project, which began in 2007. Bulgaria ceased construction on its part of the line in June following pressure from the European Commission that the deal would violate the Third Energy Package legislation, and other E.U. states were being similarly influence, Goodrich explained.
Additionally, the cost of the project had ballooned from its original $10 billion projection, with some estimates putting the ultimate price tag around $50 billion. While the new Turkish pipeline may cost as much, Goodrich said, Moscow sees the market there as more promising than the tepid European one.
In fact, Russia has already found a successful partnership with Turkey in the Blue Stream pipeline between the two countries, explained Tim Boersma, acting director for the Energy Security Initiative at Brookings. He described this week's announcement as a "reinforcement" of those relations that reflects shifting global energy demand.
"Similar to China, in Turkey natural gas demand is expected to increase substantially in the coming decades, whereas European gas demand is in decline," Boersma told CNBC. "I think Russia's decision should be seen in that context, and is further incentivized by the anti-Russian sentiment in Europe."
The cost of sanctionsWhile experts said the South Stream cancellation was largely due to other factors, the sanctions and rhetoric against Moscow from the West have taken their own toll on the Russian energy sector. The major drop in oil prices has also taken a toll.
"The Russian economy is obviously in a dire state at this point," Boersma said, pointing to an estimated $100 billion annual cost of oil's decline and a $40 billion yearly effect from sanctions. "Having said that, I have always believed that there will be buyers for Russian commodities, even if the U.S. and Europe believe that they can 'isolate' Russia, and the deals with China and Turkey are good examples of this in my view."
Still, damage from sanctions is likely to become increasingly dire for the Russian energy sector, Goodrich said, as firms will find it impossible to secure credit for either new projects or to pay off loans. Moscow-controlled oil company Rosneft is particularly disadvantaged, with $23 billion due in the next 3 months, but Gazprom would also suffer if sanctions continued for years.
Another consequence of the sanctions have been the loss of faith in Russian companies, James Henderson, senior research fellow at the Oxford Institute for Energy Studies said in a Thursday talk at Columbia University. In fact, Rosneft oil sales to Japan have essential ceased because no one wants to finance those deals, he said.
The loss of Western energy technology will also begin to take a toll on the sector, as American and European firms are the only ones possessing the capabilities to access Russia's energy reserves. "Everything that is conventional energy in Russia has really been tapped," she said.
Chinese companies have developed some of those required technologies, but they remain untested, Goodrich added.
LOL! Your stupid post quotes Statfor. Zero credibility. And the rest cites an expert giving a speech at Columbia University. The university Obama "graduated" from but no one ever recalls seeing him there. More zero credibility sources.
After reading your though bubbles I have come to the conclusion -- -that you are a F$%#ng idiot and - -- - -
Definately NOT a Patriot ! If you were you would see a different reality that so many at ZH have seen for years. More & more ordinary people are getting the message that what the Western media publishes is BS. Here in Australia it's the same BS -
1000 words of someone else's opinion.
but then that's all you've got isn't it. someone elses's opinion. LMAO
American Parrot, your stupidity is showing. At least some of the countries in the EU are starting to realize the cost of allowing the NWO Zionists to run things from Brussels and nod along with whatever stupidity next afflicts the neo-con Jews near Washington D.C.
Russia would have liked South Stream but cutting the deal with Turkey is a master stroke by Putin.
1) It shows the member states of the EU that there is a huge economic sacrifice to being good little NWO robots. They are starting to see that they are just pawns in the machinations of others (e.g, they are just assets to be used to the advancement of Israel). Some in the EU have realized this which is why they are coming begging to Putin to reopen negociations (hint - he WON'T, as an object lesson)
2) It starts to wean Turkey away from the EU - Erdogan is no fool and can plainly see that Turkey joining the EU is suicide to Turkish sovereignty. The EU is so, last century and the new century is the East, a much more natural focus for Turkey.
3) It cock-blocks the Qatari, or maybe Israeli pipelines into southern Europe. Turkey now has a vested stake in keeping this from happening, no matter how much Erdogan hates Assad.
4) It still meets the objective of removing Ukraine from the picture as a conduit for Europpean gas.
The US MSM is a really, really, poor source of information. Anyone who makes economic decisions based on what they are told is in for a a rude shock, probably soon.
I hope you are fully invested...
I respect Putin. I agree with Paul Craig Roberts! He nails it! I am ashamed of president Obama and our current leaders. They are so full of themselves, full of hubris and arrogance, making fools of themselves, making one bad decision after another. Not only that, they have blood on their hands, all the killing of civlians they have done all over the world. Putin carries himself with dignity and talks intelligently. Appears to me that God is helping him. Record harvests in Russia this year. Many Americans see what I see - they too are disgusted at the unwise expenditures of American treasure on foolish wars, torture advocacy in violation of international law, the growing police state, evil civil forfeiture laws, the steady dissolution of civil and religious liberties on one pretext or another and national bankruptcy with nothing to show for it. Putin has emerged as the calm, moral force in the world, not president Obama who has repeatedly demonstrated that he can't tell the truth.
Hoping that the Russsian people will rise against Putin because of the deteriorating economic situation is a delusion. Most of the Russians see the current geopolitical clash between Russia and the West as a kind of sacred battle with the injustice and double standards impersonated in the US's ambitions for global domination. And one must admit that the US over the past decades have given them quite a lot of reasons to think so. Knowing Russian mentality it is easy to predict that the people will be prepared to overcome any hardships bearing in mind that sacred goal I mentioned above. So if this is the plan, it will most likely fail. What is plan B? Starting a war against Russia?