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The Oil-Price-Shock Contagion-Transmission Pathway
As we noted previously, counterparty risk concerns (and thus financial system fragility) are starting to rear their ugly heads. In the mid 2000s, it was massive one-way levered bets on "house prices will never go down again." When the cracks started to appear, the mark-to-market losses in derivatives led to forced liquidations and snowballed systemically. In the mid 2010s, it is massively levered one-way asymmetric bets on "commodity prices [oil] will never go down again." Meet WTI-structured-notes... the transmission mechanism for oil-price-shocks blowing up the financial system.
Because nothing says exuberant ignorance like limited upside, unlimited downside OTC (illiquid) derivatives...
Here's BNP Paribas' 1-Yr WTI-linked notes that collapse if oil drops below $70...
And Credit Suisse's ironically-names "TWIn-win" notes that collapse once oil prices close below $65
And finally Barclays, Leveraged Contingent Buffer Enhanced Notes Linked to the Performance of WTI Crude that start to die if oil prices close below $77.28
* * *
All of these "notes" are simply bundles of risk-free bonds subsidized by written derivative premiums on oil-prices - and sold to greater-fool yield-reaching muppet investors around the world who never saw a short-term tren they did not extrapolate - the question is - who is on the other side of all these notes? Especially now that capital is actually being eroded instead of simply less gains...
The snowball is starting (which explains why bank credit spreads have started to bleed higher)
We are still trying to size this market but its complexity and recent issuance suggest it is anything but "contained."
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The new Ebola. Got milk....er....dead dinosaurs?
We shall transmit this to some folks.
Let us all sing, We wish you a merry yen, We wish you a merry yen, we wish you a merry yen, and a happy cosplay.
jb
As long as the FED exists, serial bubble/burst sydrnome will prevail. END THE FED ALREADY. Until then, there are no free markets.
Hmmm.. Brent and WTI both trade on exchanges with high liquidity and sensible margin requirements.
Most oil patch volk have deep pockets and a time frame of decades. In any case, low oil prices benefit a few dozen companies for every one that loses.
ZH needs a better "sky is falling" meme. This one has whiskers.
So you're saying massive debt and leverage in derivatives isnt a problem with the oil sector?
Really?
One of many problems, but nothing to get excited about. Lots of farmers lost their asses last year. New land leases have to be signed by March 1. There will probably be a bigger impact from that than anything related to oil, but it gets no ink. Nada.
Even Venezuela is small potatoes. Half dead before this mess.
Watch the big stuff, Japan, real estate, the break up of the Euro. Something will take this thing tits up, but it won't be oil
Ouch..
Pretty darn good deal for the broker/bank, though.
I presume they create these things out of thin air as the sheep request them.
Farm land leasing is rarely brokered. It's usually an annual tenant/landlord lease, either for a specific amount of cash per acre, or a 50/50 split of costs and revenues.
Here's the rub.
A typical tenant farmer now, may own 200 acres, which is his base, but lease 3,000 acres. It is a massive annual gamble, well into the millions. Sooner or later, many of them lose the bet.
Kaiserhoff, yes, but what about say $100 TRILLION dervatives or synthetic derivatives tied up in WTI ?
What is the right number ? Isn't that a very large risk to the efficient markets ?
Didn't the highly leveraged CDO's destroy the market liquidity in 2007 ?
Its the leverage that ruins markets, the ZIRP based leverage for 6 years.
The leverage and massive size of the derivatives and synthetics completely wipes out the physical markets.
A verse on financialized oil
Derivatives starting to spoil
Levered & leaking
From bonds that are reeking
A cauldron of death brought to boil
I enjoy your talent. You'd been missing awhile but now are back. Keep with it.
what i dont get is why would any chump BUY these stupid things? Just buy physical oil. if it goes down to $60 a barrel, you still get $60. These derivatives make you lose it all - for what upside? 12.5% ?
makes you half suspect they wrote billions of these things then triggered the price drop SPECIFICALLY to snare these chumps
Why? Because: Money for nothin' and your chicks for free.
And they also pay 2% to their BNP/Credit Suisse/Merrill Lynch 'Advisor' to get them into these instruments.
But don't worry, the FAs will definitely have the right product next time.
A B A B A Interesting.
IMHO very nice and one of your best.
I have no idea if that's the right number. Given the nature of the beast (private contracts) I'm pretty sure no one knows, but that at least is interesting.
As has been said many times here, that which can't be paid won't be paid. That sort of derivative exists so the banks can pretend to have insurance, which they don't have. My hope is that when some of this crap blows up, it will destroy the whole globalization/new world order nonsense, but no one will make a serious attempt to pay off on that stuff. It will simply be shown up for the casino it always was.
Wishful thinking.
The tribe criminals and their gov muppets will simply find another way to dump their losses on unsuspecting taxpayers. Scumbags.
"the question is - who is on the other side of all these notes? Especially now that capital is actually being eroded instead of simply less gains..."
I don't know who they are, but they are getting bailed out.
"The crash is contained," ....
My cousin from Houston sent me these articles from his Houston Business Journal. For some reason he's not as Bullish as Barry on this Robust Rekovery:
Houston companies stagger in wake of low oil prices
http://www.bizjournals.com/houston/print-edition/2014/12/12/houston-companies-stagger-in-wake-of-low-oil.html?iana=ind_energy
Halliburton to cut 1,000 jobshttp://www.bizjournals.com/houston/morning_call/2014/12/halliburton-to-cut-1-000-jobs.html?iana=ind_energy
Oil prices worry Houston housing markethttp://www.bizjournals.com/houston/print-edition/2014/12/12/oil-prices-worry-houston-housing-market.html?iana=ind_energy
It's nice to know that Halliburton's hurting. Well, would have been hurting if it didn't just gut punch 1,000 families, but you get my drift.
Q: How do you make a little money farming?
A: Start with a lot of money.
Q: How long you plan to farm?
A: Until the money runs out.
Not true. Most of the "tennant" farmers here are mega-operations owning well over half of the ground they farm. Leases are usually 3 year cash rental agreements. If you own 200 acres and are renting 2,800 with current crops at less than COP...you're ass will be in bankruptcy by next fall. Cash rental wars here are waged by guys farming 10-30K acres. The little guys are long gone.
That was kind of my point. What state are you in?
SE Illinois. Corn average county yields here is 135-40 bu/acre. Ground is selling for $ 8,500.00/acre. Total fucking insanity. 2015 is going to remind guys what 1980's looked like....and it ain't gonna be pretty.
Yup I remember the farm aid days. You could buy 250 acres in Iowa with a nice victorian house on it,
for $250,000 because no one in the county had money.
Do you see financing problems coming up for the Spring?
Bankers are drooling at the chance to confiscate some farmground. Funny, but ag suppliers will be the ones to go unpaid and the Banks will own the property. 2016 is the year to watch....by then most high levereged with equipment financed etc. will begin to drop....one could only hope.
Here in Central Illinois, we would be thrilled with 8500 an acre. Try 13,14,15k right now.
Central IL Corn APH Yields 220 bu/acre
SE Illinois Corn APH Yields 140 bu/acre.
Do the math...Your ground is underpriced. lol
"...the little guys are gone"...mostly true, I'm afraid.
In the early 80's when I started, no one would rent me land or give me credit. I eventually bought and owned 900 acres because that was the only way I could guarantee the big guys wouldn't jump my leases from landlords.
But I'm considered a little guy still, and it's hard to get motivated to expand at age 54 at these land prices. Unless my kids come home soon...my days farming are numbered.
But!! if a crash happened and land dropped like 1981...I've got some gold and silver I could cash out and buy land. I'd do it, just to do it.
me thinks we are going to need that $303 trillion dollar bailout from the taxpayers real soon.
Well, well. That's worth a million dollar bone-us for somebody.
Reminder to self:
Revisit this comment in two weeks.
*
So did mortgages. But as we saw, in the real world CDO returns were synthetic and markets thin.
Good point, but look at the scale. Millions of people were and are invested in over priced real estate. Few people know what a master limited partnership, typically used in oil leases, is about. Those who do are usually wealthy and well diversified.
Lots more money will be lost in the next tech bust, or even Netflix, Herbalife, and Chipotle coming back to earth.
kaiserhoff
Four good posts.
Food will become a problem, especially for the third world, but the problem will spread to everyone, eventually.
Not worry about margins on the oil business, yet, because it’s a well-regulated existence where the critical players know their roles.
Right about Euro going before the dollar.
Putin has to go. Then, watch out for Coup D’états.
The unintended consequences are what will get us, because this over financialized global economy is on its last leg.
Please give yourself an upper-cut.
Cheap energy does not lead to food shortage.
It makes the cost of prodution lower.
In th US there will be another farm operator who will plant the crop if the first one goes broke.
yup, a week ago there were articles about how 65$ oil would start rolling defaults and bing down the wole system.
Today oil it strading 55$ and the e-minis are still basically at lifetime highs.
And oil will keep going down,
and the sun also rises;)
Do you realize defaults take time? A company might have $200 million cash and $8 billion debt. The cash on hand will enable them to keep making interest payments for 6-12 months. Then comes the default. If you don't believe it, then look at the stock prices of the small and mid-sized E&P's. Do you think they've dropped 50-80% since October because earnings are down or because of the risk of default? Once they default, there is no recovery for the bondholders.
oh im fully aware of all that. Im just saying it wont be the price of oil that ends this bull market, this is just another dip to buy. facebook netflix apple yahoo baba etc dont give a shit about the price of oil.
MLP's are only good for a few years then get out because of the shale depletion rate. I've audited a few of them and those are some wealthy people. They get the good cash flows the first few years then dump them on unsuspecting suckers.
You underestimate the importance of oil and how much money it has pumped into the US economy the past 4 years. Residential RE is a different animal. People still live in their houses whether it's worth $400K or $300K. It won't change their lifestyle or spending habits unless they have to sell. Those aren't liquid investments that determine cash flow.
"Hmmm.. Brent and WTI both trade on exchanges with high liquidity and sensible margin requirements.
Most oil patch volk have deep pockets and a time frame of decades. In any case, low oil prices benefit a few dozen companies for every one that loses."
I agree, but only because I believe that the oil price decline is an engineered part of the Zionist western banksters', and Israel's, war against Russia for Syria.
If they can get social and civil instability in the American heartland, Venezuela and Mexico, so much the better for them and the planned neo-cons'/Zionists' return to power in 2016.
Keep an eye on Mexico, as they just privatized their oil industry, and it seems they did it at the behest of China, not the west.
An American, not US subject.
As Tyler has pointed out on numerous occassions, kaiserhoff, it's not oil itself- it's the DEBT construct of oil that will be the issue here.
Doesn't matter how liquid your oil is when you've pledged it as collateral at $60 to service your debt- once you're in default, all your shit is gonna get sold at market- liquid at $60? Check. $50? Check? $40? Check. All cleaned out yet? Check.
It's pretty simple, really- what's the most overbloated pig in the room? High yield debt.
Just like shooting stops- hammer them until they're out of money.
Son, this country is going straight to hell! Agree or get downvoted.
https://www.youtube.com/watch?v=jRq89XXIPGU
*downvotes you btw*
O-oh
I-I
L-Lose...
But this contagion cannot be hemmed in with a face shield and N95 particle mask...
We are all about to get really sick, eh?
DaddyO
Damn. And I was hoping to repurpose those cute little stretch booties I bought for carrying out the dead.
You might want to use those booties in that greenhouse
Ebola didn't pan out.
Was only killing darkies. They put it back in the oven to cook a little longer.
It'll come back...with friends.
Flounder is leaving early in the new year.
That might restore some honest reporting. Time will tell.
now that the american public is on the hook for all these derivatives I guess we will win at the gas pumps while losing all the $ in our bank accounts due to the corresponding derivatives.
That has to be relevant. They're gonna fuck us hard, right in our faces and dare us to do shit. It almost seems they want violence, Ferguson and all so they can clamp down. You know, for civilization's sake.
I learned on ZH to only have enough money in the bank to cover the monthly bills.
Oilbola = ill-liquid
European markets tanking as we speak as WTI breaks into 56.xx and Brent is looking hungrily at 59. But wait until Brent goes to 57.xx......minds are going to focus REALLY fast and hard when that happens.
Don't worry, the contagion is contained.
With our DNA wizardry and 3D printing we can now just print replicas of dead dinosaurs.
Problem solved.
Next.
Please do not worry...
BOOM indeed...
Credit Suisse 'TWIn' Notes? Collapsed in on their own footprint?
Pull it!
The time has arrived:
Release The Kraken
the chase for yield always is risky
17 year old makes $72mio trading stocks....
http://www.dailymail.co.uk/news/article-2873411/New-York-high-school-stu...
it's just another dumb story - you need to go and buy stock and stop pay for credits
Wasn't the guy who started National Inflation Association a penny stock wunderkind? I wonder how ol George For Title is doing these days.
Is he a shoeshine boy? Of the son of a money-changer?
"We will never see oil prices below $90 per barrel again in my lifetime" - Dead Banker.
Oh was that the guy that landed on the metal fence, or the one with the nail gun?
It was the one that fell from a second floor balcony, and split in two.
Him and Matt Simmons partying in the great hot tub in the sky.
This whole counterparty risk thing....
That's like alcohol poisoning at a hipster kegger, right?
Or like at an Ivy League fraternity party.
Ivy League don't do Frats, my brother.
They have Societies.
While we were boogying down in front of the altar of beer and poontang, Societies bow to the alter of power and war.
Be a better world if they could appreciate a few cold ones and some pink. Guess that's just muppet fun.
Comacho, I'd vote for ya if yer platform is cold ones and a little pink! :>D
You know it, bro...those are core values.
Wait until folks see another part of my election platform.
Handjobs at Starbucks. Order extra frothy...
Harvard
Chasing yield? Good luck...I mean the books are honest, right? Accountants wouldn't lie, would they? Selling brokers did speak to the down side risk, correct? Guess they can turn all those oil pools in ND into reflecting ponds.
I'VE SEEN THE FUTURE AND IT IS WONDERFUL!
Right. Things can only go up..never down. Got it!
As high yield rates rise to 15% or 20% then many interest rates will rise.
Then all the ZIRP debt will get wiped out and companies will no longer be able to finance their own stock buybacks.
Then the DOW will collapse as nothing will support it any more.
Honestly, I think you are overly optimistic.
12% upside and 100% downside? Sign me up!*
* by "me" I mean the pension fund I manage, of course.
No, it's 12.5% upside. Don''t forget that 1/2% extra!
[er,... I guess it doesn't matter given that those notes are currently at between 30% and 50% loss...]
OPM= Other People´s Money. No harm done. It´s not like its my money....again. It´s the money of poor widows and orphans.
On the positive side it looks that it´s a massive profit opportunity next week in shorting and buying reverse ETF´s or just go away and sit it out and go back in again in a couple of months.
Just have to grapple with my ambigous feelings towards moral hazard. I floated an idea in another discussion where I proposed treateing these people like the witches they are. Salem style. Burn them at a stake. Bare minimum would be to burn in a pentagram in the forehead with a red-hot iron on everyone that is working at a trading desk or in a bank. The wild screams and smell of sizzling flesh would go some way towards correcting that moral hazard thing.
Can I do both?
May have to seek some spiritual guidance on this one.
Doing God's work(s) covers a lot of gray area(s)!
You're in luck, Thom, I just happen to be a god in my spare time and I give you my blessing to do both.
Thank you!
Pure evil will have to be dealt with on it´s own terms.
http://i.imgur.com/kOFW3eq.gif
Aw, aw baby, yeah
Ooh yea, huh, listen to this
Spy on me, baby, use satellite
Infrared to see me move through the night
Aim gonna fire shoot me right
Aim gonna like the way you fight
And I love the way you fight
Now you found the secret code
I use to wash away my lonely blues well
So I can't deny or lie 'cause you're the only one
Who can make me fly
Time bomb, time bomb, you're a timebomb uh, huh
You can give it to me when I need to come along, give it to me
Time bomb, timebomb, you're my time bomb
And baby, you can turn me on, baby, you can turn me on
You know what you're doing to me, don't you?
Ha ha, I know you do
....songwriter Narada Michael Walden et al and original performer Tom Jones
Option strategy - to sell put options. Very risky.
Exactly. This scam is just an expensive way to write a put on WTI. The only reason it exists is to lure in retail and collect enormous commissions. Lovely.
lets wait 1.39 hours and i hope for nikkei for 20k /sacr
Do like Abe does - print Phucking MOAR!!!!!!!!!!!!!!!!!!!!!
BNP Paribas, muppet slayer extraordinaire. gains capped at 12.5% no matter how high oil goes but losses you can eat it big time. Good lord, what an ingenious scheme! step right up, test your luck!! lolololololololol!!!!
12% upside, 100% downside????? WTF indeed!!!!
This has muppet city written al over it.
Shhhhhhhhhh, listen. The shitstorm is coming!
"Don't tell me that, Julian! You and Ricky bought those contracts for a lot of weed! Well, the Shitstorm is coming, my friend! Those banksters have all of your dope and those notes are gonna be worthless! Randy and I are going to go get drunk and laugh our asses off! Shitstorm, Julian, hahhahaha!"
When the other guy loses it is good thing. When I lose it is a terrible thing. When everybody loses the winners are hiding.
no winner in mass suicide
The winners are those in hiding and opted out to begin with.
As for for the rest they can knock themselves out. Forward lemmings...OVER THE CLIFF.
You still have time to OPT OUT.
Yep. That's called a crash course in being poor.
The materialistic females in your tribe may not embrace your ascetism easily.
BTDT.
The only way they can get something for nothing, is if someone else is getting nothing for something.
"the question is - who is on the other side of all these notes? Especially now that capital is actually being eroded instead of simply less gains..."
Tylers, we look forward to the followup on this one. Be nice to bag the next Bear Sterns or Lehman!
If the Russians were on the other side of it, it would be pure karma.
we know that bnp is just the middle man. they make money no matter what. on one side is certainly some oil producers on the other side it has to be muppets. those contracts were written to guarantee a minimum price to the producer while letting them keep the lion's share of the upside. only a muppet with opm could buy that stuff.
I wasn't suggesting Vlad actually bellied up at the counter and bought em. Pretty sure he has some proxies and cutouts that could swing this and he has the Intel assets that could put this play to him.
I'm just looking at this through the lense of economic warfare, which I think may be the proper context. Sanctions, weapons and a lot of back and forth.
Pair that with some strange caps in PM markets and an obscene amount of cheese in the Cromnibus nonsense...I dunno, it just makes me think that this isn't the work of the usual suspects. The "good guys" have layed in some serious CYA funds and controls.
i'm thinking middle east on the producer side and hedge funds on the muppet side. we may never know.
Guess we will see soon enough.
If you are on it, I'd expect to see some hedge fund managers with their nuts nail gunned to the desk in the very near future...which is the kinda stuff we live for here anyway.
My bet is on the HNW and SHNW muppets here in the USSA.
I sell analytic software to RIAs, HFs, B/Ds, etc. and cover Texas as part of my territory. A few RIA Texas based prospects have been selling these structured notes to their HNW clients for years now. Many are recent millionaires from leasing their ranches to the frackers.
I modeled a few of these instruments in my software and was not impressed with the payouts. If you time the 2 year notes during bull markets you can do very well ( though not much better than being long the market conventionally). If you hit a protracted bear market you get slaughtered.
I suspect these advisors will be looking for a new vehicle to sell. I also think many of their client's will be showing up at their offices with pitchforks soon.
Well hopefully their offices are wired for video and we can get a look at what happens when a muppet loses a shit load of money a breakd in to the office uninvited.
If the fracker debt is financed with notes structured like this example the producers are in pretty good shape. It would be one heck of a producer hedge, better than commodity market trades.
CalPERS just has to be one of the main muppets. They seem to be the pack leader in stupid investments.
It is almost as if these notes were designed to fail.
Tyler said the following above...
"All of these "notes" are simply bundles of risk-free bonds..."
So, we are good, right? Risk free. We won't need that throttle on metals after all, right?
All AAA rated.
Oh wait....
Well I am sure these are FDIC insured after the Criminalbus passed through the Senate. It was probably buried on Page 1577. Small print inserted by Barclays directly.
These will not be insured. The trading desks will collect big time on these and the muppets who own them will get slaughtered. Congress and the regulatory agencies do not care about muppets only TBTF Ponzi houses.
Glitch in the Matrix :)
What you mean, "we", Kemo Sabe? :-)
Exactly how many of these have been sold? 100 mm, maybe 200 mm tops. Hardly something that will topple a domino - although we may see a few nail gun incidents among the trust-fund set.
Key will be...how many of the $600 TRILLION in derivatives and synthetic derivatives there are tied up in WTI.
That will be all she wrote.
I'd predict at least $100T is in WTI one way or another...100T is a very big number.
And what kind of multiplier is rehypothecation in the equation?
The roof is on fire. Let the motherfucker burn.
Well , lets go down memory lane.
Bear Sterns held the record of one Note sold 42 times. The average was 10 times across TBTF.
After all the jail time handed out to the bankers after that, have a guess.100,200,300 times
would not be out of the question.Why not, risk free to them.
we sold some Yield Starved Muppet folks some
Phony (toilet) Paper.
7 years is just about here...
How about people who follow "god like" oil geniuses like Andrew Hall.
Andrew Hall was called "god" for his trading accumen when it came to traiding oil futures. In November his fund was up 1% despite a 15% plunge in the product he had been trading his entire life....oil. This was because of furious dollar buying in efforts to hedge.
If I got it right...the oil leg of his trade was -13%!!!!. A hedge saved his ass from pulling a LTCM and a LUCKY one at that. His ass could have easily tanked his Hedge Fund, Occidental Petroleum, and whoever was counter-party to them. He must have been shitting his fucking briches watching the oil universe implode like it has.
...clearly "god" like and clearly evidence that this fucking tax payer funded and FED induced drunken party fest has once again gone too fucking far and the history lessons of Enron, LTCM, and Amaranth are lost in the annals of history.
This thing is all fucked up. And anyone who would buy some piece of Tom Fuckery called "Trigger Twin Win" is a fucking cunt and you deserve to get your fucking ass ripped out.
Crude future down $1.24 to $56.49: watch the unfolding collapse live here:
http://www.investing.com/commodities/crude-oil-advanced-chart
I'm selling some Gold and Silver tomorrow (CEF, Central Fund of Canada), to buy some SRTY. Then get more CEF later.
But...if the market collapses super bad...then all payouts may be frozen ? or some SEC might make shorting illegal ? or ... ?
Interesting times.
RUT and the other broad indices are still nicely vulnerable up here at 6 year nose-bleed highs: where does SRTY go from 36 when RUT drops from 1150 to supports at 800 and 600?
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=RUT&insttype=&freq=2&show=&time=13
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=srty&insttype=&freq=2&show=&time=20
Not the collapse i was hoping for, but it'll do...for now.
Ima hafta get my 78 coupe deville back on the road.
It gots a 425 cubic inch engine, and goes WAAAHHHHH!
Bullish! (for muscle cars) Bullish! (for antique cars) :-)
:) I might buy an "antique" car when owners of them are forced out. A car is just a car, a liability, nothing else.
I agree. A car is just a tool. An expensive tool.
We knocked out some folks
THIS is deflation!
I wish I knew you were right. The fundamentals have not been relevant in this manipulated casino they are calling a market. Why is this the natural real deal, vs. engineered? Engineered in such a way that they can turn it on a dime and jack the shit again when their goals are met?
I wish this was the market getting all natural and stuff.
Since most (though not all) of the economists getting published by the MSM today appear to be neoKeynesian economists, and since I consider neoKeynesian jargon to be cover for insider manipulation of the casino, I don't accept their definitions of words. I accept only what I can actually see. When I actually see higher prices, I think I see "inflation". When I actually see lower prices, I think I see "deflation". Right now, I see lower gas prices at the gas station. That's what I meant.
And maybe this decline in oil prices is engineered. Regardless, for me, it is deflation.
STORY HIGHLIGHTS
Editor's note: Jill Dougherty is a public policy scholar with the Woodrow Wilson International Center for Scholars in Washington. She was CNN's Moscow bureau chief for nine years.
Moscow (CNN) -- Russia looks richer in the snow. Muscovites, as they always have, stroll the main boulevard, Tverskaya Street, in their fur coats and hats on snowy evenings, basking in the holiday lights and decorations, their capital transformed into an icy wonderland.
Moscow's coffee shops are full of young Russians still willing to pay 300 to 400 rubles for a latte. But the foreign currency exchange shops I pass are an ominous sign. Just a few weeks ago, 300 rubles was worth about $10. Now, it's about half that.
Thursday, I exchange dollars for rubles and get a rate of 54.20. By Saturday it's 57 rubles to the dollar.
Consumer prices are up about 8% from a year ago. Inflation is growing at its fastest pace in three years. In the food store where I used to shop, I search in vain for my favorite imported cheese. It's fallen victim to Russia's ban on dairy, meat, fruit, poultry, fish and other products imported from the West -- Moscow's retaliation for U.S. and European economic sanctions over its actions in Ukraine.
Even the price of bread, which holds a near-sacred place in Russian popular culture, is rising. The business daily Kommersant reported that bread prices will increase 5% to 10% in the near future due to the rising price of "flour, grain, sugar, foreign raw materials, packing supplies and transportation costs."
Food wholesalers want to adjust consumer prices more frequently, once a week instead of every 45 days, according to the paper.
In Moscow's working-class neighborhoods, the falling ruble is reawakening old fears and old methods of coping with economic uncertainty. Some middle-aged Russians, who lived through the economic chaos of the early 1990s, are beginning to put away reserves of salt, matches, macaroni, flour and other staples.
Middle-class Russians are buying TVs, cars and household appliances, convinced that prices after New Year's will be higher. "Russians live one day at a time," a 40-year-old woman who works for a livery service tells me. "We never know what the future will bring."
A new Russian poll shows that Russians are losing confidence in the future and are making plans for only a few months in advance. In that poll, by VTsIOM, 51% of those questioned said they are confident in the future, down from 61% in the spring of this year. Nearly half said "life is difficult, but bearable."
The U.S. and Europe imposed economic sanctions in response to President Vladimir Putin's actions in Ukraine and Crimea, but Putin blames the West for trying to weaken Russia. His fellow citizens, by and large, agree; Putin's latest public approval rating is an overwhelming 82%.
But some, especially among Russia's beleaguered political opposition, see a silver lining in the economy's woes: the end, sooner or later, of the Putin regime.
"My prognosis? In three years the situation will change," Dmitry Stepanov of the liberal RPR-PARNAS Party told me at an opposition conference in Moscow. "The country is in economic crisis and no one in the government knows how to solve that."
The economy will tank, Stepanov predicted, "and this will elicit mass dissatisfaction among the public. That will activate political battles, and that will lead to a peaceful change of power."
Several people I spoke with at the conference said there's a perfect storm brewing that could sweep Putin from office: low oil prices resulting in plunging profits for Russia, Western sanctions, and a faltering economy. But no one I spoke with wanted that "perfect storm" to end in revolution.
The conference, "Crisis in Russia-E.U. Relations: Causes and Ways Out," was held on December 12, Russia's Constitution Day, and brought together approximately 200 members of the opposition along with some liberal European politicians.
It was co-sponsored by Russia's liberal opposition party, RPR-PARNAS -- short for the Republican Party of Russia/Party of People's Freedom -- and the transnational European party, the Alliance of Liberals and Democrats for Europe.
One of the hosts: Mikhail Kasyanov, co-leader of RPR-PARNAS, who served as minister of finance from 1999 to 2000 and as Russia's prime minister from 2000 to 2004. Putin fired him, along with his Cabinet, shortly before running for and winning a second presidential term.
The current Kremlin policy, Kasyanov told me, is "leading nowhere," and he predicted growing economic and political problems.
"We want to force the present leadership of the country, using pressure from society, to change its aggressive course in its international as well as domestic policy and abide by the Russian Constitution," he said.
Just where that pressure will come from, however, is not clear. Historically, the opposition has been divided internally, and so far, Putin has most Russians on his side.
One participant in the conference, who works in a nongovernmental organization and did not want her name used, told me that Putin won't willingly leave power. ""He will never leave of his own accord," she said, "so somebody will have to help him. And they will do that once they are frustrated enough." His inner circle, she said, could turn on him.
"They are Russians like everybody else, so their patience is very, very long," she told me. "One day, however, it will crack. That's what I think. What it will take to crack, I don't know."
I speak for all of us here at ZH , please do us a favor and never post anything from CNN or any MSM crap, it is worthless info
Hence that is why I am here in the first place
Sorry Bob, you're going to have to suck it up and deal with it. Ad hominem attacks are a logical fallacy, and you've just engaged in one.
Try this instead. Whenever I post some facts or analysis you don't like, close your eyes and say "lalalalalalalalalalala..." until you've successfully blocked it.
Right. You paste in a piece from CNN.
So we got the propaganda part of the dump. No shortage of that, at all.
When were you going to get to the "facts and analysis" part?
He wouldn't recognise facts or analysis if it bit him in the ass.
Talking of ass, I think he's sexually attracted to Putin, and his antipathy is just
cover for his latent queerdom.
Why doesn't Tyler ban assholes like this troll?
Good grief...what a waste of space this clown is.
Asses are revealed when their comments are not related to the information provided.
You are the real Jenny displaying your features.
Sir, have you no respect for THE "Woodrow Wilson International Center for Scholars?" If this institution is named after a fine, upstanding man such as WW, I'm sure that its . . . scholars are veritable beacons of truth and want nothing but the best for their benighted charge.