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Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%
Following the biggest rout to the Ruble in ages, Russia - unlike Mario Draghi - instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to... hold on to your hats... 17.00%, a 650 bps increase!
From the press release:
The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks.
In order to enhance the effectiveness of interest rate policy loans secured by non-marketable assets or guarantees for a period of 2 to 549 days from 16 December 2014 will be granted at a floating interest rate established at the level of the key rate of the Bank of Russia increased by 1.75 percentage points (Previously these loans for a period of 2 to 90 days, provided at a fixed rate).
In addition, to enhance the capacity of credit institutions to manage their own currency liquidity was decided to increase the maximum amount of funds to repurchase auctions in foreign currency for a period of 28 days from 1.5 to 5.0 billion. US dollars, as well as on similar operations for a period of 12 months on a weekly basis.
And for the Russian-speakers, the full breakdown of rates.
Few markets are open but the 1month forward Ruble market just dropped (Ruble rallied) over 2.5 handles...
RSX (ETF) is starting to rally after-hours...
Chart: Bloomberg
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I picked up one of the 1960s and early 1970s high school indoctrination paperback books on 'health' -- lots of stuff about nukes, preparations, symptoms and treatments.
Narrow trench. L-shaped entrance 3 feet of dirt on top of a set of interior panel doors for earth arching. Must build an air pump. Or move to China and you can shack up with one of those basement bunnies in Beijing.
Remember that dumb TV ad during the Regan administration that showed the buisnessman with Sally Jesse Rafael glasses digging a hole in his backyard with his family looking on? I think they said dig a 6 foot deep hole and throw 4 feet of dirt on top of a door which rested on that hole. The TV ad likened it to a coffin.
Russia needs to go gold-for BTUs.
That will have the cockroaches of the Zionist controlled west scurrying. "Show me the gold!"
An American, not US subject.
Russia also needs to announce that instead of MAD, they are going ADI: Assured Destruction of Israel. "Any nukes thrown at us will have two retaliations: One against the launcher, and a second against Israel."
Russias economy is strong it can handle 25% interest rates ... no problem.
The russians aren't really addicted to money like Americans and Vodka is cheap.
http://d2tq98mqfjyz2l.cloudfront.net/image_cache/1304725446515615.jpeg
As significant as this rate move is, I still think that Putin recognizes that the ruble collapse is a speculative move by Western Banks. (He has said so) I see Putin taking further actions against those banks and the petrodollar. Russians do not let invaders knock down the gates of Moscow and then gracefully retreat. There will be blood in the snow...
What Fools - all they have to do is start selling their energy exports for Gold.
Look at other currencies, Norwegian, Brazilian, S.African, Argentinian, Iranian etc., even Chinese. They all crushed exchange rate against dollar but not a value of their currency because speculative price is not a value of dollar if you do not have debt denominated in dollars.
These are western FX speculators which respond to panic fleeing of western capital from emerging markets due to in big part: surprise; acceleration of world process of DEDOLLARIZATION. It is attempt of disorganized escape of foreign investments from developing countries because value of dollar in Russia and other emerging countries is going to zero soon as a result of being purged from trade and savings/investment instruments of these countries.
Those which do not have US treasuries to dump will default in order to dedollarize.
Western speculators and local oligarchs desperately try to sell rubles in panic and incur massive losses of capital in the process since Russians will pick it up on cheap. It has nothing to do with economics or value of currency for exporters like China or Russia. The interest hike is just for regular Russians so they stop panicking under western propaganda since there is no fundamental reasons to loose ruble. However, there is fundamental reason to loose dollar. Watch out caviar lovers in US because its going bye bye.
Look at other currencies, Norwegian, Brazilian, S.African, Argentinian, Iranian etc., even Chinese. They all crushed exchange rate against dollar but not a value oftheir currency because speculative price is not a value of dollar if you do not have debt denominated in dollars.
These are western FX speculators which respond to panic fleeing of western capital from emerging markets due to in big part: surprise; acceleration of world process of DEDOLLARIZATION. It is attempt of disorganized escape of foreign investments from developing countries because value of dollar in Russia and other emerging countries is going to zero soon as a result of being purged from trade and savings/investment instruments of these countries.
Those which do not have US treasuries to dump will default in order to dedollarize.
Western speculators and local oligarchs desperately try to sell rubles in panic and incur massive losses of capital in the process since Russians will pick it up on cheap. It has nothing to do with economics or value of currency for exporters like China or Russia. The interest hike is just for regular Russians so they stop panicking under western propaganda since there is no fundamental reasons to loose ruble. However, there is fundamental reason to loose dollar. Watch out caviar lovers in US because its going bye bye.
And despite this rate increase -- it will be EASIER and CHEAPER for a Russian oil company to borrow money than it will be for an American shale oil company to borrow ANY money from a TBTF US bank!
Defending exchange rates with higher interest rates is very expensive and usually futile.
Capital controls or massive influx of Chinese capital is probably a better idea. Is the Russian central bank really loyal to Putin?
No, they are not.
http://en.wikipedia.org/wiki/Central_Bank_of_Russia
Step No. 1
Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%This is not the last move.
Step No. 2 Russia Backs Ruble with Gold
Before your step 1 and 2: Rusia sells US Treasury billls and notes
All of the above!
Washington D.C. liked this announcement by the Russian CB so much that they decided to spread some holiday cheer to Russia and the international commodities markets to make them ALL even happier!
No worries???!... Santa's got it all covered!
I see S&P and the DOW breaking new records with this news before the end of the year!
Just realize that the sword you use to cut the top of the champagne bottle off also doubles as a great device to slice wrists and throats in the bath tub!!!
THIS IS ALL PLANNED.
Allow the RCB to show its true 'colours'
Get rid of the RCB leadership, discredit their BIS connections and implement governemnt issued and/or commodity backed currency.
Wait for the Dec 18th Putin question time and speech.
Russia with huge energy resources and a powerful military should do just fine. I wonder if all the money going to the USofA will start moving to Russia.
All the Volume at the End, Talk about catching a falling knife.....
RSX (ETF) is a Trade?
Look at other currencies, Norwegian, Brazilian, S.African, Argentinian, Iranian etc., even Chinese. They all crushed exchange rate against dollar but not a value oftheir currency because speculative price is not a value of dollar if you do not have debt denominated in dollars. They keep trading among themselves like nothing happened.
These are western FX speculators which respond to panic fleeing of western capital from emerging markets due to in big part: surprise; acceleration of world process of DEDOLLARIZATION. It is attempt of disorganized escape of foreign investments from developing countries because value of dollar in Russia and other emerging countries is going to zero soon among other reasons, as a result of being purged from trade and savings/investment instruments of these countries.
Those who do not have US treasuries to dump will default in order to dedollarize.
Western speculators and local oligarchs desperately try to sell rubles in panic and incur massive losses of capital in the process since Russians will pick it up on cheap. It has nothing to do with economics or value of currency for exporters like China or Russia. The interest hike is just for regular Russians so they stop panicking under western propaganda since there is no fundamental reasons to loose ruble. They could introduce Chine style capital controls but they want to collapse value of western investments in Russia.
However, there is fundamental reason to loose dollar which any ZH reader knows. Watch out caviar lovers in US because its going bye bye.
And since the dollar is so far up against almost every other currency - there will be lots of countries angry with the US paper dollar and paper oil trade. Also, Russia does very little trade with the US, and a lot more with the EU and China.
This makes me believe the drop in oil was, as many suspected, the ultimate economic warfare by America and it's puppet Saudi Kingdom. I understand the arguments for reduced oil prices, but come on! A drop of this size, this fast, without a world wide financial crisis or depression, like last time it plunged. No, this time it plunged at the onset of a USA declared war on Russia.
The leaders in Russia have still not woken up to reality. This really is war, not politics, this is war. The Central Bank of Russia is basically a western institution, with western standards, and the neoliberal economic model. Some in Russia are quite ready to burn that bank to the ground. There is a huge split inside Russia with those who seek complete surrender to the west and are willing to beg for terms of that surrender. Others are defiant, and point o past times when Russia was forced to fight and rely on it's self. The question is open as to who wins the infighting, but this points to a great American victory at this point. Now we can only wait for the opposition to react. And actually, Putin still does not know which side of the fence he will jump. He can surrender and turn Russia over to the Western Neoliberal banks and corporations, and simply accept rule from Washington. That is the game the USA is seeking to win.
If Putin jumps to the Russia first side, then he must be serious enough to declare wr himself, and put Russia on an economic war footing, and seek support from China, Iran, India and BRICKS. Under a new War Economy, Russia would be taking short term suffering, real suffering, in return for long term freedom and indepndence. I call it all a toss up right now as to which side the powers in Russia jump.
The Russian people will decide, because if support for Putin dries up, he can easily be put out of power. So far, the Fiat Dollar Printer, USA, has won the first round in spectacular fashion. But them so did Hitler, Napoleon, and Karl XII.
All this is possible only because the USA holds King Dollar, and can print real wealth, real spending power can be printed, real bailout trillions can just be printed. Russia has none of those powers. This is the difference right now. Expect the dollar hegemony to come under counter attack soon.
The amount of people 'in Russia' who talk about surrendering are either 1) not in Russia (US citizens who were from Russia) or (2) neo liberals who will do whatever it takes to take Putin down. Thing is though, his popularity is over 80% and the amount of people who trust the west in Russia has dropped to an all time low this year. Pretty much, I can bet that around 77% to 80% of the population is pretty much on side to being mad at USA. Also, Germanies economy was snuffed out in the 30's thanks to US, which lead Hitler into power. Pretty much, German currency was worthless at that point. But he turned the nation around.
The Russians can look at Ukraine to see their fate if they abandon Putin.
This is like the Nazi attack on Russia in WW2. The same people are trying to get control of Russia again like they did in 1917 and when the oligarchs stole everything.
If they abandon Putin they will get people like Porschenko, Yatz, Koholdovsky (sp?) and others. Just like the Bolsheviks too who murdered tens of millions of Russians and Ukrainians.
The Russians can end up like Americans where their president, Congress, media, TV and Hollywood plus the military think American citizens are lower than illegal aliens. Americans are serfs like Ukrainians now.
The question to me is whether the globalist-zionist alliance is proven over the next year or two to be nothing more than a temporary period in human history - a period of 300-400 years. If the Chinese and Russians have determined that western strength can be challenged and beaten then we might see a new era.
Meet the new boss. Same as the old boss, slightly different accent.
Jack Burton:
"[- - -] If Putin jumps to the Russia first side, then he must be serious enough to declare wr himself, and put Russia on an economic war footing, and seek support from China, Iran, India and BRICKS. Under a new War Economy, Russia would be taking short term suffering, real suffering, in return for long term freedom and indepndence. [- - -]"
My comments:
Most BRIC countries have capital controls. Many countries in Western Europe had capital controls up to 25-30 years ago, Sweden up to 1989. Would Russia take short term suffering because of capital controls? Or because of massive influx of Chinese capital? I don´t understand what kind of "war" you are talking about and why that war and the accompanying suffering would be necessary.
Not a good time to "declare" war on the United States. Millions of angry fuckers everywhere. As for the oil decline, I suspect it is a function of the American economy. A lot of folks are broke. Really broke.
Except for a brief period in the 1990's, the West has been at war with Russia for 90 years. There is nothing new under the sun and nothing the Russians haven't already experienced a dozen times.
Except a mulatto, Affirmative Action, on-the-job training President of the USA. But I don't think they're popping Valium on that account.
Can you show me how you came to that opinion?
Where in the book of Central Bank Printing does it say that Russia's Central bank is proscribed from printing interest payments of 10.5% or even 17%?
Putin will absolutely come down on the Russian side of the fence. Support for Putin will not dry up. The USA has not won the first round in any fashion at all, least of all spectacular.
You forget how Putin shut down Obama in Syria. You overlook the reunion of Russia and Crimea, which is what the conflict in Donbas is all about.
Do you really think framing Russia and the separatists with the downing of MH17 with suborned perjury is the mark of anything but villainy?
The monstrous behavior of the elected officials of the West is the only spectacle I'm aware of.
Talking about Syria here is something if you already haven't seen it.
http://www.veteranstoday.com/2014/12/13/historic-speech-in-damascus-send...
That really is war indeed.
Thanks.
There are no charges leveled against the US and West that surprise me.
Except that their leaders are out of an alien wormhole.
Support for Putin seems strong, but when the bread and circuses end ... then what? I could see Putin pushed out by the military, or ex-military (including the old KGB) or by their own homegrown bankster-types who don't want to see their wealth evaporate.
Putin is a cornered animal and you're right that he will never capitulate to the West. Still, he will be undone by his own hubris. The US will win, not because we're so smart, but because of Putin's tragic flaws.
Boodles
Some would say that the bread and circuses are just starting. How long have LED smart tv's been around? !0 years? B&C may last another 100 years. If oil lasts that long.
I'm pretty sure I don't know any more than you do about RF's military, but Putin did replace the Chief of General Staff when he began his third term. And replaced the Minister of Defense a couple of months later.
The military is firmly in his hands at the end of 2014. And if you are a Russian officer or enlisted man and you have seen Putin stand up to Washington and take back Crimea with all it's history and strategic value, are you less likely to follow him where he goes next?
I see no hubris. I see a savvy Russian leader, without whom standing up against the US and the West, in short order we would have History repeating itself and the nazification of America.
I think the best Christmas present from Putin to Russian people could be abolishing or taking full control of RCB on January 7, 2015. Time will tell...
US interest rates were at 20% in the 1980s so there's still a way to go for Russia to beat that.
The new Paul Volker.
He's got https://www.youtube.com/watch?v=gJ3tqIukBKg
It's like antiKugman - antiNIRP
> russia central bank raised rates to 150% in 1998 http://articles.latimes.com/1998/may/28/news/mn-53973
Can't help but notice how similar this move is to "Black Wednesday" with the British Pound. Huge interest rate hike to try to stop a currency crisis. Same playbook. Same result??
Same Soros in the background.
What are these interest rates for ? Are they for Dollar deposits ?
Not for dollar accounts -- you have to take your dollars and BUY rubles (the purpose of doing this). Thus this will attract people who want to sell dollars and buy rubles -- which is the opposite of what the paper speculators have been doing with paper dollars and paper rubles.
Russia's lucky,they have little foreign debts.How much does Obuma owe?Try over 18 trillion.This is nothing more than a bad attempt to collapse the Russian economy.Russia has some very huge trade deals in the works and basically the pimps in Treasury are paranoid about Russia and their trade partners trading outside the US Dollar system with their own currencies.Is it tuff?You bet it is and they'll make it tuffer on Brazil,China and emerging markets.I see it as a last ditch effort by corrupt powers in Washington that can't get their own debts under control to hold onto the printing press as long as they can.
It's insane to compare any measure of fundamentals and come up with the Dollar being stronger than the ruble.
The ruble tumbled the most since 1998, sliding past 60 for the first time, as traders tested Russia’s willingness to defend the currency amid an oil slump that’s pushing the economy toward recession.
The ruble weakened 9.1 percent to 64.0005 per dollar at 7:57 p.m. in Moscow, the steepest slide on a closing basis since the year Russia defaulted on local-currency debt. The 10-year government bond yield rose 23 basis points to 13.23 percent. Three-month implied volatility for the ruble climbed to a six-year high as the rout triggered the Bank of Russia to sell foreign exchange, according to BCS Financial Group and MDM Bank.
Traders are pressing the central bank to buy more rubles to limit a selloff that has wiped out 22 percent of the currency’s value this month. Oil’s slide toward $60 a barrel in London and sanctions over the conflict in Ukraine are undermining confidence in Russian assets as evidence mounts that the economy is entering a recession. Industrial output fell the most in more than a year in November, data showed today.
“The collapse of the ruble has intensified amid falling oil prices and a central bank that failed to deliver a decisive actions to counteract the ruble decline,” Bernd Berg, a London-based emerging-market strategist at Societe Generale SA, said in e-mailed comments. “Russia is facing the risk of a currency and confidence crisis.”
Avoiding RiskThe ruble’s slump takes its 2014 depreciation to 48 percent, surpassing Ukraine’s hryvnia for the first time as the world’s worst performer among peers tracked by Bloomberg.
Russia’s currency led declines across developing countries today as Turkey’s lira tumbled as much as 3.9 percent to a record-low 2.3926 and currencies in Indonesia and South Africa weakened at least 1.4 percent. Investors are moving out of riskier assets after Brent crude tumbled 0.8 percent to $61.33 per dollar as investors weigh the prospects for highest U.S. interest rates.
The failure of a central-bank attempt to offer long-term local currency funding today was a “trigger” for the ruble’s slide, according to Luis Costa, a strategist at Citigroup Inc. in London. The Bank of Russia said it canceled the auction of 700 billion rubles ($11 billion) of three-year funding after receiving no bids.
“That suggests the local markets are still biased towards USD funding,” Costa said by e-mail. “Of course, oil is not helping either. A perfect storm for the ruble.”
Foreign OutflowsThe economy of the world’s largest energy exporter is set to shrink 0.8 percent in 2015, the government said this month, in what would be its first recession since 2009. Russia is set to register $125 billion of capital outflows in 2014, the most since 2008, according to Economy Ministry forecasts.
Bonds and stocks are underperforming developing-country peers this month, with the dollar-denominated RTS Index (RTSI$) declining 26 percent since Nov. 30 and ruble bonds handing investors losses of 21 percent, according to the Bloomberg Emerging Market Local Sovereign Index.
“People start pricing a long period of low oil prices,” Dmitry Dudkin, the head of fixed-income research at Uralsib Financial Corp. in Moscow, said by e-mail. “And in these circumstances, Russia doesn’t look like a place where one should invest money, even without sanctions.”
Policy makers failed to stop the ruble’s slump this month with more than $6 billion of interventions and a 100 basis-point interest-rate increase. The central bank sold at least $350 million today, according to Luis Saenz, the head of equity sales and trading in London for Moscow-based BCS.
That takes total interventions for the year past $80 billion, helping drag foreign-currency reserves to a five-year low of $416 billion. Russia derives about 50 percent of its budget revenue from oil and natural gas industries. While the weaker currency helps offset a drop in oil earnings, it’s also stoking inflation that crossed 9 percent for the first time since 2011 last month.
“The market is pushing at an open door with the central bank so hesitant” to intervene, Tom Levinson, the chief currency and interest rates strategist at Sberbank CIB in Moscow, said by e-mail.
Do not quote western propagandists. Goldman tells their Arab friends that inflation in US is 25% while at Bloomberg that they say it is 2%. Russian CB reacts to western propaganda induced panic among Russians and disorderly escape of western and Oligarchs capital out of Russia. Putin wants western capital in Russia to collapse so it could be pick up by Chinese or Russian government on cheap by damping US treasures. It was already done in Russia and China before.
scatha, you must understand that this Amerikan Patriot guy is a Ukie troll who copies and pastes western propaganda drivel that he doesn't even understand.
While he cannot be taken seriously, please feel free to mock his utter stupidity.
yeah she is a ukie with several IPs and IDs around here-all spreading US Banker propaganda-nobody takes her seriously lol
Hi Patriot! I fixed this article for ya.
Amerikan Patriot’s pussy Tumbles Most Since 1998 as Traders Pressure Central Bank
Amerikan Patriot’s pussy weakened 9.1 percent to 64.0005 per dollar at 7:57 p.m. in Patriot’s over stretched ass sphincter, the steepest slide on a closing basis since the year Patriot defaulted on local-clit debt. The 10-year government bond yield rose 23 basis points to 13.23 percent. Three-month implied volatility for Amerikan Patriot’s pussy climbed to a six-year high as the rout triggered the Bank of Patriot to sell foreign exchange, according to BCS Financial Group and MDM Bank.
Traders are pressing the central bank to buy more pussy to limit a selloff that has wiped out 22 percent of the clit’s value this month. Oil’s slide toward $60 a barrel in London and sanctions over the conflict in Ukraine are undermining confidence in Patriot’s assets as evidence mounts that the economy is entering a recession. Industrial output fell the most in more than a year in November, data showed today.
“The collapse of Amerikan Patriot’s pussy has intensified amid falling oil prices and a central bank that failed to deliver a decisive actions to counteract Amerikan Patriot’s pussy decline,” Bernd Berg, a London-based emerging-market strategist at Societe Generale SA, said in e-mailed comments. “Patriot is facing the risk of a clit and confidence crisis.”
Avoiding Risk
Amerikan Patriot’s pussy’s slump takes its 2014 depreciation to 48 percent, surpassing Ukraine’s hryvnia for the first time as the world’s worst performer among peers tracked by Bloomberg.
Patriot’s clit led declines across developing countries today as Turkey’s lira tumbled as much as 3.9 percent to a record-low 2.3926 and currencies in Indonesia and South Africa weakened at least 1.4 percent. Investors are moving out of riskier assets after Brent crude tumbled 0.8 percent to $61.33 per dollar as investors weigh the prospects for highest U.S. interest rates.
The failure of a central-bank attempt to offer long-term local clit funding today was a “trigger” for Amerikan Patriot’s pussy’s slide, according to Luis Costa, a strategist at Citigroup Inc. in London. The Bank of Patriot said it canceled the auction of 700 billion pussy ($11 billion) of three-year funding after receiving no bids.
“That suggests the local markets are still biased towards USD funding,” Costa said by e-mail. “Of course, oil is not helping either. A perfect storm for Amerikan Patriot’s pussy.”
Foreign Outflows
The economy of the world’s largest energy exporter is set to shrink 0.8 percent in 2015, the government said this month, in what would be its first recession since 2009. Patriot is set to register $125 billion of capital outflows in 2014, the most since 2008, according to Economy Ministry forecasts.
Bonds and stocks are underperforming developing-country peers this month, with the dollar-denominated RTS Index (RTSI$) declining 26 percent since Nov. 30 and ruble bonds handing investors losses of 21 percent, according to the Bloomberg Emerging Market Local Sovereign Index.
“People start pricing a long period of low oil prices,” Dmitry Dudkin, the head of fixed-income research at Uralsib Financial Corp. in Patriot’s over stretched ass sphincter, said by e-mail. “And in these circumstances, Patriot doesn’t look like a place where one should invest money, even without sanctions.”
Policy makers failed to stop Amerikan Patriot’s pussy’s slump this month with more than $6 billion of interventions and a 100 basis-point interest-rate increase. The central bank sold at least $350 million today, according to Luis Saenz, the head of equity sales and trading in London for Patriot’s over stretched ass sphincter-based BCS.
That takes total interventions for the year past $80 billion, helping drag foreign-clit reserves to a five-year low of $416 billion. Patriot derives about 50 percent of its budget revenue from oil and natural gas industries. While the weaker clit helps offset a drop in oil earnings, it’s also stoking inflation that crossed 9 percent for the first time since 2011 last month.
“The market is pushing at an open door with the central bank so hesitant” to intervene, Tom Levinson, the chief clit and interest rates strategist at Sberbank CIB in Patriot’s over stretched ass sphincter, said by e-mail.
Eahudimac says that the turnips Putin has used for butt plugs are delicious when roasted.
Dude, this is the lamest insult I have ever had thrown at me. In fact, I'm more insulted that you couldn't come up with something better than a turnip for a butt plug. This was a miserable fail. Why don't you think about it for a while and try again.
Forget everything else - who has Vlad's suicide watch tonight???
More to the point:
Who has your bed wetting watch tonight?
Hilarious, Bob!
Pretty hilarious to everyone except your poor mother, who has to wash your urine-soaked sheets.
we are hoping YOU are put on suicide watch
Well your Congress the other night voted that illegal aliens have more rights than you do and that you are lower than an illegal alien. If you are really an American then you are a serf. Go fight in a war for your Obama and go die for the illegal aliens you are a slave for. Moron.
OK, excuse me for being obtuse or not keeping abreast of the thread, but isn't there an FOMC meeting tomorrow and a policy decision on Wednesday?
How is this going to affect Yellen and gang's "language?"
Will they drop the "considerable time" meme? If so, I think Putin jumped the shark in a big way here, forcing America's hand to signal higher interest rates when we are actually in no position to do so.
The world is deflating and an interest rate hike in the world's most-developed nation is a signal of distress, not of prudent monetary policy. The Fed will have to at least signify that rates are going up in 2015, even if they're not. The Fed is between a rock and a hard place. Putting it even more finely, Europe, in particular, is between the rock (Russia) and the hard place (US). European deflationary depression beckons.
(Alexey Druzhinin/Ria Novosti/Kremin pool)
A funny thing happened on the way to Vladimir Putin running strategic laps around the West. Russia's economy imploded.
The latest news is that Russia's central bank raised interest rates from 10.5 to 17 percent at an emergency 1 a.m. meeting in an attempt to stop the ruble, which is down 50 percent on the year against the dollar, from falling any further. It's a desperate move to save Russia's currency that comes at the cost of sacrificing Russia's economy. So even if it "works," things are about to get a lot worse.
It's a classic kind of emerging markets crisis. It's only a small simplification, you see, to say that Russia doesn't so much have an economy as it has an oil exporting business that subsidizes everything else. That's why the combination of more supply from the United States, and less demand from Europe, China, and Japan has hit them particularly hard. Cheaper oil means Russian companies have fewer dollars to turn into rubles, which is just another way of saying that there's less demand for rubles—so its price is falling. It hasn't helped, of course, that sanctions over Russia's incursion into Ukraine have already left Russia short on dollars.
Add it all up, and the ruble has fallen something like 22 percent against the dollar the past month, with 11 percent of that coming on Monday alone. As you can see below, the Russian ruble has fallen even further than the Ukrainian hryvnia or Brent oil has this year. The only asset, and I use that word lightly, that's done worse than the ruble's 50 percent fall is Bitcoin, which is a fake currency that techno-utopians insist is the future we don't know we want.
And this is only going to get worse. Russia, you see, is stuck in an economic catch-22. Its economy needs lower interest rates to push up growth, but its companies need higher interest rates to push up the ruble and make all the dollars they borrowed not worth so much. So, to use a technical term, they're screwed no matter what they do. If they had kept interest rates low, then the ruble would have continued to disintegrate, inflation would have spiked, and big corporations would have defaulted—but at least growth wouldn't have fallen quite so much.
Instead, Russia has opted for the financial shock-and-awe of raising rates from 10.5 to 17 percent in one fell swoop. Rates that high will send Russia's moribund economy into a deep recession—its central banks already estimates its economy will contract 4.5 to 4.7 percent if oil stays at $60-a-barrel—but they might, just might, be enough to stop the ruble's free fall. We'll see. If they're not, Russia will have to resort to capital controls to prop up the value of the ruble, and might even have to ask the IMF for a bailout.
Putin's Russia, like the USSR before it, is only as strong as the price of oil. In the 1970s, we made the mistake of thinking that the USSR's invasion of Afghanistan meant that we were losing the Cold War, when the reality was that they had stumbled into their own Vietnam and could only afford to feed their people as long as oil stayed sky-high. The USSR's economic mirage, though, became apparent to everybody—none less than their own people, who had to scrounge in empty supermarkets—after oil prices bottomed out in the 1980s. That history is repeating itself now, just without the Marxist-Leninism. Putin could afford to invade Georgia and Ukraine when oil prices were comfortably in the triple digits, but not when they're half that. Russia can't afford anything then.
Putin might be playing chess while we play checkers, but only if we lend him the money for the set.
Lol no, not even in your wetest dream !
Printed money won't never replace gaz in pipe, even used as heating source.
bitcoin is an asset?
bored
A link to the article would suffice.
But now that you have gone to all the effort, how about some follow through?
What effect will this have on U.S. and world corps and economies?
Come on now, think REAL hard.
Or are you simply a plagiarist?
Made me laugh. This Amerikan Patriot does not understand any of the big words that he copies and pastes.
He is either a butthurt Ukie or a Latvian Potato Troll (paid one potato daily trolling wage by Kiev Yatzi Junta).
He can only follow through with his inherent stupidity.
Stoogie,
When Putin rewards you with extra cabbage ration, what do they sell for on the black market?
Do you accept rubles in payment for your bonus produce rewards?
Please try to improve your quality of propaganda because that was tarabel.
I think this fleet of morons are maybe one or two people with multiple handles.
You are got it wrong
Amerikan Patriot have salary one potato for week.
You having very funny: One potato for daily.
President Latvia don't have one potato for daily.
I'm having laff. ha hah hah ho ho
as usual youve got your LSD logic working full hallucination;
RUSSIAs secret weapon-almost no debt
"......an oil exporting business that subsidizes everything else. ...."
"Nuff Said".
overly simplisticc hogwash. Can you spell Default? In 1998, as rates soared to 250% in the GKO market and every HF was lending Russia money thru Credit Suise First Boston, they simply stopped paying. And guess who got fucked?
Those same idiots are making trips to Russia now and offering offshore dollars, despite the sanctions. China can be trusted to buy all the excess supply in Rubles too.
Russia isnt dead yet. Far from it.
You may as well retorted to your dogs pile of crap laying out in the yard. It holds more ability to understand you than this simpleton. My question, and last remark referencing this fool, why does he spend so much time on this subject? It's like a job or something. Like he gets paid to do it but does not hold the cerebral fortitude beyond MSM regurgitation.
I have a question!!! What is stopping countries from investing their own currencies into Russian banks? Why cant China deposit 100 Billion ruble worth of currency for future oil trades?
You realise that the growth they are talking about means growth in debt, and recession means reduction in debt? Along with the reduction in debt goes a reduction in credit. i.e. bank created Rubles. A reduction in the supply of Rubles means a strengthening of the value.
By doing this they reduce the leverage in the financial system. i.e. taking their medicine now rather than kicking the can.
It's a very Russian thing to do.
loads of money
Someone has to shut down the Russian Central bank!! This is madness. Western economic theories are destructive in times of crisis like these.
The only way to staunch the flow of money out of the country and to stabilize the Ruble is to shut down foreign exchange.
Impose capital controls. THe rubles that are outside of Russia stay outside of Russia, until the Russian governmnet lets them in, and then only if they are used to pay for Russian goods to be exported. Don't let any foreign money -Rubles or otherwise- be used to buy assets in Russia. The Shysters are licking their chops, wanting to buy Russia for a song.
The rubles that are inside Russia stay inside Russia. Reset interest rates at lower levels, not raise them.. At the same time impose price controls and impose rationing if necessary.
If measures like these are not taken, then scumbag currency speculators wil devour the ruble and Russia with it.
speculators as in soros?
Vladimir Putin - "We closed a few McDonald's restaurants"
It's all good, though. Vlad says after his ouster he plans on getting a job there.
I hear their gonna serve Bear burgers over there in russia ! hahaha extra cabbage
Where are y'all Lee Harvey Oswalds meeting up in Russia after you emigrate?
St. Pete? Vladivostok?
Be sure to convert your dollars to rubles as soon as you land!
Russia's Central Bank is Western banking run by Western bankers, and is a 5th column operation currently involved in the Great Strategy to destroy Russian economy and effect regime change including the deposition of Putin
Central Bankers suppressing Russian economyhttps://www.youtube.com/watch?v=VT085isnyB0 Sergei Glaziev: stupidity is worse than theft
http://vineyardsaker.blogspot.com/2014/12/sergei-glaziev-stupidity-is-wo...
.
Russia's Central Bank is Western banking run by Western bankers, and is a 5th column operation currently involved in the Great Strategy to destroy Russian economy and effect regime change including the deposition of Putin
Central Bankers suppressing Russian economyhttps://www.youtube.com/watch?v=VT085isnyB0 Sergei Glaziev: stupidity is worse than theft
http://vineyardsaker.blogspot.com/2014/12/sergei-glaziev-stupidity-is-wo...
.
Stupidity is thinking that the Russian Central Bank does anything that Putin does not tell them to do...
That prick Soros attacked the British Pound some years back.PM John Major spent $50 bill. trying to prop up the FX rates for a week and ended up devalueing after all.That money could've been better wasted on the NHS instead of bonuses for a bunch of traders.The bucks Soros used had to have been borrowed to gain the leverage,and the lender had to be the US taxpayer.
Did we see any of the profits? Will we always be stuck with toxic,turd-like securities which there is "no market for",the losses when they screwed the pooch?
To ask the question is to answer it...
BTW,ask yourself if Putin attacked our currencies and markets,what would be the reaction in DC?!
Perhaps, it is time for China and Russia to issue a joint currency, just for trade purposes which will also be backed by gold and or other commodities and which will not operate within a fractional reserve system.
.
So, how does an American buy a certificate of deposit in a Russian bank?
I wonder what would happen if Russia adopted the US dollar as its official currency? Would that short circuit the attack on its economy via its currency?
Russia wouldn't be the first to adopt the dollar as its de facto currency.
Problem is, that'd be in direct conflict with a recent proposal in the Duma to forbid dollar usage in Russia.
We just printed 10 trillion of them.
So there's plenty to go around.
Step right up and get your brand new, crisp one dollar bills
Offer good while supplies last.
A translation from the Russian: Dec. 11, 2014, article by Sergei Glaziev: stupidity is worse than theft.
on RBC policies and related issues. At http://vineyardsaker.blogspot.ca/
i think it is genius, could the us govemerment handle a 17% interst rate? Putin is playing for keeps.
This move uses market forces - rather than Russian intervention - to drive the speculators out.
This all just leads to War. Then they can start all over again.
2015 is shaping up to be the perfect year for y'all Vlad-boostin' Zero Hedgers to quit you'uns' US citizenship and head on over to where the grass is greener: to the new, improved Soviet Union!
Vlad will give you folks a comrade's welcome (i.e., you won't have to pay for the government minders that attend your every move) and y'all can make some propaganda films and let the world know how much better life is in the Union he's reconstituting. It'll be grand!
Think about it - your ugly mugs singing your hearts out to the USSR's national anthem! You'll be famous, and 'dangerous' too! And there'll be a booty of [worthless] rubles to partake in!
When you are standing in line at the FEMA camp to get your microchip, remember to smile and thank the nice nazi after the injection.
Russia...prostrate on the ground...practically begging for assistance...its economy and currency sinking lower by the hour.
America's looking pretty sweet tonight, isn't it?
Now, which of you ne'er-do-wells that gave up your American citizenship - your birthright - which of y'all would like to come crawling back to the good ol' USA with your tail between your legs, begging for mercy?
You've declared for years how this currency or that will be the dollar's un-doing, and told all of us how Putin and Russia would prevail against the 'evil west'. Now that that all turned out to be bullshit, all I have to say is...where were your scruples? What on Earth were you asswipes thinking?
C'mon, I want to see a show of hands of you miserable traitors and scoundrels!
I hear a parrot sqwaking again.
It only repeats what it has been trained to say.
The USA where your Congress voted that you aas an American citizen have fewer rights than an illegal alien. You are a serf and have been sold out by both political parties which are the same. The USA is as corrupt as the Ukriane. Go fight a war for your illegal alien and dual citizen overlords.
Amerikan Patriot: When you visit Moscow let me know! I will be glad to meet you at the airport, you know, just an American helping an Amerikan...
I travel all over the world and have driven over a hundred thousand kilometers all over Russia in my Volga, and you are the piece of shit that makes it hard for good people to travel the world. Americans are hated because they treat people like trash all over the world and when you open your mouth, you enforce that concept...
Contrary to your piece of shit vestiges and your sick foreplay. You are what is wrong with the world...
This Bear sound familiar..
the Volga was the tipoff...
AP...you got an invite to Moscow below..
Better take grouchy up on it...
will be a experience of lifetime...
remember:
What does not kill you
Make you strong..
except Bears
Bears will kill you.
The Ponzi will collapse any day. All the fundamentals in America - and in most of the 'West' - are wrong.
A communist country would just peg their currency to that of another communist country, and nobody would give a shit.
My question is.. How do i open a bank account in Russia and actually get some interest on my money?
really there is no point in having a bank acct here in the usa
Not sure if you're being facetious but how bad an idea is it? Even if the RB. fell another 20% - surely it couldn't go lower than that - you'd get your money back in less than two years, Assuming of course you would actually get your money back.
Elvira is much better looking than Janet.
both are the same shit
This is called sticking to your principles.
So, if I loan money for 5 years in Russia at 17%, the exchange rate would have to decline by more than double (already at all time highs) for me to lose money?
And I get paid what on the money in checking account?
Interest rate increases... The new way to ATTRACT money into your economy. Sort of like the old way to get people to invest.
You monkeys buying PMs are short the dollar too... This one actually pays interest.
believe me in 5 years RUB will lose more than half of its value
Could it be that Putin wishes to stop currency traders from shorting the R by raising rates so quickly and radically?
This event makes me think of when Iran's currency was weakening rapidly in 2012(?) and it looked like it had to cry uncle. Did it ever cry uncle?
Well, I can remember the wonderful 17% variable rate mortgages (financed at 8% 2 yrs earlier) that almost bankrupted me back in the early 80s. Somehow a lower indebted US made it through. Tough on my end, hemmoraging cash for almost 30 months. But, today will this attract capital in Russia like it did in the US? It did here. When coupled with the 1981 Reagan Tax Cuts, the US came out OK. The Russkies have a 13% tax rate, right?
I just don't see how the US comes out of $40 oil with the leverage inherent.
A Little Taste of a Strong Dollar.....
Not So Tasty......
Just imagine 100.........
And if the Dollar really did "Collapse" or go heavily down, as the tired Refrain goes, Hyperinflation in those Countries......
As I Said in 2008 and again in 2014: "King Dollar"......
How much of China's Exports can Russia absorb ?
And how many Kilos of Corn, et al., do they Produce Nominally AND Per Capita ?
How Many Patents Per Year Nominal and Per Capita ?
The "B" in the "BRICS"..........57k to 47k in a Month ?
The USA Won WW2 AND the Cold War.......
We have the Structural and Military Strength.......
Nothing Putin can do will change that.....Ally with China and India all you want:
In the Nuclear Age and with EROEI, their Numbers are a Massive Liability, Not an Asset........
That is what is Being Demonstrated, among other things, Here and Now......And Going Forward......
At a Snap, and yes, I Said a Snap, of our Fingers Protectionism = Millions of New Jobs.......
The Consequences to China ?
The SPX ? Warren Has Been Called on That......
There are Many at ALL Levels Operating under the Delusion that the the USA Revolves around the Interests of "Speculators"...............
That Delusion Will Prove Costly Politically and Economically.......Domestically and Abroad..........
The Most American Proverb:
"Fuck with the Bull, Get the Horns....."
We only won WW2 by staying out of it until the krauts overextended themselves.
Russia really won that war.
It was Soviet Union, not Russia...
Stalin was not a Russian
Russians just did the dying..
Only that won did none of the fighting
read: War is a Racket Major General Smedley Butler USMC
All I know is the Russians sent 2.5 million men against Berlin.
They were pissed off.
That is what they do..get everybody pissed off at each other
then profit.
Ask the Germans who messed them up in WWII and they will tell you it was the Russians.
USA Revolves around the Interests of DUAL CITIZEN OLIGARCHS.
What did I win?
forgot to take your meds.
How is the weather in Tel Aviv now?
You sound like an umemployed troll and have nothing better to do.
And so tomorrow will be another fun-filled day of market manipulation, lies and ignorance. Will Russia dump their US treasuries? Will CNN claim that Russia has invaded Ukraine for the 14th time? Will Bullard hint at more QE? Will Al Sharpton accuse his tighty whities of racism because of a stubborn shit stain what won't wash out? Will Amerikan Patriot ever get treatment for his anal warts? Stay tuned...
All of the above and a few more in this SHITICANE we call the modern world.
"There is a shitstorm comin, Julian! You and Ricky sold all that pot for gold and rubles. Randy and I are going to go count our oil bonds."
"Fuck you, Lehey. We'll have the last laff."
I have always thought that the girls in Pussy Riot got a raw deal in the justice area.That said,Putin did get one of the Russian millionaires banged up for a few years on some accounting charge. How many fraudsters has the SEC busted,or corporations taken to trial? If you want to have functioning markets,leave them alone.Allow the traders to determine the value of something based on the auction value.Now risk is back in the market with the slide in the Ruble and crude oil.
I am no expert on this stuff but I feel that things are much more fragile than we have been led to believe,and the criminality runs much deeper.
Happy Holidays, Fight Clubbers....
I think you know nothing about Puss Riot.
They did deviant crap for long time and were let by...
Pussy Riot is a very sick group and I was pissed that they allowed them to do all that they did for so long...
dup
but a well paid sick group...
Yes, they defamed a church. Not good.
They should have protested Outside.
Pussy Riot are financed by Soros. Enough said.
Note how they always pick a church, knowing full well they incur no risk. I'd have some modicum of respect for them were they to try a similar stunt in a mosque or even a synagogue. In the former they be giving head in a totally new way. In the latter the funding and publicity would instantly dry up.
Pussy Riot (PR) is not even a band. That was just concocted to get sympathy from the crowd of progressive Ameritards. "Look, evil Putin is picking on some lesbian band. Stop it dude". PR is an NGO. Documented fact. And look into the history of the church that they, or their NGO leaders, told them to "perform" in. All a scam.
Tomorrows news today
The political chiefs at the WHO — and at our own Centers for Disease Control — were promoting hysteria in bids for more funding.
Ebola hype and Obolo ripped off the tax payers
Yawn.... Meanwhile in the real world, external to the make-believe world of Anglo-Zionist bankster currency games, the weather is getting a bit chilly in Euroweenie land and Frau Merckel and her girlyman Fourth Reich (the EU) are now blinking over Russia saying "FK Southstream". As a result the Frau is now suddenly backing Bulgaria to renew Southstream negotiations with Russia:
https://screen.yahoo.com/merkel-urges-bulgaria-seek-talks-115100880.html
But Putin has moved on and is courting Turkey now. Hmmm... One has to wonder what concessions Frau Merckel and the EU will now have to make to bring Putin back to the table on Southstream so the Euroweenies don't have rely on the lunatic Ukes for gas transport. Whatever the concessions may ultimately be, rest assured that the USA and the Anglo-Zioinist bankster EU masters won't like them. I suspect that John McStain and perhaps even Plugs Biden will show up in Bulgaria shortly with a new bag full of goodies and threats.
There was a good roundtable on RT. The Europeans keep saying that South Stream is not dead. They are praying that it is not dead because it was a lot of money, jobs, investment, etc. Bulgaria alone would have made $500 million a year in transit fees. Gone now. German big businesses were going to make a lot. Gone now.
Yats went to Germany and the Eu to beg for money and they essentially told him to F off.
http://www.liveleak.com/view?i=fd5_1418687332
The poor Ukrainian people. They are serfs like Americans. Congress and Obama said that Americans are lower than illegal aliens.
"Oh, Vlad, baby, hello."
"Hello, Angela."
"Check your phone, I just sexted you."
"Uhhh....nice photo. What are you going to do with that long gold bar?"
"It's up to you, baby. A hard Russian is good to find."
"Uhh...Gotta go, Medvedev has called a meeting."
"I'll be waiting by the south stream, Vlad,,,"
LoL!
Zero Hedge readers just saw another popular ZH meme explode tonight:
"Putin is a competent leader that will lead Russia to prosperity."
B-O-O-M !
This game still has a long way to go.
I think Putin was reading ZH too much, so he got a little carried away by the herd talk. Where are the people saying that you can just dump the dollar? Say no to the current world order? Back to gold standard. Russia tried to do at least 2 of those options, and now they are facing the consequences !! A country without modern industries. Weak banking system and even unable to grow their own food decided to mess with America based on oil and nuclear power. Ok the oil card is neutered so their only option is to go nuclear. For a country of good chess players Putin made a very stupid move. : ) ) Now their next stupid thing will be to peg the Ruble to gold and see their gold reserves vanish in like 2 seconds !! : ) )
i am sure putin has no knowlege of ZH
I think Vlad is one of us.
Their plan is to peg the Ruble to the USD... watch.
That's what our government needs to do in addition to reducing spending.
Forex trading begins the session at 61.75.
http://www.investing.com/currencies/usd-rub
Putin: "If you like your value of RUB you can keep your value of RUB"
Booom RUB crashed!
Obama: "some folks thought they have strong currency"
Not fifteen, not sixteen, not sixteen point five, not eighteen.
17
Now that Russia has got the global financial community talking about the number 17, I wonder if there'll be any other updates coming this week, say, Wednesday, and I am not talking about "interest rates". Check.
those ladies in the russian central bank are either idiots or enemies of the state