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Back To Basic Fundamentals - The Dollar Versus The Ruble
Submitted by Simon Black via Sovereign Man blog,
Last night, the Russian central bank announced a shock decision to hike up its key interest rate from 10.5% to 17%, effective immediately. Incredible.
On Monday alone the ruble declined more than 9% against the dollar, and almost 50% in 2014. It looks like a massacre.
If you listen to conventional financial news, they’ll all tell you that you’d have to be insane to own anything in Russia right now—stocks, bonds, currency, etc.
They’ll tell you that the ruble is in freefall, and that the dollar is the place to be.
But if you have been a reader of this column for any length of time, you know that I am a very data-driven person.
So… just for kicks, I decided to dive into the numbers and make an objective comparison between the US dollar and the Russian ruble.
The results might surprise you.
First of all, I start off with the premise that ALL paper currencies are fundamentally flawed.
Our global monetary system is absurd—the idea of letting unelected central bankers conjure as much money as they want to out of thin air is simply insane.
But it is true that some fiat currencies have better fundamentals than others. And if you want to understand the health of a currency, it’s imperative to look at the ISSUER of that currency, i.e. the central bank.
As with any bank, one of the most important metrics in determining a central bank’s financial health is its level of solvency.
Specifically we look at the bank’s capital (i.e. net assets) as a percentage of its total balance sheet.
The US Federal Reserve only has a basic capital ratio of 1.26%. Talk about razor thin. (This is down from 4.5% just a few years ago)
That means if the value of the Fed’s assets declines by only 1.26%, the issuer of the world’s dominant reserve currency becomes insolvent.
Now, what happens to the liabilities of an insolvent entity? They decrease in value. Just like how Greek bonds (the liabilities of the Greek government) collapsed a few years ago.
What are the Fed’s liabilities? Open your wallet. Those green pieces of paper aren’t ‘dollars’. Just look. They have “Federal Reserve Note” (i.e. debt) printed on them.
So the Fed’s pitiful financial condition directly affects the value of the dollar over the long-term.
On the other hand, the Russian central bank’s ratio is 12.5%—literally almost TEN TIMES GREATER than the Fed.
Capital cushion is crucial because when the unsuspected happens, this is what can help keep you afloat.
Think about it: you might be able to keep going without savings, perhaps even accumulating debt, but only until something happens out of the blue.
Until your car breaks down, or you need to go to the hospital, for example. Then all of a sudden, your lack of capital can become a serious issue.
Another important metric is gold. As I mentioned, since all fiat currencies are fundamentally flawed, it’s important to see the amount of REAL ASSETS that a central bank holds in reserve.
To make an apples-to-apples comparison, we look at a central bank’s GOLD reserves as a percentage of the money supply, i.e. how much gold backs the money supply.
In Russia, it’s 6.2%. And rising. Last year it was 5.5%, and the central bank is continuing to heavily stockpile more.
How much gold backs the dollar?
Precisely zero point zero percent. Zilch. Nada.
The Fed doesn’t own gold. It loudly proclaims this on its own website: “The Federal Reserve does not own gold.”
It holds ‘certificates’ which are redeemable for US dollars. But there’s not a single ounce of gold backing the US dollar.
So… with no gold and pitifully razor thin solvency levels, it really wouldn’t take much of a shock to topple the dollar.
By comparison, the ruble is much better capitalized and actually has something backing it.
Now, I’m not necessarily advocating to buy the ruble, but hard, publicly available numbers clearly demonstrate the discrepancy between “sentiment” and objective data.
And at a time when the ruble and the whole Russian economy have been beaten down so much that Apple alone is now worth more than the whole Russian stock market, Russian assets certainly make for an interesting speculation.
The bottom line, however, is—if you wouldn’t own the ruble, then what are you doing holding 100% of your assets in the dollar?
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needs a chart
Those with the biggest guns wins. Has always been that way.
Oil is being used as a weapon to kill Russia. Once Putin is economically castrated, don't be surprised if it spikes back up.
http://www.planbeconomics.com/2014/12/are-resource-stocks-obvious-trade....
There's no doubt in my mind that this was to destroy russia. The good ol usa traded in their shale companies to saudi to smash the fuck out of russia. This will not last forever and riches will be made on the way back up with oil. I might buy a ton of UCO leap calls after russia taps out. Going long an idividual oil company is risky because it could go BK or to zero, whereas UCO basically just moves with oil. SCO, the short oil etf, has gone from 22 to 77 during this oil collapse. UCO is near 11 right now and might end up going to $5-10. I'd like to ride that up when russia taps out. Why is russia just standing by and doing nothing? They know damn well these disgusting fucks who run the us are 100% behind this. How about send some missiles and bomb dc? I think 99% of america would probably go out and buy a russia/putin tshirt. I know I would.
Regardless of which side you are on, regardless of what you think of the family, Rule of Rothschild 101 is 'buy when there is blood running in the streets'. Do you see any bargains in OECD equities now? The only question is will the blood get deeper. With an overnight jack of rates to levels the fed used to dead stop inflation in the late 70's, I think we may be close enough to start averaging in.
It appears as if the writer is looking at the wrong fundamentals.
Feel free to grace us with your own analysis and you know, actually provide a counterpoint, using the "right" fundamentals.
Incorrect... Rule of rothschild is create the blood in the streets with other peoples kids and your ursury extraction earned on both sides... then play the trade you created to ensure utter ownership of industry.
...
buy energy sector bonds with profits from RUble shorts to plug the hole from credit abilities?
http://hedgeaccordingly.com/2014/12/golub-capitals-daniel-posner-perfect...
"needs a chart"
Preferably a chart with all other major currencies. It would be interesting to see the same stats on all of them...
So the whole meme of "generate inflation watch your market soar" is not even brought up here.
Who cares about the ruble again?
And the answer of course is "because they're very sound financially" (400 billion in reserves!!!!) I do agree this is a total WTF moment.
Welcome to econ PhD poopie pie!
This stuff is the real deal and pretty much involves nothing BUT intangibles (networking, communication, algo's, quote stuffing, spoofing, the media, decision trees, game theory, Deal Book, Quant's, pyramid schemes, captured regulators, captured "mindware", another hundred other things) none of which involves a SINGLE material item. In short once we're done just scratching the surface of perception of reality we still haven't pulled the trigger on a single trade!
Now we're gonna pull the trigger on 50,000 of them in 8 miliseconds!
I understand and agree with the totality of the gold meme..." But the T-2000 is superior in every way!"
There is no simpler way to explain the total dominance of the dollar than the saying "buy on the rumor, sell on the fact."
This is when the IDEA of something good "gets into the system" thus maniacly getting the bid pushed up and the price moved higher only to see...hold your breathe folks!...THE RUMOR IS TRUE AND THE STOCK GETS CLOBBERED!
So here's the skinny in my view: bid up equities to nosebleed levels on the rumor of recovery...get actual good recovery news (which indeed the USA has had) "and then start selling."
Obviously this is a vast oversimplification....and yet with the use of all this tech the whole markets seems driven by cock and balls more than ever. "Ripe for manipulation.". The actual " data" speaks to this quite well. The worst trade ever until the past few weeks has been to short the vapoware.
But once you have a real recovery folks start talking real money. And while it sounds back asswards to save "the cheaper something new becomes the more it is held dear" (disinflation) this really does square with the facts. The "moral hazard" of bailouts suddenly morphs into a battle over real copper pennies.
In short "as prices fall middling classes actually see the chance for advancement.". This is a powerful inducement for " labors" as suddenly new and better lifestyles are "in play."
War in Crimea? I just don't get it....
T-2000?
I prefer the P90.
I must need more coffee. I got none of that
dollar is backed by US military
Useless against Russia
Not useless if Russia collapses.
If Russia were to collapse in these times the US would be on the receiving end of a few thousand ballistic missiles. If there were any sane politicians left in Washington then they would realize that the US has recently sown such an outcome.
Long term this can only end badly for the US.
Unfortunately the best case scenario for the US entails acceptance of no longer a unipolar world; and the hubris in Washington is just too much to allow for such a favourable result for the American people.
a lovely imagination but you make no sense. a russian collapse means the end of their government not the end of their people. it means, perhaps, a default, nothing more. the people of russia, as always, will suck it up and grind their way through this, as they have always done. washington has actually done a fantastic job demonstating the concept of the alpha male. and i, as a citizen of the u.s. would much prefer this outcome than being overrun by mother russia.
"a russian collapse means the end of their government"
I very much doubt after what has happened recently they will go out quietly.
Also, who is going to force them out?
Their people? I don't think so..Russians know who the enemy is.
A foreign government? Refer to my previous post.
Got nukes?
Seriously though, if the government fails and someone else takes over just to take the bailouts offered by the western banks this show is over.
Got nukes? ...show is over.
It it's over, they win. They use nuclear as food.
If not and Putin led .gov falls, "peace" comes to Ukraine, they win.
Meantime, they thrive on our fear, food for them.
Craps! i know.
" i, as a citizen of the u.s. would much prefer this outcome than being overrun by mother russia. "
Huh?
It's YOUR fucking govt that's fucking things up, not Russia's.
Your comment fits in quite nicely with the MSM's propaganda storyline here.
.
"They would be welcomed as liberators."
Yes, the military and since WWII has the following track record.
- A tie in Korea (60+ years later, still not resolved).
- Vietnam, a clear loss (and embarassment).
- The US took the balance of the 70's and 80's off but just couldn't leave well enough alone so by the early 1990's, they were back at it.
- And the last 20+ years, a cluster fuck in the Middle East leaving in its wake ISIS and a soon to be vaccum in Afganistan.
Beyond some small tactical victories (e.g., Grenada), not much of a track record I would really brag about.
I'm not saying the US Military isn't a significant force that must be contended with but the continued arguments about it's strenghts need to be evaluated in relation to actual results which are mixed at best.
Its not about winning the miltary battle, its about controlling resources. By that metric, the US has been stunningly successful thus far.
Can't disagree with you there. The US military controls LOTS of resources - tax dollar resources, that is. Stunningly successful.
Wait a minute...WE KICKED ASS IN PANAMA !!
fucking sad
I thought that the real return to "power" was defeating Grenada.
It is really about not having a military battle. Sadly, a lot of people don't see that. I think the Russian do and that is why we are not yet fighting.
Well American troops and Americans are lower than illegal aliens according to Congress. Congress and Obama do not listen to Americans. So why would anyone fight and die for a country when you are treated lower than piss?
The troops are treated like shit in joke wars where they get blown up for nothing. Their votes during elections are thrown in the garbage. Any benefits are cut and if they are lucky they might get a dog for their blown off legs.
The most disgusting thing is the meaningless "Support the Troops" bullshit. If you really supported the troops you would stand up to stop the midnless phony wars.
I agree that we need to stop these wars from occuring but you'll find little pity here in regards to our modern vets.
The troops are mercenaries that enter into a contractual agreement to fight for the oligarchy while being promised all sorts of goodies: super easy home loans, tax free sundries at any local base, and thousands in college money. Why should I care if they get anything from the beast? I worked my ass off to get the pittance of income I scrape in daily and a good portion of which pays for their spoils.
Admittedly, a lot of the poor bastards didn't know any better when they signed up and for those I have litterally wept, but on the other hand I have very little pity for the ones that went in with open eyes or even just with the lust to kill and earn a few bucks. If we're talking Vietnam vets...totally different, but the boy in uniform today made a choice.
I especially will not have some vet come to my house and tell me that because "freedom isn't free" he needed to run off and kill lots of brown people in some far off land for my rights.
Fuck that guy. I am a sovereign man. My rights ARE. They are not some gift presented from powers on earth and certainly not from some snotty brat what who wanted to go shoot people at the taxpayers expense.
When are they going to go after our domestic enemies as is required in their oath? If they start shooting bankers, the corrupt cops, and storm Mordor on the Potomac...well then we may have something, but I'm not holding my breath.
Let the red arrows come. I will wear them as a badge of honor.
That guy that had to run off and kill lots of brown people believed he was doing it to protect his and yours from more imminent attacks. Just like the financial system, defense is a lie that is still believed by a good number of people. Just today Fox was saying (I know, I was not the one to turn it on but I certainly let my disgust be known) something like 60-70% or more of Americans supported torturing people and thought the Dems were evil for exposing the evil that is the CIA and that the CIA is holier than a suicide bomber.
You know that scene from the Matrix were Morpheus teaches Neo that everyone is a potential enemy even though we are fighting to save them all? That much is our lives on the big screen.
It just so happened that NBC was on this evening (not my choice either) and I happened to overhear those stats of apporval for the use of torture.
51% Say the interrogation practices were acceptable.
45% Think they should be used in the future.
Seriously America. What the fuck? Have we fallen so far? I'm ashamed at what my beautiful country has come to represent. We've become a nation of cowards and for what?
I had a vet as a roommate that signed up the week after Sept. 11th back in 2001. My opinions on the military "service," economics, and politics are largely based on the long drinking conversations we had in that crappy little apartment in Virginia.
He went to Afghanistan, saw his buddies get blown up, protected poppy fields, witnessed some terrible deaths of civilians, and pretty quickly gathered that they were doing absolutely nothing in the way of protecting his family or even improving the lives of the locals.
As soon as he could, he got the hell out and never looked back.
My heart went out to the poor guy...really fucked with his whole perspective on the world and turned him into a sad broken dude. I picked him up from the bar quite a few nights and once I'd chaffuered him home he'd cling to my arm like a lost child as walked him to the couch so he could pass out. I had my eyes opened by him more than any one person and still to this day I owe him for imparting all that knowledge.
Everyday I see things and my eyes bug out when I realize that we'd talked about it 4 years back only I'd thought he was at least partially crazy. He introduced me to ZH back then as well and I have been lurking until just recently.
If Americans knew that the soldiers raped and buttfucked children in front of their parents in order to extract confessions from their parents I do not believe that the Poll Numbers would reflect that support.
That is difficult to document but it can be done with extensive searches using Foreign Search Engines.
Americans do not know the details of the interrogation process...That is why the details of the Senate Report were withheld from the public.
Like this?
https://www.youtube.com/watch?v=m-dsiufhMu0
"The troops are treated like shit in joke wars where they get blown up for nothing."
It pains me to say it (since they're well-intentioned if ignorant human beings, and probably with families who love them), but... GOOD! I hope they keep treating them like sh*t, because...
What goes around, comes around. When the Cup is full, the Payback will be something to behold.
And only then might we see "Change we can believe in".
Feel free to point out when this has ever really been any different.
It's about TPTB using others to die for their rule. Always has been the case, always will be (as long as people continue to believe they need "leaders").
"The most disgusting thing is the meaningless "Support the Troops" bullshit. If you really supported the troops you would stand up to stop the midnless phony wars. "
Amen! (I spent years out of my life fighting against this BS, only to constantly run across Party Pussies and "proud mother/father of a <fill in the fodder sector>", only to conclude that I have no desire to risk my life to save people such as this [I have no kids, so if they're stupid enough to sacrifice their gene pool then maybe it's the right thing.)
We kicked the crap out of Panama and Granada. USA USA USA!!!
We only win wars when it is profitable for our opponents to capitulate. If winning requires us to fight like the enemy fights, we lose. Osama said it twenty years ago stating that America lacked the political will to tolerate the losses and carnage winning requires. Besides, perpetual war is much more profitable for those serving our government.
Every war has its price. This price is always paid out of the pockets of ordinary people the United States.
But profit from any war, always get just the oligarchs USA.
Any war for the United States - is a way to collect money from ordinary people and give this money to the ownership of the US oligarchs.
And Cuba, don't forget Cuba. And the Phillipines.
The US military wins every engagement, but the military jerkoff lawyers, and douchebag politicians, and smelly protesting hippies back home consistently fuck things up by negotiating rules of engagement with enemies both foreign and domestic.
if we ever truly take the gloves off, look out.
The other side will take their gloves off as well.....the US will just be beaten quicker.
Won't be just Russia. Add China and Iran into the mix.
or cowbell.
Fuck it, I'm moving to Russia...
You should at least try before you buy....
Fifteen percent Russian income tax on your foreign pension - and no deductions.
Yes, but look at all the hotties on those Russian dating sites!
Its bait for your money..You must pay for 10 letters before you get actual contact info...
then find out the 50 letters you exchanged with 5 hotties might have been one guy...
there are some reputable sites, but Ladies all be so striking...
I could tell you which..
Siberian Ladies are best.
Hope your not religious. You can only be Jewish, Muslim, or Russian Orthodox. No one else allowed.
Not true. I know Protestant.
Just no TV evanglists cults
That being less than I have to pay now... You make a good argument for moving.
Yes. But what's the real tax rate here?
Not just income, but property, auto, mandatory health insurance, fees, permits, sales taxes, use taxes, 911 fees, etc.
I'd say it's upwards of 60% for most people that aren't ballers.
Those Central Bank reserves and the assets of the pension fund are quickly being drawn down to fund the operatons of Putin's business buddies. It is not about the soverign debt but the $$$denominated debt of the large enterprise.
The companies in too much debt will default. State (i.e. the Russian state) will take over. Some TBTF from west will end up with a shitload of worthless Russian paper. The American taxpayer will foot the bill, as usual. That's all...
Yes, and there is also 1998.
The Russian people are re-learning a very painful (but frequently taught) lesson: never save in rubles.
Russia collapses and defaults on $700 billion debt. US and EU central banks are already at ZIRP and powerless as the thinly capitalized European banking system collapses and we all go into a worldwide depression with Russia. USA USA USA!!!
We haven't even monitized the grand canyon yet. What are you talking about.
That's because we're still digging... you know, we have to get out of the hole before we sell it! Hang on, just a few more shovel-fulls and we should be...
Here is your America in Chicago where your dear Kenyan leader is from:
http://www.liveleak.com/view?i=0a9_1418597457
I'm sure American P hates ubammy as much as the next guy. He just realizes that Pukin wants a power block word and those days are long over. Once Iran and Russia fold (and they will eventually) you will live in a world complete controlled by interlocking central banks = NWO. Sorry, China is part of the FED system all ready.
here it is translated from mrs. june clever
https://www.youtube.com/watch?v=fXSLcYQHqFQ
Imagine this brotha on Russian Vodka!
You and lakecity55 are in competition for who can work up the most froth on your Keyan homo friend... (oh, and I think that nweman is also in the running- seems to have disappeared from here during the last elections, hmm) Party Pussy stuff (as it's all about TPTB, not some clown on a string)
"The Russian people are re-learning a very painful (but frequently taught) lesson: never save in rubles."
Once again, Amerikan Parrot, perspective. PERSPECTIVE, Bubba. The true lesson is...
"The Russian people are the most recent example of re-learning a very painful (but frequently taught) lesson: never save in fiat currency."
Pre Commie Rubles were Gold and Silver
.
...as were pre-commie US dollars, too.
Fascinating. +1
How is it that the Yen has not collapsed in the manner of the Ruble?
Has Japan ever defaulted?
After they lost the war, cities and almost every man under the age of 40
Who is owned by WS Banksters?
The yen is just collapsing more slowly. Japanese lucked out and don't have any oil. Otherwise, they'd be speaking Chinese by now.
They haven't run out of zeros + they can still service the interest payments.
Fiat currency is not a store of value, just a medium of exchange.
"How is it that the Yen has not collapsed in the manner of the Ruble?"
Because Japan is on a much smaller island than Russia, and they don't have dirty ores, minerals, oil, gas or wheat fields and forests. All those things are worthless, because they require work. Lots of work. Dirty work.
By contrast, Japan has clean jobs and office jobs, that are valued far more in the Markets, don't ya know.
p.s. Also not to be underestimated is the physical agility of the Japanese, who can bow so low as to kiss American ass all the time, or fellate NY banker penis without having to go down on their knees. Thus Japan has MOAR... [cough] 'Liquidity' from NY bankers.
Because Japan has so many lemmings willing to put their life savings in bonds or do anything to save the country. If Abe tells them to lick their arses, they will.
Because Japan is ruled by Western bankers?
Because Japan is USA's bitch since 1947 (in reality since 1868 Meiji Era).
While Russia not so much.
The ruble has a vastly higher money velocity than the dollar. And that is why the ruble is crashing. It has nothing to do with gold or the central bank assets. All you really care about is the demand for the currency. If demand is rapidly fading then you better fade the currency too, because when velocity of the currency units goes ballistic there is no turning back. Ever.
Russia has defaulted in the last 20 years. Who wants to own that?
When is the next planeload of Lee Harvey Oswalds heading from JFK to Moscow?
I believe they have been here for decades....
They are already here and living under your bed.
Russia doesn't appear to be doing too badly relatively.
- a depreciating currency that is apparently stimulating demand at home.
- sure they're locked out of credit markets but Russia doesn't have much debt relatively.
- insulation from the decline in oil because of a crashing currency.
- a leader who is leading and a nation (mostly) unified behind him.
- gold reserves multiplying every year.
The United States on the other hand has:
- a strengthening currency which is killing US exports.
- a massive 18T debt with no plan to handle it and no politician with guts or balls to address the problem.
- a Federal Reserve caught between a rock and a hard place on interest rates... raise rates and the debt becomes unsustainable.. don't raise rates and crash the bond market.
- a major problem with oil sensitivity. The shale folks are toast and getting toastier.
- A leader who does not know how to lead and a nation deeply divisively divided over every major issue that makes a nation stable, prosperous, and great.
- unverifiable gold reserves and a fractional reserve banking system that sees gold as Kryptonite Anathema.
and, a big, bad orbital- based nuke system. soon them flyin' bears be in action.
Russia have orbital nuke also, they can do evasive maneuver (so more difficult to intercept in reentry), they have some of them on trucks (which can be deployed anywhere rapidly) in addition from ground silo and submarine...
Going nuke won't make a winner/loser outcome, but self-annihilation: I hope you neo-con are intelligent enough to understand that.
And one of these two has defaulted in the recent past. Those with real money know which of these two to trust.
Trust ?? are you insane. ALL govt's lie, steal and cheat. And they default if the pressure gets unbearable.
So - currently Russia is getting the squeeze from the bankers.... but since the govt has little debt (and enough foreign reserves to pay back in full), not a lot of pressure. Some pressure in the private sector... but that is not likely to cause a soverign default.
America .... ahh - total pressure on every front.
So which one is a bigger risk right now? See - it is not about 'trust', it is about risk assessment based on the balance sheet. You need to assume that all the counterparties are untrustworthy,
"ALL govt's lie, steal, and cheat." Time to end it all, dude. Government is eternal.
.
Well, if that's the way you feel, at least be decent about it and don't leave a bloody mess for your family to clean up. Maybe you and a rope just go for a long walk in the woods. Also, leave a note explaining where you can be found. No sense wasting the time and effort of others in an unnecessary search.
Both Russia and the USA have defaulted on their obligations within my lifetime.
The US closed the gold window in 1971, defaulting on all those who thought their dollars were redeemable in gold. Russia defaulted in 1998.
BTW, did you see what happened to oil prices after Russia's 1998 default? Here's a chart for you.
http://www.indexmundi.com/commodities/?commodity=petroleum-price-index&m...
This time the pain is going to be felt more than just in Russia.
Those things might be all true, but let's be honest and objective, shall we?
The real pain that Russia feels and will feel even more, is that...
- Their International mega-projects are in jeopardy.
- The other BRICS and EM friends are now nervous, if not downright terrified that they are next, if the US can bring Russia to heel economically like that, and Russia can't or won't truly defend their Allies (Libya, Iraq). Or even their Front Door in E. Ukraine, without getting apologetic and defensive about it.
By contrast, Genghis, Hitler or even fatso Breznev would have acted and asked if anyone else wants to have a Go at 'em. These guys have been... "gentrified" by comparison. Look, I like Russia's and Putin's measured responses, but that's the problem: They're RESPONSES, not initiatives. The US is acting, Russia is reacting. BIG fucking difference.
And I'm getting tired of the huffing and puffing of their "Air Defense". So far they haven't shot down a single fucking IDF or US plane over Syria. Until I see those planes falling out of the sky, I call Bullshit! I say "Potemkin Village", regarding the Russian Air Defenses. All flash, no bang. "I'm from Missouri. Show me!", as it were.
Unless and until Russia does something more substantial, I'd give the fight to the US (on points) -- so far in the title match.
Go Big, or Go Home!
Russia is being provoked by US involvement in coup in Ukraine. Russian border is 100 miles from Kiev they could be there in less then 2 hours on land 10 minutes with 100 thousand of airborne troops which can drop everything like 500 tanks and big guns and arrest ukrainian fascists/oligarchic regime anytime. The only problem Putin has is what to do next since it stinks of political entrapment. US just jumps in without thinking.
I agree, except:
"US just jumps in without thinking."
NOTHING is done by accident. Again, look around. By ALL accounts the US should be dead; yet, here we are, a printing press controlling the entire globe. Eventually, it all fails, as does everything.
The West is kicking Russia out of the bankers club. It's a dying club anyway. Russia, and any country that is smart about it, will look to take this opportunity to make a break from the printing-press fantasy that's headed over the cliff. It's really a matter of the Russian people understanding what's happening and to accept reality now rather than later when adjustment will be even tougher.
A lot of words. But little real meaning.
Why So Hyped up by currency exchange?
Economy is not about currency.
Russian economy is doing fine.
But I agree with you on the air defense. I have yet to see air defense in action. Though all I see is bombings daily and Syrians counting corpses
Wait just a minute here...
Are you trying to let facts get in the way of a good 2 Minutes Hate?
Damn you to Hell! /sarc
Please join me in congratulating Vladimir Vladimirovich Putin on his 15th consecutive Russian Man of the Year award!
The Sad Irony of Putin’s ‘Man of the Year’ Prize By Adam Taylor December 16 at 11:04 AMRussian President Vladimir Putin attends the inauguration of World Diamond Conference in New Delhi on Dec. 11. Indian Prime Minister Narendra Modi told Putin on Thursday that Russia will remain India's top defence supplier, even though New Delhi's options had improved since the end of the Cold War. (Ahmad Masood/Reuters)
On Tuesday, Russian President Vladimir Putin was named Russia's "man of the year," according to independent polling group Public Opinion Foundation (FOM). It marks the 15th time he has won the award, Interfax notes, with the Russian president even further ahead of other politicians and public figures in the country this year.
While it's being proudly touted by Russia's state media, the award isn't a particularly big deal in Russia. It's worth noting, however, due to some rather unfortunate timing: The announcement comes just after Russia's economy, weakened by declining oil prices and sanctions, dramatically imploded. And despite a 17 percent interest rate hike announced at 1 a.m. Moscow time, Tuesday saw another day of dramatic drops for the ruble.
At the time of writing, the ruble stands at more than 70 to the dollar. For some Russians, it is bringing back painful memories of 1998, when the nation defaulted on debts and many families' savings were wiped out.
The FOM poll was conducted Dec. 7, before the scale of the cracks in Russia's economy became apparent. According to Interfax, 68 percent of respondents named Putin as the most important political personality, a figure that was double his percentage from last year. Assuming that these figures are accurate, it's likely that the respondents were thinking of the Sochi Olympics or Russia's defiance over the Ukraine crisis as examples of Putin's great leadership.
It's also true, however, that Putin has long been remarkably popular with the Russian public, and that popularity has long been tied to Russia's improving economy and the rewards reaped from it for the average citizen. After the basket-case economy of Russia in the 1990s, life under Putin was a welcome respite. Many observers felt that there was an implicit deal in Russian society – keep our quality of life improving and we can live without the full range of civil liberties enjoyed in other democracies.
Now the Russian president's economic policy, so reliant on oil prices, is beginning to look suspect, and his foreign policy, in particular regarding Ukraine, is a source of international economic isolation. The deal seems to be falling apart.
Does it spell disaster for Putin? Not necessarily. As The Post's Michael Birnbaum explains, it doesn't seem good for him, but Russians have weathered worse. Other analysts, such as Zachary Karabell in Politico Magazine, have wondered whether it could strengthen him, creating some kind of "rally 'round the flag" movement in the face of what is seen as outside threats.
Another option is far more unpredictable: The economic turmoil creating some kind of political turmoil. And that scenario is another reason to feel disheartened about Putin's "man of the year" prize – 15 years of Putin's leadership has left few plausible candidates to succeed him. Brash ultranationalist politician Vladimir Zhirinovsky and Foreign Minister Sergei Lavrov came behind the Russian president in the poll, earning a paltry 4 percent and 3 percent of the votes respectively.
Ok let's see Putin actually do something.
He won't. He's on the "company" payroll just like all the rest.
http://www.radioislam.org/islam/english/jewishp/russia/putin-yarmulke.jpg
I agree that he needs to "do something" far more substantial, such that it affects the US where it hurts: In the POCKETBOOK.
If he's "on the payroll", it's on China's payroll and he's their bitch. Which is my ever-growing suspicion.
The JPG looks photoshopped, BTW. So I'm skeptical on that.
p.s. If I were him, I'd let the US know that if things get out of hand and even "tactical nukes" start flying, that Israel and Riyadh would get hit first, and be left as a sea of radioactive glass for the next 10000 years. "Yahweh that, bitch!" And see if those Zionist crazies in NY would come to heel, or be made to.
"If he's "on the payroll", it's on China's payroll and he's their bitch. Which is my ever-growing suspicion."
Over the longer-term Russia is the clear "winner." China is flashing, it's position will start decaying rapidly as global growth continues to crash. China doesn't have the natural resources that Russia has. If one looks at history and king-making it's pretty clear that it really only happens via exploitation of natural resources. China's rise has been possible only from global trade, which was spurred at the juncture in which the USD went totally worthless: early 70s, when the USD went completely off the gold standard, when the US's oil production peaked, when trade relations between the West and China were opened up: it was all about juicing growth, growth being necessary to prop up the Growth Ponzi (which would have otherwise stalled out- which it had for the US).
If it looks like a massacre and acts like a massacre then maybe it IS a massacre.
BTW and somewhat off topic but has anyone been paying attention to the SHIBOR in China? The short-term rates (one and two month especially) have gone vertical. This could be a seasonal issue related to the end of the year and the Chinese New Years approaching but the rate of increase is relatively steep. If liquidity concerns are building in China again and this puts pressure on their currency (which some are predicting), man, you throw another BRIC currency meltdown into the mix and all hell is going to break loose. Definitely worth watching as the BRICS really seem to be coming under attack from an appreciating USD which could destablize the entire world.
So explain to me why the Fed would want to raise interest rates as with inflation clearly not a problem, the USD already rising, and the world's economies teetering towards recessions (outside of the US), raising rates is only going to aggrevate these problems (and damage US multi-national operating results). To me, raising the rates at this time would only be undertaken for the following reasons:
- To deliver a message to the world that the USD is and will always be King Dollar (and to crush the competition).
- In an effort to stave off a run they are scared to death about in the future if the BRICS and other countries de-dollarize at a much quicker rate than anticipated.
Not sure what data the Fed is looking at and relying on but it would appear that once again, their agenda (if rates are increased) has nothing to do with the interests of the American people.
I don't know about that. It may be that the cards are laid such that dollar strengthening multiplies real, currency parity, profits of multi-nationals, even if profits decline in nominal dollar terms.
"Not sure what data the Fed is looking at and relying on but it would appear that once again, their agenda (if rates are increased) has nothing to do with the interests of the American people."
It's about the SYSTEM! The system that protects TPTB. But, ALL empires collapse, in which case it's all about buying more time...
I would vote for the dollar
.
but it cant even be voted on
Yea so that razor thin percent of assets is protected by an fleet of laser bearing war ships and nuclear armed sumbarines... Russia's assets are just about as protected as Bami's Mother. I take USD any day.
That's good 'american' thinking. What you can't see will never hurt you.
This western attack on the ruble simply speeds the dollar down process and its replacement by SDR's. China thinks its a good thing. Well good things don't hurt, so they can shove this one up their ass because they're going to have to live with the realities of full currency exchange access,... you lose a level of currency control on you economy to the Devil guised as a banker.
do you know what an XDR is? do you understand how it works?
guess where IMF headquarters is?
do you recall the reason why the XDR was created?
I swear, they could hire chimps to post here and things would improve tremendously...
http://en.wikipedia.org/wiki/International_Monetary_Fund#Voting_power
The dollar will collapse as soon as we run out of zeros.
what's all this I hear about the dollar versus the rubble? Everyone knows rubble is rubble, like trash, it's worthless. If the dollar and the rubble played football, the dollar would win. If the dollar and the rubble fought each other in war, the dollar would win, because rubble is already broken. It's rubble. I can't buy crap with rubbles. In fact, I can't even buy rubbles with dollars. And there's no bubbles in rubbles. Forget about em.
The reality is that both are broken currencies because they both represent broken economies.
In any case, the error you are making is in stating that the rouble would lose a war with the dollar. There is no war between the rouble and the dollar. Only between the USA and Russia. The war between these two nations will be fought on many fronts and let's just hope that one of those fronts is not at the tip of a missile.
Frank, apparently people missed the humor. Sigh... (I appreciated it though).
Hint: (think) Emily Litella
Tough crowd here,since most weren't born yet when Gilda Radner was still alive.
Eleven time zones.
Russia doesn't have the resources to collapse.
Not enough paper...'.
Let's divorce fundamental asset value from its market price. These are two different things. Price, in perfect market can only slightly and temporarily differ from the value because of market deficiency due to limited by speed of information distribution and its cognitive processing of market participants.
Our real markets in contrast, are cesspool of market making inside traders who, using their own financial power and strategy of obfuscation, make money by manipulating markets through driving and ultimately setting asset price, however, different from its fundamental value, and in the process picking winners, often their own cronies, friendly business interests or preferred by government policy needs.
Today’s markets in US and elsewhere are legally proven scams, merely price propaganda tool aimed to induce certain, often self-defeating, main street economic measures by populace at large, as a part of policy moves of power elites.
The elites, that way fabricate cheap gold, expensive treasuries, cheap labor and expensive debt, cheap ruble and expensive dollar etc. at their will. In other words they can make all they own expensive and all you own worthless on a whim.
In today’s age of digital, they do not even need to create any fake assets they just need to lie about them.
Yup. But, you know, reality can be a bitch; and, eventually, it wins out. The digital world will eventually vaporize into the ether. Got phys (actual shit)?
"In today’s age of digital, they do not even need to create any fake assets they just need to lie about them."
It's about CONTROL of them. The control is looking pretty tenuous...
What's this "Fundamentals" that Libertarian fundamentalists cling to, like some damn religion?
I am not suggesting that they are wrong or even flawed, but I am suggesting -- even insisting -- that they may not be nearly as RELEVANT as they make them out to be.
Shoe 1 to drop: If the "Jedi Mind Trick" of the Western banksters works on its own and other masses around the globe, then... "PERCEPTION IS REALITY".
Shoe 2 to drop: Perception will not and does not have to work 'forever'. It only has to work "Long enough". Long enough to win the Game: gaining ownership of the majority of the world's key resources. To that extent, the US and its bribed, blackmailed or bullied Friends/Allies have been wildly successful.
Unless and until the rest of the world breaks the Jedi Mind Trick, NOTHING will change that amounts to anything.
Yeah, but the mind trick doesn't work for Russia, China, India, and a bunch of middle east countries. US is still doing David Copperfield for heaven sake.
When people start going hungry I assure you that the power of the "Trick" will lose its luster. TPTB are well aware of how this all goes down, which is why they've amply primed us with diversionary mentalities (I'm guessing that people will recognize this as another way of saying "divide and conquer").
I say this is how the next world war is going to get started. When a party gets pushed too hard, they'll fight back. It doens't take much for a government to force oil price to go up!
You might add that Russia has more foreign-exchange reserves (418,000 million$) than the US (134,000 million $). Yes, the US is in worse shape to defend the dollar than Russia the rouble. It doesn't matter. The US is the exceptional nation, until one day we wake up and it isn't anymore.
who cares about fundamentals when central banks print money at will for speculation
last example - as of russian CB rate hike the commercial banks still were borrowing rubles from it at 17.4% and buying USD on mass
All this is irrelevant, as long as Putin is at the helm. There is NO trust in Russia's market. ZILCH, NADA, NIHUYA. You can give me all the figures you want to give, Russia may have all the gold in the world, for all I know, this is still irrelevant. There is NO trust, and the current situation reflects it. Essentially, Russia has done an equivalent of jumping off the bridge, thinking that the laws of physics do not apply to her. Now, the jumper is meeting the ground, feeling extremely surprised that Sir Newton was actually right - and, this will be the last thought going through the jumper's moronic head.
The only issue regarding Russia that the West will be concerned about now is how to secure those fucking nukes - I guess you will see Ukrainian peace-keeping forces guarding those Russian nuclear sites pretty damn soon.
So, let me get this straight, there's "no trust" because the West says so? Is this the same West that is collapsing? Is it the same West that has, for decades now, resorted to engaging in far-flung meddling in the affairs of other nations (which often include large-scale killings of innocent civilians? The same West that can boast of ever killing people with nukes?
You're asking about trust? WTF?
Oh! I see, no built-in bias going on here, now is there? (don't let logic and facts get in the way of perfectly good bais- eh?)
http://www.zerohedge.com/users/marriedgeordie
"Biography
I am a Ukrainian. Everything else is unimportant for now. And, puck Futin."
Well, the West has been collapsing since about the 1960s, in the Soviets', and then the Russians' minds. I grew up there, so I know what I am talking about. Now I live in the West, and I can see that it has been doing just fine, while the USSR is gone, and Russia as we know it now will be gone soon, too.
Yes, I am Ukrainian, and you can call me biased if you wish. But you, Sir, are plain delusional, which is quite a dangerous position to take, in the long run...
"Now I live in the West, and I can see that it has been doing just fine"
Annecdotals are meaningless. You have offered nothing but them.
Again, facts and logic are the things for rational discussion. You're free to skirt them, but I wouldn't count on betting against them over the long-run.
"But you, Sir, are plain delusional, which is quite a dangerous position to take, in the long run..."
That's your opinion. I'm doing fine, thank you (and no one who knows me believes me to be dangerous or delusional- only highly biased folks who are unable to stand up to meaningful debate, debate based on facts and logic, resort to such claims).
If your narrative is accurate, the time for "no trust in Russia" was in February 2014 when it allegedly walked in to Crimea. That was the time when trust should have dissipated. The timing of the events we're witnessing is different.
Rightly or wrongly Russia has made it clear that she doesn't want to be part of the global finance/banking fix.
Rightly or wrongly Russia has been the driver for the move away from the petrodollar system. The dollar's survival is entirely predicated on the survival and maintenance of the petrodollar system. If countries begin to do deals for energy that are not denominated in dollars,
the American dollar is gone and the sovereign debt of America, all $18 trillion of it, will come home to roost.
Is it the petrodollar aspect or the reserve currency aspect that is the greater enabler? Maybe this is a chicken-and-egg thing...
But, yes, it's ALL about the final decaying orbit of a widely used fiat currency. This Ponzi is running its final course. I'm thinking that this is the final growth Ponzi: I don't believe that there's any way of creating another (because, as Ponzis go, any subsequent replacement needs to be bigger than the last).
Expect lots of kicking and screaming...
If you're a "Geordie", you should stop getting your news from The Sun, MSM Daily Slime, Sky News, BBC. They're just political propaganda.
Ukraine will go down the drain long before Russia.
There is only one factor in favour of the USA at the moment and that is that the US dollar is still the main currency in international trade and is still to be found in the foreign reserves of most countries. These countries therefore would not like to see the value of their foreign reserves be diminished and therefore continue to hold and trade what is essentially an unbacked piece of rubbish.
At the same time, as I have often said, Russia is no paradise and Putin is no saint.
Japan is a sewer waiting to burst and Europe is an assylum with lunatics dispensing medication.
So all in all, the world is a great place to be in if you are looking for action.
" the US dollar is still the main currency in international trade and is still to be found in the foreign reserves of most countries."
Yeah, and it appears to be slipping pretty fast.
"These countries therefore would not like to see the value of their foreign reserves be diminished and therefore continue to hold and trade what is essentially an unbacked piece of rubbish."
Have to think that there's a lot of itchy fingers out there. One wouldn't want to be caught holding big bags of worthless (virtual) shit!
"So all in all, the world is a great place to be in if you are looking for action."
Life is good: I don't think there's a good alternative. As Derrick Jensen puts it (paraphrasing): "It's perfectly acceptable to believe that on one hand we're fucked and on the other that life is really, really good."
Apple is worth nothing. The shittiest of the companies - the display of "US economy", brought to absurd as everything in the monkey's paradize. Without China you are nothing, zero, vacuum. Prepare to eat, drink and shit greenbacks.
"Without China you are nothing"
And China without a consuming West is?
It's The System! It's fucked!
China will face some pretty hard decisions on how it wants to break the news to its people that the bulk of its population won't make it out of poverty (that pretending that a country can be based on consumption will be found, just as with/in the US, to be complete lunacy). Without resources (and especially after trashing the environment) good luck eating empty promises...
It has been one gigantic hoax we've ALL played on ourselves, that we could forever engage in the Growth Ponzi... (now that this story is about to run its course we resort to the age-old means of divide-and-conquer).
"And China without a consuming West is?"
Roughly the same. Without resources? Trashing the environment? Are you speaking about US rather than China?
Yes, The System is fucked. The West one.
I don't know if this originated on ZH, but here it is anyhow, and although they didn't graph the Fed's Gold reserves for comparison, just assume it's the X-Axis.
http://imgur.com/a/rmaN8Just glad the typical propaganda is not repeated here. Nice pen up!
What whould happen to the US economy if the FED had to raise interest rates to 17%???
Hell I would say that we cant even get off the floor of 0% without a total collapse.
The US has absolutely no cash on hand, no foreign reserves, and probably no gold.
Look at what is happening to the Russians, its going to be much, much, much worse when the US goes thru its currency crisis.
I can see the value of assets held by the Russian CB declining by 12.5 percent.
Trying to make Putin unpopular and get him out of office isnt going to work on the russian people. They will see it as exactly that and support him even more against the evil of the west.
I like how he starts by assuming that all paper currencies are fundamentally flawed. I.E. "I will base my economic analysis on an assumption rejected by all mainstream economoists and financial experts everywhere."
If they didn't reject that assumption, then they couldn't be mainstream economists, now could they?
They get paid to work in fantasyland.
When a man's salary depends on him not understanding someting...
lol The usa govt doesn't have gold? Who mints american gold eagles? /lol
Stick with your argument no matter how embarrassingly the market disproves it...
According to Jim Rickards and the CIA the Russians are fed up with America starting wars and together with China will dump bonds into the market on 28th February 2015 to destroy the $ in minutes. Hence the economic WW3 attacking the Ruble.
According to Jim Rickards and the CIA the Russians are fed up with America starting wars and together with China will dump bonds into the market on 28th February 2015 to destroy the $ in minutes. Hence the economic WW3 attacking the Ruble.