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Western Banks Cut Off Liquidity To Russian Entities
As Zero Hedge first reported today, shortly before noon one (and subsequently more) FX brokers advised clients that any existing Ruble positions would be forcibly closed out because "western banks have stopped pricing USDRUB", over concerns of Russian capital controls. Ironically, it was this forced liquidation of mostly short RUB positions that pushed the RUB higher, which in turn had a briefly favorably impact on energy commodities and risk assets, as the market had by then perceived the Ruble selloff as excessive. Of course, since nothing had actually changed aside from a temporary market technical, the selloff promptly resumed into the close of trading once the market finally understood what we had explained hours previously.
And unfortunately for the bulls, various falling knife-catchers, and those who hope the Russian situation will stabilize imminently with or without capital controls, it appears things in Russia are about to get a whole lot worse because as the WSJ reports, the next driver of the Russian crisis is likely to come from within the banking system itself because "global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis."
Presenting Russia's banks: now cut off from the outside world as the second cold war goes nuclear, at least when it comes to the financial system:
Such banks as Goldman Sachs Group Inc. this week started rejecting requests from institutional clients to engage in certain ruble-denominated repurchase agreements and other transactions designed to raise cash, according to people familiar with the matter.
Bankers and traders say the moves to restrict some ruble transactions have become increasingly widespread among major Western financial institutions this week, even as the same institutions continue to try to profit from the ruble’s wild swings. The moves, which the banks are deploying to protect themselves against further swings in the currency, have the potential to add to the strain on Russia’s financial system.
Goldman in recent days largely stopped doing longer-term ruble-denominated repurchase agreements, or repos, in which securities or other assets are swapped in exchange for cash, said a person familiar with the matter. The Wall Street bank is still doing short-duration ruble repos, those that mature in less than a year, this person said.
And where Goldman goes, everyone else follows, even though according to the WSJ this has not happened, yet:
Other banks, including Bank of America Corp. and Citigroup Inc., haven’t changed their trading with Russia or in rubles, according to people familiar with those banks.
They will, it is only a matter of time. Meanwhile, the entire Russian capital market, and not just its currency, is becoming isolated from the rest of the Western world:
In one sign of the banking industry’s hasty retreat, the London-based manager of an emerging-markets hedge fund said Tuesday that he couldn’t get any banks to trade Russian government bonds with him.
Of course, anyone who read our article in early November explaining "How The Petrodollar Quietly Died, And Nobody Noticed", predicting the crunch in global intermarket liquidity as a result of the collapse in crude, would know this is coming. As for the death of the Petrodollar we warned about, a death which has resulted in the disintegration of market volume just as warned, suddenly everyone is noticing.
Regardless, what all of the above means is that Russia now has at best a few weeks in which to find an alternative source of short-term funding. One coming from the East.
The question is will Putin swallow his pride and proceed with the next logical step as the Eurasian axis realizes the time to abandon the dollar has long past, that now only actions matter and not words, and joins forces with China in a new monetary union, one which combines the Ruble and the Yuan, and is backed by China's gold and Russia's natural resources, as cheap as they may be for the time being... until one or more of the largest middle-east oil exporters experiences a major and "unexpected" geopoolitical incident, one which sends the price of oil soaring right back up.
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Putin's adventures abroad are either designed to improve the ability of Russia to defend itself (Crimea) or to protect its economic interests. Putin does not go around trying to overthrow elected leaders because they have politically incorrect policies.
Vlad 'goes around' trying to reconstitute the Soviet Union, Bob. Remember, Vladimir Vladimirovich said that 'the greatest geopolitical catastrophe in the 20th century was the breakup of the Soviet Union'. He plans on rectifying that 'problem'.
He grabbed a piece of Georgia. He grabbed a piece of Ukraine. And he's on record saying that Kazakhstan 'isn't even a real country'.
Except now he's having 'funding' problems.
Putin does not engage in foreign advertures. You cannot name a single one. Foreign advertures are our schtick.
You folks who have been inadvertently referring to the rouble/ruble as the 'rubble' are getting the last laugh!
this is how germans feel about the usa and sncationing russia. americans are not allowed to do this anymore and accept it as the way it is because it is what it is. .....and there are people here who expect revolution. lol!
https://www.youtube.com/watch?v=wY0-FQ1My9Q#t=823
Who's got Vlad's suicide watch tonight?
More like a homicide watch -enemies better watch their backs- and while they are looking behind, he may slit their throats. Don't mess with Putin.
http://fortruss.blogspot.com/2014/12/rouble-vs-dollar-games-from-perspec...
Zems - Live Journal
Only the lazy are not writing about this subject today. But everyone for some reason is looking in the wrong direction. Let me explain:
- Our country has a stock of dollars
- The currency of our country - roubles - is held by other countries
- We - Russia - are planning to sell oil for roubles in the future
- Everyone who buys oil from us in the future will have to look for these roubles to buy oil
- The harder it is to look for them, the more expensive they will be
Naturally, the task is simple - we need to drop the rouble to the bottom, and then buy all the roubles that we can, giving away the dollars that are no longer needed and not guaranteed by anything. This will help concentrate all of the roubles inside the country and to assign their price independently, while holding and releasing more money to the market.
Meanwhile there will be a short-term increase in prices and a reduction in living standards, but it's like an incision by a surgeon - a little painful at first, but then you will be healthy and strong for the rest of your life.
I am sincerely surprised by the hysteria and resentment against the government regarding the devaluation of the rouble. Is it so hard to look more than a month into the future? Everything is done correctly and wisely, so everything will be all right, guys =)
The Mongols, Napoleon, the Prussians, the Japanese, and the Germans had all defeated Russia -- at least in their own minds -- until it was later found out that they had not...
Mongols didn't defeat Russia? Are you serious? That single series of Mongol incursions forever changed Russian culture and largely made it is today more than any other single even or whatever Russian ruler has attempted since including Peter the Great or Lenin.
http://vineyardsaker.blogspot.com/2014/12/ruble-exchange-rate-fluctuatio...
The Eurasian Economic Union comes into force on January 1, 2015. Most likely at the same time the Russian ruble and foreign exchange markets will change drastically, and the Russian economy will take a distance to the dollar and the euro. Now the West is doing its best to weaken the ruble and thus destabilize the Russian economy and the political system before the end of the year. The maxima of the West is to prevent the emergence of the new economic union and closer cooperation within the BRICS. Taking into account the Christmas holidays, the West has little more than a week to succeed.
Why the hurry, why did this suddenly go nuclear in a few days? Perhaps this might suggest part of the reason, or at least a lead into why this mad rush to eliminate the rubel and the Russian economy right now.
"The Eurasian Economic Union comes into force on January 1, 2015. Most likely at the same time the Russian ruble and foreign exchange markets will change drastically, and the Russian economy will take a distance to the dollar and the euro. Now the West is doing its best to weaken the ruble and thus destabilize the Russian economy and the political system before the end of the year."
As this suggests, once this union becomes fact, there will be a changed market and all things there will reset. The west is in a hurry to slay Russia before this Eurasian Union is fact.
What does China want with Russia anyway? Seriously. For the Chinese to cuddle up with Russia means that mutual and historic enmity will be magically forgotten. Remember, C and R are ENEMIES, not friends. Jeez. The past 35 years, or so, the two economies have developed in different directions. China has connections with the rest of the world. They make stuff others want. Russia, on the other hand ...
China stupidly entered into that energy-buying agreement with the Russians a few months ago and will surely "renegotiate" the terms of that contract, to Russia's detriment. I believe this included a pipeline between the two countries. But now, China can get energy anywhere: it is cheap and abundant. So why would C saddle itself with Russia's serious issues just for oil/gas?
China needs to trade with Russia? Laughable. Russia needs food and goods far more than China needs Russian energy. After losing the Ukraine, it isn't clear if Russia can feed itself without oil revenue.
To sum: China won't rush to commsumate a currency/gold deal with Russia because there's nothing in it for China.
(Perhaps China would buy some of Russia's military technology, but I doubt the Russians would be willing to share it with their historic enemy. What else does Russia have that China can't get elsewhere? Nada.)
http://www.motherjones.com/politics/2014/12/chinas-new-silk-road-europe-...
@ boodles aka NumbNuts
All that INFRASTRUCTURE China & Russia are working on TOGETHER, bah.
In China's own words "We are preparing for war with the US" my enemies enemy is my friend.
Every time that evil scores a victory it ultimately hastens its own demise.
Those that are acting in this mess with dirty hands and dirty intent will eventually be overcome by their own malevolence.
Putin Orders Feared “Samson Defense” To Collapse US-EU Economies
By: Sorcha Faal, and as reported to her Western Subscribers
http://www.whatdoesitmean.com/index1825.htm
A chilling report published today by the Ministry of Economic Development (MED) is warning of potentially “catastrophic unknown consequences” relating to President Putin’s issuance to the Central Bank of Russia (CBR) of orders to initiate what is commonly known within the Kremlin as the “Samson Defense” designed to crash the Russian ruble, while at the same time insuring the economic collapse of both the United States and European Union.
The CBR’s “Samson Defense” is a Russian monetary strategy designed to economically mirror Israel’s feared “Samson Option” deterrence strategy of massive retaliation with nuclear weapons as a “last resort” if military attacks threaten its existence.
In Putin’s action against the US-EU, this report says, the CBR’s stunning move earlier today in raising the interest rate to 17% from 10.5% has had its desired consequence as the ruble plunged more than 20% and to date and has now lost about 57% of its value versus the US dollar since the start of the year, which exceeds the 36% plunge related to the 2008 global economic crisis.
Most importantly to note about this currency plunge, however, this report notes, are that Russia’s fiscal domestic accounts are denominated in depreciating rubles and its oil exports are invoiced in an appreciating US dollar, meaning that the fiscal blow from lower oil prices will be cushioned by a weak ruble, and was a strategy that Putin warned about earlier when he stated that the Federation was braced for a “catastrophic” slump in oil prices.
Equally as important to note, MED analysts in this report say, the CBR agreed to lend money this weekagainst 625 billion rubles (over $10 billion) of bonds freshly printed by oil giant Rosneft allowing it to hoard its export dollars and meet a $10 billion loan repayment later this month, and another $4 billion in February.
As to how catastrophically low oil prices can fall, this report continues, it notes that OPEC has already stated that they are willing to push prices as low as $40 a barrel in their bid to take on Russia and US shale, a stance which began this past September when the Obama regime reached a secret deal with Saudi Arabiain order to flood the world with oil to collapse the Russian economy, but which has now backfired on them as the Saudis seek to bankrupt US shale producers too.
With 15% of US shale gas producers are already losing money because of the Obama regimes secret deal with Saudi Arabia, this report warns, up to half of all of Americas shale operations will face financial ruin if oil prices slip below $55 a barrel leaving millions without jobs in an already collapsing economy.
To the ability of the Federation withstanding a “Samson Defense” economic war against the US and EU, this report says, it should be noted that the current debt of the US stands at a staggering $18 trillion [an amount so large it is now mathematically impossible to ever pay back] while the EU is, likewise, at a equally staggering amount of €12 trillion ($15 trillion).
Compared to the combined US-EU debt of $30 trillion, this report notes, Russia has only $678 billion in foreign debt, has very little outstanding debt and its public debt to gross domestic product ratio is 10% - an excellent figure compared to the EU’s dismal average ratio of 90.9 and the US’s 71.8%.
Likewise to note, MED analysts in this report say, is that while Russia’s debt to GDP is roughly 14%, the EU currently stands at 90.9%, the US at 80.2%, and Japan’s at 227%, meaning, simply, that the Federation can withstand any economic hardship the Western alliance puts against it.
Also, and as independent analysts confirm, Moscow‘s coffers are well-filled, giving Russia the durability to weather a double external shock - tanking oil prices and Western sanctions.
The Finance Ministry controls two sovereign wealth funds, which contained some $172 billion as of December. The money, held in foreign currency, has been accumulated during the past 15 years of high oil and gas revenues and has been earmarked as a piggy bank, primarily for the pension system.
Additionally, the CBR’s overall foreign currency reserves stood at a healthy $416.2 billion dollars in early December.
And most critical to note about the “Samson Defense”, this report concludes, is that Russia will not cut its oil production against the headwinds of collapsing prices, and may, indeed, increase its amount as the plunging ruble, combined with a rising US dollar, actually makes Federation oil the most affordable in the world.
Now watch the roaches run for cover.
So long amerikan patriot.
Someone finally wrote the obvious.
Sorcha Falls articles are the mixmasters of truth blended with fantastic bullshit. I've read their fuked articles and they were spin mastering 10 years ago.
May be. But are you prepared to dispute any element of the story?
What is it that you dispute in this particular article. Just trying to educate myself here.
So, Obama/Saudi's collapsing the shale oil industry in the US helps the US how again? Way to go Einfuckingstein.
<------- The person who wrote this is an idiot
<------- Russia wanted to trash its currency and ruin its citizens
Quote: the CBR’s stunning move earlier today in raising the interest rate to 17% from 10.5% has had its desired consequence as the ruble plunged more than 20% and to date and has now lost about 57% of its value versus the US dollar since the start of the year.
One of the reasons the banking mafia are doing this is to drive a wedge between Germany and Russia (because if Germany joins the BRICS then it's all over).
So it's very important for Bad Vlad to not make this about Europe generally e.g. a blanket energy ban. (A targeted energy ban - if possible - against the UK only (because London is cheer leading the current economic warfare because London is banking mafia controlled) might be politically okay if possible.
More generally it would also be better politically imo for Russia to not blame America or the West as a whole.
Instead if he makes it about "financial speculators in the western banks who are driving USUK policy" he can achieve two things
1) blaming it on the western banks would limit the anti-Russian propaganda value in the West as the banks are already so unpopular
2) it allows targeting the Russian reaction specifically at the western banks
This could pave the way for a default on loans to western banks only - and possibly even better if it was only the USUK banks and not German and French (although the big German and French banks are part of the banking mafia doing it this way would play better at dividing public opinion in the West).
I think the USSA of Obama-Soros & Illegal aliens has failed and Germany will pivot towards Russia.
Here is a member of Germany's Parliment trashing Mrerkel for dealing with Ukraine Nazis and for her being a USA-Obama puppet.
http://www.liveleak.com/view?i=b5f_1418776628
The woman speaking is from Germany's Left Party but she is pretty impressive and not bad looking too.
I think it's on a knife edge. It will be hard for the Russians to not retaliate out of anger against the US and EU as a whole but if they stop themselves doing that and target it at the banks then they win imo.
Yeah well fuck those banks. My wife and daughter found this for sale. I called the guy and that deal could be done. Not many folks an kick my ass my can. It's not a bad idea really but I was like "What are we going to do with that?" and she looked like I was an idiot and said "We will turn that into an RV." Alright woman what?LOL I could have made the deal over the phone but I was not in the market for a "Cool bus". Her Russian ass kicked my American ass and I admit that.
She got me pretty good but what she diddn't is that I the guy will call and ask questions. I found out the history of the bus and seems like a good deal but I had the question is how he came across that bus in the first place. First of all it is a manual transmission and can not be figured out by mankind because it is just so overly complicated. OK, well but why did why you buy this in the first place. He worked for the company who maintained teh bus na dhe did work on it himself. You will never guess why he bought that bus and what he was going to do with it. Take a guess. RussainitisA could not figure that one out either.
I might just have to keep that one to myself because it so Midwestern. Alright. he was going to use that School bus to haul hogs to market. What? I had to ask what he was going to do. He was going to remove the seats an make it into a pig hauler. Everyone in the Upper Midwest knows that you turn an old schoool bus into a beehive. I had to ask what she wants thing for but she always has reply for me, "We might as well go full scale white trash". I convenietly suggested that we decorate the bus with more shit from IKEA. I got her back and could not stop laughing.
I guess I need a bus now too. WHere am I going to put that big yellow piece of shit? My bro is not going to go along with that. What deos he need some big yellow piece of shit sittin on his property for? The grain truck was OK but a fool bus?
I'd be tunin' her up to win the race to the precious metal store.
Soon.
I talked to a lot of people today. Commmodities are three months out at least. It is no secret that I love silver and gold but unless you buying something for a Christmas present now is not the time to double down. Talk about a piss pounding over the last two years. I took it on the chin but I knew that going in. I took the risk but I am still up 70%. I had nothing to do with the Russian ruble though.
I've been buying the handle on that fifty year silver chart.
Stackin' all the way down.
Stack On
So nothing like some real volitility and financial stress to get the comments flowing so I might as well throw in my two cents on the subject matter. First, remember that the Russian population has direct experience dealing with a currency crisis. They've dealt with it before and understand the process/challenges. Here in the US, beyond some uncomfortable inflation in the 1980's combatted by Volker driving interest rates high, the US sheepie have never had to deal with a currency crisis and won't know how to respond (if and when the USD has it's day in the sun). The average Russian has been through far more hell, problems, challenges, etc. compared to the average American and always found a way to emerge. They are battled tested and have witnessed this show before.
Second, I don't believe any actual defaults have occured yet (only threats, estimations, assumptions of default, etc.). So while everyone's jumping to the conclusion that Russia or large Russian companies will default, making assumptions such as this is usually the mother of all fuck-ups.
Third, let's go through the default process for a moment. Smart companies usually plan well ahead if they see trouble coming. By that I mean they build up reserves/cash or a back-up financing source as they know once they default, they will be cutoff from the credit markets (and basically be placed on COD). So if they have planned ahead and have resources, they will survive by making the necessary adjustments. For the debt holders, however, the problems are far worse as they are going to either take some major hits and write-offs or attempt to secure collateral pledged against the loans/debt. Well good luck with this if the assets are in Russia, I doubt any control is going to be achieved.
But maybe the debt holders were smart enough to purchase CDS (which are really nothing more than the equivalent of life insurance policies) so if a default occurs, the underwriters/originators of the CDS will be on the hook to cover the losses. Of course this is where the counter-party strenght/risk issues become a real problem as I doubt the strenght/liquidity is present to support the insurance claims. This leads to failures in the CDS world as the "insurance" companies begin to fail and everyone starts to realize that no real value exists in the collateral food chain.
Just an ugly unwind if this occurs which of course is similar to the great MBS mess from 2008-2009. If you remember, AIG basically was going under as they wrote the CDS insurance on various MBS products until the Federal Government bailed them out with a loan which basically flowed right to Goldman Sachs (that hoodwinked the US government into believing that AIG was TBTF).
So what organization could possibly bailout this mess at the debt default and CDS failure levels, but of course, good old Janet and the Fed could step in and flood the system with USDs to cover the losses which are often denominated in USDs. Can't have the insolvent banks and under funded pensions taking major hits from Russian defaults now can we?
I smell a bailout coming as the old saying goes, the more things change the more things stay the same. Whether it's overpriced residential real estate or oil, it doesn't really matter. When economic fundamentals and the laws of supply and demand take hold, the outcome is always the same.
Pussies in the U.S. don't understand.
Too many dentists.
"So while everyone's jumping to the conclusion that Russia or large Russian companies will default"
Personally I'm not assuming they will default - the Russian central bankers, even if they're not banking mafia themselves, will have been brainwashed in their education to think defaults are always bad. I'm saying Russia *should* default on all loans to specific targeted banks based in London and New York (and only those specific, targeted banks).
Default is the way of the market.
Live by the market die by the market. Lets see if Russia is more market oriented than the west... Will they allow companies to fail?
Putin is winning!!
At this precise moment he's not but there is an opportunity here for a winning throw if he defaults on loans to the London and wall St. TBTF banks (and only those banks).
If they do default, WE THE PEOPLE will cover those losses.
.
Anyone not under the zio banks is winning. But, the rat faced assholes will find anyone and everyone to suck their blood and life. It's who they are. With the blank US taxpayer checkbook in their hands, they can do anything they want now to anyone. The brave and mighty US taxpayers will watch the raping and pillaging on the sidelines, as usual. The idiots will cheer Team Bankers USA until victory is OURS!!!
This is an orchestrated attack on Russia by the West and everyone knows it...well Russia isnt so isolated, China is all prepped and ready to step in and fill the vaccum. Obama thinks he's so clever colluding with the Saudis...but all he's done is alienate a mostly benevolent Russia and drove it into the arms of China...now we have all of the Eurasian continent as potential future enemies...way to go
This is an orchestrated attack on Russia by the West and everyone knows it
So why is this attack being orchestrated, from the overthrow of the Ukranian government to the current currency wars?
Gee whiz, maybe because forex trading halted at exactly -6.66%. Just a coincidence?
Here's the story in a nutshell, dex.
The current currency wars are the attempted -- and failed -- punishment of Russia by the US and the West.
Punishment for what?
For keeping Edward Snowden in June of 2013. The Maidan revolt was the punishment for that.
Putin must have been informed of the coup and then had to make a strategic decision: Should he put down Nuland's clumsy $5 billion coup or should he let it succeed?
Why wouldn't he put it down and maintain the status quo?
THE ANSWER IS CRIMEA.
Now Crimea is Russia. If he had Viktor Y put down the coup, Crimea would still be Ukrainian. It's as simple as that.
Now Putin can keep as much weaponry and as lethal arms there as he want's without worrying about what the Nazis in the Rada or what Cuntselor Nuland is going to do.
When Obama and the West realized they had been caught with their pants down, they became enraged and decided to strengthen the dollar, sanction Russia and destroy the ruble.
First, the criminals shelled Donbas and shot down MH17.
A month or two of a weak ruble is nothing.
How long did Stalingrad last?
Three Prizes of Ukraine Nikolai Starikov
https://www.youtube.com/watch?v=Nrki2zYJ-5Q
President Putin's Mother survived siege, but infant child died....older brother of VV Putin.
think how that forms a certain character...
The Putin hatred here is American Exceptional Envy of anything good other nations have and America doesn't.
Mom, apple pie and hate Russia.
It is all about oil. Washington saw that Europe was getting too dependent on Russian energy, which if left unchecked, would allow Russia to have much more influence over EU foreign policy. That was unacceptable. Qatar wants to build a pipeline to Europe but it would have to go through Syria. Assad is allied with Russia, so he refused to allow the pipeline to go through his country. Washington then decided Assad had to go. Obama accused Assad of using chemical weapons as an excuse to invade but Putin out maneuvered him.
Once Obama realized he lost on the Syrian front, he turned his attention to Ukraine, where the bulk of Russian oil flows through to the rest of Europe. Russia proposed to build the south stream pipeline to bypass the problems in Ukraine, but under pressure from Washington, the EU blocked it. Putin recently signed a deal to bring oil into Europe through Turkey, and to hedge risk of loss of export to Europe, Putin signed a multi year deal with India and China.
The goal of Washington now is to cripple the Russian economy, wound the oil industry and reduce production, and thereby reducing exports to Europe. Then the EU will be forced to buy more oil from the Middle East and in order to facilitate that, the EU and Washington will bring more pressure on Assad via the UN to allow the Qatar pipeline to go through. If successful, the petrodollar will remain intact for a while longer.
Thank you sir. Makes sense.
Well with the USA being the centre of Jewish Fanaticism it looks as if the goyim have hitched a ride on the Armageddon Express.
It seems inevitable now that nuclear war will take place, every buffer put in place since 1950 has been breached and it is clear Gorbachev made a terrible mistake in withdrawing from Central Europe which is always going to be the plaything of Great Powers simply because it is the flat central European plain with no natural barriers.
He withdrew and the US moved in. The scenario is set just as it was in August 1914
Well, locking the Russians out of SWIFT as the most effective sanctions measure seems superfluous now.
James Marson, Olga Razumovskaya and Alexander Kolyandr
Updated Dec. 16, 2014 8:40 p.m. ET
MOSCOW—As Russian President Vladimir Putin has ratcheted up the conflict with the West for most of the year, the economic fallout on ordinary Russians has been limited.
Suddenly, though, the plunging ruble is reawakening fears of rising prices and the kind of financial crisis Mr. Putin has sought to put behind his country. As the ruble hit a record low, falling as much as 20% against the dollar Tuesday, Moscow residents rushed to buy electronics and other big-ticket items and drained rubles from ATMs to swap them for dollars and euros—signaling a new feeling of vulnerability among Russians and a fresh challenge to their leader.
From St. Petersburg to Siberia, money changers ran out of foreign currency and were raising exchange rates. Sberbank , Russia’s state savings bank, and Alfa Bank, Russia’s largest private lender, said they were experiencing a rush for dollars and euros.
Russia overnight increased interest rates by 6.5 percentage points to 17% in an attempt to support the falling ruble, which hit a record low on Tuesday. So what's next? WSJ's Katie Martin explains. Photo: Getty.“The demand is enormous. People are bringing piles, huge piles of cash. It is madness,” said Kamila Asmalova, a manager at a Moscow branch of Sberbank. The branch ran out of foreign currency by 2 p.m., she said.
Lanta Bank, a midsize Moscow lender, said its foreign counterparts would be unable to send foreign currency Wednesday as aircraft that typically transport cash are full.
Apple Inc. said it halted online sales in the country because of the ruble’s volatility, and IKEA announced it would raise prices there.
The ruble’s continued fall despite the Russian central bank’s move to raise interest rates to 17% rippled across global markets Tuesday, fueling a selloff in emerging market currencies and stocks. In the U.S., the turbulence was more muted, as the Dow Jones Industrial Average closed down 0.7%. The yield on the 10-year Treasury, a traditional haven, fell to 2.07%, its lowest closing level since May 2013.
Abroad, Russia’s crumbling currency—driven by sanctions and eroding oil prices—raises the threat of a currency market contagion, particularly for emerging economies facing headwinds, such as Turkey and Indonesia.
At home, economists say the Russian central bank’s rate gambit is certain to push the country’s faltering economy into recession by raising borrowing costs. Even before the rate increase, the central bank estimated the economy could contract as much as 4.7% next year if oil remains around $60 a barrel. On Tuesday, Economy Minister Alexei Ulyukayev said that the government would introduce some “regulatory measures” on the foreign-exchange market, but that it wasn’t discussing any capital-control measures.
The big question is whether Russia’s economic troubles will turn into a real political challenge for Mr. Putin, whose approval ratings remain above 80% and who retains unparalleled control over politics and the economy.
The faltering economy could fortify the already strong backing for the Kremlin in its confrontation with the West, since Moscow blames the problems on enemies.
As the White House said Tuesday that President Barack Obama would sign a bill turning Russian sanctions into law, Russian Foreign Minister Sergei Lavrov told television station France 24 that “Russia will not only survive but come out much stronger.”
Banks were already bracing for the impact of high interest rates. UBP fund manager Pavel Laberko said banks would be the first to be hit by the higher cost of borrowing, with weaker institutions having to halt operations.
“A lot of [market] participants are in serious condition because of these events,” Bank of Russia Deputy Chairman Sergei Shvetsov told reporters Tuesday. “The choice the central bank made [to raise rates] was between very bad and very, very bad.”
Global banks also have curtailed the flow of cash to Russian entities this week. Banks including Goldman Sachs Group have started rejecting requests from institutional clients to engage in certain ruble-denominated repurchase agreements and other transactions designed to raise cash, according to people familiar with the matter.
With credit more expensive after the rate increase, rising prices are set to hurt consumers. The Association of Retail Companies expects food and drink prices to rise by as much as 15% in the first quarter of next year, according to its spokesman.
Russians have in recent days rushed to spend their rapidly weakening rubles on electronics and cars before their prices are expected to rise. M.video, an electronics retailer, attributed around one-third of current sales to such purchases.
Shoppers reported long lines at IKEA stores in Moscow after the company announced price increases in the coming days. Last month, Apple raised the price of the iPhone 6 by 25% in its online store in Russia as the U.S. dollar continued to rise against the ruble.
Deputy Prime Minister Olga Golodets warned that rising prices would lead to an increased number of people living in poverty, a rare government acknowledgment of impending economic pain.
Maria Semyonova, a 30-year-old home maker from Nizhny Novgorod around 200 miles east of Moscow, said she was expecting tough times paying for her mortgage and baby on her husband’s salary and her maternity pay. She said the family was cutting back on New Year’s presents, buying theater tickets for her parents rather than spending thousands of rubles on gifts.
Still, Mrs. Semyonova said she and her husband agreed with Mr. Putin that the West was at fault for the crisis. “I think that Putin is acting appropriately given the situation,” she said.
Mr. Putin’s main supporters—poorer people and state workers—often don’t have savings and their expenses are mostly in rubles. The ruble’s slide is mostly hitting the middle classes who sometimes vacation abroad and have savings. Tatiana Boytsova, a 28-year-old finance professional from St. Petersburg, said her colleagues spent 40 minutes in line trying to exchange rubles. She said she and acquaintances were canceling trips abroad even if tickets couldn’t be refunded, since costs there would simply be too high.
Ms. Boytsova said she wasn’t expecting much of an end-of-year bonus, and was even thinking about trying to sell her ticket to an opera Friday. “At the moment, money feels better than the opera,” she said.
Some retailers were putting up prices on Tuesday after holding them steady for several weeks, so as not to scare customers while they sold off stock.
A store in central Moscow selling Apple products temporarily removed old price tags for computers and gadgets on Tuesday, while printing out new ones with prices higher by as much as $50 in ruble terms.
Amerikan Penisrot
If you spent as much time playing poker as you do playing 'Old Maid' and 'Go Fish', you would understand why Putin hasn't told you what his 'hole cards' are (it's a poker expression not something to wack off about).
You don't show them until the end of the game if you have the winning hand (which he does).
When Putin has 4 aces, his poker face doesn't give him away and more money is drawn in to the pot. When you have 4 aces you start dancing around the table and everyone folds
The Russian Ruble is not the Weimar mark or the Hungarian pengo. While it lost value against other currencies, at home only the price of imported products and domestic products with foreign components is affected. And the EU sanctions have limited drastically limited those.
From your Tribeca condo in New Dork City, it looks much worse than it really is.
Ordinary Russians are re-learning a very painful lesson many have forgotten - never save in rubles.
I can smell parrot shit.
Gee, I guess the CHN, BRA, and IND banks should step in here shortly.
RUS can start cutting out Western Banks, and demand more Gold as pmt for Oil and Gas.
Heck CHN, BRA, and IND can start kicking out NATO money and businesses as a response.
Epic Fail...
Russia begins testing a SWIFT alternative.
http://rt.com/business/212423-russia-payment-system-test/
But did Russia actually start testing it?
Is that why the Empire decided now was the time to whack the ruble?
Absolutely correct. RIFT is almost complete so the west has gone for the throat. Try to undermine SWIFT or dollar hegemony and you get the stick. Your move Putin.
Whackaruble!
<... Russian Standard vodka
<... Jim Beam bourbon whiskey
(I like to diversify, so some of each, just to be safe. :-)
My grandmother and her sisters were talking about the Great Depression, and one of them said, "It was so bad that, at Christmas, instead of exchanging $20 bills, we only exchanged $10 bills." :-)
http://www.1tv.ru/news/world/248338
Check it out. 5th Columnist operating in Russia has been exposed.
Angliski?
Any confirmation out there to my thinking that cramers big BS would backfire?
http://www.cnbc.com/id/102273943
The tbond free ride is getting scary either way.
Is Russia's debt anything like our 18T by comparison? What percent of their GDP is foreign debt?
http://www.whatdoesitmean.com/index1825.htm
Russia has only $678 billion in foreign debt
Likewise to note, MED analysts in this report say, is that while Russia’s debt to GDP is roughly 14%, the EU currently stands at 90.9%, the US at 80.2%, and Japan’s at 227%, meaning, simply, that the Federation can withstand any economic hardship the Western alliance puts against it.
That is in that article the link pointed to.
Interesting. Anyone know what China's is? Isn't China one of the largest US bondholders?
The US is higher than that since that debt is actually a tad higher when you notice that this "GDP" is based on inflationary prices? Since Putin just raised the interest rates (oh how I wish I owned Rubles right now!)- their doing that much better than we are.
Japan's "debt" is carried by a trade surplus from the US. As it has always been for Japan and China.
These numbers are so misleading, Japan has a black credit card while the US scammed equity lines to spend. Both China and Putin recently dumped more US Treasuries.
I absolutely detest the way the boomers' elected politicians and lobbyists pulled over there. Nothing says, "fallacy of false outcomes" like pulling some nasty mean shit on someone who was just trying to sell some natural gas to China!
If Bushie's Chevron didn't bribe the block of Unical to CNOOC back in 2003, I wonder if the Chinese would like buying nat gas from us more or less.
The US is THAT stupid. AND!!!!
THE BANK HOLDING COMPANIES ARE BLOCKING US CITIZENS FROM GETTING INTEREST!!!
That's called THEFT.
I'm sure Goldman Sachs is buying just enough Rubles on the Military balance sheet to collect on that without being seen.
My understanding is that it's more the dollar denominated debt of Russian companies who borrowed from western banks for investment (machinery etc).
If the Russian govt. lets them default on that - but only on loans from London and New York banks - it will hurt.
OK, so when does this currency war escalate to a WW and where will the first real bomb be dropped and by whom?
The banking mafia or neocons will do it but they won't do it if they think they're winning without it. So that would decide who and when. It probably won't be dropped (as they don't have an official air force) although I guess it could be.
Where depends on whether it's primarily a neocon or bankster move and who they want to blame. If it's primarily bankster and they want to blame Russia the target will be different from the one they'd pick if it was primarily neocon and they wanted to blame Iran or Isis. Also they won't do it near where they live - and preferably near where some people they hate live.
So, assuming in this case
1) they want Russia to be blamed
2) not near where they live
3) preferably near people they hate
where does that suggest?
If it was anti-Iran or anti-Isis then i'd say Rome for sure but if it's Russia not sure - Germany maybe?
Among Europeans they seem to hate Slavs the most generally and Ukrainians specifically with Germany second but if the aim was to blame Russia and put a wedge between them and Germany then Germany might just pip it.
Compromise on Poland?
tumblemore
Why in the world would they think that?
Bad drugs?
false flag to coverup the dollar's collapse,then all bets are off. If this sht does go nuclear ill be glad to send Vald my coordinates.
On Al Sharpton's house, by about 100 million white poeple that are sick as shit of his fucking antics.
Well, Putin rolls hard.
He stacks Gold like a motherfucker, though.
But he took a fat smack to the beak today in the Currency War.
Great News :)
Finger-chopping boomerang in 3... 2... 1.
Is this legit, and if so, are we going to hear of Hollande suffering some sort of gruesome 'accident' soon?
http://www.4thmedia.org/2014/12/terrified-france-warns-russia-of-obama-t...
These are desperation tactics to protect the US$. The US have thrown the EU under the bus to save the US$ reserve but when the dust settles, bearing in mind that the strongest economy by far in the EU is Germany with almost 50% of it's trade (over 6.000 companies 350.000 jobs) is with Russia, will most likely put the EU on life support. May be reality will kick in for us Europeans when our young blood form orderly queues for a tin hat a rifle and a fucking "THICK" overcoat paid for by a strong artificially "rigged" US$$.
Germany is not with Russia, either politically or (significantly)financially. Not sure where you are getting your numbers, but Russia is #7 when it comes to export. To put it into a context, they have 2.5x the amount of export to Netherlands than with Russia. With import Russia is not even in top 10.
http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_Ger...
https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/Forei...
One would assume that the CEO's of companies like BMW, Siemens, Mercedes, Deutsche Telekom, who all have substantial business interests in Russia would have been bending Merkel's ear about trying to protect those investments.
Europe needs to start talking to Russia.
Europe needs to start taking an independent and unilateral line on Russia and to stop getting caught up in a conflict not of it's own making.
Let us not forget that Western oil companies have sunk many billions into Russian oil and gas projects. It would be very simple for Russia to let Russian energy companies declare bankruptcy in Russian courts - eliminating all Western debt and partnerships.
I am expecting some kind of follow-up from Russia after the rate hike.
So the US has decided on regime change in Russia, step one destroy the economy and starve the Russian people, that's not nice, Russia will need to raise cash, how about teaching the US about repercussions and sell some ICBMS to Iran, or ten of those mobile nuclear missile launchers they have..
Are you back you little cock sucking prick? Blindsided me with a reply to a comment 4 hours later. Class A CUNT.
lol, roll with the punches pussy.....you still checking after 4 hrs to see if anyone was cross with you, LOL.
Listen,
Where's that Bangalore guy been? Bunch of people get banned lately? A lot of guys have gone that I enjoyed reading.
Yeah probably got NSA'd by these 2 little cock sucking .gov whore's above , namely Amerikan Patriot and AussiKiwi
WTFUD, lol, little girl talking tough, harden up princess.
Skousen is SO right.
So who is the press more desperate to attack? Bill Cosby or Putin? Immelt or Zucker?
Cosby's son Ennis was tragically murdered by a very racist guy from Ukraine. Ironically, Cosby's being attacked with severe character assasinations via drive by media when the US funded Nazi Kievs.
Also, someone mentioned that Cosby had once tried to buy the entire NBC station (i didnt' know he had THAT much money)- GE "politely" declined. Sorry, thought Cosby was a lot more likable than Soros or the CLintons or whatever is running it now .
I think two key dots are the derivatives bailout and the PM circuit breakers. The circuit breakers are there to slow paper's attempt to recouple with physical price once it breaks. The bailout is there to help soak up the blood. The banks were smarter this time to get the bailout approved in advance.
The West knows that overt military conflict with Russia has too great a chance to spiral out of control, and the loss of power and control is what is feared the most by any authority. The West cannot do to Russia what it did to Iraq and Libya when they tried to shake off the shackles of the petrodollar. It must try to accomplish through currency destablization and sanctions what it cannot safely do through brute force - stopping Russia from establishing a viable alternative to the USD for global trade settlement, particularly in energy. The West is squeezing Putin's balls hard and fast to see if he will tap out. He may yet. I hope he doesn't.
I think China is smart enough to have positioned itself to minimize the damage that would come from a selloff in USTs. I think they've pledged a lot of their USTs to third parties in exchange for hard assets in Africa and elsewhere. I also wouldn't be surprised if China was using their USTs in support of suppressing paper gold, thereby seemingly helping out the good ol' Fed, whilst simultaneously buying up physical. Once the corks pops globally, the world will reflexively flee into USTs and other USD denominated assets, thereby slowing USD's fall. China can then sell USTs into the panic. So I think it is a safe bet that China would be able to offset its UST losses, if not actually come out on top, though appreciation in physical gold price.
What China is most afraid of is civil unrest, and that any rapid shift away from the current order poses a meaningful risk of internal destabilization. A symptom of this are the ghost cities and massive infrastrcuture projects. They keep people busy, and even if they're not an efficient use of capital in terms from a traditional standpoint, they help channel the steam. I think
I think Russia, China and India are stockpiling gold hand over fist because it will be used as collateral to increase confidence and settle trade amongst themselves (and increasingly others) whilst they work out the kinks and ride out the volatility that will occur at first. Even if any of them have aspirations towards it, which I doubt, Russia and China are not going to try to establish their currencies as the/a new global reserve currency. Russia wants to sell oil and gas in a stable environment that shears the sheep but doesn't skin them. Russia is often portrayed as a thugocracy. Maybe so. But history tells us that the mafia and organized crime syndicates can run markets very efficiently and fairly. (See http://www.newyorker.com/magazine/2014/08/11/crooked-ladder and read down about the Private Sanitation Industry Association and Fulton Fish Market).
I love doomer porn as much, if not more, than the next bloke, but the outcome I see as having amongst the largest probability upon reaching a tipping point of de-dollarization is a skyrocketing cost of oil. I've consistently said on ZH that so long as the US is able to feed itself, we're not going to have uncontrollable, nationwide civil unrest. The nation's largest cities, strategic resource areas, and key industries and infrastructure will be overtly militarized and be subject to martial-style law and repressive control, which will be less prevalent in more rural and less strategic locations. Energy costs will skyrocket and economic activity will crater. Waves of consumer and business bankruptcies. Consolidation of the means of production into fewer and fewer hands, increasingly intertwined with the government.
This crisis will not be wasted. TPTB know the score and can do the math. It will be used to restructure or eliminate countless trillions in unfunded obligations to retirees and pensioners. Much easier to bust the unions and blocks of angry government pensioners and force cuts to their payments when they're wholly reliant upon you for their next meal. The falling price of USTs will facilitate their purchase and cancellation, thereby reducing the national debt back to a more manageable baseline. The goverment will also soak up and remove a large portion of all the excess USD that will be floating around through confiscatory tax rates. Things will stabliize after awhile. At that point, the next iteration of the Matrix can begin. US industry will start producing more and more because the price of Chinese and other imports will make them increasingly unaffordable. Americans' standard of living will have plummeted and become more on parity with that of nations whom Americans previously viewed with self-satisfactory pity and contempt. Within a generation or so, people will tell stories about how hard they had it and how they survived the [insert adjective here] Depression, and how lucky the current generation has it.
And whichever ilk of craven self-appointed geniuses that assume the mantles of Krugman, Bernanke, Greenspan, et al. will assure us from their ivory towers how they have learned from the mistakes of their predecessors and how this time will be different because those mistakes can never again be made.
Wall St. bribing congress into guaranteeing another Wall St. bailout at the same time as passing a law that effectively declares war on Russia does seem a bit too coincidental.
Almsot like they expect Putin to make the obvious counter move - allow Russian companies to declare bankruptcy over their loans to the TBTF Wall St. banks.
.
"but what the fuck is China staying so mute for"
The best outcomes from China's pov in order are:
1) *Both* Russia and the banking mafia weakened
2) Russia strong, banking mafia defeated
3) Russia destroyed, US banking mafia strong (because China will be next).
So they're only half on Russia's side. They need the US banking mafia defeated same as everyone else but it's better for them if Russia soaks up most of the hits.
Just like the USSR soaked up most of Germany's hits in WWII.
Ou wait, you'll see! Putin making another smart move! Ya! on the left it was 33 RUB for 1 USD than he made a smart move on the right and it was 40 RUB for 1 USD, than Putin the great made another super sweet move and it was already 50 RUB to 1 USD, than again made extra smart move and it was 60 RUB for 1 USD and than came the smartes move from dear leader Putin and at one time it was already 78 RUB for 1 USD. Yes, my hero is making so smart moves all the time, he is few steps ahead to everyone, none I mean none expected that RUB would loose it's value so fast, but that is the part of the plan Putin now executes. People loosing their savings, lining up at ATMs, can't pay back their debt, can't take a loan, business can't grow, that is all part of the plan. And Putin will continue to make these super smart moves and one day, I tell you, one day, he will, I repeat he will back all those rubbles to gold. Yes, we have gold, lot's of gold so much gold you have not seen before, and it all will be used to back rubble with gold. And than you will see what will happen. Yes, that will totaly happen because as you can see Putin already makes these all sweet moves.. cha cha cha!
The banking mafia hold a lot of cards but their weakness is those cards are all proxies: Congress, MSM, Saudi, Germany, Japan etc. They are not very strong in themselves because they are so leveraged. Hence why Putin targeting the banking mafia specifically could potentially have such a dramatic effect.
Even better if he could target only one of them at a time - Goldman sachs for example - the rest would get into such a feeding frenzy tearing the carcass apart that it would distract them for a while.
edit: All he has to do is let big Russian companys who need to roll over large Goldman Sachs loans, default.
Yes, default and not paying back money you took is the best way to make trust to other partners! I agree this could be next smart move from Putin! Yes! We are winning again!
I wonder what would happen if Russian companies who had loans to rollover selectively defaulted on loans to Goldman Sachs?
Then GSCO will find a way to wrap it around a pool of derivatives and stick it to the US taxpayers. They're not stupid. That's why they're doing 'God's work' and are 'Richer than you' and me.
The goy will pay either way.
their assets outside russia would have been seized
forputin or forcallin
China's CCTV view: http://www.liveleak.com/view?i=00e_1418791597
Collect your Russian brides while you can, gents. At the same time, hedge with investment into American bride pimping companies that will see increased market-share in the upcoming decade.
I suggest you hold - they will be two-for-one soon. BUT a fair warning is in order - those Russian brides are very expensive in the long run
Not near as expensive as a north american bride. Believe me, they don't need new everything all the time. But don't use an agency. Just go over there. I went to Estonia. Many Russan girls there as well as locals. But only if you like beautiful women. Not the pigs they produce on our shores. I used to come back from there and pick up a Maxim magazine, wondering how is it possible that ugly women can be in a magaine? Being under 150 lbs does not make you beautiful.
I'm dollar cost averaging into Russian equities, so might be considered a "knife catcher", it doesn't overly concern me.
For those crowing about the crashing Ruble. Seriously? Do you have ADHD? Things go down, things go up. I also buy my central heating gas from Russia, pay in Euros and that concerns me a lot more than any investments I have there in an MSCI indexed fund.
I'm not going to advise you to buy Russia, there are billionaires out there who keep telling you with various language how this buy low, sell high stuff works but people just keep on not understanding.
Apple cancels orders within Russia
http://www.bbc.com/news/business-30510969
Well I am sure the Chinese competitors will sell ones that look just like Foxconn originals
good riddance
Now, that's what I call decoupling!!! Dobro pozhalovat' v Severnuju Koreju, dorogie rossijane! (Welcome to North Korea, my dear Russians)
Today>> "Western Banks Cut Off Liquidity To Russian Entities"
Soon>> "Russian Federation cuts off all gas to the EU"
I guess people seem to be forgetting that aspect of this financial warfare side of dice.
Yeah, reduced flow of foreign currency is exactly what Russia needs now...
nazi, what is the weather in Tel Aviv now?
The Russians want to totally avoid turning this into Russia vs the West or Russia vs America as that is what the banking mafia wants and needs.
They need to turn it into Russia vs "financial vultures" (aka the banks).
I'm sure the cabal is playing its last hand as they want WWIII desperately.
Raiffeissen down 8%
Pretty lucky for Vlad the international sanctions are in place huh?
All those hedge funds woulds be buying Moscow out from under the Oligarchs for 45c on the dollar
http://newamerica-now.blogspot.com/2014/02/beyond-collapse.html