Just over a year ago when the Obama administration first introduced the vague, scary-sounding, all encompassing concept of "costs" when it explained how US sanctions would cripple the Russian economy, we mocked this latest bout of amateurism by the US State Department, noting that ig anything it would instead crush Europe's dominant, and far more intertwined with the Russian economy, powers such as Germany.
A few months later, Europe was on the verge of a deflationary bust and triple dip recession, and only the launch of €E has allowed the continent to kick the can for a few months before the crippling economic reality comes back with a vengeance. Incidentally, some skeptics (such as this website) wondered in late 2014 whether the Russian sanctions weren't precisely what Mario Draghi ordered: without the collapse in the German economy in the second half of 2014, the ECB surely would not have been allowed to proceed with its current courtesy of debt monetization.
But more importantly, overnight it was none other than the White House itself which finally admitted that the entire brilliant idea of collapsing the Russian economy by way of sanctions across the western world, ended up hurting European nations (i.e., US partners) who had no choice but to "sacrifice their own economies."
This is what Josh Earnest, White House press secretary, said yesterday.
"The commitment required by our European partners to implement and maintain these sanctions is significant. They have economies that are more integrated with Russia than the United States has, and so we recognize that many of the countries that we’re counting on to continue to enforce these sanctions are countries who do so at some sacrifice to their own economy."
In other words, the Russian sanctions will continue until every European country taps out.
And just to make sure Europe is crushed by the relentless juggernaut of John Kerry's diplomatic skillset, earlier today Obama said he'd convinced European leaders to maintain economic sanctions on Russia, "even as U.S. officials concede the measures have done little to curb aggression by separatists in Eastern Ukraine" according to a CNN report.
It doesnt end there, because Obama, ever generous with crushing the economies of America's partners, will gladly continue until the bitter end... for said partners.
Obama said Europe and the United States stand ready to impose new sanctions if violence increases.
"Ultimately, this is going to be an issue for Mr. Putin," Obama said. "He's got to make a decision: Does he continue to wreck his country's economy and continue Russia's isolation in pursuit of a wrong-headed desire to recreate the glories of the Soviet empire? Or does he recognize that Russia's greatness does not depend on violating the territorial integrity and sovereignty of other countries?"
So when the impact of the current iteration of European QE fades to nothing, at least we now know precisely how the status quo will enable round two: boost Russian sanctions so aggressively that Europe skips the triple-dip recession and goes straight into depression.