The Russian Sanctions Are Working; That's What Is Hitting The Ruble

[babylonsister]

The Russian Sanctions Are Working; That's What Is Hitting The Ruble
Tim Worstall


My opinion of the effectiveness of the US (and to a lesser extent European) sanctions on Russia over the Crimea and Ukraine has risen rather in the last couple of days. They appear to have been better crafted than I had thought. And it is those sanctions that are causing this current problem as the ruble exchange rate gyrates away. Not so much the basic problem that Russia has to deal with, being a state largely financed by natural resource extraction and that resource near halving in value, but as to why it has all blown up now and in such a dramatic fashion.

Today’s news is that the ruble continues those gyrations. Just today it’s traded at 73 to the dollar, to 62 to the dollar and is now back at, at pixel time, at 68. No wonder that Apple AAPL -0.76% has closed its Moscow online store, pricing imported goods in the face of such variation is going to be pretty hard. Not even Apple’s famed profit margins can take the sort of hit that those movements could cause. We’re also hearing that the Ministry of Finance is selling of dollars to support the exchange rate:

“The ministry of finance considers the rouble to be extremely undervalued and is starting to sell its remaining foreign currency on the market,” it said in a statement carried by Russian newswires, which added that the ministry was ready to sell $7bn.

That’s the sort of thing that a finance ministry is supposed to say in these circumstances of course. And that is a very much smaller amount than the central bank has if it should wish to intervene.

snip//

The more I think through this the cleverer I’m thinking these sanctions are. That ban on financing certain firms (and it is only certain firms, those most closely linked to Putin’s inner circle) was never going to have an immediate effect. But it would obviously help to concentrate minds as the due date for many of these commercial loans became closer. No bank that deals in US dollars anywhere in the world can lend to any of those companies for more than 90 days. As just about every bank has some USD business then that means that just about every bank is excluded from offering such loans. So that boxes in that inner circle on one side.

more...

http://www.forbes.com/sites/timworstall/2014/12/17/the-russian-sanctions-are-working-thats-what-is-hitting-the-ruble/

[yortsed snacilbuper]

1. Does pooty have a food taster,

in case one of his disgruntled inner circle tries slip some cyanide into his big mac?

[NuclearDem]

2. Hope Crimea was worth the recession.

[babylonsister]

4. Huh? What are you talking about?

Ours or theirs? Maybe lessons are important without resorting to violence.

[Cha]

13. Pretty sure, he's talkin' to Russia.. babsis.

[NuclearDem]

16. Yeah, I was referring to Russia.

[doc03]

3. But all the Faux News morons were calling for us to liquefy our

natural gas and send it to Europe to bring down Putin. I wonder just how long it would have taken to do that.

[babylonsister]

5. Really? I bet they haven't even mentioned it lately. ;) nt

[Monk06]

6. It's not sanctions it's Saudi Arabia manipulating the price of oil in the short term in order to

trigger turmoil in Russia, Iran and Venezuela. If the strategy damages the Canadian oil sector it could create some extreme downstream repercussions for US energy security.

It may even backfire and destroy OPEC.

[newfie11]

7. +1!!! Nt

[babylonsister]

8. So our sanctions had nothing to do with SA's actions? nt

[joshcryer]

9. Russia has reserves to last several years.

The ruble crashed because they got cut off with financial transactions. That's it.

Oil being low makes Russia have to burn into its reserves, but like I said, they have several years to play with.

[pampango]

18. That's part of it but Russia's currency has crashed faster and farther than those of other oil

exporting countries. While oil/gas constitute 60% of Russia's exports, that percentage is even higher in similar countries like Venezuela, Iran, Mexico, Norway, Nigeria, etc.

Something is making the ruble decline more than the currencies of countries that are even more dependent on the oil exports than Russia is. If it's not sanction, what is it?

[Monk06]

19. It's because the Russian mafia, Putin included are not holding their wealth in Rubles.

They are converting Russian gas and Oil into Euros and US dollars thus weakening the Ruble.

They will sell oil to China in Rubles for political purposes meanwhile sending their dollars and Euros to their Swiss bank accounts.

They win coming and going.

[babylonsister]

11. If Russia is so unconcerned about the ruble, why are they so concerned?

http://triblive.com/usworld/world/7400691-74/ruble-putin-russia#axzz3MQDEv88D

Russia acts to stanch ruble's plummet
Friday - Dec. 19, 2014
By The Washington Post
Thursday, Dec. 18, 2014, 12:01 a.m.

snip//

The currency turbulence has upended Putin's carefully constructed economic system, which for his 15 years in power has offered relative prosperity and stability to voters in exchange for a passive political scene.

The situation led car makers and others to suspend sales until they could decide how much to charge. As of Wednesday, Apple's online store in Russia was still out of service. A day earlier, lucky customers at their physical stores in Moscow could buy iPhones and computers at steep discounts.

Russia's Finance Ministry announced that it will join the Central Bank in selling off reserves of foreign currency to help prop up the ruble. Medvedev promised that Russia would steer clear of making any “extremely harsh regulations” to bring the ruble rate to heel and that the government's moves would “be founded on market mechanisms.”

[Cha]

14. Exactly, babsis.. they were laughing when this first started.. I don't think they're laughing

anymore. Oh, maybe Putin's online supporters are putting on a brave face but it seems like they're not willing to face the reality of what putin is up to and down to.. or they just don't give a shite.

[Cha]

21. I just read in that article that was a HIDE.. they have "Bully Obama".. HAHA! Oh, poor little ol

misunderstood pious putin.

[Behind the Aegis]

15. also from your site...

Amazing words which fully confirm one of the most important facts of the current situation: the AngloZionist Empire and Russia are at war, a war in which either the Russian Bear will be "stuffed and that's all" or the AngloZionist Empire will crumble. This is an existential war for both sides, for the AngloZionist Empire and the Russian Civilizational Realm - one of them will defeat the other.

That, of course, is an article in which he quotes Lew Rockwell. Oh, and the hate isn't limited to Jews, not that it matters here, but I bet this will perk some up....

Moscow bans homosexual "pride" parades for the next 100 years

First, when I saw the RT news item announcing that "Moscow bans gay pride for century ahead" I went "no way!" and had the giggles thinking of how the doubleplusgoodthinking Lefties in the West would cry in outrage if such a decision had really been taken. Then I saw an outraged statement by Human Rights First confirming that the folks on Moscow had really taken such a decision. Now some of you might wonder what a self-proclaimed "Left Libertarian" like myself might think of all that. Let me tell you:

I am totally DELIGHTED by this decision!
--snip--

Furthermore, compare the situation of Russian homosexuals with the situation of Western pedophiles who are the victims of a systematic campaign of vicious persecutions. Oh, I am not saying that it is wrong to persecute pedophiles, I am only saying that I don't see any logical reason to viciously prosecute the adepts of one form of paraphilia while allowing the adepts of another form of paraphilia to engage in "pride parades". And if Moscow has no right to ban "gay pride parades" then the West has an obligation to allow "pedophile pride parades" in its Berlin, New York or Rome. But no, the West gets away with its massive anti-pedophilia campaign while, in July of 2011, the European Court of Humans Rights condemned Russia to pay 30,000 euros in compensation to gay activists over its decision to ban so-called pride marches. Talk about absolute hypocrisy!

--snip--
more: (remove the spaces, I won't directly link to that Jew/Gay hating site) http:// vineyardsaker. blogspot. com/2012/06/moscow-bans-homosexual-pride-parades.html

Perhaps seek another venue for your article.

[NuclearDem]

17. Saker again?

[davidn3600]

12. It's a combination of sanctions, oil, and just bad political environment

What really started the ball rolling was the tumbling oil prices.

The EU sanctions on top of it added to the snowball effect. Now businesses and investors are spooked and taking their money out of Russia.

Putin has a lesson to learn about economics in that a lot of it is dictated by stability. Investors put their money where it will grow and be stable. And people who have money and control money don't particularly trust governments that are riddled with corruption and seem to operate as a mafia-style regime.

[former9thward]

20. Sanctions have little to do with it.

Russia is very dependent on the price of oil and oil has dropped a significant amount in a short time. That is what is causing the ruble to fluctuate. The ruble was up 8% against the dollar on Friday. Does that now mean sanctions have failed?