Russia raises key interest rate to 17% amid rouble decline

[wooloomooloo]

My wife has been her for 12 or 13 years, is one of the most knowledgeable people in the US about US and Russia global banking and finance issues, but you try and tell her Purin is bad for Russia and her head spins and pea soup like substance comes spewing out of her mouth.

Glad your wife won't be queueing for three hours for a loaf of bread and running on her bank just to hide her lifesavings under the mattress. Always best to witness the homeland implode from a distance.

Strangely enough, the current sanctions are relatively mild and the screw yet to be turned but the Russian economy is a wreck already.

Don't be fooled - the masses will turn on Putin when they're starving.

It ain't sanctions. Its oil price which is driven by US and Saudi.

Doesn't matter. It's a disaster and well-deserved.

[Thai at Heart]

What happens if Russia (and China) start dumping US Treasury's on the open market?

If they bought them at 50 and sell them at 100 they would lose half of the money in the Russian Treasury. Did they hire a Thai finance minister?

A Russian dump would be material, but not catastrophic. A Chinese dump would be catastrophic. A Russian + Chinese dump would be essentially "game over" for the petrodollar.

You are talking absolute nonsense again, but I assume you already know that. Any sane person would know that. Russia holds about 1.7% of outstanding treasuries. We could easily absorb that and already buying back treasuries at rate to cover in 2 months anyway. China is more dependent upon our treasuries than we are on them. No one would dump anything and drive prices down because they would loose too much and China cannot afford to allow it currency to appreciate and lose exports since they are decades away from becoming a consumption economy.

Dude, I explained tis a while back but you either are too dense to get it or just ignore it to keep spreading rumors and paranoia.

Absolutely. No one can afford to dump USD treasuries. Ironicay, the larger holders of whom, are USA pension funds

[watso63]

Thinking more about the effect of what this means for Thailand. Tourism from Russia will likely fall off a cliff edge and seeing how condo construction has been largely marketed towards Russians, unless buyers from elsewhere can be found there could be many uncompleted projects left to litter places like Pattaya as many of these projects are funded by off plan purchasers making regular payments. I'm going to look out for lots of cheap bargains as Ivan and Ivana have to pack up and leave to go back to their bleak and freezing motherland.

[Asiantravel]

http://www.slate.com/blogs/moneybox/2014/12/16/russian_currency_crisis_putin_has_no_good_solutions.html

Russia Is So Screwed

Oops!

Maybe the Russians will revolt now against their dictator who is largely to blame for this?

Russian public names Putin ‘Man of the Year’ – fresh poll

http://rt.com/politics/214743-putin-year-man-russia/

Edited December 17, 2014 by Scott

[Morch]

http://www.slate.com/blogs/moneybox/2014/12/16/russian_currency_crisis_putin_has_no_good_solutions.html

Russia Is So Screwed

Oops!

Maybe the Russians will revolt now against their dictator who is largely to blame for this?

You clearly don't understand Russian mentality or what life is like there. Never happen.

The Romanovs might have had something to say about this.

[Fr3nzy]

Next russian bank measure might be nuclear

http://rt.com/business/214927-ruble-capital-controls-nuclear/

New sanctions coming http://rt.com/usa/214967-obama-sign-sanctions-russia/

[zydeco]

Next russian bank measure might be nuclear

http://rt.com/business/214927-ruble-capital-controls-nuclear/

New sanctions coming http://rt.com/usa/214967-obama-sign-sanctions-russia/

Wow. No currency conversion for the ruble. This will effectively put the Russians back behind their Wall. The closest any Russian will get to Thailand is Vladivostok.

[Scott]

A post containing a racial slur has been removed.

[Publicus]

In a year the ruble has lost almost 50% against the baht, and likely to lose another 10-20% in the near future. This will make Thailand foods too expensive to import, further limiting Thailand's market strategies as it tries to avoid financial impacts of any potential US and EU markets restrictions over human rights and democratic issues.

Russian oil becomes "cheap" compared to the baht. Good for Thailand? With current and near-future oil prices less than Russia's oil production breakeven costs, it won't be worth Russia's efforts to export oil to Thailand (or anywhere else for that matter). This is another losing situation for Thailand.

Thailand and Russian economic partnership: lose-lose

RUBvsBAHT.jpg

Interesting take.. Oil is now $43 per barrel below Russia's break even point. That means Thailand can pick it up for almost half of the pre-Russian Ruble collapse price from other sources.

The Ruble was being devalued not to make exports attractive, but to try and keep lower oil prices from create large deficiencies in Russia's federal budget. Pretty selfish though process you have here.

US had 15 % inflation, SL crises and etc. in the early 80s. You, however, cannot compare US situation then to Russia now. Completely different economic issues, outlook and potential fixes.

Russia is heading toward isolationist, partly out of necessity, partly out of spite and partly due to sanctions. Participation in world financial markets and inflow of foreign investments helped US in the early 80s, but won't be a savior for Russia now in the direction things are headed.

Drop the US and Russia comparisons that feeds your inner happy button or resentment issues. Stupid selfish crap that completely misses the boat on a dire situation for a lot of lovely, good people.

Sanctions need to stop, the oil price bs needs to stop, Obama needs to become a real man and get over his petty personal issues o Putin showing him up over Snowden, Syria and etc.

Some of you guys don't get it. Russians were already paying double digit mortgage rates even before the central bank started raising rates. You cannot just throw up central bank rates from US in 80s and Russia today and say same, same. 17 % with Russia's economic structure, low GDP person and low income per person is devastating, especially without inflow of foreign investments or participation in the world market.

I agree with some of what you said and would add; why not tell the lovely good people to give Crimea back and get all the troops out of the Ukraine.

I hear you loud and clear, but it is not the Russians that are suffering causing this. Public opinion in Russia in favor of remaining in the Ukraine/Crimea dropped from 72% approval to 24% approval. This is more a political stand off now than anything else and What both Obama and Putin are doing could hurt both US and Russian citizens long term.

I am very sympathetic to the Ukraine and have many Ukrainian friends. They do not want Russia there, they are very worried and they are suffering big time. They now have black outs between 5 p.m. and 10 p.m. every night.

Obama et al are going about this the wrong way. They will NOT force Putin to do anything. He would cut his own arm off to keep from being shown up by Oabam or told what to do, hence he is considering going back to isolation and telling everyone to f off.

Obama et al are going about this the wrong way. They will NOT force Putin to do anything. He would cut his own arm off to keep from being shown up by Oabam or told what to do, hence he is considering going back to isolation and telling everyone to f off.

Well then let Putin cut off his dick and award present it to the most patriotic Russian.

Prez Obama and Chancellor Merkel are doing this in exactly the right way. Prez Obama is preparing to sign further sanctions by or on the weekend and Chancellor Merkel endorses them. Those who predicted Germany would join the Brics and their supposed 80 country alliance are now having their heads examined or they should be.

Chris Beauchamp of IG sums it up:

It it looks like the power of OPEC to maintain a balance in the market has been severely weakened, if not broken entirely. Supply gluts are set to stay with us into 2015, and the geopolitical ramifications will be felt throughout the globe, not least in relation to Russia and Putin’s attempts to reconstruct a Moscow-led sphere of influence.

The Russian people have suffered socio-economically for a thousand years and at this time the mass of Russians are in fact prepared to suffer more. Russians want to get hit harder, and again -- they accept that it is their natural condition to be miserable.

Russians know the past ten years of socio-economic improvements have proved to be hollow and fleeting and the mass of Russians now accept this as reality. Political change in Russia has gone in only one direction, which is toward authoritarianism instead of democracy. Russians know this and are fully accepting of the present radical reversal of events. So be it.

All of this is also a lesson to the CCP Boyz in Beijing as their rattletrap political economy grinds, creaks and emits blue smoke while the governments and elites of this region gaze at Russia to their left and China to their right.

The Coming Collapse: Authoritarians in China and Russia Face an Endgame

Since the beginning of the twenty-first century, China and Russia have been constants in the world. They have been autocratic, resistant to the spread of freedom, occasionally belligerent toward their neighbors, and increasingly prosperous. They have consistently joined together in order to block Western initiatives in the UN Security Council and to

defend dictatorships like Iran, North Korea, and Syria.

http://www.worldaffairsjournal.org/article/coming-collapse-authoritarians-china-and-russia-face-endgame

[spidermike007]

Kudos to King Vlad for working so hard to improve the lifestyle for the average Russian. Nice job man. Keep it up. Continue showing your compassion and concern for your people.

[Publicus]

I hear you loud and clear, but it is not the Russians that are suffering causing this. Public opinion in Russia in favor of remaining in the Ukraine/Crimea dropped from 72% approval to 24% approval. This is more a political stand off now than anything else and What both Obama and Putin are doing could hurt both US and Russian citizens long term.

I am very sympathetic to the Ukraine and have many Ukrainian friends. They do not want Russia there, they are very worried and they are suffering big time. They now have black outs between 5 p.m. and 10 p.m. every night.

Obama et al are going about this the wrong way. They will NOT force Putin to do anything. He would cut his own arm off to keep from being shown up by Oabam or told what to do, hence he is considering going back to isolation and telling everyone to f off.

Obama et al are going about this the wrong way. They will NOT force Putin to do anything. He would cut his own arm off to keep from being shown up by Oabam or told what to do, hence he is considering going back to isolation and telling everyone to f off.

Well then let Putin cut off his dick and award present it to the most patriotic Russian.

Prez Obama and Chancellor Merkel are doing this in exactly the right way. Prez Obama is preparing to sign further sanctions by or on the weekend and Chancellor Merkel endorses them. Those who predicted Germany would join the Brics and their supposed 80 country alliance are now having their heads examined or they should be.

Chris Beauchamp of IG sums it up:

It it looks like the power of OPEC to maintain a balance in the market has been severely weakened, if not broken entirely. Supply gluts are set to stay with us into 2015, and the geopolitical ramifications will be felt throughout the globe, not least in relation to Russia and Putin’s attempts to reconstruct a Moscow-led sphere of influence.

The Russian people have suffered socio-economically for a thousand years and at this time the mass of Russians are in fact prepared to suffer more. Russians want to get hit harder, and again -- they accept that it is their natural condition to be miserable.

Russians know the past ten years of socio-economic improvements have proved to be hollow and fleeting and the mass of Russians now accept this as reality. Political change in Russia has gone in only one direction, which is toward authoritarianism instead of democracy. Russians know this and are fully accepting of the present radical reversal of events. So be it.

All of this is also a lesson to the CCP Boyz in Beijing as their rattletrap political economy grinds, creaks and emits blue smoke while the governments and elites of this region gaze at Russia to their left and China to their right.

The Coming Collapse: Authoritarians in China and Russia Face an Endgame

Since the beginning of the twenty-first century, China and Russia have been constants in the world. They have been autocratic, resistant to the spread of freedom, occasionally belligerent toward their neighbors, and increasingly prosperous. They have consistently joined together in order to block Western initiatives in the UN Security Council and to

defend dictatorships like Iran, North Korea, and Syria.

http://www.worldaffairsjournal.org/article/coming-collapse-authoritarians-china-and-russia-face-endgame

“ The Coming Collapse: Authoritarians in China and Russia Face an Endgame “

How is the police state of USA any less authoritarian ? An American I was chatting to three weeks ago up in Chiang Mai ,who was teaching in Yunnan province in China said emphatically he felt much more free in China than in USA.

316,000,000 Americans say you and your chum live in an unreal dimension, same as Putin and his 80% of Russians and same as the CCP and its billion of the 1.3 billion PRChinese.

Meanwhile and all the same, happy new year....

Putin last week lost another $5 billion of his foreign reserve fund which is now reduced from the $540 bn of earlier this year to its present $416 bn, and the CCP Boyz in Beijing say Putin's forex reserves are in fact less than $400 billion.

Putin just printed up $10 billion for Rosneft Oil to pay a load due by Dec 31st so his buddy who heads Rosneft can hang on the the USDollars they currently have going forward -- or backwards and sideways. It is part of the $30.1 billion Russia has to pay by the end of the year along with another $15.5 bn payable in February. All in all, Russia has $137 bn of corporate and bank debt coming due in 2015. The only question is when the roof will fall in.

Reports are unconfirmed Putin last week started selling some of his gold hoard so that remains unclear, but Putin sooner or later will have to start selling some so the markets are watching, which is probably what stopped Putin to begin with. Markets are also anticipating capital controls which will further freeze the economy and banks.

Russian central bank says growth will decline 4.5% next year while the IMF says 6% and everyone agrees inflation next year will go much higher than the present 10%. Russia imports 40% of its food and food eats up 30% of Russian disposable income, yet Putin has slapped sanctions on relatively low priced food from the EU.

The ruble has collapsed into a rubble and the Russian economy is in freefall because of the risk factor to the markets imposed by geostrategic concerns. Putin and his people have finally stopped talking nuclear weapons but the damage is done. This is a showdown but it's no gunfight at the Ok Corral when both sides shot themselves full of holes. It's more like Putin's last stand.

Edited December 17, 2014 by Scott

[zydeco]

BTW, where are all the Russians that used to post in defense of Putin? Has the collapse hit them so hard that they can't pay their internet bill anymore?

[Jingthing]

BTW, where are all the Russians that used to post in defense of Putin? Has the collapse hit them so hard that they can't pay their internet bill anymore?

Looking forward to the day when most Russians lie and say, I never supported Putin ... because it would be shameful to admit to it.

[F430murci]

BTW, where are all the Russians that used to post in defense of Putin? Has the collapse hit them so hard that they can't pay their internet bill anymore?

They won't be doing it from new iPhones, iPads or Macs. Apple stopped online sales to Russia due to volatility in the Ruble.

http://m.bbc.com/news/business-30510969

[mania]

While it is not unusual to read here the usual cheering from the usual

supporters of X,Y or Z countries

It is unusual that none seem concerned about worldwide stability.

It is never a good thing IMO when a large country becomes destabilized through

what ever means & more so when thru sanctions or wars.

Folks seem to think it has no effect outside of the one being targeted?

Aside from that at the end of the day there are people in Russia same as there were people in

Iraq, Egypt,Libya,Pakistan, Palestine etc. etc. etc. that will be heavily affected. Out of that comes

questions, anger & more.

Lastly who is to say what the ultimate outcome of such sanctions/actions will be?

Will Russia just lay there? Will others decide to take sides? Who ultimately needs who?

It is a worldwide market ...it functions when it is allowed to function freely.

It does not run on one or two countries output alone if it did they would have done so long ago.

It grinds to a halt not for just the one being punished thru sanctions but for other countries that

relied on products from that country & for many humans that have no say in governments games.

So before so many don their party hats perhaps think of "all" those affected.

It is never a slam dunk/end of game scenario

Edited December 17, 2014 by mania

[thailiketoo]

Aside from that at the end of the day there are people in Russia same as there were people in

Iraq, Egypt,Libya,Pakistan, Palestine etc. etc. etc. that will be heavily affected. Out of that comes

questions, anger & more.

Excuse the edit but I just had a small question. Why did you pick those countries to mention? Does the Russian Ruble effect them more than other countries?

[mania]

Aside from that at the end of the day there are people in Russia same as there were people in

Iraq, Egypt,Libya,Pakistan, Palestine etc. etc. etc. that will be heavily affected. Out of that comes

questions, anger & more.

Excuse the edit but I just had a small question. Why did you pick those countries to mention? Does the Russian Ruble effect them more than other countries?

Yes I know.....You like everything neat & tidy On Topic 101% chai mai?

I used them as examples of instability impact on humans nothing to do with rubble

which is why I led it with "Aside from that at the end of the day there are people"

Forgive my sidebar /example I throw myself on the mercy of the hall monitors court

Edited December 17, 2014 by mania

[thailiketoo]

Aside from that at the end of the day there are people in Russia same as there were people in

Iraq, Egypt,Libya,Pakistan, Palestine etc. etc. etc. that will be heavily affected. Out of that comes

questions, anger & more.

Excuse the edit but I just had a small question. Why did you pick those countries to mention? Does the Russian Ruble effect them more than other countries?

Yes I know.....You like everything neat & tidy On Topic 101% chai mai?

I used them as examples of instability impact on humans nothing to do with rubble

which is why I led it with "Aside from that at the end of the day there are people"

Forgive my sidebar /example I throw myself on the mercy of the hall monitors court

I used to live in Pattaya I left because of the Russians. If the demise of the Ruble is serious enough and long enough to cause them all to leave Pattaya I might come back. The only reason I asked is you mentioned 5 of the most dangerous countries with the most dangerous people in the world and I wondered if it had anything to do with the Ruble.

Edited December 17, 2014 by thailiketoo

[Scott]

Yes I know.....You like everything neat & tidy On Topic 101% chai mai?

I used them as examples of instability impact on humans nothing to do with rubble

which is why I led it with "Aside from that at the end of the day there are people"

Forgive my sidebar /example I throw myself on the mercy of the hall monitors court

The hall monitor approves. You are addressing the topic and that is appreciated.

[Publicus]

Recall 1998 when I arrived in Thailand into a blast furnace called January. Went to the forex agent and got baht 55 for my usdollar. The baht at 25 to the dollar was a distant rumor in that dystopian land of chaos. My two weeks vacation in Phuket turned into six weeks as a prominent patron of Soi Sunset thru to the sunrise. The Thais meanwhile and throughout were fleeing in all directions. While the baht at 55 very soon brought me back to the new old word, I know I definitely won't be pursuing any bargains up in the glacial north.

Russian ruble's fall: A classic 'currency collapse'

The decline of the ruble is the result of Western policy. The question now is how will Putin respond? The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.

What makes the situation in Russia that much worse is that the nation’s companies, both private and state-owned, hold $670 billion in debt denominated in foreign currencies. This debt is about one-third the size of the entire Russian economy, and it will become impossible for Russian companies to service it if the ruble continues to fall. Writes Weinberg:

The amount of rubles local borrowers have to give up to pay off foreign debt obligations just increased by 20 percent overnight, by 50 percent since the start of this month, and by 90% since the start of November…. The effective interest rate on foreign borrowing for Russians is over 6000%, enough to kill any economy.

https://fortune.com/2014/12/16/russian-ruble-currency-collapse/

It is clear Western banks and others will be doing a lot of writing off even if Putin doesn't order Russian corporations to engage in a "strategic non-payment" of outstanding debts. That nonetheless will impact the Brics economies and the developing economies of other nations much more than in Europe and much much more than in the US.

[Asiantravel]

EU Demands Russia Bail Out EU & Ukraine

now Russia is not only being blamed for supporting the residents whom Western aristocrats want to exterminate, but the propagandists for western aristocracies are already starting to blame Russia for not bailing out Western taxpayers — the people who will be absorbing the losses no matter what, even if aristocrats’ business-bets on Ukraine score those ‘entrepreneurs’ a few gains.

http://rinf.com/alt-news/editorials/eu-demands-russia-bail-eu-ukraine/

Edited December 17, 2014 by Asiantravel

[F430murci]

Recall 1998 when I arrived in Thailand into a blast furnace called January. Went to the forex agent and got baht 55 for my usdollar. The baht at 25 to the dollar was a distant rumor in that dystopian land of chaos. My two weeks vacation in Phuket turned into six weeks as a prominent patron of Soi Sunset thru to the sunrise. The Thais meanwhile and throughout were fleeing in all directions. While the baht at 55 very soon brought me back to the new old word, I know I definitely won't be pursuing any bargains up in the glacial north.

Russian ruble's fall: A classic 'currency collapse'

The decline of the ruble is the result of Western policy. The question now is how will Putin respond? The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.

What makes the situation in Russia that much worse is that the nation’s companies, both private and state-owned, hold $670 billion in debt denominated in foreign currencies. This debt is about one-third the size of the entire Russian economy, and it will become impossible for Russian companies to service it if the ruble continues to fall. Writes Weinberg:

The amount of rubles local borrowers have to give up to pay off foreign debt obligations just increased by 20 percent overnight, by 50 percent since the start of this month, and by 90% since the start of November…. The effective interest rate on foreign borrowing for Russians is over 6000%, enough to kill any economy.

https://fortune.com/2014/12/16/russian-ruble-currency-collapse/

It is clear Western banks and others will be doing a lot of writing off even if Putin doesn't order Russian corporations to engage in a "strategic non-payment" of outstanding debts. That nonetheless will impact the Brics economies and the developing economies of other nations much more than in Europe and much much more than in the US.

Large US institutional investors began to cover long ago. I think back in April or May I noted the cover, amounts pulled back and how much was at stake. The amount at stake then was a very small number comparatively speaking, probably much less now, and won't have any dramatic impact on any US financial institutions. They new what was going to happen long before it happened.

The article is correct in that economically, Russia's failure would have very little impact on US.

[F430murci]

EU Demands Russia Bail Out EU & Ukraine

now Russia is not only being blamed for supporting the residents whom Western aristocrats want to exterminate, but the propagandists for western aristocracies are already starting to blame Russia for not bailing out Western taxpayers — the people who will be absorbing the losses no matter what, even if aristocrats’ business-bets on Ukraine score those ‘entrepreneurs’ a few gains.

http://rinf.com/alt-news/editorials/eu-demands-russia-bail-eu-ukraine/

Dude, where do you find these websites. Do you Googlle "Websites for Bat shyyttee Crazy Paranoid nutters" and go down the list. I kind of serious. When I Google topics, I don't get cites like this. I must be doing something wrong.

[Publicus]

Recall 1998 when I arrived in Thailand into a blast furnace called January. Went to the forex agent and got baht 55 for my usdollar. The baht at 25 to the dollar was a distant rumor in that dystopian land of chaos. My two weeks vacation in Phuket turned into six weeks as a prominent patron of Soi Sunset thru to the sunrise. The Thais meanwhile and throughout were fleeing in all directions. While the baht at 55 very soon brought me back to the new old word, I know I definitely won't be pursuing any bargains up in the glacial north.

Russian ruble's fall: A classic 'currency collapse'

The decline of the ruble is the result of Western policy. The question now is how will Putin respond? The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.

What makes the situation in Russia that much worse is that the nation’s companies, both private and state-owned, hold $670 billion in debt denominated in foreign currencies. This debt is about one-third the size of the entire Russian economy, and it will become impossible for Russian companies to service it if the ruble continues to fall. Writes Weinberg:

The amount of rubles local borrowers have to give up to pay off foreign debt obligations just increased by 20 percent overnight, by 50 percent since the start of this month, and by 90% since the start of November…. The effective interest rate on foreign borrowing for Russians is over 6000%, enough to kill any economy.

https://fortune.com/2014/12/16/russian-ruble-currency-collapse/

It is clear Western banks and others will be doing a lot of writing off even if Putin doesn't order Russian corporations to engage in a "strategic non-payment" of outstanding debts. That nonetheless will impact the Brics economies and the developing economies of other nations much more than in Europe and much much more than in the US.

Large US institutional investors began to cover long ago. I think back in April or May I noted the cover, amounts pulled back and how much was at stake. The amount at stake then was a very small number comparatively speaking, probably much less now, and won't have any dramatic impact on any US financial institutions. They new what was going to happen long before it happened.

The article is correct in that economically, Russia's failure would have very little impact on US.

Right, I don't work in banking but I do know the markets have all of this priced in and have had it priced in. As is known, the markets are driving these events and it's the markets that almost always drive these events. The events are usually set well in advance of their actual occurrence. One does not have to be a banker to know these things. There are brokers to consult, colleagues, family, friends, relatives, other professionals who provide services. One can work in a profession other than banking and still have one's own portfolio, investments, property, family and other socio-economic experiences of real everyday life over time, to include over a significant period of time, thx.

Bye the bye, doesn't Vlad look like Mr. Goldfingersky being confronted with a new 007 strategy development against him.

[Publicus]

Recall 1998 when I arrived in Thailand into a blast furnace called January. Went to the forex agent and got baht 55 for my usdollar. The baht at 25 to the dollar was a distant rumor in that dystopian land of chaos. My two weeks vacation in Phuket turned into six weeks as a prominent patron of Soi Sunset thru to the sunrise. The Thais meanwhile and throughout were fleeing in all directions. While the baht at 55 very soon brought me back to the new old word, I know I definitely won't be pursuing any bargains up in the glacial north.

Russian ruble's fall: A classic 'currency collapse'

The decline of the ruble is the result of Western policy. The question now is how will Putin respond? The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.

What makes the situation in Russia that much worse is that the nation’s companies, both private and state-owned, hold $670 billion in debt denominated in foreign currencies. This debt is about one-third the size of the entire Russian economy, and it will become impossible for Russian companies to service it if the ruble continues to fall. Writes Weinberg:

The amount of rubles local borrowers have to give up to pay off foreign debt obligations just increased by 20 percent overnight, by 50 percent since the start of this month, and by 90% since the start of November…. The effective interest rate on foreign borrowing for Russians is over 6000%, enough to kill any economy.

https://fortune.com/2014/12/16/russian-ruble-currency-collapse/

It is clear Western banks and others will be doing a lot of writing off even if Putin doesn't order Russian corporations to engage in a "strategic non-payment" of outstanding debts. That nonetheless will impact the Brics economies and the developing economies of other nations much more than in Europe and much much more than in the US.

Large US institutional investors began to cover long ago. I think back in April or May I noted the cover, amounts pulled back and how much was at stake. The amount at stake then was a very small number comparatively speaking, probably much less now, and won't have any dramatic impact on any US financial institutions. They new what was going to happen long before it happened.

The article is correct in that economically, Russia's failure would have very little impact on US.

Yes, the article is correct.

Yes, it is correct.

[mopar71]

You clearly don't understand Russian mentality or what life is like there. Never happen.

Was only hoping.

Me too. My wife has been her for 12 or 13 years, is one of the most knowledgeable people in the US about US and Russia global banking and finance issues, but you try and tell her Purin is bad for Russia and her head spins and pea soup like substance comes spewing out of her mouth.

She knows he is wrecking them economically, but she still want to desperately believe he wants or is doing what's right for Russians. She grew up post break up hyper inflation days. She views Putin as raising Russia from the ashes and restoring Russian pride.

Restoring pride she thinks? Attacking a neighbor and stealing its land? A neighbor who is such a close brother nation that most other people in the world can't tell you apart? Imagine what kind of American would be proud that some president decided to invade Canada, killing thousands and over a ten day period making part of it the 51st state? That's the kind of pride the world can do without.

[F430murci]

You clearly don't understand Russian mentality or what life is like there. Never happen.

Was only hoping.

Me too. My wife has been her for 12 or 13 years, is one of the most knowledgeable people in the US about US and Russia global banking and finance issues, but you try and tell her Purin is bad for Russia and her head spins and pea soup like substance comes spewing out of her mouth.

She knows he is wrecking them economically, but she still want to desperately believe he wants or is doing what's right for Russians. She grew up post break up hyper inflation days. She views Putin as raising Russia from the ashes and restoring Russian pride.

Restoring pride she thinks? Attacking a neighbor and stealing its land? A neighbor who is such a close brother nation that most other people in the world can't tell you apart? Imagine what kind of American would be proud that some president decided to invade Canada, killing thousands and over a ten day period making part of it the 51st state? That's the kind of pride the world can do without.

Lol, you have no concept of Eastern Europeans. This is a very tough issue for them as Ukrainians are like family, Most of my wife's best friends here are from the Ukraine. They cannot talk about this stuff. I actually do not talk about this stuff with her. Russian buy hook line in sinker that there are no Russian troops in Ukraine and that Crimea did what they wanted to do. When it looked like everything was going to end a few months ago, she was so relieved and thanking God in her Russian thing way. All of this is very upsetting to them.

You should not judge unless you been there. She used to take her family money to the market and stand on lines on the day they were paid to get whatever food they could get that day because of hyperinflation. Russian went through hard times that no one in the US has ever come close to experiencing. The economy not only recovered, they began experiencing wealth and opportunities Russia had never previously experienced after Putin came into control. They literally went from no food and hungry to enjoying an a lifestyle very similar to ours in a very short period of time under Putin's reign.

[maccaroni man]

I have a brother who lives in Estonia, lived in Kiev and Masco he is fluent in Russian and seems to have the same point of view regarding Putin as mopar

[F430murci]

I have a brother who lives in Estonia, lived in Kiev and Masco he is fluent in Russian and seems to have the same point of view regarding Putin as mopar

Lived in Kiev maybe the key. Look, I agree Putin is a scum bag, but most Russians don't feel that way for the reasons I stated. Our family in Russia and everyone we know in Russia knows Putun robbed ever one blind and has billions stashed away. They don't care. Corruption is a way of life over there. The Russian mafia collecting their share is accepted as normal as our tax system.

Some of our closet friends are Ukranian and the share the same view as Mopar and your family member. Russians don't. Google Russian Putin approval.

[VegasVic]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

A Russian dump would be material, but not catastrophic. A Chinese dump would be catastrophic. A Russian + Chinese dump would be essentially "game over" for the petrodollar.

You are talking absolute nonsense again, but I assume you already know that. Any sane person would know that. Russia holds about 1.7% of outstanding treasuries. We could easily absorb that and already buying back treasuries at rate to cover in 2 months anyway. China is more dependent upon our treasuries than we are on them. No one would dump anything and drive prices down because they would loose too much and China cannot afford to allow it currency to appreciate and lose exports since they are decades away from becoming a consumption economy.

Dude, I explained tis a while back but you either are too dense to get it or just ignore it to keep spreading rumors and paranoia.

Russia and China and Thailand and so many others HAVE to hold a significant amount of USD to engage in international trade. They hold them in Treasuries to back their trades because the USD is the petrodollar and the international unit of trade.

If they dumped their Treasuries they would be out of business in international trade. Almost no one will take the currency of China or Russia or Thailand in exchange for what they want to buy.

So many people misunderstand why "The US Owes Them Money" when in fact they are all broke but have to hang on to their Treasuries ($USD) to stay afloat.

N.S., Well put there my friend, the U.S. A. haters here don't have the first clue as to how important the U.S. Dollar is and why it is that way