Panicked Russian markets plunge over Ukraine

[davidn3600]

Source: AFP through Yahoo

Moscow (AFP) - Russian stock markets Monday crashed almost 10 percent and the ruble plunged to historic lows in value against the dollar and euro, as alarm grew over the potentially disastrous economic consequences of military intervention in Ukraine.

Russia's central bank hiked its main interest rate in an emergency move to stem capital flight and the losses for the ruble, amid what risks becoming at least Russia's worst economic crisis since 2009.

President Vladimir Putin on Saturday had won approval from Russia's upper house for the sending of troops to Ukraine due to the standoff in Crimea following the ousting of pro-Moscow president Viktor Yanukovych.

Economists warned the move risks creating a litany of further trouble for the Russian economy, which is already battling chronically slow growth.

Read more: http://news.yahoo.com/russia-hikes-rates-amid-market-carnage-over-ukraine-100455087.html

[cosmicone]

1. Western economic warfare

by dumping shares held on Russian markets to make them panic.

[Renew Deal]

2. Proof?

[pampango]

4. Proof? "I don't need no stinking proof!"

Markets are down in Europe too, though not nearly as much. I'm sure there are some that blame those declines on Russian economic warfare. It's always easier to blame foreign manipulation than to admit that your own policy is screwed up.

[cosmicone]

8. Individual stockholders

never have enough power to move the markets. It is usually the institutional investors and funds that have such power. Most of the powerful institutional investors and funds are based in the West.

What they do is sell the stock while purchasing forward options to get back in without losing any money.

This game was played in the late 90's in the currency markets ... the lead fund manager doing that was George Soros and he wreaked havoc in the currencies of Russia, Thailand, Indonesia and South Korea.

[karynnj]

10. The ruble was already falling since the beginning of the year

In fact, politifacts points out that the slide started last year because of RUSSIAN POLICIES to do just that. http://www.politifact.com/truth-o-meter/statements/2014/mar/02/john-kerry/john-kerry-tells-cbs-viewers-russian-isolation-com/

Note that Politifacts, always harder on Democrats, used that fact to make it "mostly true" - rather than 100% true which it should have been as all Kerry said was that it was falling - which it has been for several months.

Individual stockholders DO have the ability to move the market in AGGREGATE and it does happen. The process is not that different than the run on banks that occurred in the depression era when a rumor that they were in trouble led to so many withdrawals that the bank - not originally in trouble - was in trouble. (See It's a Wonderful Life if you want a depiction - though one where the bank was able to calm the situation.)

Not to mention, I doubt there are many small "individual stockholders" trying to make money by buying and selling foreign currencies. There are some funds that include currencies and they likely DO consider that the ruble - which had fallen nearly 14% in less than a year - was likely to be even more risky if Russia became involved in Ukraine.

One thing you ignore is that investors are first and foremost out to make money - and even more fundamentally preserve the capital they have. They would not sell when the price was low if they knew it was artificially low out of politics. Those selling today are very likely LOSING money on the rubles they have.

[geek tragedy]

19. weren't you just telling us that Putin had no vulnerability to the west

Good to see you finally acknowledge that a second-tier, sickly economy is no match for the world's economic superpowers in this sort of conflict

[1000words]

31. Russian disaster capitalism

They learned from the masters.

[LiberalEsto]

3. Serves them right nt

[OldRedneck]

5. Best US course of action: Do nothing.

Putin has stepped in it. Our best course of action is to let him get out by himself.

This news about the Russian stock market is only the start of the very bad news he's facing.

[Berlin Expat]

6. Yep....keep some pressure up regarding

sanctions and whatnot, thereby increasing capital outflows from Russia.

This is when the "invisible hand of the market" gives Putin a pimp-slap upside the head. His billionaire kleptocratic buddies may decide that military adventurism is not worth the price.

[pampango]

7. The Russian rich can't be happy about this. Plus I read that government spent $10 billion today

propping up the ruble. These costs may not go on for long, at least Putin must fervently hope they don't, but there are costs to this invasion beyond the direct military costs which are undoubtedly substantial .

The EU/US are obviously not going to respond militarily to the Crimea invasion, but they may employ financial/economic measures. That may look like a weak response to those who fight military aggression with a military response, but the threat of those sanctions may be why many Russian rich folks are cashing in their stocks today.

[blackspade]

9. Interesting that economics might trump imperialism.

[GliderGuider]

12. If economics trumps the environment, and potentially even the survival of the planetary biosphere...

It's no great stretch to imagine it trumping imperialism. But then, we're talking about Russia here, and other factors are in play.

I think this has a (rapidly) growing potential to go nuclear, which makes it the gravest crisis on the planet since the Cuban Missile Crisis. I think it's far graver than the Russian invasions of Czechoslovakia or Hungary.

[blackspade]

29. I seriously doubt this will go nuclear.

But I agree with the rest.

[GliderGuider]

32. On reflection, I don't think it will even go military except for clashes with Ukrainian troops.

Putin has effectively neutralized the US and Europe. Any international military intervention would have to acknowledge the probability of a nuclear escalation. Is Ukraine (and especially Crimea) worth that? Not in the opinion of Western leaders. So letters will fly, pronouncements will be made and sanctions will be rolled out, but in the end Ukraine becomes a new Soviet Socialist Republic.

Realpolitik at work. Putin is a bloodless master at that game.

[modrepub]

11. “War is a matter not so much of arms as of money.”

Thucydides

[L0oniX]

13. So how is our MIC stocks doing over the prospect of another military confrontation?

[TwilightGardener]

14. Good.

[Kelvin Mace]

15. One hopes that this will act as a check on

Putin's ambitions.

[Iliyah]

16. From what I have witnessed there is presently no such thing as stock market "trickling down"

economics. Loses in the stock market solely hits the 1-2%ers so therefore I can see the uneasiness of the super rich across the world.

As I have mentioned recently, Putin is a self indulged creep who wants the world to see him as the world leader. Instead of bringing Russia towards as a world's partner he's plunges it back 100 years. Anytime a leader of a country takes total control of their country's airwaves, spells - dictatorship.

[Beacool]

17. Good.

That's where the West can hurt Putin. The US and Europe will not send troops to the Ukraine, but it will hit Russia in its economic pockets. Someone said that if Putin wants to act like North Korea, then he will be treated like them. Sanctions and more sanctions.

[former9thward]

18. The markets in Europe and U.S. are down also.

So by that logic everyone is being hurt. Markets always correct back to the true value of the companies in them. Russia included.

[geek tragedy]

20. US is down 1%, Russia is down 10%, Russia's currency is at an all-time

low in value relative to the dollar and Euro

So much for that spin.

[former9thward]

21. And when the U.S.drops 10% in a day what will your great analysis be then?

As it has many times. And when the Russian market corrects back up what will your stock market analysis be then? What will be your spin?

[geek tragedy]

22. You're not entitled to your own facts, sorry the math is against you.

the US stock market has dropped by more than 10% a grand total of three times in its history.

http://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

Once since 1929.

But, hey, go on telling yourself that Russia is really a strong economy who's not vulnerable to sanctions from the world's economic superpowers.

[former9thward]

25. Ok, I will wait breathlessly for your analysis when the market corrects back up.

[geek tragedy]

26. assuming facts not in evidence nt

[Sunlei]

23. Russias' ignorant investors are now being romneyed (tm)

don't worry Russians, the 'for profit' prisons will move in and help you *wink* hold all those new prisoners.

[treestar]

24. Wars are expensive

Pooty needs to check out recent US history. And the US is not as bad off economically.

[Sunlei]

27. military supply war profiteers could always take part of russias raw resourses as part payment

depends how much of Putins country he's willing to let go for credit. War profiteers will take the whole country if Putin will sign the contracts.

[oldandhappy]

28. This on top of the huge debt from the five rings.

Stop all trade with the Russian Federation.

[riversedge]

30. Since Putin wants to be cowboy, be can face the consequences.