Russia risks Soviet-style collapse as rouble defence fails
Source: The Telegraph
Russia has lost control of its economy and may be forced to impose Soviet-style exchange controls after "shock and awe" action by the central bank failed to stem the collapse of the rouble.
The situation is critical, said the central banks vice-chairman, Sergei Shvetsov. What is happening is a nightmare that we could not even have imagined a year ago."
The currency crashed to 100 against the euro in the biggest one-day drop since the default crisis in 1998 as capital flight gathered pace, despite a drastic rise in interest rates to 17pc intended to crush speculators and show resolve.
After years of bluster and suggestions by Mr Putin that the US is a paper tiger, the Kremlin is now coming face to face with the cataclysmic consequences of what it has done by invading Ukraine and changing Europe's borders by force. By the same token, Washington needs to move with care since it would be a geostrategic miscalculation of the first order to push a nuclear-armed Russia too far into a corner, or to perpetuatue a cycle of grievance.
Read more: http://www.telegraph.co.uk/finance/economics/11297770/Russia-risks-Soviet-style-collapse-as-rouble-defence-fails.html
Hang on - its going to be a bumpy ride.
mountain grammy
(26,571 posts)MNBrewer
(8,462 posts)and the Tatars in Crimea won't fare very well either.
COLGATE4
(14,732 posts)DetlefK
(16,423 posts)Hint: Declaring a neighbouring nation's territory "Novorossia" while there's a bitter civil-war going on, does not make you trustworthy.
Everybody knows that there are russian soldiers fighting undercover in Ukraine. There are russian witnesses who can attest to that. Like these:
http://en.wikipedia.org/wiki/Union_of_the_Committees_of_Soldiers%27_Mothers_of_Russia
Why would Putin declare a russian NGO a "foreign agent" if not for political retaliation?
hack89
(39,171 posts)Last edited Wed Dec 17, 2014, 12:28 PM - Edit history (1)
Russia's economy starts and ends with natural resources. Sanctions are contributing their problems but it is falling oil prices that represent the real long term threat to the Russian economy.
Iggo
(47,489 posts)Last edited Thu Dec 18, 2014, 09:37 AM - Edit history (1)
Is that something that can be manipulated to punish Russia?
Or is that just tinfoil hat stuff?
hack89
(39,171 posts)shale oil is much more expensive to pump while Saudi Arabia has some of lowest oil production costs in the world.
starroute
(12,977 posts)I've been wondering if it could be true or is just an unsupported conspiracy theory -- but the claim was that the Saudis were letting the price fall as a favor to the US. At this point, I guess we just wait and see how it plays out. Certainly some of the western economies, like Canada, are also being hurt by the oil price drop.
hack89
(39,171 posts)they are losing market share and want to slow down the competition.
Cosmic Kitten
(3,498 posts)Look at who is hurt and who is helped.
Oil importing nations get help:
USA, China, Japan, are some major winners.
Oil exporters are losers:
Iran, Russia, Venezuela are getting hurt
Saudi Arabia is kneecapping the competition...
assisting US hegemony, and strengthening it's regional
Sunni based power while undermining the Shiites.
Keep in mind DeeCee is in a "pivot to Asia".
So in the context of winners and losers
the power alignments are very predictable.
HOWEVER,it is possible to see the destruction of the dollar,
as a reserve currency, as an unintended consequence.
BRICs don't want the dollar any longer.
China and Russia just agreed to the largest energy deal ever.
Uben
(7,719 posts)I think declining oil prices have everything to do with Putin's actions. Seventy percent of Russia's exports are oil related. When we started sanctions against Russia for the actions in the Ukraine, oil prices dropped precipitously. I see the bankrupting of Russia with lower oil prices being the modern day version of Reagan bankrupting the USSR with defense spending. Whose interest is it in for lower crude prices? America is now producing more oil than it imports...not us. OPEC certainly would like to see prices rise as well because oil is an even higher percentage of their exports. Venezuela? No, their hurting as well.
I think the drop in crude prices was a well orchestrated effort by the U.S. and OPEC to convince Putin to stop his aggression against the Ukraine and eastern European countries. It certainly has knocked the shit out of Russia! You watch, as soon as Putin gives in, and he will, prices will start rebounding immediately. Russians won't go along with Putin if he lets his hubris take food off of their table. They will kick him aside for a more moderate president.
Of course, we all have our opinions, but this makes perfect sense to me.
hack89
(39,171 posts)it slows down or stops US and Canada taking away their market share. US and Canadian shale oil is very expensive to pump while Saudi Arabia has very low production costs. This is pure capitalism - they are trying to slow down competitors.