The American MSM is cackling at the collapse of the Russian ruble and the Russian stock market. They seem to think Russia’s loss is an American win. They are too myopic to realize a Russian collapse will just be a first domino in a worldwide conflagration. The collapse in oil prices is mainly due to a collapse in worldwide demand because we have entered a global recession. No one wins in a global recession. Central banks have shot their load. The debt binge has failed to cure a disease caused by too much debt. Deflation has taken hold and will ravage the debt laden countries. The pain is just beginning.
As a reminder – Russian debt to GDP is 20% and they still have hundreds of billions of barrels of crude oil under their land. The US has debt to GDP of 103% of GDP and shale that is worthless unless oil prices are above $80 per barrel. Oil is currently $56 per barrel. Are we really winning?
The wildcard in this is Putin. The faux journalists and toady politicians think he will back down, leave the Ukraine, and bow down to Obama. Really? Not a chance. He is more likely to launch tanks into the Ukraine and see if Obama and NATO have any balls. Obama is an amateur with 40% approval who will not be able to accomplish anything in the last two years of his failed presidency. If he pushed Putin too hard, the unintended consequences may end up being a major chapter in a future history book.
The sheep are busy preparing for Christmas while tweeting, texting and facebooking to their heart’s content. They have no idea they are being led closer to the slaughterhouse.
Submitted by Tyler Durden on 12/16/2014 15:10 -0500
Via Mint – Blain’s Extra Porridge,
“Nazhmite Lyubuyu Stavku…“
Extra Comment – this might be getting serious.
Russia’s markets have been spanked hard despite last night’s hike. 19% currency crash and 13% down stocks in a session. Ouch! Cumulatively, over the past few weeks stocks, oil and the Ruble are off 50% plus, and bonds off 40%. This morning felt like free-fall. Expect more action from the Russians to stave off economic catastrophe… imminent capital controls are rumoured, but markets are demonstrating a massive loss of confidence.
Lots of old market hands are talking about how its similar to the Russia default and crash of ‘98 all over again.. Actually.. its worse.
Much worse.
The scale and speed of the current collapse is a magnitude greater, and the effects are accelerated and magnified by the utter absence of liquidity, and by the political stakes at play. Lots of comments about how a Russian crisis might play out and what cornered Putin may do – or be forced into. Let’s not speculate, but it seems pretty clear that any Western support to calm the crisis and stabilise markets would come at a very high personal cost to Putin. That would be a good point to get selectively involved.
It’s too early. We’ve seen a few cautious buyers get wallpapered with Russian and Ukraine paper – and done decent amount of business, but generally none of the main distressed players feel it’s yet time to get involved. “Don’t expect a V-Shaped recovery – its different and aint going to happen..” said one manager. Hope is not a strategy when it comes to Russia at present.
The big risk is whether the Russian meltdown can be contained within the borders of the Rodina. All kinds of no-see-ems suggest themselves.
What are potential knock-ons into other markets? Perhaps Russians having to unwind London Property, (we understand Russians have been very big buyers in recent weeks prefiguring potential exchange controls), or further ructions in Europe? We’re already concerned European sovereign debt is poised on a knife-edge between brutal reality and over-inflated hopes for QE. A strong nudge from a conflagurating Russia and bang goes Italy?
Or will it come from safe-haven flight triggering sell-offs across every asset class in a replay of 2008? Could a Russia default that will outspook the Lehman apocalypse be on the cards?
So much for dull Christmas markets…
And today the white house said obama will sign new sanctions against Russia, taking credit for Russia’s currency crisis, they want to “deepen the pain” and the crowd goes wild!
I know poking a pissed off bear is not smart, of course it takes a smart leader to know that, and Darwinism being what it is……..clears the herd of the stupid and weak I suppose, too bad innocents will be hurt.
Since the Ruble is tied, basically, to the feds reserve greenback, this seems (to me) to be a sign of global deflation and is the result of global monetary printing (QE) when you print to excess you lower the value.
Told ya cheap oil was to crash the Ruskies, worked in the 80’s and looks like (ouch) it’s working again. The price we will pay for gas when this bs is over sends chills up my spine. Yes they will take it out of our hides.
OUR government is behind the crash in oil prices, it was well reported that Obama and the House of Saud came to an agreement. Well documented in late summer via all sorts of sources.
I stated THEN that this would kill the US, most people only want to see what it is “doing” to Russia.
For fuck’s sake, what does it take?
It becomes more apparent by the day, and especially following the loss of 200 innocent lives, that WE are the fucking evil empire and WE are doing to Russia what we successfully did to Japan.
I don’t think Putin is quite in the same position as the Japanese Emperor though.
Obama is shutting down our power plants in the middle of winter, plus he just destroyed the ONLY non-government paid for industry that has actually CREATED jobs since 2006.
I know, I know, these are just “unintended” consequences with “unforeseen” outcomes. Unless you actually have been paying attention.
Destroy our currency (federal reserve/debt), destroy our families (welfare/SS/prisons), destroy our communities (offshoring, overregulation), destroy our status of living (illegals/environmental regulations/health care) all while actively KILLING us through mandated toxins.
Oh, and do it ALL with the express written consent of those being culled. Freaking priceless!
Anyone that has studied world finance and financial/ruling/social history can SEE what is happening.
We are being shoved lower in our status of living, gifted a “bad guy” (guess the Arabs didn’t work as well as originally planned), then soon, when our suffering reaches new heights, World War.
All I know for sure is this: come holiday get togethers this year, Aunt T’s hugs are going to be super long for all those that will be co-opted to die for the “cause” of “freedom.” A freedom that no longer exists, if it ever did.
I have many nieces and nephews that will be sacrificed on this altar. Sickens me how those wanting this fight have no notice that it is their own families that are going to pay to solidify the lies and fantasies.
The next ten years are going to be made of the things a person my age has only read about. Scary, scary, stuff is coming.
Pretty sad when our only “hope” is a Russia holding a cooler head while being attacked on all sides.
Dollar vs Ruble?
First take a look at the bank’s capital (i.e. net assets) as a percentage of its total balance sheet. The Fed only has a basic capital ratio of 1.26%. So, if the Fed’s assets declines by only 1.26%, the issuer of the world’s dominant reserve currency becomes insolvent.)
The Russian central bank’s ratio is 12.5%— about 10x greater than the Fed.
.
What about the amount of REAL ASSETS — you know, gold — that the central bank holds in reserve? How much gold backs the dollar? Zero. The Fed doesn’t own gold. It loudly proclaims this on its own website: “The Federal Reserve does not own gold.”
—- http://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm
In Russia, it’s 6.2%. And rising. Last year it was 5.5%, and the central bank is continuing to heavily stockpile more.
Also, which country is TRILLIONS in debt … which EVERYONE with half a neuron knows will never be repaid?
.
So, should you invest in the Ruble? Of course not. But that just begs the question — what’s so great about holding 100% of your assets in the dollar?
Is The Ruble Collapse An ACT OF WAR? — Dr. Paul Craig Roberts
Roberts contends, “It is not a currency crash in the sense there are no economic reasons for the ruble’s fall. Unlike the United States, which has a massive trade deficit, and if the currency markets were not rigged, the dollar would be collapsing, the Russian economy has a trade surplus. Therefore, there is no pressure on its currency for economic conditions.”
Dr. Roberts goes on to say, “This is not some independent action of market forces. So, it’s either hedge funds, currency speculators like Soros, or it’s an Act of War on behalf of the United States government by the Federal Reserve or the Exchange Stabilization Fund. . . or possibly both hedge funds working with the federal government.”
https://www.youtube.com/watch?feature=player_detailpage&v=SRrNs4mlHMA
Never heard of this …. too lazy to do some fact-checking …. just throwing it out there
10% of American Homes Are Powered by Russian Nuclear Fuel
https://www.youtube.com/watch?feature=player_embedded&v=SVqgT_6FxMU