The Russian economy (catch all)

[baranov107]

We used to think that The Ukraine was inept at adopting an armament program (something most would develop and be prepared to fight) as early as 95. Turns out, they were more interested in business and copying Russian Sierra to sell elsewhere :eek: I recall more than 30% GNP was dedicated to defense, but for the purposes of selling, not remotely interested in defending the Mother Land !

There are literally hundreds of sites regarding this, although none go right out with a price per "article". The going price (backwards that is) is a cool M for at least three each. The offer BTW still stands I am told.

Some links to ponder (light reading if you will :D )
MANPADS duties (http://www.state.gov/t/pm/wra/)
Do a little digging - you'll get there

Support Anti-Terrorism (http://www.tcuec.com/manpads.html)
This one leads to just about anywhere



It took place here, but not to the extent most feared. Glad to say that era for Estonia is dead and gone. Take no Sierra (God forbid I ever make it to Parliamentary status) ;)

Did you help Ukraine to protect its territory? I want to live in free country without Russian empire. There is only one way - Putin must go.

[Firn]

Russia reduces gas exports to Poland (http://www.bbc.com/news/world-europe-29154335)


Russia's gas supplies to Poland have dropped by 45%, Poland's state gas firm PGNiG says, amid tensions over Ukraine.

The news came just hours after Poland stopped providing gas to Ukraine through "reverse-flow" pipelines.

The Russian gas volumes were 24% lower on Tuesday and 20% lower on Monday, according to PGNiG. That shortfall prompted Poland to halt reverse-flow.

Poland and Ukraine rely heavily on Russian natural gas. Russia is in a pricing dispute over gas with Ukraine.

Some analysts believe Russia, which stopped gas supplies to Ukraine in June over the pricing dispute, is punishing Poland for sending gas to Ukraine.

It looks like a test, which obvioulsy gets denied to see the initial Polish, Ukrainian and European reaction. One has to keep in mind that the SU was a reliable supplier, especially in the later stages when it needed all the hard currency it could get. The Kremlin seems to increase it's stakes in the play about Russia's future.

[OUTLAW 09]

Russia reduces gas exports to Poland (http://www.bbc.com/news/world-europe-29154335)



It looks like a test, which obvioulsy gets denied to see the initial Polish, Ukrainian and European reaction. One has to keep in mind that the SU was a reliable supplier, especially in the later stages when it needed all the hard currency it could get. The Kremlin seems to increase it's stakes in the play about Russia's future.

Firn---thought sanctions were to be against the "others" not your own population.

Well it's back to the Russian Lada (the old Fiat 424) and baggy clothes fashioned from the 30s I guess.

Somehow the Kremlin doesn't seem to get that #sanctions is what you do to SOMEBODY ELSE.
#foodban #clothesban #caran
http://www.vedomosti.ru/politics/news/33305991/rossiya-mozhet-zapretit-import-avtomobilej-i-odezhdy …

[OUTLAW 09]

Firn---seems to be an unintended side effect of the Russian food bans.

Is Putin's food ban triggering bloodshed on Moscow's fruit and veg markets?
2 contract killings already:
http://www.gazeta.ru/social/2014/09/10/6209477.shtml

[Firn]

Russia restricting Austria's gas supplies (http://www.thelocal.at/20140911/russia-restricting-austrias-gas-supplies)

I have made a quick search if other European countries suffered also a drop in supply.


According to the energy regulator E-Control, Gazprom supplied Austria 15 percent less gas than had been previously agreed.

Similar issues have hit Poland, which has seen their supplies cut by 45 percent, and Slovakia, which has ten percent less gas than expected for the period.

I don't know how this compares to previous episodes, it might be just coincidence, but I think most will be rather sceptical. The Kremlin plays with the trust posed in it's role as supplier, which was formed during the cold war.

In any case tomorrow the new EU sanctions should be put in place. I'm curious what kind of counter-sanctions to expect from the East. After the food bans I would not rule out a lot.

[Dayuhan]

Firn--Brent broke through the 100 barrier and is at 99.80 and falling. Tendency is further falls.

Hard to say if that willl happen. The latest drop was a response to the IEA revising demand forecasts down, but the Saudis have cut production substantially and some analysts think they are going to try to defend the $100 mark. Of course they may or may not be able to do that. Have to wonder if Russia will cut back exports to sustain pricing, and if the Chinese will advance some credit vs future deliveries.


Which means sour ie Russian crude will fall to about 92-90 range and that hurts as they planned for 104.

I still can't begin to figure out what index or benchmark you are using for "sour crude"... perhaps you'd care to make that clear?

Unfortunately I no longer have access to a Platts feed (and I'm not about to pay for it), but the most recent figures I see:

http://af.reuters.com/article/commoditiesNews/idAFL5N0R248F20140901?pageNumber=1&virtualBrandChannel=0

say that Urals (primary Russian export blend) was trading as of Sept 1 at dated Brent minus $.95. That spread varies of course, but I see no reason to expect that it will vary radically. Do you? If so, what are the reasons.

Again, "sour crude" per se is not a traded entity. If you want to refer to price spreads between Brent (the usual reference benchmark) and Russian exports the figure you need to refer to is the spread between Brent and Urals Blend.

Russia does talk about a balanced budget at $114, but we all know that nations can go a long long time without a balanced budget. Sustained prices below $100 would give some pain, but it's in no way certain that it would cause any policy changes, especially since policy in the Ukraine would have no significant effect on oil prices. Even if Putin brought the troops home and became possessed by the spirit of Mother Teresa, that wouldn't change the global oil equation in the least.

[OUTLAW 09]

Hard to say if that willl happen. The latest drop was a response to the IEA revising demand forecasts down, but the Saudis have cut production substantially and some analysts think they are going to try to defend the $100 mark. Of course they may or may not be able to do that. Have to wonder if Russia will cut back exports to sustain pricing, and if the Chinese will advance some credit vs future deliveries.



I still can't begin to figure out what index or benchmark you are using for "sour crude"... perhaps you'd care to make that clear?

Unfortunately I no longer have access to a Platts feed (and I'm not about to pay for it), but the most recent figures I see:

http://af.reuters.com/article/commoditiesNews/idAFL5N0R248F20140901?pageNumber=1&virtualBrandChannel=0

say that Urals (primary Russian export blend) was trading as of Sept 1 at dated Brent minus $.95. That spread varies of course, but I see no reason to expect that it will vary radically. Do you? If so, what are the reasons.

Again, "sour crude" per se is not a traded entity. If you want to refer to price spreads between Brent (the usual reference benchmark) and Russian exports the figure you need to refer to is the spread between Brent and Urals Blend.

Russia does talk about a balanced budget at $114, but we all know that nations can go a long long time without a balanced budget. Sustained prices below $100 would give some pain, but it's in no way certain that it would cause any policy changes, especially since policy in the Ukraine would have no significant effect on oil prices. Even if Putin brought the troops home and became possessed by the spirit of Mother Teresa, that wouldn't change the global oil equation in the least.

Dayuhan--all good points but then is this big but---initially when the Crimea started Russia was talking about needing a 95 base price, then as the Ukraine hit it was talking about a price of 104 and the last three days as been in the 114 range.

Now what is interesting is that as the sanctions have been hitting now harder and harder the demand on the required pricing seems to be headed upwards.

Then there was a press release yesterday stating they could absorb all financial hits by using the cash flow on oil/gas that is coming in--BUT that has been long planned for other things they have designed it to be used for---appears to me to be just one big Ponzi scheme simply moving the money around and appearing to be fifthly rich.

Then yesterday a short tweet came out of eastern Europe indicating that the Urals fields are in fact in a major decline and will be by 2017 producing nowhere close to what they are now--that is why the heavy new push into the Artic region.

And the sanctions yesterday were designed to do exactly that limit and or stop any further Artic development because Russia needs western tech of that type of drilling and this is the kicker--all oil/gas services companies of the west were in fact told yesterday to stop work in Russia---which Russia relies on heavily for their field maintenance.


Dayuhan---this popped up this morning via twitter:

#Russia could see its $19B surplus become a deficit by end of 2014, as oil prices continue to slide.

http://oilprice.com/Energy/Oil-Prices/No-Rebound-In-Sight-For-Sliding-Oil-Prices.html

IMO--there is an unusual effect going on right now in the sour oil side of the house---virtually low to no demand and a continuing sliding price base that sees no bottom yet.

[OUTLAW 09]

Firn---seems to be an unintended side effect of the Russian food bans.

Is Putin's food ban triggering bloodshed on Moscow's fruit and veg markets?
2 contract killings already:
http://www.gazeta.ru/social/2014/09/10/6209477.shtml


This appeared today via RIA concerning possible inflationary increases due to the banned foods and other products.

There was a short Interfax release yesterday that some of the banned items still on the shelves are being priced 21% higher than before the ban---not so sure even the CB even understands the price development on banned items--since many of their employees started after the Cold War days where banned items were being sold on the black markets across the entire country as a way of life.

From RIA today:

MOSCOW, September 12 (RIA Novosti) – The Russian Central Bank said in a statement Friday that import restrictions will have a short-term influence on price growth in Russia.

“The growth in inflation was also caused by the introduction of restrictions on foreign trade,” the bank said in a statement. “Further inflation dynamics will be determined, among other things, by how fast the economy adjusts to these restrictions. It is highly probable that the increase in the consumer price growth rate, caused by the above-mentioned factor, will be short-term.”

According to Russia’s State Statistics Service, prices gained 0.2% since September 1 and 5.8% since the start of the year.

[Dayuhan]

Dayuhan--all good points but then is this big but---initially when the Crimea started Russia was talking about needing a 95 base price, then as the Ukraine hit it was talking about a price of 104 and the last three days as been in the 114 range.

Given the extent of the change over a very limited time, and given that we've no access to the process by which these numbers were generated and we've no idea what agendas are being pursued by the people announcing the numbers... take them all with multiple grains of salt.

Certainly lower oil prices will cause economic stress, but there's little reason to expect that stress to change Russian policy on the Ukraine, or on anything else.


Then there was a press release yesterday stating they could absorb all financial hits by using the cash flow on oil/gas that is coming in--BUT that has been long planned for other things they have designed it to be used for---appears to me to be just one big Ponzi scheme simply moving the money around and appearing to be fifthly rich.

I generally give Russian press releases about as much credence as I give to yesterday's toilet paper. That Ponzi scheme is of course quite common, and while it eventually catches up, do you think it will catch up soon enough to have an impact on events in the Ukraine?


Then yesterday a short tweet came out of eastern Europe indicating that the Urals fields are in fact in a major decline and will be by 2017 producing nowhere close to what they are now--that is why the heavy new push into the Artic region.

Twitter is not generally a vehicle for serious analysis, and unless it links to credibly sourced material such things are generally best ignored. The Russian oil industry does of course face major problems across the board, and those will be exacerbated if prices stay below $100, but that picture has been analyzed to death and there's little reason to suggest sudden or recent changes in the picture. It's a big problem that Moscow will have to deal with, but again it's far from certain that it will affect Russian policy in the Ukraine.


And the sanctions yesterday were designed to do exactly that limit and or stop any further Artic development because Russia needs western tech of that type of drilling and this is the kicker--all oil/gas services companies of the west were in fact told yesterday to stop work in Russia---which Russia relies on heavily for their field maintenance.

It will be interesting to see what they do. They may decide to go fro broke, take what they want in the Ukraine and impose a fait accomplii, knowing that sanctions will degrade over time once the deed is done. They may also turn to China, though brother Han drives a hard bargain and gives nothing away: the quid pro quo will probably be painful.


#Russia could see its $19B surplus become a deficit by end of 2014, as oil prices continue to slide.

Certainly true, but as all Americans know, governments routinely operate at deficits for many years. Again, a problem for Moscow but not necessarily a problem that will make them less aggressive. They could turn more aggressive, if they decide that a bit of jingoistic fervor will provide a distraction from economic issues.


IMO--there is an unusual effect going on right now in the sour oil side of the house---virtually low to no demand and a continuing sliding price base that sees no bottom yet.

On what evidence? I see nothing really unusual, and nothing that's at all specific to "sour crude" or to Russian exports. Demand is there, of course, it's just somewhat below expectations. US production is up, the fear factor in Iraq is receding, and Libya seems to be pumping again, despite the mess. Normal ups and downs, really. Some producers, Russia among them, made some unsupportable estimates of the cash they'd have available, and will pay a price. It will hit a lot of producers harder than it hits Russia: keep an eye on Nigeria and Venezuela, in particular.

[OUTLAW 09]

Given the extent of the change over a very limited time, and given that we've no access to the process by which these numbers were generated and we've no idea what agendas are being pursued by the people announcing the numbers... take them all with multiple grains of salt.

Certainly lower oil prices will cause economic stress, but there's little reason to expect that stress to change Russian policy on the Ukraine, or on anything else.



I generally give Russian press releases about as much credence as I give to yesterday's toilet paper. That Ponzi scheme is of course quite common, and while it eventually catches up, do you think it will catch up soon enough to have an impact on events in the Ukraine?



Twitter is not generally a vehicle for serious analysis, and unless it links to credibly sourced material such things are generally best ignored. The Russian oil industry does of course face major problems across the board, and those will be exacerbated if prices stay below $100, but that picture has been analyzed to death and there's little reason to suggest sudden or recent changes in the picture. It's a big problem that Moscow will have to deal with, but again it's far from certain that it will affect Russian policy in the Ukraine.



It will be interesting to see what they do. They may decide to go fro broke, take what they want in the Ukraine and impose a fait accomplii, knowing that sanctions will degrade over time once the deed is done. They may also turn to China, though brother Han drives a hard bargain and gives nothing away: the quid pro quo will probably be painful.



Certainly true, but as all Americans know, governments routinely operate at deficits for many years. Again, a problem for Moscow but not necessarily a problem that will make them less aggressive. They could turn more aggressive, if they decide that a bit of jingoistic fervor will provide a distraction from economic issues.



On what evidence? I see nothing really unusual, and nothing that's at all specific to "sour crude" or to Russian exports. Demand is there, of course, it's just somewhat below expectations. US production is up, the fear factor in Iraq is receding, and Libya seems to be pumping again, despite the mess. Normal ups and downs, really. Some producers, Russia among them, made some unsupportable estimates of the cash they'd have available, and will pay a price. It will hit a lot of producers harder than it hits Russia: keep an eye on Nigeria and Venezuela, in particular.

Dayuhan----here is the continued slide to now 95 per barrel for Ural sour.

You would be surprised what comes via twitter these days including oil information.

This came via twitter--pic is the pricing slide in chart form and you must admit there seems to be no bottom right now:

Urals Crude at $ 95.34 today.

pic.twitter.com/qifuQ0lO0e

There are a couple of things in play right now that are contributing---number one is the high US production that is flowing straight to the US refineries which are designed to handle mainly sour thus a slumping need for Urals sour rught now in the US---production does not seem to have been reduced by Qatar/UAE and the KSA and that is leading to an oversupply right now and 2) there seems to be a general slump in demand for what ever reason.

The Swedes are saying it it hits 93 by say next Tuesday Wednesday then there is in fact no bottom until the 85-88 ranges which could in fact happen by the week after next.

That is a major problem for Russian finances especially in the face of this latest round of sanctions.

Rostnef is asking the Russian CB for a bailout of over 46B just to get through until the end of 2014 and the sanctioned banks are standing in line as well.

Seems the Ponzi scheme is clamoring for money and the CB is the only place to get it since the finance markets have been cut off.

[Dayuhan]

You would be surprised what comes via twitter these days including oil information.

This came via twitter--pic is the pricing slide in chart form and you must admit there seems to be no bottom right now:

Urals Crude at $ 95.34 today.

pic.twitter.com/qifuQ0lO0e


As usual with stuff flying around on Twitter, this is suspect: there's no indicated source for the data and no actual transactions cited. The figures would represent a very large deviation from the normal Brent/Urals price spread, and that alone makes them questionable.

When you see a referemce to a specific transaction: i.e. a Urals cargo in the Baltic or Mediterranean sold on x day at dated Brent minus y... then you know the actual price, what people are paying instead of what someone says they are paying. I would not trust such information via Twitter, unless linked to a credible source.


There are a couple of things in play right now that are contributing---number one is the high US production that is flowing straight to the US refineries which are designed to handle mainly sour thus a slumping need for Urals sour rught now in the US

The US was never a significant buyer of Russian oil; domestic production is primarily displacing Venezuelan and Nigerian production. That oil will go somewhere of course, and will compete with Russian oil for buyers.


---production does not seem to have been reduced by Qatar/UAE and the KSA and that is leading to an oversupply right now and 2) there seems to be a general slump in demand for what ever reason.

The Saudis have cut 400k bbl/day. It's not clear how far they are willing to go. So far OPEC seems to be treating it as normal fluctuation, no special meetings to discuss production cuts or any similar indications of alarm.


The Swedes are saying it it hits 93 by say next Tuesday Wednesday then there is in fact no bottom until the 85-88 ranges which could in fact happen by the week after next.

Which Swedes? Again, don't take it seriously unless specific transaction data is reported.


That is a major problem for Russian finances especially in the face of this latest round of sanctions.

Yes, it is, though the extent of the problem remains difficult to quantify. That still leaves the question of how any of this relates to the Ukraine. I don't see Putin backing down just because he suddenly has an unanticipated money problem: it might even make him more aggressive. It's not as if backing down in the Ukraine will push oil prices back up again. The oil price problem and the woeful state of the Russian oil industry will be there no matter what happens in the Ukraine, so it's hard to see it as a major influence on the decision making process there.

[Dayuhan]

PS to above:

Outlaw, I still think you're wildly overrating the importance of categorizing Russian oil as "sour". Urals is in fact a medium sour blend with API gravity of around 31.2 and sulfur content of 1.35%. That's comparable to Arab Light and other major blends and is pretty much within the operating range of most major refineries. As a distinction it doesn't really matter much. It won't price as high as the very light sweet product, but it's not dedicated to specific markets either.

This is quite different from, say, the extremely heavy and extremely sour product that dominates Venezuelan exports, which really does require specialized refining and transport. Fortunately for the US, Canada produces a very similar product from its tar sands, so US refineries designed specifically for Venezuelan oil have been able to use Canadian product. That of course is a problem for Venezuela, as their crude cannot just slot in anywhere.

Again, it's likely that oil prices will be below $100 for the medium term future, and this will put some hurt on the Russians. Whether or not that's going to affect their decision making process in the Ukraine is another question altogether.

[Dayuhan]

Some clips from the oil price discussion...

http://www.bloomberg.com/news/2014-09-10/saudi-arabia-told-opec-it-cut-oil-output-408k-b-d-in-aug-.html


Saudi Arabia will reduce by about 500,000 barrels a day in the fourth quarter and will make further decreases if prices slip further, Bloomberg oil strategist Julian Lee said today...

Crude prices should rebound above $100 in the next few months as Chinese demand rises, Nawal al-Fezaia, Kuwait’s governor to OPEC, told reporters in Kuwait today.

There’s no need for OPEC to cut output because prices will recover once demand for winter fuel increases, Thamir Al-Ghadhban, senior adviser to the Iraqi government and a former oil minister, said in a phone interview on Sept. 8.


OPEC ministers kept their output target unchanged at 30 million barrels a day on June 11 in Vienna. The group is scheduled to meet next on Nov. 27. Iranian Oil Minister Bijan Zanganeh said there’s no need for an emergency meeting, according to comments cited by state-run news agency Mehr today.

The group will probably refrain from making cuts unless crude falls below $90 a barrel, according to JBC Energy GmBH, a Vienna-based consultancy. Saudi Arabia may have “become a little more relaxed” about prices trading under $100 for a few months, JBC said in an e-mailed report today.

Obviously nobody knows for sure what will happen, but I wouldn't say there's a consensus on a long term price drop. It is true that NE Asian winter buying will become a factor in Oct, hard to say what impact that will have. Also hard to know how much the Saudis are willing to cut, what decision OPEC will make in Nov (or what the pricing environment will be in Nov), how Libyan and Iraqi production will hold up, etc. Lots of variables out there.

It's wort noting that when a country talks about the price needed to balance a budget, they are talking about the average price for that budget year, not the daily price. The average for 2014 is still well over $100, and it would take some time to skew that average down. A month or so in the $90 range would not do all that much damage. We'll see how far it falls and for how long.

Again, though, it's hard to see how any of this is likely to impact Russian decision making in the Ukraine.

[OUTLAW 09]

As usual with stuff flying around on Twitter, this is suspect: there's no indicated source for the data and no actual transactions cited. The figures would represent a very large deviation from the normal Brent/Urals price spread, and that alone makes them questionable.

When you see a referemce to a specific transaction: i.e. a Urals cargo in the Baltic or Mediterranean sold on x day at dated Brent minus y... then you know the actual price, what people are paying instead of what someone says they are paying. I would not trust such information via Twitter, unless linked to a credible source.



The US was never a significant buyer of Russian oil; domestic production is primarily displacing Venezuelan and Nigerian production. That oil will go somewhere of course, and will compete with Russian oil for buyers.



The Saudis have cut 400k bbl/day. It's not clear how far they are willing to go. So far OPEC seems to be treating it as normal fluctuation, no special meetings to discuss production cuts or any similar indications of alarm.



Which Swedes? Again, don't take it seriously unless specific transaction data is reported.



Yes, it is, though the extent of the problem remains difficult to quantify. That still leaves the question of how any of this relates to the Ukraine. I don't see Putin backing down just because he suddenly has an unanticipated money problem: it might even make him more aggressive. It's not as if backing down in the Ukraine will push oil prices back up again. The oil price problem and the woeful state of the Russian oil industry will be there no matter what happens in the Ukraine, so it's hard to see it as a major influence on the decision making process there.

Dayuhan--there you go again---what will it take for you to "actually see" 1) the price is falling and 2) the reasons why.

Right now in the Us a simple fact---a majority of all refineries are and were built to take source crude--why the pricing was cheaper and the US would then import from wherever the price was the cheapest--now with rather large amounts of US crude online and more coming the US refineries hast shifted away from imports to using inland sources---thus less of a demand from wherever the sources were.

You still have not convinced me that in fact the ME has lowered their production numbers which in fact with a lower US demand creates an over abundance thus ever lowering prices.

Lastly even official Russian sources indicating panic on their lowering cash inflows from sales actually match the net comments regardless of what you think about net comments and lack of validation support.

You do realize that 80% of all intelligence is open source and that often demands no validation process--it is there for all to see and analyze.

[OUTLAW 09]

Sechin expecting 1,5 trillion RB from Russia's Wealth Fund & Pension Fund

Here it comes:Russian Min. of Finance says Rosneft likely to get bailed out by State Wealth Fund http://www.newsru.com/finance/13sep2014/siluanov.html … via @LevShlosberg

[Dayuhan]

Dayuhan--there you go again---what will it take for you to "actually see" 1) the price is falling and 2) the reasons why.

We all see that the price has fallen. Whether this is in the range of normal fluctuation or the start of an extended decline remains to be seen. I certainly wouldn't assume either, there are many variables involved and many of them are not amenable to reliable prediction.


Right now in the Us a simple fact---a majority of all refineries are and were built to take source crude--why the pricing was cheaper and the US would then import from wherever the price was the cheapest--now with rather large amounts of US crude online and more coming the US refineries hast shifted away from imports to using inland sources---thus less of a demand from wherever the sources were.

Increased US production is certainly a factor. Whether it is sufficient in the medium to long term to compensate for decreasing production and potential political events elsewhere remains to be seen. Again, the price drop is in no way specific to "sour crude", it's across the board, and the oil displaced by US production is by no means all sour: the single biggest drop in US imports is the 73% decline in shipments of light, sweet Nigerian crude. What the Russians are exporting is only mildly on the sour side and is not especially heavy and would require no major modifications to refine: unlike Venezuelan, it poses no special technical challenges to transport or refine.


You still have not convinced me that in fact the ME has lowered their production numbers which in fact with a lower US demand creates an over abundance thus ever lowering prices.

The Saudi production cuts are established and on record, that's not under dispute. I would not expect OPEC as a whole to address the issue before their scheduled Nov meeting unless the price drops under $90.

The "ever lowering prices" expectation is not shared by most credible analysts, though it may fly around Twitter.


Lastly even official Russian sources indicating panic on their lowering cash inflows from sales actually match the net comments regardless of what you think about net comments and lack of validation support.

If you cherrypick the panic comments (social media and cherrypicking go together rather well, that's the impression you get. The price will have to stay under $100 for some time to drop the annual average to a seriously critical level. That may or may not happen: again, there will be a substantial acceleration in buying in Oct and Nov as the NE Asian consumers get their winter contracts in. Certainly a sustained period below $100 would put a lot of stress on the Russian economy, but I don't see credible analysts expecting that, so it remains largely a speculative possibility.


You do realize that 80% of all intelligence is open source and that often demands no validation process--it is there for all to see and analyze.

"Open source" encompasses a fairly wide range, no? If you believe what you read on Twitter, you'll never want for moonshine.

Again, though, what you're not addressing is the point that there's little reason why any of these oil issues would cause Putin to revise his policy in the Ukraine. If anything, these problems may make Russia even more aggressive. The decision to back down or push ahead in the Ukraine will have no impact on the oil price problem, which will be there no matter what happens in the Ukraine. A transient drop in oil prices will cause pain, but it will be manageable pain. An extended drop... who knows where that would go, but it's far from certain to happen.

[OUTLAW 09]

Dayuhan---And sanctions do not work? By the way this is taken Dayuhan from social media---have you seen anything reported by the standard media yet on the items mentioned below--that is the power and speed of social media.

Siluanov's comments imply that any financial assistance to Rosneft & Novatek is likely to be a fraction of the amount requested by Rosneft and this does not include the six banks hit who are also asking for financial support to survive through to the end of 2014--and sanctions are not working?--then the sinking income from oil/gas and where does it then stop financially for the Russian CB?

NOTE: Rosneft must pay back at the end of 2014 almost 46B in credit lines and long term bank loans/bonds.

Russian companies have been playing the great Ponzi scheme of where is the pea by taking out large western bank loans on virtually no interest charges in order to hold onto their own capital--normal for businesses, but now for some reason those billions they are suppose to have had in their bank accounts seem to not be there---wonder what personal bank account in the UK or Switzerland they are sitting in?

Siluanov: Russia is ready to support sanctions-hit energy companies #Rosneft & #Novatek from its National Wealth Fund
http://www.reuters.com/article/2014/...0RE0B420140913 …

NOTE: There is talk of over 70% of the National Wealth Fund being given to Rosneft--so much for future Russian pension raises. But then this comment late yesterday.

Siliuanov: "It's been decided so far not to unseal the remaining 40% [of NWF]. This is our strategic reserve"
http://rbth.com/news/2014/09/13/rosn...4_-_39756.html …

[Dayuhan]

Dayuhan---And sanctions do not work?

They work if they accomplish their goal... have they? Only if the Russians back away in the Ukraine, and that doesn't seem to be happening.


By the way this is taken Dayuhan from social media---have you seen anything reported by the standard media yet on the items mentioned below--that is the power and speed of social media.

Rumors always spread fast. They don't always turn out to be true.


Siluanov's comments imply that any financial assistance to Rosneft & Novatek is likely to be a fraction of the amount requested by Rosneft and this does not include the six banks hit who are also asking for financial support to survive through to the end of 2014--and sanctions are not working?--then the sinking income from oil/gas and where does it then stop financially for the Russian CB?

Again, sanctions have only "worked" if they change Russian policy on the Ukraine, which is what they were intended to do.

Hard to know when, or if, it stops. If oil prices bounce back they can probably get through it pretty much intact. They still have all sorts of problems to deal with, but those aren't caused by sanctions and their impact on the geostrategic equation is not predictable. It is by no means certain that financial stress at home will make Russia less aggressive toward its neighbors.

[OUTLAW 09]

Dayuhan--since you do not like comments from social media---then is an official one from the RIA---from the horses mouth but take it with a grain of salt for the following reason--remember I mentioned the Ponzi scheme ie where is the pea under the walnut shell game---there have been some serious Russian economists commenting on the oil price and they indicated a base of 114 was the correct calculating price for the Russian budget purposes up from this figure of 96 and not what was mentioned four weeks ago at a base price of 104.

During the beginning of the Crimea event Russia mentioned a base of 95 was needed now this number below.

The Russians are literally playing with the numbers---why---it is an old Cold War game of not letting the opposition know the real numbers so they cannot accurately gauge my economy--only I have the keys to the kingdom kind of thing going on.

MOSCOW, September 14 (RIA Novosti) - Russian Ministry of Finance closely follows the oil prices and will undertake measures in case the price for Urals oil falls significantly lower than the budgeted figures of $96 per barrel, Russian Finance Minister Anton Siluanov told journalists on Sunday.

"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from US.

"How will the situation unfold? Either the [global] economic growth will have to increase, causing the increase in demand for oil, or, if measures to regulate the oil market are once again not taken, there will be an excessive supply," said the Minister.

Dayuhan--this single comment from Siluanov is signaling a clear understanding that the Russian reality is sinking in as the world markets are in overabundance right now and for the coming year or so and he is right it is the US oil coming online---Libyan oil is a smokescreen and they never produced that much even in good years.

[OUTLAW 09]

Dayuhan---a really good research done on how exactly the Russian oil/gas wealth is really just a Ponzi scheme.

With so much being ripped off how can the public numbers be anywhere close to accurate?

http://johnhelmer.net/?p=11324

And this dude has his wealth in the US and he is not being hit by the sanctions?

[OUTLAW 09]

Seems the Russia economy is having some problems these days.

From Interfax today:

16:10

DUE TO CHANGES IN MACROECONOMIC PARAMETERS RUSSIAN BUDGET WILL NOT RECEIVE 570 BILLION RUBLES IN 2015-2017 - SILUANOV

16:09

NEW BUDGET EXPENSES IN 2015 ESTIMATED AT 500 BILLION RUBLES, WILL BE FINANCED THROUGH REDISTRIBUTION - SILUANOV

16:08

FINANCE MINISTRY PLANS 2015 BUDGET WITH DEFICIT AMOUNTING TO 0.5%OF GDP - SILUANOV

16:06

RUSSIA MAY START USING RESERVE FUND ONLY IN CASE OF SHARP OIL PRICE FALL - SILUANOV

16:06

RUSSIA'S RESERVE FUND WILL NOT BE REPLENISHED IN 2013 AND WILL HARDLY BE REPLENISHED IN 2015 - SILUANOV

16:04

RUSSIA'S 2014 BUDGET MAY BE CARRIED OUT WITHOUT DEFICIT - SILUANOV

[OUTLAW 09]

Long RIA press release today on Russian oil and gas numbers.

NOTICE: The Russian constantly refer to increased Libyan oil production and that does not quite fit reality.
Libyan Oil Production Hits Highest Level in Five Months from July 2014
Output Still Less Than Half of Normal Production Level

Yes their oil production is up faster than anticipated---BUT it is still half of the original production before the fighting.
It still does answer the major low demand and oversupply in the current sour crude markets.


Updated 7:52 p.m. Moscow Time

MOSCOW, September 14 (RIA Novosti) - Exports of natural gas from Russia are expected to grow while crude sales are most likely to go down as a result of a revival in Libyan oil production, and the start of light crude exports from the United States, according to the data provided by Russia's Ministry of Economic Development.

Exports of natural gas from Russia will amount to 190 billion cubic meters in 2015, 191 billion cubic meters in 2016, and 191.5 billion cubic meters in 2017, an evaluation of basic macroeconomic indicators from the Ministry of Economic Development shows. The evaluation was provided by the Ministry to RIA Novosti on Sunday.

Forecasts of natural gas exports compared with the budget for 2014-2016, in addition to index budget projections for 2017, have slightly changed. Thus, the rate for 2015 increased by 0.9 percent, the 2016 rate went up by 0.4 percent, while the 2017 rate decreased by 0.3 percent.

In comparison with the forecast published by the Ministry in May, the rate of gas exports from Russia in 2015 decreased by 1.2 percent and by 0.8 percent in 2016 and 2017.

According to Russia's Federal State Unitary Enterprise, Central Dispatching Department of Fuel Energy Complex (CDU TEK) gas exports in 2013 increased by 10 percent totaling some 204 billion cubic meters.

Meanwhile, oil exported from Russia in 2015 and 2016 will amount to 227.5 million tons and 229.5 million tons in 2017; with 153.5 million tons of oil in 2015, 149 million tons in 2016, and 144.2 million tons in 2017.

The Ministry downgraded the outlook for oil exports in 2014 and 2015 by 4.3 percent and 6.2 percent respectively, compared with the budget for 2014-16. Forecasts for 2017 oil exports predict a 8.2 percent decrease compared with respect to budget projections.

In comparison with the forecast published by the Ministry in May, Russia's oil exports have been cut by 0.96 percent in 2015-16 and by 0.2 percent in 2017.

Exports of petroleum products from Russia in 2015 are predicted to total 153.5 million tons along with 149 million tons in 2016, and 144.2 million tons in 2017. Forecasts have increased by 13.9 percent and 15.4 percent with respect to budget figures for 2015 and 2016 while budget projections for 2017 have increased by 16.2 percent.

The Ministry's May projections on petroleum exports from Russia have increased by 3.4 percent in 2015, 2.8 percent in 2016, and 1.4 percent in 2017.

According to the CDU TEK, oil exports decreased by 2.1 percent in 2013, amounting to 234.86 million tons.

Russian Finance Minister Anton Siluanov told journalists on Sunday the Finance Ministry was closely following oil prices and pledged to take measures in case the price for Urals oil fell significantly lower than the budgeted figures of $96 per barrel.

"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from the United States.

"How will the situation unfold? Either the [global] economic growth will increase, causing the increase in demand for oil, or, if measures to regulate the oil market are once again not taken, there will be an excessive supply," said the Minister.

[OUTLAW 09]

More Russian economy bad news released via RIA today---

http://en.ria.ru/business/20140914/192934871/Macroeconomic-Changes-to-Cost-Russian-Budget-Over-15-Bln-in.html

[Dayuhan]

Dayuhan--since you do not like comments from social media---then is an official one from the RIA---from the horses mouth but take it with a grain of salt for the following reason--remember I mentioned the Ponzi scheme ie where is the pea under the walnut shell game---there have been some serious Russian economists commenting on the oil price and they indicated a base of 114 was the correct calculating price for the Russian budget purposes up from this figure of 96 and not what was mentioned four weeks ago at a base price of 104.

Anything from official Russian sources has to be taken with multiple grains of salt.

Given the opacity of Russian budget processes, we have no way of knowing what prices they are assuming when they budget. If they are assuming $114, then they are essentially assuming a deficit, because that's way out of line with even the highest estimates. They may very well be doing that: governments routinely run deficits: it's a problem, not a catastrophe, and they can carry it off for a while if they juggle (as most governments do).


"We will monitor the situation and react according to the situation," Siluanov promised, adding that the current decline of oil prices was caused by growth in Libyan oil production and beginning of export of the light crude oil from US.

That's completely off the wall: the US does not export oil. It's illegal to export oil from the US. There's some talk of changing that, but it's still talk at this point.

An unexpected increase in Libyan exports has had an impact on the overall prices, as has greater confidence that Iraqi production will not be heavily affected by the mess there. Relatively small fluctuations in production, even in the hundred thousand bbl range, can have a significant impact on prices.

Analyst consensus still seems to be that the 2014 average will be over $100, and last I looked the 2015 projection was hanging around $105. If they can't balance at that price they'll be in deficit. Will that have any impact on their policies in the Ukraine?

Again, we all know that Russia is corrupt, we all know they have serious problems in their energy industry, we all know that sooner or later this will all catch up and they will have to cope with serious fiscal issues. The question is how any of this will impact their foreign policies. I wouldn't expect much to change: if anything they may get more aggressive. Of course in the long term the possibility of another economic collapse is always there, but that's well out in the future.

[OUTLAW 09]

Anything from official Russian sources has to be taken with multiple grains of salt.

Given the opacity of Russian budget processes, we have no way of knowing what prices they are assuming when they budget. If they are assuming $114, then they are essentially assuming a deficit, because that's way out of line with even the highest estimates. They may very well be doing that: governments routinely run deficits: it's a problem, not a catastrophe, and they can carry it off for a while if they juggle (as most governments do).



That's completely off the wall: the US does not export oil. It's illegal to export oil from the US. There's some talk of changing that, but it's still talk at this point.

An unexpected increase in Libyan exports has had an impact on the overall prices, as has greater confidence that Iraqi production will not be heavily affected by the mess there. Relatively small fluctuations in production, even in the hundred thousand bbl range, can have a significant impact on prices.

Analyst consensus still seems to be that the 2014 average will be over $100, and last I looked the 2015 projection was hanging around $105. If they can't balance at that price they'll be in deficit. Will that have any impact on their policies in the Ukraine?

Again, we all know that Russia is corrupt, we all know they have serious problems in their energy industry, we all know that sooner or later this will all catch up and they will have to cope with serious fiscal issues. The question is how any of this will impact their foreign policies. I wouldn't expect much to change: if anything they may get more aggressive. Of course in the long term the possibility of another economic collapse is always there, but that's well out in the future.

So Dayuhan--now that you have seen "official" Russian oil/gas statements and noticed they tended to be out of touch with "reality" then is really Russia one large supper Ponzi scheme just teetering?

Russia oil broke to 94.85 today and heading lower.

https://twitter.com/andersostlund/status/511465977473925120/photo/1

[OUTLAW 09]

So Dayuhan--now that you have seen "official" Russian oil/gas statements and noticed they tended to be out of touch with "reality" then is really Russia one large supper Ponzi scheme just teetering?

Russia oil broke to 94.85 today and heading lower.

https://twitter.com/andersostlund/status/511465977473925120/photo/1

Dayuhan---by the way a side question--was the press release for internal Russian consumption and or external global consummation?

[OUTLAW 09]

When it rains it pours on Russia since the last round of sanctions.

From Interfax today:

16:13 Car production in Russia down 4.6% in 8M, plummets 38% in Aug - Rosstat

16:00 RUSSIAN INDUSTRIAL GROWTH SLOWS TO ZERO IN AUGUST, BELOW FORECAST

10:10 DOLLAR TOPS 38 RUBLES/$1 ON MOSCOW EXCHANGE

10:05 DOLLAR UP 9% TO 37.87 RUBLES, RUBLE DOWN AGAINST BI-CURRENCY BASKET

[Dayuhan]

So Dayuhan--now that you have seen "official" Russian oil/gas statements and noticed they tended to be out of touch with "reality" then is really Russia one large supper Ponzi scheme just teetering?

Of course; it's been that way for ages, it's only recently that people are looking. As I said, any information from Russian sources has to be assumed to be unreliable. They are in a bad way on a lot of levels, not as bad as Venezuela, but no oil producers are as bad off as Venezuela. That doesn't mean a collapse is imminent: they can carry on for some time just by shuffling the numbers faster. Long term it is not sustainable, but as we've seen in Venezuela things can stagger on for quite a time.


Dayuhan---by the way a side question--was the press release for internal Russian consumption and or external global consummation?

Which press release? If you mean the unsourced price quote from Twitter, if it's Urals it's export; it's an export blend. I don't know of any source that reports internal Russian prices.

This would interest you:

http://www.platts.com/latest-news/shipping/london/unipec-fixes-third-vlcc-of-september-urals-crude-26875445

and:

http://af.reuters.com/article/energyOilNews/idAFL6N0RG4FJ20140915?pageNumber=1&virtualBrandChannel=0

The unusual Chinese purchases of Urals might be an effort to prop up the market, or it might just be taking advantage of low prices.

Data from Platts or based on the Platts window are always interesting because they report actual transactions, not just rolling average price quotes.

[OUTLAW 09]

Of course; it's been that way for ages, it's only recently that people are looking. As I said, any information from Russian sources has to be assumed to be unreliable. They are in a bad way on a lot of levels, not as bad as Venezuela, but no oil producers are as bad off as Venezuela. That doesn't mean a collapse is imminent: they can carry on for some time just by shuffling the numbers faster. Long term it is not sustainable, but as we've seen in Venezuela things can stagger on for quite a time.



Which press release? If you mean the unsourced price quote from Twitter, if it's Urals it's export; it's an export blend. I don't know of any source that reports internal Russian prices.

This would interest you:

http://www.platts.com/latest-news/shipping/london/unipec-fixes-third-vlcc-of-september-urals-crude-26875445

and:

http://af.reuters.com/article/energyOilNews/idAFL6N0RG4FJ20140915?pageNumber=1&virtualBrandChannel=0

The unusual Chinese purchases of Urals might be an effort to prop up the market, or it might just be taking advantage of low prices.

Data from Platts or based on the Platts window are always interesting because they report actual transactions, not just rolling average price quotes.

Again Dayuhan reported via twitter which you seem to dismiss, but then again it came via yahoo another internet reporting site not quite as fast as twitter.

The sentence is this article is "telling"---do not "panic" Russian population we have a plan........

You will also notice they quote falling oil prices.

http://news.yahoo.com/ruble-plunges-sharply-against-euro-dollar-110647010.html

Deputy foreign minister Alexei Moiseyev sought to put on a brave face, saying authorities were taking steps to curb inflation.

"Don't panic," he said on Tuesday

[OUTLAW 09]

Dayuhan--more on the falling Russian economy:

Ruble Drops to Record as Russia Sanctions Fuel Dollar Shortage


By Vladimir Kuznetsov and Ksenia Galouchko Sep 16, 2014 11:48 AM ET 0 Comments Email Print




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The ruble fell to a record for a fourth day as sanctions over the Ukraine crisis exacerbated a foreign-currency shortage in Russia, while the government canceled its ninth straight debt sale. Stocks advanced.

The exchange rate tumbled 0.9 percent to 43.8454 against the central bank’s dollar-euro basket at 7:10 p.m. in Moscow, depreciating for a seventh day to a record low. That’s within 56 kopeks of 44.40, the level that would trigger the central bank to intervene. The Micex Index climbed 1.6 percent to a two-month high, led by OAO Sberbank, the nation’s biggest lender, which was named under expanded U.S. sanctions last week.

Foreign-currency liquidity has come under pressure as the European Union and U.S. imposed new penalties to curtail access of Russian companies to their debt markets. The one-week dollar-ruble swap rate traded at the widest discount to the central bank’s main interest rate in six months today, signaling traders are willing to pay a premium for the U.S. currency.

“Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, Dmitry Polevoy, the chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said in an e-mailed note. “The market is now targeting the upper boundary of the ruble corridor at 44.40.”

The ruble, which has lost 15 percent of its value against the U.S. currency this year, depreciated as much as 1.4 percent to 38.9300 per dollar, before trading at 38.7145. It lost 1 percent versus the euro.

Dollar Shortage

The implied yield on a one-week swap fell for a third day to 6.43 percent, taking the spread over the central bank interest rate to minus 157 basis points, compared with minus 105 basis points yesterday.

Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAO Alfa Bank in Moscow.

The currency pared declines after Deputy Finance Minister Alexey Moiseev said the ministry and central bank were discussing ways to alleviate the “structural” shortage of foreign currency in the market.

“An injection of dollar liquidity by the central bank could push the ruble higher, back to 38 versus the dollar,” Moscow-based Sberbank CIB analyst Iskander Abdullaev said by e-mail.

Auction Pulled

Companies have $22 billion in dollar-denominated payments to make in September and local banks are “anticipating demand for hard currency from retailers and accumulating additional dollar liquidity,” Abdullaev said.

“The geopolitical background remains unstable,” Dmitriy Gritskevich, an analyst at OAO Promsvyazbank, said in an e-mailed note. The ruble may move “without any serious obstacles” straight to the upper limit of the dollar-euro basket, he said.

Government bonds due in February 2027 climbed, sending the yield down four basis points to 9.66 percent, trimming the increase since President Vladimir Putin started his incursion into Ukraine’s Crimea region in March to 130 basis points. The Finance Ministry cited “unfavorable” market conditions today for pulling a domestic bond auction.

Tougher penalties were announced last week even amid a cease-fire between pro-Russian separatists in eastern Ukraine and the government in Kiev, stoking concern Russia would retaliate with measures of its own and deepen the six-month crisis.

Stocks rose after Ukraine’s parliament approved a law giving special status to two regions controlled by pro-Russian separatists. That boosted optimism the crisis may ease and sanctions would be lifted, Vadim Bit-Avragim, who helps oversee about $4.1 billion at Kapital Asset Management LLC in Moscow, said by phone.

[OUTLAW 09]

Dayuhan--more on the falling Russian economy:

Ruble Drops to Record as Russia Sanctions Fuel Dollar Shortage


By Vladimir Kuznetsov and Ksenia Galouchko Sep 16, 2014 11:48 AM ET

The ruble fell to a record for a fourth day as sanctions over the Ukraine crisis exacerbated a foreign-currency shortage in Russia, while the government canceled its ninth straight debt sale. Stocks advanced.

The exchange rate tumbled 0.9 percent to 43.8454 against the central bank’s dollar-euro basket at 7:10 p.m. in Moscow, depreciating for a seventh day to a record low. That’s within 56 kopeks of 44.40, the level that would trigger the central bank to intervene. The Micex Index climbed 1.6 percent to a two-month high, led by OAO Sberbank, the nation’s biggest lender, which was named under expanded U.S. sanctions last week.

Foreign-currency liquidity has come under pressure as the European Union and U.S. imposed new penalties to curtail access of Russian companies to their debt markets. The one-week dollar-ruble swap rate traded at the widest discount to the central bank’s main interest rate in six months today, signaling traders are willing to pay a premium for the U.S. currency.

“Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, Dmitry Polevoy, the chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said in an e-mailed note. “The market is now targeting the upper boundary of the ruble corridor at 44.40.”

The ruble, which has lost 15 percent of its value against the U.S. currency this year, depreciated as much as 1.4 percent to 38.9300 per dollar, before trading at 38.7145. It lost 1 percent versus the euro.

Dollar Shortage

The implied yield on a one-week swap fell for a third day to 6.43 percent, taking the spread over the central bank interest rate to minus 157 basis points, compared with minus 105 basis points yesterday.

Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAO Alfa Bank in Moscow.

The currency pared declines after Deputy Finance Minister Alexey Moiseev said the ministry and central bank were discussing ways to alleviate the “structural” shortage of foreign currency in the market.

“An injection of dollar liquidity by the central bank could push the ruble higher, back to 38 versus the dollar,” Moscow-based Sberbank CIB analyst Iskander Abdullaev said by e-mail.

Auction Pulled

Companies have $22 billion in dollar-denominated payments to make in September and local banks are “anticipating demand for hard currency from retailers and accumulating additional dollar liquidity,” Abdullaev said.

“The geopolitical background remains unstable,” Dmitriy Gritskevich, an analyst at OAO Promsvyazbank, said in an e-mailed note. The ruble may move “without any serious obstacles” straight to the upper limit of the dollar-euro basket, he said.

Government bonds due in February 2027 climbed, sending the yield down four basis points to 9.66 percent, trimming the increase since President Vladimir Putin started his incursion into Ukraine’s Crimea region in March to 130 basis points. The Finance Ministry cited “unfavorable” market conditions today for pulling a domestic bond auction.

Tougher penalties were announced last week even amid a cease-fire between pro-Russian separatists in eastern Ukraine and the government in Kiev, stoking concern Russia would retaliate with measures of its own and deepen the six-month crisis.

Stocks rose after Ukraine’s parliament approved a law giving special status to two regions controlled by pro-Russian separatists. That boosted optimism the crisis may ease and sanctions would be lifted, Vadim Bit-Avragim, who helps oversee about $4.1 billion at Kapital Asset Management LLC in Moscow, said by phone.

[OUTLAW 09]

Now the Yukos Two case:

After the arrest of the Basneft oligarch owner yesterday the stock dropped this morning by a whopping 26%.

Who needs sanctions when Russians shot themselves in their own feet--which just adds to the current sanctions misery.

[OUTLAW 09]

Are sanctions working?---this tends to prove they are in fact hitting Russia hard--will they change Russia's stance---check the last sentence and one sees the economy will truly tank before Putin accepts "failure".

From NYTs 17/9/2014

MOSCOW — President Obama has warned Russia that “there will be costs” for its policies in Ukraine. European leaders and the head of the North Atlantic Treaty Organization have done the same.

On Tuesday, an influential figure in the Russian political elite and a longtime aide to President Vladimir V. Putin drove home this argument.

European Union and American sanctions have pushed Russia to a tipping point between growth and recession, Aleksei L. Kudrin, a former finance minister, told an audience of Western executives at a conference in Moscow hosted by the American chamber of commerce. Mr. Kudrin then outlined, in unvarnished and detailed terms, what awaits Russia if a fragile cease-fire in the war in eastern Ukraine breaks down: possibily a contraction over 5 percent lasting one to two years.

“The ceasefire is important for everybody, and for Russia most of all,” Mr. Kudrin said. “We should study these consequences, and avoid a worsening of the situation.”

Already, Mr. Kudrin said, sanctions have trimmed about 1 percent from Russia’s $2 trillion gross domestic product this year, with the effects now being felt beyond the tight coterie of businessmen deemed close to President Putin who first felt the sting. Economic growth slowed to what Citigroup projects will be 0.5 percent this year. Since January, $110 billion has left Russia as capital flight.

Aleksei L. Kudrin, a former finance chief for Russia, said sanctions have trimmed about 1 percent from Russia’s $2 trillion gross domestic product this year. Credit Olga Maltseva/Agence France-Presse — Getty Images

Faint consumer demand caused car and other durable goods sales to contract. Rosneft, the state oil company has asked for a government bailout. Yevraziya, a chain of sushi restaurants, closed in Moscow after the price of salmon doubled.

Bob Foresman, the chief executive of Barclays bank in Russia, in a speech to the gathering cited a survey of businessmen’s views on the Russian economy, highlighting phrases like “fatigue,” “caution,” “false hope” and “false dawn.”

In Ukraine this week, Separatist gunmen and the Ukrainian army are exchanging artillery fire daily over military objectives like a regional airport and a strategic village, Debaltsevo, northeast of Donetsk, where Organization for Security and Cooperation in Europe observers came under fire Sunday.

If European leaders decide the cease-fire has failed, they have vowed to leave in place financial and oil industry sanctions imposed last week, rather than repeal them. That, Mr. Kudrin said, would stall the Russian economy with zero growth in 2015, or push it into a mild recession.

If the European Union and United States escalate sanctions on the banking sector by prohibiting Russian banks from accessing SWIFT, the international secure money transfer system, the Russian economy will go into deep recession with a contraction of at least 5 percent lasting one or two years, Mr. Kudrin said.

Turning inward and relying on a revival of domestic manufacturing and agriculture helped by the weakening ruble, the plan to fortify the Russian economy of so-called import substitution outlined by an acting deputy prime minister who also spoke at the gathering, is unrealistic, Mr. Kudrin suggested.

Soft-spoken and with a wry sense of humor, Mr. Kudrin seems at times to almost take pleasure in pointing out the dismal realities of the global economy, when nobody else here will.

Europe and the United States, the governments imposing sanctions on Russia, spend about $1.5 trillion on research and development annually, while Russia spends $20 billion, he noted. As such, Russia can never hope to replicate a wide range of these nations’ imported goods. The Russian government should designate only select niches of the economy for this policy, he said.

The Russian leadership, he said, understands the costs but may be willing to pay them. Earlier, he described the economic blow as the price for Russia having a foreign policy independent of the United States.

“At a minimum, two or three years are needed to resolve the questions,” of the Ukraine crisis, he said, even if no escalation takes place.

“Until then, we won’t know what investment climate we have and the final state of our relations with the West,” he added, and the Russian economy will be in a “period of instability.”

Mr. Kudrin, whose ties to Mr. Putin stretch back two decades to the city hall of St. Petersburg, where both worked, is retired from government. His is a rare public voice of a liberal wing of the Russian elite on the mounting economic costs of the war and sanctions. Kremlin watchers, though, are divided on whether such sentiments carry any weight now with Mr. Putin.

One attendee at the conference questioned whether the Kremlin, already hurt by sanctions, sees no point in changing its behavior in Ukraine, citing Winston Churchill saying “If you’re going through hell keep going.”

[OUTLAW 09]

Chart depicting the anticipated fall rate of the Rubel out to 2017/2018--and the Russian CB cannot do anything to stop it---might help in the end for exports but Russia does not export tons of manufactured quality products outside of oil and gas.

http://t.co/amjn6bHA7C

[Dayuhan]

The question is whether the economic oligarchs, both licit and illicit, have sufficient influence to persuade Putin to change course. Not sure anyone knows the answer to that question... we'll find out.

[OUTLAW 09]

The question is whether the economic oligarchs, both licit and illicit, have sufficient influence to persuade Putin to change course. Not sure anyone knows the answer to that question... we'll find out.

Dayuhan--arrest a major oligarch who many say did his business by the book and letter of Russian law after Yukos---his company takes a 27% loss on it's stock and this is the Russian governments response.

Today from Interfax:

09:07
PESKOV: WE ACKNOWLEDGE POSSIBILITY OF EMOTIONAL MARKET REACTION TO YEVTUSHENKOV'S SITUATION BUT THIS IS NOT REASON TO HINDER INVESTIGATIVE PROCEDURES

That "emotional market reaction" was a total of 27.3% loss in stock value in a single day on a company estimated before the arrest of 8.9B USD.

Does any current Russian government official including Putin "understand" the law of the markets and basic economics 101?

[OUTLAW 09]

Dayuhan--arrest a major oligarch who many say did his business by the book and letter of Russian law after Yukos---his company takes a 27% loss on it's stock and this is the Russian governments response.

Today from Interfax:

09:07
PESKOV: WE ACKNOWLEDGE POSSIBILITY OF EMOTIONAL MARKET REACTION TO YEVTUSHENKOV'S SITUATION BUT THIS IS NOT REASON TO HINDER INVESTIGATIVE PROCEDURES

That "emotional market reaction" was a total of 27.3% loss in stock value in a single day on a company estimated before the arrest of 8.9B USD.

Does any current Russian government official including Putin "understand" the law of the markets and basic economics 101?

Now down to 33% by 1330 today---that means roughly 3B USD of wiped out shareholder values--and the Russians really understand economics?

Evtushenkov’s investment company, AFK Sistema, dropped 33 percent to 24.558 rubles as of 1:39 p.m. in Moscow.

“This is the new Yukos,” Vadim Bit-Avragim, who helps oversee about $4.1 billion in assets at Kapital Asset Management LLC in Moscow, said by e-mail. “The economy is doing poorly, sanctions have been imposed, and all there’s left to do is to seize tidbits that are left in the country.”

Evtushenkov has a fortune estimated at about $7 billion, according to the Bloomberg Billionaires Index, making him Russia’s 19th richest person. Moscow’s Micex Index dropped 2.2 percent today as investors deemed the arrest as a sign of political instability in the world’s biggest energy exporter.

“This directly hits the investment climate,” Vladimir Tsuprov, the St. Petersburg-based chief investment officer of TKB BNP Paribas, said by e-mail. “Many investors saw geopolitical risks and Ukraine as the main problem, underestimating the internal situation.”

[OUTLAW 09]

Russian humor:

Russians joke over latest currency slide by renaming 50 Rb note "One Euro"
pic.twitter.com/WsV53a0lA6 v

[OUTLAW 09]

Dayuhan---notice in this article the particular refrence by Gazprom of sinking nautral gas reserves---yes they are playing with the delivery numbers due to the Ukraine--bot on the back side not delivering in the face of sanctions hurts the Russian cash flow when they need dollars--so something is more ongoing than politics.

Look at the estimated figures up through 2017---the gas volumes are actually sinking strongly.

Having come fro an oil background and having worked the oil/gas fields when one was young--there is a direct relationship to oil production and gas production especially in joint fields---where there is oil is always gas to be found.

There have been strong net rumors of sinking oil production also mentioning 2017--here is your prove and it is from Yahoo of the mentioning of sinking oil reserves.

Remember I did indicate by 2020 massive oil prodution losses as compared to now and you questioned the comment since it came from the web.


Gazprom says unable to meet rising gas demand from Europe for now
Reuters

19 hours ago

* Gazprom says adheres to supply contracts with Europe

Gazprom Said to Face Biggest Decline in EU Revenue in 5 Years Bloomberg
( A side article really worth reading if you find it)
Gazprom's Q1 earnings hurt by Ukraine, exports outlook worsened Reuters
(Second intetesting artile worth reading)

By Alexei Anishchuk

MOSCOW, Sept 17 (Reuters) - Russia's Gazprom said on Wednesday it is unable to meet rising gas demand from Europe while it builds up stockpiles ahead of winter, undermining the ability of Europe to supply Ukraine with gas.

Slovakia, Poland, Romania and Austria have all reported slight falls in shipments in recent days from Russia, which is embroiled in a row with the European Union over the crisis in Ukraine.

Some countries in eastern Europe send gas to Ukraine, to which Russia stopped gas flows in June over a pricing dispute.

Gazprom's Chief Executive Officer Alexei Miller told Russian President Vladimir Putin that the company is pumping gas in accordance with contracts with European consumers, but was not supplying extra volumes asked for.

"Gazprom is carrying out stable daily supplies to European consumers. We fully adhere to our contractual obligations," Miller said in a meeting at the Kremlin attended by reporters.

"Once gas is collected in our underground storage, then we will be able to satisfy the (extra) demand of our European consumers," he said.

EU industry experts and European Commission officials held the latest in a series of meetings on Tuesday to assess the security of the EU's energy supplies.

EU sources, speaking on condition of anonymity, said the issue of how much gas Gazprom was supplying to the European Union had been raised and that EU officials had said Gazprom had been adjusting volumes but within contractual limits.

The European Commission has repeatedly said that storage levels are comfortable for now, but they are concerned about the longer term.


CHINA TALKS

Miller said Gazprom will produce 463 billion cubic metres (bcm) of gas this year, which is down from a previous estimate of 496.4 bcm published in May and 487.4 bcm pumped in 2013.

He also reiterated that Gazprom had been in talks with China on supplying gas on top of the previously agreed 38 bcm per year after 2019 via a so-called Western route.

Russia set its sights on energy-hungry Asian markets a decade ago and struck a landmark deal with China in May to supply it with gas from Russia's east Siberian fields.

Gazprom's previous discussions on delivering additional gas to China via the Western route have met with a lukewarm response from Beijing.

Miller told Putin that Gazprom and China have been discussing an increase in supply volumes via the route by up to 100 bcm per year, an ambitious task given a decline in the company's production levels and China's tough stance in the negotiation process.

Gazprom's chief added that the company would be able to satisfy gas demand both in Asia and in Europe

[Firn]

The Russian Economy: Can Growth be Restored within the Economic System? (http://www.foi.se/Documents/foir3876.pdf) by Susanne Oxenstierna, hosted on the FOI of Sweden is well worth a read. Roughly forty pages.

A bit of it's conclusions...



Market forces play only a limited role in the Russian economy and to improve the prospects for growth with ‘western’ economic policy or to improve the institutional framework will be difficult and have a limited effect. Only parts of the economy profit from market reforms and stronger institutions. The old rent dependent sector has strong political support. It follows that more substantial political reforms are needed to solve the structural impediments and efficiency problems of the Russian economy. Society needs to become more democratic and more transparent

...

Today the Russian society is polarised on many political and economic issues, but civil society is weak and restricted and cannot fulfil its function either as watchdog or as a channel of ideas and entrepreneurship. Without political reform and a market-oriented democratic government it is difficult to see how the performance of the economy could improve.

[Firn]

As some here expected Russia is facing a tough budget (http://www.themoscowtimes.com/business/article/russia-approves-tough-budget-as-growth-restricted-by-western-sanctions/507362.html):


Admitting that macroeconomic stability was a "fragile" thing, Prime Minister Dmitry Medvedev told his ministers the state will not borrow excessively and will keep spending tight.

"This is the first time when work on the federal budget, the three-year budget, took place in such difficult circumstances, when an economic slowdown was exacerbated by the implementation of sanctions," Medvedev said.

"The main problem that we face today is the high level of uncertainty when it comes to how fast trust will return, how soon businesses become interested in investing, how the consumer market grows and what steps our partners will take."

It doesn't of course mean that the Russian balance sheet isn't still quite solid, but the Russian economy will continue to suffer and the some elements of the crisis and the sanctions will kick in with some lag.

A little side-story:


Economy Minister Alexei Ulyukayev said the arrest of billionaire Vladimir Yevtushenkov on money laundering charges had hurt, not helped, Russia's business climate. These marked the first critical comments by an official since the chairman of Sistema, a telecoms-to-oil conglomerate, was put under house arrest on Tuesday.

"This is certainly reflected in the investment climate. It is clear that the suspicion that there is some economic motive behind this complicates investors' decision-making," Ulyukayev told reporters, adding that the situation could spur capital flight.

Meanwhile, on the gas front (http://www.themoscowtimes.com/business/article/russia-s-gazprom-faces-lowest-gas-output-in-history-due-to-ukraine-crisis/507372.html):


Russian gas producer Gazprom is likely to record its lowest output this year since its creation a quarter of a century ago after cutting supplies to Ukraine and losing market share to domestic rivals.

Gazprom reduced its 2014 production forecast this week, and analysts regard even this figure as overoptimistic due to Moscow's battle with Kiev over gas prices and its role in the conflict in eastern Ukraine.

Falling output could put further pressure on the economy, which relies heavily on oil and gas sales and is already slowing to a crawl partly as Western sanctions start to bite.


At least war is mostly far from cheap and the Russians are already paying part of the price for Putin's invasions...

[Dayuhan]

Russian production isn't falling because of a shortage of reserves, it's falling because of a shortage of investment. In the short run the impact is the same, but a deficit of investment can be corrected, while a deficit of reserves cannot.

Russia suffers from a syndrome common to oil producers... one might call it the Venezuela disease. The problem arrives when the government begins to depend on energy revenue, rather that a diversified tax system, to fund its operations. That typically leads to a place where the government ends up absorbing money that the energy industry needs to re-invest in operations in order to sustain its productivity. That inevitably leads to lower production, and to the government taking an ever higher percentage of falling revenue, leaving less and less money to reinvest. Venezuela looks to be entering the final stages of that death spiral; Russia has a way to go.

It is worth noting that Russia could balance its budget with oil at $90. They could balance it with oil at $80. BUT... they would have to raise taxes, quite substantially. They have room to do that: Russian income tax is a flat 13% regardless of income, and other taxes are similarly low relative to developed countries. It would not be a popular move, though, especially dring a recession. That's the danger you get into when you rely on oil money and let the people get used to low taxes.

It will be interesting to see what they decide to do.

[OUTLAW 09]

Russian production isn't falling because of a shortage of reserves, it's falling because of a shortage of investment. In the short run the impact is the same, but a deficit of investment can be corrected, while a deficit of reserves cannot.

Russia suffers from a syndrome common to oil producers... one might call it the Venezuela disease. The problem arrives when the government begins to depend on energy revenue, rather that a diversified tax system, to fund its operations. That typically leads to a place where the government ends up absorbing money that the energy industry needs to re-invest in operations in order to sustain its productivity. That inevitably leads to lower production, and to the government taking an ever higher percentage of falling revenue, leaving less and less money to reinvest. Venezuela looks to be entering the final stages of that death spiral; Russia has a way to go.

It is worth noting that Russia could balance its budget with oil at $90. They could balance it with oil at $80. BUT... they would have to raise taxes, quite substantially. They have room to do that: Russian income tax is a flat 13% regardless of income, and other taxes are similarly low relative to developed countries. It would not be a popular move, though, especially dring a recession. That's the danger you get into when you rely on oil money and let the people get used to low taxes.

It will be interesting to see what they decide to do.

Dayuhan---here is the same problem again---taken from the source you do not like but sometimes actually accurate the web.

Here is an unusual admission from a Russian in the know concerning oil:

Lukoil's Alekperov unusually open about hit to oil industry from sanctions - says 25% of oil from fracking - Interfax

This goes to the loss in production by 2020---heavy fracking in the older fields in needed as they are losing both in volumes and production rates.

25% is a heavy percentage--nowhere close to that in say older US fields.

That is why this last round of sanctions was bad for Russia---it hit the fracking side of both gas and oil thus Russia in the long haul cannot even keep that percentage stable. It hit also the US oil/gas services companies Russia is heavily dependent on for their fracking and artic drilling--Russia simply does not have that capacity inhouse to replace them.

They will be hurting production wise in about 9 months if these particular sanctions stay in place as it seems they will---there was also a side comment concerning OPEC--they sense that OPEC is keeping their production run rates on sour at record highs---almost contributing to the falling sour crude prices..

[OUTLAW 09]

And sanctions are not hurting the Russian oil/gas industry?---literally an flood of negative Interfax press releases today on the Russian oil industry.

Ouch...it seems the Russian oil industry is screaming for Russian CB support.. almost a panic tone in the releases...from Interfax today

18:48
PRODUCING OWN OIL INDUSTRY EQUIPMENT WON'T RESOLVE BAN ON IMPORTS QUICKLY - MEDVEDEV

18:46
COLOSSAL MEANS NEEDED TO FULLY REVIVE PRODUCTION OF EQUIPMENT TO PRODUCE OIL IN RUSSIA - ALEKPEROV

18:46
TAX MANEUVER TO LEAD TO INCREASED TAX BURDEN ON OIL INDUSTRY - ALEKPEROV

18:45
LUKOIL NOT EXPECTING MONEY FROM ABROAD IN MEDIUM TERM, HAS TO DEPEND ENTIRELY ON ITSELF - ALEKPEROV

18:45
EFFORTS MUST BE MOBILIZED IMMEDIATELY TO PRODUCE HYDROFRACTURING EQUIPMENT IN RUSSIA - ALEKPEROV

18:43
LUKOIL'S ALEKPEROV SAYS 25% OF OIL PRODUCED BY FRACKING, BAN ON EQUIPMENT IMPORTS FOR THIS COULD HURT OIL INDUSTRY

[Firn]

In short so far it seems that the Kremlin is protecting it's budget while letting the economy suffer. We discussed the origins of that logic before.

I think the Swedish paper is pretty good and has a nice picture about the dangers of Russian rent-seeking. If I find some time I may read Resource Rents and Economic Growth (http://www.khaznah.co.uk/pages/gb/Report.pdf), 'A report for the Russian Presidential Academy of National Economy and Public Administration (RANEPA)'. I doubt that it was widely discussed in the Kremlin. :wry:

The durability of networked authoritarianism (http://www.ponarseurasia.org/sites/default/files/policy-memos-pdf/pepm194.pdf) is far shorter and more relevant at the moment. The author is now back from Moscow and the director of the Russian institute at the King's College, London. The graph at page three is rather neat...


This memo takes a step back from the passions of the November 2011 parliamentary and March 2012 presidential elections and the protests that surrounded them. It argues that the consolidation of the underlying Russian political economy over the past 20 years has given rise to a system of rent-seeking and arbitration pursued successfully at various levels and supported by a robust network of interlocking interests. This ”networked authoritarianism” supports the status quo and militates powerfully against significant reform. It does so, I argue, at the cost of increasing inefficiencies and social friction, raising the possibility of catastrophic change in the future. This memo will explore the structure of the system, the pressures and constituencies for change, and the limits of reform.

I fear that that catastrophic change might have already taken place in the propaganda fog of Putin's new war.

[Firn]

After my link to that fine paper about the durability of networked authoritarianism around Putin the NYT has an excellent piece of reporting about how a private bank fuels the fortunes of his inner circle (http://www.nytimes.com/2014/09/28/world/europe/it-pays-to-be-putins-friend-.html?_r=0). Some has already be known, of course, but it adds new insights and puts all together. The graph about it's rise in assets is quite stunning...


He had arrived in Moscow as a midlevel apparatchik in ill-fitting suits, had ascended to power as a thoroughly unexpected president and won his first presidential election in 2000 on the crest of war to suppress separatists in Chechnya. By 2004, Mr. Putin had become the paramount figure in Russia, winning a second term with 72 percent of the vote, in a race tainted by allegations of strong-arm tactics and vote rigging. Yet Mr. Putin probably would have won a fair election easily, too. The Russian economy, buoyed by high oil prices, was booming, creating huge fortunes and also lifting the middle class. The long era of post-Soviet gloom seemed done.

Not many people yet understood that in the middle of Russia’s prosperity, the men in the tight circle close to Mr. Putin were becoming fabulously wealthy, and increasingly powerful, in what critics now consider a case study in legalized kleptocracy.

Sadly for many Russians the shock will all be greater if the economy goes where it seems to be headed in the mid run...

[kaur]

Putin's friend Arkady Rotenberg has problems in Italy due to sanctions.

http://www.themoscowtimes.com/mobile/business/article/italy-freezes-assets-of-sanctioned-russian-billionaire/507663.html

Navalny has studied his fortune there. In Russian, but a lot of pics.

https://navalny.com/p/3845/

[OUTLAW 09]

And.....here come the overall price increases which the Russian "common man/woman" on the street will definitely notice.

More from that new Econ Min forecast from last week: food prices expected to jump 12-13% this year

IMO---they will eventually come in between 15-225 more as the long term food delivery contracts run out and Russia has to look for more suppliers from overseas adding to the shipping costs and reduced quality.

http://vedomosti.ru/~h1e

[OUTLAW 09]

And.....the Rubel slide continues ever downwards.

It seems that the super micro and marco economist Putin does not seem to see the connection between his actions in the Ukraine, the sanctions that he himself stated publicly they could survive with ease and the resulting disaster coming at his economy in the next six months as the winter hits and overall Russian economics slows down due to weather.

Seems the attempted Russian FM Reset 2.0 was an attempt to row against the current and get back to business as usual.

Ruble slides (again), inches toward central bank intervention levels. http://www.bloomberg.com/news/2014-09-29/ruble-drops-to-record-heads-for-central-bank-intervention-level.html

[OUTLAW 09]

Russia is slowly ever so slowly getting to the point of confirming the slackening/drop off of oil production under the current figures starting in 2020 which means a hit for the finance side of the Russian budget.

This Interfax press release from today will slowly start the march to 2020---if they are indicating a plateau now what is then due in 2020. 2014 and three years makes it 2017--slowly getting to the magic number of 2020.

Interfax fro today:
13:04 Russian hydrocarbons output to remain on plateau for at least three years - ministry

Notice no mention that it going back up and "for at least" is not a good sign.

[OUTLAW 09]

It does now seem that in fact the Russian economy is and or was just one great Ponzi scheme meaning borrowing from the left hand to pay the right and doing it on cheap interest loans on shot 90 day lines of credit and or bank loans ---all in USDs---the sanctions have been in effect for how long now? and the targeted companies are now screaming for Russian government support which they will have to provide unless they want to the banks and oil companies to declare bankruptcy.

The core question just how long can the Russian CB hold out under the strain?

Better yet just how long can Russian Foreign Reserves hold out---a number of companies are having extreme difficulty in getting their hands on USDs due to the high exchange rates and they need upwards of 41B USDs to pay back bank/private venture groups lines of credit and loans due this month.

#Sberbank is seeking financing from Russia's pension funds & insurance companies to bolster its strained capital base http://www.themoscowtimes.com/article/507992.html

IMO Putin and his inner circle absolutely did not see this freight train coming at them when they annexed the Crimea and went into the Ukraine.

[OUTLAW 09]

Seems Russia is now complaining the sanctions did not go through the UN or WTO-----and they had anticipated the whiplash to hurt Europe which it has apparently not done as Russia had hoped for.

From Interfax today:

Duma chief: West bypassed UN, WTO in sanctioning Russia

MOSCOW. Sept 29 (Interfax) - The head of Russia's lower house of parliament has accused the West of unlawfully bypassing the United Nations and World Trade Organization in slapping its Ukraine-related sanctions on Russia.

"All this time the sanctions that have been introduced bypassed UN decisions and WTO rules, have run against common sense, and have had nothing at all to do with the course of settlement of the internal Ukrainian crisis," State Duma Chairman Sergei Naryshkin said in a letter to the president of the Parliamentary Assembly of the Council of Europe and the leaders of political groups in PACE.

It was five months after the West came up with its first set of sanctions that Russia took retaliatory measures, which is "a degree of restraint that is hard not to notice," Naryshkin said in his letter, whose text has been published by his office on Monday.

"We believed that the entire senselessness of this race of inflicting losses on each other would come home to our European partners, but this has never happened," he said.

Meanwhile, the war of sanctions has already done considerable harm to all European countries, Naryshkin said. "Responsibility for this now lies with all those who have given direct or indirect support to their main initiators," he said.

He claimed that "arbitrary interpretations" of facts had led to groundless accusations against Russia and to sanctions against Russian officials and businesses.

"Everyone has noticed that Europe did this as a follow-up to American measures," he said. "Was this not the reason that the European Union countries were prompted to be the first to introduce the so-called 'sectoral sanctions?"

"However, now that a new cold war is being forced onto the world, European politicians would be well-advised to be more careful - not to lie about a threat from Russia. That depends on the United States," Naryshkin said.

[kaur]

Russian Roulette, reloaded
- Russia latest financial account data show Moscow may not be the first to blink
by Silvia Merler on 30th September 2014

http://www.bruegel.org/nc/blog/detail/article/1443-russian-roulette-reloaded/

[OUTLAW 09]

http://www.bruegel.org/nc/blog/detail/article/1443-russian-roulette-reloaded/

kaur---all good points but the inherent problem is Russian banks and companies needing dollars to balance out outstanding lines of debt due this month and next month and again in early 2015 all totally well over the 130B USD mark as well as the Russian companies and banks needing USDs to pay for their overseas imports which are targeted in USDs and contracts that are still delivering even in the face of the various Russian bans.

Shifting to China has always been an idea but shifting as fast as they Russian economy is sinking ----they will not make the shift in time.

Yesterday they were only .3 away from CB involvement in supporting the Ruble---the market will push the CB to provide support and once that support wall is broken through there is no telling where it will go and the CB cannot support the Rubel for long is the general take even from Russian economists.

Again it seems the Russian economy is really just one very large Ponzi scheme which hit the wall when the sanctions came into play---the bigger question is just how much foreign currency reserves does the CB currently really have and can one trust even their numbers?

If the article figures are correct they have lost easily over 10% of their FC reserves just in the last month and that type of hit cannot go on for long for any country.

[OUTLAW 09]

And the Russian economy news just keeps on getting bad-----

Another miserable day for the Russian ruble
http://www.businessinsider.com/ruble-falls-2014-9 …
(though, partly good news for Russia's budget, which earns in dollars)

BBG story forces ruble to weaken to a threshold where Central Bank says it will intervene

Huge Scoop by BBG's Pismennaya ``Russia Said to Weigh Capital Controls If Net Outflows Intensify.'' Watch the markets now !

[OUTLAW 09]

And the price of oil just keeps falling and falling even though OPEC oil production is climbing.

IMO OPEC is driving up production to just get the same amount of USDs as before just doing it with more oil--and there is a weak demand coming out of china that is not helping.

Will be interesting to see how the Russian stock market takes this news today and the rest of the week.

A report from Reuters that OPEC had increased its output to a level not seen in nearly two years, combined with a stronger dollar, torched crude prices following the report. OPEC produced nearly 31 million barrels of crude per day in September, according to Reuters, up from 30.15 million barrels in August.

[Firn]

The article by Silvia Merler is well-written and most importantly contains a number of neat graphics. :wry:

I think it is important to put the points raised into the wider economic context:

1. Making the access to the Western financial markets more difficult is just one outcome of the sanctions. It's effects, much discussed here, a far broader and cut deeper, especially together with the Russian 'counter'-sanctions.

2. As already mentioned before there are excellent reasons why Russian companies have foremost tapped into the European financial markets and not the Chinese one. The latter has been somewhat of a stop-gap, as it seems from the numbers. Shifting comes at a considerable price.

http://www.bruegel.org/uploads/RTEmagicC_140930_Russia3.png.png

P.S: A good update about the currency reserves:

https://lh3.googleusercontent.com/-9SymuNeOEV_kzPh96hC5M1bFM-4w8gvU6QIx1KkpL1SGzCYxCIvjU17dveG-ApMAbIdio0W2gYB31s3X3S20arIVmolVCuV04Z09rgNqcn3R8I g7-MJoHa7YNNZdbR7KQ

[AmericanPride]

Firn,

I wonder what your take is on this Economist article (http://www.economist.com/news/finance-and-economics/21620204-size-and-homogeneity-countrys-population-has-big-bearing-its-economic?src=tumb/chart) from several days ago measuring government spending and ethnolinguistic diversity. The focus is of course on Scotland, but I'm also wondering how many of the same issues are applicable to Ukraine's internal conditions. I don't have the data to point out where Ukraine (or Russia) falls on the linked chart.

Also - since we're talking about separatism, why do you think Scotland's movement for independence gained mainstream legitimacy while the same of ethnic Russians in Crimea and Donbas did not (even before direct Russian intervention)? This seems like both a political (is it legitimate?) and institutional (can it be resolved peacefully through the mechanisms of government?) problem.

[OUTLAW 09]

Now the Russian business leadership is starting to tell the "truth" concerning the impact of the sanctions.

Herman Gref, head #Russia biggest bank, Sberbank tells biz confab government is wrecking the economy, ignoring lessons Soviet collapse.

Now that is brave---in the current Russian environment.

[Firn]

An good find (http://zeenews.india.com/news/world/top-banker-warns-russia-against-repeating-soviet-mistakes_1479186.html), outlaw.


Speaking at an investment conference in Moscow, Herman Gref, chief executive of state-run Sberbank, pilloried a state-led model of economic development, pointing to a lack of competition and poor governance.

"Why did the Soviet Union break up?" Gref, a former liberal economy minister, told foreign and Russian investors.

"There is one key reason which determined the rest: it`s mind-boggling incompetence of the Soviet leadership. They did not respect the laws of economic development," he said at the annual "Russia Calling" investment forum.

Seems I was not the only one reading an old book. :wry:




Citing a book by the key architect of Russia`s market reforms, Yegor Gaidar, "Collapse of an Empire," Gref said Russia must learn lessons from history.

"We cannot allow the same situation," he said, noting that the Soviet Union also faced a combination of high oil prices and "huge structural problems."


The high oil prices allowed the Soviet regime to do bad business as usual while the huge structural problems grew. The shock of low oil prices kicked away under it's economy what was left of it's legs...

German Gref is a son of German Russian which were deported during the war and speaks fluent German and his oldest son studied in Germany. From an older German article (http://www.faz.net/aktuell/wirtschaft/automobilindustrie/sberbank-chef-gref-der-russe-fuer-ruesselsheim-1799772-p2.html):


As director of a think tank set up by Putin, he worked in 2000 for a long-term oriented, liberal economic program. In the same year he was also appointed Minister of Economic Affairs. Putin and Gref know each other from the early 1990s at the Law Faculty of the University in St. Petersburg and developed mutual respect. Under the legendary Petersburg mayor Anatoly Sobchak, who was also Gref's thesis advisor, the lawyer as Putin began a management career in St. Petersburg. The dismissal of Gref as economy minister in 2007 can be understood as atmospheric disturbance in the relationship between Putin and Gref.

Google translated with some corrections.

@AP: I will responds perhaps later, no more time.

[kaur]

Oil Prices Are Falling, Not Oil Regimes


But for all the turmoil in oil markets, not all petrostates are panicking. Although big producers, from Saudi Arabia to Russia, rely on high crude prices to balance their budgets, the price hasn't dropped low enough, or long enough, to fiscally squeeze them just yet.

Russia could feel the pain next. Oil far outweighs gas in Russia's energy-export mix, but Moscow's budget is predicated on Brent crude prices north of $100 a barrel. What's more, Russia's economy has also been battered by Western sanctions in the wake of the Ukrainian crisis, leading to ruble flight, slumping markets, higher interest rates, and slashed growth forecasts.
Now, falling oil prices have Russian policymakers worried: One former finance minister said cheaper oil could punch a $30 billion to $40 billion hole in Russian revenues. The Russian Central Bank, meanwhile, is scrambling to prepare for oil prices as low as $60 a barrel, Reuters reported. Russia's current finance minister said Thursday that cheaper oil is a huge risk to its wobbly economy.

http://www.foreignpolicy.com/articles/2014/10/02/oil_prices_are_falling_not_oil_regimes_opec_russia _saudis_iraq

[AmericanPride]

A concern about the economic stability of the Eurozone (http://nationalinterest.org/feature/will-the-ukraine-crisis-tank-europes-fragile-economy-11401):


The energy war, coupled with the trade war that has broken out due to the implementation of the sanctions regime against Russia, may result in Europe’s backsliding into a recession next year. We may already be seeing signs of it. On Wednesday, the eurozone PMI (Purchasing Managers Index) hit a fourteen-month low, while France’s continued to contract and Germany’s fell to a fifteen-month low. Meanwhile, a sanctions-induced reduction in oil flows from Russia could further stifle eurozone growth by 1 to 1.5 percentage points in 2015.

[AmericanPride]

And despite it all, Putin's approval rating is even higher (http://council.smallwarsjournal.com/showthread.php?t=20692&page=16) than when Russia seized Crimea:


We shouldn’t assume that Putin is “losing” because…well, because so far Russians haven’t held him responsible for any of the negative consequences of his Ukraine policy. Perhaps they will in the future, but the reality is that Putin might very well be more politically powerful at the moment than at any other time in the past decade and a half.

[OUTLAW 09]

An good find (http://zeenews.india.com/news/world/top-banker-warns-russia-against-repeating-soviet-mistakes_1479186.html), outlaw.



Seems I was not the only one reading an old book. :wry:




The high oil prices allowed the Soviet regime to do bad business as usual while the huge structural problems grew. The shock of low oil prices kicked away under it's economy what was left of it's legs...

German Gref is a son of German Russian which were deported during the war and speaks fluent German and his oldest son studied in Germany. From an older German article (http://www.faz.net/aktuell/wirtschaft/automobilindustrie/sberbank-chef-gref-der-russe-fuer-ruesselsheim-1799772-p2.html):



Google translated with some corrections.

@AP: I will responds perhaps later, no more time.



Interesting blog report on the actual inflation rate in Russia at over 18% not the "official" 7-8%.

Appears Putin cancelled his annual financial budget report to the Duma and country---wonder why?

Current inflation in #Russia:
Official: 6-8%
Actual: 18.3%
It is BAD.
#AP
pic.twitter.com/MhVtjCQCx4

[Firn]

Two points have to be taken into account when reading current Russian estimates of inflations or other variables:

1) They are estimates and as in all other countries they are subject of revision in periods to come as more reliable data comes in.

2) They are Russian. Institutes like the Bank of Russia have been reliable in the past but the difficult current situation may well result that fewer want to bear bad messages.

@AP: Your link is broken, which happens. In any case like I said months ago, it looks like a long conflict and Russia's economy is as far as I can see in a pretty bad stagflation. Already in January it was seen as a potential problem (http://en.itar-tass.com/economy/714681). Time will tell how bad it will become and how heavy the political implications will be for Putin. It is quite possible that Putin and his circle will be able to hold it's firm grip on power, as we have seen in other circumstances. At the very least the economic damage should show other potential aggressors that such actions can have high economic costs. As a bonus the Russian military built-up will also be more costly and difficult for the Kremlin.


Regarding a whole range of developing countries, including Russia, we can speak about such a problem as stagflation, that is a rapid deceleration of economic growth accompanied by a spurt in inflation,” Kseniya Yudayeva, a deputy head of Russia’s Central Bank, said Wednesday.

Yudayeva, who was speaking at the Gaidar Forum, one of the country’s major economic conferences, said the tendency could also be observed in India, Brazil and a number of other countries.

[Firn]

Just some quick points about the economic risks for Europe as a whole:

1) Obviously the current Russian aggression is a negative factor for European growth.

2) Obviously it is so far a very small one for the huge economy as a whole even if there are sectors and countries suffer more.

3) Obviously Russia can greatly increase the damage but only if it shoots into an economic leg called gas.

Once again time will tell. I actually wouldn't even rule out point 3 after the latest Russian actions, which says quite a lot.

[kaur]

Whose is Russia’s external debt?
- 90% of the country’s external debt was attributable to banks and other (non-government) sectors
by Silvia Merler on 7th October 2014


And when is this debt coming due?
54% of Russia’s external debt has maturity of over two years (unspecified); 10% is between 1 and 2 years whereas about 23% has maturity of 1 year or less. For part of the external debt, the schedule is not available or inexistent (debt without schedule). Of that part of debt that is coming due within 1 year, the biggest redemptions will be in December 2014 - with 32 USD billions of banks and other sectors’ debt coming due - and Q5-2015, with 28 billion.

http://www.bruegel.org/nc/blog/detail/article/1451-whose-is-russias-external-debt/

[OUTLAW 09]

How an average oil price of $90/barrel would give #Russia a budget deficit of 1.2% of GDP year

http://www.bloomberg.com/news/2014-10-07/oil-plunge-magnifies-russia-s-sanctions-pain-chart-of-the-day.html …

pic.twitter.com/H0BXBsnf0Z

And even more good news: "Brent Crude down almost 1% so far today."

pic.twitter.com/fa64R8NBve

[OUTLAW 09]

Russia spends $1.68 billion to prop up the ruble in just two days: http://bloom.bg/1nYmYXN
pic.twitter.com/D07JEjq19b

[Firn]

A nice slide From the first Bloomberg report:

http://www.bloomberg.com/image/io72t17otmyc.jpg

Of course the usual caveats like inter alia apply.


“In the short-term, the falling oil price will be a big blow to the economy, especially if it reaches $80 a barrel,” Alexei Kudrin, the finance minister from 2000 to 2011 who helped return Russia’s budget to surplus, said by phone today. “However, in the long run, the sanction will have a more serious impact.”

Russia will require an oil price of about $104 to balance its budget in 2015, Sberbank estimates. Brent crude, a benchmark for more than half the world’s oil including Urals, Russia’s main export blend, declined more than $20 since its 2014 peak in June and traded at about $92 a barrel today. It closed at $92.31 on Oct. 3, the lowest since June 2012.

The oil price might well rise, but every month around the current level will have it's negative impact. Sure, Russia's budget should handle it but it will sap fiancial strenght. I already talked before about the long term harm the sanction plus the counter-sanctions have should do.

[Firn]

Putin Clans Gridlocked Over Arrest as Sanctions Bite (http://www.bloomberg.com/news/2014-10-05/putin-clans-said-gridlocked-over-arrest-as-sanctions-bite.html) is a rather dramatic title but it meshes well with earlier papers and reports like that NYT article or comments by the current or former finance ministers.


When Putin came to power at the end of 1999, state companies accounted for about 30 percent of the economy, according to BNP Paribas SA. (BNP) Now the share is more than half.

Unlike Putin’s first two terms as president, when Medvedev and other “economic rationalists” had more freedom and growth averaged 7 percent, this cabinet is dominated by “statists” who want to expand the state’s role in the economy, according to Masha Lipman, an independent political analyst in Moscow.

“When there’s a clash between economic efficiency and rationalism and control and sovereignty, Putin always opts for the latter,” Lipman said. “The desire of the statists to be fully in charge has intensified. This trend has become irreversible. Medvedev is at risk and removing him as premier would take away the last defense of the rationalists.”

Foreign businesses are still investing but far less so then before. The damage inflicted on Russia is certainly increasing, but takes time. Worst are perhaps the wounds caused by it's government itself.

[AmericanPride]

Putin Clans Gridlocked Over Arrest as Sanctions Bite (http://www.bloomberg.com/news/2014-10-05/putin-clans-said-gridlocked-over-arrest-as-sanctions-bite.html) is a rather dramatic title but it meshes well with earlier papers and reports like that NYT article or comments by the current or former finance ministers.

I think the biggest take away from that article is that the Putin administration is not monolithic, and that it contains a number of factions competing for power, wealth, and influence. It might be tempting to believe that the Russian government is stock full of 'irrational criminals' living in an 'altered state of reality' but the truth is that decision-making in Moscow is really a function of a factional process in which the combat between competing voices produces sub-optimal policy outcomes (not unlike in the U.S.).

For me, the real question is how much influence will the nationalists gain at the expense of the realists and technocrats still remaining in government.

[AmericanPride]

From Igor Yurgens, Chairman of the Management Board of the Institute for Contemporary Development and Vice President of Russian Union of Industrialists and Entrepreneurs:

"The West vs Russia" at the National Interest (http://nationalinterest.org/feature/the-west-vs-russia-the-unintended-consequences-targeted-11427):


Most importantly, beginning a new chapter is not the same as ending one—and it by no means preordains the final pages of the book. Perhaps ironically, the harder the West tries to isolate Russia, the more Western actions will strengthen forces inside the country that welcome isolation. This will make it increasingly difficult to find necessary cooperative solutions to current differences, and it is likely to increase costs on all sides.

[Firn]

A voice of smart reason - sadly following Putin's logic. It is the West who should strech out it's arm and just forget that Putin's aggression has ripped the poltical landscape and post-war consensus of Europe. What have all those offers and understanding got from Russia's side? At best united with the Ukrainian resistance they made a deeper invasion less likely and reduced the level of violence for the time being.

Making the oligarchs of Putin's circle and the common people suffer economically and weakening the Russian ability to built up it's military further is perhaps the least worse outcome given Putin's actions. That there is some infighting within the circle for a bigger slice of the cake which is no longer growing is a just a bonus.

As written by a important Russian economist Putin dominates more the Katharia the Great. This means that the 'moderates', which supported openely his policies of aggression have at best a limited influence the foreign realm if more so in the economic sphere. Actually the isolationists, which seem to be used in part as a spectre would help a great deal to wreak the Russian economy. They already are working hard on it. That has also risks but lower ones then the alternatives. IMHO, of course.


It might be tempting to believe that the Russian government is stock full of 'irrational criminals' living in an 'altered state of reality' but the truth is that decision-making in Moscow is really a function of a factional process in which the combat between competing voices produces sub-optimal policy outcomes (not unlike in the U.S.).

Quite unlike the US, in which one man doesn't dominates personally or through proxies the media, all the three branches and the economy. The infighting is within his circle not between quite indipendent political forces...

[AmericanPride]

Firn,


. It is the West who should strech out it's arm and just forget that Putin's aggression has ripped the poltical landscape and post-war consensus of Europe.

Except for some of the hardliners in Russia, I don't think anyone is saying this at all. I think the majority of the criticism towards Washington's policy is that it's not considering long-term consequences to the conflict's continuation or escalation. Sure - the U.S. can punish Russia economically, but as I've asked Outlaw repeatedly, how does that impact other U.S. security and economic interests? And since the sanctions are in response to Russia's occupation of Ukrainian territory, how do the sanctions reverse that specific action? Historically speaking, sanctions are ineffective in that regard, and considering the other foreign policy consequences of a confrontational U.S.-Russian relationship, there needs to be more consideration of how to de-escalation the conflict at its source.


Quite unlike the US, in which one man doesn't dominates personally or through proxies the media, all the three branches and the economy. The infighting is within his circle not between quite indipendent political forces...

We can debate the extent that this is true, but recent research shows that U.S. policy decisions effectively align with the preferences of American elites, and that the specific outcomes and contours of policies are often subject to heated bureaucratic infighting (i.e. invasion of Iraq, several major intelligence programs, Affordable Care Act, etc). That the specifc mechanisms of power and elite relationships differ to some degree does not in my view invalidate the argument that this process of bureaucratic infighting occurs and shapes policy rather than policy being designed and driven by one man or a monolithic agency.

[AmericanPride]

Some more reasons why Russia is unlikely to alter its course (http://rbth.com/business/2014/10/09/purpose_of_sanctions_is_unclear_for_many_russians_ 40471.html)in Ukraine in response to sanctions:


In a poll conducted Sept. 19-22 among 1,600 respondents in 46 Russian regions, 71 percent of Russians believe that the main purpose of Western sanctions is “to weaken and humiliate Russia.”


Sixty-eight percent of the respondents believe Russia should “continue its policy” in retaliation against the sanctions, almost a fifth (22 percent) call for “seeking a compromise and making concessions in order to stop the sanctions” and 10 percent are undecided.

So essentially it appears that as of September, Western sanctions have strengthened not weakened the Russian public's resolve.

[OUTLAW 09]

Oil price crash continues today, falling as low as $88.11 in Asia. Analyst Chris Weafer says Russia relying on $110.

Note:
Next bottoming is estimated to be at 85---if it clears 85 then there is no more bottoming until around 79--if it clears then 79 then hold your breath--some in the field say 69-70 is final end point--currently extremely low demand especially out of China and a very high over supply as suppliers push as much as possible to make up the short falls via large volume movement.

So for every barrel Russia tries to sell at say 85 and they need 110--what is the daily loss----60-80M per day in revenue?

http://qz.com/278945

[OUTLAW 09]

the Russian stock market opened his morning 1.3% down and the CB has again moved the currency bundle band in an attempt to slow down the fall of the Ruble which continued again today.

Leading Russian economist has openly stated the CB will run out of money as the slide cannot be stopped alone by the CB--there must be some political breakthrough to reassure the markets and support the Ruble.

Boy was he brave with that statement.



From Interfax today:

10:10 CB SHIFTS BICURRENCY CORRIDOR TO 36-45 RUBLES

10:05 RUSSIAN STOCK MARKET OPENS WITH 1.3% DROP FOR MICEX, RTS INDEXES

10:04 DOLLAR UP 5 KOPECKS AT 40.2 RUBLES, RUBLE FALLS AGAINST BICURRENCY BASKET

11:09 Russian monetary base down 38.1 bln rubles

11:07 MONETARY BASE IN RUSSIA WAS 8.299 TRLN RUBLES ON OCT 3 AGAINST 8.337 TRLN RUBLES ON SEPT 26 - CENTRAL BANK

11:05 RUSSIAN MONETARY BASE DOWN TO 8299.3 BLN RUBLES ON OCTOBER 3 FROM 8337.4 BLN RUBLES ON SEPTEMBER 26 - CB

[AmericanPride]

So, outlaw, how does the downward momentum of the Russian economy alter its policy preferences?

[OUTLAW 09]

So, outlaw, how does the downward momentum of the Russian economy alter its policy preferences?

AP--in some aspects you read my mind---in theory the "ceasefire" is not "ceasefire" when since 5 Sept there have been over 1340 shellings and ground attacks.

There was some Russian troop movement out of the Ukraine but it now appears that it was a typical Russian Army rotational shifting of troops and equipment.

Putin then "disappears" for his 62th birthday and there is silence from him--BUT then look a one day before he disappears--Russian military units started moving back into the Ukraine including equipment never seen outside of Russia.

So one can now speak of an escalation instead of a de-escalation ---which is the reason for the strong German comments yesterday and French comments directed towards Putin today.

Now to your question--in a "death race" the core question becomes---can I win victory and or my defined end state before my economy collapses around my ears and my own population starts to suffer?

The sectorial sanctions were designed to hit the oligarchs not the Russian population---that was the core western mistake---actually Putin has done more to hit his own people than the west did.

Today the price of oil broke through the 85 marker and now the bottom will tank at around 68-70.

Oil: $84.81
pic.twitter.com/LMxnPdt0AH

Personally after watching him for years starting in Dresden he will go all in for the land corridor and the full territory of New Russia as that is the "victory" he himself defined for the Russian population six months ago---that was what he defined in his Duma speech as well.

See AP even with all the fighting in the Donbas and all the destruction and now the resurgence of the mercenaries and his high Russian troop loses--he still has not "won a single thing" ie the Ukraine has signed the EU agreements, the RADA is voting on revoking the non alignment law and NATO is nudging closer to him inside the Ukraine and here is talk hat he Ukraine will leave the CIS shortly.

That explains some of the new Russian military equipment moving into the Ukraine especially the new artillery guidance radar for high precision artillery strikes against moving tanks.

There have been three bridgeheads built up by Russian troops and the manpower in them as reached the standard Russian attack ratios they seek when they overwhelm enemy forces--using their standard rolling attack formations.

Now if you would have understood the "suckered in" comments you would have seen a corresponding redeploying of Ukrainian troops and equipment opposite those bridgeheads. Remember I did say Ukrainians do understand the Russia mindset.

By the way the US comments on potential US lethal aid to the UA hit a major Russian nerve yesterday---and they commented aggressively again today "they can prove the aid is in fact in the country now along with trainers".

This in fact might be true as a heavy anti tank ability would in fact negate the heavy Russian use of tanks making the fight a tad more equal.

[AmericanPride]

Now to your question--in a "death race" the core question becomes---can I win victory and or my defined end state before my economy collapses around my ears and my own population stars o suffer.

So, in sum, the impact of the sanctions may actually make Russia more aggressive, not less?

[OUTLAW 09]

So, in sum, the impact of the sanctions may actually make Russia more aggressive, not less?

AP--again AP you need to read more---aggressive more or less than what?

The sanctions did not start before the Crimea did they?----Putin's Duma speech and the clarity of the Putin Doctrine and the Russian UW strategy were before and or after the sanctions?

The sanctions are only speeding up the Putin Doctrine not slowing it down--by the way you did notice that Putin is starting the same EU threats against Moldavia right?

What Putin did not calculate and he could not have calculated were in fact the strength and depth of the sanctions--that did not happen after Georgia and Moldavia--he really did think it would go back to business as usual.

There was a short comment online early on by a close advisor to Putin that actually stated he was stunned and totally surprised by the sanctions as was Putin himself.

He has about until say next Tuesday to make a serious decision--move forward militarily and or declare a "victory" now and reign in the mercenaries as per Minsk 1 and 2 and figure out another way to influence the Ukraine.

The Russian CB cannot stop the Ruble crash--there is simply not enough USDs available for them to stem the total crash longer than next Tuesday or no later than Wednesday.

As sanctions bite, Russian central bank is unable to halt slide in national currency
http://uatoday.tv/business/as-sa

[Firn]

So essentially it appears that as of September, Western sanctions have strengthened not weakened the Russian public's resolve.

So it might appear of September. Which might weaken it's resolve considerably more down a long bleak economic road as it enables in the short run more policy stupidity. Or maybe not. Early times, still after months early times.

In any case this isn't the only aspect of a weaker Russian economy. For example increasing it's military strenght will also require more effort or more sacrifice in other areas as the cake doesn't grow bigger and Western tech will be harder to come by. It's economic 'lever' over some countries will likely become weaker. Supporting the occupied territories in economic turmoil like the Crimea will be harder even if they don't screw it up as badly as they do currently.

[AmericanPride]

Which might weaken it's resolve considerably more down a long bleak economic road as it enables in the short run more policy stupidity.

I think there's alot of inferences in that assessment that wouldn't stand up to scrutiny. The problem with the sanctions argument and the assumptions about Russia's behavior in response to them is that its often viewed (and justified) within the prism of Western normative dispositions. Russia 'should' do this or 'should' do that. When is anyone going to talk about what Russia will do and can do?


The sanctions are only speeding up the Putin Doctrine not slowing it down

That would be more aggressive.

If the sanctions do not reverse Russia's gains in Ukraine, but 'punish' Russia by weakening its economy (with all the attendant instability), is that a 'win' for the U.S. and/or the West?

[OUTLAW 09]

I think there's alot of inferences in that assessment that wouldn't stand up to scrutiny. The problem with the sanctions argument and the assumptions about Russia's behavior in response to them is that its often viewed (and justified) within the prism of Western normative dispositions. Russia 'should' do this or 'should' do that. When is anyone going to talk about what Russia will do and can do?



That would be more aggressive.

If the sanctions do not reverse Russia's gains in Ukraine, but 'punish' Russia by weakening its economy (with all the attendant instability), is that a 'win' for the U.S. and/or the West?

And again AP you show a weak understanding of Russian politics since Stalin and especially the four legged decision making process Putin moderates.

In order that you better understand the rule of the Russian oligarchs and how Putin plays that group to serve himself--please again read something which you tend to not do.

http://www.nytimes.com/2014/10/11/opinion/joe-nocera-putin-shows-his-hand.html?smid=tw-share&_r=0

AND again you do no seem to believe he theory of "suckered in"---remember the Ukrainians tend to far better understand Putin than we do.

AND AP the Moldavians are also having their problems with Putin---this from the CIS meeting this week.

"Even after the verbal spat was over, Russian and Moldovan presidents continued to exchange angry looks & gestures"

http://www.mk.ru/politics/2014/10/10/na-sammite-v-minske-putin-vstupil-v-rezkiy-konflikt-s-prezidentom-moldovy.html …

[OUTLAW 09]

Looks like the Russian Finance Ministry has a new strategy---"hope".

From Interfax today:

10/11 18:19 Oil price unlikely to go down to $60 per barrel - Russian Finance Ministry official

10/11 18:11 No fundamental reasons for ruble to continue weakening - Finance Ministry official

[Firn]

I think there's alot of inferences in that assessment that wouldn't stand up to scrutiny.


You forgot the maybe not, just saying. Overall it might be helpful if you are a little bit clearer why it wouldn't stand up.

As well it surprises me that you seem to expect results so quickly, almost like Mr. Market. Looking at the Russian polls, including those in which many understandably confess that they have no idea why the ruble is falling (http://www.themoscowtimes.com/business/article/forty-percent-of-russians-don-t-know-why-ruble-is-falling/509267.htm) I'm reminded about an old Graham quote: “In the short run the market is a voting machine. In the long run it's a weighing machine.”

That goes pretty well for an economy as a whole. Time, the harshest scrutinizer, will tell what us what happened to the Russian economy and Mr. Putin.

P.S: Would you bet that in the next poll by Pew Global (http://www.pewglobal.org/2014/05/08/chapter-3-russia-public-backs-putin-crimeas-secession/) after a year from now has the same or higher level of support? I think not.

[OUTLAW 09]

#Siluanov tells Duma that #Russia will have to use the Reserve Fund if oil & the ruble stay at their current rate:

http://www.themoscowtimes.com/article/509331.html …

And the spiral continues onward and downward.

From RIA and Interfax today:

MOSCOW, October 13 (RIA Novosti) -The Russian government could spend up to 1.5 trillion rubles (over $37 billion) in 2015-2017 to finance the federal budget in light of falling oil prices and the weakening of the national currency, the Finance Ministry said Monday.

"Our budget policy is facing several risks. We are expecting some 1.5 billion rubles, or almost half of the Reserve Fund, to be spent in the next three years [to counter those risks]," First Deputy Finance Minister Tatyana Nesterenko said.

Russia's Reserve Fund totals some 3.5 trillion rubles ($74 bln) as of September 2014.

Interfax:
14:58 Central Bank shifts currency corridor another 25 kopecks to 36.25-45.25 rubles

14:57 FINANCE MINISTRY INCLUDES POSSIBILITY OF USING ABOUT 1.5 TRLN RUBLES FROM RESERVE FUND IN THREE-YEAR BUDGET - NESTERENKO

14:54 Finance Ministry supports idea of allowing non-state pension funds buy Russian banks' subordinated loans (Part 3)

[OUTLAW 09]

About a month into the Crimea problem the US in a little noticed move did a
6M barrel crude oil sale out of the strategic reserves---the US argued it had to do with the maintenance of the depots---some analysts stated then that if the US maintained the rate of sales through say four months the overall market price for sour crude ie Russian oil could drop into the 80s ranges.

Then about two months ago a really little noticed single one prargraph Russian new release came and went and was never backed up by others which is standard practice--this PR simply stated --- a named Russian official from inside the oil industry stated "he felt that the KSA would not "play" games with the crude oil prices.

It was rather unusual and simply did not fit in the normal Russian news PR flow for that day and it did not tie into any other PRs for that week or the rest of the month.

IT appeared to be a "please please do not sink the oil prices" kind of plea.

I mentioned both articles here in SWJ and indicated had the oil price been forced far faster downwards Russian troops would not be in the Ukraine--and took massive heat in some comments for thinking that to be possible.

THEN this today hit the news cycle---and behold the KSA is "playing" with the oil prices especially sour crude---what Russia exports.

I had also pointed out that the KSA has been teed off at Russia for a long while concerning their support for Assad especially on the military weapons support side of the house---also many did not like that statement as well.

Saudi Arabia's Oil Price 'Manipulation' Could Sink The Russian Economy

Business Insider
By Tomas Hirst
1 hour ago

The vice-president of Russia's state-owned oil behemoth Rosneft has accused Saudi Arabia of manipulating the oil price for political reasons. Mikhail Leontyev was quoted in Russian media as saying:

Prices can be manipulative. First of all, Saudi Arabia has begun making big discounts on oil. This is political manipulation, and Saudi Arabia is being manipulated, which could end badly.

The news comes as Reuters reports Saudi officials have been privately admitting to oil market participants that they are comfortable with lower oil prices. According to the news service, the Organization of the Petroleum Exporting Countries (OPEC) is willing to accept prices as low as $80 a barrel for as much as the next two years.

NOTE: the Russian budget cannot take a hit to their oil pricing of 80 for two straight years.

Falling prices are of particular concern to Russia. Russia needs high oil prices to buoy its economy. The country has seen its economic performance slow under the weight of sanctions over Ukraine and weakening domestic demand. The Russian Central Bank forecasts growth over 2014 to be a meager 0.4%, improving marginally to between 0.9%-1.1% in 2015.

The problem is that Russia's latest budget requires oil prices to average at least $100 a barrel in order to cover the government's spending promises. The government already needs to borrow around $7 billion from foreign investors next year and as much as 1.1 trillion rubles ($27.2 billion) from domestic investors. Given the country's sanctions-imposed isolation from international bond markets, any additional borrowing would be a big concern for policymakers in Moscow.

Finance Minister Anton Siluanov has already acknowledged that the budget forecasts for both Russian GDP growth and oil prices are "optimistic." During the Reuters Russia Investment Summit in September he was quoted as saying:

There are risks to economic growth rates. It is a rather optimist forecast; there are risks to oil price. Without a doubt, this and the next year we will have to try very hard to ensure the planned growth rates.

If the forecast growth fails to materialize and the oil price continues its slide it could force the Russian government into an embarrassing retreat on spending commitments and increase the country's economic woes.

[OUTLAW 09]

The Russian economy death spiral still continues and only gets worse.

Oil Price Set To Fall to $76-77 -- Oil Minister of #Kuwait
No reduction in OPEC production to support prices either:)
http://www.theinsider.ua/business/543b98aaa8039/ …

Appears the Russian CB has also given up on supporting the Rubel.

#Russia|n Central Bank Admits Defeat as Ruble plunges to new low:
$1 = 40.460
€1 = 51.342
http://www.businessinsider.com/russian-central-bank-admits-defeat-over-defending-the-ruble-2014-10 …
@AP pic.twitter.com/LSnOpxDcZ4

[OUTLAW 09]

The Russian economy death spiral still continues and only gets worse.

Oil Price Set To Fall to $76-77 -- Oil Minister of #Kuwait
No reduction in OPEC production to support prices either:)
http://www.theinsider.ua/business/543b98aaa8039/ …

Appears the Russian CB has also given up on supporting the Rubel.

#Russia|n Central Bank Admits Defeat as Ruble plunges to new low:
$1 = 40.460
€1 = 51.342
http://www.businessinsider.com/russian-central-bank-admits-defeat-over-defending-the-ruble-2014-10 …
@AP pic.twitter.com/LSnOpxDcZ4

More reports on the KSA oil price effects on Russia--the "real sanctions" against Putin.

RUB - 51.3120 versus EURO, 40.4350 against USD.
Real sanctions against Putin imposed by Saudi Arabia.

http://www.bloomberg.com/news/2014-10-13/russia-interventions-top-4-billion-as-crude-drop-worsens-rout.html …

[Firn]

It is certainly not easy for many oil-producing states which, as was discussed in this forum before, need increasingly high oil revenues to balance their budget. New participants won't be part of a restriction of supply and the increased vulnerability makes it harder for key players to cut big against their short-term interests. From Bloomberg (http://www.bloomberg.com/news/2014-10-12/brent-crude-slumps-to-lowest-in-almost-four-years-on-supply-glut.html):


Iraq will sell its Basrah Light crude to Asia at the biggest discount since January 2009 as it follows Saudi Arabia and Iran in cutting prices amid a slump in Brent futures to the lowest in almost four years.

Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, trimmed the price differentials for supplies to Asia and Europe for November, the country’s State Oil Marketing Co., known as SOMO, said today. Futures slid as much as 2.7 percent in London to the lowest intraday level since December 2010, and West Texas Intermediate lost 1.2 percent after tumbling into a bear market last week.

The world’s two most-traded oil futures are collapsing as demand growth slows and output expands in the U.S., Russia and other nations. OPEC’s biggest producers are responding by cutting prices, sparking speculation they are ready to compete for market share. Iran last week said it will sell oil to Asia in November at the biggest discount in almost six years, matching cuts by Saudi Arabia.

Still I have no idea what the oil price will do in the next months or years...

[OUTLAW 09]

It appears that after one war and several rounds of sanctions now Russia wants to discuss a free trade zone between the EEC and the EU.

BUT again it is all smokescreen because for EEC products to move freely and or with limited duties the products must be able to pass EU health and safety standards---that was the massive scream by Russia and the Ukraine/EU agreement which implementation was delayed to 1 Jan 16 to give Russia time to pickup their quality and safety standards to EU levels---Russian products now come nowhere close to EU standards thus would have been cut out of the Ukrainian EU market--roughly 400M per year loss. Currently very very few Russian products make it into the current EU due to health and safety standards problem--Russia loves tons of products not quality of products--an old Soviet holdover.

That is why Putin is basically telling Moldavia what do with their EU membership--do not join---what is strange there is that Russian products in Moldavian do not have a large market.

MOSCOW, October 14 (RIA Novosti) – Moscow is ready to discuss a free-trade zone with the European Union, Russian Foreign Minister Sergei Lavrov said Tuesday.

He said that the Russian-led Eurasian Economic Union will formally start its activities on January 1, 2015.

“We remain open to cooperation with other states, other regional groups, ready to discuss free trade zone with the European Union and are ready to build the integration model step-by-step,” Lavrov said.

[OUTLAW 09]

One must ask one's self what economical world Russia resides in--they have been attacking the EU from day one on their latest gas deregulation law 3 which is being used to stop the South Stream pipeline construction because Gazprom will not deregulate itself and allow a 3rd party to maintain the pipeline and all gas producers who want to ship gas will be able to ship gas--just not only Gazprom but there are at least another 14-18 suppliers that would love to ship and sell inside the EU.

Seems like Russia just does not like competitive pricing and competition for business as a State-owned company that the EU now demands from gas suppliers.

NOTE: if one looks at the countries Russia says supports the South Stream many of them favored no EU sanctions on Russia--connection maybe?

Russia has never liked the business, safety, and health regulations that the EU has and at every turn has attempted to either ignore them and or find a way around them.

MOSCOW, October 14 (RIA Novosti) – Russia expects that the European Commission will pay attention to interests of the European population and businesses while considering the South Stream gas pipeline project, Russian Foreign Minister Sergei Lavrov said Tuesday.

"We expect the European Commission to reject politically biased approaches to the construction of this gas pipeline and will take into account interests of the EU population and businesses, including the stance of participating states, who have repeatedly spoken in favor of its implementation," Lavrov said.

Russia's Gazprom energy giant started building the South Stream gas pipeline across the Black Sea in 2012 to reduce the unreliable passage of Russian natural gas to central and southern Europe through Ukraine. The pipeline is expected to be fully operational by 2018.

The South Stream pipeline route is expected to come ashore in Bulgaria and continue to Serbia, where it is to split in two, with the first branch going through Hungary to Austria and the second through Hungary and Slovenia to Italy. Under the plan, branches are also to be constructed in Croatia and the Bosnian Serb Republic.

Intergovernmental agreements were earlier signed with Serbia, Bulgaria, Hungary, Greece, Slovenia, Austria and Croatia in order to implement the construction of the pipeline's onshore sections. However, in August, Bulgaria suspended operations, saying that they did not meet European Commission requirements.

Brussels has long been trying to hamper the project saying it violates EU's Third Energy Package, which stipulates that pipelines in its member countries cannot belong to natural gas producers. Moscow insists that the construction of the pipeline does not contradict the regulations in any way.

[OUTLAW 09]

Ruble is again in free fall today as it appears that the Russia CB cannot continue to throw Billions at the problem--up to now over 4B was used to just slow down the slide--not even to stop the slide.

The ruble continuing to slide, now 40.72 to the dollar, 64.99 (!!) to the pound.

[OUTLAW 09]

Bloomberg TV ✔ @BloombergTV

BREAKING: Russian finance ministry cancels Ruble bond auction for tomorrow

Russia cancels debt auction as yields near 10% ---by the way the last time it was cancelled the yield was running at 8.14%----almost a 2% increase in little under three weeks.

http://on.ft.com/11irS7B

[OUTLAW 09]

It is certainly not easy for many oil-producing states which, as was discussed in this forum before, need increasingly high oil revenues to balance their budget. New participants won't be part of a restriction of supply and the increased vulnerability makes it harder for key players to cut big against their short-term interests. From Bloomberg (http://www.bloomberg.com/news/2014-10-12/brent-crude-slumps-to-lowest-in-almost-four-years-on-supply-glut.html):



Still I have no idea what the oil price will do in the next months or years...

US oil fracking killing Russia w/ lower prices. Putin needs over $100. We can do w/ $60. Saudis w/ us.

http://online.wsj.com/articles/iea-cuts-its-2014-oil-demand-growth-forecast-to-its-weakest-in-five-years-1413274259#printMode …

[OUTLAW 09]

And the Ruble is still sinking as is the price of oil:

The ruble beat its own low against the dollar many times today. Lowest at 40.8793.

pic.twitter.com/6Sdb7GnYsU

18.00 GMT +2: Crude Oil (Brent) USD/bbl. 86.45 -$2.44, -2.74%.

OPEC stated today they are not concerned over the current oil glut and are OK with the price fall--wonder just how Russia will take that news?

[OUTLAW 09]

Now "official Russia" is starting to panic on the current economic collapse of the Rubel and oil prices.

From Interfax this evening:

10/14 19:34 POTENTIAL RUSSIAN RATING DOWNGRADE WOULD MAKE REFINANCING TERMS FOR COMPANIES WORSE, HAVE NEGATIVE IMPACT FOR ECONOMY - ULYUKAYEV

10/14 19:34 RUSSIAN RATING DOWNGRADE WOULD INDICATE EITHER INCOMPETENCE OR POLITICAL BIAS - ULYUKAYEV

10/14 19:32 ULYUKAYEV: DISCUSSIONS AND RUMORS CIRCULATE OVER POSSIBLE DOWNGRADE IN RUSSIA'S SOVEREIGN RATING

BUT then this from Interfax this evening--concerning oil impacting them at the 80-90 price ranges--notice they think the 60 range is the worst case scenario although some Me oil analysts are saying that is even possible right now if it break through the 80 range and the KSA has signaled they can live with the 60 range.

Gref: oil at $80-$90 per barrel 'not fatal'

MOSCOW. Oct 14 (Interfax) - Sberbank of Russia (MOEX: SBER) President and CEO German Gref believes oil priced in the range $80-$90 per barrel is "not fatal."

"It depends on how low it drops. If it is in the range $80-$90 [per barrel], it would be difficult, but not fatal. Nothing terrible. Industry experts, including those I respect most, are not forecasting a drop below $80," Gref told journalists on Tuesday.

The chance that oil prices will drop below $80 per barrel is small. "The probability it goes to $80 is higher. We must wait and see. All of those scenarios are in the realm of possible fluctuations," Gref said.

Central Bank Chairman Elvira Nabiullina said in the State Duma the day before that the Central Bank conducted economic stress testing assuming oil priced at $60 per barrel, but that the probability the most negative scenario would come to pass was exceedingly small.

[Firn]

I would be surprised to see oil prices that low, but then I again I have no idea about the oil market. It might well recover, in any case one shouldn't rule that out.

Overall the picture is pretty grim for the Russian economy: Hefty staflation and falling state revenues, plus the huge long-term economic costs of increased isolation. As discussed before the trajectory of federal expenditures looked troubling even a year ago due to increasingly large public pay and generous pensions promises made in better times.

Obviously the situation in some EU countries, including Italy, is also bad with slight deflation* but thankfully considerably better then in Russia.

*Despite all that noise about the mad money-printing ECB. While the 'virtous' RCB has to do shoot all lot of it's arrows to suppress the high inflation...

[OUTLAW 09]

I would be surprised to see oil prices that low, but then I again I have no idea about the oil market. It might well recover, in any case one shouldn't rule that out.

Overall the picture is pretty grim for the Russian economy: Hefty staflation and falling state revenues, plus the huge long-term economic costs of increased isolation. As discussed before the trajectory of federal expenditures looked troubling even a year ago due to increasingly large public pay and generous pensions promises made in better times.

Obviously the situation in some EU countries, including Italy, is also bad with slight deflation* but thankfully considerably better then in Russia.

*Despite all that noise about the mad money-printing ECB. While the 'virtous' RCB has to do shoot all lot of it's arrows to suppress the high inflation...


Firn--from the blog world

Another week or so and the ruble defence will have cost more than the Olympic games in Sochi which was 40plus b.

pic.twitter.com/Hc1fBaNaf8

[OUTLAW 09]

The Russians are trying everything in their play book to slow down the Ruble and it is failing badly;

1. claim to want a reset US/Russian relations in the recent UN speech
2. then claim to withdraw Russian troops from the border regions to the Ukraine-but leave troops inside the Ukraine
3. claim Putin will "explain" Russian efforts in settling the Donbas fighting at the EU Asian conference and on and on
4. keep claiming they never did support the mercenaries with anything

BUT then they seem to fail to truly see that if they fully implemented the Minsk 1 and 2, fully and verified their eastern Ukraine troop pullout, if they truly shut down the border and fully stopped supporting their own mercenaries---THEN and just maybe THEN the Rubel might just stop falling.

BUT that is still to hard for Putin as that then means his strategy for the Ukraine is and was a failure and that his own doctrine is and was a failure and his new military UW strategy is and was a failure--that he will never do.

Ruble falling sharply in morning trade. New low is 41.0173 against the USD. pic.twitter.com/bJi4yl3W1M

Interfax from today:
13:03 CB to quote ruble at 40.9416 rubles/$1 and 51.7829 rubles/EUR1 on October 16

Oil hit $87.26 per barrel the Urals Crude is now at its lowest since December 2010.
pic.twitter.com/ytD7RSn4gG

From Interfax today:
10:19 Russian stocks open lower on Wednesday amid plunging oil prices

10:17 Central Bank sold $2.763 bln in forex on Friday, Monday

[OUTLAW 09]

Now "official Russia" is starting to panic on the current economic collapse of the Rubel and oil prices.

From Interfax this evening:

10/14 19:34 POTENTIAL RUSSIAN RATING DOWNGRADE WOULD MAKE REFINANCING TERMS FOR COMPANIES WORSE, HAVE NEGATIVE IMPACT FOR ECONOMY - ULYUKAYEV

10/14 19:34 RUSSIAN RATING DOWNGRADE WOULD INDICATE EITHER INCOMPETENCE OR POLITICAL BIAS - ULYUKAYEV

10/14 19:32 ULYUKAYEV: DISCUSSIONS AND RUMORS CIRCULATE OVER POSSIBLE DOWNGRADE IN RUSSIA'S SOVEREIGN RATING

BUT then this from Interfax this evening--concerning oil impacting them at the 80-90 price ranges--notice they think the 60 range is the worst case scenario although some Me oil analysts are saying that is even possible right now if it break through the 80 range and the KSA has signaled they can live with the 60 range.

Gref: oil at $80-$90 per barrel 'not fatal'

MOSCOW. Oct 14 (Interfax) - Sberbank of Russia (MOEX: SBER) President and CEO German Gref believes oil priced in the range $80-$90 per barrel is "not fatal."

"It depends on how low it drops. If it is in the range $80-$90 [per barrel], it would be difficult, but not fatal. Nothing terrible. Industry experts, including those I respect most, are not forecasting a drop below $80," Gref told journalists on Tuesday.

The chance that oil prices will drop below $80 per barrel is small. "The probability it goes to $80 is higher. We must wait and see. All of those scenarios are in the realm of possible fluctuations," Gref said.

Central Bank Chairman Elvira Nabiullina said in the State Duma the day before that the Central Bank conducted economic stress testing assuming oil priced at $60 per barrel, but that the probability the most negative scenario would come to pass was exceedingly small.

Firn---if the President of the Sberbank thinks that the oil price range dropping below 80 per barrel is small and above 80 is not "fatal" then what is a drop below 80 --"fatal"?

Ever wonder if bank CEOs really believe what they say and or state for the press?

THEN today oil price just keeps going South.

Breaking: Oil price falls off a cliff..
$81.84 currently.

4m 4 minutes ago
#Putin's nemesis, Oil, falls further south.
Current price $80.54

[OUTLAW 09]

Ruble Erases Gain as $9 Billion Intervention Fails to Stem Rout http://bloom.bg/1rx3FPP
via @BloombergNews

BREAKING #Russia has lifted ban on cheese & butter from #European Union. Very covertly, w/o much fuss & PR statements

"The supply and price of Russian #gas has been part of [the Ukrainian] crisis from the start": BBC's @paulkirbyuk
http://bbc.in/101jkBE

[OUTLAW 09]

Russian CB again trying to stem the tide against the Rubel with all kinds of press releases--appears to be an attempt to influence the markets.

From Interfax today:

13:21 LIMIT IN FIRST DOLLAR REPO AUCTIONS TO BE UP TO $1.5 BLN FOR 28DAYS, $1.5 BLN FOR WEEK - CENTRAL BANK

13:21 BI-CURRENCY BASKET FALLS 15 KOPECKS ON NS CENTRAL BANK COULD HOLD FX REPO AUCTIONS FOR $50 BLN BY END 2016

13:20 CORRECTED: CENTRAL BANK SAYS WILL HOLD FIRST 28 DAY AND 1-WEEK FX REPO AUCTIONS ON OCT 29 AND OCT 30

13:17 CENTRAL BANK TO SET MINIMUM RATES AT USD, EUR REPO AUCTIONS AT LIBOR + 2% FOR ONE WEEK AND +2.25% FOR 28-DAYS

13:16 CENTRAL BANK TO OFFER $50 BLN AT FX REPO AUCTIONS BY END-2016 - BANK

13:14 CENTRAL BANK SAYS WILL HOLD FIRST FX REPO AUCTION ON OCT 27

[OUTLAW 09]

firn--just 3 USD shy of breaking the 80 bottoming barrier and then there is nothing to stop the fall into the mid 70s.

Brent #oil price are continuing to decline - $83.35 today. Putin's regime is loosing money.

pic.twitter.com/gbA91GICTZ

[OUTLAW 09]

firn--more bad news for the Russian CB.

Ruble slid to a record as Central Bank's pledge to provide $50bn of foreign currency till 2016 failed to ease rout

http://www.bloomberg.com/news/2014-10-16/ruble-gain-eases-russia-s-burden-after-9-billion-intervention.html …

[Firn]

It seems now quite likely that the Russian central bank will hike it's rates, accepting the trade-offs. We will see, maybe they can weather the storm without but if the pressure on the ruble continues like that...

[Firn]

Stepping back it is important to look again at the link between the economy and public support for the leadership. According to the Moscow Times most Russians think western sanctions will Boost nation's economy (http://www.themoscowtimes.com/business/article/most-russians-think-western-sanctions-will-boost-nation-s-economy/509537.html), an opinion which is quite difficult to square with reality even if (or especially because) it gets pushed by the state-controlled media.

Putin seems indeed immune to the economic troubles, (http://www.themoscowtimes.com/news/article/putin-invincible-to-economic-decline-so-far/509515.html) so far at least. I share the minority opinion within Russia it seems:


Alexei Makarkin, deputy director of the Center for Political Technologies think tank, said the current situation can be compared to the Soviet Union in the mid-1980s, when economists were sounding the alarm but the population at large was lulled into a sense of false security by relative stability.

But when oil prices dived in 1986, people suddenly felt that "they can be economic experts too," according to Makarkin.

"As the Soviet Union collapsed, everybody realized that the economy is relevant and its indicators affect everybody," he said.

Some analysts have claimed that economic ills are being camouflaged by state-run media, which blames factors that are not under Russia's control for them. According to Makarkin, this view is simplistic.

"Propaganda only stirs up authentic sentiments, such as imperial nostalgia and so forth. If there was a significant dissonance between what they said on television and what people felt and saw around them, propaganda would not work," he said.

"No one will take action until all hell breaks loose," he concluded.

That makes it especially dangerous for the simple Russian citizien, which might only wake up and react politically until very deep damage has been already inflicted.

[OUTLAW 09]

Stepping back it is important to look again at the link between the economy and public support for the leadership. According to the Moscow Times most Russians think western sanctions will Boost nation's economy (http://www.themoscowtimes.com/business/article/most-russians-think-western-sanctions-will-boost-nation-s-economy/509537.html), an opinion which is quite difficult to square with reality even if (or especially because) it gets pushed by the state-controlled media.

Putin seems indeed immune to the economic troubles, (http://www.themoscowtimes.com/news/article/putin-invincible-to-economic-decline-so-far/509515.html) so far at least. I share the minority opinion within Russia it seems:



That makes it especially dangerous for the simple Russian citizien, which might only wake up and react politically until very deep damage has been already inflicted.

firn--they are already asking just why the Ruble is falling and the common Russian on the street can no longer take that trip to Paris because it is now to costly.

Bank of Russia Raises Ruble Trading Band to Let Currency Fall to New...

The Bank of Russia continued adjusting the ruble trading band, letting the ruble weaken gradually to new all-time lows, the bank’s data showed.
Wall Street Journal @WSJ

[OUTLAW 09]

firn---seems Putin has not quite figured out that the Chinese see Russia is only a raw resources supplier nothing more nothing less.

#China snubs #Russia (and #Gazprom) again. #Putin better get used to it: http://carnegie.ru/eurasiaoutlook/?fa=56936 … via @EuromaidanPress
pic.twitter.com/VlpBsld1CI

[OUTLAW 09]

It simply gets bad and from bad to worse--not sure what comes after a financial disaster as a term.

Man the Russian CB is attempting everything including selling the Czars personal china dinner set.

From Interfax this evening Moscow time:

20:01 Dollar, euro hit historic maximums on Thursday

19:59 Central Bank could offer up to 150 bln rubles in 18-month loans backed by non-market assets on Nov 10 (Part 2)

19:53 Russian stock market down Thursday as RTS index hits five-year low due to ruble's depreciation

[OUTLAW 09]

Stepping back it is important to look again at the link between the economy and public support for the leadership. According to the Moscow Times most Russians think western sanctions will Boost nation's economy (http://www.themoscowtimes.com/business/article/most-russians-think-western-sanctions-will-boost-nation-s-economy/509537.html), an opinion which is quite difficult to square with reality even if (or especially because) it gets pushed by the state-controlled media.

Putin seems indeed immune to the economic troubles, (http://www.themoscowtimes.com/news/article/putin-invincible-to-economic-decline-so-far/509515.html) so far at least. I share the minority opinion within Russia it seems:



That makes it especially dangerous for the simple Russian citizien, which might only wake up and react politically until very deep damage has been already inflicted.

firn---there has been little mentioned in western media about the Gazprom method of pricing and not delivering the agreed to amounts as per contract---called under pumping but still demanding payment for the agreed to contractual amount.

That is at the heart of the Ukrainian and Russia dispute as much as Russia does not want to talk about it---they were bitterly against the Ukraine going to court to have the contracts reviewed. If the court rules against Russia then the entire EU can challenge their delivery contracts and it plays deeply into the EUs Cartel Office investigation of Gazprom. This by the way is a deep Putin dislike of the EU--they have regulations that go counter to state owned and run Russian businesses.

#Ukraine lodges case w/ Stockholm tribunal ov #Russian gas transit:
$5 bil for under-pump
introduce EU transit formula in-out
RUS tech gas

[mirhond]

According to the Moscow Times most Russians think western sanctions will Boost nation's economy[/URL], an opinion which is quite difficult to square with reality even if (or especially because) it gets pushed by the state-controlled media.

That makes it especially dangerous for the simple Russian citizien, which might only wake up and react politically until very deep damage has been already inflicted.

Should I explain you the basics of economy and trade? Do you realise that weak currency and ban on imports make imports unprofitable and therefore create an opportunity for our manufacturers? Allmost the same happened in 1998 after default and skyrocketing rate of exchange - even the basic imported staples vanished from shops and then have been replaced by Rusian ones.

I am the proverbious simple Russian citizen - pleace explain me what deep damage I have to scare $hitless?

[OUTLAW 09]

By the way mirhond---was not Russia to assist in the implementation of Minsk 1 and 2---at least that is what your own Russian media, the Russian FM and Putin has repeatedly stated since 5 Sept 2014.

Had not representatives of Russia signed the Minsk agreements/ ---just as they did for the Budapest Memorandum---right?

THEN why was this necessary via Interfax yesterday?

21:13

Putin: Russia ready to mediate in separating conflicting parties in eastern Ukraine

SO comrade mirhond---just what did Putin agree to in Minsk 1 and 2---?

ALL lies and smokescreens coming from Putin and the Russian government.

[OUTLAW 09]

mirhond--a checklist for you in order that you can recognize if Russia is now a "fascist" state.

Seems that it is if you use this checklist.

https://twitter.com/Leefellerguy/status/523329678707154945/photo/1

[mirhond]

Same store, same shelves after two months of food ban.
Apocaliptic visions of starving Russia shared by some users here seem to be... visions. ^_^

http://i61.tinypic.com/20tl193.jpg

http://i59.tinypic.com/2v9x9xz.jpg

http://i61.tinypic.com/2eld1k8.jpg

http://i60.tinypic.com/2zdykhw.jpg

[OUTLAW 09]

Same store, same shelves after two months of food ban.
Apocaliptic visions of starving Russia shared by some users here seem to be... visions. ^_^



come on comrade mirhond---you have got to be kidding me---those photos are all over two months old and you display nothing newer than two months and yet you make your comparison statement--nothing but blatant lies again.

These photos were geo tagged and dated when they first were posted by you two months ago---did you not think people could/would not compare them?

BY the way--how is the Ruble doing today?--hope you were not planning a trip any time soon to Paris.

[OUTLAW 09]

wow mirhond--great Russian economy you have there---it is like 1998 all over again.


1. oil to drop to 60 USD per barrel

2. Russian economy will not grow at all in 2015

3. Russian economy in recession by end of 2014

4. Russian stock market in chaos---about to become junk status on a lower credit ranking

5. and the mighty Russian Rubel---literally in free fall against the USD/Euro

Centrbank Russia spent $5,18 bln to help Rubble in 2 days
http://liveuamap.com/en/2014/28-october-centrbank-russia-spent-$518-bln-to-help-rubble …
pic.twitter.com/IE0fhkQ5wn


your CB has spent over 15B USD to stop the fall and yet it just keeps on "falling".

[OUTLAW 09]

Should I explain you the basics of economy and trade? Do you realise that weak currency and ban on imports make imports unprofitable and therefore create an opportunity for our manufacturers? Allmost the same happened in 1998 after default and skyrocketing rate of exchange - even the basic imported staples vanished from shops and then have been replaced by Rusian ones.

I am the proverbious simple Russian citizen - pleace explain me what deep damage I have to scare $hitless?

mirhond--hope you are not travelling anytime soon to Paris and need USDs.

your own central bank raised interest rates to 9.5% to "save your Rubel" and what happen after two minutes it hit the lowest level since 1998.

From Interfax yesterday

19:28 Ruble posts heavy losses against dollar, euro

Ruble’s Two-Minute Rally Shows Russia Guessed Wrong.
http://bloom.bg/1s10iC5 via @BloombergNews

[Bill Moore]

The Colder War
How the Global Energy Trade Slipped
from America's Grasp

http://www.colderwar.com/book#about


The Colder War provides a reversing contrast from the hysterical "Putin is Stalin, Jr., restart the Cold War" message emanating from the neocon think tanks and the mainstream media. Marin Katusa shows the real threat to the American people... ” Dr. Ron Paul (Congressman)


Vladimir Putin is stripping America of its superpower status. And he's not using bombs or tanks to do it!

Instead, he's orchestrating an ingenious yet devastating, decades-long plan to control the global energy trade—the largest source of demand for the dollar and bedrock of American might and prosperity.


Putin’s consolidated and nationalized the Russian energy industry. Natural gas, oil, and uranium are all controlled by the state and overseen by an ultra loyal group of Putin’s childhood chums. These enterprises have never been more profitable or powerful.

As a result, Europe is now reliant on Russian natural gas and oil—a third of its fuel needs come through Putin’s pipelines. He can bend the EU to his will simply by twisting the valve shut. No need for military intervention. Crimea and the eastern Ukraine are his.

Putin’s next target? The US.

He cut a landmark deal to build pipelines and sell natural gas to China for the next 30 years. This fills Russia’s coffers, but more important, not a dime will transacted in US dollars. This is a direct threat to the current petrodollar system, in which the majority of the energy trade is priced in US dollars and sold in dollars.

Along with China, Putin delivered another crushing blow to the US dollar with the New Development Bank, which will make large strategic investments in developing nations in Africa, Latin America, and Asia through a non-dollar international payment clearing system.

The advertisement is a bit dramatic, but a few valid economists are recommending the book. Furthermore, the links tab is worth looking at.

[kaur]

FT posted couple days ago this interesting article.


October 29, 2014
Russian oil: Between a rock and a hard place


It has the largest reserves of shale oil in the world but as sanctions bite, can Moscow exploit them?

...

And even where Russian suppliers can replace western equipment, the quality is likely to be lower. “The Russian oil services industry is in a bad shape, it always was,” says Mr Lebedev. “It’s like having an old Russian Lada instead of a Mercedes.”

http://www.ft.com/intl/cms/s/2/fc354a6a-5dcb-11e4-b7a2-00144feabdc0.html#axzz3Hup9oD9w

[mirhond]

An exclusive video from a net convenient store P'aterochka, made by me:
Russia is "starving" after food ban

(May be it's time to start a thead "Debunking common nonsence and outlandish bull$it about Russia's everyday life" here)

http://youtu.be/VvcIHnngT2g

ps. bonus video - I was stuck in an elevator just after a visit to the aformentioned store :)

http://youtu.be/1eXPafC5e6o

[kaur]

Dear mirhond, I'm glad that you are doing well. You don't have to suffer beacause of comrades from Piter.

I can see there products from traditional Russian firms Valio, Danone, PepsiCo etc.
For example http://images.myshared.ru/414669/slide_2.jpg
http://article.unipack.ru/40533/

PS nice new avatar. Why Jesus is carrying Barrett?

[Bill Moore]

A lot less spin, and some facts (backed up by other agencies).

Bottom line is that Russia is still messed up compared to Western states, but most of their economic and social trends are positive. Trends that may reduce their recent international aggression tendencies, but then again increased wealth will probably increase them, just as increased wealth made the West more aggressive.

http://www.forbes.com/sites/markadomanis/2013/02/04/five-myths-about-russia/

[Firn]

A lot less spin, and some facts (backed up by other agencies).

http://www.forbes.com/sites/markadomanis/2013/02/04/five-myths-about-russia/

I'm a bit curious what do you mean by a lot less spin - compared to which articles and sources? I actually largely agree with all his points* apart from 'myth' 2 but one should really put it that way:


Basically, what these graphs show is that:

1) Russia still has a lot of problems, and it remains extremely troubled in comparison to developed Western countries, and

2) things in Russia have actually improved at a reasonable clip.


Mr. Adomanis knows quite well that past performance , even in indicators with considerable momentum, is different from the present or the future one and should have put that knowledge also in his summary. Most of this thread has been about the current state and near to mid-term future of the Russian economy and not about it's past...

*He should have been more precise, actually like in earlier post of his, especially about immigration in the context of demograhics on which economic performance has of course an important impact.

[Firn]

Someone raised the positive aspects of devaluation. Of course there are undeniable upsides to the 'Ruble Rout' experienced this year (http://www.bloomberg.com/news/2014-10-31/ruble-s-two-minute-rally-shows-russia-guessed-wrong-today.html), despite the painful and costly steps undertaken by the Russian Central Bank to stop or at least slow it down like pushing your key rate roughly 9% up above your main trade partner and burning dozens of billions of hard currency comes clearly. Now I'm not quite sure if the RCB does this for fun but after taking into account the various facts one might think of the remote possiblity that the wise guys there think that such a stark and rapid loss of valuation isn't the ideal outcome for the Russian economy.

The big problem with the boost to the Russian industry can be summed up in a single provocative question: What Russian industry?

http://upload.wikimedia.org/wikipedia/commons/c/c3/2012_Russia_Products_Export_Treemap.png

Now Russia does have of course an industry, but one which can clearly only replace imports to a certain small degree in the short run and a somewhat bigger degree in the long run. Things like smartphones made in China won't get suddendly produced in Russian plants. When it comes to exports it is difficult to see much of a boost given the small slice of exports which the lower ruble will make more competitive.

Needless to add that with the high rates and high inflation act as additional gravity to Russian investment, beside the usual, well-known factors as corruption, little rule of law, etc.


P.S: I have no idea what the oil price will do in next years. The decline of oil has contribuited to the ruble's rout and higher oil prices would help the RCB a lot to stem the tide.

[davidbfpo]

Firn,

As a watcher of the Russian economy, what do their imports look like?

In particular whether grain is still imported in bulk. I have a vague recollection it is now that grain is shipped from Canada & USA to Russia via various ports. Awhile whilst in Montana, USA it was quite clear trade was good and the grain trains rumbled past every day towards Seattle / NW Pacific ports.

[Ulenspiegel]

Firn,

As a watcher of the Russian economy, what do their imports look like?

In particular whether grain is still imported in bulk. I have a vague recollection it is now that grain is shipped from Canada & USA to Russia via various ports. Awhile whilst in Montana, USA it was quite clear trade was good and the grain trains rumbled past every day towards Seattle / NW Pacific ports.

According to the German FAZ, Russia imported food for 43 billion USD in 2013, of these 16 billion USD were paid for EU products.

Around 30-50% of fish, beef and vegetables are imported, in addtion diary products. The domestic agricultural industry is still not able to provide sufficient amounts, hence, redcution of imports will very likely lead to higher inflation, which is already around 8%.

However, according to various sources Russia was a net-exporter of grain 2013, the harvest in 2014 seems to be very good, therefore, no change expected.

[OUTLAW 09]

Someone raised the positive aspects of devaluation. Of course there are undeniable upsides to the 'Ruble Rout' experienced this year (http://www.bloomberg.com/news/2014-10-31/ruble-s-two-minute-rally-shows-russia-guessed-wrong-today.html), despite the painful and costly steps undertaken by the Russian Central Bank to stop or at least slow it down like pushing your key rate roughly 9% up above your main trade partner and burning dozens of billions of hard currency comes clearly. Now I'm not quite sure if the RCB does this for fun but after taking into account the various facts one might think of the remote possiblity that the wise guys there think that such a stark and rapid loss of valuation isn't the ideal outcome for the Russian economy.

The big problem with the boost to the Russian industry can be summed up in a single provocative question: What Russian industry?

http://upload.wikimedia.org/wikipedia/commons/c/c3/2012_Russia_Products_Export_Treemap.png

Now Russia does have of course an industry, but one which can clearly only replace imports to a certain small degree in the short run and a somewhat bigger degree in the long run. Things like smartphones made in China won't get suddendly produced in Russian plants. When it comes to exports it is difficult to see much of a boost given the small slice of exports which the lower ruble will make more competitive.

Needless to add that with the high rates and high inflation act as additional gravity to Russian investment, beside the usual, well-known factors as corruption, little rule of law, etc.


P.S: I have no idea what the oil price will do in next years. The decline of oil has contribuited to the ruble's rout and higher oil prices would help the RCB a lot to stem the tide.

In general Russia is a raw resources exporting country much as the rest of the 3rd world raw resource exporters---after that there is little to no actual product lines that earn them massive income on.

The Chinese deals are sweet heart deals for the Chinese but end up not really earning much for say Gazprom because the Chinese set the gas costs not Gazprom. the Chinese are using Russia just as they do Uganda---cheap raw resources.

Part of the problem with their dislike of the EU Ukrainian agreements is the simple fact that millions of dollars of current exports to the Ukraine will not be allowed into the EU free trade zone simply because they could not pass the safety and food standards that the EU even demands for say Romania and or Slovakia.

[Firn]

IIRC the Moscow Times run a while ago an article why Russia imports so much fish from the West and still exports a large amount to other countries. The solution is of course quite obvious and has to do with the sheer size of Russia and the distribution of it's population...

Actually a considerable part of Chinese products destined for Russia gets shipped to the EU for similar reasons.

BTW, the article 'The World is still not flat' (http://blogs.hbr.org/2014/11/the-world-is-still-not-flat/) has a nice graph which should underestimate to a good degree the calls between countries where costs are relatively high. Still if you take that into account it (over)fits with the streams of trade.

https://hbrblogs.files.wordpress.com/2014/10/whosphoningwhom.png?w=640

Now what did the authors have in mind when they put Russia so far away from the rest of Europe? Other then that a large amount of calls goes to Ukraine*...

*Many Ukrainians, just like folk from Kazakhstan, work of course in Russia which explains part of the volume.

[OUTLAW 09]

firn---now comes the Russian economy crash that Putin did not calculate when he made his Crimea and eastern Ukraine moves.

LONDON (AP) -- Oil prices sank to four-year lows on Tuesday following reports Saudi Arabia, OPEC's largest oil producer, is cutting its prices for customers in the U.S.

By early afternoon London time, a barrel of benchmark crude was down $2.07, or 2.6 percent, at $76.79, its lowest level since September 2010. Meanwhile, Brent crude, the international benchmark, was down $2.14, or 2.5 percent, at $82.63 a barrel, its lowest level since October 2010.
The market was shaken by news that Saudi Arabia was cutting prices for the U.S. to compete with the surge in oil production there.

"A snowballing effect is what we are seeing in crude oil price today," said Fawad Razaqzada, an analyst at Forex.com. "News that Saudi has cut its asking price to customers in the U.S. suggests even the largest OPEC producer is now worried about its market share. This does not bode well for the future of the cartel."

[OUTLAW 09]

IMF sees Russia's economic downturn weighing down Central Asia, Caucasus; growth weakening, inflation up

http://www.imf.org/external/pubs/ft/reo/2014/mcd/eng/pdf/mreo1014.pdf …

[OUTLAW 09]

(Economic giants) #Abkhazia,#Transnistria,#Venezuela & #Cuba assist DNR-Whatever #Zakharchenko

http://bit.ly/1tX0Mhd
pic.twitter.com/gBE1uX0EJB

[Firn]

Nor suprisingly the impact of the Russian slowdown is in those 'Stans' felt more on the import side and the soft paychecks of migrant workers. On the other hand the fall in commodity prices reduces the amount of hard currency flowing into the economy or the various pockets.

An interesting survey (http://www.themoscowtimes.com/business/article/russian-small-business-likes-sanctions-loathes-stagnation/510605.html), thanks to the Moscow Times for sharing it.


The index was based on a survey of entrepreneurs over the third quarter of this year representing almost 2,000 small and medium-sized companies involved in sales, manufacturing and service industries in 19 Russian regions.

It showed that companies are struggling to raise finance and are not planning new investment.

...

"But as companies get smaller, business activity and attitudes become more and more negative," he said. This is a worrying sign Konstandyan said: Small business is a fine-tuned barometer that reacts to changing economic realities first, sending warning signals to bigger companies.

Small and medium-sized companies expected a decline in their sales volumes and revenue this year, the index said.

Whereas in developed Western economies small businesses' share of gross domestic product can be as high as 70 percent, in Russia the figure is roughly 20 percent. And despite government support programs to reverse the trend, experts say this number is only decreasing.


The difficulties for Russian small & mid companies to get credits is of course not exactly new but even if they could the high rates make of course new investments far less attractive. The weight of the state economy in Russia is, needless to repeat, staggering.

The cited upside of high inflation as a chance to raise prices is quite interesting and it would be nice to digg deeper there. One should also not omit that Russia climbed 30 places up to 62nd in the World Bank's 'Doing Business' Report.

P.S: A quick check (http://data.worldbank.org/data-catalog/doing-business-database) confirmed my hunch that the last data comes from late Nov 2013.

P.P.S: Catanzaro (http://www.doingbusiness.org/Rankings/italy/) does so well that my cynical side gets primed...

[Firn]

Konstantin Sonin's view (http://www.themoscowtimes.com/opinion/article/ruble-s-fall-echoes-1991-not-1998/510290.html) reflects much of my own thoughts. Of course the self-inflicted wounds, the Western sanctions and now the lower energy prices have accelerated this process...


Most Russians — ordinary citizens and members of the ruling elite alike — probably identify January 1992 as the "breaking point" when the economic problems that had existed for the previous two years came to a head and the former Soviet economic model stopped working. Though contrary to widespread myth, former Prime Minister Yegor Gaidar did not eliminate the planned economy: It had ceased to function even before he came to office. Thus, the economic problems of the early 1990s had been set into motion long before, through the gradual breakdown of the Soviet economy.

The current crisis is the same sort of "gradual" type, and the economic slowdown actually began long ago. The quarterly growth rate began declining after the presidential elections in 2012 and reached a state of complete stagnation in 2014. The slowdown was quite natural.

First, growth originally began from a low starting point and second, Russia exhausted the sources of its growth in the 2000s — primarily the untapped labor pool and production capacity along with rising oil prices. For the economy to grow further, it needed investments.


I did of course bring Yegor Gaidar early into this discussion. The cited, often held impression and confusion about cause and effect reminds me a bit of the 'dagger' myth in post WWI Germany.

[OUTLAW 09]

firn--today the Russian Central Bank all but gave up in their support of the falling Rubel--minimal efforts were undertaken thus the fall of the Ruble to a ne "historic low" against the USD.

They are appearing to let it "free float" and it will then be interesting to see how the political events around Russia now drive the currency.

[Firn]

firn--today the Russian Central Bank all but gave up in their support of the falling Rubel--minimal efforts were undertaken thus the fall of the Ruble to a ne "historic low" against the USD.

They are appearing to let it "free float" and it will then be interesting to see how the political events around Russia now drive the currency.

Just a quick look by Bloomberg (http://www.bloomberg.com/news/2014-11-05/russia-changes-ruble-intervention-policy-to-ward-off-speculators.html):



Russia spent about $30 billion to shore up the ruble in October as oil’s slide and sanctions over Ukraine worsened the world’s worst currency rout. The Bank of Russia said today it was abandoning its predictable intervention policy to hamper “speculative strategies” against the ruble. It also freed itself up to sell foreign currency at undisclosed quantities to defend against “threats” to the nation’s financial stability.

“It’s a big step toward floating the ruble,” Neil Shearing, the chief emerging-markets economist at Capital Economics Ltd. in London, said by phone. The ruble is “going to find a floor more quickly than would have been the case under the old framework, and the central bank will spend fewer of its foreign-currency reserves in the process.”

Reserves of the world’s largest energy exporter have fallen $73 billion in 2014 to a four-year low of $439 billion on Oct. 24 as the standoff with the U.S. and its allies over Ukraine worsened, oil prices slid to four-year lows and sanctions created a domestic dollar shortage. Russia’s $2 trillion economy is on the brink of recession.


We have of course just a limited insight but I remarked earlier that hard-currency reserves or their lack have at times been very important in the last three decades in that area of the world. Thus the decision-makers should tent to be more sensitive in that regard. The RCB of course monitors the expectations and tried to pull off a Guderian by hiking big in one go while trying to covering the retreat of it's reserves from the market. So far it looks like that they underestimated the market reaction to the latter once they discovered the ruse...


P.S: "We'll be monitoring our gold and forex reserves and the national currency's exchange rate. We'll be making a gradual transition to a floating rate, we won't be burning our reserves thoughtlessly, but using them for a certain balancing," Putin said in late late October (http://rbth.co.uk/news/2014/10/24/russia_to_move_gradually_towards_floating_ruble_ra te_using_reserves_for__40878.html).

[OUTLAW 09]

firn---as a "free floating currency" the Ruble will now be extremely venerable to political events and Russia political actions/reactions much as are other western currencies.

Will be interesting to see the development of the free fall as the fighting have broken out now all along the mercenary frontlines in over 40 or more locations and the Ukraine is now stating they are fighting no longer for the Donbas but to survive as a nation state---that is in very undiplomatic language---we are now at war with Russia.

That will have an impact tomorrow.

From Interfax today:

14:10 Euro soars higher than 57 rubles, fall of ruble continuing to gain momentum

[OUTLAW 09]

firn---Rubel to 47 and it is going lower in the forex boards this morning.

Today's Nezavis.Gazeta on the sliding rouble: "The authorities are finding it increasingly difficult to convince Russians to stay calm"

Putin has now a choice---continue onto victory in eastern Ukraine and or completely lose his own economy in the so called "victory".

Russia's economy: No access to credit, no investments, no manufacturing, brain drain, sinking oil price, lower oil production expected.

[OUTLAW 09]

mirhond--hope you are not travelling anywhere where you need USDs, Euros or GBPs.

and you still think the sanctions are not hurting Russia?

#Russia's ruble drops off a cliff, as #Ukraine's war deepens:

$1 = 47.023
€1 = 58.305
£1 = 74.409

[OUTLAW 09]

firn---will be interesting to learn the results of this Russian CB emergency meeting? Was the foreign currency account actually just one big Ponzi scheme that has been rocked by the falling oil price and ruble support and they have actually far less than they have always stated they have?

Central Bank of Russia holding an emergency meeting right now. Mega rate hike on the way?

[OUTLAW 09]

OPEC via a number of press reports indicated they can live with the current bottom remaining in the 70-75 USD ranges.

Part of the KSAs oil price reduction is to get their sour crude to market in the US refineries thus the price reductions for US consumers as the US has the largest sour crude refinery capacity in the world---appears that there is a slow down in sour rude sales due to the US fracking oil coming online massively which is an ultra light grade rating a higher than WTI pricing level.

And since Russian oil is sour thus the impact on Russian prices and sales.

From RIA today:

Global Oil Prices Continue Fall Amid OPEC Forecasts
By 08:24 a.m. Moscow time (05:24 GMT) December futures for the US WTI Light Sweet Crude Oil fell by 1.44 percent to $77.56 per barrel. December futures for Brent fell by 0.68 percent to $82.39 per barrel.

[OUTLAW 09]

Results from the Russian CB emergency meeting--NOTICE they are blaming currency speculators and not the events in the Ukraine and or the sanctions and the sinking oil prices:

MOSCOW, November 7 (RIA Novosti) - Russia's Central Bank said Friday it was ready to increase interventions on domestic currency markets as there are prospects of risks for financial stability in the country caused by a spike in consumer demand for foreign currencies.

"We have noticed signs of a speculative demand [on domestic currency markets] in the past few days, which poses risks for Russia's financial stability," the country's financial regulator said in a statement.

"In this situation, we are ready to increase currency interventions at any time, and also use other financial instruments [to stabilize the demand]," the statement said.

Russia's national currency, the ruble, has lost a quarter of its value since the beginning of 2014.

The weakening of the ruble spiked this week after the Central Bank announced on November 5 it had dramatically reduced its support for the national currency pursuing the transition to the so-called "free floating" currency exchange policy.

[Firn]

Roughly half a year ago I stated in this post (http://council.smallwarsjournal.com/showpost.php?p=153897&postcount=488):


There is in my opinion little doubt that for the West Russians center of gravity is it's economy, while for Russia it is the Westerns political willpower. Interestingly the EU+USA are roughly twenty times bigger in GDP terms the Russia, almost the same factor by which the Ukraine mainland dwarfs it's occupied territory. It would certainly be the supreme irony if Russias Crimean robbery would result in the long term loss of the Ukraine.

I think it is now plain that Russia's center of gravity is indeed it's economy, which has run out of steam due to various issues discussed in this thread. Putin's model, based on a large public sector and tight control of the 'strategic' big players of economy was only possible due to high oil prices created in part by an increasing global demand in the wake of robust global growth. Demographic reserves and the usual well-know macro mechanisms after a collapse played it's part in the recovery. It brought great economic and social benefits to the Russian people as a whole, even if the share was quite uneven, especially in comparision to the hard years after the Soviet crash. It's cost in democracy and liberty seems so far small to many.

Nobody can predict what exactly will happen to the Russian economy as it depends on quite a few variables but obviously it looks pretty grim if you take the currently available facts into account. Just look at the start of the thread, created in a difficult time for Russia during big global shock. Clearly the Russian economy survived through big stimulation, aggressive RCB action and mighty oil price swing up. The structural Russian weaknesses were already obvious there and deepened in good times only to resurface strongly in the current situation. This doesn't mean that Putin's model has to collapse soon and certainly not that we know how the public will react in that case. If however Putin continues to wage war and the Ukraine and the Western countries don't give up easily the conflict will continue for a long time. In that case is highly doubtful that Russia will be able to grow much, if at all, in the next years. I seems that what Gaidar feared has become true, Russia has become a threat to the world. That is the worst thing that could happen to Russia, he stated, short of a terrible (nuclear) war I suppose.

What internal consequences this will have I don't know but everything passes in some way or the other. Of course this can take sometimes a surprisingly long time. It would be quite naive to expect 'results' in a quarter or a year.

[OUTLAW 09]

Roughly half a year ago I stated in this post (http://council.smallwarsjournal.com/showpost.php?p=153897&postcount=488):



I think it is now plain that Russia's center of gravity is indeed it's economy, which has run out of steam due to various issues discussed in this thread. Putin's model, based on a large public sector and tight control of the 'strategic' big players of economy was only possible due to high oil prices created in part by an increasing global demand in the wake of robust global growth. Demographic reserves and the usual well-know macro mechanisms after a collapse played it's part in the recovery. It brought great economic and social benefits to the Russian people as a whole, even if the share was quite uneven, especially in comparision to the hard years after the Soviet crash. It's cost in democracy and liberty seems so far small to many.

Nobody can predict what exactly will happen to the Russian economy as it depends on quite a few variables but obviously it looks pretty grim if you take the currently available facts into account. Just look at the start of the thread, created in a difficult time for Russia during big global shock. Clearly the Russian economy survived through big stimulation, aggressive RCB action and mighty oil price swing up. The structural Russian weaknesses were already obvious there and deepened in good times only to resurface strongly in the current situation. This doesn't mean that Putin's model has to collapse soon and certainly not that we know how the public will react in that case. If however Putin continues to wage war and the Ukraine and the Western countries don't give up easily the conflict will continue for a long time. In that case is highly doubtful that Russia will be able to grow much, if at all, in the next years. I seems that what Gaidar feared has become true, Russia has become a threat to the world. That is the worst thing that could happen to Russia, he stated, short of a terrible (nuclear) war I suppose.

What internal consequences this will have I don't know but everything passes in some way or the other. Of course this can take sometimes a surprisingly long time. It would be quite naive to expect 'results' in a quarter or a year.

firn---a few really good European "left" economists are now publicly stating that what one sees now is nothing to what they are predicting to occur the middle of 2015 when the sanctions really hit and if oil settles into the 70-75 range as being now publicly stated by OPEC to be their "bottom vision".

They estimate as it is hard to get economic facts out of the Russian oligarchs---160B USD has to be paid back in outstanding loans and lines of credit in 2015 as the Russian oligarchs have been living on "borrowed cheap money" and literally pocketing via corruption the profits.

One stated yesterday---if you have built your entire economy around 100 per barrel and could not get the investment side going and making the economy resilient then at 75 you will just crash as there is nothing that can be done for "poor" leadership on the political side.

[OUTLAW 09]

Smart seven-point analysis of Russia's economy. Summary: it's all about Putin

http://www.bloombergview.com/articles/2014-11-10/how-close-is-russia-to-financial-crisis …

[OUTLAW 09]

firn---here comes the 60-65 per barrel range---the main producers of the OPEC have stated they can live with that for awhile.

KSA kicked it off---was it aimed at Russian support to Assad and to damaging Iran the regional hegemony competitor also being supported by Russia?

JP Morgan suggesting oil price could fall to 65 USD per barrel.
RUS-> http://tvrain.ru/articles/jpmorgan_dopustil_snizhenija_tsen_na_neft_do_65_do llarov-378022/ …
pic.twitter.com/SaNA8eeggr

[OUTLAW 09]

Crude futures prices may continue to free fall even with the 30% drop since June. The price of West Texas Intermediate for December is now hovering at the $76 a barrel level, just shy of the $75 target the team at Goldman Sachs (GS) is forecasting for 2015. While Brent for December is at $79 a barrel, the lowest since 2010 and below Goldman’s $85 a barrel target.

These prices may look good to some speculators, however Jonathan Hoenig of CapitalistPig.com says forget about it. “Why go long assets in a bear market? It’s a bad move, it's a low probability bet in my book.”

Hoeing predicts the bear market in crude will continue with prices potentially falling as low as $50 a barrel, in part because the global economy is slowing, pushing supply levels higher.

Get the Latest Market Data and News with the Yahoo Finance App

This week the U.S. Energy Information Administration (EIA) confirmed what the market is telling us by cutting its 2015 forecast for Brent crude to $83 a barrel. In a report, the EIA said, “There is significant uncertainty over the crude oil price forecast because of the range of potential supply responses from the Organization of the Petroleum Exporting Countries (OPEC), particularly Saudi Arabia, and U.S. tight oil producers to the new lower oil price environment.” OPEC is set to meet on November 27th in Vienna, Austria.

The other half of the energy story and also a big influence on prices, says Hoenig, is the advancement in the U.S. energy industry, and the production of great oil companies particularly in the United States. "We like to rail against fossil fuel companies, but it is their advancements in oil extraction and fracking that have brought oil and natural prices to historic lows.”

The EIA expects Henry Hub natural gas spot price to average $3.97/million British thermal units this winter, lower than the $4.53/M BTUs last winter. The United States Natural Gas ETF (UNG), which closely tracks the natural gas market, has advanced 22% over the past 12 months.

[Firn]

@Outlaw: I'm always a bit amused on how quickly and massively some analysts change their forecasts, happens also for listed companies. Of course I can afford to have no opinion on the future oil Price, others have to work with something for their budget.

After a short general take on the Russian economy it makes sense to look after a while again at the Crimean one.

Russia Delivers a New Shock to Crimean Business: Forced Nationalization (http://www.businessweek.com/articles/2014-11-18/crimea-gets-renationalized#r=hp-ls):


Another recent target was Zaliv, Crimea’s largest civilian shipbuilder. In late August, men describing themselves as Crimean “self-defense” forces stormed the company’s headquarters in the port of Kerch and demanded that management hand over control to a Moscow-based company. “Currently, representatives of the legitimate government of [Zaliv] are not allowed to perform their functions,” the company said in a statement on its website, adding that its activities have been “completely blocked.” No official reason was given for the seizure, but Russian authorities have said they want to overhaul Crimea’s shipbuilding industry.

Seems like the Goblin and his friends are rather busy...



Such measures are turning Crimea into a “neo-Bolshevik criminal dictatorship,” Russian opposition party Yabloko said in a statement this week on its website. “The action to legitimize robbery must be cancelled, stolen property returned to owners, losses reimbursed.”

Well put but robbing here and there seems now so easy. Of course part of those assets will likely indeed become nationalized, the question is only how large that slice will be...

[davidbfpo]

Firn,

The shipyard @ Kerch has a website in English, which in places is quite revealing, especially over the lack of shipbuilding for many years:http://www.zaliv.com/en/

When I visited the Crimea now a few years ago the steel plant in the city, close to the shipyard and shore was moribund. My recollection was that our guide stated very little work was being done at either industrial plant.

[Firn]

Good catch. The lack of activity is of course not surprising if you consider the great shift away from far more modern European yards to Asian, especially South Koreans ones.

Maybe that LLC "Shipyard "Zaliv" was founded not that long ago. They registered the shipyard business in Moscow to usurp the original JSC "Zaliv Shipyard" and hired in the next step some 'self-defence guys' to take over physically. Now they might hope that Moscow 'invests' into Crimean shipbuilding and their pockets...

My 2 cents, I could be easily wrong, of course.

[kaur]

Some where we discussed with mirhond food prices in Russia. Russian business TV channel published in the end of September this information. Sorry, in Russian.

https://www.youtube.com/watch?v=-gph0HXhmRU

Fruits' prices will go up 40%
Salmon 35-40%. Biggest salmon importer is Faroe Islands instead of Norway. Check the map.
Milk price will go up.

[OUTLAW 09]

And the Russian economy just keeps on tanking---the interesting point will be---at what point in the tanking is the pain so intense Putin stops in the Ukraine?


#Russia reserves hit fresh 5yr low. Gold, Forex Reserves down $0.8bn to $420.6bn in week to Nov14.
pic.twitter.com/LHOkdh5cjA

[Firn]

@Outlaw: Inflation, especially in the food sector was certainly strong (http://www.themoscowtimes.com/business/article/staple-foods-rising-prices-to-hit-russian-consumers/511557.html) in this year and even more so recently:


From October to November, the price of hard flour increased more than 70 percent, Andrei Dribny, CEO of Extra-M, one of Russia's largest pasta producers, told Interfax. The retail price of pasta, which is made from hard flour, could soon rise 20 to 25 percent, he said.

The price of rice has also climbed from about 26,000 rubles ($550) a ton in October to 33,000 rubles ($700) a ton this month, the report said, citing data from grain tracker ProZerno.

...

The prices of apples, sunflower oil and buckwheat have also risen steeply in recent months. Buckwheat, a traditional staple of Russian cuisine, spiked to an average of about 45 rubles ($0.96) per kilogram on Wednesday, with prices increasing up to 80 percent in some regions.

[Firn]

More interesting, from an economic point of view, are the various difficulties (http://www.themoscowtimes.com/business/article/ten-months-after-russian-annexation-crimean-savers-ask-where-is-our-money-/511482.html) facing some Crimeans:


Ten months after Russia invaded this Black Sea peninsula and seized it from Ukraine, the financial fallout is still being felt. Thousands of ordinary citizens have little or no access to their funds. Losses for Ukrainian banks continue to mount as billions of dollars worth of loans they issued in Crimea go unpaid. Lawyers for the banks are preparing legal actions against Russia, which confiscated many of the banks' buildings, equipment and cash.

Meanwhile, Crimea has been thrust into a kind of technological time warp: Most ATMs no longer accept non-Russian bank cards; foreign credit cards can't be used to buy things. Most non-local mobile phones can't receive a signal. And even if they could, calling other Crimeans is complicated: Most of the peninsula's residents recently had to get new mobile phone numbers because Ukrainian services were cut off.

The banking and phone chaos are another front in the conflict between Ukraine and Russia.

In Crimea, which has been part of Ukraine for 60 years, Russia has basically blown up the existing banking system, forcing Ukrainian banks to close, banning the Ukrainian currency and replacing the region's retail banking network almost overnight. The resulting economic turmoil has shuttered some businesses and complicated life for thousands, forcing people to deal with a Kafkaesque bureaucracy to try to get their money returned.


It is of course important that so far:


For all the havoc President Vladimir Putin's conquest has caused, many living here don't blame him for their hardship. In interviews, residents accused Ukrainian banks and the government in Kiev of stealing their money

Crimea is an interesting case study of a region torn from pretty strong economic (among others) links trying to grow new ones with an economically more distant occupier. Not an easy task under any circumstances, far more so in a war with a crashing economy and massive economic problems up north and big ones east. Add in the usual problems which seem to have increased a lot and it is difficult to see a quick economic recovery.

[OUTLAW 09]

Russia Update: Capital Flight from Russia Reaches $113 Billion This Year http://bit.ly/11HaauO

[OUTLAW 09]

Delirious budget math in #Russia: final reading of RU budget passed based on oil price $96 per barrel; 1 USD = 37 RUB

http://ria.ru/politics/20141121/1034509349.html …

Saw a small blog today coming out of Sweden indicating that the entire Russian business community has to handle the repayment of bank bond/bank debt to the tune of 160B USD by the end of 2015 beginning 2016.

[OUTLAW 09]

Seems like some Russians are awakening to the simple fact that one cannot be a militay power unless one is an economic power.


From Interfax today: 11/22 16:34 Kudrin: Russia's fate depends on economic power, not on weapons

[OUTLAW 09]

I have been saying here for the last six months that the Russian economy is just one very large Ponzi scheme and the West has never really seen anything like it before. so therefore just does not recognize it for what it is.

Looks like some are starting to pay attention.

Russia's wounded economy is closer to crisis than the West or Vladimir Putin realise

http://econ.st/1AoAE2A
https://twitter.com/search?q=pic.twitter.com%2Fqsho1A0f1c&src=typd https://twitter.com/search?q=pic.twitter.com%2Fqsho1A0f1c&src=typd

[OUTLAW 09]

mirhond use to comment here at SWJ that there was no food price increases and or shortages since the sanctions went into force---does not match reality in Moscow though.

Shopping in Moscow after Ukraine trip. Where's all the buckwheat gone??!! Big pain without the grain.
https://twitter.com/search?q=pic.twitter.com%2FC3g1XkDVM7%20&src=typd

[OUTLAW 09]

I have been saying here for the last six months that the Russian economy is just one very large Ponzi scheme and the West has never really seen anything like it before. so therefore just does not recognize it for what it is.

Looks like some are starting to pay attention.

Russia's wounded economy is closer to crisis than the West or Vladimir Putin realise

http://econ.st/1AoAE2A
pic.twitter.com/qsho1A0f1c

This taken from the article confirms my faith in the Russian economy just being one heck of a large Ponzi scheme that depended on cheap interest western bank loans and bonds---currently Russian companies must repay by the end of 2015 over 160B USDs in dollar bonds and or bank loans/lines of credit and they simply cannot meet that deadline while the dollar is high and in short supply.

Even firms that earn dollar revenues may struggle to pay their debts. Rosneft, an oil giant, recently asked the Kremlin to lend it $44 billion. Mr Putin has so far resisted, but he cannot let a company that is 70% state-owned and employs 160,000 people fail. There is a lengthening queue of troubled Russian firms. Non-performing loans were rising even before interest rates were raised to 9.5% to defend the rouble. Meanwhile Russian banks are reliant on the central bank to replace deposits that their customers are understandably spiriting into dollars.

Directly or indirectly, many of these bills will end up with the Kremlin, which is why its reserves will be vital. They are evaporating: down $100 billion in the past year, following failed attempts to defend the rouble. And the book-keeping is dodgy. Of the reported $370 billion reserve pile, more than $170 billion sits in the country’s two wealth funds. Some of their assets are iffy, including various stakes in Russia’s state-owned banks and debt issued by Ukraine that Mr Putin’s own aggression is fast rendering worthless. One of the funds is earmarked for pensions. In reality, Russia’s government has perhaps $270 billion of hard cash that is accessible and usable without massive cuts elsewhere—less than its external obligations due over the next two years (see article).

[OUTLAW 09]

mirhond use to comment here at SWJ that there was no food price increases and or shortages since the sanctions went into force---does not match reality in Moscow though.

Shopping in Moscow after Ukraine trip. Where's all the buckwheat gone??!! Big pain without the grain.
https://twitter.com/search?q=pic.twitter.com%2FC3g1XkDVM7%20&src=typd

Hope mirhond answers---

Russia's changing. In August my local hypermarket was bursting with buckwheat. Not any more.
pic.twitter.com/wj4kg4Eadm

And maybe mirhond can respond to this article if he even accepts that it is true:

110 individuals control 35% of #Russia's wealth - and Mr #Putin controls those 110

http://www.economist.com/news/books-and-arts/21633785-academic-investigation-networks-control-russia-band-brothers?
pic.twitter.com/gSoiDRQGbd

[OUTLAW 09]

Falling oil prices have cost Russian 100B USD.

http://www.bbc.com/news/business-30174650#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

So between the falling oil prices (100B) , sanctions (40B) and capital fleeing (120B) the country a total of 260B USD has "disappeared".

So how long can the Russian CB hold on at this pace?

[OUTLAW 09]

Slippery slope or a massive Ponzi scheme.

#Russia’s official reserve figures overstate funds it has at its disposal http://econ.st/1xUFa80
pic.twitter.com/GdWJAwIol5

[OUTLAW 09]

Nice reporting & profile by @Reuters about Ukrainian oligarch Dmytro Firtash, to whom Russia channeled billions of $$

http://uk.reuters.com/article/2014/11/26/russia-capitalism-gas-special-report-pix-idUKL3N0TF4QD20141126 …

Russian billionaire, judo head confirms $155 mln loan for Firtash bail. “Purely business transaction”

Putin’s allies channelled billions to oligarch who backed pro-Russian president of Ukraine

http://reut.rs/15wnzHY

[OUTLAW 09]

Russian budget, economy may lose $21.5 bln in 2015 over low oil prices, sluggish economic growth - Finance Minister

Russia needs to readjust budget over next few years with oil prices at $80 per bbl instead of $100 per bbl - Finance Minister

[OUTLAW 09]

Russian budget, economy may lose $21.5 bln in 2015 over low oil prices, sluggish economic growth - Finance Minister

Russia needs to readjust budget over next few years with oil prices at $80 per bbl instead of $100 per bbl - Finance Minister

Interfax from today:

16:00 CORPORATE PROFITS IN RUSSIA PLUMMET OVER 83% IN SEPT, FALL FOR THIRD STRAIGHT MONTH - ROSSTAT

[OUTLAW 09]

Not profitable." Kazakhstan stops supplying electricity to Russia, blames ruble devaluation. Coal may be next.

http://www.fergananews.com/news/22848 (Rus)

[OUTLAW 09]

Russia sold less than 10% of the debt it offered in auctions

http://www.bloomberg.com/news/2014-11-26/russian-yield-hits-5-year-high-as-ruble-slides-before-auctions.html …

#Oil Brent futures price fell again today to record $78,4, washing out the state budget funds of Putin's Russia.

http://expres.ua/news/2014/11/26/120147-putin-chekaye-yogo-nafta-pidkysne …

[OUTLAW 09]

While Crimea has a severe electricity shortage, Kazakhstan now says it will stop exporting electricity to #Russia

http://lenta.ru/news/2014/11/26/energo/ …

[OUTLAW 09]

VIENNA — Oil prices fell sharply Thursday amid expectations the powerful oil collective OPEC will decide against intervening in global markets by cutting production levels.

Crude oil prices plummeted over 2% to $72.15 a barrel. In June, prices were as high as $115 a barrel.

Russian lawmaker @A_Sidyakin on OPEC's decision not to cut oil output: "The ghost of the shale gas revolution has frightened the sheiks"

Now we know the true profit margin for Russian oil.

#Rosneft in response to #Opec decision: "Nothing extraordinary is happening. Rosneft has a safety margin given net prodn costs of $4/bbl"

Russia dep finmin says hopes of $80 oil now look 'moderately optimistic,' problem of excess supply 'won't be resolved quickly'

Oil prices plummet after OPEC says it won't intervene in markets. RU LUKOIL defies it'll produce oil w/max profit even if prices fall to $25

But when your national budget is geared for 80 now and formally for 100 then 25 is a major economic disaster.

[OUTLAW 09]

VIENNA — Oil prices fell sharply Thursday amid expectations the powerful oil collective OPEC will decide against intervening in global markets by cutting production levels.

Crude oil prices plummeted over 2% to $72.15 a barrel. In June, prices were as high as $115 a barrel.

Russian lawmaker @A_Sidyakin on OPEC's decision not to cut oil output: "The ghost of the shale gas revolution has frightened the sheiks"

Now we know the true profit margin for Russian oil.

#Rosneft in response to #Opec decision: "Nothing extraordinary is happening. Rosneft has a safety margin given net prodn costs of $4/bbl"

Russia dep finmin says hopes of $80 oil now look 'moderately optimistic,' problem of excess supply 'won't be resolved quickly'

Oil prices plummet after OPEC says it won't intervene in markets. RU LUKOIL defies it'll produce oil w/max profit even if prices fall to $25

But when your national budget is geared for 80 now and formally for 100 then 25 is a major economic disaster.


#Rouble hits new record low of 48.36 per USD after #Opec decision. Down more than 3% in two hours. #Russia
pic.twitter.com/1TMNAOFiRt


Russian Stock Market -1.6%
Gazprom -2.19%
Lukoil -0.77%
Sberbank -2.61%
VTB - 2.1%
Ruble vs USD -1,45% #47_74

pic.twitter.com/LVy572TySl

[OUTLAW 09]

AND the Russian economy just keeps on going South---and a 20M USD per day for their military costs in the Ukraine---now becomes the question Ukraine or my own economy which is more important?

This is the spiral death dance that I wrote about three months ago here in SWJ---Putin now has a serious decision to make--can he "win militarily in the Ukraine" but afford to completely crash his own economy and turn the Russian population against his moves?

Or does he take an face saving off ramp and save himself---he may in fact go for the military option.


Holy smokes. Brent down 41% now since June. WTI plunges below another threshold, in the $60s.


#Rouble hits new record low of 48.36 per USD after Opec decision. Down more than 3% in two hours


#BREAKING: BRENT CRUDE FALLS MORE THAN $6 TO $71.25 A BARREL #oil #OPEC This means that #Nigeria and #Angola are in trouble

[OUTLAW 09]

AND the Russian economy just keeps on going South---and a 20M USD per day for their military costs in the Ukraine---now becomes the question Ukraine or my own economy which is more important?

This is the spiral death dance that I wrote about three months ago here in SWJ---Putin now has a serious decision to make--can he "win militarily in the Ukraine" but afford to completely crash his own economy and turn the Russian population against his moves?

Or does he take an face saving off ramp and save himself---he may in fact go for the military option.


Holy smokes. Brent down 41% now since June. WTI plunges below another threshold, in the $60s.

#Rouble hits new record low of 48.36 per USD after Opec decision. Down more than 3% in two hours

#BREAKING: BRENT CRUDE FALLS MORE THAN $6 TO $71.25 A BARREL #oil #OPEC This means that #Nigeria and #Angola are in trouble


#Russia Ruble in free fall after Opec leaves #Oil production unchg. pic.twitter.com/NJtTRrBc9T

[OUTLAW 09]

Perfect example of the Russian "altered state of reality".

Seriously---since OPEC did not follow exactly what Russia wanted them to do they are being "investigated"?

#Russian investigative committee opened criminal case on all members of #OPEC. Unfortunately this is no joke.

[OUTLAW 09]

More Sechin: "#Rosneft is flexible and has resources; $60 suits us fine. Of course, we will be forced to postpone some expensive projects"

Sechin predicts #oil price fall below $60 in first half of 2015:
"We anticipate a possibility of a fall in prices to $60 and lower

[OUTLAW 09]

Seriously! Did the Crude Oil (Brent) really drop to $72.58 -$5.17 -6.65% today? That is unprecedented!

pic.twitter.com/l7HPqH0lTg

[OUTLAW 09]

I often in the last several months indicated that the oil price would break towards 60 and it is breaking towards 60 and some oil analysts are saying if 60is broken then 50 is the bottom.

A few months ago I remember reading an article about the mythical oil 75. Now the Brent is at 71.62!

pic.twitter.com/KLFo0AwZMq

[OUTLAW 09]

Brent breaks to 69 USD.

#Putin says world to collapse with $80 oil. Then says oil will not fall below $75, today WTI oil at $69, Rosneft ask Putin to stop talking.

1 USD= 49.99 RUBLE. The markets are punishing Russia far more than any meek Western government. Putin is squirming. pic.twitter.com/QFFIvgFhHc""

And the ruble just continues it's free fall--at almost 62 per Euro

#Russia'n national currency continues it's descent. And it still doesn't look like full scale panic is here.
pic.twitter.com/RhbRfhBdBt

[OUTLAW 09]

Russians love conspiracy theories.

VTB strategist Neil MacKinnon suggests move in oil price to $70 + below may be part of US-sponsored plot to hurt producers like Russia +Iran

Would suggest to the VTB it might be in fact a KSA plot and not US sponsored as that would mean the US is actually telling the KSA what to do.

Russian oil Ponzi scheme is now falling apart and they cannot stop the fall.

http://finance.yahoo.com/news/russia-oil-giant-battles-debt-090902948.html

[OUTLAW 09]

Now comes the Russian blame game on their oil earnings losses---it's the US naturally.

Sechin blasts America's "non-traditional" energy production.
http://www.interfax.ru/business/409787

[OUTLAW 09]

US crude hit 66.15 today

Here's today's insane move in oil.
pic.twitter.com/U2UCxyuae5

Ruble just hit 50 to the U.S. dollar for the first time ever:
pic.twitter.com/Pr8sZqZUAR

Brent Crude price over the last 3 days $80 to $70
pic.twitter.com/gWOMRGiOcP

[Firn]

Yes outlaw, the oil rout in recent weeks, especially the last days was indeed an amazing thing to watch. Show me the expert which predicted it at those levels and was not almost anytime wrong in the last ten years or so. This is why I try to avoid that area like the plague. I'm glad that I'm not long on commodities. :wry:

As I have been bearish on the Russian economy in the long run I have to especially careful not to overvalue short term events which support my view. Much depends on how long the oil price stays at such or somewhat higher levels.

P.S: Russia also suffered btw some losses when they exchanged hard dollars against soft gold.

[OUTLAW 09]

Yes outlaw, the oil rout in recent weeks, especially the last days was indeed an amazing thing to watch. Show me the expert which predicted it at those levels and was not almost anytime wrong in the last ten years or so. This is why I try to avoid that area like the plague. I'm glad that I'm not long on commodities. :wry:

As I have been bearish on the Russian economy in the long run I have to especially careful not to overvalue short term events which support my view. Much depends on how long the oil price stays at such or somewhat higher levels.

P.S: Russia also suffered btw some losses when they exchanged hard dollars against soft gold.

firn---this whole trend was triggered by the almost unannounced Strategic l Reserve oil sale of 6m barrels months ago shortly after the Crimea annexation--that was when the price started to move.

Still not sure if in fact the KSA moves are targeting the US due to their coming online with light crude out of fracking which I doubt as the US crude from fracking is a very good quality light crude somewhere above WTI and under Brent or truly targeted against Iran their regional hegemon competitor and Russia for supporting both Iran and Assad.

[davidbfpo]

An Open Democracy article by a Russian and paints a dire picture:
I was amazed the machinery was working! They were harvesting the grain from under the snow!’Kholmanskikh was telling the truth..... in the Kurgan Region, for example, where 40% of the grain to be harvested is lying under snow...
Link:https://www.opendemocracy.net/od-russia/georgy-borodyansky/battle-for-siberian-harvest

[OUTLAW 09]

Ruble down this morning by 3% already.

Now Putin is trying desperately to protect the oligarchs income and yet it will destroy his own economy due to lost taxes that have to then come out of the pocket of the average Russian.

Putin frees Gazprom from taxes for 15 years, raises taxes on small business 7.5%
https://twitter.com/msvetov/status/539352807392808960 …

[OUTLAW 09]

With the de facto devaluing of the ruble current inflation rate is running about 41%.

Putin has about one week left tot make a critical decision as he cannot stop this spiral dance of fiscal death--go for a military victory in eastern Ukraine--- and risk even more sanctions or focus on his own economy?

No relief: Ruble takes another step down, to 53.17/$ and 66.28/euro

Ruble is following the exact drop rate as the price of oil---

[OUTLAW 09]

With the de facto devaluing of the ruble current inflation rate is running about 41%.

Putin has about one week left tot make a critical decision as he cannot stop this spiral dance of fiscal death--go for a military victory in eastern Ukraine--- and risk even more sanctions or focus on his own economy?

No relief: Ruble takes another step down, to 53.17/$ and 66.28/euro

Ruble is following the exact drop rate as the price of oil---

It just keeps on falling---and Putin just stated it is good though for the economy?

Hard to follow the ruble today. New low is 53.4109 against the USD.

[Firn]

In some cases you will reach success only through almost heroic effort, but if something makes little if any economic sense you have to ask yourself Pyotr Shumakov's question: 'Who needs this “heroic harvest?’

If you are forced to do heroic deeds very often in business to just tread water then you are doing something wrong or are in a bad spot in a bad business.


Kholmanskikh, Putin's envoy, no doubt would have enjoyed the heroic spectacle. But one of Omsk’s oldest farmers, Pyotr Shumakov, sees this heroism as destructive. ‘They are ruining people and equipment. What’s the point of harvesting grain from under the snow? To make it usable, they’ll have to run the grain through a dryer three or four times. And that costs money. And where do you find a dryer anyway?’ Indeed, the region is short of dryers and other equipment. Vitaly Erlikh admits that it’s not even a question of individual farms. For instance, there is not a single dryer in the whole of the Kolosovsky district, which covers an area of almost 5,000 square kilometres. ‘And if the grain is damp, the silos reduce their price per tonne by 1,000 roubles (£13). So you end up burning a lot more diesel. Who needs this “heroic harvest”?’

Pyotr Shumakov was still to begin harvesting his 18 hectares (45 acres) on 3 November. Waiting for the snow to melt and the fields to dry out, Shumakov had been measuring the moisture content of his grain on a daily basis. And all the other farmers he knew were doing the same. For them, it’s not a question of heroism: ‘We don’t need all this showing off. We need to survive.’

It has been also obvious for a while that not only the farmer in this area have a hard time to get a credit or to serve their old one. I remember that in a short piece from Moscow after the second round of Western sanctions they interviewed people in the market and then a farmer. The consumers were almost elated by the 'superior' quality of Russian food, making the switch to the rather gloomy small farmer even more marked. The latter talked pretty much about the same issues, lack of credit and thus little investment. While some with enough capital and possibly connections will expand production it will be hard for the small and medium farms to follow suite in similar fashion.

[OUTLAW 09]

In some cases you will reach success only through almost heroic effort, but if something makes little if any economic sense you have to ask yourself Pyotr Shumakov's question: 'Who needs this “heroic harvest?’

If you are forced to do heroic deeds very often in business to just tread water then you are doing something wrong or are in a bad spot in a bad business.



It has been also obvious for a while that not only the farmer in this area have a hard time to get a credit or to serve their old one. I remember that in a short piece from Moscow after the second round of Western sanctions they interviewed people in the market and then a farmer. The consumers were almost elated by the 'superior' quality of Russian food, making the switch to the rather gloomy small farmer even more marked. The latter talked pretty much about the same issues, lack of credit and thus little investment. While some with enough capital and possibly connections will expand production it will be hard for the small and medium farms to follow suite in similar fashion.

Seems the current Russia failed to remember the Soviet days that also failed for the exact same reasons it is now---massive corruption and planned state economic decisions.

[OUTLAW 09]

#Oil Shock Streaks Across Globe From #Moscow to Tehran to Caracas. Ready for $40?

http://www.bloomberg.com/news/2014-11-30/oil-at-40-possible-as-market-transforms-caracas-to-iran.html …

pic.twitter.com/xkhZzEkxZa

Expert:#Putin can not freeze conflict in #Ukraine,#Russia's #economy is collapsing before our eyes.
pic.twitter.com/tMeBGioDB5

[Firn]

I think one has to be quite careful with an assumption of oil around 45 or less, or with any. That it gets discussed shows how many animal spirits react to the often mentioned supply glut.

High Inflation should persist in Russia if we don't see any short-term strenghtening, as a considerable amount of prices of imported services and products have not been adjusted due to various reasons as market share, contracts and so forth. It is not far away from the high rates of the RCB, so the real returns are not quite as attractive as the Central Bank might suggest.

And btw South Stream seems to be dead (http://www.themoscowtimes.com/business/article/russia-s-scrapped-south-stream-pipeline-falls-victim-to-politics-energy-prices/512227.html).



The announcement on scrapping South Stream came during a visit by Russian President Vladimir Putin and Gazprom chief executive, Alexei Miller, to Turkey, during which Putin proposed building it to Turkey instead, offering its gas at a discount.

"I don't think Putin is bluffing. I think he's really adapting to a fundamentally new geopolitical situation in Europe," the IISS' Noel said.

Offering a discount seems to be the new Russian way of trying to sell it's NG. OF course in this case the discount may be just a reflection of current price events on the markets...

[Ulenspiegel]

The Russian idea of North Stream and South Stream was, to avoid the usage of Ukrainian and Polish pipelines, i.e. to end the theft of NG by Ukraine and to re-gain some strategic freedom in respect to Ukraine and Poland.

The capacity of North Stream is IIRC sufficient to reduce the flow through Ukraine by ~50%.

When the EU delayed the the construction of South Stream in summer 2014 the situation for Russia became worse:

1) The capacity of North Stream and then Ukrainian pipelines are more than sufficient for deliveries to western Europe, however, the Russians have to use Ukrainian pipelines and may become victim of some kind extortion again.

2) The Russian investments for South Stream are substantial and not finishing the project hurts therefore twofold.

3) Alternatives like Blue Stream to Turkey connect Russian fields with a customer who will not pay as much as the EU customers.

[OUTLAW 09]

The Russian idea of North Stream and South Stream was, to avoid the usage of Ukrainian and Polish pipelines, i.e. to end the theft of NG by Ukraine and to re-gain some strategic freedom in respect to Ukraine and Poland.

The capacity of North Stream is IIRC sufficient to reduce the flow through Ukraine by ~50%.

When the EU delayed the the construction of South Stream in summer 2014 the situation for Russia became worse:

1) The capacity of North Stream and then Ukrainian pipelines are more than sufficient for deliveries to western Europe, however, the Russians have to use Ukrainian pipelines and may become victim of some kind extortion again.

2) The Russian investments for South Stream are substantial and not finishing the project hurts therefore twofold.

3) Alternatives like Blue Stream to Turkey connect Russian fields with a customer who will not pay as much as the EU customers.

What is not being mentioned was the Israeli offer last week to build a NG pipeline into Italy and Greece---therefore actually undercutting Russian efforts and their pricing levels are rumored to be a good deal lower than Gazproms---that is why GP is giving reductions--also their delivery contracts had tied NG prices to the oil price levels.

[Firn]

Russia Delivers a New Shock to Crimean Business: Forced Nationalization (http://www.businessweek.com/articles/2014-11-18/crimea-gets-renationalized#r=hp-ls):

Seems like the Goblin and his friends are rather busy...

Well put but robbing here and there seems now so easy. Of course part of those assets will likely indeed become nationalized, the question is only how large that slice will be...

...and busy they are, and doing well it seems (http://bigstory.ap.org/article/166097f662ec4e6e899b14c12e9a0c58/change-leadership-crimea-means-property-grab).


The studio, nestled in hills overlooking the Black Sea, is just one of thousands of businesses seized from their owners since Crimea was annexed by Russia eight months ago. Crimea's new pro-Moscow leaders say the takeovers, which they call nationalizations, are indispensable to reverse more than two decades of wholesale plunder by Ukrainian politicians and oligarchs.

But an Associated Press investigation throughout this peninsula the size of Massachusetts found many instances of less noble practices: legal owners strong-armed off their premises; buildings, farms and other prime real estate seized on dubious pretenses, or with no legal justification at all; non-payment of the compensation mandated by the Russian constitution; and targeting of assets belonging to or used by independent news media, the Crimean Tatar ethnic minority and the pro-Kiev branch of the Orthodox Church.

Looks like a Russian robbery in scale both large and small. Dark days (no electricity pun intended) for many in Crimea...


The attorney for a labor union whose property holdings in many Crimean cities have been threatened with nationalization said people here are living in legal limbo. "It's a circus — everything is up in the air," said the lawyer, who requested anonymity out of fear of official reprisal.

When Crimea joined Russia, she added, "nobody understood that."

More will now. We will see how the mood is in a couple of years. With Russia's economy in or sliding into recession, the state-supported robbery, the legal limbo, the crash in tourism, the Ukrainian water-blockage, criminals in charge, very high inflation and the financial outfall of the bank busting it is difficult to see bright spots for Crimea's economy.

[OUTLAW 09]

Russian Cent Bank spent $700m propping up ruble on Dec. 1, first intervention since Nov. 10:

http://bit.ly/1yhgUIw

[davidbfpo]

According to Business Week, Russia has another drainage problem:http://uk.businessinsider.com/russia-brain-drain-putin-ukraine-crimea-2014-12?r=US

https://pbs.twimg.com/media/B355Ie9IQAAEhh4.png

There is a second graph that shows emigration into Russia.

[Firn]

The jump in emigration in 2014 is quite large, still I'm pretty sure that the partly ethnic Russians fleeing the fighting and dispair in Dobnas over the open border will more then balance it out even if fewer should come from other areas due to the economic crisis. Of course the demographics of the people moving is of great importance...


"There are opportunities for my children in Moscow that aren't found anywhere else," one parent told BI.

I'm sure there are. Strangly I recalled after that sentence the rants of masked men blocking the road to Crimea on the economic power of Russian and the collapsing Western economy, especially of course the USA. Plenty of gay this and gay that, of course.

P.S: Yes the RCB has intervened again. It has become more likely to see another rate hike.

[OUTLAW 09]

At first Russia "laughed off" the EU and US threat to cut them out of SWIFT.

Seems they are no longer "laughing".

Cutting Russia from SWIFT is the "finance nuclear strike" without using nukes.



Cutting Russia Off from SWIFT 'Will Mean War': Top Russian Banker
http://www.interpretermag.com/russia-update-ruble-sinks-to-lowest-rate-since-1998/#5207 …

[OUTLAW 09]

Looks like senior Russian political types are starting to "panic" and blame everyone else instead of their own actions causing the Ukraine to impact the Russian economy.


Russian Leader Accuses Central Bank of Economic Sabotage

The Fiscal Times
By Rob Garver
2 hours ago

The current government of Russia has a talent for denying the obvious. Vladimir Putin spent months denying that Russian troops were invading Ukraine, despite massive amounts of evidence to the contrary. In the face of overwhelming evidence that Russia-backed rebels shot down a commercial airliner over the summer, Russian leaders spun webs of conspiracy theories in an effort to implicate the Ukrainian government.

One Russian institution, though, has been consistently willing to admit to the existence of an observable reality. And it appears that it is now paying a price. After months of providing honest, if gloomy, appraisals of the state of the Russian economy, the Russian Central Bank this week finds itself facing accusations from lawmakers that it is trying to sabotage the country’s economy.

Yevgeny Fyodorov, a senior member of Putin’s United Russia party and chair of the Russian Duma’s economic policy committee, reportedly told Russian News Service Radio that the bank is “an institutional enemy of the country” and accused it of orchestrating a steep decline in the value of the Russian ruble against international benchmark currencies. At Fyodorov’s request, the Russian Prosecutor General’s Office has begun inquiries into the bank’s activities, bank officials confirmed to Interfax on Monday.

The status of the ruble has been a vexing problem for the bank, as it has lost close to 40 percent of its value against the U.S. dollar and the euro this year. The bank spent some $70 billion of the country’s foreign currency reserves in an effort to protect the ruble earlier this year.

And, despite announcing last month that it would abandon its increasingly fruitless effort to prop up the plunging currency, the Central Bank of Russia on Wednesday confirmed that it had yet again dipped into its foreign currency reserves this week in an effort to halt the currency’s slide.

The bank announced that it had sold $700 million in reserves Monday, after the ruble dropped another six percent against the dollar. As of Wednesday morning in the U.S., the intervention appeared to have had little effect. The ruble was trading at between 54 and 55 to the dollar on Moscow markets, a record low.

The ruble’s decline illustrates the challenge facing the Central Bank of Russia. Many of the problems driving the decline in the ruble’s value are outside the control of both the central bank and the Russian government more broadly.

The Russian economy has been pummeled by international sanctions in the wake of Russia’s invasion of Ukraine’s Crimean peninsula, its continued support of a violent uprising in eastern Ukraine, and increasingly aggressive military posture toward its neighbors.

Additionally, the oil markets have been severely hurting the Kremlin’s biggest revenue stream. Oil prices have dropped from well over $100 a barrel to about $70 in recent months. The Russian government’s primary source of income is tied to the sale of oil and natural gas on the international markets. Analysts believe Russia needs oil prices to be at or above $100 per barrel to keep its extraction industry profitable and the stream of tax revenue flowing to Moscow.

Last week’s decision by the Organization of Petroleum Exporting Countries to keep production at current levels, ignoring a call from some members to create an artificial shortage in order to boost prices, was terrible news for Russia. The biggest players in international oil markets, particularly Saudi Arabia, can tolerate lower prices, and are willing to do so in order to put pressure on U.S. shale oil producers. But a side effect is the significant damage it is doing to the Russian economy.

Until now, the country’s central bank has been fairly matter-of-fact about the headwinds facing both the ruble and the economy more generally. As Russian political leaders, most notably Putin, shrugged off the impact of international sanctions, the bank last month issued a report predicting that the Russian economy would almost certainly fall into recession in the near future.

The bank has also had to make a series of embarrassingly unsuccessful forays into the international debt markets throughout the fall and winter, where it has been unable to sell its bonds at interest rates it deemed acceptable because of investors’ nervousness about the long-term value of any security denominated in rubles.

But with terms like “enemy of the country” being thrown around by powerful lawmakers, and prosecutors knocking on the door, it looks as though the independence of the Bank of Russia may be facing a challenge.
.

[OUTLAW 09]

Ruble going all over the place on Chechnya and Putin's speech.

pic.twitter.com/2lL6cfHKAw

[OUTLAW 09]

Ruble going all over the place on Chechnya and Putin's speech.

pic.twitter.com/2lL6cfHKAw

Putin talks rubel down

pic.twitter.com/MJefmuknr7

[OUTLAW 09]

KSA lowers the price of oil for Asia beginning in January then this;

SAUDI ARABIA CUTS ALL JAN. OIL PRICES TO U.S., ASIA; SAUDI ARAMCO CUTS JAN. ARAB LIGHT ASIA OSP TO $2 DISCOUNT: BBG

Saudis announced this morning another price drop to oil shipped to USA
This is escalation

Maybe Russia will declare war on the KSA, occupy it and take the oil.

[OUTLAW 09]

Russian Inflation Surges to 9.1 Percent in November; Food Prices Skyrocket: http://www.themoscowtimes.com/business/article/russian-inflation-surges-to-91-percent-in-november-food-prices-skyrocket/512594.html …

Putin can't explain why last decade's petro-windfall ended up in oligarchs' pockets instead of in jobs, roads, etc.

http://windowoneurasia2.blogspot.com/2014/12/window

[OUTLAW 09]

Two extreme's of the same Russian economics in the sanctions phase.

#Russian Prostitutes Hike Rates Over Slumping Ruble
http://tmt-go.ru/512596 #news

Russia Faced With 'Massive' Liquidity Problem, Says Sberbank Chief: http://www.themoscowtimes.com/business/article/russia-faced-with-massive-liquidity-problem-says-sberbank-chief/512573.html

[OUTLAW 09]

Two extreme's of the same Russian economics in the sanctions phase.

#Russian Prostitutes Hike Rates Over Slumping Ruble
http://tmt-go.ru/512596 #news

Russia Faced With 'Massive' Liquidity Problem, Says Sberbank Chief: http://www.themoscowtimes.com/business/article/russia-faced-with-massive-liquidity-problem-says-sberbank-chief/512573.html


Oil prices continue to slide. @ 3:47 GMT: <WTI $65.48 /bbl> <Brent $68.47/bbl>

[OUTLAW 09]

On Thursday the Russian central bank cut the foreign exchange repo rate, the interest rate it charges on the currency it gives to banks. The rate fell from 1.5% above the London Interbank Offered Rate (Libor) — the benchmark interest rate at which banks lend to one another — to 0.5% above Libor. A lower interest rate should make it less expensive for banks to borrow from the central bank and therefore more appealing.

The rate cut illustrates that the central bank is growing concerned about the ability of Russian banks to meet their debt repayments. If they fail to pay, it could trigger a wave of defaults that would further hit the fragile Russian economy, which is already expected to fall into a recession in 2015.

Yet if the problem is a shortage of collateral, these measures are unlikely to be enough. Back in February, JPMorgan analysts warned of just such a scenario: about 60% of available collateral was already pledged of an upper limit of about 75%. That top level is the point at which JPM says the stress in the banking system, in the form of increased risk of default, may start rising rapidly.

We appear to be near that point.

Judging by Thursday's news, banks appear to have been forced instead to seek help from the state.

This would explain Putin's move to divert money usually earmarked for infrastructure investment (for example, in Russia's ageing road and rail network) into a bank bailout.

Reuters reports that VTB and Gazprombank have already applied for 250 billion roubles ($4.7 billion) and up to 100 billion roubles in additional support. This would put a further dent in Russia's reserves after the country saw total international reserves drop some $90 billion so far in 2014, mostly in failed attempts to buoy the rouble.

It might also open the door for non-bank companies to lobby for additional support. The oil company Rosneft requested 2 trillion roubles last month but was turned down.

[OUTLAW 09]

Russian finance: a very serious worry of a few smaller banks losing total confidence when a lot of non-preforming loans hit in early 2015.

[Firn]

Putin's speech strenghtens some the fears for the Russian economy. He wants to appear strong and to avoid any sign of weakness and thus strides firmly down the ever darker economic road.

Of course the oil price might jump before inflicting too deep wounds but it really looks as if the new Russia is in surprisingly similar economic situation as the Soviet Union was in one sense: It is highly dependent for it's economic well-being on prices of the commodities it exports, especially oil. Sad indeed for such a country. It is very hard to see upsides for the Russian economy. Maybe I will make a seperate post trying to play devil's advocate, because so much seems to confirm my earlier opinions.

@outlaw: There are quite a few de-facto state companies deep in (foreign-currency) debt which makes their balance sheets vulnerable. State support seems needed and has already been given. Maybe some people will understand the though lessons especially the Irish, Cypriots and Spanish had to learn: even countries with nominally low debt can find quickly a lot of it when sierra hits the fan ...

[OUTLAW 09]

Now the Russian economy is in total free fall and headed to total collapse.

http://www.bloomberg.com/news/2014-12-08/russia-pain-spreads-to-stock-and-bond-markets-as-ruble-plunges.html?hootPostID=074aa751bebeada94d80788e03 2dc57d

[OUTLAW 09]

Russian media is having a hard time depicting the falling rubel and oil price.

#Rossiya24 is ditching Brent Oil price for $ -> ₽. Constantly rising number cements the optimism of viewers.
pic.twitter.com/eOJTD832Ab

Wechselkurs #Rubel / Euro und lpreis erstmals auf gleicher Hhe.
pic.twitter.com/B9T6LuwBlZ

Diese Website zeigt live den #Rubel-Absturz im Vergleich zum lpreis:
http://zenrus.ru/ #lastTweet
pic.twitter.com/9pAobI8El1

Russian state TV anchor tamps down concerns over depreciating ruble by standing in front of the rate in the studio
pic.twitter.com/Etz3Yw53dh

[OUTLAW 09]

Russia's central bank has admitted it intervened to support the rouble in foreign currency markets last week spending a total of $4.53bn (£2.9bn).

It has spent more than $70bn supporting the rouble since the start of the year.

Its admission came as the World Bank warned the Russian economy would shrink by at least 0.7% in 2015 if oil prices do not recover.

Both the currency and Russian share indexes fell on Tuesday as global oil prices fell to a new five year low.

Rate rise?

Russia has been forced to defend its currency as Western sanctions, in response to its role in eastern Ukraine, and falling oil prices begin to bite.

But analysts suggested it may take a significant hike in interest rates to stop the currency from further falls as well as surging inflation, which stood at 9.1% in November.

"The CBR [Central Bank of Russia] simply is not doing enough to convince the market that it is serious, using a pea-shooter in terms of current piecemeal intervention," said Standard Bank analyst Tim Ash in a note. "It will need to hike rates significantly to defend the rouble, or let the rouble further weaken."

The bank has already raised interest rates by 1.5% in October to 9.5%. It is expected to raise interest rates further later this week.

On Tuesday the rouble fell by 0.9% against the US dollar to 54.25 roubles and lost 1.1% to 67.00 against the euro.

'Speculative demand'

Sberbank foreign exchange and rates chief strategist, Tom Levinson estimated the Russian central bank spent a further $300m to support the rouble in the currency markets again on Monday.

He added that the interventions had prevented the currency from trading much nearer to 60 roubles against the US dollar. But he said the rouble would be "unable to sustain lasting appreciation".

In November the central bank announced it was going ahead with a free float of the rouble by abolishing its unofficial link to the euro and the US dollar. It also announced it was ending automatic interventions to support the currency, instead propping it up only when it was deemed necessary.

The bank had previously supported the rouble when the exchange rate against the euro and dollar exceeded certain limits.

At the time the CBR's chairwoman, Elvira Nabiullina. said the bank would instead intervene in the currency market "at whichever moment and amount needed to decrease the speculative demand."

The bank has said it hopes to achieve a full floating exchange rate in 2015.

Economic woes

Meanwhile, the World Bank forecast Russia's economy would shrink by 0.7% in 2015, but warned that the contraction would be worse if oil prices were to keep sliding.

The World Bank said its forecast is based on a scenario of crude prices averaging at $78 in 2015.

But if oil prices fell to $70 on average, Russia's output would shrink by 1.5%, it said.

Russia's reliance on tax revenues from the oil industry makes it particularly sensitive to price movements.

It warned last week, the Russian government warned the economy would fall into recession next year.

Russia's economic development ministry estimates the economy will contract by 0.8% next year.

It had previously estimated the economy would grow by 1.2% in 2015.

Stock price fall

Both Russian stock indexes also fell heavily in response to the plunging oil price.

The dollar-based RTS fell 1.9% to 854 points, having earlier set a new five-year low of 847 points. The rouble-based MICEX index was down 0.7% at 1,471 points.

Brent crude fell 0.7% on Tuesday to $65.75, extending Monday's steep decline.

[OUTLAW 09]

Once upon a time there was a strong Ruble. Crude Oil was above $100 and apples were from Poland.
pic.twitter.com/qf6eS9pgQd

Opec is “effectively dissolved” as Bank of America sees oil at $50 http://fw.to/efwUV0C

Morgan Stanley yesterday pegged a potential price range at 45 over the net few years as there is a server over supply and virtually no demand.

[OUTLAW 09]

Once upon a time there was a strong Ruble. Crude Oil was above $100 and apples were from Poland.
pic.twitter.com/qf6eS9pgQd

Opec is “effectively dissolved” as Bank of America sees oil at $50 http://fw.to/efwUV0C

Morgan Stanley yesterday pegged a potential price range at 45 over the net few years as there is a server over supply and virtually no demand.

#Oil price lower as OPEC says 2015 demand for Its crude will be weakest in 12yrs.
http://bloom.bg/1x18UzT
pic.twitter.com/RbX3b4ydUh

[OUTLAW 09]

It seems the central bank has gone home for the day, so the ruble heading lower, now 54.79/$, 68.12/euro

[OUTLAW 09]

It seems the central bank has gone home for the day, so the ruble heading lower, now 54.79/$, 68.12/euro

Reason for plunging oil price (& ruble): #Russia is set to increase lending rates.
@BloombergNews pic.twitter.com/fPmXfZC6h4

BREAKING: Oil price plunges over 5% to $60.53
http://bloom.bg/1ukQHX7
v @BloombergNews
pic.twitter.com/Dr9SLPYd0Y

[Firn]

It seems now quite likely that the Russian central bank will hike it's rates, accepting the trade-offs. We will see, maybe they can weather the storm without but if the pressure on the ruble continues like that...

The head winds have gathered even greater force and thus the CBR did it (http://www.bloomberg.com/news/2014-12-11/russia-raises-rates-to-end-ruble-run-as-rout-ravages-economy-1-.html), for the fifth time in this year. So far it doesn't seem enough to shield the ruble from further decline, it just slows it down.


Russia’s fifth interest-rate increase this year failed to stem the ruble’s worst rout in 16 years, risking further damage to an economy battered by sanctions and oil prices near the lowest since 2009.

The Bank of Russia increased its key rate to 10.5 percent from 9.5 percent, according to a website statement. That matched the median estimate of 34 economists surveyed by Bloomberg. The ruble traded 0.8 percent weaker at 55.2605 per dollar after the decision, breaching 55 for the first time. The central bank will hold a news conference later today.

“This is not enough to stabilize the ruble and increases the risk of a full-scale currency crisis,” Piotr Matys, a currency strategist at Rabobank International in London, said by e-mail. “The central bank may intervene more aggressively on the market, but selling hard currency already proved to be an insufficient tool, as reflected in the worst ruble rout since the 1998 crisis.”

[OUTLAW 09]

$60 oil will be norm for next 5 years:
Economist http://cnb.cx/1Dgd9uM

[OUTLAW 09]

#Russia's International Reserves Reduced by $4.3 Billion this Week http://bit.ly/1vHyraL
pic.twitter.com/aMo5DDtNlH

[OUTLAW 09]

The head winds have gathered even greater force and thus the CBR did it (http://www.bloomberg.com/news/2014-12-11/russia-raises-rates-to-end-ruble-run-as-rout-ravages-economy-1-.html), for the fifth time in this year. So far it doesn't seem enough to shield the ruble from further decline, it just slows it down.

firn---remember when we talked about 60 being the bottom limit---maybe that 45 is far more accurate right now.


CRUDE OIL BREAKS $60
http://www.businessinsider.com/oil-price-december-11-2014-12 …

[OUTLAW 09]

firn---remember when we talked about 60 being the bottom limit---maybe that 45 is far more accurate right now.


CRUDE OIL BREAKS $60
http://www.businessinsider.com/oil-price-december-11-2014-12 …

Stress in #Moscow is rising by the minute. WTI crude oil below $60/bbl, Russia 5yr default probability >25%.

pic.twitter.com/5EoB5G6TwS

[OUTLAW 09]

Russia’s effective international reserves only $203 billion as rest of its $409 billion reveres appear to be locked into prtojects/funds.

This would mean Russia has lost this year roughly a 1/3rd of its effective international reserves.

How much liquid - and accessible - foreign reserves does Russia really have? A lot less than you'd think. http://www.economist.com/blogs/freeexchange/2014/12/russias-foreign-exchange-reserves …

Today the Central Bank is faced w/ one of the most difficult challenges of the post-Soviet era,
http://daily.rbc.ru/opinions/economics/12/12/2014/548ac4c32ae596c848d1f91d …

Russians who can't pay off currency mortgages due to ruble collapse protesting: "we/children are homeless debt slaves
pic.twitter.com/yj16awxGbH

[OUTLAW 09]

WTI is now at 57 and Brent is at 61.

Oil is falling....
pic.twitter.com/YVq9aC8A3H

[OUTLAW 09]

Small sign that just maybe Russia is giving up on their food ban, but just not saying anything in order to not "lose face"?

Gone shopping. At the market they're selling "Spanish Oranges" & "Spanish Persimmon". "Is the ban over?" I ask. "Maybe", winks the seller

[OUTLAW 09]

Russia's spectacular failure to maintain its currency's value
http://bloom.bg/1G7kdIe
pic.twitter.com/mB6T2Cmehc

[OUTLAW 09]

OPEC willing to see Oil at $40 a barrel? To Russia that would be an act akin to economic war.

http://www.bloomberg.com/news/2014-12-14/u-a-e-says-opec-won-t-change-output-even-if-price-drops-to-40.html …

[OUTLAW 09]

Rouble tanking again, hits 59 to the dollar for first time ever and heads towards 60
pic.twitter.com/quoW1OQiyg

[OUTLAW 09]

If this rout of the Rubel continues at this pace--Russian default is around the corner. Their CB has nothing left to use effectively to even slow the rout down.

There is only one thing that will effectively stop it--open and visually and verified pull out of the Ukraine--but that means a defeat for Putin and he loses face---that will not happen.

Over 93 for a £
Over 74 for a €
Almost 60 for the US $

pic.twitter.com/PaxOF1syPL

[OUTLAW 09]

If this rout of the Rubel continues at this pace--Russian default is around the corner. Their CB has nothing left to use effectively to even slow the rout down.

There is only one thing that will effectively stop it--open and visually and verified pull out of the Ukraine--but that means a defeat for Putin and he loses face---that will not happen.

Over 93 for a £
Over 74 for a €
Almost 60 for the US $

pic.twitter.com/PaxOF1syPL

Zenrus.ru has added lots of different music and backgrounds, so you can relax to falling ruble in a variety of ways now.

[OUTLAW 09]

Moscow (AFP) - The Russian ruble on Monday fell to new lows despite repeated interventions by the central bank to keep the national currency afloat.

The ruble crumbled to 58.81 to the dollar and 73.23 to the euro after the Moscow Exchange opened Monday morning.

The slump came even though the Central Bank has spent nearly $6 billion so far this month on market interventions to slow the ruble's slide.

The bank made interventions every day last week, and on Thursday decided to hike its key rate by one percentage point to 10.5%.

The ruble's depreciation continued through the weekend however, pulled down by a global slump in oil prices and the effect of Western sanctions imposed over Moscow's annexation of Crimea and its role in eastern Ukraine.

"During a crisis like the one Russia is experiencing now, only changing expectations can lead to stabilisation," economist Maxim Buyev wrote in the Vedomosti daily to explain the seemingly unstoppable slide of the national currency.

"The government must offer a clear plan of reforms," he added.

Vedomosti further reported Monday that the government plans to cut budget spending by 10 percent in 2015. The cuts would impact transportation programmes as well as spending on space, aviation and development of the rar east, the report said.

The 2015 budget is balanced on the assumption of selling oil at $95 per barrel -- a price well above the current level hovering around $60.

[OUTLAW 09]

Moscow (AFP) - The Russian ruble on Monday fell to new lows despite repeated interventions by the central bank to keep the national currency afloat.

The ruble crumbled to 58.81 to the dollar and 73.23 to the euro after the Moscow Exchange opened Monday morning.

The slump came even though the Central Bank has spent nearly $6 billion so far this month on market interventions to slow the ruble's slide.

The bank made interventions every day last week, and on Thursday decided to hike its key rate by one percentage point to 10.5%.

The ruble's depreciation continued through the weekend however, pulled down by a global slump in oil prices and the effect of Western sanctions imposed over Moscow's annexation of Crimea and its role in eastern Ukraine.

"During a crisis like the one Russia is experiencing now, only changing expectations can lead to stabilisation," economist Maxim Buyev wrote in the Vedomosti daily to explain the seemingly unstoppable slide of the national currency.

"The government must offer a clear plan of reforms," he added.

Vedomosti further reported Monday that the government plans to cut budget spending by 10 percent in 2015. The cuts would impact transportation programmes as well as spending on space, aviation and development of the rar east, the report said.

The 2015 budget is balanced on the assumption of selling oil at $95 per barrel -- a price well above the current level hovering around $60.

Bank of Russia will have to pay enormous premiums to stabilise the ruble. http://bloom.bg/1sta40l via @BloombergNews
pic.twitter.com/CEaePGrPSs

Interfax from today:
14:27 Budget may run out of foreign currency to offer banks in deposit auctions by end-Q1 2015 - Moiseyev

[OUTLAW 09]

The Russian economy is now crashing far faster than the Russian CB can keep up with.

Citing "devaluation and inflationary risks" Central Bank raises key rate to from 10.5% to 17% http://www.cbr.ru/press/pr.aspx?

Russians are struggling to find anyone to sell them ANY foreign currency in exchange for their worthless rubles. The panic is on.

Russian bond yield climbs above Rwanda's. Yes, you read that right...
http://on.ft.com/1zdWvYW
pic.twitter.com/TdXaFf66pz

#Russia Ruble Nose-Dives To 63 To Dollar,78 To Euro lost 48% more than 47% of #Ukraine Hryvnya http://bit.ly/1sur4mZ pic.twitter.com/1PsNafE4g5

The Central Bank of Russia spent $2-3bln trying to support the ruble today.
http://liveuamap.com/en/2014/15-december-the-central-bank-of-russia-spent-$23bln-trying …

#Russia banks have $60bn debt coming due in next months.
Central Bank will have to bail them out with money meant to defend falling #ruble

#Russia's central bank blames the Russian people for making the ruble devalue. http://top.rbc.ru/finances/15/12/2014/548f16c32ae5964f117fc581 …

[OUTLAW 09]

Russian CB raised rates to 17% at 0100 in the morning. the ruble will take a serious hit in the morning when the market opens although in other over night markets it is now falling.

MASSIVE interest rate hike may not work. Ruble's already on its way back down!
http://bit.ly/1qTk2gj

Drastic, bold measure by Nabiullina and Central Bank but needed to be a week ago. Has she tried to slam the door after the ruble has bolted?

Hiking interest rates punishes Russian consumers instead of oligarchs (capital controls) or sacrificing strategic goals (spending reserves)

A week ago when asked why the Central Bank of Russia didn't hike the rates in more aggressive way, they said they didn't want to cause panic

Can the day get worse for #Putin?
YES it can :-)
#EU agrees on more sanctions vs. #Russia b/c of #Crimea/#Donbas.
#ruble to fall faster now.

Kirill Rogov on FB: If Central Bank hikes rate to 17% at night,there is sth we do not yet know in add. 2 bleak consequences we already know

Ruble & stock market fall not just a reaction to low oil prices & sanctions, but also distrust of gov economic measures

[Firn]

So they took out the big interest rate bazooka. I confess I'm surprised by the boldness of the move.

It is just amazing to see such a vast gulf between the interest rates of the Western World and Russia. Fact is stranger then ficition...

[OUTLAW 09]

Early round up of comments on the blogger side concerning the rate hike to 17%.

Ruble was initially up 9% but has fallen now 4% and looks to fall back again in the coming hours especially after the Swiss bank CS indicates it is now anticipating Russian companies going into default as they basically owe in the coming 24 months 650B USD that needs to be serviced and they cannot.

If they default in large numbers it will hit western banks badly.

Duma deputies already calling for central bank governor Nabiullina's head. Because clearly everything is her fault.

Ruble crisis "risks turning into a broader market emerging rout". @AmbroseEP on the chaos. http://www.telegraph.co.uk/finance/economics/11295402/Russian-crisis-turns-systemic-as-rouble-crashes-13pc.html …

The Moscow Times ✔ @MoscowTimes
#Russian State Media Downplays Extent of Ruble Crisis
http://tmt-go.ru/513367

Credit Suisse Says Russian Company Defaults Are ‘Inevitable’
http://www.bloomberg.com/news/2014-12-15/credit-suisse-says-russian-company-defaults-are-inevitable-1-.html …

In a few minutes, the #Russian #ruble strengthened 9% then fell 4% again
pic.twitter.com/WDstNO7qiS

Russia economic black humor
Under the Central Bank: "The dollar is at 66! What do we do?" "17!!!" "17 what?" "I dunno, raise something to 17."
pic.twitter.com/22pQvC7y11

All the interest in the ruble appears to have crashed the Moscow Exchange website, http://moex.com , this morning.

[OUTLAW 09]

Second day of a economic rout is building and is in the middle of starting ---as the rate hike did not impress the market and the RCB rally has nothing left to throw at the problem as it now requires Putin to make a decision---pull completely back on the Ukraine and compromise on Crimea or play the military card which will drive the market even lower.

"Panic selling" of Russian equities will continue today, according to analysts from a big US investment bank.

Russia may have to ask the IMF for a bailout. http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/15/russias-economy-is-doomed-its-that-simple/ …

Three reasons for RU economic crisis: western sanctions, dependency on oil, lack of trust in competence of regime (Kudrin).

You know it's getting out of hand when.....Moskovsky Komsomolets newspaper starts rate-hike live blog http://www.mk.ru/economics/2014/12/16/eksperty-kommentiruyut-povyshenie-cb-stavki-do-17-pokhoroshemu-nabiullina-dolzhna-uyti-v-otstavku.html …

Markets not inspired by Nabiullina's midnight rate hike - dollar rising past 63.50 now, no sign of intervention.

Rouble is tumbling again after briefly holding up, and signs of elite battle breaking out. Kudrin criticising Sechin, Rosneft criticing CB.

Russia’s Economic Problems Exacerbating Moscow’s Relations with Republics, Tatar Analyst Says http://goo.gl/7tZYQG

ruble back in negative territory now, 64.64/$ as the rate hike seems to have left the market less than impressed

[OUTLAW 09]

Second day of a economic rout is building and is in the middle of starting ---as the rate hike did not impress the market and the RCB rally has nothing left to throw at the problem as it now requires Putin to make a decision---pull completely back on the Ukraine and compromise on Crimea or play the military card which will drive the market even lower.

"Panic selling" of Russian equities will continue today, according to analysts from a big US investment bank.

Russia may have to ask the IMF for a bailout. http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/15/russias-economy-is-doomed-its-that-simple/ …

Three reasons for RU economic crisis: western sanctions, dependency on oil, lack of trust in competence of regime (Kudrin).

You know it's getting out of hand when.....Moskovsky Komsomolets newspaper starts rate-hike live blog http://www.mk.ru/economics/2014/12/16/eksperty-kommentiruyut-povyshenie-cb-stavki-do-17-pokhoroshemu-nabiullina-dolzhna-uyti-v-otstavku.html …

Markets not inspired by Nabiullina's midnight rate hike - dollar rising past 63.50 now, no sign of intervention.

Rouble is tumbling again after briefly holding up, and signs of elite battle breaking out. Kudrin criticising Sechin, Rosneft criticing CB.

Russia’s Economic Problems Exacerbating Moscow’s Relations with Republics, Tatar Analyst Says http://goo.gl/7tZYQG

ruble back in negative territory now, 64.64/$ as the rate hike seems to have left the market less than impressed

Collapse is deepening and gaining speed and there is no much more the RCB can do but wait it out---Putin needs to make a clear geo political decision which would slow it down but will he?

Ruble crash gains momentum. New low against the USD is 65.8477.
pic.twitter.com/Uds768KLbR

NOTE-currency exchange businesses have ordered signs that would allow three digit US/Ruble quotes so they are anticipating a potential of at 100 to one

Off we go again. Over the cliff. Ruble resumes is dive vs $ to 66 or so. http://www.xe.com/currencycharts
NOTE: now over 66

NOW oil price is diving under 60 which will reinforce the ruble drop
Crude Oil Brent hit a new low trading at $59.85

[OUTLAW 09]

Pro-Kremlin media just giving up now as the ruble plumbs new depths.
pic.twitter.com/aUtIvM9cd9

Ppl gather in front of the National Bank demanding back their deposits from a commercial bank, old currency exch rate for USD loans

Ruszen.ru gives Zen calmness in face of falling rouble. But have you seen the genius Belarusian equivalent belzen.by?

So... How about Moscow the global financial centre? Ruble the reserve currency? Oh, but Crimea is ours.

#Russians indeed have started to use old Soviet anti-inflation / unreliable currency trick - drain your account & buy whatever you can buy.

[OUTLAW 09]

Pro-Kremlin media just giving up now as the ruble plumbs new depths.
pic.twitter.com/aUtIvM9cd9

Ppl gather in front of the National Bank demanding back their deposits from a commercial bank, old currency exch rate for USD loans

Ruszen.ru gives Zen calmness in face of falling rouble. But have you seen the genius Belarusian equivalent belzen.by?

So... How about Moscow the global financial centre? Ruble the reserve currency? Oh, but Crimea is ours.

#Russians indeed have started to use old Soviet anti-inflation / unreliable currency trick - drain your account & buy whatever you can buy.

Great short article from BBC Financial Editor on the Russian economy.

http://www.bbc.com/news/business-30491170

#Russia business elite says 2014 rendered to zero efforts in last 15 years.
pic.twitter.com/fiJ8Vhx1UJ

[OUTLAW 09]

Nabiullina: we should learn to live in new zone, focus on own sources of financing (Part 2)

MOSCOW. Dec 16 (Interfax) - The head of the Central Bank of Russia, Elvira Nabiullina, has commented on the regulator's decision to sharply raise the key rate to 17% from 10.5%.

"In order to limit the negative effects of the weakening of the national currency's exchange rate, we have decided to raise the key rate from 10.5% to 17%. This is decision is directed toward lowering inflation and inflationary expectations," she said in an interview on Russia-24 television channel.

According to the Central Bank, the weakening of the national currency's exchange rate is happening due to falling prices for oil and the closure of Western capital markets for a number of Russian borrowers. Nabiullina added that the Central Bank had recently placed the ruble in free float. This will allow for the effects of negative external factors on the Russian economy to be mitigated.

She said that the weakening of the exchange rate is a signal for the Russian economy to adapt to new conditions. "We should learn to live in the new zone, focus to a large extent on our own financing sources and projects and give import substitution a chance," the Central Bank head said.

Nabiullina said the Central Bank believed that Russian companies are able to pay back foreign debt. "In order to smooth out this process, we are developing our own instruments. We are giving them forex on loan," she said.

In order for the increased rate not to stop Russian projects from developing, the Central Bank has left special instruments and their rates unchanged, Nabiullina said. This concerns investment projects, project financing, projects aimed at supporting small and medium business and commodity exports.

[OUTLAW 09]

Ruble rate held for a couple of hours steady at 66 and then took off again and has officially cross the 70 to 1 ratio---the 17% maneuver has formally failed.

As the ruble crosses 70/$ (!) for 1st time, it's a good time to start thinking how a Russian economic crisis could affect rest of the world

[OUTLAW 09]

Ruble crosses 73 to 1---then this blog comment hit

God, at this rate will Putin even be around to do his press conference on Thursday?

Ruble -32% against the dollar in just three days. Epic collapse. pic.twitter.com/IWPNhx7W5q

Dollar at 76 and the Euro at 92

Чорний вівторок російського рубля
$ - уже 76 руб, € - 92 руб
pic.twitter.com/gliDxqoeOe


BBC Russian covering #rouble fall live
http://www.bbc.co.uk/russian/russia/2014/12/141216_live_russia_rouble?ocid=socialflow_twitter … This is big

[OUTLAW 09]

Ruble crosses 73 to 1---then this blog comment hit

God, at this rate will Putin even be around to do his press conference on Thursday?

Ruble -32% against the dollar in just three days. Epic collapse. pic.twitter.com/IWPNhx7W5q

Dollar at 76 and the Euro at 92

Чорний вівторок російського рубля
$ - уже 76 руб, € - 92 руб
pic.twitter.com/gliDxqoeOe

BBC Russian covering #rouble fall live
http://www.bbc.co.uk/russian/russia/2014/12/141216_live_russia_rouble?ocid=socialflow_twitter … This is big

Sberbank Moskau : 1 € = 99 Rubel
pic.twitter.com/uqmlfTYtD6

Interfax, usually reliable, reports that #Gazprom is considering firing 15%-25% of its 460,000 staff, citing sources. Huge if true

The repeated Rosneft statements that it was not behind ruble sell off obviously aimed at one person. Sechin seems visibly nervous

A crisp explanation by @AndrewKramerNYT on the opaque Rosneft bond issue that contributed to the ruble's plunge.
http://www.nytimes.com/2014/12/17/business/russia-ruble-interest-rates.html …

https://meduza.io/news/2014/12/16/zhurnalisty-soobschili-ob-otkaze-sberbanka-kreditovat-fizicheskih-lits … Reports that Sberbank, Russia’s largest bank, has stopped all lending to individuals in Russia.

[OUTLAW 09]

Sberbank Moskau : 1 € = 99 Rubel
pic.twitter.com/uqmlfTYtD6

Interfax, usually reliable, reports that #Gazprom is considering firing 15%-25% of its 460,000 staff, citing sources. Huge if true

The repeated Rosneft statements that it was not behind ruble sell off obviously aimed at one person. Sechin seems visibly nervous

A crisp explanation by @AndrewKramerNYT on the opaque Rosneft bond issue that contributed to the ruble's plunge.
http://www.nytimes.com/2014/12/17/business/russia-ruble-interest-rates.html …

https://meduza.io/news/2014/12/16/zhurnalisty-soobschili-ob-otkaze-sberbanka-kreditovat-fizicheskih-lits … Reports that Sberbank, Russia’s largest bank, has stopped all lending to individuals in Russia.


Rosneft spokesman Leontyev says Central Bank shot Russian economy 'so it doesn't suffer'. Others say it was Rosneft.
http://pda.rusnovosti.ru/news/357602

[OUTLAW 09]

The Russian foreign currency exchangers have cracked the 100 mark with their exchange signs.

Crack! Va @jfarchy
pic.twitter.com/p1Gy9JHl5D

[OUTLAW 09]

It just keeps on getting worse---interesting to see if again at 0100 tonight the RCB does a "shock and awe" move.

Vneshprombank is selling dollars for 100 rubles and euros for 120. Межтрастбанк (next door) stopped currency exchange
pic.twitter.com/1F5tBldsnX

The rouble plummets, starting a Black Tuesday for Russia. Why are all the investors fleeing? http://econ.st/1vVL2HB
pic.twitter.com/Z1tZ2h1XMH

Hold onto your ushanka! RT @AFP: #BREAKING Russian central bank says ruble slide 'critical', to take further measures [v @Verkkomeedio]Microcosm of the crisis: Sberbank branch on Tsvetnoy Bulvar started day with $100k in cash. Now (7pm) just $100, cashier tells me

Will Russia Introduce Foreign Currency Controls?
http://bit.ly/1xpqFJB

[OUTLAW 09]

Sounds like the 30s in the States:

Co-owner of financial services company committed suicide in a Moscow hotel
http://www.interfax.ru/russia/413508

[OUTLAW 09]

Crude oil is starting to roll over.

In late morning trade, West Texas Intermediate crude oil futures were giving up earlier gains and were down more than 1% on the day. WTI futures were down near $56 a barrel on Thursday, after briefly touching $59 a barrel earlier.

On Wednesday, crude oil had a wild ride, spiking ahead of the Federal Reserve's announcement before giving up those gains.

Near dawn in New York, crude again rallied, but in following with yesterday's pattern, these gains are evaporating.

Crude oil has crashed over the last several months and the market is looking for the bottom in oil prices.

But the second day in a row, a crude rally looks like it's failing.


http://uk.businessinsider.com/crude-oil-price-december-18-2014-12?r=US#ixzz3MGXd9t3l

[OUTLAW 09]

Interesting that the author of this article is also starting to ask the question--has through corruption the Russian economy been on large Ponzi scheme for the oligarchs. With a an estimated national reserve of 900B which should have been ===where did the money in fact go---for houses in London?

http://krugman.blogs.nytimes.com/2014/12/18/notes-on-russian-debt/?_r=0