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Thread: Russian Ruble Collapse

  1. #1
    I'll most likely shit myself



    bacpacker's Avatar
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    Russian Ruble Collapse

    I have been reading about the financial problems that have popped up in Russia. It seems to be rapidly accelerating since the cost of oil has dropped the last few weeks. I found this article a bit ago and the second on Zerohedge earlier today.

    http://fortune.com/2014/12/15/the-ru...d-for-you-too/

    The ruble's collapse is disastrous for Putin - and bad for you too


    A financial crisis would make the Kremlin more unpredictable, wreck western banks and heap misery on the Russian people.

    Russia’s ruble is melting down faster than you can say “Vladimir Vladimirovich”. That’s nothing short of disastrous for him–but it ain’t good for you either.

    The ruble fell a jaw-dropping 11% against the dollar Monday. Even when seen in the context of the dollar routing all emerging market currencies (Brazil’s real fell 1.2% and South Africa’s rand 1.5%), a move like that is straight out of the Financial Crisis Handbook–completely unsustainable. Russia has seen nothing like it since it defaulted on its domestic debt in 1998.

    Given President Vladimir Putin’s status as the West’s new bogeyman, the temptation to rejoice in the abrupt collapse of his regime’s economic clout is acute. Many will want to congratulate themselves at the success of economic sanctions, the aim of which was to punish Putin for his annexation of Crimea and its covert sponsorship of a civil war there.

    They shouldn’t get carried away.

    For one thing, it doesn’t make Russian concessions on Ukraine any more likely: the worse the economic pressure, the more the Kremlin’s propaganda will drum home the message that it is the Evil West, denying Russia its holy Crimean birthright, that is to blame. Opinion polls suggest that the vast majority of Russians still accept this version of events.

    As such, Ukraine will remain a running sore, infecting both the European economy and, through it, the world’s. Moreover, Ukraine itself is on the verge of a default that will send shock waves through European and global financial markets, amplifying the effect.

    A financial crisis in Russia would have much larger negative consequences than a Ukrainian one: western banks (mainly European ones) will have to write off more loans, western companies will have to write off investments. And that’s even if contagion doesn’t spread to other vulnerable emerging markets such as Indonesia or Brazil, both big recipients of western investment.


    http://www.zerohedge.com/news/2014-1...st-rate-105-17

    Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

    Following the biggest rout to the Ruble in ages, Russia - unlike Mario Draghi - instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to... hold on to your hats... 17.00%, a 650 bps increase!

    From the press release:






    The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks.



    In order to enhance the effectiveness of interest rate policy loans secured by non-marketable assets or guarantees for a period of 2 to 549 days from 16 December 2014 will be granted at a floating interest rate established at the level of the key rate of the Bank of Russia increased by 1.75 percentage points (Previously these loans for a period of 2 to 90 days, provided at a fixed rate).



    In addition, to enhance the capacity of credit institutions to manage their own currency liquidity was decided to increase the maximum amount of funds to repurchase auctions in foreign currency for a period of 28 days from 1.5 to 5.0 billion. US dollars, as well as on similar operations for a period of 12 months on a weekly basis.



    Both stories can be read completely at the link. Also, Zerohedge has several other stories that came up tonight I haven't had a chance to read yet.

    To me this sounds a lot like the plan to destabilize Russia by drying up their income. Saudi's are going along with it.

  2. #2
    I'll most likely shit myself



    bacpacker's Avatar
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    Here is another story I found today.

    http://armstrongeconomics.com/2014/1...hings-to-come/

    Russian Ruble Collapses – Conspiracy Or Warning of Things To Come

    The anti-dollar contingent around the world who have preached that since Russia already trades its own currencies independently from the dollar and China has been trying to make the same move, are spinning the blogs claiming this is a “Zionist banker” conspiracy and this proves that all nations are tired of debt making Zionist banking. Well aside from the prejudice, this is not about merely debt and banking. I warned in the Greatest Bull Market that during a massive Sovereign Debt Crisis, there is nothing that remains standing. This is a complete control-alt-delete.
    There was nothing that survived during the Great Depression from stocks, bonds, commodities, tangible assets, to currencies. This is what we are facing. The complete meltdown of the world economy thanks to the convergence of many factors. Just about anything that can go wrong is going wrong and the end game is not looking pretty. As we can see from this chart of the bond market, while Andrew Mellon first bragged when the stock market crashed “gentlemen buy bonds”, those who ran into the bond markets either were left with nothing as sovereign debt defaulted, or their US bonds were suddenly devalued by FDR and the gold redemption clauses were reneged upon.
    The Russian central bank tried to shore up the currency with a rate hike to 17%, but when that proved ineffectual, confidence in the bank evaporated and the sellers piled on. This is an example of the problems we face with all governments. Right now, people generally look to government with a demigod perspective that they are in charge and all powerful. I have been behind the curtain and also been on the other side of phone calls from various central banks in the middle of a panic. They are no more in control than you or I. All they can do is pound their chest and hope people will do as they preach.

    The collapse in Russia is being caused by a collapse in energy prices and sanctions. The Middle East has become addicted to high energy prices and thus they have increased their budget taking into consideration expectations of perpetual high energy prices. However, with all things, there is a cycle. Our original forecast back in 1998 that oil would rise to $100 by 2007 was at first laughed at. By 2000, even the Department of Energy wanted us to forecast energy prices for the nation.. What has to be understood is rather simple. Oil had to rise in price in order to generate (1) new improvements in extracting, and (2) alternatives. We saw that rally and by 2007 the year-end closing was $95.98. The rally ended with the highest closing coming on the 13 year mark in 2011 closing that year at $98.83 in line with the Economic Confidence Model.
    During the Great Depression, stocks rallied into 1929 but commodities peaked in 1919. The tangible commodity sector declined into 1932 coinciding with the stock low. That 13 year decline was profound. It wiped out much of the commodity industry. The correlated trends globally demonstrate that this is not some conspiracy of Zionist bankers, Illuminati, or a plot between Saudi Arabia and the USA to destroy Russia. We are dealing with a very serious crisis within the global economy that is by no means limited to Russia or oil.
    We are witnessing the unraveling of the world economy because we have pervasive corruption in government with political manipulations that are only concerned about winning the next election. There is no plan here for the long-term.
    Crude oil has two numbers we must now pay close attention to for year-end $75 and $57. A closing BELOW $57 warns that we are in serious trouble with oil and we may not see the final low until 2016-2017. The real critical level of support lies at $32. We should see this type of decline send crude back to retest the 1980 high of about $40 similar to gold retesting the $875 high of 1980. Welcome to the land of DEFLATION as all the promises of socialism with government taking care of you from cradle to grave are over and done with.

    Consequently, additional proof that this is not limited to Russia is just open your eyes. There is a crisis in ALL EMERGING markets. As the dollar rises and commodities decline, this is part of the cycle that sets in motion the Sovereign Debt defaults.
    Russia’s central bank raised its key interest rate to 17 percent in the early hours of Tuesday morning in an emergency move to halt a collapse in the ruble as oil prices decline and the country’s sanctions-hit economy slides towards recession. We are looking at a major decline within the world economy. This is part of Big Bang. We will produce a major and very serious report on this entire subject matter after the closing of 2014.


    From all outward apperences this is just gonna continue going downhill. If Russia gets fed up enough and pulls the plug on Europes oil supplies going into this winter, I think the western alliance will totally collapse and it'll be each country for themselves.

  3. #3
    Claims to have NEVER worn pink. Likely story.

    Twitchy's Avatar
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    This is not good.....
    It is, of course, obvious that speed, or height of fall, is not in itself injurious ... but a high rate of change of velocity, such as occurs after a 10 story fall onto concrete, is another matter.

  4. #4
    Stalkercat...destroyer of donkeys, rider of horse


    izzyscout21's Avatar
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    In Mother Russia, ruble collapse you.......
    WARNING: This post may contain material offensive to those who lack wit, humor, common sense and/or supporting factual or anecdotal evidence. All statements and assertions contained herein may be subject to but not limited to: irony, metaphor, allusion and dripping sarcasm.

  5. #5
    I have still yet to grow a brain
    Vodin's Avatar
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    I don't delve to deeply in the reasons of political things, just the results. I was understanding this is occurring because Saudi Arabia distrusts our Government to deal appropriately with Iran/Nuclear issue. And since the ruble is falling Russia is not able to aid/contribute effectively to Iran.

    Is this a correct possible assessment of this situation?

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