Russian rouble now worth less than a penny or euro cent
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It's not about punishing the oligarchs but stopping Putin's imperialism. People aren't going to stand for funneling money into international "projects" when the country is collapsing. It's going to continue to be corrupt domestically.
They were practically at war during the days of communism when they should have been each others best friends, they seem friendly now but they're still suspicious of each other. They can turn on each other fast. China also exports more to Russia than it imports. At one point, it starts getting a bigger advantage to just take the east of Russia from them for China.
PhoenixDark
Banned
But guys, Putin is a mastermind and Obama is a weakling getting embarrassed!
Sidewinder
Member
I'm not really knowledgeable about Russia, but last I heard, the people stand behind Putin more than ever before since the proxy war against Ukraine began.
The more they suffer from these sanctions, the more they'll blame the West for everything and the more they'll support Putin.
It's about more than Putin's pet projects. Fast forward a few months and this is a modern Russian default. The price of oil isn't going back to over 100 any time soon. Any countries that built economies around oil at 100+ are royally fucked. Russia and Iran being two of them. The problem is basically Venezuela and all middle eastern countries except Saudi Arabia are in the same boat (I think the Saudis are okay at around 60? I forget. General consensus is US producers breakeven 60-70, and our economy doesn't rely on our newly found oil riches).
This significant instability will definitely have unpredictable consequences. Can these countries rebalance their budgets in time without major internal strife, and what governments take the place of the existing ones. What happens when some of these countries in volatile regions can't pay their militaries. What happens when imports in these countries stop entirely.
This change is far larger than any Russian-Ukrainian skirmish. It has massive international repercussions.
Yeah, US forced Russia to invade neighbouring countries. Then the US forced Saudi Arabia and several other oil producing countries to attempt to destroy America's shale sector as well as Iran. Damn those evil masterminds in Washington.
China has been amazing in all this. Negotiating for a new pipeline with Russia that Russia will pay for using credit from Chinese banks, after which the pipeline will then be used to sell gas at very low prices. Beijing knows it has the upper hand and will act accordingly.
Anyway, I hope the Russian people will end up making it through all this
. Nobody deserves the gang of thieves that currently is wrecking their country.http://informing.ru/2014/12/16/sechin-obvinil-navalnogo-v-obrushenii-rublya.html
Sechin, the person behind the Rosneft, who asked for fucking billions and TRILLIONS from the budget to help his company and who is directly responsible for devaluing rouble now blames Navalny and other liberal politicians on the crisis. Navalny was under house arrest for an year and half.
I mean, what the actual fuck. Jesus.
Sechin, the person behind the Rosneft, who asked for fucking billions and TRILLIONS from the budget to help his company and who is directly responsible for devaluing rouble now blames Navalny and other liberal politicians on the crisis. Navalny was under house arrest for an year and half.
I mean, what the actual fuck. Jesus.
Mr. Luchador
Member
I can't wait for Ted Dibiase's appearance on Monday Night Raw to blast Rusev with economical superiority and FINALLY give America the upper hand in it's struggle against Rusev's reign of terror.
Just another amateur here, but this is my understanding of it:
In simple terms currency speculation works the same way any commodity does: it's determined by what costumers are willing to pay. When speculators think a nation is in for tough times (meaning they might try to devalue their currency to boost exports, or default on loans) they will sell. If everyone agrees on this, and think it's likely to last, they will sell one after another for ever lower prices and create a rout.
That's what's happening in Russia right now. The CBR's (Central Bank of Russia's) failed attempt to boost the rouble caused today's freefall because it convinced the last holdouts that the situation is out of control.
If I'm wrong, anyone can feel free to correct me.
They won't have enough money to buy weapons to attack Europe.
thehypocrite
Member
What a wonderfully executed CIA operation. The movie writes itself
Getting serious is good that Putin is exposed as the corrupt hack that he is.
I wonder how this is going to end. As awful as it is I don't see any outcome where Russia will give back Crimea. As much as their invasion was illegal and the referendum was a sham, a majority of Crimeans probably would rather be in Russia. And it'd just be politically impossible for any Russian leader to survive giving it back at this point. But at the same time the West can't really let this sort of thing slide; Russia's leadership need to know they can't mess around in Europe.
At least this should stop Putin slicing off any more of Ukraine or Moldova.
I guess Dollar cents are the next milestone?
At least this should stop Putin slicing off any more of Ukraine or Moldova.
I guess Dollar cents are the next milestone?
Entryhazard
Banned
Putin is going nowhere, his people wil just blame west and jews
j_k_redtail
Member
Exchange rates are basically driven by supply and demand. If nobody wants rubles, the value of the ruble will drop.
You need a nation's currency to buy its goods. If nobody wants Russian exports, they won't 'buy' rubles, and the value if the ruble will similarly drop.
Sanctions and a weak domestic economy will reduce the demand for Russian goods. This leads to a drop in the ruble's value.
This means that Russians have less buying power internationally. However, this also means your dollar will 'buy' more in Russia, and will buy more Russian exports. People who want a deal on a vacation might be tempted to travel to Russia (edit: see: Rocket Scientist's post on page 1). This would increase the demand for rubles. So the value of the ruble is pulled up or down by demand.
China is a special case, because their currency is pegged to a certain fraction of the dollar. Your dollars go far in China, so they export a lot. This creates Chinese jobs, but limits China's buying power. This is why currency control is an important part of Chinese policy: it has sustained their economy for years.
Does that make sense?
King Cobra
Banned
Once again Russia loses against American capitalism.
industrian
will gently cradle you as time slowly ticks away.
This time last year you could buy 54 roubles with £1.
Today it's been as high as 120.
Crimea was quite a costly purchase.
China doesn't like anything that rocks the boat and creates uncertainty. They support their allies to save face though.
Today it's been as high as 120.
Crimea was quite a costly purchase.
China doesn't like anything that rocks the boat and creates uncertainty. They support their allies to save face though.
Sidewinder
Member
Yeah Crimea is a done deal, nothing is gonna change that now.
Unfortunately, I think this is the most likely situation too.
Increased US production and lower worldwide demand due to slowing economies.
gutter_trash
Banned
Russia focused its economy too heavily on oil n gas. Now with gas prices tanking so does their currency.
It's important for these nations to diversify.
It's important for these nations to diversify.
The Russian people have been here before, they have a lot of experience coping with a rotten economy. The news program mentioned above warned shops to not trade in other currencies but that's how Russians got through the worst of the late 90's and 00's, they traded in 'units' or said another way; euros and dollars.
A rouble in near free-fall is a matter of speculation and sentiment, it does not reflect the reality of what this currency represents; the resources, the infrastructure, the true power of Russia. It will be interesting to watch what manner of correction will take place.
For me there is one especially satisfying and reassuring aspect to this drama. It seems there are limits to what a country like Russia can get away with when it comes to invading other countries. If the U.S. and Europe can tank the Russian economy then that is a great deterent against future annexation... but time will tell.
A rouble in near free-fall is a matter of speculation and sentiment, it does not reflect the reality of what this currency represents; the resources, the infrastructure, the true power of Russia. It will be interesting to watch what manner of correction will take place.
For me there is one especially satisfying and reassuring aspect to this drama. It seems there are limits to what a country like Russia can get away with when it comes to invading other countries. If the U.S. and Europe can tank the Russian economy then that is a great deterent against future annexation... but time will tell.
American shale oil. Normally if any one nation drastically increases oil production, OPEC (a group of oil producing nations that try to manipulate oil prices, mostly unsuccessfully) decreases production to keep prices artificially high but Saudi Arabia decided to use this as an opportunity to bring the economic pain to Iran and Russia and also try to drive US shale oil out of the market.
A point should be made that it is slowing economies abroad. General view lately is the US is unquestionably the best house on a bad block. All indicators are pointing to improving US economic conditions while Europe stagnates, China slows (maybe more than we are being told), Japan gets desperate while entering recession, and Russia implodes.
SymbiantXenos
Member
It's inevitably our fault whatever happens to russia.
I joked that it'd reach 100 to 1$ by the end of 2014. This is close to reaching yeltsin levels of wtfness.
I joked that it'd reach 100 to 1$ by the end of 2014. This is close to reaching yeltsin levels of wtfness.
The Shogun
Banned
Saying this recent recession was caused by western sanctions does nothing but strengthen the party line that the west is at fault for everything going wrong in Russia. The truth is Russia's economic troubles are the result of years of questionable economic policy under Putin and were a long time coming.
Entryhazard
Banned
As if people in Russia will realize that
industrian
will gently cradle you as time slowly ticks away.
Is Iran's oil sector still under sanctions? Because their currency has not seen the immediate collapse of value in the same way that Russia's has.
That said: what the fuck happened in 11-12 September 2013? Iran's currency literally halved in value overnight:
Maybe so but Crimea is still separated from Russia. There is nothing contiguious, not even a land bridge. This is not usually how it's done. This causes a lot of problems.
Ehh, hello there. My mother voted for Putin in 2011 and now loathes both him and the whole Crimea situation with passion. I see many examples of that in my surroundings. We're not that stupid
Multiple factors affect the exchange rate.
- Capital flows
- The domestic savings rate
- Interest rates (Interest rate parity)
- Inflation. This will be tied with interest rates to a degree.
- Perceived risks of allocating capital within a country
- Labour/Capital efficiency
Is Iran's oil sector still under sanctions? Because their currency has not seen the immediate collapse of value in the same way that Russia's has.
That said: what the fuck happened in 11-12 September 2013? Iran's currency literally halved in value overnight:
This. That also explains why it has been so steady.
Entryhazard
Banned
Sorry I was speaking about majorities. Surely some are going to realize what's happening, but I'm still doubtful about the majority of the population. Manipulation of the media is really strong on the masses no matter how smart people are.
I don't debate that the world is inter-connected. Arguably, we would have off-the-charts growth right now if the rest of the world wasn't in such a shitty state. Our growth projections take into account the rest of the world coming to a crawl (we've been expecting continuing global economic turmoil for many months now). The only truly shocking development has been just how far oil has fallen. Sure, that may impact growth we were expecting in the energy sector, but we should still achieve 2.5% to 3% real GDP growth next year even with a slower energy sector. Cheaper oil should help many other sectors, both domestically and abroad.
industrian
will gently cradle you as time slowly ticks away.
Thanks for the link. I expected it to be either a drastic re-evaluation or the implementation of additional sanctions.
Amory
Member
Yes, thank you! Thanks as well to others who provided insight.
Eighty Deuce
Banned
...fuck
Maybe I'm being too optimistic, but I get the impression that people have finally realized that something's really wrong. It will be hard to worship Putin if there's nothing to eat. Time will show *shrug*
Resident_UA
Member
I think that it is important to mention that Russian Ruble is now about to beat Ukrainian Hryvnya as the wost performing currency of the year. So from this point of view lost territory and a war did less damage to Ukrainian economy than Putin managed to do to Russian.
Don Chalupa
Banned
I would disagree with this notion. With our artificial "recovery" (aka real wages going nowhere or down for almost half of Americans) drive by our energy boom, oil states already projecting slowdowns for next year, and with even more companies relying on junk debt (a market that is now crashing), 2015 will be a year of reckoning now that the Fed has pulled QE and has to stand by their rate hike talk (before they lose even more credibility).
I think this oil drop will be the catalyst for the next major market downturn, ala 2008, made worse by reckless money printing by most central banks in the world in the last 5 years.
Well, not a penny (anymore).
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