[radon1]

I bought into a Russian ETF today (ERUS) figuring an 11% drop in 1-day was over the top (it's down almost 40% since Nov.1st).

If THAT rate hike doesn't give the rubble some support, then interesting times are truly ahead.

Looks like you have all the reasons to petition Obama to have him sit down with Putie and negotiate. If they do, then you'll make fortunes within days if not hours.

Interesting, that the more RU-ETFs bottom out, the more people of all sorts who happen to buy in, have all the reasons to have Obama to explore solutions. Aren't the integrated free markets beautiful.

[Sixstrings]

Interesting, that the more RU-ETFs bottom out, the more people of all sorts who happen to buy in, have all the reasons to have Obama to explore solutions. Aren't the integrated free markets beautiful.

Indeed, peace through globalist capitalism one way or another.

Russia will fully recover long term, obviously, so there is quite a lot of money to be made at the moment.

(the only caveat is oil.. what's really going on with that.. how long will it be so low? and what are the causes? So those are open questions, can the Russian economy be what it used to be, without the higher prices.)

[AgentR11]

Six, the Russian economy "as it used to be" is gone. Forever. There is no getting back to a trading range currency paid for by the Russian Central Bank. The new Russian economy can become prosperous, but it will look nothing like the old economy of extremely cheap European imports, vacations, and subsidized London mansions...

Yes, it will be horrible, but they will have to pay $2.50 for 18 eggs.. just like me.

[Red Pill]

radon, I'm not an oligarch. I did not "bet the farm" on Russian equities.

It was a small wager on a sector that seemed oversold. I am not going to change my ideology in hopes that this wager pans out. If Putin continues down the bare chested he-man path, then I will be more than happy to take a loss on this wager and throw some coin at a leveraged ETF that bets against Russia (RUSS, for example).

I grow more disturbed by each passing day to learn how "respected" Putin is in Russia. How a country that can regularly put people on the ISS is still this stuck with strong man governance is a trip.

[sjn]

I grow more disturbed by each passing day to learn how "respected" Putin is in Russia. How a country that can regularly put people on the ISS is still this stuck with strong man governance is a trip.

If you find reality disturbing, perhaps you should check your beliefs and assumptions?

[Withnail]

(the only caveat is oil.. what's really going on with that.. how long will it be so low? and what are the causes? So those are open questions, can the Russian economy be what it used to be, without the higher prices.)

How is it that you haven't understood why prices are currently low, with all your braying about US shale oil production?

[AgentR11]

How a country that can regularly put people on the ISS is still this stuck with strong man governance is a trip.

Because its not a great trick to put people in LEO once you have experience doing it.

That said, going forward, I expect Russia or more precisely, China+Russia to do some things in space that we might be able to, but are completely unwilling to do.

Namely. Go and stay.
Delete the "and safely return" from space missions and a whole ton of stuff becomes possible and interesting. The ability to return to Earth is what really blocks our progress, if one were a believer in manned space flight. Strongman / authoritarian regimes are more likely to be able to attempt such a thing.

Personally... I think putting human bodies in space is just about the dumbest thing anyone could ever imagine doing. Robotics is the answer, not figuring out how to pee in space for 18 months.

[radon1]

I grow more disturbed by each passing day to learn how "respected" Putin is in Russia. How a country that can regularly put people on the ISS is still this stuck with strong man governance is a trip.

That's the other side of the coin - obviously, if Putie goes away, the ETFs may also sky rocket. And the more economic pain the public feels in Russia, the more pro-western it may become.

The whole sanctions affair looks like a clash of egos though.

[AgentR11]

From rbth:

It makes no economic sense to limit automobile imports at today's exchange rate, Russian President Vladimir Putin said at his annual press conference.
"At today's rate, [a ban on automobile imports to Russia] would simply make no economic sense because the rate has put everything in place by itself," he said.
Source: Russia Beyond the Headlines - http://rbth.com/news/2014/12/18/no_econ ... 42378.html)

Again, the current rate is not the anomaly; the trading range support of the past decade was the sin against capitalism and free markets. The current exchange rate may be very close to the real, unmanipulated value of the ruble; and long term, if Russia is to avoid the energy export trap of reliance, the ruble must float. The trading range has been destroyed, and will not be coming back. European manufactures will no longer be able to rely on a 40% margin advantage simply because of an artificially pegged exchange rate; if they want to sell stuff to Russians, they're gonna have to really compete on price, or they can leave the market and Russians will, of necessity, purchase domestically manufactured goods.

The era of comfortable oligarchs living in London, mooching it up at the expense of the Russian Central Bank... *is over*.

[Sixstrings]

The Swiss are now at a negative interest rate due to the Russian ruble collapse
http://qz.com/315621/the-swiss-are-now-at-a-negative-interest-rate-due-to-the-russian-ruble-collapse/

[radon1]

Interesting that the Ukrainian, Belorussian and Russian heads of the central banks are all women at the moment, just like Yellen. When things get tough, men cowardly flee and women bear the burden. Looks like a central banker's becomes women's profession and role.

[careinke]

Interesting that the Ukrainian, Belorussian and Russian heads of the central banks are all women at the moment, just like Yellen. When things get tough, men cowardly flee and women bear the burden. Looks like a central banker's becomes women's profession and role.

Seems to be working for Iceland.

[dissident]

http://fortune.com/2014/12/18/why-russi ... mping-oil/

Further, the high price of oil during the commodity supercycle, coupled with a high real exchange rate, led to a serious decline in the Russia’s manufacturing and agricultural sectors over the past 15 years. This correlation—termed by economists “Dutch disease”—lowered the Russian manufacturing sector’s share of its economy to 8% from 21% in 2000.

The longer the ruble remains weak, however, the less Dutch disease will rule the day. A lower currency means investment in Russian manufacturing and agriculture will make good economic sense again. Both should be given a real fillip.

In the most recent development, the Russian central bank has reacted by raising interest rates to 17%. On the one hand, this is meant to curb inflation. On the other, it’s an direct response to the short selling speculators who’ve been attacking the ruble. They now have to pay additional premiums, so the risk/reward ratio has gone up. Speculators are going to be much warier going forward.

The rise in interest rates mirrors how former U.S. Fed Chair Paul Volcker fought inflation in the U.S. in the early ‘80s. It worked for Volcker, as the U.S. stock market embarked on a historic bull run. The Russians — whose market has been beaten down during the oil/currency crisis — are expecting a similar result.

In short, while the current situation is not working in Russia’s favor, the country is far from down for the count. It will arrest the ruble’s slide and keep pumping oil. Its economy will contract but not crumble. The harsh reality is that American shale fields have much more to fear from plummeting oil prices than the Russians (or the Saudis), since their costs of production are much higher. Many US shale wells will become uneconomic if oil falls much further. And it they start shutting down, it’ll be disastrous for the American economy, since the growth of the shale industry has underpinned 100% of US economic growth for the past several years.

[Loki]

the growth of the shale industry has underpinned 100% of US economic growth for the past several years.

LOL

As for the rest of the article: "economic collapse will be good for Mother Russia." Have fun with that.

[AgentR11]

I don't see anything that looks like economic collapse though. I see numbers that represent a mild recession as one should expect from sanctions and the counter balancing Russian import bans. I see a currency that is now correctly priced, such that a bag of flour here costs what a bag of flour there costs. (ignoring ridiculous US fashionista bags of flour).

I see a source of continuous drain on the Russian Central Bank that has been permanently eliminated. A shot across the bow of speculators both short and long between the interest rate and the Rosneft refi method.

Seriously, the world in general took a far greater beating in 2009, and that could hardly be called collapse.

It seems to me the whole Russia / Ukraine thing is just filled to the brim with Wishcasters for impossible outcomes; and if those outcomes were possible, they should be terrified of them, not relishing them. Russia will not collapse; Kiev will manage to join EU-lite; Kiev will never control the Crimea; Russia will not cut off gas supplies to the EU; the EU will not stop buying gas from Russia. Putin will be reelected if he runs again; Kiev's democracy will remain owned by oligarchs with private armies.

The opportunity to gut the Eurasian thing by cheap, fantasy-ruble priced imports died with the ruble float. It literally, no longer matters. Ukraine can join, or not join the EU; if they buy something in Germany and drive it into Rustov via Ukraine to sell, the German item will simply be to expensive to beat the local alternative on price/value, and it won't sell. If they price it competitively, there will be no profit. The Russian Central Bank is no longer subsidizing that German import.

The ruble at 30.. .thats called a bubble, smushed and sustained by corrupt state policy, but artificial bubble none the less.
The ruble at 60.. honest, fair value. That's not collapse. That's victory.

And we served it to the twit in the Kremlin on a silver platter.

[Tanada]

I don't see anything that looks like economic collapse though. I see numbers that represent a mild recession as one should expect from sanctions and the counter balancing Russian import bans. I see a currency that is now correctly priced, such that a bag of flour here costs what a bag of flour there costs. (ignoring ridiculous US fashionista bags of flour).

I see a source of continuous drain on the Russian Central Bank that has been permanently eliminated. A shot across the bow of speculators both short and long between the interest rate and the Rosneft refi method.

Seriously, the world in general took a far greater beating in 2009, and that could hardly be called collapse.

It seems to me the whole Russia / Ukraine thing is just filled to the brim with Wishcasters for impossible outcomes; and if those outcomes were possible, they should be terrified of them, not relishing them. Russia will not collapse; Kiev will manage to join EU-lite; Kiev will never control the Crimea; Russia will not cut off gas supplies to the EU; the EU will not stop buying gas from Russia. Putin will be reelected if he runs again; Kiev's democracy will remain owned by oligarchs with private armies.

The opportunity to gut the Eurasian thing by cheap, fantasy-ruble priced imports died with the ruble float. It literally, no longer matters. Ukraine can join, or not join the EU; if they buy something in Germany and drive it into Rustov via Ukraine to sell, the German item will simply be to expensive to beat the local alternative on price/value, and it won't sell. If they price it competitively, there will be no profit. The Russian Central Bank is no longer subsidizing that German import.

The ruble at 30.. .thats called a bubble, smushed and sustained by corrupt state policy, but artificial bubble none the less.
The ruble at 60.. honest, fair value. That's not collapse. That's victory.

And we served it to the twit in the Kremlin on a silver platter.

I find your argument both cogent and rational, and it makes me a little sad to see the western media treating this situation like a triumph of Americanism Uber Alles.

When Reality smacks the west upside the head it is going to be like kissing a frog looking for your prince/princess and only finding you caught warts instead. There will be much gnashing of teeth and tears of anguish, and I hope nobody does something stupid out of frustration that the fantasy is collapsing instead of Russia.

[dissident]

Actually it was the "twit"'s policy to float the ruble and the removal of CBR interventions was to happen by 2016. America's coup in Ukraine moved the schedule up thanks to Sorosite speculative attacks on the currency.

The demonization of Putin is the equivalent of personal attacks by trolls. It is based on lack of any substantial arguments and is just a simple minded ad hominem. For example, it is routine to label Putin a populist. Yet his economic policy proves this to be utter BS. It has been systematically a mix of austerity and neo-liberalism (see the 13% flat tax, no splurging on social programs, etc.). Such policies are proven to be unpopular around the world and you could see Putin's popularity decline with time. The current surge is all thanks to the twits in Washington and their quislings in the EU.

BTW, all the Politkovskaya, Litvinenko and $40 billion in secreted cash conspiracy spew does not stand up to any analysis. For the clueless, compare to Latin American juntas of the 1970s and their treatment of dissidents.

[dissident]

https://www.youtube.com/watch?feature=p ... CY_wJCTloQ

Worth watching both parts. "Call me Dave" Cameron claims credit for the ruble exchange rate fall. What a putz.

[AgentR11]

Diss, yes it was the twits policy, and your account is correct (I did think the float was supposed to be complete sometime in 2015 though, if they moved it up from 2016, thats even more impressive).

I can admire his achievements, and still call him a twit because he's not serving US interests. Just ticks me off that we (west/NATO) botched it so badly over a port facility that has zero value to us. We were actually stupid enough to sail a German warship (port visit) into a Crimean port before all this got heated up. That's like playing poker with your own cards layed out for all to see, and everyone else hiding everything. The magnitude of the stupid that that took... I really can't quite get my thoughts around it. WHO thought that was a good idea? REALLY.

As to Cameron... well we bleeped the poodle in full daylight, with an audience... gotta say something, ANYTHING. Because Russia won't go belly up at 60; the EU can't harm Russia at 60, and China just got delivered the strategic victory of the epoch at our expense. History is going to be brutal to the current batch of Western leaders; they deserve a little razzing, but what they're gonna get in the history books of 2200 will be humiliating. And it'll get worse in the retelling.

Oh, and if you didn't get the memo.. China is encouraging Russia to use their currency swap agreements to stabilize the ruble... where it is. At 60. China can't finance the world yet, nor be the world's reserve currency; but they sure as heck can finance Russia's resource export state at 60, and make a huge profit, if the ruble becomes stable near 60. We'll see in the coming weeks.

[Sixstrings]

(the only caveat is oil.. what's really going on with that.. how long will it be so low? and what are the causes? So those are open questions, can the Russian economy be what it used to be, without the higher prices.)

How is it that you haven't understood why prices are currently low, with all your braying about US shale oil production?

Well, some are saying that the saudis will put shale out of business, pushing the price below profitability for shale.. which I don't believe, shale is here to stay..

I also wonder if the Saudis have increased production, or not, and if any of this was coordinated to tank the Russian economy. Which is a darn good cold war tactic, Reagan did the same thing.