dagblog - Comments for "Making Putin Blink/The most incredible currency collapse I think I have ever seen "

I collect silver plate and

trkingmomoe — Fri, 19 Dec 2014 09:49:37 +0000

In reply to All I thought of is what it

I collect silver plate and never had the money for sterling so I remember the loss of some beautiful antiques by 18th and 19th century silversmiths that were truly artists.I only have a few small pieces of sterling that came in box lots that I bought years ago. My mother in law hoarded coffee in that panic and ended up giving some of it to me.

I know Venezuela economy is tied to oil also and was in trouble. Their problems have multiple causes too. Most of theirs started with the end of the last dictator.

What I find interesting about Russia is it is being run by Oligarchs. They have in place everything that is on the Koch bros. wish list. It is a far right's wet dream. They have a flat tax, the currency is tied to liquid gold and outlawed abortions. They are trying to run a colonial economy based on extracting resources from the land and disposable labor that is cheap. It is a system that is not very elastic and don't weather changes very well. It is prone to bubbles and busts. It is also very destructive.

All I thought of is what it

artappraiser — Thu, 18 Dec 2014 10:53:21 +0000

In reply to I can't help but think of

All I thought of is what it was like during the end of Jimmy Carter's presidency. People were buying cases of toothpaste and yes, appliances, like crazy, because it would only be more expensive tomorrow. The Hunt Bros. silver fiasco caused us to lose a lot of antique silver in this country to being melted down--I was just learning the auction business and we had to weight the silver and the weight value was often more than the antique value.

The gas lines, sometimes violent, and the even/odd rationing rationing that resulted, yikes that was really something crazy through. Tough getting used to having to plan your gas needs, the dawn of a new day. First time older middle class retired people got the chance to "play" with money, that is, invest it in anything other than a savings account. CD's and similar were new and the rates were crazy and they all had as much fun as if they had gone to Vegas. As I am sure you know, there's winners and losers to all this stuff and we've seen more than a few "oil crises" with vastly different end effects. The Japanese were buying up the country and they were bashing Japanese cars in Detroit.

The weird thing was, inflation and unemployment hung around for a much longer time than the side effect manic things like panic buying and Japanese-car-bashing--people just settled down and got used to it and handled it more rationally.

And as part of momoe's comment implied, sometimes" oil crises" both high and low are of the type that can end with the snap of a Saudi king's fingers, other times the are big game changers, or they can be anything inbetween.

Besides global warming, one thing that could be a significant long-term game changer is our development of natural gas resource to compete with the few oil "barons" left. And hey... fracking part of that...,global warming part of that....as i said below, it's all inter-related.

Great comment, momoe.

artappraiser — Thu, 18 Dec 2014 10:34:38 +0000

In reply to You are not the only one who

Great comment, momoe.

And both you and Mike got me thinking, and I thought, hmmm, oil countries--haven't paid any attention to Venezuela lately--and guess what--as I and a pal used to joke on another group blog like this long long ago--it's all inter-related

Mess in Venezuela Is One Reason Cuba Turned to the U.S.

By Ezra Fieser, Bloomberg News, Dec. 17, 2014

Cuba’s decision to agree to a prisoner exchange with the U.S. in return for easing a five-decade embargo comes as the Caribbean island's key benefactor, Venezuela, struggles to avoid default.

With Venezuelan President Nicolas Maduro unable to contain the world’s fastest inflation and the country’s bonds trading at default levels, Cuban President Raul Castro has been working to diversify the Communist country’s economy away from Venezuela, which provides about 100,000 barrels of oil a day in exchange for medical personnel.

“You only need to look at the economic disaster that is Venezuela and clearly it’s a bad bet to have all your chips in one basket,” [....]

Makes perfect sense, as Venezuela was often a significant helper in keeping the Cuban economy alive. Perhaps the Pope and Canada are getting a little too much credit.

This pairs perfectly with rmrd's comment on the Cuba thread.

You are not the only one who

trkingmomoe — Thu, 18 Dec 2014 08:44:57 +0000

In reply to I can't help but think of

You are not the only one who has thought of that.

Russia has been teetering on the brink of financial collapse for months. They needed oil to be $93 dollars a barrel to support their currency and government budget. They stopped exporting grains several years ago because of a drought in Western Russia. The same drought that started the problems in Ukraine. They now have to import wheat off of the world market to keep up with demand. There is inflation that has been going on because of the drought in food products and now inflation is climbing on everything. Their central bank a couple of weeks ago decided it could not prop up the currency anymore and started to let it float. The Saudi King decided to ride out the deflation of the oil bubble and let oil stay just under $70. Oil at $108 dollars a barrel was not sustainable on the world market and is now adjusting. That would have happened without sanctions.

For centuries rural Siberia has raised hard winter wheat during the summer and they burn off the tundra while it is still frozen to prepare new fields. The idea was to increase wheat production that was needed. The only thing was they set Siberia on fire in places that got out of control because of global warming. So now there are places that have burned down 3 feet of permafrost soil. So they are struggling with increasing wheat production and educating their farmers not to burn in remote areas. Russia's drought happened without sanctions.

I don't know where all this is going to go.

This is an example as to why global warming matters. It can be a destabilizing factor in world order. Russia set it sights on Ukraine which is Europe's bread basket.

I can't help but think of

Michael Wolraich — Thu, 18 Dec 2014 06:26:18 +0000

In reply to Making Putin Blink/The most incredible currency collapse I think I have ever seen

I can't help but think of Germany after the Treaty of Versailles. I'm afraid that a Russian economic catastrophe bodes ill for the world.

I read this a couple of weeks

trkingmomoe — Thu, 18 Dec 2014 03:24:09 +0000

In reply to Making Putin Blink/The most incredible currency collapse I think I have ever seen

I read this a couple of weeks ago the warnings that this was coming. The fall of the price of oil was one of the predictors in this.

Russia Is So Screwed

artappraiser — Wed, 17 Dec 2014 07:04:13 +0000

In reply to Making Putin Blink/The most incredible currency collapse I think I have ever seen

Russia Is So Screwed

By Jordan Weissmann, Moneybox @ slate.com, Dec. 16, 2014

[....] the hope was that, with higher interest rates, investors would finally stop pulling their money out of the country—that, as the New York Times's Neil Irwin put it, keeping money at a Russian bank would simply be “too good an offer to refuse.”

t wasn’t. Today, the currency plunge has continued, with the ruble at one point falling 35 percent, at 80 to a dollar. It has rallied a bit since then. A dollar is now worth about 70 rubles, which only looks good compared to the absolute crisis earlier in the day.

A crashing currency is a problem for a number of reasons. For one, it makes imports more expensive and stokes inflation. This is especially a problem for everyday Russians, since their country depends on imports for an outsized percentage of its food. At the same time, it's becoming harder for Russian businesses and financial institutions that borrowed in dollars to pay off their debts, which are getting ever more expensive, and dangerous, as the ruble slides.

But at this point, it’s not clear that Russia has any good options left at its disposal to stop the ruble from tumbling [....]

For more, see Weissmann's predecessor @ Moneybox:

Why the Russian economy is melting down
By Matthew Yglesias @ Vox.com, December 16, 2014