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3rdRock

Russia Watch

Post by 3rdRock »

http://www.bbc.co.uk/news/world-europe-30322198
President Vladimir Putin has warned Russians of hard times ahead and urged self-reliance, in his annual state-of-the nation address to parliament.

Russia has been hit hard by falling oil prices and by Western sanctions imposed in response to its interventions in the crisis in neighbouring Ukraine.

The rouble, once a symbol of stability under Mr Putin, suffered its biggest one-day decline since 1998 on Monday.

The government has warned that Russia will fall into recession next year.

Speaking to both chambers in the Kremlin, Mr Putin also accused Western governments of seeking to raise a new "iron curtain" around Russia.

He expressed no regrets for annexing Ukraine's Crimea peninsula, saying the territory had a "sacred meaning" for Russia.
and from Reuters:
The currency has already lost a third of its value this year, capital flight is soaring, the fall in oil prices has blown a hole in state finances, and Russian companies and banks are scrambling to find dollars to pay foreign debts.
To borrow a line from an old blues standard, "something tells me we're in for some stormy weather".
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Post by clv101 »

It's maybe not the disaster it might seem. Remember Russia runs a significant trade surplus, falling value of the rouble will make their exports even more attractive. The fall in the price of oil has been balanced by the fall in the rouble so Russia still has plenty of rouble to settle internal debts. The price inflation of imported goods will make local goods more attractive...

It's not good news for Russia, but its not as bad as it might sound in my opinion.
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Post by Little John »

This strategy by the US and its Saudi allies/puppets may well backfire into the bargain since the Saudis are pushing the price down in the face of the rest of OPEC not agreeing to it. This could, quite conceivably, break OPEC. Basically, the Yanks seem content to push the world to the brink of MAD in order to hold onto global dominance. As Ken suggested the other day, they seem to be hell-bent on ensuring that if they can't have all the cake, no one gets any,
Last edited by Little John on Fri Dec 05, 2014 5:01 pm, edited 1 time in total.
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Post by emordnilap »

In one of his most powerful of posts recently, John Pilger warns us of the prospect of another major war.
The suppression of the truth about Ukraine is one of the most complete news blackouts I can remember. The biggest Western military build-up in the Caucasus and eastern Europe since world war two is blacked out. Washington's secret aid to Kiev and its neo-Nazi brigades responsible for war crimes against the population of eastern Ukraine is blacked out. Evidence that contradicts propaganda that Russia was responsible for the shooting down of a Malaysian airliner is blacked out.
[...]
An American general who heads Nato and is straight out of Dr. Strangelove - one General Breedlove - routinely claims Russian invasions without a shred of visual evidence. His impersonation of Stanley Kubrick's General Jack D. Ripper is pitch perfect.

Forty thousand Ruskies were massing on the border, according to Breedlove. That was good enough for the New York Times, the Washington Post and the Observer - the latter having previously distinguished itself with lies and fabrications that backed Blair's invasion of Iraq, as its former reporter, David Rose, revealed.

There is almost the joi d'esprit of a class reunion. The drum-beaters of the Washington Post are the very same editorial writers who declared the existence of Saddam's weapons of mass destruction to be "hard facts".

"If you wonder," wrote Robert Parry, "how the world could stumble into world war three - much as it did into world war one a century ago - all you need to do is look at the madness that has enveloped virtually the entire US political/media structure over Ukraine where a false narrative of white hats versus black hats took hold early and has proved impervious to facts or reason."
JP also takes on austerity, the propaganda against Assange, Saudi Arabia, the BBC, exposing them to light. What a man.
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Post by Tarrel »

clv101 wrote:It's maybe not the disaster it might seem. Remember Russia runs a significant trade surplus, falling value of the rouble will make their exports even more attractive. The fall in the price of oil has been balanced by the fall in the rouble so Russia still has plenty of rouble to settle internal debts. The price inflation of imported goods will make local goods more attractive...

It's not good news for Russia, but its not as bad as it might sound in my opinion.
Given the basically sound state of Russia's finances, here's an interesting thought:

http://www.goldmoney.com/research/analy ... y-solution
Russia faces the reality that pricing the rouble in US dollars through the foreign exchanges leaves her a certain loser in a currency war against America and her NATO allies. There is a solution which was suggested in a recent paper by John Butler of Atom Capital, and that is for Russia to link the rouble to gold, or more correctly put it on a gold exchange standard*. The proposal at first sight is so left-field that it takes a lateral thinker such as Butler to think of it. Separately, Professor Steve Hanke of John Hopkins University has alternatively proposed that Russia sets up a currency board to stabilise the rouble. Professor Hanke points out that Northern Russia tied the rouble to the British pound with great success in 1918 after the Bolshevik revolution when Britain and other allied nations invaded and briefly controlled the region. What he didn't say is that sterling would most likely have been accepted as a gold substitute in the region at that time, so running a currency board was the equivalent of putting the rouble in Russia's occupied lands onto a gold exchange standard.

Professor Hanke has successfully advised several governments to introduce currency boards over the years, but we can probably rule it out as an option for Russia because of her desire to ditch US dollar relationships. However, on further examination Butler's idea of fixing the rouble to gold is certainly feasible. Russia's public sector external debt is the equivalent of only $378bn in a $2 trillion economy, her foreign exchange reserves total $429bn of which over $45bn is in physical gold, and the budget deficit this year is likely to be roughly $10bn, considerably less than 1% of GDP. These relationships suggest that a rouble to gold exchange standard could work so long as fiscal discipline is maintained and credit expansion moderated.
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Post by Tarrel »

Actually, given the sabre-rattling coming out of the US at the moment, we are probably seeing a slow, inexorable slide to conflict not seen since the years leading up to WW2. Everybody know it was coming, but nobody seemed able to stop it. It was like a cloud sitting over everything. Orwell describes it well in his novel; "Coming Up For Air".
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Post by Little John »

I agree Tarrel.
3rdRock

Post by 3rdRock »

I hate to say it but I'd also have to agree with Tarrel.

The future no longer looks bright. :(
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Post by adam2 »

Don't worry.
"one of our lads is worth a dozen of their ill trained conscripts"
"it will probably be over by Christmas"
"best to enlist quickly, or you might not see any action"
"Installers and owners of emergency diesels must assume that they will have to run for a week or more"
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Post by Tarrel »

Call me paranoid, but I have actually identified likely nuclear targets in our neck of the woods and thought about fallout sheltering. Is this wrong? Perhaps I should take the "bear the chest and get an instant suntan" approach.
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Post by Tarrel »

Actually, for me the most frightening aspects are:

a) In our hearts, I think most of us realise that civilisation and our current way of life are stuffed anyway, so there is an element of "what have we got to lose?". This is in contrast to previous wars in which both sides saw some kind of outcome or future worth fighting for.

b) Future civilisations (if any) will look back and judge us as the "bad guys" who kicked it all off ("us" being Western / OECD / NATO - however you want to slice it; the ones who have had it all for the past few decades, and don't want to give it up or share it).
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Post by adam2 »

Tarrel wrote:Call me paranoid, but I have actually identified likely nuclear targets in our neck of the woods and thought about fallout sheltering. Is this wrong? Perhaps I should take the "bear the chest and get an instant suntan" approach.
Very sensible IMHO, a nuclear war is not that likely IMO, but it could happen and to prepare is sensible.
Apart from any possible conflict with Russia, there is also the small but real risk of terrorists or rogue states using the Bomb.
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Post by raspberry-blower »

adam2 wrote: "it will probably be over by Christmas"
It was all over before Christmas. Trouble was, they never specified which Christmas :twisted:

Meanwhile, someone gets it. Dennis Kucinich emailed his subscribers with this message: No to war, Hot or Cold, with Russia
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
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Post by Tarrel »

there is also the small but real risk of terrorists or rogue states using the Bomb.
Less of a problem for us, as we're in a rural location, well away from cities. Likely targets near us are classic strategic military ones (e.g. RAF Lossiemouth) which, I'm guessing, would be early hits in a big showdown.
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Post by raspberry-blower »

Tarrel wrote:
clv101 wrote:It's maybe not the disaster it might seem. Remember Russia runs a significant trade surplus, falling value of the rouble will make their exports even more attractive. The fall in the price of oil has been balanced by the fall in the rouble so Russia still has plenty of rouble to settle internal debts. The price inflation of imported goods will make local goods more attractive...

It's not good news for Russia, but its not as bad as it might sound in my opinion.
Given the basically sound state of Russia's finances, here's an interesting thought:

http://www.goldmoney.com/research/analy ... y-solution
Russia faces the reality that pricing the rouble in US dollars through the foreign exchanges leaves her a certain loser in a currency war against America and her NATO allies. There is a solution which was suggested in a recent paper by John Butler of Atom Capital, and that is for Russia to link the rouble to gold, or more correctly put it on a gold exchange standard*. The proposal at first sight is so left-field that it takes a lateral thinker such as Butler to think of it. Separately, Professor Steve Hanke of John Hopkins University has alternatively proposed that Russia sets up a currency board to stabilise the rouble. Professor Hanke points out that Northern Russia tied the rouble to the British pound with great success in 1918 after the Bolshevik revolution when Britain and other allied nations invaded and briefly controlled the region. What he didn't say is that sterling would most likely have been accepted as a gold substitute in the region at that time, so running a currency board was the equivalent of putting the rouble in Russia's occupied lands onto a gold exchange standard.

Professor Hanke has successfully advised several governments to introduce currency boards over the years, but we can probably rule it out as an option for Russia because of her desire to ditch US dollar relationships. However, on further examination Butler's idea of fixing the rouble to gold is certainly feasible. Russia's public sector external debt is the equivalent of only $378bn in a $2 trillion economy, her foreign exchange reserves total $429bn of which over $45bn is in physical gold, and the budget deficit this year is likely to be roughly $10bn, considerably less than 1% of GDP. These relationships suggest that a rouble to gold exchange standard could work so long as fiscal discipline is maintained and credit expansion moderated.
It appears that Alaisdair Macleod is on to something here.
Very few people understand what Putin is doing at the moment. And almost no one understands what he will do in the future.

No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold.

Putin is not shouting about it all over the world. And of course, he still accepts US dollars as an intermediate means of payment. But he immediately exchanges all these dollars obtained from the sale of oil and gas for physical gold!
Grandmaster Putin's Golden Trap
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
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