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Campaign to end cold or hot war with Russia
Russia: Another Point of View USA December 8, 2014
Friends, for the remainder of 2014, I will send articles to help us examine the nature of the U.S.-Russia relationship and how it has developed over the past 130 years. Until we understand the differences in the evolution of these two cultures, we cannot hope to untangle the current picture which is now dangerous for the entire world. Until we understand the impact of public media on the relationship between the two countries, we will be hopelessly trapped in a mesh of misunderstandings and misinterpretations. We must find ways to hold journalists responsible for irresponsible headlines and faulty war-making scenarios. Sharon Tennison
Russian spy chief blames U.S., EU for ruble, oil price collapse
Ilya Arkhipov Bloomberg News USA December 4, 2014
The U.S. and its allies are seeking to change the regime in Moscow through sanctions and attacks on the ruble and the oil price, Russia’s spy chief said.
A decline of more than 30 percent in the oil price this year is caused partly by U.S. actions, Mikhail Fradkov, the head of the Foreign Intelligence Service, said after President Vladimir Putin’s annual address to parliament.
Foreign investment funds are “taking part” in ruble speculation via intermediaries, Fradkov, a former prime minister, said in an interview in the Kremlin. “Any speculation has specific schemes and the schemes have a number of participants,” he said.
The ruble has lost 39 percent of its value against the dollar this year, the world’s worst performance after the Ukrainian hryvnia, as the U.S. and the European Union imposed sanctions after Russia’s annexation of Ukraine’s Crimea peninsula in March. They also accuse Russia of providing military support to separatists in Ukraine’s eastern Donetsk and Luhansk regions, a charge Russia denies.
The U.S. and its allies want to oust Putin from power and achieve regime change, Fradkov said. “Such a desire has been noticed, it’s a small secret” he also told reporters. “No one wants to see a strong and independent Russia.”
The ruble weakened 1.8 percent to 54.1770 at 5:27 p.m. in Moscow, after Putin vowed that Russia would never back down over Crimea in his address to legislators at the Grand Kremlin Palace. The president pledged to punish speculators attacking the ruble, while he made no comment on the slump in the oil price in his 70-minute speech.
Sanctions are forcing Russia to focus on solving domestic issues, Fradkov said. The confrontation with the U.S. and the EU will continue until Russia’s adversaries learn to stop attacking the country and respect its geopolitical interests, he said.
It will take two to four years to reach the “more objective understanding needed for lifting some barriers and cooperation,” according to Fradkov.
A different point of view: Martin Hutchinson over at the Prudent Bear (“Oil free market is bad news for U.S.”) writes: “The fall in the oil price is caused by a fundamental shift in the market. Price is now being driven by supply, whereas previously it was driven by demand. This has happened before: the oil price fell from $27 a barrel at the beginning of 1986 to $10 at the year’s end, where it remained until around 2000, with only a short blip during the Gulf War. … The market and its Keynesian boosters have taken the fall in oil prices as yet another positive sign for the beleaguered U.S. economy. The cheerleaders are wrong.”
Items: The engineered decline in oil prices: Economic warfare is the West’s main weapon
Takis Fotopoulos Global Research Canada December 8, 2014
Visit this page for its appended links.
In the globalization era, economic warfare is the main weapon used by the Transnational Elite to integrate into the New World Order of neoliberal globalization any country resisting the loss of economic and national sovereignty that joining it implies. Its conclusion is that only the building of an economic and political union of sovereign nations, like the original conception of the Eurasian Union was, which would embrace the nations all over the world still fighting the NWO of neoliberal globalization, from Europe and Asia up to Latin America and the Arab world, could possibly create conditions of self-reliance and self determination and, at the same time, an alternative pole to the present criminal unipolar world.
In recent developments, it became clear that economic warfare is the main weapon used by the Transnational Elite, (TE- i.e. the network of the elites based mainly in the G7 countries which run the New World Order of neoliberal globalization), to subordinate Russia and integrate every other country still resisting the process, e.g. Iran and Venezuela. This includes not just the usual economic sanctions, or the blocking of new projects to facilitate distribution, like the South Stream project but, also, as the dramatic decline in the price of oil has shown in the last few months, the induced fall in its price. This was the case of the last OPEC meeting when Saudi Arabia was the main organ for the implementation of this plan.
In fact, the present dramatic fall in the price of oil is part of a long-term plan to force the ‘nationalist’ part of the Russian elite to submit to the Transnational Elite’s (TE) rule, despite the aspirations of the overwhelming majority of the Russian people that follows it. This was clearly shown when this majority enthusiastically welcomed the only real counter-attack so far against the continuing and intensifying attack by the TE against Russia, i.e. the re-integration of Crimea.
Therefore, only the building of an economic and political union of sovereign nations like the original conception of the Eurasian Union was, which would embrace the nations all over the world still fighting the NWO of neoliberal globalization, from Europe and Asia up to Latin America and the Arab world, could possibly create conditions of self-reliance and self determination and, at the same time, an alternative pole to the present criminal unipolar world. This is the only way to effectively disable the West’s economic weapon, which successfully led to the collapse of USSR and threatens a similar fate today to the aspirations of the Russian people for a sovereign Russia.
Below: Matt O’Brien is a reporter for Wonkblog covering economic affairs. He was previously a senior associate editor at The Atlantic.
Sorry, Putin. Russia’s economy is doomed
Matt O’Brien Washington Post, Wonkblog USA December 15, 2014
Visit this page for its embedded and related links, its chart and video.
A funny thing happened on the way to Vladimir Putin running strategic laps around the West. Russia’s economy imploded.
The latest news is that Russia’s central bank raised interest rates from 10.5 to 17 percent at an emergency 1 a.m. meeting in an attempt to stop the ruble, which is down 50 percent on the year against the dollar, from falling any further. It’s a desperate move to save Russia’s currency that comes at the cost of sacrificing Russia’s economy.
But even that wasn’t enough. After a brief rally, the ruble resumed its cliff-diving ways on Tuesday, falling another 14 percent to a low of 80 rubles per dollar. It was 60 rubles per dollar just the day before. The problem is simple. Oil is still falling, and ordinary Russians don’t want to hold their money in rubles even if they get paid 17 percent interest to do so. In other words, there’s a well-justified panic. So now Russia is left with the double whammy of a collapsing currency and exorbitant interest rates. Checkmate.
It’s a classic kind of emerging markets crisis. It’s only a small simplification, you see, to say that Russia doesn’t so much have an economy as it has an oil exporting business that subsidizes everything else. That’s why the combination of more supply from the United States, and less demand from Europe, China, and Japan has hit them particularly hard. Cheaper oil means Russian companies have fewer dollars to turn into rubles, which is just another way of saying that there’s less demand for rubles—so its price is falling. It hasn’t helped, of course, that sanctions over Russia’s incursion into Ukraine have already left Russia short on dollars.
Add it all up, and the ruble has fallen something like 22 percent against the dollar the past month, with 11 percent of that coming on Monday alone. As you can see below, the Russian ruble has fallen even further than the Ukrainian hryvnia or Brent oil has this year. The only asset, and I use that word lightly, that’s done worse than the ruble’s 50 percent fall is Bitcoin, which is a fake currency that techno-utopians insist is the future we don’t know we want.
Putin’s Russia, like the USSR before it, is only as strong as the price of oil. In the 1970s, we made the mistake of thinking that the USSR’s invasion of Afghanistan meant we were losing the Cold War, when the reality was that they had stumbled into their own Vietnam and could only afford to feed their people as long as oil stayed sky-high. The USSR’s economic mirage, though, became apparent to everybody—none less than their own people, who had to scrounge in empty supermarkets—after oil prices bottomed out in the 1980s. That history is repeating itself now, just without the Marxism-Leninism. Putin could afford to invade Georgia and Ukraine when oil prices were comfortably in the triple digits, but not when they’re half that. Russia can’t afford anything then.
Putin might be playing chess while we play checkers, but only if we lend him the money for the set.
Russian ruble’s fall: A classic ‘currency collapse’
Chris Matthews Fortune USA December 16, 2014
The decline of the ruble is the result of Western policy. The question now is how will Putin respond?
The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.
Normally, when countries find themselves in a situation like Russia’s, they turn to the IMF, which would provide funding and debt restructuring in exchange for the enactment of economic reforms. But as University of Oregon economist Tim Duy writes, it’s tough to see either the IMF swooping in to help an international pariah like Russia or Vladimir Putin submitting to any reforms imposed by the West.
So, how will Russia’s currency crisis affect the U.S.? It’s tough to say for sure. A recession in Russia won’t have much of an effect on the American economy, as the two nations conduct very little trade with each other. But make no mistake, the crisis in Russia today is at least partially a result of the diplomatic policies of the United States. We are seeing the kind of economic misery the U.S. and Europe aimed to inflict on Russia as a result of its aggression in Ukraine.
The question now is whether the economic pain will convince Russia to back down, or double down, in Eastern Europe. Weinberg, for one, worries that Putin will instruct Russian companies to renege on their foreign obligations. This could spell bad news for banks and investors across Europe and the U.S. that have loaned money to Russian companies, and it could allow Russia’s financial instability to infect other emerging markets and the already shaky E.U. economy.
How OPEC destroyed the Russian Ruble
Frances Coppola Forbes USA December 16, 2014
Visit this page for its embedded links.
The Central Bank of Russia (CBR) was doing everything right. Responding to recent oil price falls, it floated the ruble and allowed it to fall in line with the oil price, intervening only to smooth out sharp price fluctuations. It hiked interest rates to counter domestic inflation despite the weakness of the Russian economy, due (in part) to Western sanctions. It resisted political calls to intervene to defend the currency, even when it was accused of being an “enemy of the country”. It sought, and obtained, political backing at the highest levels for its actions.
The CBR’s Governor, Elvira Nabiullina – no doubt mindful of previous disastrous attempts to support falling currencies – expected that allowing the ruble to fall freely would enable Russia to ride out the storm without suffering catastrophic loss of reserves. If the oil price stabilized at say $65 a barrel, the ruble would also stabilize, the Russian economy would be down but not out and everyone would laud her as a heroine. But she reckoned without OPEC. Or rather, she misunderstood OPEC.
Despite appeals from its smaller members such as Ecuador and Venezuela for production to be cut, OPEC has allowed the oil price to fall freely. On November 27thit announced that it would not cut production. And on December 15th, the United Arab Emirates’ Energy Minister suggested that oil could fall as low as $40 a barrel.
This was disastrous. The CBR’s worst-case scenario for the Russian economy assumed the oil price would fall to $60 a barrel. A price of $40 a barrel was simply unimaginable. Russia’s economy is terribly dependent on oil: if the oil price falls so low, severe economic recession is inevitable and default becomes a real possibility. The ruble’s slide worsened, bond yields spiked and CDS rose exponentially as capital flight intensified.
At this point Nabiullina’s inexperience became apparent. Any other central bank governor faced with such carnage would have openly talked up the ruble and calmed fears of economic collapse and default, and would have ensured that politicians sang the same song. Media management is an essential skill for central bankers, but unfortunately it does not seem to have featured largely in Nabiullina’s training. And because of this, it all went horribly wrong.
This is Nabiullina’s Norman Lamont moment. But Lamont still had the ace of leaving the ERM up his sleeve. Has Nabiullina run out of ammunition?
Not quite. She is belatedly learning media management, it seems. Reuters reports that on Russian state TV this morning, the Governor described the ruble as “undervalued”, and said the central bank was ready to coordinate with the government to support its value.
The geopolitical aspects of this game make it impossible for a central bank to play it alone. Nabiullina made a terrible mistake yesterday, but today she has done the right thing. Her strategy has failed partly because OPEC played a harder game than she expected, and partly because the political tensions around Russia are spooking investors. Now she must mobilize the heavy artillery. In the end, responsibility for the economy rests with politicians, not central bankers. Capital controls will probably be needed to stem capital flight and restore confidence. Over to you, President Putin.
Here’s why the Russian Ruble is collapsing
Natalie Kitroeff and Joe Weisenthal Bloomberg Businessweek USA December 16, 2014
What’s the best-case scenario for Russians right now?
In an ideal world, Putin would see that his economy is crumbling (the weakening currency and surging interest rates make for a deadly combination of economic contraction and rampant inflation) and take steps to convince Europe and the U.S. to ease the sanctions. That would probably be enough to stem the panic and also offer real economic benefit. To do that, he’d have to dramatically pull back activity in Ukraine; frankly, that’s extremely unlikely. Putin’s adventures in Ukraine are very popular in Russia, and that’s the one thing he has going for him.
Worst case scenario? Are we there yet?
Out-and-out economic collapse and hyperinflation. It’s frightening to think what Putin might do in response to that, but the big fear is that he will become even more aggressive on the geopolitical front to persuade his people that Russia’s problems are being caused by an outside enemy and that the time is now to stand up militarily.
Below: Among the many positions in his long and varied career, Paul Craig Roberts is a former Assistant Secretary of the U.S. Treasury. Roberts also held the William E. Simon Chair in Political Economy at Georgetown University for a dozen years. As well, he was a senior editor with the Wall Street Journal. He is a prolific periodical writer and is the author of several books. Dr. Roberts produces articles every week for the public to read free of charge on his website, PaulCraigRoberts.org.
Is ruble collapse act of war-Paul Craig Roberts
Greg Hunter USA Watchdog USA December 17, 2014
You can watch Greg Hunter’s full interview with Paul Craig Roberts (38:54) from this page.
Former Assistant Treasury Secretary Dr. Paul Craig Roberts thinks the only thing that explains the plunge in the Russian ruble is that it is being attacked by America. Roberts contends, “It is not a currency crash in the sense there are no economic reasons for the ruble’s fall. Unlike the United States, which has a massive trade deficit, and if the currency markets were not rigged, the dollar would be collapsing, the Russian economy has a trade surplus. Therefore, there is no pressure on its currency for economic conditions.” Dr. Roberts goes on to say, “This is not some independent action of market forces. So, it’s either hedge funds, currency speculators like Soros, or it’s an Act of War on behalf of the United States government by the Federal Reserve or the Exchange Stabilization Fund. . . or possibly both hedge funds working with the federal government.”
Manipulating the markets, any market, is supposed to be illegal, but don’t count on the bankers going to jail. Dr. Roberts, who has a PhD in economics, thinks, “The big banks, the big Wall Street money, are essentially agents of the government. This is why they don’t get prosecuted. This is why they can break all kinds of laws, commit felonies and settle with a fine. This is what we’ve been watching in the financial arena. When these financial gangsters are caught, instead of being indicted and put on trial, they pay money.”
How could the Russians retaliate? Dr. Roberts says, “If the Russians wanted to do payback, it’s very easy for them. The next time all of these contracts, paper gold contracts, are dumped on the futures market, the Russians need to go and buy them all up, then demand delivery because there is no gold to deliver. The whole system would collapse. So, the Russians could cause a gold squeeze here anytime they want. . . . They would blow the system wide open because they can’t make delivery.”
On war, Dr. Roberts says recent resolutions passed in Congress certainly point to it. Dr. Roberts explains, “These resolutions demonize Russia and define it as a great threat. They call on Obama to arm the Ukrainians so we can use the Ukrainians to fight Russia. In other words, we are going to fight Russia down to the last Ukrainian. Of course, the Ukraine can’t fight Russia. The whole purpose of this is to have the Russians slap them down, then we can go to the Europeans and say see, see the Russians invaded and look how dangerous they are. You’re next. They will be in Berlin tomorrow. They’ll be in London by the end of the week. Paris will fall, and Rome will burn. We can’t wait to tell the Europeans this because the whole purpose of this is to completely break every kind of relationship, economic, political and cultural, between Russia and Europe. That’s what Washington’s goal is. That’s what it’s all about. This includes attacks on the ruble and sanctions. They are setting up a war that nobody can win, for what reason? For American superiority? You don’t have superiority if the world is awash in radioactive waste and there is nuclear winter. The climate has collapsed. The whole thing is an absurdity.”
Russia has enough resources to reverse ruble crisis – Medvedev
RT Russia December 17, 2014
Visit this page for its related links and its audio and video components.
Russia has enough market instruments to soothe the drastic ruble drop, which is a result of a “game on emotions,” said Russian Prime Minister Dmitry Medvedev.
Russia’s Government and the Central Bank of Russia have worked out a joint strategy to stabilize Russia’s financial market, Medvedev said at a meeting with leading officials from the Central Bank, the ministries dealing with the economy, and the largest Russian companies.
“As for all economic and production goals which you set, our country has foreign currency resources to attain them, you know this, there are market instruments needed to satisfy the specific demand,” he told his audience.
“We will coordinate actions”, he said, specifying that it would include an increase in foreign exchange bank refinancing, and balancing demand and supply of foreign currency through increasing provision of foreign currency liquidity if necessary.
Medvedev admitted there are certain fundamental factors behind the weakening ruble, like lower oil prices and no access to international financial markets, but said the psychological factor is huge.
“… the numbers that we’ve seen in the exchange offices over the past few days do not correspond to the real situation, and are way beyond the limits of the range comfortable for the economy and for the people,” he said, adding that emotions have played a big role in this situation.
The Prime Minister said this isn’t the first ruble turmoil for Russia.
“…we have an experience of anti-crisis decisions,” he said, adding he also held a meeting on the financial and economic situation on Tuesday.
Medvedev said everyone admits the ruble is now undervalued.
“Its course has pulled away from fundamental indexes and does not reflect the state of the economy,” he said.
Restoring order in the foreign exchange market is in everyone’s common interest, but stressed that Russia wouldn’t use any extreme measures, the PM said.
“Our future actions should be based on market mechanisms.”
One of the biggest worries for Russia’s Western partners is the risk of capital controls, which Russia has repeatedly denied it would introduce.
The MSCI investment group has warned that it would exclude Russia from the MSCI Emerging Markets Index should it start controlling capital flows or currency transactions.
The Central Bank of Russia (CBR) has spent more than $80 billion of its foreign exchange reserves since the beginning of 2014 propping up the ruble. As of the start of December, Russia’s FX reserves stood at $418 billion, which far exceeds the $16 billion Russia had saved up ahead of the 1998 default.
Russian ruble firms sharply as government pressures exporters
Vladimir Abramov and Alexander Winning Thomson Reuters Canada/UK December 17, 2014
Visit this page for its related links and video report (2:25).
MOSCOW (Reuters) – Russia’s ruble strengthened sharply on Wednesday after dramatic falls on the previous two days as the government pressured exporters not to hoard foreign-currency earnings and the central bank announced new measures to support financial stability.
The ruble was around 9 percent firmer against the dollar in volatile trading, with the market also boosted by central bank plans to ease concerns over approaching external debt repayments by Russian firms and stabilize the ruble.
Traders also saw targeted sales of foreign currency by exporters, in part because of upcoming monthly tax payments.
The ruble has come under heavy selling pressure this week, falling around 20 percent against the dollar at one stage on Tuesday, sparking fears of financial meltdown, despite the central bank hiking its key interest rate by 650 basis points.
The situation poses a major challenge for President Vladimir Putin whose popularity, based partly on providing stability and prosperity, is at risk from a ruble decline that is damaging Russia’s credibility among investors.
“Sooner or later they’ll flood the market with foreign currency, that’s what the market expects. We’re awaiting foreign currency from exporters, the finance ministry and central bank,” said Igor Akinshin, a forex trader at Alfa Bank in Moscow.
Prime Minister Dmitry Medvedev called on Russia’s top exporters on Wednesday to behave “responsibly” with their forex revenues after meeting with the heads of state exporters including Gazprom and Rosneft.
The Finance Ministry, meanwhile, said it had started selling foreign currency left over on its accounts.
Analysts say the ruble’s slide has meant exporters have held on to as much of their forex earnings as possible.
The slide was deepened early this week by concerns Russian oil major Rosneft, which recently issued 625 billion rubles ($10.11 billion) in bonds, was converting the money it had raised into foreign currency to meet debt repayments.
Rosneft has denied the money would be used to buy dollars and is expected to repay a $7.6 billion portion of a bridge loan that matures on Sunday.
Putin holds his annual end-of-year news conference on Thursday, when he will field questions from a studio audience and television viewers around Russia, and is expected to comment on the ruble’s decline of about 45 percent this year.
Putin failed in a state-of-the-nation address on Dec. 4 to offer any big ideas to turn around the economy – which is sliding towards recession after being hit by Western sanctions over the Ukraine crisis and by a fall in the global price of oil, on which the Russian economy is heavily dependent.
The ruble’s slide has stirred memories of the 1998 Russian financial crisis, when the currency collapsed within days.
Related: Shopping frenzy, social media fuss and jokes in Russia as ruble collapses
RT Russia December 17, 2014
Visit this page for its related links and its audio and video components.
Luxury cars, jewellery, fridges and TVs are selling like hot cakes. Russians are rushing to buy retail after ‘Black Tuesday’ – the day the Ruble lost 20% of its value. And you can watch it on social media.
Consumers scooped up iPhones and iPads at prices over $100 lower than in the US . Apple’s Russian website stopped online sales “due to extreme fluctuations in the value of the ruble…”.
Currency exchanges have been overwhelmed across Moscow and local media outlets are reporting get-rich-quick schemes.
Amid the ruble collapse Russian social media is exhibiting its usual knack for humor.
Shopping in Russia just got really weird
Natalie Kitroeff Bloomberg Businessweek USA December 17, 2014
The Russian ruble lost as much as 19 percent of its value on Tuesday, partly because of Western sanctions and plummeting oil prices, but also because of mass panic. Russians of all stripes—traders, car buyers, and furniture shoppers—are clamoring to get their money out of the country. The hysteria has turned a slow-burning problem into a nightmare, and has also led some unexpected things to happen, both in Russia and elsewhere. A few odd side effects of Russia’s currency horrors: