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Kelly Hopper
17th Dec 2014, 08:49
As someone relying on Russia to be successful to survive myself what is the future now their economy is in freefall?
Whilst it may seem beneficial that the money I spend there now goes twice as far as just a few months ago I can see massive inflation just around the corner and many businesses start collapsing along with unemployment and all the associated problems? This can only be bad news for all the world economies?
There are many expat pilots flying for the Russians. I wonder how many see their jobs under threat yet? I am getting very twitchy!

Fitter2
17th Dec 2014, 10:01
The Russians who employ pilots don't have their money in roubles or in Russia. The guy whose job (and possibly continued good health) is most at risk is good old Vlad.

Sallyann1234
17th Dec 2014, 10:07
What worries me about "good old Vlad" is that he is following the SOP for dictators in trouble, of pretending or creating external conflicts in order to create internal support.
We can see all the signs.

El Grifo
17th Dec 2014, 10:13
Echo that Sallyann :sad:

El G.

tony draper
17th Dec 2014, 10:14
Vlad is getting all the help he needs from the feckwits in Washington London and Brussels to justify his tanks pouring through the Fulgar Gap.
Probably his trains running on time as well.
We never feckin learn.
:(

probes
17th Dec 2014, 10:24
some think it could get a lot worse, and not just for the rouble:
By proclaiming ethnicity and religion as the basis for Russian statehood and aggression against its neighbors, Putin is inadvertently stoking the forces of secessionism in those parts of Russia that are historically and culturally Islamic.
In 2015, Vladimir Putin may witness his empire's death knell (http://blogs.reuters.com/great-debate/2014/12/16/in-2015-vladimir-putin-may-witness-his-empires-death-knell/)

sitigeltfel
17th Dec 2014, 10:33
Apple have announced they are stopping selling their products online in Russia due to currency volatility.

rh200
17th Dec 2014, 10:39
Vlad is getting all the help he needs from the feckwits in Washington London and Brussels to justify his tanks pouring through the Fulgar Gap.

Hardly, he hasn't had enough time to bring his forces up to a level to go down that path. Given time yes. Basically its falling apart quicker than he can compensate with options.

Does, that mean he will get desperate, maybe, but to much to loose I think.

By proclaiming ethnicity and religion as the basis for Russian statehood and aggression against its neighbors, Putin is inadvertently stoking the forces of secessionism in those parts of Russia that are historically and culturally Islamic.

That only applys for those outside the empire, those inside will get a healthy dose of Russian compassion and understanding.

probes
17th Dec 2014, 10:42
Apple have announced they are stopping selling their products
some car dealers as well.

ORAC
17th Dec 2014, 10:48
Russia risks Soviet-style collapse as rouble defence fails (http://www.telegraph.co.uk/finance/economics/11297770/Russia-risks-Soviet-style-collapse-as-rouble-defence-fails.html)

Russia has lost control of its economy and may be forced to impose Soviet-style exchange controls after "shock and awe" action by the central bank failed to stem the collapse of the rouble. “The situation is critical,” said the central bank’s vice-chairman, Sergei Shvetsov. “What is happening is a nightmare that we could not even have imagined a year ago."

The currency crashed to 100 against the euro in the biggest one-day drop since the default crisis in 1998 as capital flight gathered pace, despite a drastic rise in interest rates to 17pc intended to crush speculators and show resolve. Yields on two-year Russian bonds spiralled to 15.36pc, while credit default swaps are pricing in a one-third chance of a sovereign default. The shares of Russia’s biggest lender, Sberbank, fell 18pc. Neil Shearing, from Capital Economics, said the spectacular failure of the rate shock may bring matters to a head. “If a rise of 650 basis points won’t do the job, we are near the end. That means stringent capital controls,” he said.......

The rouble crash has doubled the cost of servicing nearly $700bn of external debt owed by Russian banks, companies and state bodies, mostly in dollars. They must repay $30bn this month and a further $100bn next year. Oil giant Rosneft has requested $49bn of state aid to weather the crisis. Traders in Moscow expressed fury at the central bank’s refusal to deploy its $416bn of foreign reserves to “turbo-charge” the defence of the rouble, though the authorities may have intervened in late trading. The currency clawed back some ground - to 69 against the dollar - after one of the wildest days of the modern era. Eugene Kogan, from Moscow Partners, said the Russian stock market faces “slow death” over the next six months as liquidity vanishes.

It is clear that the authorities are guarding their reserves jealously after burning through $100bn this year to little avail. BNP’s Tatiana Tchembarova said what remains no longer covers external debt, unlike 2008 when there was still ample cover. “In addition to being twice as levered, Russia is entering this crisis with lower reserves,” she said. The government has already committed $143bn in foreign reserve spending for next year. “We think that more will be required to support Russia’s banking system,” she said. The Kremlin had to spend $170bn rescuing the banks in the 2008-2009 crisis........

The central bank knows that Russia’s seemingly large reserves are a Maginot Line. Yet its attempt to defend the rouble only by raising rates is itself lethal. Even before the latest move it warned that the economy could contract by 4.7pc next year in a scenario of $60 oil prices. The slump may now be far worse as a violent monetary squeeze sends tremors through the banking system and sets off a wave of corporate bankruptcies. BNP Paribas said each 100-basis point rise in rates cuts 0.8pc off GDP a year later. Rates have risen 750 points in a week. Lars Christensen, from Danske Bank, said the Kremlin’s actions have led to the “absolutely worst possible outcome” since the botched move is enough to do grave damage, without solving anything. “They should have let the currency go rather than killing the economy. Investment is in freefall, and I fear this shock is going to be even bigger than in 2008-2009. Nothing suggests that oil is going to rebound quickly this time,” he said.......

There is no sign yet of relief from the oil markets. Brent crude fell below $59 a barrel on Tuesday for the first time since the depths of the Great Recession in 2009. The fallout from the crisis is already hitting banks linked to Russia and Ukraine. The share price of Austria’s Raiffeisen fell 8pc in Vienna. More than 240pc of its tangible equity is exposed to the region. The biggest external lender is France’s Societe Generale, with €25bn of exposure, or 62pc of tangible equity.

Contagion is spreading across the emerging market nexus, hitting countries such as Turkey and India that should be beneficiaries of lower oil prices. “There is absolutely no liquidity anywhere. The system is stressed and we have a crunch all over the place,” said one hedge fund trader. There are signs that the sell-off is becoming self-feeding as investors withdraw money from emerging market bond funds, forcing the funds to liquidate holdings into the downturn. In some cases managers are acting tactically, selling “proxies” such as Turkish debt given the difficulty of exiting Russian positions.

The rouble has now fallen 56pc against the dollar over the past year. Russian GDP has shrunk to $1.1 trillion, smaller than the economy of Texas, and half the size of Italy’s. The effect has been to double Russia’s external debt to at least 70pc of GDP, a high-risk level for rating agencies.

“A Russian downgrade to junk is only a matter or time,” said Tim Ash, from Standard Bank.

Russia’s economic crisis could easily end in yet another sovereign default (http://www.telegraph.co.uk/finance/economics/11297915/Russias-economic-crisis-could-easily-end-in-yet-another-sovereign-default.html)

.......As Fathom Economics points out, the country is stuck between a rock and a hard place. If its desperate bid to prop up the rouble is successful, its real rate of interest close to 8pc (once inflation is removed from the nominal 17pc), together with the deterioration in Russia’s terms of trade, will push the economy into what Fathom describes as “a recession deeper than that observed following the crisis of 1998”. If the rouble continues to fall and then remains at the current ultra-depressed levels, the short-term consequences for the economy would be less severe but a sovereign default would become “almost inevitable.” That sounds like a pretty accurate forecast.

As I have argued in the past, however, a severe but contained recession in Russia wouldn’t actually affect the West as much as is usually thought. Sure, Apple was temporarily forced to stop its online sales in Russia because of the wildly fluctuating rouble. But the pure economic data are reassuring. As Capital Economics points out, Russia is worth just 2.7pc of global GDP at market exchange rates and falling fast. It accounts for 2.2pc of the world’s stock of foreign direct investment and 1.7pc of world trade. It’s not nothing - but even a 10pc collapse in Russian GDP wouldn’t send the rest of the world into recession. There won’t be a financial crisis in the West either, though a few players will be hit: US bank lending to Russia accounts for only 0.1pc of US GDP. For Japan, the UK and Germany, the figures are less than 1pc of GDP. The City doesn’t depend on oligarch money - and in any case, turmoil in Russia might actually swell the numbers of still relatively wealthy Russians in London, even in the event of capital controls, spending money that has already been shipped out of the country.

Last but by no means least, the fact that some countries are suffering so much from the collapse in oil prices should not blind us to the fact that most economies - those that consume more oil than they produce - will benefit immensely. That said, the world does face two major risks from the Russian crisis. The first is that a nuclear nation could soon be engulfed in intense political turmoil and thus start to behave even more irrationally. The second is that other emerging markets could be contaminated, triggering intense chaos in bond, currency, equity and property markets, culminating in bankruptcies and mini credit-crunches. Under such a doomsday scenario, we would all be badly hit - but such an outcome remains pretty unlikely.

The outlook is grim for ordinary Russians - but the rest of the world should not panic just yet.

Andy_S
17th Dec 2014, 10:52
I can see massive inflation just around the corner and many businesses start collapsing along with unemployment and all the associated problems? This can only be bad news for all the world economies?

Actually, the Russian economy isn't nearly as big as some people think, being comparable in size to Italy's. It will cause some pain to companies who export to Russia, but on the whole their economic problems are little more than an inconvenience to the rest of the world.

The real problem is not economic, but political. As Sallyann says, Putin is already escalating the nationalist rhetoric in order to whip up patriotic fervor. Will there come a point where he decides he has nothing to lose economically but plenty to gain politically by invading neighbouring countries - all in the interests of protecting ethnic Russians from 'facists', of course.

arcniz
17th Dec 2014, 12:40
Apple have announced they are stopping selling their products online in Russia due to currency volatility.

Things must be getting kinda lonely, up there in the ISS.

rgbrock1
17th Dec 2014, 12:49
Tony D.

As someone who spent a considerable amount of time at the Gap (Fulda) I can assure you that if Vlad decides to send the Russian hordes over the Gap - which no longer really exists as the "border" is now quite a bit further east - that it will be no easy go for him or his troops.

Hopefully this never comes to pass. But with Vlad, ya never know.

Having said all that, I am of the opinion that in the near future Vlad will be removed from power in a coup, possibly by members of his "inner circle", and Dmitry Medvedev will once again assume the reins of Russia. (Hey, Dmitry is a big fan of Deep Purple. How bad of a guy can he possibly be with that in mind!!!)

rgbrock1
17th Dec 2014, 13:00
Andy S wrote:

Will there come a point where he decides he has nothing to lose economically but plenty to gain politically by invading neighbouring countries - all in the interests of protecting ethnic Russians from 'facists', of course.

Good point. However, invasion and an invading military require? Money. If Russia's economy implodes - which is foreseeable - then where will the money come from to do so? That's the $60,000 question!

Doors to Automatic
17th Dec 2014, 13:08
My worry is that he has some sort of mental breakdown and presses the button! How likely do we think that scenario is?

rgbrock1
17th Dec 2014, 13:12
Doors to Automatic:

Very unlikely but also not out of the realm of the possible. Scary as that thought is.

Fox3WheresMyBanana
17th Dec 2014, 13:15
I'd rate him as one of the most mentally strong World Leaders. He likely won't flip out, but he'd invade or press the button in a heartbeat if he thought it would work. However, he doesn't.
There's no true challenger, and Russians have been through worse. They'll all ride it out.

rgbrock1
17th Dec 2014, 13:23
Fox3 wrote:

There's no true challenger, and Russians have been through worse

Correct, there is no one true challenger. However, there are lots of oligarchs in Russia who are starting to get pissed off at the losses they're all incurring. Might not be long before some, or all, of them say "enough."

Doors to Automatic
17th Dec 2014, 13:23
I don't know much about safe-guards, but would military commanders be able to override a spurious launch command of a president who has lost the plot?

Fox3WheresMyBanana
17th Dec 2014, 13:29
Very true RGB, but Vlad will doubtless remind them of who made them oligarchs in the first place. And of whom the Army support. And who used to be Head of the FSB. And of what happened to Berezovsky, Litvinenko, Politkovskaya,.....etc.

Lonewolf_50
17th Dec 2014, 14:45
While I agree with Fox3 that Russia has seen worse than this, there is a combination of factors that will take some time to correct when the price of crude rises again ... which it always does.
The following is an excerpt of a longer article that had graphs that I can't post here. The five points regarding the Russian Economy are the original thoughts of Ian Bremmer, who is president of Eurasia Group and global research professor at New York University


Ruble Riot

Russia’s currency entered free fall this week, hitting a record low of 80 rubles to the dollar today before recovering slightly. The ruble has lost over half its value this year, making it the worst-performing currency among the 170 tracked by Bloomberg. Passed on the way down: the Ukranian hryvnia.

Recession Looming

Russia's economy has been slowing for some time, and is now poised to fall into recession. In early December, Russia's economy ministry was forced to revise its estimate of 1.2 percent growth for 2015 down to a 0.8 percent contraction. Since then, oil—which makes up 50 percent of government revenue—has continued to slide, falling below $60 this week. Russia's central bank warns of a contraction of 4.7 percent in 2015 if oil prices stay at that level on average.

Surging Borrowing Costs

The economic chaos is making it significantly more expensive for Moscow to borrow money. Dollar-denominated bond yields rose above 7.5 percent, meaning the cost of international borrowing for Russia is now higher than Rwanda, the Ivory Coast and Kenya, according to the FT. Russia's 10-year local bond yield, the interest rate the government has to pay to borrow, jumped more than 2 percent to 15.36 percent.

Brain Drain

In addition to money, Russia is bleeding talent, as ordinary Russians vote with their feet. In the first eight months of this year, Bloomberg reports, more than 200,000 people left Russia—more than any full year since Vladimir Putin took control.

Capital Flight

Russia is watching money head for the exits too. Capital outflows for 2014 are estimated at $134 billion, according to the Financial Times. 2015 is likely to see a similar exodus, with the Central Bank yesterday forecasting $120 billion in departing capital.

So far, economic chaos hasn't dented the popularity of Russian's president. Putin won “man of the year” this week for the 15th year running in a Russian poll. His aggressive foreign policy has only strengthened his domestic political standing. Russia's currency collapse is bad news for Russians, but for the rest of the world, the problem is more geopolitical than economic.

bnt
17th Dec 2014, 15:52
Good point. However, invasion and an invading military require? Money. If Russia's economy implodes - which is foreseeable - then where will the money come from to do so? That's the $60,000 question!
Similar things were said during the Great War, it was one reason why Churchill et al thought it would all be over by Christmas 1914. But Germany had been planning for the war, financially, since 1912 at least, and would not be bankrupted that quickly. The UK paid for their side of the war by various means (detailed here (http://www.bbc.co.uk/guides/zqhxvcw)) such as War Bonds, which they are still paying off (http://qz.com/290183/in-2014-countries-are-still-paying-off-debt-from-world-war-one/).

If Putin went to the Russian people with a wad of War Bonds to sell, I wonder how they'd react? It might lead to the proverbial "they held a war but nobody showed up" scenario. :}

probes
17th Dec 2014, 20:25
I'd rate him as one of the most mentally strong World Leaders.
Dunno. Looks more like one who said A, then had to verbalize B and C and now there's no shutting up any more.

OFSO
17th Dec 2014, 20:35
Apple have announced they are stopping selling their products

Feature on France 24 tonight showing how many Moscow shops selling luxury items have closed "temporarily" as they can't keep up with the exchange rate falling.

Re possible invasion of the West (yes, it is unlikely I know) what forces does that West still have in Germany ? Things have changed since my time there: I know the "kasernes" in Darmstadt which used to house the US military are now all used as housing for immigrants and their families, and down in Heidelberg there are block after block of abandoned US military housings which have been vandalised/fallen into ruin..

rgbrock1
17th Dec 2014, 20:40
OFSO:

As far as American forces in Germany are concerned many US Army forces folded up the Guidons a long time ago. I'm pretty sure that, for example, the 3rd US Armored Divison* (Spearhead) is long gone. But I do know the US Scare/Air Force still has a substantial presence in Deutschland.

* I was in an infantry unit (1/36 Inf. if memory serves me correctly) of the 3rd Brigade which was at Ray Kaserne in Friedberg. I believe Ray barracks is also a place for immigrant housing as well.

OFSO
17th Dec 2014, 21:02
Used to have surface-to-air missiles at the Stars and Stripes base at Griesheim. My colleagues who lived in the towerblocks there overlooking the base would report when they were readied. My colleagues - and the missiles - are long gone. So is Manfred, the best bartender in the world, who ran the 'Stripes Press Club. So when the Red Army arrives it will have to mix its own cocktails.

rh200
17th Dec 2014, 21:32
As anyone here from the miltary would know, before any serious incursion, there will need to be a long build up of forces and logistics. This is something that is hard to do these days without the other side knowing.

Doors to Automatic
17th Dec 2014, 22:08
He would be destroyed in a conventional war with the West - US military spending alone is 10x that of Russia. The problem is the nukes - I am guessing and would hope that anti-missile defense is now top priority for NATO but I don't think it would be any match against a full-scale launch, even though that would be suicide under MAD.

er340790
17th Dec 2014, 22:16
Never, ever bet against the Russians. := They work on much longer time-frames than the rest of us.

I forget who is was who said: "The Russian capacity for suffering is limitless."

Or words to that effect...

A lot of Russians already hold hard currency. That will go a lot further now. It could be a couple of years before any real hardship appears.

And their healthcare system is wonderful. As soon as you're sick, they shoot you! (Thank you Derek & Clive circa 1978.) :}

probes
17th Dec 2014, 22:16
He would be destroyedbut then - what's 'destroyed' these days? No internet? no electricity? Bank systems crashed? no food? 'just' dead?

er340790
17th Dec 2014, 22:20
Here you go:

https://www.youtube.com/watch?v=4PSmlH5Oy6Y

Still bloody funny! :}