russian ruble collapsed

[OutHouse]

This is depression era stuff,
http://fortune.com/2014/12/15/the-rubles-collapse-is-disastrous-for-putin-and-bad-for-you-too/

 

[Genx87]

Putin couldn't pick a worse time to steal land from his neighbors.

 

[moonbogg]

From the link:

"A financial crisis would make the Kremlin more unpredictable, wreck western banks and heap misery on the Russian people"

It seems there is no collapse yet. Also, why is a collapse bad? Can't they just start using the money again after it un collapses?

 

[Brainonska511]

Putin couldn't pick a worse time to steal land from his neighbors.

Putin brought this on his own country. He's a man who longs for the "good" old days of the great, glorious Soviet Union, willing to sacrifice the present and future for the nostalgia of the past.

 

[Jaskalas]

It seems there is no collapse yet.

RUSSIA INTEREST RATE HIKE SHOCK: 17%!

Well... it would appear that they are taking drastic measures to stave off a collapse in progress.

 

[piasabird]

Something else is going on. I think the Saudi's and OPEC have been purposely selling oil for less in an attempt to collapse the Russian Oil Industry, and anyone else who is their competition, including the USA and the rest of the Western World. It is estimated that when the price of oil drops below $107 barrel, Russia may not be able to make money.

So the real question is, "Does Russia and the western world in Europe and the USA fix the price of oil higher just so they can make more money? i.e. Manipulate the Oil Market."

I think Oil Price Fixing is going on.

I also think this is a form of War. It is just as deadly as dropping bombs.

 

[piasabird]

So one solution would be for Russia to have a war with OPEC Nations to shut down their oil production. This would fix the problem right away for Russia, but it would really hurt countries that import oil from OPEC.

OPEC thinks they have the west over the barrel so to speak. However, They can also be wiped out. OPEC is really playing a dangerous game because they do not think the west or Russia will call their bluff.

 

[Spungo]

Putin brought this on his own country. He's a man who longs for the "good" old days of the great, glorious Soviet Union, willing to sacrifice the present and future for the nostalgia of the past.

It's funny because this applies to every country's idiot leaders 😀
We need to get back to the good old days when coloreds ...... and real rape ..... god damn Mexicans ........ and those Jewish .......

Well... it would appear that they are taking drastic measures to stave off a collapse in progress.

Idiots. They should listen to Paul Krugman. He says inflation is good because it gives greater time preference on current spending instead of future spending. Basically that means inflation leads to doomsday preppers who buy year supply of beans and toilet paper and.... oh 😉

Something else is going on. I think the Saudi's and OPEC have been purposely selling oil for less in an attempt to collapse the Russian Oil Industry, and anyone else who is their competition, including the USA and the rest of the Western World. It is estimated that when the price of oil drops below $107 barrel, Russia may not be able to make money.

It doesn't just collapse Russia. It also collapses USA and Canada. Processing Canadian tar sand is unbelievably expensive. Oil needs to be something like $80 for it to work. Right now we're down to $55 per barrel. Shale in North Dakota is even worse. Lots of those shale drillers couldn't turn a profit at $100 per barrel. What happens at $55? Layoffs, high yield bond market crash, doooooooom.
You can track the US effects of the oil collapse by looking at our junk bond market. A lot of junk bonds are issued to shale oil companies, so the bonds drop in value when there is a perceived risk, either real or imagined, of the bonds not being paid back.
https://www.google.com/finance?q=NYSEARCA:JNK&ei=n1qQVMH2F4fysQfR2IDYBw

What's interesting is that this is theoretically what gives value to currencies. Those pieces of paper in your wallet are actually debt instruments. Rather than being issued by an oil company, they are issued by a bank, so it's important for people to believe the bank issuing those notes is good for the money. This is why Argentina's money is worthless. Nobody has any faith in Argentina's central bank, so the notes issued by that bank are worthless. As crashing oil prices plunge Russia into a depression, people lose faith in the Russian central bank, and this contributes to the currency crisis. The only way to stop the inflation is to raise interest rates. We did the same thing in 1980. It caused one hell of a recession, but it had to be done.

 

[Sonikku]

I also think this is a form of War. It is just as deadly as dropping bombs.

ra's al ghul would be proud.

 

[Peppertronica]

ok.

 

[manimal]

isil has been selling gas at way below market values in the black market and instability in the middle east.


I bet christmas is gonna boom in the US with all the extra cash from peeps not having to buy expensive gas. This is having a stimulative effect on the economy hasnt it?

 

[brandonb]

I'm worried that if their economy collapses what the fallout would be. Russia has a decently sized military plus nuclear weapons. Would they start selling on the black market? Will they annex (more) countries as a way to help prop their economy? Go to war to strike those responsible? Fall into oblivion? Could really be anything.

 

[realibrad]

So one solution would be for Russia to have a war with OPEC Nations to shut down their oil production. This would fix the problem right away for Russia, but it would really hurt countries that import oil from OPEC.

OPEC thinks they have the west over the barrel so to speak. However, They can also be wiped out. OPEC is really playing a dangerous game because they do not think the west or Russia will call their bluff.

Things have changed.

The us has a Shale boom. Floods the market with cheap gas. People stop buying the more expensive oil from OPEC. Oil demand falls drastically. Price of oil then falls.

Russia tries to expand into Europe. They want to secure pipelines into Europe for their natural gas which is a major part of their economy. They expand into Crimeia for this purpose. Shortly, the collapse of oil and gas hits. This then makes the expected profits of selling natural gas to Europe disappear.

If the price of oil goes up, the US starts fracking again. Again the market get flooded with natural gas and the price goes down for both. OPEC and Russia are both in trouble right now. A war with OPEC countries would do very little to help anyone other than the US.

 

[realibrad]

I'm worried that if their economy collapses what the fallout would be. Russia has a decently sized military plus nuclear weapons. Would they start selling on the black market? Will they annex (more) countries as a way to help prop their economy? Go to war to strike those responsible? Fall into oblivion? Could really be anything.

Keep in mind that Russia has a very big reason not to sell off its weapons right now. If they sell off those weapons, there is a good chance one could get used against them. Russia has been dealing with terrorism for a while now, and there are many terrorist that would love to nuke Russia. Not to mention the political fallout ( 🙂 ) if they were to get caught.

 

[Spungo]

I bet christmas is gonna boom in the US with all the extra cash from peeps not having to buy expensive gas. This is having a stimulative effect on the economy hasnt it?

Oil plunged by 90% in 1930. I heard it did wonders for the economy back then.

Not to mention the political fallout ( 🙂 ) if they were to get caught.

You don't understand. If you try trashing a US politician, you might get an IRS audit. If you trash a Russian politician, your body will never be found.


edit:
I need to clarify my position on here. Yes lower prices lead to increased demand. That's just simple economics. My point is that the lower prices themselves are a reflection of lower demand. The prices are down because the global economy is an absolute train wreck right now.

 

[Jaskalas]

All those poor Russians, subjected to the whims of those invisible white males on Wall Street and their silly asian wives.

What did Wall Street do to Russia?

Why do we actively hate the one nation...

Soviet land grab at the end of WW2, cleaving Europe and Germany in half...
The long history of brinksmanship and cold war hostility...
The opposition to their modern day land grabs and threats over eastern Europe...

I'm sure we aren't making it easy to establish better relations, and I think the Iraq war seriously wounded Putin's belief in a useful international community, but Russia continues to take the actions of a stereotypical villain.

It also boils down to Russia investing in countries we'd rather bomb and invade. Take Syria for example. Russia works to exert influence and build allies, we act to destroy Russia's investment there. Our conflicts of interest are huge.

 

[mizzou]

Something else is going on. I think the Saudi's and OPEC have been purposely selling oil for less in an attempt to collapse the Russian Oil Industry, and anyone else who is their competition, including the USA and the rest of the Western World. It is estimated that when the price of oil drops below $107 barrel, Russia may not be able to make money.

So the real question is, "Does Russia and the western world in Europe and the USA fix the price of oil higher just so they can make more money? i.e. Manipulate the Oil Market."

I think Oil Price Fixing is going on.

I also think this is a form of War. It is just as deadly as dropping bombs.

:thumbsup:

 

[PricklyPete]

I don't understand the end game for the Saudi's and OPEC. Even if it cripple's the US oil business and the Russian economy...at some point they are going to need to cut back the amount they are pumping...and the oil in the US and Russia will still be there. In the meantime, shale drilling will likely get even cheaper as US companies are forced to find cheaper and cheaper ways to do it given the pricing. This seems like such a short term move for the Saudi's (as it seems to be pretty bad for the rest of OPEC).

 

[realibrad]

Oil plunged by 90% in 1930. I heard it did wonders for the economy back then.


You don't understand. If you try trashing a US politician, you might get an IRS audit. If you trash a Russian politician, your body will never be found.


edit:
I need to clarify my position on here. Yes lower prices lead to increased demand. That's just simple economics. My point is that the lower prices themselves are a reflection of lower demand. The prices are down because the global economy is an absolute train wreck right now.

Im talking about the political fallout in terms of other countries view. Anyone caught even thinking of selling a nuke would be killed in Russia, and nobody would hear about it for sure.

 

[realibrad]

:thumbsup:

Part right.

OPEC cannot collapse Russia's natural gas sector forever. OPEC can drop prices, by increasing supply, but once the price of oil goes back up, it becomes profitable to sell gas again.

Remember, the price of Oil only recently started to fall. It has nothing to do with OPEC suddenly wanting to attack Russia. Its in response to the US natural gas glut. OPEC would love to get prices back up, but cant. They cant, because people will just buy cheap natural gas again.

 

[Spungo]

Here's an interesting article confirming the ideas of Krugman:
https://translate.google.com/transl...wollen-ihre-Rubel-retten-article14169276.html

The article is about Russians rushing to spend money as quickly as possible before it depreciates. This is commonly called a "crackup boom" or "melt up". The velocity of money shoots through the roof, this leads to very high inflation even if the money supply is not expanding, asset prices go through the roof, and it eventually leads to a collapse similar to the housing bubble. It's basically pulling demand forward. Purchases that would normally happen over the span of 6 months end up happening over the span of 1 month. That 1 month looks like a strong economy, but it's followed by 5 months of stagnation and deflation. The bad kind of deflation.

 

[Jimzz]

I don't understand the end game for the Saudi's and OPEC. Even if it cripple's the US oil business and the Russian economy...at some point they are going to need to cut back the amount they are pumping...and the oil in the US and Russia will still be there. In the meantime, shale drilling will likely get even cheaper as US companies are forced to find cheaper and cheaper ways to do it given the pricing. This seems like such a short term move for the Saudi's (as it seems to be pretty bad for the rest of OPEC).

This is not OPECs doing. In fact they left output alone at the last meeting. If they decrease then people buy US/Russian/etc... oil/gas products.

People are driving less and more fuel efficient cars in the US. US production and demand of that are down as well. But a lot of those wells we started drilling 4-5 years ago are now putting out.

So more goods but less demand causes what is happening now. It just sop happens right after Russia took some land and pissed off a large part of the world. So they have a double edge as less money is coming in for oil/gas and sanctions are hurting them as well.

I just hope most people do not get stupid again and start buying massive SUV's and Trucks cause gas is cheap.

 

[werepossum]

isil has been selling gas at way below market values in the black market and instability in the middle east.

I bet christmas is gonna boom in the US with all the extra cash from peeps not having to buy expensive gas. This is having a stimulative effect on the economy hasnt it?

Yep. It's a real economic boon.

'Course, shortly most of the new-found money we're spending now will belong to China.

Keep in mind that Russia has a very big reason not to sell off its weapons right now. If they sell off those weapons, there is a good chance one could get used against them. Russia has been dealing with terrorism for a while now, and there are many terrorist that would love to nuke Russia. Not to mention the political fallout ( 🙂 ) if they were to get caught.

Yep. The only deep pockets buyers for nukes are radical Islamics, and a significant part of radical Islam is at war with Russia. A nuke sold to ISIS might well end up passing back to Moscow through Chechnya.

Oil plunged by 90% in 1930. I heard it did wonders for the economy back then.

You don't understand. If you try trashing a US politician, you might get an IRS audit. If you trash a Russian politician, your body will never be found.

edit:
I need to clarify my position on here. Yes lower prices lead to increased demand. That's just simple economics. My point is that the lower prices themselves are a reflection of lower demand. The prices are down because the global economy is an absolute train wreck right now.

On the first, oil prices plunged in '30 based on the economic collapse. Here oil prices are plunging mostly due to improved supply via new technology, not reduced demand.

On the second I fully agree.

 

[Mandres]

It's funny because this applies to every country's idiot leaders 😀
We need to get back to the good old days when coloreds ...... and real rape ..... god damn Mexicans ........ and those Jewish .......


Idiots. They should listen to Paul Krugman. He says inflation is good because it gives greater time preference on current spending instead of future spending. Basically that means inflation leads to doomsday preppers who buy year supply of beans and toilet paper and.... oh 😉



It doesn't just collapse Russia. It also collapses USA and Canada. Processing Canadian tar sand is unbelievably expensive. Oil needs to be something like $80 for it to work. Right now we're down to $55 per barrel. Shale in North Dakota is even worse. Lots of those shale drillers couldn't turn a profit at $100 per barrel. What happens at $55? Layoffs, high yield bond market crash, doooooooom.
You can track the US effects of the oil collapse by looking at our junk bond market. A lot of junk bonds are issued to shale oil companies, so the bonds drop in value when there is a perceived risk, either real or imagined, of the bonds not being paid back.
https://www.google.com/finance?q=NYSEARCA:JNK&ei=n1qQVMH2F4fysQfR2IDYBw

What's interesting is that this is theoretically what gives value to currencies. Those pieces of paper in your wallet are actually debt instruments. Rather than being issued by an oil company, they are issued by a bank, so it's important for people to believe the bank issuing those notes is good for the money. This is why Argentina's money is worthless. Nobody has any faith in Argentina's central bank, so the notes issued by that bank are worthless. As crashing oil prices plunge Russia into a depression, people lose faith in the Russian central bank, and this contributes to the currency crisis. The only way to stop the inflation is to raise interest rates. We did the same thing in 1980. It caused one hell of a recession, but it had to be done.

Good post, interesting stuff.

 

[Fern]

I'm inclined to believe the article overstates the extent of any global problems resulting from a melt-down of Russia.

As has been said before (or something similar) they're nothing but a gas station run by mafia. There isn't much to their economy besides oil. Given that oil production is not a concern, I think any negatives effects outside of Russia will be limited.

Fern