The ruble is collapsing

[ag]

This is not simply the sanctions - this is the interaction of the sanctions with the nature of the Russian state.

What did the sanctions do? They selected a few major Russian companies - CONTROLLED BY PUTIN´S CLOSE FRIENDS - and blocked their debt refinancing. Well, it is December, and some of that debt is coming due, so, as it cannot be refinanced, it has to be retired. What were the options? It could be argued that those companies have to deal with it themselves: these are major energy companies - they have cash; push comes to shove, they could sell off assets. Of course, that would hurt the FRIENDS, so it was out of question. Alternatively, the government could refinance from its reserves - there are enough reserves available. But, of course, that would make the reserves smaller, making further big government projects hard to pay for. In any case, these were the reasonable options.

Instead, the Russian government did something else. It decided to refinance those companies - but in rubles, not in dollars. So the companies would have to go to the market, get their dollars to retire their dollar debt. Great idea: the government can create as many rubles as it likes - and, well, yeah, there will be a devaluation and inflation, but that is just a redistribution from the suckers (i.e., the population at large) to the real people (the FRIENDS).

Well, guess what. On Sunday (?) the first of these companies (Rosneft) got its rubles, and on Monday it all collapsed. I am not even sure Rosneft had the time to go buy its dollars - but these days the suckers also know how to count, and they tried to get rid of their rubles ASAP.

There is no way any US government could have done so much damage to Russia with sanctions, as long as the Russian government were anything but a gang of dumb thieves.

[ag]

Yet another Obama foreign policy success!

 From the $5 billion spent to destabilize an elected government ...

You know, because the US also tried to spend $75 trillion to try to buy your used underwear, but you, proudly, resisted

[ag]

This is what far too few people realize. The real opposition in Russia at this point isn't liberal businessmen; it's far more overt and reactionary nationalists than Putin.

I would understand, why it would worry me - I have friends and family there, and, actually, barely over a year ago was seriously considering moving back, at least for a while (there seemed to be a possibility of a great job - he, who does not exist but is merciful did interfere in time). Naturally, I have a reason to care about this. But why would anybody else here care? Ok, a bunch of idiots would come to power in Russia and start killing Russians even more efficiently than Putin does. Under the circumstances, are there still people around who would care about Russians killing Russians? Isn't that our national sport?

[ag]

The questions is, whether the Russians decide to inflate out of trouble. If they do (and indications are there) further devaluation is inevitable - and there is nothing the Chinese can (or would want to) do about that.

[ag]

The questions is, whether the Russians decide to inflate out of trouble. If they do (and indications are there) further devaluation is inevitable - and there is nothing the Chinese can (or would want to) do about that.

This seems like the most likely outcome: Putin's committed to his military adventures and he can't afford to cut back on social spending + he won't attempt to raise revenue from his crony oligarchs. That seems like the recipe for printing money.

Well, there are oligarchs and oligarchs. The holdovers from Yeltsin regime (and there are still a few) are taxable. It is his own buddies that are off limits.

But, yeah, if I had to bet, I´d bet he inflates.