Wednesday, December 17, 2014

Financial Wars: Ruble's Tailspin Sparks Fears, The Engineered Fall Of The Russian Ruble

Rouble's Tailspin Sparks Fears For Russia

Berlin: A free-falling Russian rouble on Tuesday prompted fears that the nuclear-armed nation could be entering a deep economic recession with the potential for unrest, as citizens and investors try to get their hands on cash amid crippling international sanctions and sinking oil prices.
The Russian central bank tried to right the ship with a surprisingly large interest rate hike, to 17 per cent, before the nation's financial markets opened on Tuesday. But it was for naught as the already limping rouble fell another 20 per cent against the US dollar.

Problems in Russia circled the globe, with volatile trading in European financial markets and wild intraday swings on Wall Street.
The jump in Russian rates was designed to keep investors there from fleeing the country, sweetening their returns. Instead, investors shrugged it off and proceeded to head for the exits.

Adding to the pressure, White House spokesman Josh Earnest confirmed on Tuesday that US President Barack Obama will sign this week a bill that imposes further sanctions on the Russian economy. Ultimately, he said, "it will be up to President Putin to decide whether or not the economic costs are worth it to him and are worth it to the Russian people".
Ordinary Russians are emptying out ATM machines and standing in long lines to buy appliances and electronics, anything that might hold its value more than the sinking Russian currency. It's led to a strange, albeit temporary boom for Russian consumption.

 Putin's increasingly in a corner, and that's dangerous," said Mr Kliment, who does not expect a retreat from Ukraine. "Ukraine policy ... is a key part of Putin's political support now. To cave on that would be politically disastrous for him."

Mr Putin has largely been out of public view in recent days as the rouble tanked, but he's scheduled to address the nation in an end-of-year press conference on Thursday. By then, he'll know whether the rouble stabilises or whether he'll be drawn into actions to slow the economic bleed.

[This one comes with the usual disclaimers]

Despite the best efforts of the Russian central bank, the ruble is experiencing a dramatic fall. “We are seeing an economic crisis,” Natalia V. Akindinova, a professor at the Higher School of Economics, told the New York Times on Tuesday. “We are seeing a sharp devaluation of the ruble at a time when the central bank doesn’t have the reserves to influence the market, as it did in the past crises.”
“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,” writes Frances Coppola for Forbes.

Financial Class Using Oil Weapon to Tame Russia
The economic war waged against Russia by the financial elite and their partners is having a concrete and catastrophic effect.

“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,” writes Takis Fotopoulos.

It is not happenstance that Ali bin Ibrahim al-Naimi, Saudi Arabia’s Minister of Petroleum & Natural Resources, and the most influential voice within OPEC, decided to set in motion the price free fall now battering the Russian economy.
The establishment media declares the effort is a bid to win back market share, but this is little more than a cover story.
In fact, the manipulation of oil prices is an effort to destroy the Russian economy and set the stage for yet another Soros-esque velvet revolution.

It is worth quoting Fotopoulos at length:
It is therefore clear that Saudi Arabia’s action in precipitating the dramatic fall in the price of oil was far from accidental. Furthermore, it was hardly motivated by a Saudi attempt to keep its dominant share in the oil market, supposedly threatened by the US shale oil production.

This explanation, given by the ‘globalist’ faction within the Russian elite and the liberal “Left” in the West, was in fact an alibi used by the TE itself and the Saudis in order to disguise the real aim of this action. That is, the use of the price of oil as a highly effective weapon of economic warfare in order to force Russia and associate resisting regimes (like Iran and Venezuela) either to submit to the TE rule, or face a possibly severe economic recession (depending on how long the price of oil will be kept at very low levels) which could well lead to ‘velvet revolutions’ in all these countries and, possibly, to regime changes.

Wolf notes that oil played an instrumental role in taking out the Soviet Union. “The story this time is not so different,” he writes. He applauds the possibility oil may once again undermine Russia and make it subservient to the whims of Wall Street and the banksters.

There is, however, a caveat that will undoubtedly complicate the effort — Russia’s determination to upgrade its military in the wake of the crisis in Ukraine and moves by NATO and the West to aggressively militarize Eastern Europe.
In November, Michael Snyder wrote about the Russian military and its recent technological developments and how it is preparing for a showdown with the West, including the possibility of nuclear war.
Russia is a vastly different country than it was under a fossilized and atrophied Soviet Union. The question is: will it take engineered economic warfare and the possibility of its destruction in stride, or will it respond militarily?

There was nothing that survived during the Great Depression from stocks, bonds, commodities, tangible assets, to currencies. This is what we are facing. The complete meltdown of the world economy thanks to the convergence of many factors. Just about anything that can go wrong is going wrong and the end game is not looking pretty. As we can see from this chart of the bond market, while Andrew Mellon first bragged when the stock market crashed “gentlemen buy bonds”, those who ran into the bond markets either were left with nothing as sovereign debt defaulted, or their US bonds were suddenly devalued by FDR and the gold redemption clauses were reneged upon.

The Russian central bank tried to shore up the currency with a rate hike to 17%, but when that proved ineffectual, confidence in the bank evaporated and the sellers piled on. This is an example of the problems we face with all governments. Right now, people generally look to government with a demigod perspective that they are in charge and all powerful. I have been behind the curtain and also been on the other side of phone calls from various central banks in the middle of a panic. They are no more in control than you or I. All they can do is pound their chest and hope people will do as they preach.

We are witnessing the unraveling of the world economy because we have pervasive corruption in government with political manipulations that are only concerned about winning the next election. There is no plan here for the long-term.

Crude oil has two numbers we must now pay close attention to for year-end $75 and $57. A closing BELOW $57 warns that we are in serious trouble with oil and we may not see the final low until 2016-2017. The real critical level of support lies at $32. We should see this type of decline send crude back to retest the 1980 high of about $40 similar to gold retesting the $875 high of 1980. Welcome to the land ofDEFLATION as all the promises of socialism with government taking care of you from cradle to grave are over and done with.
Consequently, additional proof that this is not limited to Russia is just open your eyes. There is a crisis in ALL EMERGING markets. As the dollar rises and commodities decline, this is part of the cycle that sets in motion the Sovereign Debt defaults.

If you listen to conventional financial news, they’ll all tell you that you’d have to be insane to own anything in Russia right now—stocks, bonds, currency, etc.
They’ll tell you that the ruble is in freefall, and that the dollar is the place to be.
But if you have been a reader of this column for any length of time, you know that I am a very data-driven person.
So… just for kicks, I decided to dive into the numbers and make an objective comparison between the US dollar and the Russian ruble.

Also see:

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