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Serious Economic Crisis Looms In Russia, China May Help

Posted by Soulskill on from the blame-the-bears dept.

jones_supa writes: Russia is facing a "full-blown economic crisis," a former finance minister has warned, as the country is forced to take emergency financial measures. The economy has been battered by a wave of sanctions (set by other countries as a result of tensions over Ukraine), geopolitical uncertainty, and falling oil prices. Analysts have warned that the Russian economy will not improve in the long run until the aforementioned conditions have also improved. The Central Bank of Russia said that a plan to loan Trust bank an amount of up to 30bn rubles ($54m) had been approved. Trust bank has run a series of advertisements featuring actor Bruce Willis in Russia, along with the ironic quote: "When I need money, I just take it." Anna Stupnytska, an economist at Fidelity Solutions, said that "the risk of a sovereign default is low, it's the corporate sector where the main vulnerabilities lie, and banking in particular. Due to sanctions, companies cannot refinance their debt as access to international markets has been essentially cut off." Reader hackingbear adds: Two Chinese ministers offered support for Russia as President Vladimir Putin seeks to shore up the plummeting ruble without depleting foreign-exchange reserves. Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of the yuan for bilateral trade would have the greatest impact in aiding Russia. Western governments and experts have been criticizing China for restricting exchange and suppressing the value of its currency, even though anyone who lived in China during the 1990's knew that the value of the yuan was cut to align with the (vibrant) black market. But as grandma has warned us, we should be careful of what we wish for. China has greatly sped up the relaxation of currency exchange and is promoting the yuan as an alternative to the dollar for global trade and finance. They've signed currency-swap agreements with 28 other central banks to encourage this. Once accomplished, and backed by China's growing military might, Renminbi would be a formidable competitor to U.S. Dollar, which would hamper the U.S's ability to borrow almost freely with banks around the world.

36 of 265 comments (clear)

  1. Re:"Looms" is not a transitive verb by MarcNicholas · · Score: 3, Funny

    It Soviet Russia, verbs transitive you!

  2. And all the meantime, we are so worried about... by davydagger · · Score: 3, Insightful

    And the whole time we are super worried about North Korea, and Russia....

  3. I never have understood by msobkow · · Score: 3, Insightful

    I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

    I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

    --
    I do not fail; I succeed at finding out what does not work.
    1. Re:I never have understood by bledri · · Score: 5, Informative

      I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

      I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

      You can thank Harry Dexter White for that. (And if you're American, you should thank him. Otherwise, maybe not.) See: The Battle of Bretton Woods. It really is pretty fascinating.

      --
      Some privacy policy Slashdot.
    2. Re:I never have understood by Anonymous Coward · · Score: 4, Interesting

      If you do not understand the world's fetish with the U.S. dollar, you do not understand the state of the world after WWII. The wealth of the U.S. compared to the rest of the world at that time was staggering. Most of the developed world was in ruins. Only the U.S. remained relatively untouched by the war. The U.S. started mortgaging its future during the Reagan era, but it was the two Bush presidencies that did the most damage. Our deficit spending is now coming home to roost.

    3. Re:I never have understood by lgw · · Score: 4, Interesting

      The dollar is much like capitalism and democracy: it's the worst imaginable choice, except for everything else that's ever been tried. That's really it: the US government is just less effective at ruining the dollar than every other central bank for a major currency. Much of the current value of the euro is simply it's position as "second lest awful currency", a hedge against a reckless Fed.

      When the dollar looked rough a few years back, interest in gold perked up, and interest in the Swiss franc bloomed, but the Swiss were apparently uncomfortable with the idea of becoming a reserve currency, and committed explicitly to falling with the euro. Odd choice, but there it was.

      If the EU ever finishes collapsing, all the sovereign debt in the region blows up taking the Euro with it (it's only a question of when), and then finally recovers and regains financial credibility, then finally the dollar might be displaced, Or if China has it's inevitable revolution, and happens to emerge as a capitalist democracy, or when India or Brazil finally reach first-world status nation-wide. we might also have other credible currencies. But for now, the dollar is pretty much it.

      That's not to say the dollar can't be destroyed if the Fed tries hard enough. But over the past downturn they were actually quite clever: while they were printing ~$2 T in no money via QE, they were removing ~$2T in money supply via bank reserves (while we continue with a 0 reserve banking system, the Fed paid attractive-enough interest that banks voluntarily increased their reserves to unprecedented levels). And the Fed did actually wind down QE. I'm still waiting for the other shoe to drop, when that ~$2T in "Excess reserves" comes back into the money supply and turbo-charges inflation, but hopefully that will just be Carter-like, and not a currency collapse.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    4. Re:I never have understood by FooAtWFU · · Score: 4, Interesting

      Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

      See, you used two words in that sentence. One of them is economy, the other is currency. They're related, but they're not the same. The thing that matters to most US residents is the economy -- specifically that it will be growing enough that it's possible to find a job in it which will secure a certain amount of output to secure one's well-being. (Residents saving for retirement benefit from both). The thing that matters to someone who borrow or lend or hold dollars isn't the economy per se, it's the fact that he can use that dollar in the future to buy a predictable amount of goods and services: price stability. (Stability is better than an increase in value of those dollars, because borrowing and lending need to balance each other out... besides, if you really wanted returns you'd find a real investment, not cash.)

      The US has flirted with price stability issues in the past (look at the 1970s and early 1980s), but not to the extent that Russia is experiencing right now. Russia has issued additional rubles through the state-backed Rosneft bond offering (a bailout averting a bankruptcy for one of Putin's top cronies) which was the proximate cause of the ruble free-fall, and because of sanctions, falling oil prices, and general economic decline outside of the oil sector, the ability of a ruble to purchase valuable goods and services (like oil) in the future is in question. China, meanwhile, has its own set of currency controls (hence a thriving black market in RMB-USD) and central-bank interventions of a scope and magnitude which make QE and QE2 look small.

      So what else are you going to use? Euros? No way, I thought you were worried about stagnation and deficits and stuff. Gold? Oh, yeah, obviously it's been an absolute MODEL of price stability lately, hahahahahahahahahaha... Bitcoin? Makes gold look good. Pounds sterling? Mmmaybe, in a pinch. Then most of the other currencies are on the small side, so it's harder to use them in high volumes.

      --
      The World Wide Web is dying. Soon, we shall have only the Internet.
    5. Re:I never have understood by lgw · · Score: 3, Interesting

      I wish I knew a good one! Most places are as crazy as ZeroHedge, in one direction or another. I read MarketWatch, but more to keep abreast of market fashion than reality (never read a stock market site for economic news).

      The most useful stuff I've ever read on economics was the old-school stuff: on the business cycle, not just boom-bust but which sectors recover in which order - what leads recovery, and what's big when the end of the boom is near, and what survives best during the bust. The history of different kinds of currencies and the problems the had. The various big name economists from the first half of the 20th century, now that we can see the actual economic growth in various countries that seem to follow on or another of them. Everything old is new again.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    6. Re:I never have understood by NotDrWho · · Score: 3, Informative

      I never have understood the world's fetish with the US dollar.

      It stays strong because if anyone is stupid enough to speak out against it, we make them regret it.

      Don't fuck with the U.S. Dollar.

      --
      SJW's don't eliminate discrimination. They just expropriate it for themselves.
    7. Re:I never have understood by Cyberax · · Score: 5, Insightful

      That's not to say the dollar can't be destroyed if the Fed tries hard enough. But over the past downturn they were actually quite clever: while they were printing ~$2 T in no money via QE, they were removing ~$2T in money supply via bank reserves (while we continue with a 0 reserve banking system, the Fed paid attractive-enough interest that banks voluntarily increased their reserves to unprecedented levels).

      That's not true. While Fed pays some interest on the reserves it also asks to pay interest on the loans. They are pretty much the same.

      So no, the other shoe won't drop. The accumulation of reserves is caused by a liquidity trap and in this case monetary base can be expanded pretty much indefinitely. If you want proof then look at Japan - its central bank does not pay interest on the reserves and yet almost 5x increase in the monetary base failed to increase inflation even to 2%.

      There are other examples - Switzerland increased its monetary supply by three times also doesn't pay interest on the reserves. And now it actually wants to institute a _negative_ interest rate (i.e. force banks to pay the central bank for holding the reserves). Yet Swiss Frank is still rock-solid.

    8. Re:I never have understood by lgw · · Score: 3, Interesting

      It seems people don't get this, so let's spell it out:

      Inflation requires both demand and supply of money. You can't cause inflation simply by increasing the money supply, unless you go totally crazy with it - however, if that supply is there when the economy heats up and demand appears, look out.

      Hpwever, 5-10% inflation during a good economy isn't per se a problem: high inflation is a symptom of a bubble economy but may be there without the bubble. And it's the malinvestment associated with a bubble that hurts everyone - "medium" inflation only really hurts people who made the wrong bet on the future value of the dollar.

      As long as you don't actually crater the currency, inflation is merely a warning sign of the real problem, and the real problem is people working on things no one wants: from bubbles to government make-work, the stuff we have is just the stuff we make, and if we're not working to make stuff we want or need, we'll all suffer for it.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    9. Re:I never have understood by Shoten · · Score: 3, Interesting

      I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

      I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

      Oil...no matter where you buy it on the planet, or from whom...is priced in dollars. In no market is the price of a barrel of crude listed in euros, pounds sterling, or any other currency for that matter.

      Why does this matter in this case? Because Russia is basically an entire economy propped up solely on oil revenues. If the ruble devalues against the dollar, then essentially they are subjected to a brutal form of arbitrage where oil is cheaper from Russia than other places. So they get less money than the other oil producers do. If they boost production, it drives the cost of oil down even further. If they restrict production, they get less money that way too. Either way, they're fucked.

      And you know what? GOOD. Fuck them.

      --

      For your security, this post has been encrypted with ROT-13, twice.
    10. Re:I never have understood by CrimsonAvenger · · Score: 4, Insightful

      Alas, we weren't tied up in silly alliances with people we detested like most of the European nations in both WW1 and WW2.

      It should be noted, though, that the USA provided material and military assistance to the UK & USSR well before Japan attacked us, and in violation of US laws at the time (FDR was many things, including a tyrant who ignored the laws and Constitution when it suited him).

      Google Reuben James sometime. Trust me, US Navy ships escorting convoys of war material to a belligerent isn't business as usual. Or wasn't then.

      Note also that just because you're at war doesn't actually obligate other people to help you.

      Note finally that we remained untouched by the war not because we entered late, but because we had thousands of miles of ocean between us and Japan/Germany - they couldn't REACH us to do much damage, even if they'd wanted to.

      --

      "I do not agree with what you say, but I will defend to the death your right to say it"
    11. Re:I never have understood by MrBigInThePants · · Score: 5, Insightful

      You Americans just crack me up. Always arguing whether the demcratic party (i.e: The big business party) is better than the republicans (i.e. the big business party)

      Its like arguing whether Stalin or Hitler were more evil...

    12. Re:I never have understood by TubeSteak · · Score: 4, Informative

      See: The Battle of Bretton Woods. It really is pretty fascinating.

      A more useful answer is inertia.

      After England's Sterling lost its place as reserve currency for the world, the USA's massive gold reserves (>50% of the world's holdings) let the US peg the Dollar to gold and everyone else pegged their currency to the Dollar (aka the Bretton Woods system).

      Of course, (puts on flame suit) because gold standards are actually a terrible idea, the USA's overprinting of cash ended up causing exchange rate imbalances and Europeans started cashing in their dollars for gold.

      So Nixon ended the gold standard and inertia + economic strength and maneuvering has kept the Dollar as the global reserve currency for 43 years.

      --
      [Fuck Beta]
      o0t!
    13. Re:I never have understood by narf0708 · · Score: 5, Informative

      Japan/Germany - they couldn't REACH us to do much damage, even if they'd wanted to.

      That's just not true. The German u-boats in particular were very much able to reach us, and cause significant damage. Operation Drumbeat in particular was able to do a surprising amount of damage. With only 5 u-boats, they were able to sink 25 American ships, many of them within sight of major US cities such as New York and Boston, all in the span of a single month.

      Over the next few months, they managed to sink 22% of our tanker capacity, and well more than 2 million tons of cargo shiping.

      It got to the point where the u-boat commanders were calling the time from January to August in 1942 the "American Shooting Season," and east coast cities and towns had to be blacked out after dark for most of the remainder of the war.

      They couldn't invade, but Germans could certainly reach us all right.

      --
      "Violence is not the answer. Violence is the question. The answer is yes."
  4. Move over USA, it's China's time to shine now... by bogaboga · · Score: 3, Interesting

    Yes, you read it correctly. It's now China's time. to shine.

    As we debate the real meaning of these numbers, let's remember that our economy is mostly financed by debt. We're indebted to those nations we despise.

    Sadly, the ordinary American just doesn't get it.

  5. Re:Move over USA, it's China's time to shine now.. by wiggles · · Score: 5, Informative

    Most of our debt is owned not by foreign governments but by the federal government itself, mostly between the Fed and Social Security - we've been dumping surplus receipts from the payroll tax into T-bills for years.

    Actual debt owned by foreign governments - combined - is only about a third of the total debt.

  6. Re:"Looms" is not a transitive verb by pla · · Score: 3, Informative

    It can, however, stand on its own, making the "Hamming-correct" headline read as follows:

    "Serious Economic Crisis Looms; Russian China May Help".

    So clearly, flatware manufactured in Russia might just save us all from the looming non-specific economic crisis. Time to open a Pottery Barn in Moscow!

  7. Re:Move over USA, it's China's time to shine now.. by wiggles · · Score: 5, Informative

    Source here:

    http://www.factcheck.org/2013/...

  8. China has to buy US bonds ... by drnb · · Score: 5, Interesting

    China has to buy US bonds. They mangage/manipulate their currency so that there is effectively a huge discount to all products and services in China. This discount on *everything* is what really drives relocating manufacturing to China not so much wages.

    To force the exchange rate to a level that provides this effective discount they need to control the US dollars in their economy. So all the merchants/suppliers being paid is US dollars need to sell those dollars to the gov't and then the gov't needs to remove these dollars from the economy. Buying US bonds does this through the magic of international accounting.

    Yes, this is an accounting trick but this is how the calculation of exchange rates work. At least that's how our macro econ professor explained things a few years ago. China can't stop buying US Bonds because then it would lose control of the exchange rate and lose its primary competitive advantage.

  9. Morons should read some economic history by mveloso · · Score: 5, Insightful

    Actually, you really don't get it.

    The financial system is fundamentally held together by one thing: trust. The US Dollar isn't the key currency because the US was the largest economy, or because we have the most weapons - although those things factor into it. The US Dollar is where it is because the US has the political will and ability to support the world financial system when things go bad, even though those actions may cause severe short-term problems in its own economy.

    Do you trust China to manage your currency? Even the Chinese don't trust their government when it comes to money. Russia? The EU?

    Good luck with that.

    1. Re:Morons should read some economic history by Rei · · Score: 4, Interesting

      China's in this thing with Russia for precisely one thing: China. They're taking advantage of a weakened Russia to strike deals that they never would have gotten before. A good example is the "Power of Siberia" gas pipeline deal that they signed for a few years back. China's been trying for years to get Russia to bite at bargain-basement prices that leave almost no profit for Gazprom (perhaps even a slight negative that would have to be somewhat subsidized by the government's gas royalties), and Russia had been refusing. Then they sign the exact same deal they'd been refusing a few months ago and herald it as a great victory.

      China has Russia in an excellent position and is going to squeeze every drop of potential profit out of their bad situation that they can. And Russia will herald it as a glorious blow to the west all the way down.

      That said - even China's GDP doesn't compare to the sanction imposers (US + Europe + Japan + misc), all the leverage multipliers of global banking and fiat currency that the sanction imposers have aside. Even if China's goal was to break sanctions - which it's not - it's just not big enough, it's a third their size. And Russia a trivial fraction of that. And the multipliers of controlling the banking system and a fiat currency are very real. Throw trade into the picture, forget it - Moscow is closer to Newfoundland and Liberia than it is to Beijing. There's a giant barren wasteland between the two. They have a border but it's more of a barrier than a facilitator for trade.

      As the very article linked by Slashdot put it:

      "In the current conditions, any help is very welcome," Vladimir Miklashevsky, a strategist at Danske Bank A/S, said by e-mail. "Yet, it can't substitute the losses of the Russian banking system and economy from western sanctions."

      --
      I am a proud traitor to my species in alliance with my mother the Earth in opposition to those who would destroy her.
    2. Re:Morons should read some economic history by rahvin112 · · Score: 5, Interesting

      I agree with you about trust but don't about the reasons why.

      The US dollar has several important advantages.

      1. Trust as you said, but encompasses several factors. The first is that the US's separation of powers provides a guarantee that no matter what is politically expedient or the people want without concurrence by all three branches it won't happen. Two the independence of the US court system is very powerful and the laws and case law that governs financial transactions is highly defined and well understood. This results in a system where foreigners are treated the same in financial transaction as US citizens and corporations. This is emboldened by the restraint congress shows towards the financial system, and the unwillingness of our politicians to slaughter the golden goose under any circumstance. The final component of the trust lies with the much maligned US federal reserve system. The US has basically put the private banking system in charge of the economy and they are chartered to maintain inflation between 1 and 2%. They have demonstrated this several times by slaughtering the late 1970's economy to halt inflation that was higher than 3%, even against the complaints and maneuvering of president Carter and again under the second Regan administration and most recently with QE1, 2 and 3.

      2. The trust in the system builds in another important factor and that is the transparency of our system. Almost everything is done in the open, the Fed doesn't make a move without warning about it for weeks or more frequently months and years. There are only one or two other systems which even have this.

      3. Trust combined with Transparency yields Stability. Behind the Fed's primary mandate on inflation their second most important objective is stability. They've demonstrated absolute devotion that they will do whatever it takes to maintain stability in the system. This was demonstrated most recently with the QE's. The Fed basically created more than 4 trillion dollars out of thin air and gave it to the banks to do with whatever they wanted. This injected massive liquidity into the system at its most broken point and restarted lending because the banks were handed all that money and weren't charged any interest for it. Many people (particularly Edrogan of Turkey) don't realize the boom in the BRICS group was a direct result of all this free money. The banks took those trillions and invested it in systems that offered the highest possible return and this made massive dollars available in those markets propelling their economies forward. But the end of QE means the end of free money and a return of the slow growth to these nations along with all those trillions being pulled bank into the US system. Stability is one of the Dollars most important attributes. It's why it's the currency of choice in dozens of nations around the world, from countries like Zimbabwe that have no local currency to countries like Venezuela that are seeing hyper inflation to Argentina who has a love affair with the stability of the dollar.

      4. Is the most complicated attribute, it ties two concepts together and that is the US governments willingness to run massive trade deficits to allow enough dollars to flow outward to satisfy demand and the Feds willingness to flood the market with dollars if they are needed to maintain that inflation mandate. This allows the dollar to have trillions of dollars floating all around the world completely out of US control.

      The UK is the only nation I'm aware of that met conditions 1-3. The pound would likely still be a major player but for two reasons. The first is that at the end of the war the UK government was leveraged (indebted) to 250% of GDP (the Tea Party was created out of the idea of 100% of GDP). They were also severely economically damaged during the war. London had massive infrastructure (capital) damage and the UK had lost billions of pounds. Not the least of which was the several billion pounds (2014 pound) of equipment lost during the Dunkirk evacuation. But most importa

  10. Oil prices loom is more like it... by Bob_Who · · Score: 5, Interesting

    Too bad we're not big importers of Borscht.

    Its interesting how "economic sanctions" are no match for an OPEC decision to increase production. Even at lower prices with increased U.S. production and fracking, they did not waiver at market price. This will eventually hurt everyone who invested in shale, back when the market was twice the price. The middle east continues to be able to pull oil from the ground for about one half the cost...maybe even less. Of course, nothing lasts forever, but it seems the oil has been the biggest stick there is when it comes to economic pressures. It sure is a lot easier to shoot down air traffic over the Ukraine when oil is pegged at $120 a barrel. Now Putin is gonna be happy just sipping the borscht and saving the warfare for summertime, perhaps.

  11. Re:Except that they have no debts by jeffmflanagan · · Score: 3, Insightful

    >then Obama gave in to Castro, basically ending another "cold war" but this time with USA's political defeat,

    That's absurd propaganda from the ignorant conservatives. They hate all progress, and are learning-disabled due to preferring dogma over evidence, so it's best to ignore them.

  12. Re:Move over USA, it's China's time to shine now.. by halivar · · Score: 3, Interesting

    Wait until China's property bubble bursts. It's happening and it ain't gonna be pretty for anyone (us included).

  13. As Russian by Anonymous Coward · · Score: 5, Informative

    As Russian, I might add that if China will help Russia, it will simply absorb Russian, digest it, and in not far near distant future, we might see China expanding its territories a bit close to Europe. To be honest, I am highly pessimistic about future of my country at this point.

    Unless Europe and US will try to integrate Russia into "West", China will take over. China is more dynamic, more capable and way way less corrupt. No way country with population of 140 million(and rapidly declining) can reside on 1/6 earth's land territory. I am hoping Putin's will be squashed (and I dough it will happened), and Europe and US will go through painful, long integration process.

    Saddest part of all, country is becoming a European "Hamas".

    1. Re:As Russian by Fire_Wraith · · Score: 4, Insightful

      Based on my understanding of history, I don't think China will ever wipe out Russia. Russia (and Russians) are simply too tough and stubborn. You've survived and fought off all comers for centuries - Mongols, French, Germans, etc. (Though China will probably try and buy up the rights to much of the material resources, much as they do in Africa and elsewhere)

      That said, I do think it would be better for everyone involved if Russia was better integrated with Europe/USA. I think Russian Culture/Russians are pretty cool, and it saddens me the way things have gone recently. I wish humanity would realize that we have better things to do than kill each other over land and nationality.

    2. Re:As Russian by Cyberax · · Score: 3, Interesting

      There's a reason why Eastern territories of Russia are sparsely populated. The chief reason is that it simply makes no sense to live there. Just look at Canada - it has huge tracts of land, yet almost nobody lives north of Edmonton.

    3. Re:As Russian by ElusiveJoe · · Score: 4, Interesting

      China invasion is a popular scarecrow in Russia, but it will not happen. Thinking anyone is envy of big Russian territories boosts the Russian self-esteem, but it is a lie. Rarely anyone thinks what will China actually do after it had sucessfully invaded Siberia.

      The Siberian lands are hostile. Both Tsarist Russia and USSR managed to set up cities there only by propaganda and forced relocation. It's better to set up a puppet government and suck out all resources than to actually invade a country. Which is what is happening right now.

      The only thing that might happen is that some China leaders will try to gain a small territory in order to earn political points at home. But that can happen only after Taiwan has been be conquered, which is still a big problem for them.

      The future of Siberia is grim, it will probably continue to collapse into a No man's land, scarcely populated territory without any laws, ruled by local mafia leaders. Something like Libya is today. And no one will really care about it, other than buying oil from whoever sells it. Again, like Libya.

    4. Re:As Russian by Guspaz · · Score: 3, Informative

      90% of Canada's population is within 160KM of the southern US border. Add the Calgary and Edmonton metro areas and you're up to 97% of the population.

    5. Re:As Russian by aralin · · Score: 5, Interesting

      This guy is not Russian. First of all, he is using the propaganda points that US is spreading in Russia, the fear that China will take part of their territory. It is one of the talking points. Second, he is making homophone mistakes (doubt -> dough) that only native speakers make or sometimes people who use english for 10-20 years or so and he is not making any of the grammar and preposition mistakes common for foreign speakers. It is sad to see our discussion here on slashdot tainted by spooks.

      --
      If programs would be read like poetry, most programmers would be Vogons.
  14. Economic crisis is peanuts vs Crimean gem trophy by Trachman · · Score: 3, Interesting

    This economic crisis can be comparable to the fever that occurred after annexing significant piece of land in a prime location. If Russia will survive it, they will be stronger, meaner, richer, better diversified. Russia for more than a decade have been preparing for this scenario.

    Occupied Crimea and Donbass represent an area of approximately 42 thousand square meters and had a population of approximately 6 million people (actual number will be lower due to the war). The area is larger than Switzerland and population is comparable to Austria. The Crimea is a prime sub-tropic location, a desirable trophy to Russia who has abundance of land in cold climate. Crimean peninsula is surrounded by sea and has significant untapped oil and gas reserves. To summarized, this is an incredibly valuable piece of land and Russia will not give it up at any cost even if they need to wage a nuclear war.

    For Russia adding Switzerland size country economic crisis is an incredibly low price to pay. Russians have stashed away significant foreign currency reserves and have been waiting for this precise reaction from the west.

    It is time for the west to impose a reverse Iron curtain on Russia so that Russians could enjoy and continue their relationship with China and North Korea.

    West lost the moment Russia wiped their arse with 1994 Budapest memorandum which had to guarantee territorial integrity of Ukraine.

  15. Re:Sovereign default by Rei · · Score: 4, Interesting

    If it comes down to military force stopping loss of assets for failure to pay debt, then you're saying "stop all international trade with me this instant".

    Russia imports nearly 40% of its food. So, say hello to the largest famine of this century.

    --
    I am a proud traitor to my species in alliance with my mother the Earth in opposition to those who would destroy her.
  16. Petrostates by Tailhook · · Score: 5, Insightful

    China is going to prop up Venezuela. China is going to prop up Russia. Will China also prop up Iran when the price of oil pulls the rug out from under that bunch of fundies?

    I know China is all productive and stuff, not fighting self-inflicted headwinds of OSHA NLRA EPA etc., and having been fully exempted from any concern for carbon emissions for another three decades by Obama, but they can't actually afford to fully float all these fucked up petrostate kleptocracies. And what support they do offer will be highly conditional and hard to accept by these client states.

    Russia had a chance. Western money was pouring into Russia; places like Magnitogorsk have had huge investments from Europe and the US to build out decrepit steel works into some of the best specialty metal sites in the world. They could have seen 5% GDP growth for the next two decades.

    But they couldn't help themselves; Putin took off his shirt, said nasty things about 'Murica and the the Russian people made him dictator for life. So now, rather than emerging from a century of self-inflicted fail, they're making themselves into a European pariah state.

    Enjoy, Russia. You deserve it. Be nice to the Chinese I guess.

    --
    Maw! Fire up the karma burner!