Early this morning I said that:
And that’s the point here about the ruble. That rise in interest rates to 17% should work. Should stabilise the currency, aid it to regain some of its lost value against the dollar. But, and here’s the catch, only if everyone believes that the government’s going to stick with it. 17% interest rates really aren’t going to be good for that Russian economy. In fact interest rates that high are going to strangle many a business. If the markets believe that the central bank is going to allow that to happen in order to defend the ruble then it will indeed defend the ruble. But if they think, as they did in the UK’s experience, that the pain won’t be undertaken then the ruble will continue to fall: and perhaps faster than it has been.
It’s way to early to be able to tell which way this is going to go. But it does remain true that the outcome is in doubt.
At the moment the ruble is down another 26%…..
Buy roubles.
It might or might not rain this afternoon. And I’ll be back later to point out how prescient I was.
There’s been some research on whether interest rate hikes are effective against speculative attacks on a currency. The answer is that on average they have no effect either way. Which is not surprising, because why would they?
Has the Daily Express / Mail picked up on this yet? “House prices tumble as Russian buyers priced out of market. Read more on pages 2, 3, 4, 5, 6, 7, and all day every day for ever.”
An example of the impossible trinity*. Free movement of capital, independent monetary policy, control of exchange rate… Not gonna happen.
Capital controls then.
*There’s lots of them. My favourite is liberté, égalité, fraternité
A rate hike like that says “our currency is in free-fall, and there is nothing we can do about it”.
Also, a rate hike like that would destroy the economy. How can that help the currency?
Putin in September 2012:
Russia’s President Vladimir Putin has said its possible to use the rouble as a reserve currency.
“We hear more and more statements about reserve currencies,” the president said at the APEC CEO summit, claiming the “Rouble can claim for the role of reserve currency.
Heh!
It’s probably got the SNP crying into their porridge.
Russia is a mess–but so is the West. Wait till the same fate befalls the dollar. No fiat scrip of them has much more than ill-founded belief in them.
Here’s another bit of prescience: the US/EU tanking the economy of the world’s first (equal) nuclear power will not end well for them.
When I first read that, I thought there was a letter missing from your spelling of ‘ruble’ but i can’t decide if you need an ‘o’ as the third letter or another ‘b’.
Here’s another bit of prescience: the US/EU tanking the economy of the world’s first (equal) nuclear power will not end well for them.
You really think the Russian generals are going to obey a Putin-ordered nuclear strike order on the West, issued because the oil price has collapsed, his entourage has been sanctioned, and they can’t buy Lithunanian cheese? Russia will descend into infighting, coups, and collapse before that happens. We’ve been here before, remember?
Putin will ride out the storm. See The Dictators’ Handbook.
He’ll stop the payment of pensions if he has to. (That’s his popular base, but he can throw them to the wolves now.) Maybe he’ll have to increase the corrupt opportunities for his pals though.
What biF said.
Remember we are dealing with one of the most ruthless (groups of) bastards in history here…
Liked the comment about London house prices as well LOL
Shouldn’t that be “Rouble”?
Or maybe Rubble…
What? Putin hasn’t sacked his central bank governor yet? And replaced her with one of his pals. Who may know nothing about money but may know where to find it.
Expect a sacking soon. Then we can call it the rube.
A wee bit of a war with Japan ( or an island nearby) would distract well and likely get Chinese approval.
And Putin could later blame/ approve a rogue general.
With Obama in charge of the USA he is safe from military action there.
The world over – small running wars are very popular amongst those who count.
Tim Newman – “You really think the Russian generals are going to obey a Putin-ordered nuclear strike order on the West, issued because the oil price has collapsed, his entourage has been sanctioned, and they can’t buy Lithunanian cheese? Russia will descend into infighting, coups, and collapse before that happens. We’ve been here before, remember?”
Nuclear weapons were marginally useable in the Cold War. If you’re going to murder millions of people anyway, once you liberate them from capitalism, you might well think about using them. But these days? I agree, they won’t do it for Putin.
But Putin is in a bind. He can’t back down without being weak and hence being overthrown. He can’t sit and wait without the Russian economy, such as it is, collapsing and hence being overthrown. He needs to find a solution and he does not have one.
The end result will be the generals will overthrow him. The only question is how long they will put up with not being able to buy Lithuanian cheese. That depends on how thoroughly he has purged the military.
I’ve often wondered what is Putin’s endgame. How does he have a happy retirement? He seems to be slowly but surely upping the ante. Does that suggest there’s no out?
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Rub-a-dub – “I’ve often wondered what is Putin’s endgame. How does he have a happy retirement? He seems to be slowly but surely upping the ante. Does that suggest there’s no out?”
I don’t know. I am sure he has a mini-sub stored somewhere so he and his white cat can make a quick get-away.
What could go wrong?
The Moscow question: Must Putin die in the Kremlin? Otherwise he’d be put on trial and shot.
Other question: do his cronies have more dollars than roubles?
Putin, unlike Lamont, does not regard the SME sector as important. So he may very well be prepared to crush the economy to further his aims, So don’t bet the farm against a rebound from the rubble.
Kremlinology isn’t hard when you start from the premise that they are complete shits, but not totally irrational.
@Tim N You really think the Russian generals are going to obey a Putin-ordered nuclear strike order on the West
The SRF generals will likely do what they’re told. But Putin doesn’t need to risk an exchange with the US; he just has to use his nukes as a blocker.
For example: Putin, his economy crumbling and his life threatened, cuts off the EU gas supply and uses his mostly modernized conventional forces take multiple NATO capitals. Obama refuses to risk getting nuked & so doesn’t mount the air bridge us cold warriors relied on. The EU pays Putin a few trillion Euros to pull back.
That’s what worked for the Prussians.
JeremyT – “For example: Putin, his economy crumbling and his life threatened, cuts off the EU gas supply and uses his mostly modernized conventional forces take multiple NATO capitals.”
Mostly modernized conventional forces? The last Soviet tank was introduced in 1993 and they are still using it. The Soviet Union could not keep East Germany down and they stationed 9 tank divisions there. The whole of Russia was down to 8 tank divisions and now I think they are down to just 3. I am sure Putin could take Berlin – it is not as if any government in Europe is serious about defending itself – but they would have no chance of staying there.
“That’s what worked for the Prussians.”
And where are the Prussians today? Look on their works ye mighty and despair.
So what’s George Soros doing these days?
Or is this some Soros wannabe having a go?
@Rub-a-dub
“I’ve often wondered what is Putin’s endgame. How does he have a happy retirement? He seems to be slowly but surely upping the ante. Does that suggest there’s no out?”
I think this is a great question.
At a personal level, does he intend to rule until death? If he does not, how does he provide for his own security in a country so bereft (partly because he has made it so) of basic legal protection?
The other question is how far is the fall out going to travel?
I like to think of myself as overly pessimistic, but I wonder. I expect some countries close to Russia are feeling a little worried. But Kazakhstan does not matter. Are the Chinese worried? I think that perhaps they should be. Anyone want to put money on Brazil raising interest rates soon? India?
@SMFS
“Mostly modernized conventional forces? The last Soviet tank was introduced in 1993 and they are still using it. ”
When you you think Chally 2 was brought in to service?
Or the Leopard 2?
Or the M1 Abrams? Yes, it’s been upgraded, but it’s a 1980 tank.
The Soviet kit has also been upgraded since 1993.
Apart from that I (amazingly) agree with your military insight. No chance whatsoever of Putin’s tanks rolling anywhere, and if they do there is no chance that the Yanks would allow it to proceed uncontested, Obama or no Obama.
That’s without our Apaches, one of which can take out a dozen main battle tanks in thirty seconds from the other side of a hill, and ignoring the fact that the rest of Europe does still have forces, just not forces they particularly want to send overseas.
The French and the Krauts would be a very tough proposition fighting on their own land. It was ever thus.
@MBE he intends to go on until he croaks. When he croaks isd the interesting question. Anyone seen that polonium-210?
If you can’t destroy your enemies militarily, destroy them economically
The French and the Krauts would be a very tough proposition fighting on their own land. It was ever thus.
I agree, the Germans fighting on their own French land were a very tough nut to crack. Snigger.
@Tim N
I really mean people fighting on their own land generally, should have been clearer.
However, WW2 was something of an abberation, helped by a vastly superior Army coming in at lightning speed.
Had it not been for the Channel they would have been in Downing Street on Day 3, too.
The French have historically been a much more martial race than the Brits.
I really mean people fighting on their own land generally, should have been clearer.
I got it, I was having a pop at the French. 🙂
That’s without our Apaches, one of which can take out a dozen main battle tanks in thirty seconds from the other side of a hill
That might have been true back in the day (although US Apaches got hammered in Iraqi Freedom). But nowadays Russian land manoeuvre forces defend against pop up helicopter and fighter attacks with SA-22s: highly mobile, hardened, fast shooting, and accurate. A Syrian 22 whacked a Turkish fighter a while back in spite of it having all its jammers lit.
NATO has nothing like the SA-22 to protect its own armour.
I am so old I can dimly remember the Suez Crisis: the only time I saw my parents shouting at people in the street.Then of course it was the pound that was in trouble until the Brits decided to evacuate their troops from the Canal Zone (their area of strategic importance) whereupon the run on the pound was miraculously stopped by massive IMF backing. Seems like the Americans are still pursuing their WW2 war aims of making temporary alliances and then attackingr erstwhile allies economically when their turn comes.
@Tim N
Ah sorry my ironometer was off!
@Jeremy
US Apache is a far different and far inferior beast to UK Apache (as you may know from the use of the phrase ‘US Apache’, I guess).
Most of the Iraqi Freedom losses were due to pilot error or mechanical failure but yes a small number were shot down.
But that’s using everything from small arms to indirect fire to SAMs, and given that they were fighting a highly ROE-controlled war over civilian territory I think the losses were amazingly small.
In a war for survival against an invading army, with the gloves off a bit more, with a lot of standing off from the advancing column, and never getting anywhere near small arms range, I think helos flown by combat veterans vs tanks driven by spotty kids from Murmansk would be very effective.
With Apache out of radar and other view of an SA22 crew in hilly western Europe as opposed to flat Iraq, and being fed grids by satellite or (out of range) AWACS, the tanks (and the SA22 operators) would never know what hit them. Not to mention that SF would be in and around the area blowing things up, and Stealth, and cruise missiles, and – here’s a blast from the past – partisans.
I think it would turn into Russia’s biggest ever mistake.
In my opinion (it’s all only opinion after all).
The SA22 is a pretty formidable weapon (and coupled with S300 even more so) but it has actually been around a fair time and has been sold around the world to some fairly insecure and Western-friendly countries. I imagine the Yank spooks (and probably ours) have their hands on the clever bits and pieces now, and know how to defeat them.
It has so far put down one Turkish jet – a Phantom. Phantoms were flying over Baghdad while you were in your dad’s bag etc etc. I assume the Phantom was equipped with the best counter measures available to the Turkish, but I also assume (I certainly hope) that ours are better!
I don’t honestly know whether our SAM kit is worse, as good or better, but I don’t think anyone does. It has yet to be tested in real life. What I do know is that historically the west has tended to be ahead tech-wise (though China may be interesting) and in the war of tank vs helicopter there’s only one winner, IMO. Especially if you have general air superiority, and we would have air superiority.
Doesn’t mean we wouldn’t lose some Apaches, of course.
Or that if we lost a couple we might not just decide to let them have Berlin.
Anyway, it’ll never happen for all the other reasons.
Jeremy T,
Most of NATO have FIM-92 Stinger, which has been upgraded and updated rather faster than Russian IRCM. The UK has Starstreak HVM, which is… impressive, fast and lethal and very hard to jam (the US Army wanted it as a weapon on Apache but the Knights who say NIH! denied it)
I wouldn’t sell life insurance to the pilot of a Russian ATGW helo going on the offensive into Germany, put it that way…
The North Koreans threaten to blow up a movie theatre or two and the Americans pull a major studio film.
All this talk of kit is interesting but beside the point. No one in the West has the backbone to defend themselves. Not the Germans whose soldiers turn out to be too fat to fight anyway. Not the rest of Europe who stood by and let the Serbs massacre civilians in Bosnia. We don’t even have the courage to protect vulnerable children from gang rape.
Putin can have whatever he likes. No one is going to stop him. He just can’t keep it.
I don’t honestly know whether our SAM kit is worse, as good or better, but I don’t think anyone does.
If by ‘our kit’ you mean NATO (and not Israel), I do know. Ours is worse.
I may be biased – the control systems theory I used when working on my first (NATO) guided missile was developed by a Russian.
Interested may be interested in the recent IDF raid on Syria. The Assad lot took down down a (very hard-to-hit) Israeli Popeye with a old SA-3 with upgraded radar.
@Jeremy
You could be head of development at BAE Systems and the Royal Artillery’s top marksman on alternate days for all I care, you still don’t know because nothing is known until it’s tested in the real world.
Plus, it’s never about technology and nothing else.
Re Syria – sure, so your point seems to be that,,, their old SA3s will take out our crappy old Apaches for fun, but our best arrows won’t bring down their air attack/cover???
Right…if you say so…