Moon of Alabama Brecht quote
March 23, 2022

More Sanctions On Russia Will Destroy Europe

On February 21 Russia announced that it would recognize the Donbas republics. A day later it did so. The 'west' immediately announced sanctions which in fact had been prepared in advance. On February 24 Russian troops crossed the border into Ukraine.

The Russian ruble immediately took a big hit. It has since recovered a bit.


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Today's news will bring the ruble to a new heights.

Kommersant reports (machine translation):

Putin instructed to convert gas contracts with unfriendly countries into rubles

President Vladimir Putin instructed to issue a directive to Gazprom to convert contracts into rubles for unfriendly countries. In his opinion, supplying Russian goods to the EU, the USA and receiving payment in dollars and euros "does not make any sense for us." Against this background, the ruble moved to growth on the Moscow Exchange.

“Both the US and the EU have basically defaulted on their obligations to Russia. And now everyone in the world knows that obligations in dollars and euros may not be fulfilled. <...> It is quite obvious that in this regard, it makes no sense for us to supply our goods to both the EU and the USA and receive payment in dollars, euros and a number of other currencies. Therefore, I have decided to implement in the shortest possible time a set of measures to transfer payments for our natural gas supplied to unfriendly countries to Russian rubles,” Mr. Putin said at a meeting with the government.

The President instructed the Central Bank and the government to determine within a week the order of operations for the purchase of rubles on the domestic market by buyers of Russian gas. He claims that Russia will continue to supply gas "in accordance with the volumes and according to the pricing principles concluded in the contracts."

The dollar exchange rate on the Moscow Exchange fell below 100 rubles. for the first time since March 3rd. As of 15:37, the US currency is trading at 101.55 rubles. (-2 rubles). The euro exchange rate fell by 2.85 rubles to 111.65 rubles. The maximum dollar fell to 94.99 rubles, the euro - to 109.7 rubles.

The European Union, the United States, Great Britain and a number of other countries have imposed sanctions against Russia in response to the military operation in Ukraine, which has been carried out since February 24 on the orders of Mr. Putin. One of the measures was the freezing of about half of the Central Bank's gold and foreign exchange reserves ($300 billion).

To pay in ruble one first has to buy rubles. With higher demand for rubles and no change in supplies the price for the Russian currency will go up. As Russia is selling hydrocarbons and other resources for billions of dollars per day the ruble is likely to soon reach record heights.

On February 28 another round of sanctions hit Russia. The part of the Russian central bank reserves that were stored in the 'west' were frozen. The central bank immediately pushed its interest rate from 9% to 20% to prevent a flight from the ruble. This helped to lessen the damage but made credit expensive and has hit the future growth potential in Russia.

But with a high new rubles demand from the outside of Russia the central bank will soon be able to lower its interest rate to more normal levels. Credit conditions will ease and investment in Russia, to replace products that had so far been imported, will rise again.

Today's move to demand rubles for hydrocarbons is only on of the many steps Russia can, and likely will take, to retaliate for sanctions from the 'west'.

As I wrote previously:

All energy consumption in the U.S. and EU will now come at a premium price. This will push the EU and the U.S. into a recession. As Russia will increase the prices for exports of goods in which it has market power - gas, oil, wheat, potassium, titanium, aluminum, palladium, neon etc - the rise in inflation all around the world will become significant.

Meanwhile the New York Times writes:

As he heads to Europe, President Biden will press U.S. allies to help impose even more aggressive sanctions on Russia.

Biden demands that Europe suicides itself while he is protecting the U.S. industry. I hope that some people in the European capitals are still able to think clear enough to recognize the racket the U.S. is trying to run here:

Together with the economic devastation that U.S. and European sanctions on Russia are causing in their own economies this will end in regime-changes in several European countries. The U.S. is of course again protecting itself from as much as it can at the cost of others.


Source: Bloomberg - bigger

Tony Wood asks:

The question remains, why did all those who for so long foretold this war do so little to stop it, and so much to hasten the disaster Russia has now set in motion?

Indeed. Why didn't the government of Germany guarantee in writing that it would veto any additional NATO membership? It would have solved at least half of the problem. Why didn't any other NATO government do so?

And what are they doing now? Where are their initiatives for peace?

Wake up. Otherwise this will end in disaster. Not for Russia but for the rest of Europe.

Posted by b on March 23, 2022 at 14:23 UTC | Permalink

Comments
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Wake up. Otherwise this will end in disaster. Not for Russia but for the rest of Europe.

Why is a market correction a bad thing? Aren't markets supposed to set prices?

Posted by: too scents | Mar 23 2022 14:34 utc | 1

"The question remains, why did all those who for so long foretold this war do so little to stop it, and so much to hasten the disaster Russia has now set in motion?

Indeed. Why didn't the government of Germany guarantee in writing that it would veto any additional NATO membership? It would have solved at least half of the problem. Why didn't any other NATO government do so?

And what are they doing now? Where are their initiatives for peace?"

ANSWER:
The DC Swamp critters thought they could create a quagmire for Russia in Ukraine that would bring on Regime Change in Moscow, as if Putin and Russia were Saddam and Iraq... but unfortunately you can't easily put a lid on this caper once it gets revved up.. so yeah, if the US keeps pouring kerosene on the fire, putting us all in jeopardy of dying in a nuclear holocaust.

And yeah, even Zelensky now admits he was set up by the US... merely a disposable pawn in the service of a dying Pox Americana

https://theconservativetreehouse.com/blog/2022/03/21/admission-from-zelenskyy-highlights-how-biden-administration-wanted-to-provoke-russia-to-invade-ukraine/

Posted by: posa | Mar 23 2022 14:35 utc | 2

Europe is destroying itself for quite sometime now. It started with the Greek crisis.

The leaders of the EU are criminally incompetent psychopaths starting with Ursula of course.

Now, once again they demonstrate that they don’t care about the ordinary people but only about their corrupt schemes.

Their covid policies have pushed large parts of the middle class into poverty and now their sanctions against Russia will make things worse.

In the EU the inmates are running the asylum.

Posted by: DG | Mar 23 2022 14:36 utc | 3

Additionally, the Russian government said that the interest rate hike will not affect mortgages that are already in service. It's been fascinating to watch how Russia seems to have had a number of economic responses that are specifically designed to minimize the impact on regular Russians. Maybe Biden's new world order should take take pointers.

Also, there still haven't been counter-sanctions. Just asymmetrical responses like this, which is particularly brilliant.

Posted by: Lex | Mar 23 2022 14:41 utc | 4

If I may be permitted to repeat my post in yesterday's thread on this ominous development: Death Certificate for the USD.

Putin: West's Freeze on Russian Reserves Signals Default on Obligations, Undermines Their Currencies

AND

Putin Orders Ruble Payments for Energy, Says West’s Freeze on Russian Reserves Undermined Currencies

https://sputniknews.com/20220323/wests-move-to-freeze-russianreserves-signals-its-defaulting-on-obligations-before-moscow-putin-1094117649.html

combined with earlier article that demonstrates Russian angst.

https://sputniknews.com/20220323/wests-move-to-freeze-russian-reserves-signals-its-defaulting-on-obligations-before-moscow-putin-1094117649.html

Last week, Russian finance minister Anton Siluanov confirmed that about $300 billion of Russia's gold and foreign exchange reserves abroad had been frozen as a result of Western sanctions. On Wednesday, Russian foreign minister Sergei Lavrov called the move plain "theft."

The collective West's decision to freeze Russian reserves abroad constitute the bankruptcy of their obligations before Russia, and serves to undermine faith in their currencies, President Vladimir Putin has said.

"In the past weeks, a number of Western countries have taken illegitimate measures on the so-called 'freezing' of Russian assets. The collective West has factually drawn a line under the reliability of its currencies, crossed out confidence in these currencies. Both the United States and the European Union have essentially declared a default on their obligations to Russia," Putin said, speaking at a government meeting on Wednesday.

"In this connection, it's clear that supplying our goods to the European Union and the United States and receiving payment in dollars, euros and a number of other currencies does not make any sense to us," Putin added.

Today, everyone knows what they previously suspected - that obligations held in dollars and euros may not be fulfilled," the Russian president said.

Putin ordered the Russian Central Bank and the government to work out the means for payments to be made in rubles for Russian natural gas exports by countries designated as 'unfriendly' by Moscow, and instructed Gazprom to amend existing contracts accordingly. 

"Unlike some of our colleagues, we value our business reputation as a reliable partner and supplier. The changes will only affect the payment currency, which will be changed to Russian rubles," Putin stressed. "Russia will unquestionably continue to export natural gas in accordance with volumes at prices fixed in contracts concluded earlier," he added. 

Russia exports an estimated $10 billion in gas monthly. The European Union imported $108 billion in energy supplies from Russia in 2021, accounting for about 62 percent of total consumption.

(emphasis added)

Posted by: Likklemore | Mar 23 2022 14:43 utc | 5

"Why didn't the government of Germany guarantee in writing that it would veto any additional NATO membership? It would have solved at least half of the problem. Why didn't any other NATO government do so?"

Blackmail.

See Franklin Credit, Dutroux, Epstein, etc.

Posted by: WJ | Mar 23 2022 14:47 utc | 6

They expected a carpet bombing... They got a carpet squeeze that sent them bite the dust. a master Judo move and we can expect more surprises down the road and unfortunately they may go wild and play more dirty than ever.

Posted by: Gofigure | Mar 23 2022 14:47 utc | 7

a country known for its chess players, is what my spouse said.

As a famous german saying goes." Herr lass Hirn vom Himmel regnen" Although not so appropriate in the circumstances of war coming to think about it. So maybe we could translate Hirn as reason, or empathy or understanding or fairness or in the end, selfinterest(anyone?)

have a good whiskey at the bar, oh you know why.....

Posted by: auch | Mar 23 2022 14:48 utc | 8

I'll repeat my post also.
I'm struck by the photo coverage of Ukraine destruction in the local fish-wrap. We never saw such after all the US destruction of cities from air and ground. Never. It also reminds me of Washington's 1796 Farewell address, this part:

Europe has a set of primary interests which to us have none or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence, therefore, it must be unwise in us to implicate ourselves by artificial ties in the ordinary vicissitudes of her politics or the ordinary combinations and collisions of her friendships or enmities. . .here

Posted by: Don Bacon | Mar 23 2022 14:52 utc | 9

Not a currency trader--but I would have thought the move here was to insist on payment in physical gold from unfriendly countries.

If payment is now in rubles for a contract currently denominated in USD, & the ruble is weak, does this not reduce the number of USDs needed to meet the price?

Right now Russia benefits from USD denominated settlements, as the ruble falls, the USDs are worth more.

If denominated in gold, it exposes the paper gold fraud, increases the value of physical gold and lowers the demand for USDs.

Anyway, clearly beyond my technical understanding.

Posted by: Paul Damascene | Mar 23 2022 14:55 utc | 10

news report
At NATO, Biden is expected to announce more sanctions and stricter enforcement of those that were already imposed on Russia, as well as additional American contributions toward humanitarian aid, National Security Advisor Jake Sullivan said Tuesday. He will also coordinate with allies to send more military assistance to Ukraine, and potential changes to the alliance’s troop presence in eastern Europe.
“This war will not end easily or rapidly,” Sullivan said. “For the past few months, the West has been united. The president is traveling to Europe to ensure we stay united, to cement our collective resolve, to send a powerful message that we are prepared and committed to this for as long as it takes.”

Posted by: Don Bacon | Mar 23 2022 14:58 utc | 11

I recall the empire rejoicing with its ploy to make the economy scream in some poor South American nation. So now we are going to hear the EU scream.

Xerxes Biden sure knows how to ruin an empire. Make the vassals scream in their prison. My guess is that this will not end well for the West and that lifelong rightwing enabler, Joe Biden, will be the man of the moment ;)

Posted by: uncle tungsten | Mar 23 2022 14:58 utc | 12

BYE-BYE Petrodollar!!

Posted by: oldcutlas | Mar 23 2022 14:58 utc | 13

news report
President Biden's approval rating dropped to 40 percent this week, according to a Reuters-Ipsos poll, an all-time low for the president in that survey. The survey showed that Biden had a 54 percent disapproval rating amid high inflation and tensions caused by Moscow's deadly invasion of Ukraine, according to Reuters.

Posted by: Don Bacon | Mar 23 2022 15:00 utc | 14

Sure they will

Posted by: not likely | Mar 23 2022 15:06 utc | 15

If payment is now in rubles for a contract currently denominated in USD, & the ruble is weak, does this not reduce the number of USDs needed to meet the price?
Posted by: Paul Damascene | Mar 23 2022 14:55

This is correct. But as hundreds of billions of Rubles need to be bought and held, the ruble will appreciate considerably. Also, the USD hard currency doesn't help the Russians as much because they are shut out of some markets.

Not an expert by any means, but I think that is the strategy.

Posted by: Chicago Bob | Mar 23 2022 15:07 utc | 16

Is it a violation of existing or possible future sanctions for Western countries to purchase rubles in the first place? If so, Russia may be forcing the issue here. If gas has to be paid for in rubles, and Europe needs gas to function at all, and if the US declares it illegal to buy rubles to pay for gas, then we see a huge conflict on the horizon between Europe's ability to keep its people heated and fed and their obeisance to US dictates.

Posted by: WJ | Mar 23 2022 15:10 utc | 17

Thank you b, as always, for your dedication and hard work. And to the barflies who bring knowledge and insight into all the matters discussed at MOA.

One has to wonder at the Black Knight strategy by the USA to never admit error, double-down on every failure and crow and mock at others while the body his hacked limb from limb and all that is left with a pair of yapping lips chortling about imminent victory.

cheers!

Posted by: gottlieb | Mar 23 2022 15:15 utc | 18

President Biden came into office calling Saudi Arabia a “pariah” and promising to put human rights at the center of his foreign policy. News that Saudi Arabia is considering pricing oil sales to China using the Chinese yuan instead of the U.S. dollar has Sen. Ben Sasse, R-Neb., concerned the U.S. could be losing its footing on the world stage. In an interview with "Fox News Sunday," Sasse said this development, along with how the war between Russia and Ukraine develops, could send a message to the rest of the world that could have a significant impact.

Posted by: Don Bacon | Mar 23 2022 15:15 utc | 19

Posted by: Paul Damascene | Mar 23 2022 14:55 utc | 10

I'm assuming the contract is settled on a spot price or contract price in the original contract currency like dollars or euros. The Russians will take payment in rubles, increasing demand and raising its value.

Posted by: JMW | Mar 23 2022 15:16 utc | 20

so if a foreign central bank pays USD to buy rubles from Russia's central bank, doesn't that mean Russia is collecting USD that can be frozen or cancelled at any time?

Posted by: mastameta | Mar 23 2022 15:16 utc | 21

The Europeons are truly hilarious in their slavish obedience to the Americans.

It's really a heated competition between the Ukrainians and Europe proper as to who will do the most self-harm so as to please their American masters regarding economic sanctions and war.

Right now, the Ukrainians are winning as they are destroying their own statehood to fight Russia to the last Ukrainian and please Uncle Satan/Sam. But the Europeons are not far behind.

Apparently, they all still haven't figured out what Henry Kissinger stated long ago:

"To be an enemy of America can be dangerous, but to be a friend is fatal."

Posted by: ak74 | Mar 23 2022 15:17 utc | 22

b. I swear I haven't read your posts before posting the same thing you did at about the same time; though you have like, sources, and actual data backing up your points; just typed; "Putin just stabilized the Ruble" on that same news; masters of the obvious. Do you ever listen to Ed Wallace's "Wheels" it's a Sat 8-1pm (Central US Time--really 8:30-11ish) good news backed broadcast, on rock and roll/Americana, "backside of American History" story (10-15m) Oil report, and "secondhand news" overlooked stories; and cars; manufacturing, finance, sales. He's referring to the best car dealers and thus gets to actually report, very balanced, he "doesn't vote" pisses all the partisans off.

interested in ideas on Brexit. I thought it would result in Scotland leaving, but all that is apparently on hold; the Ukraine./NATO/US-UK issue seems like it is either relevant or coincidental in a curious way. But, the-fuk I know, I'm in TX.

Posted by: ScottinDallas | Mar 23 2022 15:18 utc | 23

Hey Posa, Why didn't Russia address it's security concerns to Germany, France or Great Britain? Because Russia wanted to show the world that individually these countries are not in a position to make such decisions and that the criminal organization really calling the shots is the U.S. individually and NATO collectively. That's it.

Now the U.S. wants to apply secondary sanctions against anyone attempting to trade in Russia gold. I mean it's almost laughable at the amount of ineptitude that plagues so-called U.S. diplomacy. A ticket straight to oblivion. It's been called a runaway train. There are folks out there questioning whether there is anyone in the U.S. or NATO for that matter, capable of applying any sort of breaking mechanism to slow the approaching catastrophe down. All we see from the U.S. is more pressure. It's a complete joke. Scary and sickening to think about. The most likely culprits these days are being called "neo-whatevers" and I do believe I like that label.

Finally, I see the Biden nomination for Supreme Court had to walk back on legal filings she had made previously which called out "W" and his gang for war crimes. Not willing to stand by her word. The Lavrov interview rings true loud and clear: "life demonstrates what a person’s word is worth."

Posted by: thecelticwithinme | Mar 23 2022 15:19 utc | 24

I hope everyone knows why Russia left those reserves in Western banks. And, I hope everyone understands why Russia waited till now.

Posted by: ScottinDallas | Mar 23 2022 15:22 utc | 25

Don Bacon at #11

…in the home of an intelligent Average Joe watching Tv…

Well ,gee ,Jake, weren’t you guys telling us Russia is all exhausted , has no bullets or gasoline and the war will be over in a few weeks?

Why are you now telling us it will be a long war?

What gives?

Posted by: Brother Ma | Mar 23 2022 15:25 utc | 26

It is a good question to ask why not gold instead of Rubles and I think the timing is what was the key.

The Rouble was forced down and needed to be brought back up.
Gold is way, way, way manipulated down so gold needs to come up to some level but because of manipulation and broader ownership than Rouble probably better to stabalize Rouble again and then bring gold in with other currencies and raw materials/food as part of value based alternative Reserve Currency being proposed.

Thanks b for all your efforts and a forum for us barflies

Will the EU capitulate to the Shock Doctrine event being foisted on it or break the chains of centuries of the God of Mammon jackboot?

Posted by: psychohistorian | Mar 23 2022 15:26 utc | 27

Posted by: Paul Damascene | Mar 23 2022 14:55 utc | 10

The dollar-ruble exchange rate has nothing to do with what Russia gets paid for its oil. Oil has an international price. Russia has no reason to lower its price in rubles because the ruble gets weaker. 100 dollar oil is always 100 dollars, no matter which country is selling. Russia receives 100 dollars (or equivalent) for each barrel and then decides for itself how many rubles it issues to the company selling the oil.

Demanding payment in rubles is a great step forward but the real question is what Russia demands in exchange for the rubles it sells, for foreigners to use to in turn buy gas (in practice, this means, what will Russi now barter its energy against?).

Posted by: Unnamed | Mar 23 2022 15:26 utc | 28

@Scott 25
from lavrov's remarks and the immediate ensuing fallout, I think it's clear that the 300 billion confiscated is not some trap that Russia set. it took them by surprise, the scale of it. they are dealing with the situation impromptu.

Posted by: mastameta | Mar 23 2022 15:28 utc | 29

Wj at #6

So you are saying all German govs were perverts? I wouldn’t be surprised.

Posted by: Brother Ma | Mar 23 2022 15:28 utc | 30

How many different ways can I spell Ruble this morning?....sigh

Posted by: psychohistorian | Mar 23 2022 15:29 utc | 31

Posted by: Brother Ma | Mar 23 2022 15:28 utc | 30

Not necessarily perverts, though honestly many of them probably are, to some extent. More generally I mean that the willingness to be blackmail-able is a necessary condition to be elevated to most power structures in the West and has been so for a long time.

Posted by: WJ | Mar 23 2022 15:30 utc | 32

mastameta | Mar 23 2022 15:28 utc | 29

---

Fiat money is a bond of trust. Nothing more.

If a trap was sprung to sort out the trustworthy then the trustworthy have nothing to fear.

Posted by: too scents | Mar 23 2022 15:34 utc | 33

Paul @ 10
"If payment is now in rubles for a contract currently denominated in USD, & the ruble is weak, does this not reduce the number of USDs needed to meet the price?"

Yes, but only momentarily. Assuming Russia doesn't go on a ruble printing spree, which it won't, the demand for rubles will quickly drive its value up. Brilliant, actually, to force the West to prop up the value of the ruble. Remember, the ruble has for decades hovered in the 25-30ish per dollar range; it's only since 2014 that it jumped to generally low 70s and now nearly 100/$. Something tells me this will soon bring the ruble back to it's real, non-manipulated value, sanctions be damned.

Posted by: J Swift | Mar 23 2022 15:35 utc | 34

Kind of hard to think clearly--or at all--when you have your head jammed up someone else's arse.
"Pay us in good rubles, not your crappy dollars or euros"! LMFAO.

Posted by: pasha | Mar 23 2022 15:38 utc | 35

OUCH --- President Putin found a way to LEGALLY cut off all energy supplies to fachist amerika's EU stooges !

"Putin wants rubles for Russian gas

The change will affect energy exports to "unfriendly countries"

Russia will now accept payment for gas exports to "unfriendly countries" in rubles only, President Vladimir Putin said at a meeting with the government on Wednesday.

The president explained that Russia plans to abandon all “compromised” currencies in payment settlements. He added that illegitimate decisions by a number of Western countries to freeze Russia’s assets destroyed all confidence in their currencies.

“I have decided to implement in the shortest possible time a set of measures to change the payments for – yes let’s start with this – for our natural gas supplied to the so-called unfriendly countries in Russian rubles, that is to stop using all compromised currencies for transactions,” the Russian president said.

"It doesn't make sense to deliver our goods to the EU and the US and get paid in dollars and euros," he added."

The announcement caused a spike in the cost of contracts for gas supply at the TTF European hub, Forbes Russia quoted data from the Intercontinental Exchange as indicating. During Wednesday’s trading, the gas price rose from €97 per megawatt hour (MWh) to approximately €108.5 per 1MWh, but after the president’s speech, it jumped by another €10 to €118.75 per 1MWh, before retreating to €114 per 1MWh as of 1pm GMT

love it, Love It, LOVE IT !

Posted by: Karl | Mar 23 2022 15:38 utc | 36

Re: Likklemore #5
I have been following Russian affairs for years, and I am a strong supporter of their plans for development of their country (I would love to live in Russia).
But I cannot get my head around the fact that the Russian Central Bank and the financial leadership did not foresee this freezing of their assets in Western banks.
For Heaven’s sake the West already froze the assets of Iran post 1980 Revolution, the Venezuelan gold was seezed in London (2021), after the fiasco of the American defeat in Afghanistan (2021) the US Treasury froze $7.5 US Billion of Afghan Central Bank funds ….
And these F***ing imbeciles in the top Russian financial elites could not read the omens???
It is either incompetence or corruption …. and I tend to believe corruption.
The financial elites with Nabiullina in first place, dream of being accepted into the Western elites ………. and therefore are willing to betray their own country!!!!
Russia’s tragedy, historically, has always been betrayal from within, the so-called Fifth Column.

(Sorry my first post on MoA and I am not sure about formatting)

Posted by: Beau | Mar 23 2022 15:39 utc | 37

Posted by: J Swift | Mar 23 2022 15:35 utc | 34

No, not even momentarily. There are definitely no existing contracts for oil or gas with a price in rubles, which would then get cheaper for the buyer with a falling ruble exchange rate. All energy contracts with Russia so far are in dollars, euros or yuan.

It’s also by no means given that Russia even from now on will price oil and gas in rubles just because it will demand the payment to be made in rubles. These are two different things, as described above. There is no good reason for Russia to price commodities exports in its own currency (as opposed to manufactured goods).

In fact, the USSR is said to have wanted oil priced in gold instead of in dollars. Maybe that is precisely what we will see. To some extent, oil is already priced in yuan through the existing Shanghai futures contract.

Posted by: Unnamed | Mar 23 2022 15:43 utc | 38

there was enough to square all its debts; and put the focus on the tie up on the part of others. The news last week was that Russia was gonna default on their payments; the news is the Americans and Europeans are not trustworthy; this suggests new centers for trading and banking. The Emirates are looking to transition from oil, Brazil, India, China, ASEANS likely all see banking/finance as a new opportunity; and in a multi-polar world, can't be seen to be so sanction happy. These countries ALL have a history of sanctions; we don't we have no idea what we've wrought.

Posted by: ScottinDallas | Mar 23 2022 15:44 utc | 39

Is it a violation of existing or possible future sanctions for Western countries to purchase rubles in the first place? If so, Russia may be forcing the issue here. If gas has to be paid for in rubles, and Europe needs gas to function at all, and if the US declares it illegal to buy rubles to pay for gas, then we see a huge conflict on the horizon between Europe's ability to keep its people heated and fed and their obeisance to US dictates.

Posted by: WJ | Mar 23 2022 15:10 utc | 17

In Commercial Contracts the Seller stipulates the currency he accepts in payment for services and or goods.

U.S.A will dictate it illegal to no avail.

China stipulates payments in Yuan. And Iran, under U.S. sanctions, used gold payments with the aid of helpful Turkey.

India has balked at sanctions on Russia and will trade with Russia in Rupees and Rubles

FIEO: India rupee-ruble trade mechanism with Russia may be ready ...,

https://www.cnbc.com/2022/03/23/fieo-india-rupee-ruble-trade-mechanism-with-russia-may-be-ready-soon.html

Oh, and the Saudis too
Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales

Talks between Riyadh and Beijing have accelerated as the Saudi unhappiness grows with Washington

https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541


It’s the dollar’s Death certificate. We in the West may try to wish it away. But theft is theft.

The 13% will no longer dominate the 87%. We are spectators in real time. The birth of multipolar order. Western bloc, Anglos and EU v. ASEAN. Russia now looks east. The BRICS, SCO all alive and well.


Posted by: Likklemore | Mar 23 2022 15:46 utc | 40

Re: More Sanctions On Russia Will Destroy Europe

As they say, "That's a feature, not a bug"

Plenty of international banks more than happy to take over EU'a global market share in the lucrative financial services sector, and even insert themselves as middlemen into EU trade with Russia and China.

US banks have the advantage that they will receive exemptions from their own sanctions. They will leverage this, to gain ownership of EU financial sector. Chinese will end up with the "rest of the world" global market.

EU (TTF) natgas for the coming year up approx 15% on the news. Limited long term effect on energy markets, IMO.

Posted by: ptb | Mar 23 2022 15:47 utc | 41

Russian CB: Buy Rubles but we only sell them in Yuan.

Posted by: Peter Fenton | Mar 23 2022 15:50 utc | 42

I am reading that the NATO meeting in Brussels has been moved up to Thursday now and lots of troop movement.

On Thursday as well, Russia will reopen its stock market but with significant changes to manage the foreign exchange investments...maybe bifurcated market like China with foreign investors ring-fenced.

Below is a quote from a ZH posting with my perspective following

In a new CNN interview published Tuesday, a Kremlin spokesman refused to rule out that it might use nuclear weapons when pressed by Christiane Amanpour, during a series of questions focused on the Russia's war in Ukraine. The discussion stemmed in part from Moscow last month placing its strategic nuclear forces on higher alert.

While the clip of Putin presidential spokesman Dmitry Peskov being pressed by Amanpour is now going viral with scary sounding headlines and commentary suggesting nuclear war is being mulled by Russia as a legitimate 'option', it doesn't appear he said anything substantially new in terms of a change in Russian nuclear doctrine. "We have a concept of domestic security, and it’s public. You can read all the reasons for nuclear arms to be used," Peskov emphasized.

It seems a tell of this exchange that Russia is responding to worse nuclear rhetoric by spokesfolk on empire side.

Posted by: psychohistorian | Mar 23 2022 15:54 utc | 43

I'm still thinking we might see a big stand down; Putin drops the Ruble thing; Ukraine and Russia call cease fire Minsk 2+ (?) is reinstated, NATO quietly affirms what has been revealed, out of Ukraine. Offending Polish missiles quietly pulled for "upgraded" anti-missile defense. Quietly, the sanctions will be lifted, ships re-flagged, all to give lip service to a hard won noble stalemate. I'm thinking the EU members of NATO are seeing the score. The war may be allowed to prolong, to let Putin finish the clean up; there's no need to rush, the things take time to iron out all the details. Zelensky knows he was left out to dry; but he can't even call for a cease fire without NATO's approval. If the war IS going as the Bar here seems to think; It's just a question of which cauldrons Zelensky won't mind Russia clearing.

Posted by: ScottinDallas | Mar 23 2022 15:58 utc | 44

EUR/RUB currency pair looks possibly broken (illiquid) btw

https://www.google.com/finance/quote/EUR-RUB


For comparison CNY/RUB looks like it came under control, at about 16, which is about 25% drop of Ruble vs prewar =~ 12

Posted by: ptb | Mar 23 2022 16:00 utc | 45

@gottlieb (18)

What you describe reminds me of the this: https://www.youtube.com/watch?v=s35rVw1zskA

Posted by: Rob | Mar 23 2022 16:01 utc | 46

It seems a tell of this exchange that Russia is responding to worse nuclear rhetoric by spokesfolk on empire side.

Posted by: psychohistorian | Mar 23 2022 15:54 utc | 43

Yesterday or the day before the NY Times carried an article suggesting that new nuke technology meant that we might very well see use of nuclear weapons in this conflict. Jake Sullivan alluded to this as well yesterday I believe. So far official Presidential rhetoric has emphasized Russian use of chemical weapons. But i am wondering if the US deployment of a tactical nuke somewhere in the hinterlands of Poland or Ukraine could be blamed on Russia. Certainly there's been a lot of emphasis recently on Russia using nukes as a way of trying to scare US/NATO into action. This seems crazy to me, of course. But the rhetoric is out there for some reason.

Posted by: WJ | Mar 23 2022 16:05 utc | 47

By obliging the European oil and gas clients to pay in roubles, Russia has opened the door to China asking to be paid in Yuan and other countries prefering to deal with their own currency (Iran has already started that with Turkey)
It is a new war that Putin has started, after the denazification the new goal is the 'dedolarisation' on international trade that may weaken the USA.
The dollar is the only asset besides the milirary that the USA can rely on to make other countries obedient. If Russia succeeds in trampling the dollar, it will snowball. Many countries will remove their gold deposit from US's accomplices, such the UK and Australia and either keep their gold within the country or divide it in several neutral countries. Being a close ally to the USA is now suspicious and unreliable.
The dedolarisation war will be fought back violently by the USA and I expect many military involvement of the USA to prevent that.
DEDOLARISATION is the buzz word for the next years...

Posted by: virgile | Mar 23 2022 16:08 utc | 48

Demanding payment in rubles is a great step forward but the real question is what Russia demands in exchange for the rubles it sells, for foreigners to use to in turn buy gas (in practice, this means, what will Russi now barter its energy against?).

Posted by: Unnamed | Mar 23 2022 15:26 utc | 28


Yeah, I don't quite get that either.

The rubles would have to be purchased with . . . something. If they're purchased from banks (central or otherwise) in fellow "unfriendly" states, then the effect would be to repatriate rubles. But I doubt there are lots of rubles floating around Western Europe.

Otherwise the Central Bank of Russia would be selling rubles for precisely the currencies it should be avoiding (dollars and Euro). I'm not seeing the Central Bank of Russia Bank demanding gold (or, say, yuan) in exchange for dollars and Euro -- at least not yet.

Or am I missing something? I'm no expert in these matters.

Posted by: malenkov | Mar 23 2022 16:08 utc | 49

Posted by: Rob | Mar 23 2022 16:01 utc |

exactly my reference - thanks for posting!

Posted by: gottlieb | Mar 23 2022 16:10 utc | 50

Posted by: Paul Damascene | Mar 23 2022 14:55 utc | 10

The key issue is that Non-Residents are forbidden from buying Rubles. They are not readily available - similar to Yuan. You can hold a Yuan bank account outside China but you must withdraw your funds in US dollars - you cannot hold Yuan.

So if you are an "unfriendly" purchaser of Russian hydrocarbons or - metals, grains, oils etc. - you will probably go to a Central Bank auction and buy tranches of Rubles to cover your purchases on a quarterly basis. The auction will determine energy prices and allows Russian Central Bank to determine energy export prices without exchange rate risk.

It is similar to Saudi Arabia accepting Yuan for oil to avoid being used to fund the US trade and budget deficits.

With Germany becoming spendthrift. - €100bn fund for Bundeswehr, €100bn increase in Debt Ceiling, plus EU raising €750 bn for Covid Aid Relief, plus €100bn for Industrial Energy Subsidies plus €500bn for funding Ukraine weapons purchases. - it is hard to see where the funds to repay this Debt Supercycle are coming from if Germany becomes as profligate as France

So the Euro will weaken unless Interest Rates rise which will create insolvencies across the EU - which is why the ECB wants subsidies on food, fuel, and energy to prevent a Wage-Price-Spiral which would force interest rate increases

It seems logical that Russia will not accept exchange rate risks from countries with high energy-=input prices and rising food inflation

Posted by: Paul Greenwood | Mar 23 2022 16:10 utc | 51

Dedollarization=Denazification.

Posted by: Peter Fenton | Mar 23 2022 16:14 utc | 52

Posted by: ScottinDallas | Mar 23 2022 15:58 utc | 44

After invading USSR in June 1941 Germany offered through Swiss intermediaries many peace overtures to UK - all rejected. More people died in last 6 months of WW2 than in previous 66 months of war.........

The West/NATO/USA is totally untrustworthy and has revoked every agreement and treaty - the USA is intent on destruction of Russia and control over its resources and economy as under Yeltsin. Russia would get the same deal as Serbia at Rambouillet

http://en.wikipedia.org/wiki/Rambouillet_Agreement

the accords called for 30,000 NATO peacekeeping troops in Kosovo; an unhindered right of passage for NATO troops on Yugoslav territory; and immunity for NATO and its agents to Yugoslav law. Yugoslavia's refusal to sign the accords was used by NATO to justify the 1999 bombing of Yugoslavia.


This is WAR waged by USA and its vassals who are all afraid to fight so use Ukraine as a cat's paw. They do not intend anything other than ceasefire followed by more war.

As long as the USA exists it is an existential threat to Russia, China, Iran inter alia. The world cannot co-exist with US-UK as Imperialist Powers creating chaos on every continent and instability as policy

Posted by: Paul Greenwood | Mar 23 2022 16:17 utc | 53

But I cannot get my head around the fact that the Russian Central Bank and the financial leadership did not foresee this freezing of their assets in Western banks.

Posted by: Beau | Mar 23 2022 15:39 utc | 37


Welcome to the bar. Have a few drinks on the house.

To your question why the RCB kept assets in Western banks. All countries do for “ease of liquidity, managing their currencies’ value, and for payments in trade and issued bonds (debts).

Over the Years Russia has been reducing its US Forex reserves as it has been reducing its foreign debts.
International trade continues to be priced in U.S. dollar. However, since the dollar has been weaponized, countries are now seeking alternatives.

Explainer at these links:
https://www.thebalance.com/foreign-exchange-reserves-3306258

Members of the IMF follow this guideline:
https://www.imf.org/external/np/mae/ferm/eng/index.htm

My question for Fed Chair Jerome Powell:

What now for the Eurodollar ? All to the quicksand in a basket.

Posted by: Likklemore | Mar 23 2022 16:21 utc | 54

There needs to be a slow walking data time series that tracks how long it takes announcements like ruble pricing to be picked up by the Western press.

Now there is this from Bloomberg: Russia Central Banker Wanted Out Over Ukraine, But Putin Said No


. Russian president said to reject Nabiullina’s bid to resign
. Respected central banker faces legacy at risk as sanctions hit

Russia’s highly regarded central bank Governor Elvira Nabiullina sought to resign after Vladimir Putin ordered an invasion of Ukraine, only to be told by the president to stay, according to four people with knowledge of the discussions.

Nominated for a new five-year term last week, Nabiullina’s current views couldn’t be learned. She is left to manage the fallout from a war that’s quickly undone much of what’s she’s accomplished in the nine years since she took office. The people said departure now would be seen as a betrayal by the president, with whom she has worked closely for nearly two decades.

...

“There’s no hope for the central bank to return to its old policies,” said Sergei Guriev, professor of economics at Sciences Po Paris.

Guriev, who fled to Paris in 2013 and served as chief economist at the European Bank for Reconstruction and Development, has known Nabiullina for about 15 years.

“She didn’t sign up to work in wartime,” he said. “She’s not the kind of person who can work with financial markets shut off and catastrophic sanctions.”

Putin said no. Oh my!

Posted by: too scents | Mar 23 2022 16:28 utc | 55

@Brother Ma | Mar 23 2022 15:25 utc | 26

"…in the home of an intelligent Average Joe watching Tv…

"Well, gee, Jake, weren’t you guys telling us Russia is all exhausted, has no bullets or gasoline and the war will be over in a few weeks?

"Why are you now telling us it will be a long war?

"What gives?"

***

I can imagine the intelligent Average Josef listening to the radio on New Year's Day, 1942, exactly so.

Posted by: Vintage Red | Mar 23 2022 16:29 utc | 56

Posted by: malenkov | Mar 23 2022 16:08 utc | 49

What would be really funny (and this is a thought I’ve toyed with myself for a long time) is if Russia just let the West figure out on its own that it has to deliver physical gold to the exchange in Moscow in order to raise rubles.

As it happens, the European central banks have about 10,000 tons of monetary gold. They should start looking for the keys (and in many cases, make calls to London and New York, begging them to deliver what is supposedly the Europeans’ own gold to them).

Posted by: Unnamed | Mar 23 2022 16:30 utc | 57

Saw a seminar from the Atlantic Council of all groups where German speakers were complaining the the Europeans were baring the burnt of both sanctions against Russia and also from Russian counter sanctions. The moderator surprising to me agreed with the Germans. There are Europeans who understand. This shows how much a grip the US has over NATO/EU. And now NATO conference seems to be gearing up to give China the middle finger.

Posted by: Erelis | Mar 23 2022 16:30 utc | 58

The overlap of Russian supporters with antivaxxers and immigration opponents is striking.

Posted by: Mike Adamson | Mar 23 2022 16:35 utc | 59

Martin Armstrong seems to agree...

What I would do if I were Putin is to create a two-tier monetary system like South Africa once had with the Financial Rand and Domestic Rand. What I would do to put Biden in Checkmate would be to back ONLY the domestic Ruble with gold to restore confidence among the Russian people, but leave the Ruble float for international transactions – the opposite of what FDR did in 1934.
Putin puts Biden’s King in Check

Posted by: circumspect | Mar 23 2022 16:39 utc | 60

@mastameta #21:

so if a foreign central bank pays USD to buy rubles from Russia's central bank, doesn't that mean Russia is collecting USD that can be frozen or cancelled at any time?

Here’s how I imagine this will work. Volkwagen sells cars in Russia, they get rubles in their account at a Russian bank, then they sell these rubles to Uniper, who receive them in their account at another Russian bank, Uniper uses the rubles to pay Gazprom Export for the natural gas. Volkswagen transferring rubles to Uniper within the Russian banking system will be paralleled by Uniper transferring euros to Volkswagen with the European banking system.

Posted by: S | Mar 23 2022 16:40 utc | 61

Am I the only one who noticed Biden (Or his speechwriter) has read 'The Fourth Turning' and believes he is the 'Grey champion'. Back when it was 'Bannon's bible' it was 'debunked' by 'historians' and basically declared fascist by the American and parts of the European MSM.

https://twitter.com/MaajidNawaz/status/1506072187215753218

"We are at an inflection point in the world. It occurs every 3 or 4 generations... there's gonna be a New World Order"

It seems to signal that the Americans are going all in on this and are prepared to not let Russia rejoin their order. Why on Earth the US thinks any power structure reset would result in a benefit to the US given the state it is in is beyond me but even Mearsheimer thinks the US can see off China based on previous performances in the 19th/20th centuries. (Not like they didn't have a lot of help in defeating Germany and Japan actually achieved it's war aims against the US in a roundabout way, just with massive casualties when the US lifted economic sanctions on it and built it up to help fight the USSR and China. And Britain lost out to the US by doing the same thing the US is doing with China, notably allowing it's capitalists to outsource industrial production for their own short-term profit)

Posted by: Altai | Mar 23 2022 16:42 utc | 62

What now for the Eurodollar ? All to the quicksand in a basket.

Posted by: Likklemore | Mar 23 2022 16:21 utc | 54

Worse - much worse. Eurodollar Market was created by Moscow Narodny Bank which did not trust US in 1950s with its Dollar assets so loaned them in London thus circumventing US controls. Now Eurodollar Merket is worth $14 TRILLION

and the Swaps Market requires Russian funds for liquidity - this is Poznar's Thesis that the increasing margin calls for Commodities traders are placing huge demands on Interbank Liquidity at the same time as $400 billion in Russian liquid funds are frozen and no longer available in the market........so you get a Margin Squeeze and a "Lehmann Moment"

Posted by: Paul Greenwood | Mar 23 2022 16:45 utc | 63

thanks b....

it seems there are no peacemakers in the world today... they certainly aren't in positions of power politically...

bretton woods set oil to be exchanged in us$... this obviously favours the us$ and was a result of usas role in ww2.... when the us$ came off the gold standard, it meant the usa could print us$ with no consequences.. this came about as a result of the need for continuing the vietnam war and other usa foreign policy objectives... in new world order, the oil and energy wouldn't be denominated in us$... yes, china and other countries are getting around this by trading directly in yuan and russia now wants to do this with ruble, but the way of defining the value still is in us$... changing it to gold - i am not sure what this would mean, but gold is very manipulated and fiat bankers hate it.

@ ScottinDallas | Mar 23 2022 15:58 utc | 44

scott.. i appreciate your posts! i do believe you are dreaming in technicolor if you think putin is going to back down, or the west is going to back down.. this is make or break time here... no one is backing down... the sanctions will stay as it is the only, abet poor one, that the west has at this point... and as for zelensky - he's a puppet and will do as he is told.. nothing else.. this sanction thing on russia has only increased the past 10 years.. there will be no backing down.. the west has no other strategy! so, we see it differently here... this is a major split in terms of the world financial system.. it is just beginning...

Posted by: james | Mar 23 2022 16:46 utc | 64

As it happens, the European central banks have about 10,000 tons of monetary gold.

I suspect you think they have physical control over this gold rather than it being held in New York or London ...........

Germany tried to repatriate some gold and there were rumours it was tungsten..........other claims are that much of this gold has been re-hypothecated and loaned to banks like J P Morgan

Posted by: Paul Greenwood | Mar 23 2022 16:49 utc | 65

@60 circumspect

There was actually a suggestion that Greece could do this during the debt crisis. The EBU allows the minting of special commemorative coins outside the normal issue, these are mostly silver but they don't have to be. Crucially they have their face value (Otherwise they wouldn't really be coins and collectors wouldn't want them) but they are only legal tender in the country of issue. (Precisely to avoid a situation where a country mints an unaccountable amount of them which also implies that this would be allowed given the restriction) Theoretically a country could mind large amounts of these 'commemorative coins' with some non-precious material or a very low amount of one to create an entirely domestic currency they could control the supply of.

https://www.coin-database.com/series/eurozone-european-silver-programme-euro.html

This is what they are typically like but there is nothing stopping you making them out of any material and to any size or face value.

Now, of course, I'm sure like always the European authorities would follow the rules to the letter when they want and throw them out when they want. But if they were interested in a way to avoid ejecting Greece or the other peripherals out of the Eurozone but still allowing them some paths out of crisis, this would be a way.

Posted by: Altai | Mar 23 2022 16:50 utc | 66

Posted by: Mike Adamson | Mar 23 2022 16:35 utc | 59

And you this how, exactly? Go away with your NPC trolling...

Posted by: Boo | Mar 23 2022 16:51 utc | 67

@ too scents | Mar 23 2022 16:28 utc | 55 with the quote from Bloomberg

Russia’s highly regarded central bank Governor Elvira Nabiullina sought to resign after Vladimir Putin ordered an invasion of Ukraine, only to be told by the president to stay, according to four people with knowledge of the discussions.

I can't provide links but my memory says the "highly regarded" part is because she is liked by the God of Mammon folks and was forced to be tolerated by Putin.

I think Putin is keeping her because she owns the financial boobytraps she has laid in her tenure and she is not supportive of the China/Russia et al alternative Reserve Currency gambit. I think it is a good move on Putin's part and you can bet that there is/will be someone shadowing Elvira Nabiullina every step of the way....including China....grin.....keep your enemies close is the concept.

Fascinating! I am looking forward to the outlines of the alternative financial system.

Posted by: psychohistorian | Mar 23 2022 16:52 utc | 68

- Frankly, this move surprises me and it also doesn't surprise me. This was predicted by more than person.

Posted by: Willy2 | Mar 23 2022 16:56 utc | 69

- Now Europe is "between a rock and a hard place" even more. Between the US Empire and Russia. Is going to be interesting how this is going to develop in the (near) future .............

Posted by: Willy2 | Mar 23 2022 16:58 utc | 70

https://en.wikipedia.org/wiki/Gini_coefficient

I have come to wonder if the GINI coefficient explains a great deal of our mysterious world. I see corporate leaders dumping businesses in Russia and politicians in the West acting insane, relative to their own economies and sanction effects. Why?

Because they don't care. They are protected and wealthy and can do what they wish. Even shareholders are ignored.

Meanwhile, the rich in China get limited, relative to the CCP ( they can even be executed for fraud). In Russia, the oligarchs might be removed or impoverished.

Posted by: Eighthman | Mar 23 2022 17:01 utc | 71

@S 61
thank you for answering my question. that addresses my concerns, since, as per your example, Russia is actually getting tangible goods (Volkswagens) instead of just being handed USD.

and the transaction flow you describe doesn't go through the US banking system. kind of like barter, or at least that's how I understand how iran has managed its intl trade all this time.

Posted by: mastameta | Mar 23 2022 17:01 utc | 72

@ Willy2 | Mar 23 2022 16:58 utc | 70

At the least I expect total capitulation of European "leadership" to US demands, followed by economic hardship and mass protests that will be suppressed with considerable violence. (Micron knows all about how to do that.)

Additionally, the Euro "leadership" might consent to waging hot war against Russia on the USA's behalf, but I'm less sure about that.

Posted by: malenkov | Mar 23 2022 17:02 utc | 73

@pasha #35:

Kind of hard to think clearly--or at all--when you have your head jammed up someone else's arse. "Pay us in good rubles, not your crappy dollars or euros"! LMFAO.

I am sorry to hear about your condition. Maybe your “host” can drink some herbal tea and listen to meditation music, helping him/her to relax muscles and release you from your predicament. Once your head is out and you are thus able to think again, I’m sure you will immediately understand the far-reaching implications of this change in payment currency.

Posted by: S | Mar 23 2022 17:02 utc | 74

Posted by: Paul Greenwood | Mar 23 2022 16:49 utc | 65

Well you must have missed the next sentence in the post you quoted. But yeah, one problem (for the Europeans, not anyone else) is that much of their gold is not really in their own hands. Having London in particular refuse to deliver gold held in ”custody” by them (just like they simply stole Venezuela’s gold a while ago, with the very same Westerners just laughing at Venezuela’s helplessness), needed by European countries to pay for Russian (and pretty soon Saudi, Emirati, Qatari, Iranian, etc.) energy is going to be hilarious.

Posted by: Unnamed | Mar 23 2022 17:02 utc | 75

@ malenkov | Mar 23 2022 16:08 utc | 49

I see two possibilities here:

1) Rubles held in foreign reserves in other countries get priced up quickly, and these countries make a minor killing selling those rubles -- or exact political concessions from them -- to the "unfriendly countries" in order to keep the lights on. Question is, are there even any rubles in foreign reserves in, say, China or Iran? I can't find any information to that effect.

2) Assuming no rubles in foreign reserves, then this is in effect "shutting off the spigot", the goal of which is to exact political concessions from the "unfriendlies".

I am very, very far from an expert, though.

Posted by: The Space Wanderer | Mar 23 2022 17:03 utc | 76

Posted by: Mike Adamson | Mar 23 2022 16:35 utc | 59


LOL is this supposed to be an insult? You are right that this conflict, like so many others, comes down to the liberal-internationalist professional-managerial class versus the material interests of the vast majority of actual human beings.

Posted by: WJ | Mar 23 2022 17:05 utc | 77

well, Paul Craig Roberts must be pleased with this new development. he's been advocating precisely for this.

Posted by: mastameta | Mar 23 2022 17:06 utc | 78

@ S | Mar 23 2022 16:40 utc | 61 with the comment about how interbank transactions might work.

Folks need to understand that the BIS (Bank of International Settlements) in Geneva is the PRIVATELY OWNED clearing house of all nations Central Banks. Transactions between national banks of one country to the national banks of another country normally/historically occur through the countries Central Banks, SWIFT and the BIS.

We have read about the workaround for SWIFT but I haven't read anything recent about an alternative to the private BIS that was supposed to be replaced as part of the Bretton Woods agreement.

The whole concept of foreign exchange reserves and the BIS clearing house functionality are part of the highly manipulated and not transparent world financial markets that need to be turned into public utilities with total transparency, IMO.

Posted by: psychohistorian | Mar 23 2022 17:09 utc | 79

Wake up. Otherwise this will end in disaster. Not for Russia but for the rest of Europe.

That is the plan. Martyanov has been clear on this point for sometime. Europe is the target not Russia. Building an Iron Curtain 2.0 keeps Europe squarely under the US’s thumb.

Posted by: Down South | Mar 23 2022 17:16 utc | 80

[.] I think Putin is keeping her because she owns the financial boobytraps she has laid in her tenure and she is not supportive of the China/Russia et al alternative Reserve Currency gambit. I think it is a good move on Putin's part and you can bet that there is/will be someone shadowing Elvira Nabiullina every step of the way....including China....grin.....keep your enemies close is the concept.

Posted by: psychohistorian | Mar 23 2022 16:52 utc | 68

Yes, Nabiullina has been ring-fenced.


John Helmer:

Alert on the link to article. Returns Error. John's site has been undergoing troubles.

http://johnhelmer.net/chaos-kaput-or-capitulation-who-is-taking-control-of-russian-counter-sanctions

CHAOS, KAPUT OR CAPITULATION - Who is Taking Control of Russian Counter-Sanctions?

There has been active public criticism of Nabiullina’s decision to raise the Central Bank lending rate to 20%, and her apparent unpreparedness to combat the US sanctions, which have frozen more than $450 billion in Central Bank currency reserves, and cut Russia’s leading banks from the SWIFT transaction system.
  
Leading the attack on Nabiullina has been Sergei Glazyev, the  former Kremlin economic adviser and now the minister in charge of macroeconomic policy at the Eurasian Economic Commission.  Glazyev has been joined by Mikhail Delyagin, an economist and State Duma deputy. They have accused Nabiullina of “aiding the enemy”. 
“If our country is a sovereign state,” Delyagin said on television  on March 4, “then why is Ms. Nabiullina still the head of the Bank of Russia, and not under investigation? We have people in jail for economic crimes, and yet a person who has already caused the economy to crash in 2014 and is going to do it for the second time feels just fine at her freedom.”

What can be detected in the series of Putin decrees and orders by Prime Minister Mikhail Mishustin is that a group of officials led by Mishustin, Defence Minister Sergei Shoigu and Federal Security Service Director (FSB) Mikhail Bortnikov, have taken charge of the new scheme to restrict Russian debt repayments to creditors in countries listed as hostile.
This group is known as the Commission for Control of Foreign Investments (CCFI). According to Mishustin’s order No. 431-r of March 6, 2022, Nabiullina is not a member.

On February 28, the Kremlin issued presidential decree No. 79 for “special economic measures in connection with the hostile actions of the United States of America and those who joined them.” This required the domestic retention of 80% of foreign currency earned in Russian export of goods, services, patents, rights and intellectual property.  

[.]
This commission has now replaced the Central Bank, which had been in charge of the Russian capital outflow until now. The commission can now stop the outflow of cash and capital; or it can look the other way as the Central Bank has done.   [.]

(emphasis added)

Posted by: Likklemore | Mar 23 2022 17:18 utc | 81

From RT: "Anatoly Chubais has resigned from his position as the special presidential aide for sustainable development and left Russia. ..."

So what does this portend for Russian economic planning?

Posted by: the pessimist | Mar 23 2022 17:18 utc | 82

@psychohistorian 79

that reminds me of a remark by Pepe Escobar that the Rothschilds are behind BIS.

what are your thoughts on this article below?

Rothschild: The Hidden Sovereign Power Behind BIS
https://hive.blog/bis/@anarchomission/rothschild-the-hidden-sovereign-power-behind-bis

the Wikipedia page on BIS has no mention of the R family. I guess it's been scrubbed like so much of Wiki.

Posted by: mastameta | Mar 23 2022 17:21 utc | 83

Ah!!!! The smell of burning dollars and euros in the morning!!! Smells like VICTORY!!

Rubles will be bought with "friendly" currencies--primarily yuan, but also rupees, pesos, rand, and most importantly--Gold. Psychohistorian noted the longtime manipulation of gold to keep its price low. We already know there's not enough physical gold to satisfy the demand if all paper gold attempted to be redeemed, so IMO it's very likely the manipulation of gold will be broken with a surge in physical demand for a commodity that's actually in very short supply. Gold ought to easily skyrocket to $3-4,000/oz. Furthermore, demand for "friendly" currencies will also rise while demand for dollars and euros will dramatically drop. I echo Karl's joy @36. The next blow will be a new international trading currency based on the now freed value of gold, other commodities and a variety of "friendly" currencies that will be urged to become hard instead of fiat.

That's how I see this playing out. In this situation, the euro will soon fail. Why? As more workers become unemployed due to the lack of energy to run their workplaces, welfare payments will skyrocket, but the ECB only allows so much % of GDP as a deficit which this situation will rapidly swamp, with most EU nations quickly looking like Greece did. Even if the EU and Germany were to drop sanctions and allow NS2 to function, they'll remain unfriendly states and payment for their energy must be made in rubles, gold, or a "friendly" currency.

We ought to be able to hear the massive primal scream emanating from Brussels, Berlin and Paris. The EU's sanction regime will need to die to buy rubles as will the Outlaw US Empire's.

As I advised several weeks ago, European nations need to exit the EU and NATO now and renationalize their central bank and harden their currency as best they can. Then they must reach-out to Russia and ask for forgiveness. The sooner they do that the better for their people and political survival.

Posted by: karlof1 | Mar 23 2022 17:24 utc | 84

Posted by: psychohistorian | Mar 23 2022 17:09 utc | 79

You are wrong on so many counts.

1) BIS is owned by Central Banks
2) the ONLY privately-owned Central Bank is US Federal Reserve owned by Money Centre Private Banks in USA
3) ALL other Central Banks are State-owned
4) BIS is based in BASLE not Geneva because that is where all railway lines from major European countries intersect
5) It was set up to administer German Reparations under Treaty of Versailles just as OECD was set up to monitor Marshall Aid after 1947

Posted by: Paul Greenwood | Mar 23 2022 17:28 utc | 85

the pessimist @82--

Chubais is a traitor/enemy who was kept close by Putin. His self-exile won't hurt anything and likely help Russia's development. The Saker wrote this very unflattering article about him in 2016.

Posted by: karlof1 | Mar 23 2022 17:33 utc | 87

the west has no other strategy! so, we see it differently here... this is a major split in terms of the world financial system.. it is just beginning...

Posted by: james | Mar 23 2022 16:46 utc | 64

Im both afraid you're right and hope you're right. it needs to happen, but it's going to be a bumpy ride (Bette Davis reference).

Posted by: pretzelattack | Mar 23 2022 17:35 utc | 88

@ mastameta | Mar 23 2022 17:21 utc | 83 who asks about the ownership of the BIS

One of the most important things that I have learned in my life is to focus on the structure of things and not the current elements of it.

The fact that the BIS is not a public utility run by sovereign nations tells you everything you need to know. Which of the members of the God of Mammon cult own it is not of interest to me. I want it replaced by a public utility with transparency as should every other human meatsack with morals.

Posted by: psychohistorian | Mar 23 2022 17:35 utc | 89

@karlof1
thank you for your post. of special interest to me is not just the effect on Europe but also what will happen to Japan, whose business interests are freaking out right now about Russia's move. a Reuters headline says russian energy imports cannot be replaced. and the article states:
Russia accounted for 3.63% of Japan's imports of crude oil and 8.84% of its total LNG imports last year.

if Japan must reconcile with Russia, is that not the Quad unraveling? otherwise energy deficient Japan is going to be hurting big. we have already seen the Quad begin to unravel with India siding with Russia.

Posted by: mastameta | Mar 23 2022 17:35 utc | 90

So what does this portend for Russian economic planning

@ the pessimist 82.

See the John Helmer piece at my post 81. Big shake out. Russia will prosper.

likely some are saying "good riddance, seeing the back of you"

..the Boris Yeltsin years. Say no more.

[.]Anatoly Chubais is considered one of the architects of the post-Soviet economic reforms, who introduced Russia to a market economy and privatisation. In 1998, under President Boris Yeltsin's administration, he was elected chairman of the board of RAO UES, the state-run electricity company. From 2008 to 2020, Chubais served as General Manager of the Rosnanotech state corporation.[.]

https://sputniknews.com/20220323/anatoly-chubais-resigned-himself-was-not-fired-kremlin-says-1094126467.html

Posted by: Likklemore | Mar 23 2022 17:35 utc | 91

Purely conjecture:

The entity holding roubles can specify what currency will be accepted for exchange payment. An agreement where half of a transaction is settled in dollars and half in a selected foreign currency would have an impact on global exchanges rates. In the event an OPEC like structure for a basket of currencies were to emerge as a cohesive unit dollars would be chasing foreign currencies that would appreciate with each transaction. Keep the number of roubles constant and deflate away the loss you have experienced through the loss of assets. Wait till the hypothecated gold is called for delivery.

How long the daily losses could be sustained is a question to be considered. What will be the value of the poison the U.S. Federal Reserve holds as assets?

Posted by: empiricist | Mar 23 2022 17:42 utc | 92

@ Paul Greenwood | Mar 23 2022 17:28 utc | 85 who says that

The FED is the ONLY private Central Bank
All the rest of the Central Banks are State-owned
The BIS is owned by Central Banks

Its nice you admit the FED is private....what does that say about the US Reserve Currency? grin

I don't believe that ALL nations Central Banks are sovereign (you wrote State-owned but not sovereign, why?) I refuse to take the time to prove you wrong but challenge you to prove this claim....which leads to the public utility or private control nature and history of the BIS....where is the transparency about this Paul?

Posted by: psychohistorian | Mar 23 2022 17:47 utc | 93

(ANSA) - ROME, MAR 23 - Italy should reject Russian President Vladimir Putin's demand that Europe pay for Russian gas in rubles and not euros, Premier Mario Draghi's economic advisor Francesco Giavazzi said Wednesday.

He told a Bloomberg forum that the government has not taken any decision on the demand, mad earlier Wednesday, "but my opinion is that paying in rubles would be a way of getting round the sanctions (for the Ukraine war), and so I think we will continue to pay in euros".

https://www.ansa.it/english/news/business/2022/03/23/reject-putin-demand-to-pay-gas-in-rubles-giavazzi_6e22b10d-6475-4d6f-8cf2-3fdd1b78eb16.html

Again: paying in rubles would be a way of getting round the sanctions

???

Can anyone elaborate, HOW is "paying in rubles" actualyl circumventing "the sanctions" of EU ???

Unless Italian government by "sanctions" means outright robbery - they probably do think it, but they just can not say honestly say so in public, can they?

Posted by: Arioch | Mar 23 2022 17:47 utc | 94

mastameta @90--

Thanks for your reply and query! Japan's status as an occupied vassal of the Outlaw US Empire greatly impedes its ability to satisfy its genuine national interests. It will no longer be able to purchase Russian hydrocarbons with yen, something that will quite possibly last until Japan frees herself from occupation and is allowed to freely discuss peace with Russia. And as you know, that will require a political sea-change within Japan. As time goes by and the amounts of hydrocarbons the Outlaw US Empire extracts continues to decline, a point will be reached where it can only supply itself--and that point isn't very far away as geological reality will trump political bombast. Russia has massive untapped reserves of gas in its Far East that could easily fuel Japan for decades. But until Japan frees itself, it won't be able to invest in that critical asset.

Posted by: karlof1 | Mar 23 2022 17:50 utc | 95

Posted by: karlof1 | Mar 23 2022 17:24 utc | 84

Hello,

I may be uneducated and naive on this topic, thus please explain to me how stable a world currency based on commodities that by definition are finite and/or decreasing will be in the future. We live in a world that is still expanding in population. Wouldn't such a design be also very deflationary, further adding to the instability?

Posted by: Boo | Mar 23 2022 17:50 utc | 96

@psychohistorian 80
you are right to focus on the overall structure instead of fixating on details that are mostly opaque anyway. it's just that I had never heard of BIS until Escobar mentioned it in a podcast this week. I was about to say that the economics of the system is beyond my understanding but I know just enough to know that economics as a dominant discipline functions more to obscure things than to make them transparent.

Posted by: mastameta | Mar 23 2022 17:52 utc | 97

Arioch @94--

Do recall the sanctions are all illegal and thus break all existing contracts. That situation allows the supplying entity, Russia, to alter the terms of payment. If they aren't met, you don't get what you wanted to purchase. And yes, Russia's move is aimed at destroying the entire illegal sanctions regime that's been allowed to live for too many decades.

Posted by: karlof1 | Mar 23 2022 17:55 utc | 98

Posted by: karlof1 | Mar 23 2022 17:55 utc | 98

This i understand, and this was expklicitly spelled by Putin.

However that is taboo in Western politically correct speech. They pretend liquidity of Euro and the gas contracts are separate, not related things. And now that is what puzzles me. How should they frame "cricumventing sanctions" by mere paying in rubles without bursting that buble? How can they explain it while remaining within their politically-correct vocabulary?

Posted by: Arioch | Mar 23 2022 18:00 utc | 99

@Arioch #94:

He told a Bloomberg forum that the government has not taken any decision on the demand, mad earlier Wednesday, "but my opinion is that paying in rubles would be a way of getting round the sanctions (for the Ukraine war), and so I think we will continue to pay in euros".

You can think all you want, Francesco, but if you don’t pay in rubles, you don’t get the gas. Capisce?

Posted by: S | Mar 23 2022 18:01 utc | 100

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