Russia and economic war by the west

I think the Russian Central Bank will just reduce the amount of capital control and decrease the key interest rates in case this continues. There is little point in letting the ruble appreciate too much.

The Crimean Parliament submitted to the State Duma a bill on the right to seize the property of unfriendly countries without compensation
https://t.me/rian_ru/157842


**** yeah !

lancelot wrote:I think the Russian Central Bank will just reduce the amount of capital control and decrease the key interest rates in case this continues. There is little point in letting the ruble appreciate too much.

it's not about appreciating Ruble but about making loans cheaper imho

lancelot wrote:I think the Russian Central Bank will just reduce the amount of capital control and decrease the key interest rates in case this continues. There is little point in letting the ruble appreciate too much.

Well predicted

The Yanks really screwed this up, the reverse of what they planned and in a matter of weeks.




While the rest of the world is engaged in tightening monetary policy to tame the self-inflicted inflation beast, Russia’s central bank unexpectedly cut its key interest rate the most in nearly two decades last night in an attempt to stave off a domestic recession and bolster confidence in the economy.

Taking the market completely by surprise, the central bank slashed rates by 300bps (from 20% to 17%) at an unscheduled meeting overnight and said further cuts could be made in the months ahead if conditions permit.

As Bloomberg reports, it’s a policy pivot that echoes Governor Elvira Nabiullina’s surprise 200 basis-point rate cut in 2015, which reversed an emergency hike made weeks earlier. At the time, Russia was entering an economic contraction following the first round of sanctions over Ukraine and the collapse in oil prices.

“The central bank wants to be a locomotive of the economic rebound, not a brake,” said Luis Saenz, head of international distribution at Sinara.

What is even more surprising to many is that the Ruble - previously dismissed as "rubble" by President Biden - actually strengthened further on the rate-cut, surging to 72/USD.

https://www.zerohedge.com/markets/ruble-surges-5-month-highs-after-russia-unexpectedly-slashes-rates-300bps

Russia learned its lesson well not wasting reserves trying to prop up the ruble exchange rate like they did in the 1990s.
It is just a way to feed speculators. Remember what Soros did to the UK when he forced them out of the EMU.
This tax on currency conversion in the stock exchange seems pretty critical to me in preventing these sorts of activities.
Since most rubles are in Russia, not abroad, that effectively cut foreign speculator attacks on the ruble.

Russia should continue to freeze the liquidation and conversion into foreign exchange of assets in Russia until the situation stabilizes. This will enable them to do counter sanctions in case they try to come for Russian assets abroad like they did with Gazprom Germany. Russia has a lot of mining projects abroad they might try to target.

The main deal now, I think, is how to solve the transportation bottleneck and divert the supply and export chain away from the unfriendly countries. For this, like I said before, they need to improve the rail links to China and continue to build up shipping via the Arctic at least for high value strategic energy products like LNG and oil. Russia should explore the design of new pipelines, not just Power of Siberia 2 and Soyuz Vostok for natural gas, but also oil pipelines to connect the fields in the Urals to Asia via the Altai. Russia should also try to divert oil, coal sales not just to Asia, but also to Latin America or Africa. Exports of fertilizer to those countries should also be enhanced. In particular chemical ammonia fertilizer is more energy dense than LNG would be.

Like I said the rail links should be improved in capacity. Either by double stacking cargo on trains or increasing the speed of trains like was being worked on. Of both I think increasing the speed of cargo trains would be the best solution. Since it would decrease the travel times between China and Russia's main cities and make the time distance more similar to how trade with Europe used to be. There seems to be a problem in that these high speed wagons required imported bearings from Europe. Recently we also had news of import substitution of train diesel engine block castings which used to be imported from Germany. So I think that is one major thing they need to import substitute in the short term. China has a huge rail industry probably the most advanced in the world. Like I said before Russia should import train wagons from India and China to speed up its transition to this modality of trade. Russia should also work on improving air cargo between China and other East Asian countries and Russia. Even with COVID restrictions it should be easier to expand air cargo than passenger flights. For this, if needs be, they should move An-124 or Il-76 aircraft to Russian civilian cargo operators and establish new routes. These could be used for high value low weight consumer electronics imports from China or Vietnam for example. Taxes on import of machine tools and other products required for import substitution should also be reduced.

The Dollar Devours the Euro

By Michael Hudson and posted with the author’s permission

It is now clear that today’s escalation of the New Cold War was planned over a year ago, with serious strategy associated with America’s plan to block Nord Stream 2 as part of its aim of blocking Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.

As President Biden and U.S. national-security reports announced, China was seen as the major enemy. Despite China’s helpful role in enabling corporate America to drive down labor’s wage rates by de-industrializing the U.S. economy in favor of Chinese industrialization, China’s growth was recognized as posing the Ultimate Terror: prosperity through socialism. Socialist industrialization always has been perceived to be the great enemy of the rentier economy that has taken over most nations in the century since World War I ended, and especially since the 1980s. The result today is a clash of economic systems – socialist industrialization vs. neoliberal finance capitalism.

That makes the New Cold War against China an implicit opening act of what threatens to be a long-drawn-out World War III. The U.S. strategy is to pry away China’s most likely economic allies, especially Russia, Central Asia, South Asia and East Asia. The question was, where to start the carve-up and isolation.

Russia was seen as presenting the greatest opportunity to begin isolating, both from China and from the NATO Eurozone. A sequence of increasingly severe – and hopefully fatal – sanctions against Russia was drawn up to block NATO from trading with it. All that was needed to ignite the geopolitical earthquake was a casus belli.

That was arranged easily enough. The escalating New Cold War could have been launched in the Near East – over resistance to America’s grabbing of Iraqi oil fields, or against Iran and countries helping it survive economically, or in East Africa. Plans for coups, color revolutions and regime change have been drawn up for all these areas, and America’s African army has been built up especially fast over the past year or two. But Ukraine has been subjected to a U.S.-backed civil war for eight years, since the 2014 Maidan coup, and offered the chance for the greatest first victory in this confrontation against China, Russia and their allies.

So the Russian-speaking Donetsk and Luhansk regions were shelled with increasing intensity, and when Russia still refrained from responding, plans reportedly were drawn up for a great showdown to commence in late February – beginning with a blitzkrieg Western Ukrainian attack organized by U.S. advisors and armed by NATO.

Russia’s preemptive defense of the two Eastern Ukrainian provinces and its subsequent military destruction of the Ukrainian army, navy and air force over the past two months has been used as the excuse to start imposing the U.S.-designed sanctions program that we are seeing unfolding today. Western Europe has dutifully gone along whole-hog. Instead of buying Russian gas, oil and food grains, it will buy these from the United States, along with sharply increased arms imports.

The prospective fall in the Euro/Dollar exchange rate

It therefore is appropriate to look at how this is likely to affect Western Europe’s balance of payments and hence the euro’s exchange rate against the dollar.

European trade and investment prior to the War to Impose Sanctions had promised a rising mutual prosperity between Germany, France and other NATO countries vis-à-vis Russia and China. Russia was providing abundant energy at a competitive price, and this energy was to make a quantum leap with Nord Stream 2. Europe was to earn the foreign exchange to pay for this rising import trade by a combination of exporting more industrial manufactures to Russia and capital investment in developing the Russian economy, e.g. by German auto companies and financial investment. This bilateral trade and investment is now stopped – and will remain stopped for many, many years, given NATO’s confiscation of Russia’s foreign reserves kept in euros and British sterling, and the European Russophobia being fanned by U.S. propaganda media.

In its place, NATO countries will purchase U.S. LNG – but they will need to spend billions of dollars building sufficient port capacity, which may take until perhaps 2024. (Good luck until then.) The energy shortage will sharply raise the world price of gas and oil. NATO countries also will step up their purchases of arms from the U.S. military-industrial complex. The near-panic buying will also raise the price for arms. And food prices also will rise as a result of the desperate grain shortfalls resulting from a cessation of imports from Russia and Ukraine on the one hand, and the shortage of ammonia fertilizer made from gas.

All three of these trade dynamics will strengthen the dollar vis-à-vis the euro. The question is, how will Europe balance its international payments with the United States? What does it have to export that the U.S. economy will accept as its own protectionist interests gain influence, now that global free trade is dying quickly?

The answer is, not much. So what will Europe do?

I could make a modest proposal. Now that Europe has pretty much ceased to be a politically independent state, it is beginning to look more like Panama and Liberia – “flag of convenience” offshore banking centers that are not real “states” because they don’t issue their own currency, but use the U.S. dollar. Since the eurozone has been created with monetary handcuffs limiting its ability to create money to spend into the economy beyond the limit of 3 percent of GDP, why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands? That would give foreign investors security against currency depreciation in their rising trade with Europe and its export financing.

For Europe, the alternative is that the dollar-cost of its foreign debt taken on to finance its widening trade deficit with the United States for oil, arms and food will explode. The cost in euros will be even greater as the currency falls against the dollar. Interest rates will rise, slowing investment and making Europe even more dependent on imports. The eurozone will turn into an economic dead zone.

For the United States, this is Dollar Hegemony on steroids – at least vis-à-vis Europe. The continent would become a somewhat larger version of Puerto Rico.

The dollar vis-à-vis Global South currencies

The full-blown version of the New Cold War triggered by the “Ukraine War” risks turning into the opening salvo of World War III, and is likely to last at least a decade, perhaps two, as the U.S. extends the fight between neoliberalism and socialism to encompass a worldwide conflict. Apart from the U.S. economic conquest of Europe, its strategists are seeking to lock in African, South American and Asian countries along similar lines to what has been planned for Europe.

The sharp rise in energy and food prices will hit food-deficit and oil-deficit economies hard – at the same time that their foreign dollar-denominated debts to bondholders and banks are falling due and the dollar’s exchange rate is rising against their own currency. Many African and Latin American countries – especially North Africa – face a choice between going hungry, cutting back their gasoline and electricity use, or borrowing the dollars to cover their dependency on U.S.-shaped trade.

There has been talk of IMF issues of new SDRs to finance the rising trade and payments deficits. But such credit always comes with strings attached. The IMF has its own policy of sanctioning countries that do not obey U.S. policy. The first U.S. demand will be that these countries boycott Russia, China and their emerging trade and currency self-help alliance. “Why should we give you SDRs or extend new dollar loans to you, if you are simply going to spend these in Russia, China and other countries that we have declared to be enemies,” the U.S. officials will ask.

At least, this is the plan. I would not be surprised to see some African country become the “next Ukraine,” with U.S. proxy troops (there are still plenty of Wahabi advocates and mercenaries) fighting against the armies and populations of countries seeking to feed themselves with grain from Russian farms, and power their economies with oil or gas from Russian wells – not to speak of participating in China’s Belt and Road Initiative that was, after all, the trigger to America’s launching of its new war for global neoliberal hegemony.

The world economy is being enflamed, and the United States has prepared for a military response and weaponization of its own oil and agricultural export trade, arms trade and demands for countries to choose which side of the New Iron Curtain they wish to join.

But what is in this for Europe? Greek labor unions already are demonstrating against the sanctions being imposed. And in Hungary, Prime Minister Viktor Orban has just won an election on what is basically an anti-EU and anti-U.S. worldview, starting with paying for Russian gas in roubles. How many other countries will break ranks – and how long will it take?

What is in this for the Global South countries being squeezed – not merely as “collateral damage” to the deep shortages and soaring prices for energy and food, but as the very objective of U.S. strategy as it inaugurates the great splitting of the world economy in two? India has already told U.S. diplomats that its economy is naturally connected with those of Russia and China. Pakistan finds the same calculus at work.

From the U.S. vantage point, all that needs to be answered is, “What’s in it for the local politicians and client oligarchies that we reward for delivering their countries?”

From its planning stages, U.S. diplomatic strategists viewed the looming World War III as a war of economic systems. What side will countries choose: their own economic interest and social cohesion, or submission to local political leaders installed by U.S. meddling like the $5 billion that Assistant Secretary of State Victoria Nuland bragged of having invested in Ukraine’s neo-Nazi parties eight years ago to initiate the fighting that has erupted into today’s war?

In the face of all this political meddling and media propaganda, how long will it take the rest of the world to realize that there’s a global war underway, with World War III on the horizon? The real problem is that by the time the world understands what is going on, the global fracture will already have enabled Russia, China and Eurasia to create a real non-neoliberal New World Order that does not need NATO countries and which has lost trust and hope for mutual economic gains with them. The military battlefield will be littered with economic corpses.

https://thesaker.is/the-dollar-devours-the-euro/

Watch out, those of you living in the EU...

Russia has yet another trade route... Down to Caspian Sea Iran - India/Africa . Not yet lots of capacity but with time its gonna to be increased.
I just wonder when Russia decides to support openly North Korea?

Where we may well be headed

Duke of Qin
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14h • 6 tweets • 1 min read

I wrote this a few years ago but people still aren't aware of how a chaos maximization strategy serves US interests.

People like to compare US hegemony to late imperial Rome but aren't cognizant of the fact that once Rome no longer had the strength to enforce the Roman peace or Roman law, that didn't mean it no longer had the strength to create Roman disorder.

The strategic policy of the Eastern Roman empire along frontiers it could no longer govern was to make them ungovernable so no one could. Once the US can longer be the city on a golden hill, it will not fade quietly but instead seek to be king of the dung heep. What this means in practice is taking advantage of it's relatively secure and isolated geostrategic position and creating bush fires across the rest of the world for others so that it itself is viewed as an oasis of stability and security in comparison so that financial flows can be redirected to itself from the rest of the world.

Once you move from a win-win game to a lose-lose game, the strategy becomes to make sure that others lose more in relative terms than yourself.

It is why the US is undermining the international system it publicly espouses to uphold and why it's immediate satrapies are being put to the torch first.

There are of course ways to strike back at the US strategy here, but none of them are particularly pleasant and beyond the mental blocks of people who cling to Liberalism or even just basic decency.

I just wonder when Russia decides to support openly North Korea?

Cheap energy supplies to North Korea via a gas pipeline that goes through North Korea to South Korea so that NK gets transit fees for SK purchases of cheap gas would be a good financial boost to their economy.

Cooperation in food production with Russia would also be a good thing for North Korea too... food stability is important to any country.

There are of course ways to strike back at the US strategy here, but none of them are particularly pleasant and beyond the mental blocks of people who cling to Liberalism or even just basic decency.

Actually Russia cutting ties and breaking away from the US would deny them a lot of important products and resources that they need without having to start a war or kill anyone.

Stopping using US dollars and Euros is another huge step in weakening the monster.

GarryB wrote:Cheap energy supplies to North Korea via a gas pipeline that goes through North Korea to South Korea so that NK gets transit fees for SK purchases of cheap gas would be a good financial boost to their economy.

Cooperation in food production with Russia would also be a good thing for North Korea too... food stability is important to any country.

From what I understand the problem with North Korean food production is due to the weather and the poor soil quality. South Korea used to be the farmland and North Korea the industrial zone. I think North Korea should get natural gas and a fertilizer plant.

lancelot wrote:

GarryB wrote:Cheap energy supplies to North Korea via a gas pipeline that goes through North Korea to South Korea so that NK gets transit fees for SK purchases of cheap gas would be a good financial boost to their economy.

Cooperation in food production with Russia would also be a good thing for North Korea too... food stability is important to any country.

From what I understand the problem with North Korean food production is due to the weather and the poor soil quality. South Korea used to be the farmland and North Korea the industrial zone. I think North Korea should get natural gas and a fertilizer plant.

It is a combination of two things actually - energy supply and yes, poor farm land.

When Kim Jong Un took over, he had a plan to advance NK's electrical grid by implementing wind farms up on the hills/mountain side (makes sense honestly) and then more coal burning plants for cheaper energy till they could get more windmills up and possibly tidal plants. This in turn would have provided cheap energy to develop their greenhouse growth and control food production since greenhouses are far more efficient in growing food but require the necessary resources.

All in all, they failed at this project mostly due to not being able to start the windfarms and grow the energy production. So option 2 was the free trade zone they had worked on and import more gas and resources from Russia. This can and was being done but I am unsure how far it went beyond what it did.

Now this is the perfect time for Russia to move on in, open up greenhouse production for them under deals, all the while they import what is needed in Russia - clothing material (silks and what not). NK suites are apparently very good. Our friend d_taddei2 has actually been to North Korea on a visit. He may know better.

So much for the "Sanctions from Hell", Russia just Checkmated the entire EU and the sheeple don't even know it yet. Maybe they'll understand once they're sitting in the dark & freezing their balls off...