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Very dangerous and challenging times head for Russia (and the rest of the world) - but Russia and its people are robust.
Today is Christmas in Russia
Today is Christmas in Russia
Igor
Strelkov : War Awaits Russia
Host:
Aleksander Nikolaevich Krutov, Chief Editor of the periodical
"Russian House"
Russian Default Risk Surges To New 6-Year Highs As Ruble Rubble Returns
7
January, 2015
Just
when you thought it was all over... Having
bounced post-CBR intervention and somewhat stabilized, the
re-collapse in crude oil prices and continued weakness in Russian
macro data provided just the impetus for a re-plunge in the Ruble
(back above 63.5/USD) and
surge in Russian
bond yields (back to 14%).
While Russian stocks are also retesting towards recent lows, it is
Russian CDS that is the most telling as it closed to day at 595bps
- the widest since March 2009.
While these violent gyrations are new for recent history, they are
not a new phenomenon, but are quite
characteristic of the country’s financial history.
The
Ruble and stocks are not quite back to recent lows...
But
Russian credit risk has hit new highs...
However,
as RT explains, this
is nothing new for Russia...
The
dramatic fall of the Russian ruble made headlines in December. The
violent gyrations in the ruble are not a new phenomenon, but are
quite characteristic of the country’s financial history.
On
December 15 and 16, the ruble took a 22 percent dive, which prompted
a run on the Russian national currency.
The
ruble’s spectacular 22 percent plunge on December 15 and December
16 has prompted investors to liken the crisis to 1998, when the ruble
lost 27 percent on August 17. Reaching a 16-year low, the ruble fell
to 80 against the USD. By the time of publication, it had recovered
to 62.7, compared to 32.9 at the beginning of 2014.
800 years of history
One
of Europe’s oldest currencies, the ruble has been in use since the
13th century. First made of silver, the currency derives its namesake
from the Russian word ‘rubit’ which means to chop or hack, and
originally was made from fragmented pieces of the Ukrainian hryvnia.
The
ruble has been chopped, hacked, collapsed, and re-denominated several
times throughout its nearly 800-year history. The most volatile years
came along with regime change and revolution.
After
the 1917 Bolshevik revolution, the ruble lost one third of its value,
and in the following years while the country was gripped by civil
war, the ruble dropped from 31 against the dollar to nearly 1,400.
The ruble hit its historic low of 2.4 million per USD after the civil
war and the year the revolution’s leader Vladimir Lenin died. It
was re-denominated to 2.22.
Throughout
the Soviet Union, the ruble was little used outside state borders, so
the government kept the official rate close to the dollar, a massive
overvaluation.
In
the last years of the Soviet Union, the economic crisis caused panic
among the population who were ‘stuck’ with their increasingly
worthless rubles. A black market naturally developed, and while the
official rate for the ruble was 0.56 per dollar, a single greenback
actually sold for 30-33 rubles on the street.
From Soviet to Shock Therapy
The
ruble collapsed along with the Soviet state, and different currencies
were set up in the 15 different republics. The Central Bank of Russia
replaced the State Bank of the USSR (Gosbank) on January 1, 1992 and
the Russian ruble replaced the Soviet ruble.
The
new Russian Central Bank set the official exchange rate at the Moscow
Interbank Currency Exchange (MICEX) at 125 rubles to the US dollar.
By December 1992, the ruble had already lost about two third's of its
value.
Russia’s
post-Soviet economy was dominated by ‘shock therapy’, and as
President Boris Yeltsin’s reforms spurred rapid inflation, millions
of Russians lost their savings.
Boris
Yelstin’s political infighting with the Communists in 1993 caused
the ruble to slide more, down to 1,247 per 1 USD. Yeltsin won the
political coup, and a constitution was signed on December 12, 1993.
Shortly
after the political victory, in January 1994, the authorities banned
the use of the US dollar and other foreign currencies in circulation
in an attempt to stymie the ruble’s decline.
Black Tuesday and Black Thursday
On
October 11, 1994, an event known as ‘Black Tuesday’ hit the
Russian financial market, and the ruble collapsed 27 percent in one
day, which on top of a decline in GDP and massive inflation,
catapulted Russia into an economic recession.
By
the end of 1995, chronic inflation had reached 200 percent.
In
1996 the currency closed at 5,560 rubles per US dollar. 1997 was the
first year of relative stability, but the ruble still fell to 5960
rubles per dollar. An era of stability prompted the government to
devalue the currency and slash 3 decimal places, and on January 1,
1998, the ruble was set to 5.96 against the US dollar.
The
bottom was ready to fall out of the economy. On August 17, 1998,
Russia announced a technical default on its $40 billion in domestic
debt and ceased to support the ruble on the same day. At the time,
the bank only had $24 billion in reserves. The stock market and ruble
both lost more than 70 percent, and nearly a third of the country’s
population fell below the poverty line.
Along
with the default came another mass devaluation of the ruble. In six
months the value of the ruble fell from 6 to the dollar to 21 to the
dollar.
“There
was a desire to escape from the ruble from any direction,” Sergey
Aleksashenko, deputy finance minister under Boris Yeltsin, has
observed. Aleksashenko says today’s ruble crisis reminds him of
1998.
On
May 27, 1998, the Central Bank increased the main lending rate to 150
percent, which brought loans to a near halt. By the end of 1998,
inflation was 84 percent and the Russia GDP lost 4.9 percent.
Both
currency crises in the 90s forced the governors of the Central Bank
to resign.
The
1998 ruble crisis, like today, was driven by falling oil prices,
which went as low as $18 in August 1998. However, today's crisis is
much less of a risk, as Russia has more than 10x the amount of
currency reserves as it did in 1998.
The
ruble met the new millennium with a rate of 28 to the dollar, and
after hitting a low of 31 in 2003, started to slowly strengthen.
Recession: in, out, and in again?
In
2008, Russia along with the much of the rest of the world fell into
recession, losing 7.8 percent of GDP in 2009. The Russian economy
fared the crisis rather well, and the economy was back on track with
4.5 percent growth in 2010.
Russia
is facing its biggest currency crisis since 1998. The ruble has
mostly been tumbling in tandem with weak oil prices, which have
nearly halved since June, when Brent crude went for $115 a barrel. In
January, pricesplummeted below
$50 a barrel. The ruble has lost more than half its value since the
beginning of the year. Investors worry that the devaluation, along
with falling oil and political tensions, will send Russia into
recession this year.
The
Central Bank forecast a 4.7 percent decline in GDP if oil prices stay
at $60 per barrel.
On
December 15 the ruble plunged 11 percent, and to counter the plummet,
the Central Bank increased the key lending interest rate to 17
percent, in the middle of the night. The next morning after slight
gains in the early morning hours, panic against ensued, and the ruble
shot up 22 percent, the biggest single day loss since 1998.
Russians
called it ‘Black Tuesday’ in reference to the 1998 currency
devaluation when the ruble jumped from 6 to the US dollar to 21 in
less than 24 hours.
During
his annual end of the year press conference, Russian President Putin
didn’t place blame on any particular government department, but
said the Central Bank’s response had been appropriate, but possibly
too late. So far, Putin continues to describe the Central Bank’s
policy as “adequate.”
The
government has already made many swift moves to salvage the ruble
since mid-December. It hiked the key interest rate to 17 percent to
control ruble flows, has lent money to the company’s biggest oil
producer, Rosneft, and bailed out the country’s 29th largest
lender, Trust Bank.
Russia’s
biggest oil producers, including Gazprom and Rosneft, have been
ordered to sell a fraction of their foreign exchange revenues over
the next couple of months in order to support the ruble, adding an
estimated $1 billion to the daily market.
Why
Putin Will Not Dump Novorossia: Moscow's and Kiev's Models of "United
Ukraine" are Mutually Exclusive
2
January, 2015
Anatoly
Wasserman - Antifashist.com
Translated
from Russian by Kristina Rus
The
much talked about "dumping" of Novorossiya, which is
notoriously promoted by Ukrainian, Western and partially the Russian
press [tr. and State Dep. social media warriors], in reality is
unlikely, said in an interview with the news agency News Front a
prominent intellectual and political analyst Anatoly Wasserman. The
rhetoric about "united Ukraine", which is really voiced by
the Kremlin officials, is fundamentally different from what is meant
by the official Kyiv.
And
Moscow's conditions are unacceptable to Kiev, as much as the Kiev
regime's model of "united Ukraine" is absolutely
unacceptable to Moscow. Wasserman believes such nuances are too
significant to leave them out of discussion.
"A
few words about "united Ukraine". Yes, this slogan sounds
from the mouth of Putin and Lavrov almost as often as from the mouth
of Poroshenko and Yatsenyuk. But, you know, the medieval scholastics
used to say that if two people say the same thing, it does not
necessarily mean the same thing. In this case, it is important for me
that every statement of Putin and Lavrov about "united Ukraine"
is accompanied by a description of the conditions under which Ukraine
can in principle be united. A list of these conditions shows that the
current Kiev usurpers cannot fulfill a single demand from this list.
That is, in the words of Putin and Lavrov's the phrase "united
Ukraine" actually means a radical change, constructing a
completely new government, capable of ensuring equal rights,
bilingualism and much more of what is really needed. Anything similar
to what Kiev usurpers consider "united Ukraine" Russia will
not accept," - said Wasserman.
According
to the analyst, despite the diversity of opinions in respect to
Donbass, which, of course, exists in Russian elites, overall there
are no opponents of Novorossia there. Moreover, even pro-Western
non-systemic opposition is promoting pro-Ukrainian rhetoric only
because it is removed from power. In other circumstances, their
screams would have exactly the opposite angle, says Wasserman.
"I'm
talking about Russia, as a whole, although in my domestic
publications I repeatedly emphasise that the Russian government is
divided into two parts, as, indeed, the authorities in most countries
of the world. One of these parts represents the interests of
manufacturers and is grouped around the security block of the
government and is headed directly by the President. Another part
protects the interests of the merchants and is grouped around the
economic block of the government and is headed respectively by the
Prime Minister. The balance of these two parts explains and defines
many of the oddities in the behaviour of the Russian Federation. But
in relation to Ukraine, as far as I can tell, the positions of both
parts of the Russian government are practically identical simply
because in case of victory of the U.S. and its puppets in Kiev, not
only the manufacturers in the Russian Federation will be destroyed,
but a significant proportion of the merchants will pushed aside and
they already understand this.
Given
all the contradictions in Russian domestic affairs, I am quite
convinced that neither Putin nor Medvedev can dump Novorossia.
Moreover, even if by some miracle the dreams of, what in Russia is
called non-systemic opposition, but, in fact, are mostly ordinary
agents of American propaganda, - will come true, even they will be
forced to defend the interests of Novorossia and not Kiev", -
said the expert.
Translators
Note:
At
a Ukraine debate in USA a prominent Russian opposition member was
asked a question: "How can Putin's high approval rating be
lowered?" His answer was: "By making Putin look weak".
Ironically the Western information machine has changed it's tune from
blaming Putin for supporting Novorossia to blaiming Putin for not
supporting Novorossia enough. This battle is raging on Russian
internet pages, and is spilling over onto the pages of Western
Novorossia supporters. Every event in Ukraine and Novorossia is
evaluated by its utility to "Putin is a traitor" claim.
Since the West had failed in its mission of nurturing any semblance
of Russian opposition, and Putin's rating took off after Crimea, the
West headed by Russia's main nemesis - the USA, has correctly
refocused its attention on the untapped power of Russian patriotism.
As a result the US has gotten Putin between a rock and a hard place.
He is damned if he helps Novorossia, and he is damned if he doesn't.
Russian patriots have been successfully divided into a pro-Putin and
anti-Putin camp. The anti-Putin camp is outraged by negotiations, the
halting of hostilities, calling for a march to Kiev, Russian boots on
the ground yesterday, condones any deals with Kiev and says Putin
caved to Russian elites, which caved to the West. The pro-Putin camp
trusts in the "PSP" (Putin's Secret Plan, even if
evolving), Lavrov's charm, measured steps, the building of a vertical
of power and unified command, invisible aid, Russian resolve,
consolidation of elites around the center and the ultimate goal of
turning the entire Ukraine Russia-friendly, which would not be
achieved by its invasion. The debate rages on, but ironically,
Putin's replacement would be faced with the same tasks as Putin, if
he was to hold on to power, according to Vasserman. The question is -
would he be more successful?
America Lost in Ukraine
January
2, 2015
Rostislav
Ishchenko for Prensa Latina
(Posted
in Russian on R.I. VK page)
Translated
from Russian by Kristina Rus
In
2014 the attention of the Russian society, and to a significant
extent the international community was focused on Ukraine. This is
understandable from the point of view of the dramatic events
unfolding on this territory, but not correct, from the point of view
of global processes, only a pale reflection of which were the events
in Ukraine.
The
Ukrainian crisis has become a logical continuation of the Syrian and
Libyan crises, which began in 2011 and continued until now, and the
Georgian crisis of 2008. All of these crises were stages of
coordinated U.S. attack on Russia.
Actually
the last six years, we are dealing with a global confrontation
between Moscow and Washington, which entered an open phase in 2008 on
the initiative of the USA and since then, developing incrementally.
In these sequence the year 2014 became pivotal. Having suffered
defeat in Georgia, stalled in the Middle East and North Africa, the
USA attempted with one blow to turn the tide in their favor in
Ukraine. With this goal an armed coup was organized in Kiev in an
attempt to build a Nazi Russophobic state that would become the
springboard for anti-Russian actions, and, ultimately lead to the
destabilization of Russia and the destruction of its statehood.
As
a result of complex military, political, diplomatic, economic and
financial measures taken by the Russian leadership, the plan of
Washington could not be fully implemented. However, the US did not
back off and did not replace the point of the main focus, as it
happened previously, when Georgia's central place in American plans
was replaced by Libya, then Syria, and finally Ukraine. Washington
took the path of building up efforts, mobilizing by the end of 2014
all their resources and allies.
However,
Russia managed to hold on, and the U.S. got bogged down in Ukraine
and provoked by their actions internal destabilization of the EU.
Thus, in essence, 2014 was a year of struggle for the initiative,
during which Washington has continued to raise the stakes and
mobilize new resources, and Moscow accepted each new offered level of
confrontation. At the same time, conducted by Russia in the summer
exercises involving a half-million troops from all military districts
and practicing defense from a nuclear attack on Russia and executing
a counter-nuclear strike were originally supposed to show the
opponents that Russia is ready for any developments, including the
highest level of confrontation.
It
can be stated that by the end of 2014 all available U.S. resources
were activated and thrown into battle. At the same time, Russia has
retained the ability to attract new resources of its own and of its
allies. As a result, a defeat of the US in the medium term became
inevitable. Therefore, Washington currently tries with maximum
economic pressure, as well as enabling technologies of internal
destabilization of Russia, to tactically win a strategically lost
war.
Such
a high voltage, the US and its allies (primarily the EU, which has
already begun the process of decomposition) is not capable of
withstanding much longer. However, the next few months, most likely
the entire first half of 2015 will be critical. At the same time
there is an extremely high risk of accidental plunge into a
full-scale military conflict between nuclear powers. If Russia will
be able to withstand the pressure in the spring or summer, then by
the fall (and possibly earlier) the United States should move towards
a strategic retreat and will be unable to regain the initiative in
the future.
As
for Ukraine, thanks to the complete inadequacy of the post-coup
leadership of the country and its inability to control and stabilize
the internal political and economic situation, Kiev completely lost
its function of a subject and became exclusively an object of
application of outside (primarily American) efforts. The country
turned into consumable material working for foreign geopolitical
interests and as such, will be used in 2015.
Since,
as mentioned, the US is in a rush to actively use all available
resources to destabilize Russia, to most efficiently use the remnants
of the Ukrainian statehood, they only can through the intensification
of the civil war in Ukraine and its spilling to new territories.
Therefore, we should expect that during 2015 the entire territory of
Ukraine will be one way or another engulfed in the flames of civil
war. Since there are no more internal forces for its (war)
termination and restoring some semblance of normal life in Ukraine
left, then only external armed intervention and the introduction of
external management over whatever is left of Ukraine will stop this
conflict.
Russia
should definitely take part in the military-political settlement in
Ukraine, because, first, it is already involved, and second, because
it cannot allow someone else to take over its own backyard in the
condition of a global conflict.
In
general, the end of the current geopolitical conflict lays beyond
2015 and should lead to the elimination of today's civilization,
built on the principle of military-political and financial-economic
dominance of the United States (which already do not live up to this
role) and replacing it with a different, more equitable polycentric
civilization of a multipolar world, in which the Anglo-Saxon
countries, as the initiators of the current world conflict and the
defeated party will be able to play the same role as the current
Germany and Japan - important economically, but politically
secondary. To build a new fair world de-americanization is needed not
less than denazification after the World War II.
Rostislav
Ishchenko, President of the Center of System Analysis and Forecasting
MH-17
Not a Buk-M1 missile - full report and analysis of fake evidence
Dear
friends,
I have recently informed you that the Dutch blogger Max Vanderwerff had posted a very interesting analysis debunking the Buk-M1 "missile plume" theory. Today I am posting his full research online which I encourage you to download from the following to locations:
http://www.mediafire.com/view/t5o16c6qz3nl8be/Not_A_Buk_-_final_copy.pdf
http://www.docdroid.net/oj8s/not-a-buk-final-copy.pdf.html
Both of these services offers to read the PDF file online.
I think that it is absolutely crucial that we not allow the truth about MH17 to be buried under an avalanche of lies or be 'forgotten'. By now, there is a lot of research which has been done, some of it excellent, some of it less so, but we absolutely must continue to keep this topic alive.
Please read this report and do your best to circulate it amongst your friends.
Kind regards and many thanks,
The Saker
I have recently informed you that the Dutch blogger Max Vanderwerff had posted a very interesting analysis debunking the Buk-M1 "missile plume" theory. Today I am posting his full research online which I encourage you to download from the following to locations:
http://www.mediafire.com/view/t5o16c6qz3nl8be/Not_A_Buk_-_final_copy.pdf
http://www.docdroid.net/oj8s/not-a-buk-final-copy.pdf.html
Both of these services offers to read the PDF file online.
I think that it is absolutely crucial that we not allow the truth about MH17 to be buried under an avalanche of lies or be 'forgotten'. By now, there is a lot of research which has been done, some of it excellent, some of it less so, but we absolutely must continue to keep this topic alive.
Please read this report and do your best to circulate it amongst your friends.
Kind regards and many thanks,
The Saker
Finally
it is Christmas (Рождество Христово) in Russia
Today
Orthodox Christians like myself celebrate the Eve of the Nativity
(aka "Christmas") and tomorrow will be a major feast day
for us (Orthodox feasts always begin on the previous evening).
---the Saker
