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Thread: Russian companies withdraw billions from west, say Moscow bankers

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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by MildSteel View Post
    A lot of what is said in public is for public domestic consumption. When you think about it, Europe's economy is very fragile right now. Substantial sanctions would likely trigger a disruption in gas supplies, which would damage Europe's already fragile economy, although Russia will bear the brunt of the pain. Unless this issue get's extreme. I don't think we will see any substantial sanctions as a result.
    You really shouldn't buy into the "Russia will have it worse" line. It is really just about getting the public on board with sanctions by convincing them the pain will be greater on the other side. Amazing how quick people forget that it was not too long ago when people were openly discussing the possibility of multiple European countries defaulting on their debts and collapsing the European banking system. By no means is Europe in a state where it could take an energy shock as extreme as what we are talking about. On the other hand, Russia still has other customers and it can divert some of its supply to those customers at much higher prices. They don't even have to shut off Europe's supply completely as any significant reduction would allow them to net much higher profits and sink the European economy at the same time.
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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by Summerwind View Post
    Well when the US and EU foolishly, imo, telegraph in advance their intentions, of course people are going to do what they can before the deadline hits to save what they can. If freezing assets is the plan, probably should keep that part under wraps until you're effectively already doing it.
    The problem with that is the purpose is to stop someone from doing something by threatening them. You threaten them first, and then you act. It's just like with your kid, you don't want to punish them, so you threaten them first and see if they stop the undesirable behavior. If they don't stop then you execute your punishment.

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    Re: Russian companies withdraw billions from west, say Moscow bankers

    The Russian stock market is in collapse and the ruble is at lowest in 10 years. This is just a pathetic move from putin loyalists. It's a dent in the EU market and the EU economy and it won't do much for Russia either. Pathetic really.

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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by Demon of Light View Post
    You really shouldn't buy into the "Russia will have it worse" line. It is really just about getting the public on board with sanctions by convincing them the pain will be greater on the other side. Amazing how quick people forget that it was not too long ago when people were openly discussing the possibility of multiple European countries defaulting on their debts and collapsing the European banking system. By no means is Europe in a state where it could take an energy shock as extreme as what we are talking about. On the other hand, Russia still has other customers and it can divert some of its supply to those customers at much higher prices. They don't even have to shut off Europe's supply completely as any significant reduction would allow them to net much higher profits and sink the European economy at the same time.
    The problem for Russia is that they don't have the type of financial resources that the United States has. The United States has a currency that everyone accepts and they can essential print as much as needed. At least right now. Russia doesn't have that. Another thing is that Russia is too dependent on imports such as food. That's another weakness. Lastly, there economy is too dependent on oil exports. Basically what they have that others want is oil and military supplies. Other than that, it's nothing. So yeah, they will have the worst of it.

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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by MildSteel View Post
    The problem for Russia is that they don't have the type of financial resources that the United States has. The United States has a currency that everyone accepts and they can essential print as much as needed. At least right now. Russia doesn't have that. Another thing is that Russia is too dependent on imports such as food. That's another weakness. Lastly, there economy is too dependent on oil exports. Basically what they have that others want is oil and military supplies. Other than that, it's nothing. So yeah, they will have the worst of it.
    Nonsense. Russia will lose money. Europe with lose electricity. The idea that Europe will just take it on the chin and smile is the same delusional thinking that typifies the ECB at present. All Russia needs is to cut them off for a little bit, not a long time and may not even have to completely cut them off so as to make money off the jacked-up prices. When the Arabs cut off oil it caused havoc and sent most major Western countries careening into severe recessions. At the time those economies were not particularly weak either. Europe is barely stable in growth, with it just one shock away from a serious decline at a time when they can most definitely not afford it.
    "For what is Evil but Good-tortured by its own hunger and thirst?"
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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by Demon of Light View Post
    Nonsense. Russia will lose money. Europe with lose electricity. The idea that Europe will just take it on the chin and smile is the same delusional thinking that typifies the ECB at present. All Russia needs is to cut them off for a little bit, not a long time and may not even have to completely cut them off so as to make money off the jacked-up prices. When the Arabs cut off oil it caused havoc and sent most major Western countries careening into severe recessions. At the time those economies were not particularly weak either. Europe is barely stable in growth, with it just one shock away from a serious decline at a time when they can most definitely not afford it.
    Yeah and when Russia goes and tries to buy anything outside of Russia, they are not going to want rubles. You know what they want? Dollars. That's why the US can spend one trillion dollars a year on defense. Russia will have to draw on it's sizable reserves. But they are finite and when they get low, Russia just won't be able to get the things that they need like food, medicine, and heavy machinery.

    Then Russia is going to need someone to sell the oil to. Their customer base will shrink. That's a problem.

    Then Russian businesses need loans to operate. Who will loan them the money? Russian banks won't be able to provide enough. That's a problem.

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    Re: Russian companies withdraw billions from west, say Moscow bankers

    Quote Originally Posted by MildSteel View Post
    Yeah and when Russia goes and tries to buy anything outside of Russia, they are not going to want rubles. You know what they want? Dollars. That's why the US can spend one trillion dollars a year on defense. Russia will have to draw on it's sizable reserves. But they are finite and when they get low, Russia just won't be able to get the things that they need like food, medicine, and heavy machinery.

    Then Russia is going to need someone to sell the oil to. Their customer base will shrink. That's a problem.

    Then Russian businesses need loans to operate. Who will loan them the money? Russian banks won't be able to provide enough. That's a problem.
    Most of the problems you cite have viable and relatively immediate alternatives, even if the threat was as severe as you argue and these were short-term problems. You just don't seem to get it though. All of those problems center around money. For Europe, money would not be the main concern. Money does not keep your house warm unless you burn it. You can't put money in your gas tank. No amount of money is going to get a power plant running. You need energy for those things. Sure, some parts of Europe get a lot of energy from elsewhere, but there isn't a whole lot of it out there in the first place. Finding new sellers is a lot harder than finding new buyers, especially when you have such a large gap to fill. They won't be able to fill the gap. As a result, many countries will have to severely ration existing fuel reserves, blackouts will become regular occurrences in some of these countries, travel and shipping will sputter, businesses will shutter or cut hours, and many factories will stop running since they depend on that Russian tea. Talk about getting loans, banks will have cash-starved citizens banging at their doors to empty their savings accounts since all their wages will be getting eaten up by exorbitant fuel costs, assuming they have wages to get eaten up.

    The lucky parts of Europe, the ones who are essentially self-reliant or answer to other energy masters, will have a different problem. The German economic engine will be dying as the East goes dark. No matter how independent they are of Russia's pipeline empire, they still depend on the gracious patronage of their fellow euros who are oil and gas vassals of Moscow. At the same time the European financial environment is already littered with land mines capable of blowing a hole in its economy. Barreling towards a trade war with Russia would be prancing along that mine field like someone looking to end up in the morgue. People saying Russia would be hit harder are little different from the people who insisted a company like Lehman Brothers would never be allowed to fail and that even if it did we could take it. Most of the big-wigs who say that sort of thing probably do not believe it themselves, but they need to keep up confidence and just hope they never get caught peddling the snake oil of hope. The only way it works is if they never have their bluff called. If it did come to that then, sooner or later, Brussels would cave and Washington would be on its own.
    "For what is Evil but Good-tortured by its own hunger and thirst?"
    - Khalil Gibran

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