The biggest news today. G7 (EU+North America) has said it will not pay Russia for gas in rubles. Russia has replied that it will now shut off gas supplies as they will not supply "for free". The Russians are deadly serious, too, imo. Not saying the G7 should fold, but the economic fallout is going to be immense.
The G7 should be able to:
-Use their reserves
-Buy more from other countries (logistics issues aside)
-Diversify their energy matrix
-Use a little less gas
On the other hand, how is Russia going to substitute the money income? Are China or India going to absorb all of the remaining demand AKA pay the same for resources they don't need?
Yeah, I know, but with new piplines it is the volume which is new. That goes for other Asian markets, too.
Also:
Square this:
With this:
Keep dreaming, Russian new pipeline to China won’t be ready for at least another decade. They’ll crash hard. It will also be sold at a massive discount, probably just about enough to breakeven.Yes, this is true, but Russia is already on a war-footing for the duration of the Ukrainian invasion. EU alternatives to Russian energy are at least two years away. It will be catastrophic in the economic short-term unless they reach a "third way" which seems unlikely as the entire point of the ruble demand is to say to European countries that the sanctions on the Russian economy are illegitimate. Russia, meanwhile, will move to the Asian market. Already constructing new pipelines in China.
Right now the Pound has lost more than 5% versus the Ruble in the last month.There have been many jokes about how Ruble is collapsing and people won’t be able to buy anything with it but it’s mostly repeated by people who haven’t really kept track. After initial impact there’s very little in that already, Zloty has basically lost 8% vs Dollar since the start of the war and to see Rubel drop by 20% is quite insignificant compared to what many anticipated.
I think many have overestimated the extent of harm sanctions are going to do to Russian economy. It will cripple it, there will be slowdown but it may not be nearly as catastrophic as advertised because many will still be finding loopholes to trade with Russia.
The G7 should be able to:
-Use their reserves
-Buy more from other countries (logistics issues aside)
-Diversify their energy matrix
-Use a little less gas
On the other hand, how is Russia going to substitute the money income? Are China or India going to absorb all of the remaining demand AKA pay the same for resources they don't need?
The biggest news today. G7 (EU+North America) has said it will not pay Russia for gas in rubles. Russia has replied that it will now shut off gas supplies as they will not supply "for free". The Russians are deadly serious, too, imo. Not saying the G7 should fold, but the economic fallout is going to be immense.
In the short term Europe has gas reserves, which should last a few months at least, maybe more. It's spring now, so the need for heating decreases. Also Russia has large foreign currency reserves but half of that is frozen and the rest won't last indefinitely to both prop up their currency and keep the war efforts going. Overall I think Europe's gas reserves will probably outlast the Russians' timeline for this war. Without gas income presumably that financial time constraint will become even more pressing.Yes, this is true, but Russia is already on a war-footing for the duration of the Ukrainian invasion. EU alternatives to Russian energy are at least two years away. It will be catastrophic in the economic short-term unless they reach a "third way" which seems unlikely as the entire point of the ruble demand is to say to European countries that the sanctions on the Russian economy are illegitimate. Russia, meanwhile, will move to the Asian market. Already constructing new pipelines in China.
Well China does need it they'll take up the slack for sure. LNG is only a tiny portion of their energy mix and they plan to make it a sizeable portion as it's the best route to meet climate targets.
In the short term Europe has gas reserves, which should last a few months at least, maybe more. It's spring now, so the need for heating decreases. Also Russia has large foreign currency reserves but half of that is frozen and the rest won't last indefinitely to both prop up their currency and keep the war efforts going. Overall I think Europe's gas reserves will probably outlast the Russians' timeline for this war. Without gas income presumably that financial time constraint will become even more pressing.
In order to find market share, Russia is now forced to sell its energy products at discounted prices compared to those from elsewhere.
Well if the g7 are going to buy more from other countries and there isn't currently a huge over supply then India and China are going to have to buy more from Russia aren't they?The G7 should be able to:
-Use their reserves
-Buy more from other countries (logistics issues aside)
-Diversify their energy matrix
-Use a little less gas
On the other hand, how is Russia going to substitute the money income? Are China or India going to absorb all of the remaining demand AKA pay the same for resources they don't need?
But why would anyone think the rouble would have collapsed yet - we know Putin was stockpiling wealth for this very scenario? The question is how much is the ruble being propped up by reserves and for how long can it go on - the graph will look like a cliff edge if we ever find out the answer.There have been many jokes about how Ruble is collapsing and people won’t be able to buy anything with it but it’s mostly repeated by people who haven’t really kept track. After initial impact there’s very little in that already, Zloty has basically lost 8% vs Dollar since the start of the war and to see Rubel drop by 20% is quite insignificant compared to what many anticipated.
I think many have overestimated the extent of harm sanctions are going to do to Russian economy. It will cripple it, there will be slowdown but it may not be nearly as catastrophic as advertised because many will still be finding loopholes to trade with Russia.
I’m not sure I saw anyone warning that the Ruble would hold its ground and even bounce back a degree a month in, before suddenly tumbling at a later date. Happy to be corrected, as I am a bit miffed that the sanctions haven’t more damage to their currency in the short term.But why would anyone think the rouble would have collapsed yet - we know Putin was stockpiling wealth for this very scenario? The question is how much is the ruble being propped up by reserves and for how long can it go on - the graph will look like a cliff edge if we ever find out the answer.
The jury is still out. Thread here analysing it, lots of points suggesting fake. This would not be unprecedented for Russia if we remember the elaborate staged videos in the days running up to the invasion.
Yeah, I know, but with new piplines it is the volume which is new. That goes for other Asian markets, too.
Also:
Square this:
With this:
I’m not sure I saw anyone warning that the Ruble would hold its ground and even bounce back a degree a month in, before suddenly tumbling at a later date. Happy to be corrected, as I am a bit miffed that the sanctions haven’t more damage to their currency in the short term.
Like a fortress, really? When was the last time you have been to Russia?Russia built their economy like a fortress. It was built to withstand an initial shock. Bank runs didn't happen very much after week 1 because they started to ban it. They then banned people taking money out of the country, raised interest rates to 20%, and also limited the ability convert rubles into foreign currency within Russia itself. Then of course you have the Central Bank still having half of its reserves to prop up the currency when it falls, which is basically what they do every morning (I've been observing this daily for the last month, and the value always jumps a lot in the early morning before trading starts)
But I think what they didn't expect was the war to drag on and on and on. This changes the outlook for them significantly. Now they have to use more extreme measures to create more demand in the ruble, such as by asking people to pay for gas in rubles.
We have to be patient with the economic strategy. It will only work if we keep the sanctions hard for a long time. A few months of sanctions will not do them any great harm at all.
Like a fortress, really? When was the last time you have been to Russia?
Mate, they are sinking. People are depressed, can not access their hard currency accounts. Assets frozen, prices are rising and it is still just a beginning. Oligarchs are well pissed off, Russia's largest companies are losing value like crazy. Sane people there also realize that things will only get worse, while around half of the population still feel for and support the Great Vlad who is fighting against the Evil USA and their cronies.Not that recently but that's what I've been reading. It wasn't built on growth like normal economies, but rather the ability to withstand a huge shock. I guess in that sense we should have all seen this coming when they started to stockpile a feckton of gold and foreign currencies like yuan.
It's ok though, we learn. If we see them (or China) building up crypto, yuan, rupee and precious metals again in the future, while reducing USD and Euros, then we know someone is about to get a beating.
Mate, they are sinking. People are depressed, can not access their hard currency accounts. Assets frozen, prices are rising and it is still just a beginning. Oligarchs are well pissed off, Russia's largest companies are losing value hell lot. Sane people there also realize that things will only get worse, while around half of the population still feel for and support the Great Vlad who is fighting against the Evil USA and their cronies.
It will only get worse economically. Business are shutting down and leaving, people are losing their jobs. Construction dead, aviation and heavy industry are on their knees. Logistics are fecked while oil money is likely to drop further. Their people are fleeing in tens of thousands to countries with less income.Yes, it pisses the people off but it is also exactly why the ruble is staying firm in value. Ruble can't fall if you're not allowed to sell!
Putin doesn't care that the people are pissed off, if they get too loud he just sends his hatchet men to give them a good beating.
My understanding (and I’m by no means an economist so happy for someone to educate us all here) was they’d use their vast reserves to prop up the ruble whilst being very cautious with the stock market to avoid volatility. After that it was just a case of how long they can keep that up and eventually ride it out (countries lose interest, roll back sanctions, new trade deals etc.) or the economy tanks.I’m not sure I saw anyone warning that the Ruble would hold its ground and even bounce back a degree a month in, before suddenly tumbling at a later date. Happy to be corrected, as I am a bit miffed that the sanctions haven’t more damage to their currency in the short term.
It will only get worse economically. Business are shutting down and leaving, people are losing their jobs. Construction dead, aviation and heavy industry are on their knees. Logistics are fecked while oil money is likely to drop further. Their people are fleeing in tens of thousands to countries with less income.
Abramovich confirming.
How often have we to go through this? He was never close to Putin, under Putin his influence diminished. This distance also made Ukraine approach him to act as a mediator.Great way to disassociate himself from the Putin regime.
Very murky.
