the world is currently engaged in a financial war and the ruble collapse is just one battle. The 2008 Great Financial Crisis ushered in a new currency war that has morphed into a financial market war, with oil as the weapon of choice. The latest battle in this financial war is the engineered drop in oil and subsequent collapse of the Russian ruble.
At a meeting with leaders of 16 Central and Eastern European countries (CEE) Tuesday, Chinese Premier Li Keqiang announced a new investment fund of $3 billion to facilitate financing in the cash-strapped countries. Most of these countries are members of the European Union.
Former Assistant Treasury Secretary Dr. Paul Craig Roberts: recent spending bill, allows banks to gamble on derivatives, and taxpayers and depositors are on the hook for the losses.
The German Committee on Eastern European Economic Relations said on Wednesday that ruble’s plunge would lead to a 20-percent fall in the Western European country’s exports to the Russian Federation.
Russian Prime Minister Dmitry Medvedev also stated that while low oil prices and
Western sanctions have taken their toll on Russia, the central problem is that the ruble was undervalued. "The figures we saw at exchange offices in the last days do not reflect the real picture.
Worst day in Russia’s financial crisis; fallout spreading across global markets. Pacific Investment Management Co. (PEBIX) facing mounting losses on its Russian bond holdings; almost every bullish ruble option contract registered in U.S. made worthless; foreign-exchange brokers in New York and London no longer taking ruble trades.
"Our online store in Russia is currently unavailable while we review pricing," Alan Hely, a spokesman for the Cupertino, California-based company. "We apologize to customers for any inconvenience." It is uncertain when Apple will reinstate its operations in Russia.
Goldman Sachs :The global oil industry will face a loss of $1 trillion as producers will be forced to cancel a number of key projects if oil prices stay below $60:.
The US Federal Reserve has a basic capital ratio of 1.26%. if the value of the Fed’s assets declines by 1.26%, the issuer of the world’s dominant reserve currency becomes insolvent. Russian central bank’s ratio is 12.5%—literally TEN TIMES GREATER than the Fed. GOLD reserves as a percentage of the money supply, i.e. how much gold backs the money supply. In Russia, it’s 6.2%. And rising. How much gold backs the dollar? Precisely zero.
As Russia situation has deteriorated focus on bank exposures sent stocks reeling among many European (and US) banks. UniCredit, strongly invested in Russia; 18 billion euros at stake, 40 percent of its tangible book value. US bank risk widened signicantly. No benign scenarios.
Russian debt to GDP is 20% and they still have hundreds of billions of barrels of crude oil under their land. The US has debt to GDP of 103% of GDP and shale that is worthless unless oil prices are above $80 per barrel. Oil is currently $56 per barrel.
The Russian stock market also went haywire, dropping more than 15 percent as of 2:30pm Moscow time, after it dropped 11 percent the day before. Sberbank, the country's largest lender, lost 17.77 percent, and VTB, the second biggest bank, fell by 14.29 percent. State-owned oil and gas companies Gazprom, Rosneft, and Surgut also saw shares plummet.
Global banks curtailing flow of cash to Russian entities, response to ruble’s sharpest selloff since 1998 financial crisis; potential to add strain on Russia’s financial system. Bank of America, Citigroup, haven’t changed their trading with Russia or rubles.
Russian government members have worked out measures to stabilize the currency market, Economic Development Minister Alexey Ulyukayev said on Tuesday. Central Bank’s measures would be aimed at increasing foreign currency liquidity supply on the domestic market. “We have mapped out a set of measures, which should help stabilize the situation,
The price of Brent crude oil has reached a new low, dipping below USD 60 per barrel, for the first time since May 2009. Reports suggest that the ongoing fall in oil prices were triggered by news of a drop in industrial activity in China, the world’s second largest oil consumer.
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