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watch putin blame gays
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Dec 16, 2014 00:34
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Phlegmish posted:So if I convert all my € to rubles and put everything in a Russian bank account I will make a decent amount of money come the first of January since Russian interest rates far outweigh inflation at the moment, which is not the case in Europe. However, if the ruble continues to fall relative to the Euro, those gains could be wiped out, and that is what is making people wary of converting back? Russian inflation is currently about 10%. A 7% spread for an emerging economy on the brink of a disaster is not that much.
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Dec 16, 2014 00:37
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Phlegmish posted:So if I convert all my € to rubles and put everything in a Russian bank account I will make a decent amount of money come the first of January since Russian interest rates far outweigh inflation at the moment, which is not the case in Europe. However, if the ruble continues to fall relative to the Euro, those gains could be wiped out, and that is what is making people wary of converting back? On the first-order of impacts, yes. Generally, you're correct. I'd disagree that interest rates outweigh inflation. Think of inflation like this: a flat tax on all capital denominated in that currency. Sometimes, when you increase taxes without improving the structures through which you spend those taxes, you essentially shovel that increased revenue into the fireplace. With the increase in Russian central bank rates, at the second order of impact, you've increase taxes while decreasing revenue because you've decided to keep throwing your rubles into the fireplace to keep warm over the winter and hold off on throwing your USD into the fireplace. In this analogy, structural reform is akin to turning down the supply of natural gas to the fire. Yeah, there's less heat and your house will get a bit colder, it beats throwing your money into the loving fire.
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Dec 16, 2014 00:38
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Cheesemaster200 posted:Russian inflation is currently about 10%. You're off. http://www.cmegroup.com/trading/fx/daily-ruble-rate.html 7/29/2014 European terms: 35.5979 12/15/2014 European terms: 58.4783 Ruble depreciation over this period: 60.87%
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Dec 16, 2014 00:43
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My Imaginary GF posted:On the first-order of impacts, yes. Generally, you're correct. I'd disagree that interest rates outweigh inflation. Think of inflation like this: a flat tax on all capital denominated in that currency. Then there is the risk of actually getting your money back. Putin has on numerous occasions went out and said he would soon criminally punish those (western) speculating interlopers. The Russian's could also easily put capital constraints into place that would prohibit outflows of money from Russia until they see reason otherwise. So while yes, you can put your capital in Russian markets, there is no guarantee you will get it back. That is another factor on why the Ruble is tanking right now. My Imaginary GF posted:You're drat wrong. E: The Ruble also dropped to 65 today, so even that number is off. Cheesemaster200 fucked around with this message at 00:47 on Dec 16, 2014 |
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Dec 16, 2014 00:43
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The Sueddeutsche from today (16th) has a good article about the humanitarian situation in Donetsk and Lugansk. And the situation is bad in Donetsk and worse in Lugansk. Hunger, desperation, destruction, injustice and violence by the separatists, the bare minimum in humanitarian support by Russia. Only the old, poor and weak are left. Russia and the separatists have robbed countless people of their home and forced them to flee and all those who don't have the means to leave are suffering horribly.
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Dec 16, 2014 00:52
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My Imaginary GF posted:On the first-order of impacts, yes. Generally, you're correct. I'd disagree that interest rates outweigh inflation. Think of inflation like this: a flat tax on all capital denominated in that currency. So if I understand correctly, the Russian central bank is burning through its (ruble) currency reserves in order to pay out these high interest rates, which it needs to help prop up the ruble since they keep people from converting their rubles into dollars and Euros. However, aren't they also receiving more money in the form of interest on the loans they're giving to private banks? Which makes said private banks less likely to borrow money, which in turn would slow down the economy (which is bad) and decrease inflation (which is good, in this case). Hmm...
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Dec 16, 2014 00:52
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Phlegmish posted:So if I understand correctly, the Russian central bank is burning through its (ruble) currency reserves in order to pay out these high interest rates, which it needs to help prop up the ruble since they keep people from converting their rubles into dollars and Euros. No, the benchmark interest rate is set by the central bank as a way for private (lol) banks to get short term capital. All banks need to have a certain amount of capital reserves in relation to their liabilities. If you increase this rate, banks must pay more interest to the central bank to meet their capital reserve requirements. The increased interest expenses by the banks is made up by increasing the interest rate they charge to their loan customer. This reduces growth (less people can borrow), but decreases inflation (less people can buy goods and services). Banks also raise money on the capital markets in the form of bonds or other fixed income securities. Bonds at higher interest rates are more attractive and can attract investors from abroad. To invest in high yield Russian securities, you need to convert your money to Rubles. This increases demand for the ruble and strengthens its value. In conclusion: if the central bank interest rates rise, bond yields rise high with it and attract foreign investment. High interest rates also dampen inflation, growth, and investment. This is why you constantly hear about the Federal Reserve raising interest rates in context to the CPI. Cheesemaster200 fucked around with this message at 01:02 on Dec 16, 2014 |
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Dec 16, 2014 00:59
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Phlegmish posted:So if I understand correctly, the Russian central bank is burning through its (ruble) currency reserves in order to pay out these high interest rates, which it needs to help prop up the ruble since they keep people from converting their rubles into dollars and Euros. Well, they're burning through their economy's capacity to absorb an increase in the supply of the ruble. They get to determine how much rubles to pay out, and so far, they haven't decreased their expenses in order to allow the economy to build up capacity to absorb more rubles. All they've done is made the ruble cost less than toilet paper, while also stopping foreign currency inflows. A slowing economy will increase inflation because the decrease in production will not be met by cheap imports. Its a bad spiral that Russia's in, with the economy slowing because more money is going out than is coming in, which causes more money to go out while decreasing the amount which comes in.
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Dec 16, 2014 01:01
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Dumb idiot here: Is the damage to the ruble permanent? or will it just level out once oil goes up? Is this caused by the sanctions? oil? something else? Is this actually the beginning of a Russian economic collapse or just a lovely day at the market?
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Dec 16, 2014 01:03
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sparatuvs posted:Dumb idiot here: It's on the brink of turning into a collapse but careful monetary/fiscal policy can delay the plunge long enough until oil prices even out. I really hope Russia's corruption will get the best of it and it will go down the shitter once and for all. That's a really bad thing to wish onto Russia's population, but Putin and his cronies deserve all the blowback they can possibly get. awesome-express fucked around with this message at 01:09 on Dec 16, 2014 |
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Dec 16, 2014 01:06
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My Imaginary GF posted:Well, they're burning through their economy's capacity to absorb an increase in the supply of the ruble. They get to determine how much rubles to pay out, and so far, they haven't decreased their expenses in order to allow the economy to build up capacity to absorb more rubles. All they've done is made the ruble cost less than toilet paper, while also stopping foreign currency inflows. Deflation is generally a symptom of low demand or a large, sudden increase in supply (e.g. oil right now). Inflation is a symptom of high demand with low supply, or a sudden decrease in supply (e.g. 2006-2007 in the US with oil). In general, inflation is an indicator of an overheated economy where deflation is an indicator of a receding economy. In regards to foreign reserves, Russia has a large amount (~$450bn) of dollar and Euro backed securities, most likely in treasuries, etc. They can sell these securities for dollars, and then buy Rubles to take them out of the market. This increases the value of the Ruble. However, this practice is mostly used for pegged currencies where the central bank tries to keep the exchange rate constant. In such a case, you use your reserves to "defend" a peg and hope the other guy (e.g. Soros) has less capital than your foreign reserves. Russia does not peg their currency, so foreign reserves aren't really that important unless they want to intervene on the exchange rate. sparatuvs posted:Dumb idiot here:
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Dec 16, 2014 01:11
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Cheesemaster200 posted:No, the benchmark interest rate is set by the central bank as a way for private (lol) banks to get short term capital. All banks need to have a certain amount of capital reserves in relation to their liabilities. If you increase this rate, banks must pay more interest to the central bank to meet their capital reserve requirements. I always conceived of the relationship between the central bank and private banks (I don't know what the proper term is) as being similar to the one between private banks and individual citizens, similar to what you are saying in the second paragraph. It's the first paragraph that I'm not quite grasping. How does the hike in interest rates allow private banks to get short-term capital? And if banks are paying higher interest rates, isn't the central bank being partly compensated for its loss in domestic currency reserves? I'm off to bed now, but I feel like I learned a lot today.
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Dec 16, 2014 01:15
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Phlegmish posted:I always conceived of the relationship between the central bank and private banks (I don't know what the proper term is) as being similar to the one between private banks and individual citizens, similar to what you are saying in the second paragraph. In the United States it is called the Federal funds or inter-bank rate. It is the rate that banks lend to each other via their holdings at the Federal Reserve. As previously stated, banks have a certain capital requirement in relation to their loans. Some of this is kept at the Federal Reserve. At the end of a business day, they need to make sure that the reserve percentage on their balance sheet is met after all their loans/deposits have been counted up. If they are short, they can borrow from another bank with a surplus of funds at the Federal Reserve to compensate. The Federal Reserve sets a target interest rate for this mechanism and then enforces it by buying/selling short term securities. Nobody really wants to go against that, so the FOMC activity in the short end of the yield curve usually isn't major. Cheesemaster200 fucked around with this message at 01:27 on Dec 16, 2014 |
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Dec 16, 2014 01:22
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Smerdyakov posted:As precautionary measure we may want to put the thread title at 70. I would think the ruble losing 50% of its value in <6 months is news, even in the US, but I guess not. It's NY Times website front page worthy at least http://www.nytimes.com/2014/12/16/u...&abt=0002&abg=0
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Dec 16, 2014 02:14
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Regarding the Russian interest hike to 17%, it noted that it was only four days ago that they had a 1.5% hike to the now-previous 10.5% level. Put into context, the Russian interest rate has nearly doubled in the past week, and the currency is still collapsing. I feel bad for the Russian people, who are going to have to bear this burden until they figure out it isn't the evil Western Pigs that did this to them, but their own leader who has plundered the country to make his close friends billionaires. Phlegmish posted:It's the first paragraph that I'm not quite grasping. How does the hike in interest rates allow private banks to get short-term capital? And if banks are paying higher interest rates, isn't the central bank being partly compensated for its loss in domestic currency reserves? The idea, I believe, is that most private banks don't tend to *actually* have a ton of money readily available to meet their obligations. They're also required by law to keep a certain percentage of their outstanding loan amounts *as* vault/reserve currency. Simplified: I'm a bank and I keep $100 in the vault and/or with the federal reserve. With that vault/reserve amount, I'm allowed to provide on-paper loans to my clients for, let's just say, $200. If I want to issue any more loans than that, I need more money. Which I don't have. So I go to the central bank and ask for a loan, which they grant at x%, a rate which I pass down to whomever I'm lending the money to.
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Dec 16, 2014 02:15
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To break up bank chat for a moment, 30 Russian fighter jets have been intercepted over the Baltic Sea. Here's a video. Interestingly, 6 strategic bombers have been intercepted by NATO over Sunday. This comes after some civilian aircraft had to be re-routed to avoid crashing into all those Russian combat aircraft with switched-off transponders close to them. At this point someone should be asking what all those Russian aircraft are doing all over Europe and why Russia is throwing all that money out of the window? (Because let's face it, sending hundreds of planes around like that costs a lot in maintenance and fuel.) Libluini fucked around with this message at 12:00 on Dec 16, 2014 |
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Dec 16, 2014 02:15
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Reminder that Putin is a geopolitical genius running rings around the West.
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Dec 16, 2014 02:20
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Cheesemaster200 posted:Do you want to invest money into Russia right now? This is a crisis of confidence in the Russian capital markets. People don't want to put money into Russia because they think they won't get it back or they will suffer unacceptable returns. I'm a dumb idiot too, but I'd answer Yes. I feel that the more headlines scream about the end of (the Russian part of) the world, the more bargains you can find. Buy with drums, sell with trumpets, and all that.
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Dec 16, 2014 02:33
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edit: cleaning up
Dilkington fucked around with this message at 01:47 on Mar 20, 2015 |
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Dec 16, 2014 02:40
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Doctor Malaver posted:I'm a dumb idiot too, but I'd answer Yes. I feel that the more headlines scream about the end of (the Russian part of) the world, the more bargains you can find. Buy with drums, sell with trumpets, and all that. The only problem I see is being able to buy in at the bottom instead of a still falling market which it seems Russia is still in. They should go above 70 Rubles to a dollar by the end of the month at this rate if not more and investing now is a poor choice.
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Dec 16, 2014 02:43
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My Imaginary GF posted:The difference between this Russian default and the last one is, everyone in Russia was primed for the last one by the 80s, the fall of the USSR, and the lovely 90s. Now? They still genuinely believe they're exceptional and this isn't their fault. So, it means that the Russian rich will probably eat themselves, right? They made bank manipulating their position while they had that centralized control of the economy and the move from that centralized economy to a privatized one, but now, they're so full of themselves that they believe their own hype and continuing to gamble their fortunes away thinking that they'll outlive this correction.
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Dec 16, 2014 02:49
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I guess it's kinda satisfying to watch the Russian economy come crushing down, but sadly the fact remains it will kill a lot of people.  Remember the news of the Moscow hospital system undergoing a reorganization? In the middle of a crisis? What is the chance of a complete failure.
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Dec 16, 2014 02:53
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An interesting Russia graphic: It is of course already outdated.
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Dec 16, 2014 02:53
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Doctor Malaver posted:I'm a dumb idiot too, but I'd answer Yes. I feel that the more headlines scream about the end of (the Russian part of) the world, the more bargains you can find. Buy with drums, sell with trumpets, and all that. The problem, of course, is nationalization/bankruptcy/ignoring foreign control. Might just lose it all.
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Dec 16, 2014 02:55
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Nintendo Kid posted:An interesting Russia graphic: So when will Russians begin to change rubles into Bitcoin?
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Dec 16, 2014 02:59
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Been busy lately, but it warms my heart to come to this thread and find 65+ posts about the ruble crashing and the silly Russians doubling their interest rates trying to save what money they have left. Keep in mind investors could look at the cheaper currency and take the gamble that they can bail out before they lose their investment.
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Dec 16, 2014 03:01
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Libluini posted:To break up bank chat for a moment, 30 Russian fighter jets have been intercepted over the Baltic Sea. Here's a video. For domestic consumption and political points. "We've got the decadent west shaking in its boots with our military power! Look at how we're flying over Sweden and nobody has even shot any of our planes down!"
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Dec 16, 2014 03:11
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http://itar-tass.com/en/russia  Don't worry guys, everything is fine!  Reading that website is giving me a headache. We bitch about Fox News and MSNBC being bias, but after reading Russian news outlets over the past month I have to rethink that. Cheesemaster200 fucked around with this message at 04:13 on Dec 16, 2014 |
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Dec 16, 2014 04:09
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My Imaginary GF posted:When you have a business environment like Ukraine's, its necessary to completely restructure the government in order to finance debt servicing obligations. What this means is eliminating all but high-level, indirect corruption, and plays out by re-writing the civil code from the ground up. The issue is hard hits to pensions and basic services at the same time which greatly and immediately increases the misery of the population. You can say you are eliminating corruption and fixing the civil code all you want, but as long as people see their lives getting far worse at the same time, there isn't going to be public support for it. Also, screaming "there is no alternative" at them isn't going to work either. quote:If you can't afford to pay an official enough to enforce the law without using the law for corrupt practices, you eliminate the law and fire the official. This increases effective tax revenue by eliminating all the middle-men who skim their bit on your take. It isn't going to help increase revenues enough, Ukraine is reaching the point Greece is where repaying debt is going to be the issue not tax revenue itself. One thing is that tax revenue is going to dive regardless of what happens because consumption is going to decrease and Ukraine gets a large portion of its income from a VAT. If people aren't buying, you can't tax them. Also it is going to be a real issue if you start clamping down on people working for "black wages" ie salaries off the books, because many of those people are working/middle class. quote:The alternative to this? Having a close master in Moscow who wants to get paid now to keep Moscow and St. Petersburg running. Ukranian's governing class realizes that, in such a scenario, they'd be liquidated to shore up Putin's regime. Pretty strong incentive to not revolt against structural reform and deep austerity. The political class is going one way but the rest of the population may very revolt against both, the center-right government can throw around Putin as much as they want but if they suddenly become the target of anger they aren't going to last very long. It really deepens where the coming anger is channeled and if politicians are continue to shift the anger on Putin. Btw, Russia and Putin is going to have the exact same issue, he can blame the West as much as he wants but "fiscal consolidation" and currency devaluation is hitting and will continue to hit the economy hard. Ardennes fucked around with this message at 04:19 on Dec 16, 2014 |
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Dec 16, 2014 04:15
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Also lol at any posters in this thread who only owns rubles and desire for revenge against the west.
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Dec 16, 2014 04:18
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Cheesemaster200 posted:Reading that website is giving me a headache. We bitch about Fox News and MSNBC being bias, but after reading Russian news outlets over the past month I have to rethink that. In America: Pro-administration news: "It's the enemy's fault" Opposition news: "It's the leader's fault" In Russia: State news: "There's no fault because there's no problem!"
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Dec 16, 2014 04:22
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Baloogan posted:Also lol at any posters in this thread who only owns rubles and desire for revenge against the west. Most Russian cities have plenty of currency exchange places, I have a feeling they might be doing a business lately. If I was Russian, I would pay all my expenses in rubles then convert everything I had remaining in dollars then maybe putting them in Raiffeisen.
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Dec 16, 2014 04:23
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Was it even 10 days ago that the Russian state economic agency estimated a 0.8% contraction? Now it could be almost 5%? Add on to that the fact that this situation is destabilizing by the minute, and it's not good for Russia. Unfortunately this won't do much to hurt Putin, I would imagine. When these kinds of things happen people rally around the strong leader who will almost certainly blame 'the West' for their problems.
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Dec 16, 2014 04:30
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Cuntpunch posted:In America: Holy poo poo, we have pro-administration news in America?!?!  In Russia: Pro-Administration News: "America has pro-administration news. Now watch this sex scene on Big Brother: Moscow while also Property Developers: Irkutsk is playing versus Nightly News: Sexytime Moscow."
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Dec 16, 2014 04:31
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Watch Putin start a loving war. 'You can't take away our Mastercard! You'll live to regret this!'
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Dec 16, 2014 04:33
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McDowell posted:Watch Putin start a loving war. This is eerily similar to how the Soviet Union collapsed.
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Dec 16, 2014 04:34
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McDowell posted:Watch Putin start a loving war. But...but the new world order dominated by the BRICS! What can they get in Europe or North America that they can't get in Brazil or China?
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Dec 16, 2014 04:41
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Fojar38 posted:But...but the new world order dominated by the BRICS! What can they get in Europe or North America that they can't get in Brazil or China? Democracy with stable transitions of power and lack of urban slums.
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Dec 16, 2014 04:44
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Deteriorata posted:This is eerily similar to how the Soviet Union collapsed. Of course, here in the west we could say it was the ideology of an economic system, now it is just well dutch disease, inequality and sharp cliffs of commodity pricing. There isn't much of an ideological message to take from this. Putin's Russia is quite capitalist, corrupt and a kletocracy yes but a capitalist economy nevertheless. Ardennes fucked around with this message at 04:57 on Dec 16, 2014 |
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Dec 16, 2014 04:55
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