The Western powers are waging war against Russia – not militarily, but financially.
The sanctions are a form of financial warfare and they amount to an attack.
My guess is that they are trying to collapse the currency, the Ruble and also Russian E…
The Western powers are waging war against Russia – not militarily, but financially.
The sanctions are a form of financial warfare and they amount to an attack.
My guess is that they are trying to collapse the currency, the Ruble and also Russian Economy.
Their ultimate aim might be “regime change”. They might be intending to cause a crisis which will result in a de-stablisation within Russia which in turn might bring down Putin. But this is mere conjecture on my part. It might be an accurate representation of reality, or it might not be.
There’s some controversy about how effective sanctions are. Moves to exclude Russia from SWIFT system – a financial messaging service for transactions carried out by financial institutions - could be major. Over 300 Russian banks use SWIFT. This will no doubt hamper trade in and out of Russia.
But, it must be said that Russia has been positioning itself to operate outside of Western financial systems in recent years. How they will cope being excluded from SWIFT remains to be seen. Also there are always work arounds for any rules.
Also Russia has got rid of most of its US Treasury holdings in recent years. This is part of their de-Dollarisation strategy.
Be that as it may, Russia seems to be in crisis.
So what has happened?
The Ruble has fallen 26% in less than a week after the invasion against the Dollar – from 105.4 to 84. That’s massive.
The Russian Stock market fell by 40%. This is a very large drop.
There was a debt default. But this is too complex to go into here. Suffice to say that this will have an impact because other creditors might be concerned more defaults happening. And so they might makes moves to guard against this.
In response to the crisis the Russian authorities have taken a number of emergency measures.
They have raised interest rates significantly – more than doubling. They rose from 9.5% to 20%. This measure has been carried out in a bid to support the failing currency. The aim is to encourage money to stay in the banking system and prevent bank runs. Whether it will work is debatable. Foreign money might well still take flight due to the geo-political situation. And the rise in interest rates will not be enough to overcome this.
The rise in rates has meant that debt has just become a whole lot more expensive. This will have an adverse effect, but there is less debt in Russia compared to other Western nations.
Another measure taken by the Russian authorities has been to force Foreign exchange reserves held Companies that Export goods from Russia to sell them to the state. This will support the Ruble, But it’s only a short term move. And exporters will probably not be too pleased about holding depreciating Rubles as opposed to a foreign currency.
Another measure has been to prevent any brokerage firm shorting stocks in the markets. They are not allowed to bet against stocks. The reason for this is because shorting would worsen an already bad situation. Shorting tends to drive
