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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe ruble is so vulnerable it's only a question of how much damage we want to do
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But once workers and managers, owners and financiers worry that they cant trade their rubles for dollars or euros because banks wont be able to access their foreign exchange reserves they lose confidence. The Bank of Russia can try to prop up the value of the ruble by using its reserves to buy up rubles that people are selling. But it can only do that as long as it has access to foreign reserves.
The question is how long it can make those transactions. According to Mr. Bernstams calculations, Russian individuals and companies have deposited $268 billion in foreign denominations in Russian banks.
Yet the central bank has just about $12 billion of cash in hand an astonishingly small amount, he said. As for the rest of Russias foreign exchange reserves, roughly $400 billion is invested in assets held outside the country. Another $84 billion is invested in Chinese bonds and $139 billion is in gold. The central bank could trade in some of those bonds for renminbi, which would enable it to buy goods from China, but not from other countries. It could also sell gold, although Mr. Bernstam argues that there will be few buyers for the massive tons that Russia has on hand.
Other estimates put the amount of assets held outside Russia closer to $300 billion. The potentially dire consequences for the economy are the same.
If the ruble collapses, it could usher in severe inflation and exacerbate a brewing recession, Robert Person, an associate professor of international relations at the United States Military Academy, said, noting that his views were his own and not those of the government or military. The economic consequences of these measures could turn out to be far more severe than other measures that have gotten more attention in the media, he added. This gets at the Russian governments basic tools to manage its macroeconomy.
https://www.nytimes.com/2022/02/28/business/russia-sanctions-central-bank-ruble.html
Irish_Dem
(46,918 posts)That should be our goal?
Destroy the Russian mob which controls Russia.
JustAnotherGen
(31,810 posts)SheltieLover
(57,073 posts)TheBlackAdder
(28,183 posts)lagomorph777
(30,613 posts)radius777
(3,635 posts)Putin is a thug and a bully who only understands power and dominance - so let's show it to him.
I would add that it's the appeasing/soft attitude of Western intellectuals like Mr. Bernstam - is what emboldens Putin and his regime. He knows we have ethics (that he does not) and exploits that.
Irish_Dem
(46,918 posts)He has no respect for niceties which he sees as weakness.
lagomorph777
(30,613 posts)It's a threat to the whole world, including to Russians themselves.
EYESORE 9001
(25,928 posts)Create conditions that demand pooties ouster. Sooner rather than later.
SoonerPride
(12,286 posts)The second it collapses the oligarchs will stage a palace coup.
Spider Jerusalem
(21,786 posts)Seriously, things in Russia getting bad enough that the Russian people rise up in righteous fury and give Putin the Gaddafi treatment would be one of the better outcomes of this whole thing.
Meadowoak
(5,545 posts)Raven123
(4,828 posts)If Bernstam can calculate that, let us know.
jmowreader
(50,554 posts)Russia hasnt ever had a non-corrupt government. The closest they ever came was Catherine the Great, who is generally described as an enlightened despot. She also died in 1796.
So
if we just let the Russians deal with Putin in their own way (this way usually involves gunfire) were sure to get someone even worse in there.
What I believe will have to happen is several Western countries - several Western European countries, Japan, and the Democratic Party of the United States come to mind - are going to have to go in there, clean out their government, roll up the Mafia, fix their economic system and reform their army. The Russians cant do it on their own.
lagomorph777
(30,613 posts)Start with the Siberian oil fields. That will shut down the last vestiges of the economy. Basically the equivalent of firebombing Tokyo and leveling Hiroshima and Nagasaki.
jmowreader
(50,554 posts)This time, the occupied government can pay for their own occupation. If we liquidate the externally-held assets and cash in the RMB bonds, theres enough to deal with the problem without worrying about destabilizing the gold market.
The biggest problem will be keeping our Republicans far away from the work. If we let any of those fucking traitors in there, theyll fuck it up even worse than it is now.
lagomorph777
(30,613 posts)Anything we do can be sabotaged by the corrupt mob already inside our own government.
Happy Hoosier
(7,285 posts)I don't necessarily agree with the "avoid military confrontation at all costs" idea, as Kyiv is staring down a 17 mile long column. But if we ARE going to rule out military intervention, we need a no-holds-barred approach to their economy. Make them feel it for a long time.