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Geopolitics
by
Chris Martenson
Executive Summary
- The 'Perfect Storm' of woe being applied to Russia
- Why the West may end up hurt worse by its efforts than Russia is
- Russia's most likely set of responses, and their global implications
- Why are we willing to let our leaders play nuclear "Russian roulette", for stakes we don't agree with?
If you have not yet read The Road To War With Russia available free to all readers, please click here to read it first.
The Perfect Storm
Russia, like Venezuela and other oil exporting nations is facing a very large set of financial and economic problems as a result of the low oil prices.
Besides the loss of oil export revenues, there are associated hits to their local currencies and rising yields on their sovereign debt which raises the cost of borrowing money. This is a triple whammy and if it goes on long enough can lead to the outright default of the country on its debt, which is a hugely destabilizing moment.
Russia faces 'perfect storm' as reserves vanish and derivatives flash default warnings
Jan 6, 2015
Russia’s foreign reserves have dropped to the lowest level since the Lehman crisis and are vanishing at an unsustainable rate as the country struggles to defends the rouble against capital flight.
Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.
Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.
Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.
Total reserves have fallen from $511bn to $388bn in a year. The Kremlin has already committed a third of what remains to bolster the domestic economy in 2015, greatly reducing the amount that can be used to defend the rouble.
(Source)
It's clear that Russia is experiencing quite a bit of difficulty from all this, and as we saw above, they pin a lot of the troubles on a concerted effort by the west to bring about exactly the conditions that are troubling them.
However, left out of all the stories about Russia's relative difficulties is that fact that with oil's price slide there are winners and losers in every corner of the globe. In terms of the local impact based on the local currency Russia is the least impacted of them all because…
Why No One Should Want This To Devolve Further
PREVIEW by Chris MartensonExecutive Summary
- The 'Perfect Storm' of woe being applied to Russia
- Why the West may end up hurt worse by its efforts than Russia is
- Russia's most likely set of responses, and their global implications
- Why are we willing to let our leaders play nuclear "Russian roulette", for stakes we don't agree with?
If you have not yet read The Road To War With Russia available free to all readers, please click here to read it first.
The Perfect Storm
Russia, like Venezuela and other oil exporting nations is facing a very large set of financial and economic problems as a result of the low oil prices.
Besides the loss of oil export revenues, there are associated hits to their local currencies and rising yields on their sovereign debt which raises the cost of borrowing money. This is a triple whammy and if it goes on long enough can lead to the outright default of the country on its debt, which is a hugely destabilizing moment.
Russia faces 'perfect storm' as reserves vanish and derivatives flash default warnings
Jan 6, 2015
Russia’s foreign reserves have dropped to the lowest level since the Lehman crisis and are vanishing at an unsustainable rate as the country struggles to defends the rouble against capital flight.
Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.
Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.
Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.
Total reserves have fallen from $511bn to $388bn in a year. The Kremlin has already committed a third of what remains to bolster the domestic economy in 2015, greatly reducing the amount that can be used to defend the rouble.
(Source)
It's clear that Russia is experiencing quite a bit of difficulty from all this, and as we saw above, they pin a lot of the troubles on a concerted effort by the west to bring about exactly the conditions that are troubling them.
However, left out of all the stories about Russia's relative difficulties is that fact that with oil's price slide there are winners and losers in every corner of the globe. In terms of the local impact based on the local currency Russia is the least impacted of them all because…
by
David Collum
by
Adam Taggart
by
Alasdair Macleod
Executive Summary
- The West is extremely vulnerable to financial and currency de-stabilisation through precious metals
- Access to energy supplies will be the real weapon used in the battle over Ukraine (and future geo-political wars)
- Why sanctions against Russia will not succeed
- The East is mobilizing to become less dependent on the West
If you have not yet read Is Part 1: Ukraine: A Perspective from Europe available free to all readers, please click here to read it first.
Russia’s strategy towards Ukraine appears to be to ensure NATO is excluded from Ukrainian territory, the irony being that if NATO members hadn’t interfered with Ukrainian politics in the first place the current crisis would not have occurred. As it is, at a minimum she will seek to secure Donetsk and Luhansk and force the Kiev government to drop any ambitions to join the EU economic bloc.
The fact that NATO is divided between on the one side the US and UK plus all its ex-communist members and on the other the great European welfare states, requires there to be two distinct levels of Russian strategy. They must not be confused with each other, one macro and the other micro.
Macro-Geopolitics Linked To Gold
At the higher level there is the geopolitical clash with the US. This is not just a matter of Ukraine, but it is rapidly becoming the Shanghai Cooperation Council versus America. The US is also embroiled in territorial disputes between its allies and China over mineral rights in the South China Sea. The Middle-East now sells more oil to China than the US, and by leaving the US sphere of influence will fall increasingly under the SCO’s spell. Presumably, America has woken up to the threat to its hegemony from the powerful alliance that is the SCO, together with the loss of Pakistan and India into that sphere of influence. It goes further: even Turkey, a long-standing NATO member, plans to defect to the SCO, apparently a personal project of Recep Erdoğan, the recently re-elected Prime Minister.
American-initiated actions against Russia will probably be kept by Russia and the SCO in this big-picture context. It will be treated as an attack against an SCO member, speeding up integration and trade agreements designed to exclude the US dollar as a settlement medium. In this context the SCO members already appear to have agreed on the need to increase gold ownership as an undefined part-solution to replace the US dollar as the currency standard. In other words, the rush to acquire above-ground gold stocks will continue, and China through her refiners is processing and keeping increasing quantities of African-sourced gold as well as her own which would otherwise have gone to the West.
The Russian central bank has been adding to her monetary gold reserves and officially now has more than China (though China is known to have substantial holdings of bullion not currently declared as monetary reserves). All mine output is likely to be absorbed by the State. Russia has continued to build her gold reserves at a time when it could be argued by western analysts that she needs to hold on to all her foreign currency, given the prospect of escalating sanctions. The truth is that…
The Rise Of The East
PREVIEW by Alasdair MacleodExecutive Summary
- The West is extremely vulnerable to financial and currency de-stabilisation through precious metals
- Access to energy supplies will be the real weapon used in the battle over Ukraine (and future geo-political wars)
- Why sanctions against Russia will not succeed
- The East is mobilizing to become less dependent on the West
If you have not yet read Is Part 1: Ukraine: A Perspective from Europe available free to all readers, please click here to read it first.
Russia’s strategy towards Ukraine appears to be to ensure NATO is excluded from Ukrainian territory, the irony being that if NATO members hadn’t interfered with Ukrainian politics in the first place the current crisis would not have occurred. As it is, at a minimum she will seek to secure Donetsk and Luhansk and force the Kiev government to drop any ambitions to join the EU economic bloc.
The fact that NATO is divided between on the one side the US and UK plus all its ex-communist members and on the other the great European welfare states, requires there to be two distinct levels of Russian strategy. They must not be confused with each other, one macro and the other micro.
Macro-Geopolitics Linked To Gold
At the higher level there is the geopolitical clash with the US. This is not just a matter of Ukraine, but it is rapidly becoming the Shanghai Cooperation Council versus America. The US is also embroiled in territorial disputes between its allies and China over mineral rights in the South China Sea. The Middle-East now sells more oil to China than the US, and by leaving the US sphere of influence will fall increasingly under the SCO’s spell. Presumably, America has woken up to the threat to its hegemony from the powerful alliance that is the SCO, together with the loss of Pakistan and India into that sphere of influence. It goes further: even Turkey, a long-standing NATO member, plans to defect to the SCO, apparently a personal project of Recep Erdoğan, the recently re-elected Prime Minister.
American-initiated actions against Russia will probably be kept by Russia and the SCO in this big-picture context. It will be treated as an attack against an SCO member, speeding up integration and trade agreements designed to exclude the US dollar as a settlement medium. In this context the SCO members already appear to have agreed on the need to increase gold ownership as an undefined part-solution to replace the US dollar as the currency standard. In other words, the rush to acquire above-ground gold stocks will continue, and China through her refiners is processing and keeping increasing quantities of African-sourced gold as well as her own which would otherwise have gone to the West.
The Russian central bank has been adding to her monetary gold reserves and officially now has more than China (though China is known to have substantial holdings of bullion not currently declared as monetary reserves). All mine output is likely to be absorbed by the State. Russia has continued to build her gold reserves at a time when it could be argued by western analysts that she needs to hold on to all her foreign currency, given the prospect of escalating sanctions. The truth is that…
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