Sanctions on Russia

Carl Lee27 said:Honestly, when you look at natural gas, Russia seems to have much more breathing room for the next few years, mostly because of how Germany has been acting lately. I mean, gas prices over in Europe have basically leveled out with what they're paying in Japan, Taiwan, or China... so now the whole thing really boils down to how much LNG is actually available, and from what I can see globally, there should be plenty coming toward Europe. Just look at the US—within a few years, once you factor in a realistic 65-70% utilization rate for the terminals, the US will have enough export capacity to cover most of what used to come from Russia into Europe. It all comes down to how fast Europe can actually get its act together and do its part.

As for everything else, I honestly think it’s almost laughable to even try and compare the West to Russia. I mean, seriously, who holds the upper hand? Is it the most open, free, and therefore by far the wealthiest and most advanced societies ever known... or is it just one autocratic society that draws all its strength and wealth from primary industries and squeezing resources out of the ground?
To put it simply, the West could literally build a wall against Russia tomorrow just by throwing mountains of cash at it.

Those are just my thoughts, anyway. We'll probably find out sooner rather than later whether we were right.

Carl Lee27 said:Honestly, when you look at natural gas, Russia seems to have much more breathing room for the next few years, mostly because of how Germany has been acting lately. I mean, gas prices over in Europe have basically leveled out with what they're paying in Japan, Taiwan, or China... so now the whole thing really boils down to how much LNG is actually available, and from what I can see globally, there should be plenty coming toward Europe. Just look at the US—within a few years, once you factor in a realistic 65-70% utilization rate for the terminals, the US will have enough export capacity to cover most of what used to come from Russia into Europe. It all comes down to how fast Europe can actually get its act together and do its part.

As for everything else, I honestly think it’s almost laughable to even try and compare the West to Russia. I mean, seriously, who holds the upper hand? Is it the most open, free, and therefore by far the wealthiest and most advanced societies ever known... or is it just one autocratic society that draws all its strength and wealth from primary industries and squeezing resources out of the ground?
To put it simply, the West could literally build a wall against Russia tomorrow just by throwing mountains of cash at it.

It sounds 😁 impressive, but that's just the reality. If we hadn't dealt with that unprecedented GDP crash in the West during the pandemic—which was unlike anything we'd seen in decades—I might actually understand the hesitation. But right now? The West can handle a mild or even moderate recession, whereas one of those would absolutely devastate Russia.

At the end of the day, this is how modern warfare is waged. Europe hasn't been conquered by weapons, but by capital. I suppose only the truly reckless or the utterly desperate even attempt to push back with force these days.

Nancy Gomez26 said:No one is suggesting that Putin or Russia shouldn't implement their own internal gold standard. They could back the ruble with gold reserves. The Russian Federal Reserve certainly holds enough gold to make that happen. Furthermore, nobody forced Putin to settle transactions in USD or EUR. He could have simply dictated the price of gas and oil in ounces of gold. As the seller, he sets the terms—if the buyers don't like the deal, they can take their business elsewhere. He didn't do any of that because he was a willing participant in the global fiat system and reaped the rewards. Now, that decision is coming back to haunt the people within Russia—the most loyal hostages and victims of his political machine.

He was being naive. This "global market" everyone advertises isn't actually open to everyone—it’s more like a trap designed to lure someone in before stripping them naked. It reminds me of a similar, even bigger heist: the Bretton Woods agreement.

This whole sanctions move? It's bigger than Ukraine, IMO. That conflict is almost a footnote compared to the scale of what we're stepping into.
The speed and sheer suddenness of the reaction—that pre-made list of targets—shows this was a calculated plan just waiting for an excuse to trigger.

Just watch what China does with American Treasuries and their other Western holdings in the coming months. The obvious endgame is to ditch the dollar in the medium term and make the Yuan the mandatory currency for Chinese goods—let's see who survives without it. The digital Yuan is definitely going on the fast track, and I wouldn't be surprised if they pull a total 180 on digital currencies, including mining—just so the Americans can't pull a stunt to seize control of the blockchain via "proof of work."

I'm not losing sleep over the folks in Washington or London; they'll cover themselves and probably turn a profit. The EU—and obviously Russia—will foot the bill. Like I said, the damage from the bank run on Sberbank is already costing us a fortune, and that's just the opening salvo.

Brenda Murphy3 said:but honestly, everything you just said is totally wrong... fascinating...😁

Thanks for the long-winded lecture 😁

Honestly, who cares if Putin gets hit with sanctions? If he decides to just shut off the gas valves, the entire European economy would basically collapse overnight. There isn't a single sanction on this planet that he or the Russians won't be able to weather through sheer spite. If anything, we should be more worried about him turning the tables on us and cutting off our supply lines first.

gentlehawk95 said:Honestly, who cares if Putin gets hit with sanctions? If he decides to just shut off the gas valves, the entire European economy would basically collapse overnight. There isn't a single sanction on this planet that he or the Russians won't be able to weather through sheer spite. If anything, we should be more worried about him turning the tables on us and cutting off our supply lines first.

You really can read just about anything on this forum. People are acting like the sanctions aren't having a massive impact—their largest bank is falling apart (not just their European branch, but the main one at home too), their currency is in a total freefall, and we haven't even seen the full weight of these sanctions hit yet. And yet, here we are, hearing all this talk about how Europe is doomed while Russia just breezes through it....
I mean, just look at the GDP of Europe compared to Russia. Let's try to be realistic here, shall we?

Trouble in paradise.

The sanctions are going to deal a devastating blow to Russian agriculture. Interest rates on loans for farmers have skyrocketed, jumping from reasonable levels to somewhere between 18% and 27%.

Just at the start of February, they were being offered credit at a rate of 12%.

At these astronomical rates, how is anyone supposed to break even, let alone turn a profit?

We are looking at a massive, precipitous collapse in the production of wheat and other essential crops.

https://www.vedomosti.ru/business/ar...ssii-snizitsya

Brenda Murphy3 said:...Some of you aren't even remotely grasping the reality of these dynamics...

I suspect that’s actually the crux of the issue here. Sure, Russia has plenty of hardware—nothing groundbreaking, mind you—but their industrial capacity is nowhere near what you'd see in Europe. And if history has taught us anything, it's that wars are won in the long run solely through industrial output.

1) Check out the yield on the 10-year German government bond. After a tiny little spike upward, we’re right back into negative territory at -0.01%. It’s honestly wild when you think about it—investors are actually paying Germany just for the privilege of holding onto their debt!
https://tradingeconomics.com/germany...ent-bond-yield

2) Then you look at the 10-year Russian government bond yield, which is sitting at 12% right now. Just compare that to what's happening in Germany and tell me: who does the market think is actually going to come out on top in all this chaos?
https://tradingeconomics.com/russia/...ent-bond-yield

300 Billionaires: The price tag of the invasion for the Russian super-rich
According to Forbes, Russian oligarchs have watched $126 billion vanish since February 16, 2022.
Maybe they should run the numbers themselves—might find a cheaper alternative to this mess.

Total investments sunk into Russia have hit nearly $500 billion, and right now, there’s just no way to cash them out. ☕
https://www.fdiintelligence.com/article/80757
https://www.barrons.com/news/russia-...ry-01646136307

Emily Fox2 said:Total investments sunk into Russia have hit nearly $500 billion, and right now, there’s just no way to cash them out. ☕
https://www.fdiintelligence.com/article/80757
https://www.barrons.com/news/russia-...ry-01646136307

Wow....you really think that's a massive amount? I mean, sure, for Russia it's a huge headache, but in the grand scheme of the global economy, this is pocket change....
It's honestly kind of laughable... plus, they'll find a way to get that money back eventually, one way or another 😉 .

As an economist, it honestly drives me crazy how financially illiterate people can be here in the States.

I spent basically my entire day arguing with two highly educated friends from other fields, and they kept hitting me with the same question: "Well, if they stop selling gas to Europe, they'll just sell it to China." I try to break it down using basic supply and demand, but all I get are blank stares.

For years, I’ve been telling them that Russia is actually an economically struggling nation, but they always bring up how Roman Abramovich bought Chelsea FC as proof of their strength.

Sure, they're powerful, but sanctions managed to drag them right back to the Soviet era before lunch was even over.

Carl Lee27 said:1) Check out the yield on the 10-year German government bond. After a tiny little spike upward, we’re right back into negative territory at -0.01%. It’s honestly wild when you think about it—investors are actually paying Germany just for the privilege of holding onto their debt!
https://tradingeconomics.com/germany...ent-bond-yield

2) Then you look at the 10-year Russian government bond yield, which is sitting at 12% right now. Just compare that to what's happening in Germany and tell me: who does the market think is actually going to come out on top in all this chaos?
https://tradingeconomics.com/russia/...ent-bond-yield

Bond yields usually climb when the price of those bonds drops, so this isn't exactly good news for the Russian economy.

You could just as easily argue the Russian economy is doing great because they hiked interest rates, but the truth is rates went up because the value of their money is cratering.

bluemason3 said:Bond yields usually climb when the price of those bonds drops, so this isn't exactly good news for the Russian economy.

You could just as easily argue the Russian economy is doing great because they hiked interest rates, but the truth is rates went up because the value of their money is cratering.

The negative interest rate policy at the European Central Bank

But why punish savers just to reward borrowers?

A central bank's main job is to manage conditions for saving and borrowing to keep them somewhat attractive, rather than playing favorites by punishing or rewarding specific groups. When they lower interest rates—making saving less appealing and borrowing more tempting—they're essentially nudging people to spend or invest. Conversely, if a central bank raises rates, they're usually encouraging saving over spending, which helps cool down an economy facing high inflation. This isn't just a quirk of the European Central Bank; it's how all central banks operate.

https://www.ecb.europa.eu/ecb/educat...t-rate.hr.html

Central banks set the interest rates for government bonds themselves.

The Russian central bank wants to encourage Russians to save, whereas the European Central Bank wants to push Germans toward spending by making money less valuable...

https://mobile.twitter.com/sberbank/...27428409368580

The comments flooding Sberbank’s official Twitter feed suggest things are getting messy over in Russia. Apparently, people haven't been able to access their funds for the last few hours, and the ATMs are reportedly running dry...

The thing is, Russia won't be able to just reroute gas from the American market over to China anytime soon, unless we're talking about maybe some small portion through Yamal LNG.
See, the gas headed toward America comes from totally different fields than the stuff going to China. For the American market, they're pulling from fields up in the northern Urals and western Siberia, whereas the supply for China comes from eastern Siberia. There isn't actually a connection between the pipeline network serving America and the one heading to China. And honestly, there won't be one for at least a few more years until they finally finish up Power of Siberia 2.
https://i.ibb.co/1LfhLv1/Russia2.jpg

And yeah, look—the very fact that these two networks will inevitably be linked means it's just a matter of time before Russia starts hiking up gas prices for the American market, regardless of whether sanctions are in place or not. Once they're connected, Americans will basically be stuck competing directly with the Chinese through Gazprom. It doesn't really matter to America whether they're fighting Asia for LNG today or if they'll be battling Asia for Siberian gas tomorrow; the competition is coming either way.

bluemason3 said:Bond yields usually climb when the price of those bonds drops, so this isn't exactly good news for the Russian economy.

You could just as easily argue the Russian economy is doing great because they hiked interest rates, but the truth is rates went up because the value of their money is cratering.

That was exactly my point—that this is a bad indicator for Russia, which is why I specifically pointed out the silver lining regarding those negative rates in Germany.

wiredseal7 said:He was being naive. This "global market" everyone advertises isn't actually open to everyone—it’s more like a trap designed to lure someone in before stripping them naked. It reminds me of a similar, even bigger heist: the Bretton Woods agreement.

This whole sanctions move? It's bigger than Ukraine, IMO. That conflict is almost a footnote compared to the scale of what we're stepping into.
The speed and sheer suddenness of the reaction—that pre-made list of targets—shows this was a calculated plan just waiting for an excuse to trigger.

Just watch what China does with American Treasuries and their other Western holdings in the coming months. The obvious endgame is to ditch the dollar in the medium term and make the Yuan the mandatory currency for Chinese goods—let's see who survives without it. The digital Yuan is definitely going on the fast track, and I wouldn't be surprised if they pull a total 180 on digital currencies, including mining—just so the Americans can't pull a stunt to seize control of the blockchain via "proof of work."

I'm not losing sleep over the folks in Washington or London; they'll cover themselves and probably turn a profit. The EU—and obviously Russia—will foot the bill. Like I said, the damage from the bank run on Sberbank is already costing us a fortune, and that's just the opening salvo.

Why would the Chinese people accept the Japanese yen as a reserve currency? You surely meant the yuan.
If we are discussing the Chinese yuan as a potential global reserve currency, I have to disappoint you: it’s not going to happen. (The Chinese are well aware of this and don't actually want the yuan as a reserve currency; it's a double-edged sword regardless).
The primary, insurmountable obstacle is the absolute rule of the Party currently in power in China. Instead of the firm rule of law found in any functional nation—though "functional" is a relative term these days—you have something else entirely. No rational actor is going to put themselves in a position where the fate of their debt or credit ultimately rests on the whim of a Chinese Party Secretary. That is a non-starter for the yuan. There are other reasons, of course, but this one is an impassable wall for China's current political system and remains unacceptable to all other players in the global arena.

William Anderson5 said:https://mobile.twitter.com/sberbank/...27428409368580

The comments flooding Sberbank’s official Twitter feed suggest things are getting messy over in Russia. Apparently, people haven't been able to access their funds for the last few hours, and the ATMs are reportedly running dry...

Is card processing still working? Can they still pay using credit or debit cards?

It's like a local convenience store—banks rarely keep massive piles of cash sitting around on hand anyway.

As long as they can swipe a card or use a mobile app, they've still technically got access to their funds!