Where can the West find some rubles?

Putin ordered Russia’s internal foreign exchange market to be prepared for the transition to settling export deliveries, for now specifically natural gas, in rubles. This is becoming a pressing issue because banks in “unfriendly countries” (a technical term that includes the EU and most English-speaking coutntries) are willfully and wantonly delaying payments for Russian energy. Thus, deliveries are now taking place on credit—ruble-based credit! Meanwhile, the Russian central bank’s prime rate is 17%—down from 20%, but still! Sounds like somebody not very smart is working hard to get their energy prices to go up. Meanwhile, payments received for oil and gas exports have been halved, making it likely that the exports themselves (to “unfriendly countries”) will be halved as well. At this point, some historians might take some dusty old books off the selves and opine that this sort of insane trade policy is what caused the Great Depression. I would beg to differ and call it Commercial Collapse, which follows Financial Collapse with its loss of access to credit caused by excessive counterparty risk.

Continue reading…

%d bloggers like this: