Current Affairs Ukraine

[Whiteandblue]

This might be an excellent way for the western powers to introduce their SF in the area.

Russia is fuxxed.

 

[catcherintherye]

I don't think you're understanding what I'm saying. Item #1 is self-evident. Item #2 addresses LL's 100% accurate point re: physical limitations on the amount of available physical currency available to ordinary Russian citizens with deposits denominated in rubles. They want rubles, but you know you're going to run out of physical rubles. So you refuse to provide physical rubles, hand citizens something else instead that effectively keeps the money in the banking system for the time being, and declare it legal tender.

Item #3 is regarding frozen central bank reserves, which are not the same as ordinary bank deposits. This subject gets messy and while I understand it, you want someone more qualified than me in that arena explaining that one to you. Long story short, this is how you solve the USD/other currencies problem if you're Russia and all your foreign depositors pull their money out to a degree that cannot be covered. You raise capital among speculative investors, and worry about the consequences later.

It's not much different from Goldman going hat in hand to Buffett and paying him an 8% guaranteed rate of return in order to bail them out in 2008. It will be messier, because Goldman was arguably a stronger institution despite their dire financial straits at the time, but liquidity is a service and someone will provide it at the right risk premium.

Domestic USD withdrawals are solved in other ways, in part. Kompromat can be a useful thing, the oligarchs know that they can't all have all of their money because then they all go down together, and they've all been diversifying into foreign real estate anyway for a rainy day such as this one. They sell some dollar-denominated assets for cashflow when they want to do dollar-denominated things, which they don't much like, and life goes on.

Said undergraduates were not all from the US, thank you very much. Substantial majority, yes. The undergraduates came from all over the world, including Europe, China and various other Asian countries, and I had students from those places. I can tell you that these blind spots were a systemic problem not limited to US-born students.

100% that I never had a student from Africa or South America, though some were enrolled. They didn't go in for squishy BAs in the social sciences. Now if you want to talk about where I got my BA, that was almost all Americans.

In any event, the Asian tigers aren't germane to the discussion because that was a different type of financial crisis. No frozen assets means no IOU sale.

Russia is not North Korea, but Putin has a freer hand than Western analysts seem to think. You can't do this stuff in a Western democracy because overriding existing laws to do this stuff requires an act of volition by legislators that you're not going to get. This is why Geithner et al solved the 2008 problems in the manner in which they did. Members of Congress were not going to approve measures whose consequences they did not understand at that time, so anything requiring an Act of Congress was not a valid move.

I am inclined to agree with much of this.

And the concern is, ordinary Russians wont be able to use banking, and the super wealthy Russians will be able to exploit that liquidity crisis. If that plays out, it is a grave injustice.

 

[PhilM]

I am inclined to agree with much of this.

And the concern is, ordinary Russians wont be able to use banking, and the super wealthy Russians will be able to exploit that liquidity crisis. If that plays out, it is a grave injustice.

It is. Yet, while it's regrettable for the masses, it may help undermine Kremlin's power if it significantly impacts on public opinion.

Russian mothers are going to start burying their sons; this 'lightning' war is likely to drag on; families may start to struggle in terms of their livelihoods.

Russia's problem has been many countries who were in the sphere of the USSR looked west with envious eyes, and now their own citizens may do the same.

Hopefully, the Ukrainians are able to repulse these offensives and inflict heavy casualties. Even if Russia does win the war, which is likely, what happens then?

Unless they're willing to keep serious numbers of troops in the Ukraine, it'll be difficult to maintain a puppet regime. Even then, it's going to stay costly.

 

[Martin Alvito]

I am inclined to agree with much of this.

And the concern is, ordinary Russians wont be able to use banking, and the super wealthy Russians will be able to exploit that liquidity crisis. If that plays out, it is a grave injustice.

Absolutely. A few relatively ordinary Russians would probably make a great deal of money trading a secondary IOU/rubles market, and everyone else ends up a little worse off on average. That's more or less how the present Russia was built and works today.

I don't know whether the oligarchs broadly would have the cashflow to exploit the hypothetical central bank IOUs. I don't have the data. My guess would be that broadly they would end up in the hands of Western hedge funds, unless legislation were passed to stop that. Given the state of internal politics in the US and other places, my money is on them finding a harbor.

 

[catcherintherye]

It is. Yet, while it's regrettable for the masses, it may help undermine Kremlin's power if it significantly impacts on public opinion.

Russian mothers are going to start burying their sons; this 'lightning' war is likely to drag on; families may start to struggle in terms of their livelihoods.

Russia's problem has been many countries who were in the sphere of the USSR looked west with envious eyes, and now their own citizens may do the same.

Hopefully, the Ukrainians are able to repulse these offensives and inflict heavy casualties. Even if Russia does win the war, which is likely, what happens then?

Unless they're willing to keep serious numbers of troops in the Ukraine, it'll be difficult to maintain a puppet regime. Even then, it's going to stay costly.

"Regrettable for the masses" is a rather throwaway phrase that minimises the inhumanity of the decision in my view.

It is going to be punishing ordinary people for doing nothing wrong. A shameful act, and in time will be viewed as a very very negative in my view.

 

[catcherintherye]

Absolutely. A few relatively ordinary Russians would probably make a great deal of money trading a secondary IOU/rubles market, and everyone else ends up a little worse off on average. That's more or less how the present Russia was built and works today.

I don't know whether the oligarchs broadly would have the cashflow to exploit the hypothetical central bank IOUs. I don't have the data. My guess would be that broadly they would end up in the hands of Western hedge funds, unless legislation were passed to stop that. Given the state of internal politics in the US and other places, my money is on them finding a harbor.

So essentially, we strengthen the very conditions that we are meant to be stopping, and cause more inequality and misery to ordinary Russians?

That sounds like a proportionate and sensible response.

 

[Martin Alvito]

It is. Yet, while it's regrettable for the masses, it may help undermine Kremlin's power if it significantly impacts on public opinion.

Russian mothers are going to start burying their sons; this 'lightning' war is likely to drag on; families may start to struggle in terms of their livelihoods.

Russia's problem has been many countries who were in the sphere of the USSR looked west with envious eyes, and now their own citizens may do the same.

Hopefully, the Ukrainians are able to repulse these offensives and inflict heavy casualties. Even if Russia does win the war, which is likely, what happens then?

Unless they're willing to keep serious numbers of troops in the Ukraine, it'll be difficult to maintain a puppet regime. Even then, it's going to stay costly.

In the limit, you may be right about the endgame. We may well look back and look at this as the beginning of the dismantling of Putin's regime, or the seeds of why a successor fails to cement a hold on power.

You are certainly right with respect to Putin's problems when it comes to holding dirt or propping up a regime controlling part or all of Ukraine.

 

[Bruce Wayne]

"Regrettable for the masses" is a rather throwaway phrase that minimises the inhumanity of the decision in my view.

It is going to be punishing ordinary people for doing nothing wrong. A shameful act, and in time will be viewed as a very very negative in my view.

An economic Dresden.

 

[PhilM]

"Regrettable for the masses" is a rather throwaway phrase that minimises the inhumanity of the decision in my view.

It is going to be punishing ordinary people for doing nothing wrong. A shameful act, and in time will be viewed as a very very negative in my view.

With all sincerity, it was not a throw away phrase nor was it glib. It is regrettable that the Russian population will suffer, and I mean that.

However, the shameful acts originated with the Russian invasion of a sovereign nation, and ultimately strict sanctions are a tool to help stop the aggressors.

Genuinely, unless we attack Russia, which will cost many more lives, what else do you recommend apart from rolling over and letting them succeed?

The blame that'll be viewed negatively will be Putin's decision to invade. If it helps destabilise his power base, it will have done its job.

 

[Yarrgh]

I am inclined to agree with much of this.

And the concern is, ordinary Russians wont be able to use banking, and the super wealthy Russians will be able to exploit that liquidity crisis. If that plays out, it is a grave injustice.

True, but it's always the ordinary person who suffers.

Having said that, cutting off swift should have been done as soon as one soldier put a toe inside Ukraine and it would be in place now and its effects already felt.

No idea how this resolves itself now. Russia needs a way out with a way back into normal relations without acrimony that festers and makes this situation occur again. So far I can only think of a coup and a bullet in Putin's forehead by Russian hand as the way out.

 

[Yarrgh]

An economic Dresden.

Dresden is deplorable.

 

[Martin Alvito]

So essentially, we strengthen the very conditions that we are meant to be stopping, and cause more inequality and misery to ordinary Russians?

That sounds like a proportionate and sensible response.

To be painfully direct about it, yes.

Sanctions don't work. I can't recall someone explicitly running down your line of reasoning with data (likely in part due to small sample sizes and difficulties with collecting it), but you're absolutely right in a very succinct way. I've also been out of the game for a while, so I can't tell you what may or may not have been published in the interim.

The threat of sanctions is potent. This means that, when they don't work, they must be imposed in order to keep that threat credible in future interactions with other countries. It is acknowledged that this results in human suffering. The line of reasoning is that doing things this way prevents more human suffering than it causes, which is very likely true.

International relations is dark, and full of terrors.

 

[Deleted member 48881]

So I guess UKR wants a famous Catalonia Offensive like aura in Kyiv. I wonder if many would go.

 

[Kev The Rat]

So I guess UKR wants a famous Catalonia Offensive like aura in Kyiv. I wonder if many would go.

I’m sure you would

 

[cooperman]

Some brilliant contributions in this thread from very well informed posters this morning. Given me a great deal to think about.