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| Forex speculating "Hitlers," watch your backs. |
One of the things we are learning about the current self-inflicted economic crisis in Russia is just how lame the bluster of Vladimir Putin is. Despite his shirtless
antics frolicking amidst assorted wildlife and military paraphernalia, the truth is that this vainglorious chap's economy is rather lame. He should have seen all the sanctions slapped on his country coming a mile away. Yet, it seems he is surprised by the drubbing it is getting as the ruble slides to oblivion while bond yields on sovereign debt soar to infinity. Really, he could probably do much better firing all those hosers and hiring Guns N Roses'
Duff McKagan, pronto. His
bluster now smacks of--you guessed it--desperation as he compares international opponents to Hitler:
President Vladimir Putin
pledged to punish speculators attacking the ruble with “harsh” measures
in a defiant speech that reached into Russian history to defend his
annexation of Crimea and compared his international opponents with Adolf Hitler...
Actually, his bluster does not match his actions since he's actually welcoming back monies that left the country via capital flight. I wonder why they're leaving...
Putin, who did not address falling oil and gas prices, also announced
plans for an amnesty on capital returning to Russia and said he’ll work
to eliminate unnecessary bureaucracy as he tries to reassure a nation
threatened by a spiraling economic crisis. The ruble is near a record
low, the economy is headed for a recession and banks are pleading for
state aid. The ruble has lost a third of its value since Putin started his
incursion into the Ukraine’s Crimean peninsula in March, the most among
24 developing countries Bloomberg tracks.
Oddly enough, this comes despite Russia choosing
not to defend the currency in recent times. With so many contradictory statements, you have to wonder what the country will really do:
“The Bank of Russia has moved to a free floating ruble but this doesn’t
mean it is distancing itself completely from influencing the ruble and
that the exchange rate
can become a target for financial speculation,” Putin said. “The
authorities know who these speculators are and the instruments we can
use to influence them. The time has come to use these instruments...”
The Bank of Russia today reduced the rate it charges banks to borrow
foreign currency in a bid to slow the ruble’s slide and ease a dollar
shortage. The ruble has “substantially” deviated from its fundamental
value, creating risks for financial stability and spurring expectations
of inflation and depreciation, the central bank said in a statement on
its website, reiterating its readiness to intervene without limits.
Putin is almost becoming Maduro-
like with his wild anti-Western conspiracy theories. Besides, he didn't describe what he'll be doing to tamp down the speculators via "harsh" measures. Ironically, I think it's Russians fleeing Russia doing significant damage to the ruble--hence the "amnesty" for returning capital. Until Putin actually does
something more than bluster, it's all bluster and market participants will act accordingly:
“Putin failed to scare speculators,” Bernd Berg, a
London-based strategist at Societe Generale SA, said by e-mail
after the speech. “Unless the central bank comes in with some
meaningful measures like significant FX interventions in the
size of a couple of billion, or aggressive tightening measures,
the ruble will remain under massive selling pressure as
fundamentals in Russia deteriorate by the day.”
