Did you believe that the Russians were simply going to sit back and take whatever economic sanctions that western powers decided to dispense? Of course the Russians were going to strike back, and they certainly have the capability to cause a fair bit of pain. Regrettably, economic wars have a way of becoming shooting wars, and if leaders on both sides continue to escalate matters we could quickly cross a defining moment. As it is, relations between western federal governments and the Russians have actually completely broken down. The Russians are never ever going to forgive us, and western federal governments are never going to forgive them. So that means that much of the economic “penalties” that are now being carried out are likely to be long-term.
Without a doubt, the sanctions that have been imposed on the Russians have actually done a great deal of damage. The Russian ruble has actually collapsed, there have been extremely long lines at automated teller machine and banks, and economic activity inside the country has been greatly interfered with.
However anybody that believed that we would leave this unharmed was just being delusional.
In current days, an entire host of western corporations have actually revealed that they are pulling out of Russia, and the Russians are now stating that they might simply take all of their assets…
Russia said it could take the assets of Western companies that have suspended operations in the nation.
Lots of American, European and Japanese companies from nearly every sector of the economy have deserted joint endeavors, factories, shops and offices in the last 2 weeks in action to Russia’s intrusion of Ukraine and the making sure sanctions.
Over the previous few years, western corporations have built up a massive existence in Russia, and now much of that could be removed with no settlement at all.
Oops.
The balance sheets of some business are about to get “adjusted” in a significant way.
Do you believe that their shareholders will feel good about accomplishing a “moral success” although it means losing a lot shareholder worth?
Many major banks in the western world are about to get hammered as well.
According to CNN, really little of the $121,000,000,000 that Russian entities owe to western banks is likely to ever be repaid now that war has started …
International banks are owed more than $121 billion by Russian entities, according to the Bank for International Settlements, which suspended Russia’s membership on Thursday. European banks have more than $84 billion total claims, with France, Italy and Austria the most exposed, and US banks owed $14.7 billion.
Goldman Sachs (GS) earlier disclosed that it had credit direct exposure to Russia of $650 million in December 2021.
U.S. banks only stand to lose 14.7 billion dollars, and that will certainly injure.
However the quantity of direct exposure that European banks have might possibly be absolutely ravaging.
The Russians are likewise hitting back by limiting exports. On Thursday, the Russian government launched a list of over 200 various items which will not be enabled to be exported …
“The list includes technical, telecommunication and medical equipment, lorries, agricultural equipment, electrical devices– more than 200 products in overall, including railway vehicles and engines, containers, turbines, metal and stone processing makers, monitors, projectors, consoles and panels,” the Kremlin statement states. “This procedure is required to make sure stability in the Russian market.”
A great deal of the products on that list don’t really matter, however the fact that Russia has now chosen to suspend fertilizer exports is a really, truly big deal …
On Thursday, Russian Minister of Industry and Trade Denis Manturov said Russia chose to suspend fertilizer exports. This comes when international food rates are at record highs, and European fertilizer makers are having a hard time to produce nutrients ahead of the spring growing season, increasing worldwide food inflation threats.
President Vladimir Putin said the fertilizer export ban was a move to guarantee stable domestic food costs. This is another sign of growing protectionism worldwide as nations come to grips with skyrocketing food costs. Putin said fertilizer markets are weakening, making food a lot more costly.
In previous posts, I have actually explained that even prior to the war began some kinds of fertilizer had doubled in rate, some had actually tripled in price and some had in fact quadrupled in cost.
Now fertilizer costs are likely to soar even greater, due to the fact that the Russians are a major gamer in the fertilizer industry …
. on the eve of the sowing season, European (& American) farmers are left w/t Russian fertilizers. RUS share in the world market is a little less than a 1/3 of the world production of potash fertilizers, about 10% of nitrogen fertilizers & about 20% of complex fertilizers.
This move is particularly going to hurt for farmers in Europe.
Without fertilizer from Ukraine or Russia, they are going to be facing a “supply shock” of impressive percentages.
We will likewise wish to view how Russian export restrictions affect the tech industry…
Today, #Russia represent 80 % of the market for sapphire substrates– thin plates made from synthetic stone, which are utilized in opto- & microelectronics to build up layers of numerous materials, such as silicon.
They are used in every processor worldwide– AMD & Intel are no exception. #Russia’s position is even stronger in special chip etching chemistry using ultra-clean parts. RUS represent practically 100% of the world’s supply of some unusual earth elements used for these purposes
When I ran for Congress, establishing U.S. sources of unusual earth aspects was a hot button concern for me.
Unfortunately, not much progress has been made since that time. Today, the U.S. remains exceptionally based on foreign sources. China in fact controls the international market even more than anyone else does, and so if we ever fight with China we are going to be actually, truly hurting in this area.
Before I end this article, I wish to provide an update on the cost of gas.
The average cost of a gallon of gasoline in the United States has actually now soared to $4.31, and in Los Angeles some customers are now paying nearly 8 dollars a gallon…
Gas rates are now pushing $8-a-gallon in Los Angeles, with drivers forming lines at Costco pumps throughout the United States to fill ahead of prospective additional boosts.
Snaps taken at a Mobil filling station beside on the border of Beverly Hills and West Hollywood on Wednesday afternoon showed eye-watering prices of $7.95 for premium gas.
In this case, this is something that we have actually mainly done to ourselves.
Since he went into the White Home, Joe Biden has actually pursued policies that have increased the cost of fuel, and now the war has actually caused around the world panic.
Biden is trying to beg the Saudis to pump more oil, and he may be successful. But as I have consistently alerted, the long-term outlook is exceedingly bleak.
Fuel costs will eventually go much higher than they are now.
Food costs will eventually go much greater than they are now.
And the shaking of our monetary system has only simply started.
The Biden administration desired a face-off with the Russians, and now they have it.
Sadly, their foolishness is going to cost everybody dearly.
*** It is lastly here! Michael’s brand-new book entitled “7 Year Armageddon” is now available in paperbackand for the Kindleon Amazon. ***
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