Some interesting set of articles on the topic I mentioned earlier on Irish radio and in the post here: http://trueeconomics.blogspot.ie/2014/12/16122014-russian-inflation-hot-but.html - the topic of contagion from the run on Russian ruble to the global economy:
- First off, the Guardian on the destabilising effects of playing brinksmanship with Russia (not to excuse the equally destabilising effects of Russia playing its own brinksmanship): http://www.theguardian.com/commentisfree/2014/dec/16/russia-economy-west-vladimir-putin?CMP=twt_gu
- Second, RT article on subject of spillovers: http://rt.com/op-edge/215031-russian-ruble-crisis-aftershocks/ Note: the article quotes myself on the topic
- Third, FT Alphaville piece - tongue-in-cheek - on Russian external liabilities http://ftalphaville.ft.com/2014/12/16/2074181/russian-foreign-liabilities-in-perspective/ Give that a thought - these are owed to someone in the West (mostly in Europe).
- Fourth, Bloomberg View piece on spillovers: http://www.bloombergview.com/articles/2014-12-16/russias-problems-are-everyones-problems - not much in the way of factual, but on the money in general
- Fifth, a bit over-the-top, but important question of potential geopolitical response from Moscow here: http://www.businessinsider.com/what-will-happen-next-2014-12?IR=T
- Sixth, factual report on PIMCO effect from the Russian crisis: http://www.bloomberg.com/news/2014-12-16/russia-crisis-hits-pimco-fund-wipes-out-options-as-ruble-sinks.html
- Seven (update): WSJ on Ruble spillover to European companies: http://www.wsj.com/articles/rubles-decline-deepens-concerns-for-european-companies-1418760793
As an aside to the menu of options available to Russian Government, here is one of a 'limited capital control': http://www.nakedcapitalism.com/2014/12/how-putins-fealty-to-the-washington-consensus-made-his-currency-crisis-worse.html aka de-dollarisation of the retail deposits. Surely, that would just amplify pain for ordinary savers.
And another aside: in-depth analysis of the reserves position and demand for debt redemptions for Russia here: http://www.nakedcapitalism.com/2014/12/oil-ruble-ideology.html. Key quote from the article:
"We notice that the strong depreciation of the Rouble corresponds to a peak in repayments, but that the situation will loosen up in early 2015. It is sure therefore that the exchange rate will reverse its tendency in the first semester of 2015. The question is, up to what point? If the Rouble stabilizes around 50 roubles for 1 USD, inflation will be strong next year and could reach 12%. If we witness a rise in oil prices and the Rouble stabilizes around 40-42 roubles for 1 USD, the inflation rate could amount to merely 10%. Still, this implies that the Central Bank of Russia keep an eye on such establishments which could be tempted to speculate on the exchange rate, dragging it farther down than it should normally be. Explicit threats were made by President Putin at the occasion of his declaration of general policies before the chambers of parliament on December 4th. However spectacular it has been, the depreciation of the Rouble by no means puts into question the financial stability of Russia. The trade balance remains in excess, with an amount outstanding of 10 billion dollars a month. This is largely sufficient to face up to coming payments. The budget is actually profiting from this depreciation, which should allow the government to spend a little bit more in 2015. Russia will therefore remain one of the least indebted countries in the world, which is not necessarily an advantage and goes to show that, provided it takes up debts internally, the country wields over a strong potential for investment and development."
Another update: a must-read from Bloomberg's @Bershidsky on why sanctions are at best secondary when it comes to the run on the Ruble: http://www.bloombergview.com/articles/2014-12-17/lift-sanctions-now-to-humiliate-putin
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