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J.P. Morgan: War Spells Doom for Russian Economy

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J.P. Morgan: War Spells Doom for Russian Economy

iu

3.4.22
Western sanctions are hitting Russia hard--harder than some experts expected. Much was made before the war of Russia's $643 billion in currency reserves. The thinking was that stash would help insulate the country from sanctions. But about half that money is under the control of commercial and central banks in the U.S. and its allies, The New York Times reports. So Russia will have difficulty getting at that stash. J.P. Morgan offers a bleak forecast of the country's economy, predicting "a collapse in Russian GDP." A report from the bank's economists, led by Bruce Kasman, said, "The sanctions will hit their mark on the Russian economy, which now looks headed for a deep recession." They forecast an 11% plunge in GDP from peak to trough, similar to the economy's plight in the 1998 debt crisis. "Sanctions undermine the two pillars promoting stability—the 'fortress' foreign exchange reserves of the Central Bank of Russia and Russia's current account surplus," the economists said. The current account measures a country's trade in goods and services and capital transfers.

"Russia's large current account surplus could have accommodated large capital outflows," the economists said. "But with accompanying Russian central bank and SWIFT sanctions, on top of the existing restrictions, Russia's export earnings will be disrupted, and capital outflows will likely be immediate." SWIFT (the Society for Worldwide Interbank Financial Telecommunication) is the messaging system that facilitates global payments. Meanwhile, "Downward pressure on the ruble and capital flight are pushing the Russian central bank to raise rates dramatically and impose capital controls," the economists said. "Imports and GDP will collapse."


J.P. Morgan sees the Russian economy returning to the "Aluminum Wars" days of Boris Yeltsin.

That is the nightmare of every Russian old enough to remember 1998.
 

"Did IQ's just drop sharply while I was away?"​

Take a look at the price of energy today and tell me how this is the same situation at 1998. If Russia stays in the Ukraine they gain oil reserves. How long until Europe is not "united"?

And maybe, just maybe, "someone" will complain about the high cost of gas in the US;

"We need to increase oil & gas output immediately,’ Elon Musk says as Ukraine crisis jolts U.S. crude to 2008 high​

BTW is Joe suddenly FOR fracking and leasing new oil and gas reserves? Because I missed that announcement;

"Shortly after taking office, the Biden administration announced a pause on new oil and gas lease sales while it reviewed the federal program."
 

"Did IQ's just drop sharply while I was away?"​

Take a look at the price of energy today and tell me how this is the same situation at 1998. If Russia stays in the Ukraine they gain oil reserves. How long until Europe is not "united"?

And maybe, just maybe, "someone" will complain about the high cost of gas in the US;

"We need to increase oil & gas output immediately,’ Elon Musk says as Ukraine crisis jolts U.S. crude to 2008 high​

BTW is Joe suddenly FOR fracking and leasing new oil and gas reserves? Because I missed that announcement;

"Shortly after taking office, the Biden administration announced a pause on new oil and gas lease sales while it reviewed the federal program."
Domestic production will rise to 12.6 million barrels daily in 2023, or 600,000 more barrels than in 2022, the U.S. Energy Information Administration (EIA) forecast this week. That would surpass the previous record production of 12.2 million barrels in 2019.

The increase in 2023 shows a recovery in oil pumping from the massive decline early on during the COVID-19 pandemic, when oil prices dropped below $19. Crude oil is currently at around $91 a barrel.

The EIA attributed much of the expected gains to new wells in the Permian Basin, in West Texas and Southeast New Mexico. The agency said that there were about 220 oil rigs added in the lower 48 states, and 114 of those were in the Permian region.


 
Much was made before the war of Russia's $643 billion in currency reserves. The thinking was that stash would help insulate the country from sanctions. But about half that money is under the control of commercial and central banks in the U.S. and its allies, The New York Times reports. So Russia will have difficulty getting at that stash.

This seems almost mind-bogglingly stupid.

Maybe we can trick them into letting us store their nukes for them, too.
 
This seems almost mind-bogglingly stupid.

Maybe we can trick them into letting us store their nukes for them, too.
"Hey! I got an idea! Let's put all this money in reserve for when the world shuts off our money access, but put most of it in the United States where we won't be able to get to it when they do sanction us!"

Someone must've been drinking their lunch the day that dumb shit was agreed upon.
 
If the sanctions are as complete as Mironov suggests, its difficult to see how Russian life wouldn't be impacted. When you import all the parts (e.g. microchips) and even 90 percent of your see potatoes, it has to hurt bigtime.

My only question is are the sanctions that extensive? I read somewhere Russia can still important pharmaceuticals (very important for Russia), medical, and humanitarian goods. Does that include food, their Achilles heel?
 
Take a look at the price of energy today and tell me how this is the same situation at 1998. If Russia stays in the Ukraine they gain oil reserves.

Ukraine isn't a gas/oil exporter. It is strictly a transit country (pipelines).
 
This seems almost mind-bogglingly stupid.

Maybe we can trick them into letting us store their nukes for them, too.

The big problem is that Putin never told anyone, not even his generals, that he intended to invade. Almost everyone in Russia thought he was just bluffing.

I suspect that if Central Bank Director Elvira Nabiulina had known, she would have moved the money back to Russia (it was earning more interest overseas).

She is really a top notch economist.
 
The big problem is that Putin never told anyone, not even his generals, that he intended to invade. Almost everyone in Russia thought he was just bluffing.

I suspect that if Central Bank Director Elvira Nabiulina had known, she would have moved the money back to Russia (it was earning more interest overseas).

She is really a top notch economist.
The events of the last few weeks suggest he’s an incredibly stupid man. The reputation was of a cunning strategist, but maybe he’s just a buffoon who had no compunctions about having his goons throw opponents out of windows?
 
The events of the last few weeks suggest he’s an incredibly stupid man. The reputation was of a cunning strategist, but maybe he’s just a buffoon who had no compunctions about having his goons throw opponents out of windows?

Putin has been in isolation ever since Covid struck Russia. Very few have personal access to him.

He seems to have changed mentally/emotionally since he went into isolation. He seems the unstable psychopath.
 
Putin has been in isolation ever since Covid struck Russia. Very few have personal access to him.
He seems to have changed mentally/emotionally since he went into isolation. He seems the unstable psychopath.
Wonder when the howard hughes phase begins?
 
Ukraine isn't a gas/oil exporter. It is strictly a transit country (pipelines).
Total Exports30.033.036.042.0
Exports have gone up every year. And they have at least 5 giant oil and gas fields that have been discovered;

"Giant oil and gas fields = those with 500 million barrels (79,000,000 m3) of ultimately recoverable oil or gas equivalent."
 
Exports have gone up every year. And they have at least 5 giant oil and gas fields that have been discovered

I lived in Ukraine for 5 years. It is a gas transit country.

There are also about eight underground gas storage facilities. These are for storing cheaper summer gas for European countries.
 
The events of the last few weeks suggest he’s an incredibly stupid man. The reputation was of a cunning strategist, but maybe he’s just a buffoon who had no compunctions about having his goons throw opponents out of windows?

I disagree, Greenbeard. I think Putin made a major miscalculation that led to severe negative consequences for Russia, but he made the calculation going off two decades of data in his favor. Remember, he has gotten away with foreign adventurism, seizure of territory, and atrocities like this (Chechnya, Georgia, Crimea, Syria, etc.) for the last two decades save for anemic sanctions from the West. When he initiated the invasion, Europe has never been more dependent on Russian gas and oil. NATO was never seen as more of a vestigial appendage. The United States had just made it clear that its days of foreign interventionism were over from our withdrawal of Afghanistan.

After having gotten away with practically everything he has done for two decades-plus in power, why wouldn't he make such an audacious gamble? Did anyone anticipate this devastating reaction and massive geopolitical realignment against Russia? Did anyone anticipate that so many European nations who have gone along to get along with Russia would suddenly be willing to endure real sacrifice in order to aid their neighbor Ukraine? I don't think many people did.
 
I disagree, Greenbeard. I think Putin made a major miscalculation that led to severe negative consequences for Russia, but he made the calculation going off two decades of data in his favor. Remember, he has gotten away with foreign adventurism, seizure of territory, and atrocities like this (Chechnya, Georgia, Crimea, Syria, etc.) for the last two decades save for anemic sanctions from the West. When he initiated the invasion, Europe has never been more dependent on Russian gas and oil. NATO was never seen as more of a vestigial appendage. The United States had just made it clear that its days of foreign interventionism were over from our withdrawal of Afghanistan.

After having gotten away with practically everything he has done for two decades-plus in power, why wouldn't he make such an audacious gamble? Did anyone anticipate this devastating reaction and massive geopolitical realignment against Russia? Did anyone anticipate that so many European nations who have gone along to get along with Russia would suddenly be willing to endure real sacrifice in order to aid their neighbor Ukraine? I don't think many people did.

Agree to all.

To add, Putin does not think like a Westerner. He thinks like a KGB Colonel from the heyday of the Soviet empire.
 
I lived in Ukraine for 5 years. It is a gas transit country.

There are also about eight underground gas storage facilities. These are for storing cheaper summer gas for European countries.
Perhaps this will help some understand what you are saying


(ignore the title of the url -- not sure why it's asking if I'm a robot)
This is the heading without the url descriptor

bloomberg.com/news/articles/2022-02-25/ukraine-s-grid-can-t-transit-extra-russian-gas-due-to-conflict

Ukraine Grid Can’t Transit Extra Russian Gas Due to Conflict​


 
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The Nord Stream-2 gas pipeline loops around Ukraine under the Baltic Sea to Germany and it was built to isolate Ukrainian gas transit pipelines and in 2024, when the Ukraine/Russia gas transit contract expiress, Moscow woud stop shipping any gas at all through Ukraine. This would cost Ukraine about $3 billion a year in gas transit fees. This was one method Putin intended to use to wage economic warfare against Ukraine. But now with the invasion of Ukraine, Germany has said no gas will flow through NS-2. In order to still sell gas to Europe now, Russia will have to use the South Stream, Belarus, and Ukraine pipelines (if the Russian military does not destroy Ukraine's gas pipeline system). Ukraine has more gas pipelines than Saudi Arbia and Mexico combined.
 
If people are stupid enough to think that this conflict will not have a huge effect on the economies of their own countries they are in for a shock.

When they discover that the Russian nuclear surveilance equipment isn't as sophisticated as many might think, we could be in for an even bigger, terminal shock.

Until then keep enjoying the war and hoping it spreads even further
 
If people are stupid enough to think that this conflict will not have a huge effect on the economies of their own countries they are in for a shock.

When they discover that the Russian nuclear surveilance equipment isn't as sophisticated as many might think, we could be in for an even bigger, terminal shock.

Until then keep enjoying the war and hoping it spreads even further

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"Did IQ's just drop sharply while I was away?"
Take a look at the price of energy today and tell me how this is the same situation at 1998. If Russia stays in the Ukraine they gain oil reserves. How long until Europe is not "united"?

Do you expect folks will buy $billions of petro-products with cash?

If not,
then you realize why freezing Russia's access to world-wide banks
prohibits Russia from being able to u capitalize on their natural resources as you suggest.
 
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The events of the last few weeks suggest he’s an incredibly stupid man. The reputation was of a cunning strategist, but maybe he’s just a buffoon who had no compunctions about having his goons throw opponents out of windows?
I suspect Putin is just as clever and cunning as ever.
I bet the flow of information got ****ed.

In authoritarian regimes, particularly corrupt ones, there is so much theft and dishonesty, so many threats, and other hurdles to communication that these sorts of things are bound to happen.

Regular shit rolls down hill
but bullshit floats up in these sorts of organizations.
 
I suspect Putin is just as clever and cunning as ever.
I bet the flow of information got ****ed.

In authoritarian regimes, particularly corrupt ones, there is so much theft and dishonesty, so many threats, and other hurdles to communication that these sorts of things are bound to happen.

Regular shit rolls down hill
but bullshit floats up in these sorts of organizations.

The word from Russia is that Putin will only listen to 3 people and all final decisions are his and his alone.
 
The word from Russia is that Putin will only listen to 3 people and all final decisions are his and his alone.

Is that from your personal sources in the Kremlin?
 
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