We've got Putin right where he wants us

Something is wrong with our sanctions policy against Russia..

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On Wednesday, the Russian ruble closed 6.6% higher against the US dollar at 66.30 — its highest level since March 2020, according to Reuters' records.

Wasn't the idea that we would isolate Russia so that no one would want to deal with Russia in any way? How's that working?

(Reuters) - Russia ran a current account surplus of $95.8 billion in the first four months of 2022, up from $27.5 billion in the same period last year, central bank data showed on Monday.

Russia is on track to post a record high current account surplus this year after its import of goods and service fell due to western sanctions, while commodity export revenues are boosted by globally high prices.

That's the opposite of what we were supposed to do. If anything the Russian Ruble has a stronger financial base under it than ever before. Even the hundreds of billions of dollars that we illegally seized from Russian currency reserves won't make a bit of difference if their current account balance is in the extreme green.
But we've got Europe united against Russia, amirite?

Ten more European gas buyers have opened accounts in Gazprombank JSC, doubling the total number of clients preparing to pay in rubles for Russian gas as President Vladimir Putin demanded.

A total of twenty European companies have opened accounts, with another 14 clients asking for the paperwork needed to set them up, the person said, speaking on condition of anonymity to discuss confidential matters.

This is happening despite European Commission President Ursula von der Leyen warning companies against doing what they are in fact doing.

“Companies with such contracts should not accede to the Russian demands,” von der Leyen said. “This would be a breach of the sanctions so a high risk for the companies.”

So companies are rushing to defy the Russian sanctions, despite the potential of serious financial penalties. Why would they do that? It's called R-E-A-L-I-T-Y, and it's very unwelcome in politics.

“Russia is showing that it’s ready to get serious, that if one doesn’t comply with supply contracts or payments, they’re ready to put a stop to gas deliveries,” he said. “We have to take that seriously, and that also goes for other European countries. I take that seriously.”

You can't just replace 40% of your energy needs because your politics call for it. Even if the U.S. could substitute Russian gas with our natural gas from fracking, the infrastructure doesn't currently exist to get it to Europe. Plus, if the infrastructure did exist, it would be a far higher price than Russian gas.
And then there's the math.

Out of 195 countries, only 30 have honored the US sanctions on Russia. That means about 165 countries in the world have refused to join the sanctions. Those countries represent by far the majority of the world’s population. Most of Africa, Latin America (including Mexico and Brazil), East Asia (excepting Japan, South Korea, both occupied by US troops and hence not sovereign, Singapore and the renegade Chinese Province of Taiwan) have refused. (India and China alone represent 35% of humanity.)

Add to that fact that 40 different countries are now the targets of US sanctions and there is a powerful constituency to oppose the thuggish economic tactics of the US

Finally, at the recent G-20 Summit a walkout led by the US when the Russia delegate spoke was joined by the representatives of only 3 other G-20 countries, with 80% of these leading financial nations refusing to join! Similarly, a US attempt to bar a Russian delegate from a G-20 meeting later in the year in Bali was rebuffed by Indonesia which currently holds the G-20 Presidency.

Damn You, Reality! Don't you know that defying reality is the bipartisan consensus, and being bipartisan is holy and sacred, especially when it comes to supporting wars and causing pain on the working class in the search for profits while virtue signaling.

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This issue is hundreds of years old. It has perplexed Russians for ever. Europe is a geographically small area with limited resources. Together with Russia, Europe has the resources and global span that she needs. Europe suffers from European elitism and, one might say, racism. Most of the major European countries have made war on Russia, some multiple times. The UK seems to have one of the worst cases of Rusophobia currently.

Russia understands this well and strives to have good relationships with most of the non-western world, and is succeeding very well at this.

My conclusion is that Russia completes the non-Western world even better. Russia's love affair with the West has been very bad for her overall, and she understands this now. That's why she was so well prepared for "the sanctions from hell". Russia has an economy built on substance- energy, food, natural resources and hard technologies, including IT. The West is based on Finance and endless bubble Markets and overvalued fiat currency. 65 Rubles in Moscow buys 3 times the goods as 1 Dollar does in NYC. Both the Big Mac index and tourist experience bears this out. The sanctions have had very little effect on the average Russian, unless they are addicted to overpriced Western goods. Import substitution is extremely healthy for Russia, combined with establishing firm trade relations with the non-Western world, using native currencies. One might say that the sanctions from hell have generated the motivation that Russia needs to be truly ecomically successful based on her potential.

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Capitalism has always been the rule of the people by the oligarchs. You only have two choices, eliminate them or restrict their power.

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Why the sanctions on Russia will fail spectacularly
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Here is what I had to say on the topic of the sanctions against Russia:

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Nobody on Earth is as stupid as the Empire pretends to be.

Of course these "sanctions" will do nothing but send the fucked global economy into the status of Even More Fucked.

Tens of trillions of dollars worth of "money" have been pumped into the global economy since 2019 by the central banks of the world. This slush has filled the gap of diminished demand stemming from the lockdowns and consequent realignment of retail sales away from mom and pop stores to corporate sellers.

In my own not so typical pattern of daily life of regular business travel, my gross expenditures diminished by about six thousand dollars a month. The planes were always full and the hotels wre jammed. Virtually everybody I know saw their entertainment and travel expenditures all but disappear for most of the last two years.

This massive hole in aggregate demand would "normally" cause a "recession" and it will eventually do so once the Central Bank money spigot is turned off. In the mean time, all those trillions of dollars of fiat money will continue to sit in the stock and retail estate "markets" inflating the balance sheets of all the investors in the world.

That dam could break at any moment -- that is why they call it a crash.

Now with these utterly irrational "sanctions" starting to cause specific energy and food inflation spikes. coupled with the increased demand that will come with the end of Pandemic House Arresst, Push will say hello to Shove. Two independent crises will combine Weimar level inflation with 1930's level economic contraction. The "stagflation" that elected Ronald Reagan in 1980 will return with an order of magnitude more intensity.

All over the internet, I see disgusted voices talking about how stupid the Biden Government is. That assumes, of course, that they really are oblivious to the threat of nuclear war or the idiotic economics of these Sanctions.

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Nobody is that stupid. There has to be another explanation.

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I see that the MSM is starting to ease off of the hysterical bleating about how Russia is getting its ass kicked while committing genocide and other war crimes. I expect the war crimes allegations to continue in full throated indignation -- but, uh, Russia might actually achieve its military goals.

And at that point, the Sanctions Strategy will lay as naked as the Vaxx Mandates with not even the tiniest bit of coherence.

It is fun to congratulate oneself for being smart enough to see through bullshit. Not so much fun when the bullshit keeps on chugging regardless of how stupid it is.

Maybe they are not that stupid -- but have another set of goals they are not telling us about.

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I cried when I wrote this song. Sue me if I play too long.

QMS's picture

ain't all that great after all.
Sure, the fat cats are getting fatter
but the rest of us are feeling the pinch.
Since greed and power only benefit the 1%
in capitalist economies, seems Russia, China
and a few Latin countries have a better idea of
how to survive the sanctions of the west.

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Pluto's Republic's picture

....that strong-armed sanction-attacks are having on Russia's economy. The US is also attempting to blockade Russia's trading routes and threatening Russia's trading partners. Russia cannot control how the threatened nations react; they can only remain steadfast, themselves. I think it's clear that Russia has engaged in tremendous advance planning for handling US sanctions, preparing their trading partners and confirming their contracts. Russia took no overt defensive actions and didn't try to conceal their assets, but they did design many layers of reciprocal responses that will keep the US economy equally uncertain and scrambling.

I read a discussion, I believe it was in the Saker, that suggested the Russians were caught off guard and surprised by some of the sanctions and economic assaults that the US levied against them. Some of those sanctions made the US look very sinister and depraved in the eyes of the world. Russia was not expecting direct attacks on the Russian people — deactivating their credit cards for example, leaving them stranded financially. But we saw that Russia had fully functional parallel systems standing by that could instantly take over all consumer transactions.

The Saker article mentioned that Russia was not expecting the US to seize their currency reserves — but Russia did not try to hide these funds or make them inaccessible. It appears now that Russia was hoping the US would be tempted to steal the money. In the world of international finance, It is such an egregious and barbarian thing to do. It's part of a pattern of self-destructive actions on the part of the United States. This gave many nations pause to contemplate what kind of force the US had become.

Of course, the theft of Russia's currency reserves created the perfect cover for Russia to reasonably request that purchases be made using Rubles. Thus, the global demand for Rubles suddenly became intense. This, in turn, drove up the cost of exchanging Euros for Rubles on the Forex. I'm guessing that was a penalty designed specifically for Europe.

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____________________
Those who can make you believe absurdities can make you commit atrocities.
— Voltaire

The Liberal Moonbat's picture

How long before the Ministry of Truth debuts RussiaGate II?: "It was Putin's idea all along! Somehow he PROVOKED us into sanctioning Russia! He's an Evil 4-D mastermind, but we'll beat him by passing puerile memes around a Designated Anti-Free-Speech Safe-Space...!"

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In the Land of the Blind, the one-eyed man is declared insane when he speaks of colors.

To paraphrase Jodie Foster: Human is not something to aspire to, it's something to get away from.

It seems those who bet against Russia are losing money

Stocks linked to Russia plunged following the outbreak of war and subsequent economic punishment meted out to the country, vindicating bearish wagers. But sanctions also made trading Russian securities almost impossible, leaving short sellers unable to exit their positions.

The result? Investors who shorted -- sold borrowed shares with the intention of buying them back more cheaply before returning them -- are still borrowing, paying the associated fees indefinitely.

The short-selling world is notoriously opaque and dominated by institutions who rarely disclose their bets. But based on available data, technology and analytics firm S3 Partners estimates short sellers of Russia-focused exchange-traded funds have paid around $2.6 million in borrow fees since the products were halted in early March.

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As the Azoval surrenders continue…….

Russia’s lower house of parliament, the State Duma, is planning to discuss the potential withdrawal of the country from the World Trade Organization (WTO) and the World Health Organization (WHO), according to Pyotr Tolstoy, the vice speaker of the parliament.

Russia has just started the process to withdraw from Council of the Baltic Sea States.

Previously they canceled membership in the Council of Europe.

We are also waiting for a formal announcement that from now on, oil will also have to be paid for in Rubles.

These are major changes in our world configuration.

LINK

Interesting times we’re living in right now. Though big changes can be very unsettling, these strangely sound more like hopeful progress to me. Anything that might stop the endless progression of wars in service to Empire would be a boon to humanity.

EOM

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“We have a very small window in which we need to make a fundamental shift away from capitalism.” Kshama Sawant

@ovals49
They were essentially locked out of the rest of the world during the Cold War.
But this is unprecedented during the last 40+ years.

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The Liberal Moonbat's picture

@ovals49 America lost the Cold War.

Sure, the Reds did too, but not as badly in the long run. The Spectre of Communism faded away back when Stalin dissolved COMINTERN, and the USSR thereafter had no vision (with the HUGE admitted exception of the Space Race!). It says something about a country when about a third of its history, and one of the more fondly-remembered parts by those who lived through it, is officially referred to as "Stagnation".

The way my poli-sci teacher put it, Gorbachev knew he was doing the worst thing he could conceivably do to the US: He took its enemy away.

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In the Land of the Blind, the one-eyed man is declared insane when he speaks of colors.

To paraphrase Jodie Foster: Human is not something to aspire to, it's something to get away from.

on the effects of sanctions on Europe are quoted here, but without a link:

https://www.moonofalabama.org/2022/05/ukraine-for-laughs/comments/page/2...

... What follows is taken from the middle of Putin's discussion as it deals with the propaganda aspect of Europe's self-inflicted energy crisis:

"... And today we see that for absolutely politically colored reasonsAnd instead of admitting their mistakes, they look for the culprits on the side.

"Yes, the Europeans explicitly admit that they cannot yet completely abandon Russian energy resources. It is all the more obvious that some EU states, in the energy balance of which the share of Russian hydrocarbons is particularly high, will not be able to do this for a long time. However, they set such a task, we see it. They bet without paying attention to the damage they have already done to their own economy.

"One gets the impression that our Western colleagues – politicians and economists – have simply forgotten the basics of elementary, basic economic laws or, to their own detriment, prefer to deliberately ignore them.

"What results do they achieve with their decisions?

"First. The sanctions already adopted by our European colleagues and the declarations on the possibility of a complete rejection of Russian energy carriers in the future have led to the fact that oil prices on the spot market are rising. You know this yourself: if you say something inaccurate at the political level, that's it, it is immediately reflected in the market, instantly.

"Second. The cost of petroleum products in the European market, such as, for example, diesel, due to their actual deficit, is growing even higher than oil prices. Such energy inflation – they are trying to write off this energy inflation on us, they call it by our names, they blame everything on Russia, trying to cover up, as I have already said, their own systemic mistakes in this area – this is already directly hitting transport and European industry, falling on the shoulders of consumers – millions of Europeans.

"Finally, the third and most important thing. The rejection of Russian energy resources means that Europe systematically, in the long term, becomes the region with the highest cost of energy resources in the world. Yes, of course, prices here will increase, and resources will also go here, to these prices, but it will not be possible to radically change the situation. And this is in the most serious way, and, according to some experts, irrevocably can undermine the competitiveness of a significant part of the European industry, which is already increasingly losing competition to companies from other regions of the world. Now these processes will certainly be accelerated. It is obvious that along with Russian energy resources, the possibility of increasing economic activity will also leave Europe for other regions of the world.

"Such economic auto-da-fé, suicide, is, of course, an internal affair of European countries. We must act pragmatically, proceeding primarily from our own economic interests."

Nothing Putin is saying is secret, even the Western media is publishing the actions of the ongoing suicide...

Posted by: karlof1 | May 17 2022 19:01 utc | 176

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snoopydawg's picture

@Linda Wood

I thought that was spot on. It just seems so boneheaded that they are ruining their economy so that American billionaires can get richer. But then our government is doing the same damn thing isn’t it? Unfortunately in lots of countries poor people are going to die. All so defense companies can keep their high profits. What will be the first country that overthrows their government? Sri Lanka is off to a good start.

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It is not until the tide goes out that you discover who has been swimming naked.