Saturday, December 20, 2014

Foreign Affairs: Russian Division

More foreign comedy is happening in Russia where their ruble has become like Tolstoy's play The Living Corpse - dead money walking.

The Russian Affair
Russia is the most perfect example of a kleptocracy in human history. The Sochi Winter Olympics cost a staggering $51 billion, five times the cost of the 2012 London Summer games. The cost was so high because much of the money was diverted by bribes, kickbacks, and other corrupt practices.

The ruble has lost half its value in less than four months. Imagine having $10,000 on Sept. 1 and have it worth a little more than $5,000 by Christmas. This has caused, not just a run on banks, but a run on the entire currency and Putin's beloved oligarchs have been the first out the door. 

The cause is the massive drop in oil prices, Russia's economy is oil and pretty much nothing else, but the oligarch's currency manipulations, designed to profit from disaster, has accelerated the ruble's collapse. Western sanctions, targeted against Russia's elite, have had a tangential effect - by squeezing the oligarchs it has made them more willing to bleed the ruble.
The $1.2 billion yacht of Russia oligarch Roman Abramovich.
That's not the funny part. What's funny is how American plutocrats are rushing to defend their brother billionaires in Russia. Morgan Stanley wants to sell its oil unit to the Russian government owned oil company Rosneft. BP isn't just in bed with Rosneft, it is having rough Russian sex with it. Exxon is losing its joint venture with Rosneft to pollute the Arctic Ocean. So the plutocrats have gone to financial press to beg the West to bail out Russia.

We are being told that Germany and the United States have to prop up Russian billionaires or else face our own economic ruin, perhaps even nuclear war. The first will not happen because the oligarchs are insignificant to the Western economies. And if the second happens it will be because Putin is insane not because his billionaire buddies can't have Ritz crackers with their caviar.

No comments: