The rouble meltdown proves financial sanctions work really really well

December 17, 2014

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The root cause of the meltdown of the rouble is the western financial sanctions, says the FT today. The only realistic cure is to have these sanctions lifted. The Kremlin can accomplish that by fully and credibly evacuating its troops and armaments from eastern Ukraine. No other action is likely to have a significant economic effect. The big policy lesson is that financial sanctions are far more effective in the modern globalised world than many thought possible.

 

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Co-op bank fails the stress test and blubs: we won’t make money for three years

December 16, 2014

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Co-op wasn’t the only UK bank found lacking. Two other leading UK banks have been found to be short of capital as of the end of 2013, under a plan to gauge their ability to weather a major economic storm.

Royal Bank of Scotland and Lloyds Banking Group, were said to be “at risk” in the event of an economic downturn.

But only Co-op have been told to submit a new capital plan to regulators. As a result, they say they won’t make a profit for three years. Blub!

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What do Vladimir Putin, the oil price, and the rouble’s value against the dollar have in common?

December 15, 2014

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They’re all 62.

A series of brutal trading days for oil and the rouble brought them together on Monday  just below the Putin line—that is, $62 per barrel, 62 rubles per dollar, and 62 birthdays for the Russian president.

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UPDATE: This morning the Central Bank of Russia pushed interest rates up to a whopping 17%.  As a result the rouble was trading at 60.27 per dollar (up by 6.2% early this morning) after it lost more than 10 per cent to yet another record low on Monday  – when oil fell below $60 for the first time since 2009.

Reliant on the price of oil, commentators say the Russian economy is perma-screwed.

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