Last week I advocated for severe economic punishment for Russia’s blatant disregard for Ukraine’s national sovereignty and amazingly (because who thought the Western Allies could ever agree on doing something) that punishment has been meted out.
Somewhat.
I’m hoping that the somewhat is only to give Vlad the Impersonator a taste of what could happen if full measures were in fact instituted. Hoping, but something tells me that somewhere along the line some country somewhere will do the “but we need their natural gas” and begin to fray the alliance. But as for now the sanctions currently in place are definitely worrying to Russia. Russians are lining up at ATM’s trying to get cash out. The Bank of Russia even went so far as to promise that
“The volume of bank notes ready for loading into A.T.M.s is more than sufficient. All customer funds on bank accounts are fully preserved and available for any transactions.”
Um, sure. But something tells me many Russians are getting ready to make a run on the bank which is never a good thing. Would that panic spread to the rest of the world? My college economics professor would have said yes, but the world has changed in the *cough cough* years since I took his class. As the sequel to Wall Street (the movie) said, “money never sleeps”. Besides with a government fiat against doing business with Russian banks in place, a default letter from any Russian bank will be laughed at by any foreign borrower.
Damn that let’s Trump off the hook for a while. No wonder he thought Putin’s Penetration was a smart move.
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In addition many Russian banks have been kicked out of the SWIFT system, which means those institutions can’t process payments. Doesn’t matter if your credit card has no limit when the guys actually paying the credit card company can’t make a payment.
Meanwhile the value of the ruble continues to worsen. At one point on Monday it fell to less than one cent. Back when I visited the Soviet Union when that’s what we called Russia, the value of the ruble couldn’t actually be fixed as it was not a currency traded internationally above board. Even with that the artificial “street” price was fifteen cents to the ruble, not that we could buy anything unless it was from a “hard currency” store (I got some very fun Soviet pins). At the time that actually was kind of in line with other European currencies in relation to the dollar. The franc and the Dutch kroner were around 25 cents. Everyone got very nice Christmas presents that year.
Reality check. Your country is only as good as it’s currency. Or as the smart guys say:
“If people trust the currency, the country exists,” Michael S. Bernstam, a research fellow at the Hoover Institution at Stanford University, said. “If they don’t, then it goes up in smoke.”
The next step is the one that, as much as the current sanctions have caused pain, would probably topple Putin from power. That step would be to freeze all the holdings Russia has in foreign banks. All those dollars, euros, yen, and pounds that the Russians use to buy foreign goods and services. Freeze those and it’s game over. Ah, but here’s the catch. Freeze those assets and a whole lot of companies and people don’t get paid what they are owed. If they’re not getting paid they might not be as willing to continue to support a freeze. Putin’s propaganda arm would then go into high gear saying “see, the West really is trying to destroy the motherland” and people might just start to believe it.
Me personally, I’d go with freezing all the assets of Putin’s nearest and dearest. As much as we think of him as this all powerful dictator, without the support of the oligarchs he created he would be out of a job and that was before he decided on his Ukrainian Ultra Adventure. Put the hurt on those guys and the phone’s gonna start ringing off the hook with “suggestions” he might want to step down for his health. Remember, there are a lot of windows in the Kremlin and all of them open.
Putin is playing with fire right now. When a country’s currency can’t buy anything, the citizens of that country tend to get a little, shall we say, upset. It won’t matter how many soldiers are guarding the gates of the Kremlin if they can’t buy anything to eat with their pay. They will throw off their uniforms and get in with the mob.
And Russians have a better record with mobs ransacking official government buildings than the Dipshit Insurrectionists will ever have.
In other words, no more half measures. I’ll let Jonathan Banks as Mike Ehrmantraut explain it fully in five of the greatest minutes of television ever produced.
