Barack Obama, Economy, Foreign Affairs, Issues, War

Russia’s First Domino?

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10_rublesIs this the start of the great crash for Russia? Remember how two years ago Vladimir Putin was threatening to replace the dollar with the Ruble as the world’s default currency?

But since then the value of his only major asset, oil, has more than halved. To make things worse, trade sanctions are in force for his over-reaching annexation of the Ukraine. Russia has lost 50% of its revenue from the tax on oil and is now unable to recapitalize its massive outstanding loans. Since S&P down-rated the ruble to Junk status they are running out of options.

Of course, Putin’s cronies, the so-called oligarchs who double as the government in this corrupt and fragile country, are now frantically searching for new assets to steal. Maybe today they found it. News just out of Moscow suggests the first domino has fallen, heralding the implosion of the Russian financial system.

This morning, the Sudostroitelny Bank (LTD) or Sb Bank as it’s known, froze all the business and private accounts. Account holders were told they could not take cash from their accounts. The bank tellers would only reveal the ‘bank has problems’ and recommended not to deposit any more money. When questioned by the anxious customers, they would only reply, “its on the internet” and wouldn’t get into a conversation.

The Sb Bank branch our source visited this morning was full of Russians who although anxious, seemed quite resigned to their fate. The bank itself buried the news as the third item on its website

Уважаемые клиенты! 29-30 января 2015 года выдача наличных денежных средств со счетов физических и юридических лиц осуществляться не будет. О дате возобновления выдачи и о возможности получения денежных средств по ранее принятым заявкам будет сообщено дополнительно.

TRANSLATION: Dear customers! 29-30 January 2015 issue of cash from the accounts of individuals and legal entities will not be performed. The date of issuance and renewal of the possibility of obtaining funds on the previous application will be announced later.

On January 26th, the Bank of Russia disconnected SB Bank from its electronic banking messaging system. This move by the Russian banking “regulator” means that SB Bank is no longer able to receive or make payments in rubles. Moody’s are downgrading the bank.

Expect more of the same. Russia could face a run on its banks that will bring its economy to its knees. And a desperate Putin could do anything.

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