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http://www.cnbc.com/id/102235487

Vladimir Putin’s worst nightmare may be happening right now
Is Russia’s tanking economy making its leader vulnerable?
Dan Peleschuk
9 Hours Ago
Global Post


A plummeting currency, rising inflation and sagging oil prices — that's the stuff Vladimir Putin's nightmares are probably made of.

The former KGB operative has staked his reputation for years on Russia's spectacular economic growth throughout the 2000s, thanks to its dependence on increasingly lucrative energy exports.
As the price of oil, Russia's most important export, climbed from $16 a barrel in 1999 to more than $140 in 2008, a new middle class enjoyed the fruits of prosperity, eagerly burying the memories of the impoverished 1990s.

Read MoreCrumbling oil makes Putin more dangerous: Expert

But as the Kremlin now lords over Ukraine and stares down the West, Putin's nationalist gambit is finally being felt on the home front, threatening the central notion that's helped keep him in power so long.

"The myth of 'stability' has now been broken," says Anders Aslund, a senior fellow at the Peterson Institute for International Economics.

Russian rubles on display in front of a portrait of Russian President Vladimir Putin.
Ulrich Baungarten | Getty Images
Russian rubles on display in front of a portrait of Russian President Vladimir Putin.
While Putin's grip on power is still far from tenuous, the steady stream of gloomy economic news is probably causing at least some concern in the Kremlin.

The effects of Western sanctions and steady drop in global oil prices to a five-year low of below $70 this week are costing Russia some $140 billion annually, according to the government's own estimates.
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Russian officials on Tuesday warned the country faces a recession in 2015 that could see the economy shrink for the first time in five years.
They believe it will contract by 0.8 percent next year, down from a previous estimate of 1.2 percent growth.
Ordinary Russians have watched as their currency lost nearly 40 percent of its value since the beginning of the year. They can also expect double-digit inflation by early next year, officials predict.
Taken together, these stats are why Putin has long stopped trumpeting his country's economic statistics in order to boost popular support, says Alexander Baunov, an editor of one of Russia's only remaining independent news outlets.

Read MoreAs ruble tumbles,what will Putin do next?

Instead, the third-term president harps on the historical injustices he claims Russia has suffered at the hands of foreign powers, part of a nationalist drive casting his country as a bulwark against the West and shielding him from domestic contempt.
"The frustrated president-economist has turned into the president-historian before our eyes," Baunov wrote Tuesday on Slon.ru. "And usually this portends nothing good."
Even those with ties to Putin are warning about the dangers of his current political strategy, which has spooked investors and boosted capital flight to nearly $130 billion this year.
Late last month, a well-respected former longtime finance minister under Putin argued in a newspaper editorial that the president's "populist approach" would slow economic growth in the long term.
To be sure, most Russians haven't registered the developments quite yet. A majority of the population still credits Putin for restoring what it sees as Russia's rightful role on the global stage.


Thanks to a fierce propaganda campaign that's played out over state-controlled media here, few people realize the economic malaise is the Kremlin's own fault, says Denis Volkov, a researcher at the independent Levada Center think tank.

Read MoreWhy is Putin buying gold?

Instead, many remain resentful of what state television insists are aggressive and irrational Western policies toward Russia.
"Almost no one understands the point of view of the other side," he says. "People do not even understand why the West is imposing sanctions, for example."
The Kremlin has bolstered its narrative with an ongoing onslaught against the last vestiges of independent media. Critical outlets have been emasculated or shuttered and their editors threatened or cowed.
That helps explain why even though 60 percent of Russians say they've noticed the hike in consumer prices, a whopping 82 percent of decided voters would reelect Putin in a snap presidential heat, according to fresh Levada statistics.
Some observers suggest Russia's economy can still float along while depending on its substantial foreign currency reserves — which hover around $400 billion — to stave off economic depression and widespread discontent.
But Aslund says the usable sum of those reserves is actually much smaller, while the price of oil may continue its steady slump.
"I think we are likely to see much more decline than anybody now predicts," he says.
Other observers say that while Putin can still count on the propaganda coup his state media machine has pulled off, it's only because Russians haven't had to cope with the downturn for long.
What comes next, says Volkov, is still anyone's guess.
On one hand, Putin has already successfully weathered a mass protest movement and defanged his political opposition. On the other, it's the first time his 14-year rule has been put through such economic trials.
"We're only in the very beginning of this situation," Volkov adds, "so it's rather hard to forecast how it will develop."
Putin must be having a tough time now. Anyway, he is also a tough guy...

Putin orders cash from Russia's wealth fund to be used to support banks

MOSCOW - Russian President Vladimir Putin said on Thursday that money collected in one of the country's two "rainy day" funds should be used for supporting domestic banks, as part of broader efforts to help Moscow to overcome its economic woes.

Broadly shut out of external funding due to western sanctions over Moscow's role in the Ukraine crisis, Russia's largest banks such as VTB, Gazprombank and Russian Agriculture Bank are betting on the state support.

"We have a large amount of internal savings, they should become effective investments," Putin told in his union annual speech to members of parliament and other top officials in the Kremlin.

"Using our reserves, firstly, the National Wealth Fund, I propose to ... recapitalize leading domestic banks with funds offered ... to use for lending to the most important projects in the real sector of economy."
...
http://www.todayonline.com/world/putin-o...port-banks
He reminds me of WW2 Hitler where he will do alot of inhumane and expansion things with applause from his population.
Very dangerous. Is good that leaders of the world decided no appeasement. Crimea must be returned.
This is just a tiny cost on Russian go against the global main stream, more will come...

Russia economic pain spreads as UBS cuts seven stocks

NEW YORK (Dec 9): Russia's worsening economic crisis is spreading through its corporate bond and stock markets as a tumbling ruble and plunging growth erode confidence in companies recently seen as able to withstand the turmoil.

UBS has cut stock ratings for seven retail and Internet companies including Lenta and Yandex.

Petropavlovs, Russia’s third-biggest gold producer, agreed with most of its investors to a rescue package that includes selling US$335 million of shares and bonds to cut debt.

More than 50 of the country’s corporate bonds now yield at least 10 percentage points more than Treasuries, levels considered distressed.
...
http://www.theedgemarkets.com/sg/article...ven-stocks
One million refugees?

Someone posted a comment in FT.com: "The government in Ukraine wasn't, isn't and won't be virulently anti Russian."

Another forumner replied: "when 1 million Russian speakers in east Ukraine are forced to flee before the Kiev forces into the perceived safety and sanctuary of Russia, maybe its not because Kiev is virulently anti Russian. Maybe when Kiev was shelling Lugansk into submission, forcing hundreds of thousands out of their homes, this was a gesture of friendship. Maybe the people of east Ukraine completely misread the friendly overtones from Kiev.

Why would you think one million east Ukrainians fled to Russia when the Kiev forces came calling? What possessed them to think Kiev was against them and Russia, in total contrast, was on their side? If you can explain that enormous forced migration of humanity, probably the largest since the second world war, you might have a point.

But nobody else will be able to find a reason for the flight, other than they thought Kiev was out to destroy them and their families, and Russia was the only safe haven available.

And though Western journalists interview Syrian refugees almost on a daily basis, no Western journalist will even talk to Ukrainian refugees. Why? Because they would all denounce Kiev's actions unreservedly, and the West's narrative would be destroyed. Why else is there no Western journalistic analysis of this extraordinary misery, perhaps the biggest humanitarian disaster in Europe for decades? "

When one reads about how the CIA has been blatantly violating basic human rights as well, one begins to get the picture .....Sad
Haha since cold war days USA has been trying to control the world lah, no surprise there.

Also suspect a lot of conflict created by them as they are top seller of arms, and that is big business! Conflict is very profitable!!

Anyways now china is getting more powerful things should get interesting.

-- via Xperia Z1 with tapatalk
There is a country Ukraine/ Russia and a race Ukranians/ Russians but there is no such race called Soviets

When it comes to the crunch, people take comfort in race and politicians use the race card. From Hitler's annex of Austria to Yugoslavia to Rwanda, race was the pivot. The Russians in Ukraine will move back to Russia. Turkey for decades been edgy about the Kurds, and their call for a Kurdish state just next door.

That's why Singapore is right to be paranoid about race that sometimes we take for granted the effort that was made since the racial riots. We are really very blessed that race is not a major issue here which is not the case even in major cities in US.

And it is significant why LKY called for Malaysia for Malaysians vs what the UMNO wanted, (and still what they wanted based on the recent UMNO convention). Obviously he lost and imagine in 1965 we name ourselves NanYang instead of Singapore. Having a crescent in our flag and making the national anthem in bahasa was a matter of pragmatism and survival.

That's why minorities will always have a sense of oppression if the country's name is race related, from Korea to Japan to even China. I have a friend who came from Nothern China near North of Korean Peninsular who is a Chinese citizen with Chinese passport but identity is very strongly Korean because he is of Korean race. The name United Kingdom is very different from Scotland and England

What's in a name? Actually a lot
It is a complex issue.

For us Singaporeans, race, religion and nationality are separate identities, for which we take for granted. For other people, a minimum of two, some as much as three are exclusive and indistinguishable.

LKY's call for Malaysia for Malaysians will always be ahead of times because it calls for a supra-national identity which supersedes race and religion.
Putin is also engaging India, besides China. India should also benefiting from the Western sanctions...

Putin turns to India with energy, defence offers

NEW DELHI — Russian President Vladimir Putin held talks with Indian leaders today (Dec 11) to strengthen trade and energy cooperation with Asia’s third-largest economy as Western sanctions threaten to push his country’s economy to the brink of a recession.

Mr Putin’s discussions with India’s Prime Minister Narendra Modi are expected to focus on deepening ties at a time when New Delhi is perceived to be drawing closer to the United States, especially in areas such as defence and investment.

Indian officials said nearly two dozen agreements on space, defence cooperation and energy were likely to be signed.

“Looking forward to a productive visit that will take India-Russia ties to newer heights,” Mr Modi tweeted.
...
http://www.todayonline.com/chinaindia/in...nce-offers
Russian central bank raises key interest rate to 17% from 10.5% to stop rouble's freefall

Business | Updated today at 06:34 AM
MOSCOW (REUTERS) - Russian central bank has decided to hike its key interest rate to 17 per cent from 10.5 per cent, it said in a statement on Tuesday.

It added that the decision, effective from Dec. 16, was taken in a move to curb increased devaluation and inflationary risks.

The rouble plunged around 10 per cent against the US dollar on Monday, its sharpest fall since 1998, and Russian assets sold off across markets, testing the firepower of the central bank and posing a major challenge for President Vladimir Putin.

Traders said the slump in the rouble, down 50 per cent against the dollar this year, forced the central bank to intervene in the market on Monday to defend it against the threat of new U.S. sanctions over Ukraine, tumbling oil prices and one-sided bets that the currency would fall.

Intervention has become a near-daily routine since the start of the month. Neither rate hikes nor tough talk from senior policymakers have been able to stem the currency's decline.

Putin's popularity, based partly on providing stability and prosperity, is at risk from the rouble's decline, which is stoking already galloping inflation and damaging Russia's credibility among investors.

On Monday, the rouble weakened beyond 60 roubles per dollar for the first time, hitting a record low of 64.44 to the dollar on the Moscow Exchange, almost 10 per cent weaker than the previous close, and 78.87 versus the euro.

In U.S. trading, the rouble sank further to 65.90 to the dollar after it broke through the upper limits of a price boundary set by the Moscow Exchange, meaning the exchange did not accept offers above 64.4459 in the evening session.

The dollar-denominated RTS share index closed down 10 pe rcent at a five-year low and Russian companies' dollar bonds sold off.

The central bank has spent close to US$80 billion propping up the rouble this year, including over US$5 billion this month. It has raised its main lending rate 5 percentage points this year in response to Ukraine-related market turmoil.

It said on Monday the Russian economy would likely contract in the first quarter of next year and that it could shrink by around 4.5 per cent in 2015 as a whole if oil prices average US$60 a barrel.

A bill passed by the U.S. Congress after Russian markets closed on Friday set out tougher sanctions on Moscow, putting pressure on Russian assets.

U.S. President Barack Obama has not signed the bill into law and has opposed further sanctions on Russia unless Europe joins in, but the draft law nevertheless soured the market mood.

Crude oil prices came under renewed pressure on Monday, and Brent hit five-year lows of nearly US$60 a barrel. That in turn hurt the rouble because sales of oil and gas are Russia's chief source of export revenue.

"Unless the situation in Ukraine improves and we see a big change in oil prices it's not trivial to go in and buy Russia,"said Bhanu Baweja, head of emerging market strategy at UBS in London.
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