An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Monday, March 28, 2022
Rouble Gas Payments are probably a False Flag — NeilW
Neil explains the settlement details with T-accounts.
If we slim that process down does it now not just mean that European banks will have to go to the ruble exchange to exchange Euros for rubles.
Is The only reason Russian banks are involved at all, is because they ARE the ruble exchange? Whereby in essence Gazprom was acting like the ruble exchange before.
Gazprom gets paid in rubles no longer has to worry about exchanging anything.
Means the Russian central bank does nothing apart from supply the roubles for the ruble exchange.
If you were Russia and a strong ruble kills your exports. In this scenario how would Russia try and weaken the Ruble?
They Can't export to the EU but will all currencies not weaken against it ?
"That’s a recipe for a very large appreciation in the value of the Rouble, or a full blown EUR-RUB liquidity crisis where Roubles can’t be obtained at any price."
Awesome. That's what I thought. May already be starting to happen. EURRUB @ 108, down from 163.
"If we slim that process down does it now not just mean that European banks will have to go to the ruble exchange to exchange Euros for rubles."
FX isn't exchanged on the bank side. Currency is created and then netted off, just like with payments. So really FX is just lots of people offering OTC contracts at a quoted price and you pick the one you like.
What that means is they can't get roubles because the banks either won't quote or can't quote an exchange rate. Remember that savings are an export product. The Europeans have decided they don't want to export either savings or equipment to Russia, which means that the price of Russian Gas explodes in Euro terms as there is nothing going in the other direction.
It's only because the Bank of Russia has been throwing the Euros in the metaphorical drawer and giving Russian banks Roubles for them that the Rouble hasn't ascended into the stratosphere before now.
That's why I laugh when you hear commentators talking about the Russian 'war chest' or their 'foreign reserves'. These aren't valuable assets, they are the accounting effluent that arises from an export first policy.
And as we can see, cancellable at will by deficit nations.
The global energy watchdog announced last week it had developed a 10-step plan aimed at reducing global oil demand by 2.7 million barrels per day within four months. The organization proposes reducing the speed limit on highways by 10 k/h, banning the use of cars on Sundays, reducing public transport tariffs, stimulating car-sharing, expanding remote work to three days a week, and promoting the use of high-speed and night trains instead of flights, as well as the broader use of electric vehicles.
All it took was a war with Russia to fix climate change and cure covid.
Millions of people displaced, thousands dead and maimed, cities/towns destroyed, the threat of nuclear war ratcheted up, nothing but pain and grief and...
All it took was a war with Russia to fix climate change and cure covid.
He's a piece of nasty work this armchair soldier. All smiles, too, I see:
:)
Nasty piece of work these armchair soldiers. Unsurprisingly, they never bother to get up from their respective armchairs to enlist -- you know, put their life and limbs on the line. Pity.
Couple of questions....
ReplyDeleteTo get my thinking right....
If we slim that process down does it now not just mean that European banks will have to go to the ruble exchange to exchange Euros for rubles.
Is The only reason Russian banks are involved at all, is because they ARE the ruble exchange? Whereby in essence Gazprom was acting like the ruble exchange before.
Gazprom gets paid in rubles no longer has to worry about exchanging anything.
Means the Russian central bank does nothing apart from supply the roubles for the ruble exchange.
If you were Russia and a strong ruble kills your exports. In this scenario how would Russia try and weaken the Ruble?
They Can't export to the EU but will all currencies not weaken against it ?
"That’s a recipe for a very large appreciation in the value of the Rouble, or a full blown EUR-RUB liquidity crisis where Roubles can’t be obtained at any price."
ReplyDeleteAwesome. That's what I thought. May already be starting to happen. EURRUB @ 108, down from 163.
"If we slim that process down does it now not just mean that European banks will have to go to the ruble exchange to exchange Euros for rubles."
ReplyDeleteFX isn't exchanged on the bank side. Currency is created and then netted off, just like with payments. So really FX is just lots of people offering OTC contracts at a quoted price and you pick the one you like.
What that means is they can't get roubles because the banks either won't quote or can't quote an exchange rate. Remember that savings are an export product. The Europeans have decided they don't want to export either savings or equipment to Russia, which means that the price of Russian Gas explodes in Euro terms as there is nothing going in the other direction.
It's only because the Bank of Russia has been throwing the Euros in the metaphorical drawer and giving Russian banks Roubles for them that the Rouble hasn't ascended into the stratosphere before now.
That's why I laugh when you hear commentators talking about the Russian 'war chest' or their 'foreign reserves'. These aren't valuable assets, they are the accounting effluent that arises from an export first policy.
And as we can see, cancellable at will by deficit nations.
Thanks Neil.
ReplyDelete
ReplyDeleteA lot of them on the Saker understand MMT which surprised me a lot. Considering it is quite right wing.
Although there are still the usual monetarist myths floating around.
Abba P. Lerner was born in Russia.
Meanwhile, in the EU…
ReplyDeleteThe global energy watchdog announced last week it had developed a 10-step plan aimed at reducing global oil demand by 2.7 million barrels per day within four months. The organization proposes reducing the speed limit on highways by 10 k/h, banning the use of cars on Sundays, reducing public transport tariffs, stimulating car-sharing, expanding remote work to three days a week, and promoting the use of high-speed and night trains instead of flights, as well as the broader use of electric vehicles.
All it took was a war with Russia to fix climate change and cure covid.
:)
Millions of people displaced, thousands dead and maimed, cities/towns destroyed, the threat of nuclear war ratcheted up, nothing but pain and grief and...
ReplyDeleteAll it took was a war with Russia to fix climate change and cure covid.
He's a piece of nasty work this armchair soldier. All smiles, too, I see:
:)
Nasty piece of work these armchair soldiers. Unsurprisingly, they never bother to get up from their respective armchairs to enlist -- you know, put their life and limbs on the line. Pity.
USDRUB 85 now.
ReplyDeleteEURRUB 97 now.
Wow.
USDRUB 85 now. EURRUB 97 now. Wow.
ReplyDeletehttps://www.fxstreet.com/news/usd-rub-extends-losses-to-below-80-the-figure-202203290353