Weakening the Russian Ruble may Backfire within 3-5 Years

December 19th, 2014

FAKE NEWS for the Zionist agenda

Christof Lehmann (nsnbc) : Sanctions, isolating Russia from financial instruments and falling oil prices have had a critical impact on the Russian economy. In November, the Central Bank of Russia expected a growth of no more than 0.6% in 2014. Recent developments led to the drastic decision to increase interest rates to 17%. Western and western-aligned OPEC member’s decision to let oil price dive and attempts to weaken the Russian ruble may, however, backfire over the coming years.

The sustained depreciation of the ruble reached a critical low-point on December 16, leading the Central Bank of Russia (CBR) to raise interest rates to a whopping 17%.

The measure has slowed, but not stopped the depreciation and further countermeasures can be expected.

In its latest report, entitled Guidelines for the Single State Monetary Policy in 2015 and for 2016 and 2017, the CBR writes, among others:

Starting from 2015, the monetary policy will be conducted under the inflation targeting regime. … To constrain inflation, the Bank of Russia increased its key rate, which, amid the increased external economic uncertainty, made it possible to maintain confidence in the ruble and limit speculation against it. … In 2014, global economy growth, which characterises the external demand, did not demonstrate the expected acceleration. According to current IMF estimates, growth in global GDP will equal 3.3% in 2014, as in the previous year. Nevertheless, the situation in the global economy is not uniform: while in the USA the year 2014 has been characterised by a confident recovery in business activity, Russia’s key trading partners, including European countries, the CIS and China, have seen less favourable trends than previously assumed, which held back growth in the Russian economy. …

The average annual price of Urals crude in 2014 is estimated at $101.6 per barrel, which is close to the $101 per barrel value in the baseline scenario. However, there is a high likelihood that the substantial drop in oil prices at the end of 2014 will persist (last year it was expected to remain around the mark of $100 per barrel in 2015 and 2016). This has a negative impact on the sentiments and investment plans of Russian economic agents. (Full Report – PDF)

While many “politically motivated” western economists and media are positioning Russia as top-ruled and denounce the Putin administration for implementing instruments for the control of finance, economy and capital, the Russian model is, arguably, superior to that of the Western anarchio-oligarchical systems which lack a unified control, and which are, largely, based on a chaotic pack or capital maximizers who tend to jump off the wagon when economic warfare backfires.

A comparable situation, that occurred in Malaysia in 1998 could demonstrate these dynamics.

In 1998, during the Asian economic crisis, the government of the than Malaysian Prime Minister Dr. Tun Mahatir Mohamad, implemented capital control measures comparable to those which have been implemented in Russia since the onset of the weakening of its economy in 2014 and those outlined in the latest CBR report.

Ethan Kaplan and Dani Rodrik, at the John F. Kennedy School of Government at Harvard University, reviewed the effectiveness of the economic measures which were implemented by the administration of PM Mahatir Mohamad. Their report concludes that Malaysia, due to its policy managed and overcame the crisis better than many other Asian economies.

The Malaysian government perceived that flexible exchange rate policies would fail to prevent a rapid depreciation and a following severe depression. Capital controls were, among others, implemented to prevent currency outflows. Ultimately, the administration of PM Dr. Tun Mahatir Muahamad, although it was bitterly defamed by Western governments and corporate media, came out on top.

A Small Price for Macroeconomic Stability. Capital controls are a relatively small price to pay for a country that is being targeted by global financial “cabals”. So is the preservation of government control over the energy sector and other key commodities, industries and infrastructure. The Malaysian, as well as the Chinese example have demonstrated that the general outcome is greater macroeconomic stability than one could achieve in the chaotic anarchio-oligarchic “free markets”.

State control over key sectors generally also affords greater workplace stability which can help mitigate the effect of the ruble depreciation on the Russian population.

Considering the continued push for a strategic encirclement of Russia, considering greater appreciation for Russia as a long-term strategic partner for India and other BRICS member states as well as countries like Egypt or Mozambique, the growth trend that can be observed in Russia’s defense industry is likely to increase. This growth will also be generating long-term employment stability as a factor that mitigates the impact which an economic crisis has on the population.

Russia’s military-industrial complex is the country’s largest manufacturing sector. Russian President Vladimir Putin’s recent visit to India and the penning of long-term contracts on the joint development of military technology is one among many good indications for a continued growth in that sector. A growing number of countries, including Afghanistan, show tentative signs which suggest a greater trend towards more multipolar, independent and diversified foreign policies and economies.

Manipulations could fracking backfire. Finally, one could expect that the primarily US/UK driven policy of sanctions and the oil price dip that was unleashed by US/UK aligned OPEC members could drastically backfire within a two – five years period. Much of the economic growth the IMF registered in the USA as well as the UK is based on oil and gas production with unconventional technologies.

The “fracking and tar sand bubble”, however, has been proven to be inherently unstable, over-advertised and, most importantly, the profit margin in the industry is minimal.

The ruble may be in trouble but seen from a mid-to-long-term perspective, the Russian economy is likely to come out on top as Malaysia did. If one absolutely wants to use an allegory one could say that bears are supremely more well equipped for hibernation than a swarm of hysteric wasps whose survival strategy is to steal honey from a bear who’s licking his paws.

CH/L – nsnbc 19.12.2014

Source Article from http://nsnbc.me/2014/12/19/weakening-the-russian-ruble-may-backfire-within-3-5-years/