Why has the Russian economy plunged SO SUDDENLY into the toilet? The best economic fun of the past few weeks has been watching the meltdown of the rouble and the associated problems in the Russian economy. OK, “fun” might not be quite the right word: schadenfreude, perhaps? Real people are undoubtedly, through no fault of their own, being made worse off by what is happening - so fun is …
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Quite.
The US economy is far, far removed from free market capitalism. Such concepts like banks that are "too big to fail", prove this. Corporatism rules the roost now and without effective campaign finance reform the politicians will continue working for their sponsors (large banks and associated mega-corps) rather than the people.
Such concepts like banks that are "too big to fail", prove this
Can't believe this still has to be explained.
The issue isn't that the banks are too big to fail, it's that banks have too many customers (you, me, small/large businesses). If a bank fails and takes a billions of dollars/pounds/euros debt down with it the people who lose out are the customers - there is a long queue and the bank customers are to be at the back of it. The houses you borrowed against are now assets of a liquidator and inevitably they will be sold to pay of some (probably foreign) investor and the whole things costs admin time and money. Outcome: everybody is poorer.
On the other hand if you rescue the bank you can fix it's fundamentals and eventually sell it off you can stand to make money, or potentially significant volumes of money, effectively for the tax payer. Yes, rescuing a failing bank is an investment in both it's customers and the bank itself.
RBS is the classic example in the UK - if it's shares are worth £5 each the taxpayer breaks even, any more they make a profit, i.e. we're richer than we were before. They've hit £4.03 and most investors can see a time when they'll hit the target, frankly they'd probably have been there already if it wasn't for the various banking scandals since. The share price has tripled from the lowest point, the gap is easily made up - and no customers ever lost their homes/savings/pensions/jobs so the state didn't have to invest in that directly where there would be no possibility to recover the costs.
The problem isn't rescuing banks, it's the effective lack of prosecution and consequences for people who let it happen in the first place; be it regulators or people who worked at those banks. That's where the cronyism has to be rooted out.
@streaky: that defence doesn't hold water.
If a bank goes under, that doesn't mean everyone who has money deposited in the bank loses out. That's what deposit guarantee schemes are for. In the UK, you're covered up to 85,000 pounds per banking license. So as long as you don't have more than that amount deposited with any one banking license, you're literally as safe as if the money were in the Bank of England itself.
As for the houses being sold - because the Evil Foreign Liquidator would just spontaneously orgasm at the prospect of a property price crash in the UK, where they now suddenly have substantial interests? Yeah - no. It's in nobody's interests, certainly not the person who holds the debt, to force borrowers to pay back their debts ahead of schedule. The most they'd be likely to do is raise rates, and at that point there's nothing to stop you taking your mortgage elsewhere.
RBS: " if it's shares are worth £5 each the taxpayer breaks even, any more they make a profit". Here's news for you: if you invest in something in year N, and succeed in selling your holding at the same price in year N+7, that does not make you a fiscal genius. To really "break even", the shares would have to reach around £10 (by the end of next year - and as more time goes by, the breakeven point only goes up). They're not going to do that.
@veti -
"That's what deposit guarantee schemes are for. In the UK, you're covered up to 85,000 pounds per banking license. So as long as you don't have more than that amount deposited with any one banking license, you're literally as safe as if the money were in the Bank of England itself"
You're right - but who pays for it. Oh, yeah. Taxpayers do - and again there's no chance of recovering it, and the state would probably have to borrow to cover it. End result huge black hole versus sellable assets.
"To really "break even", the shares would have to reach around £10 (by the end of next year - and as more time goes by, the breakeven point only goes up)."
It does - but not by *that much*. Remember that interest rates are effectively negative. You actually make money by not keeping it in a bank but by spending/borrowing. There's a cuttoff sure, that cuttoff does move but not by the amount you're suggesting. It could but it hasn't.
The reality is if they were sold today the taxpayer would make a loss but nowhere near as significant as the loss on burning all the accounts, compensating everybody and the admin costs of stripping the bank apart.
Techically there's never *been* a fully fledged free market capitalist society. All markets have some degree of influence or manipulation by governments, even if it's just regulating what can be traded legally (since this pushes up the risk and the reward of trading such goods beyond what pure supply and demand would) and government granted monopolies (copyright, patents and trademarks)
I would like to see a coherent explanation of how crony capitalism (caps are not appropriate here) explains the growth in the US of the semiconductor industry, the computer industry, the computer software industry, and various internet based enterprises such as Google and Amazon.
Giant country and actually for every Intel, MS, Google there are 10,000 fails or mediocre companies.
Actually Google, Amazon & Apple probably hurt US economy by removing money from circulation and in Apple's case doubly so by borrowing to pay dividends..
Google, Amazon & Apple remove bugger all money from circulation when viewed in the context of QE - or printing as many 'new' dollars, pounds or euros as our esteemed overlords feel like.
Add to this the fact that with fractional reserve banking, loans made by banks are little more than money created out of thin air, and it becomes apparent that the whole system is a house of cards.
It continues as long as the participants believe - or pretend to - in it, but at some point someone of power/influence is bound to say "Hold on, this here's all funny money which doesn't really exist".
And then? - Solids, meet air-conditioning...
I love it when people use the phrase "fractional reserve banking". It just means that the rest of the comment is going to be deluded nonsense. It's Bullshit Bingo time.
For the love of God, one final time, here it is: FRB only creates money if you are an idiot that forgets to subtract debt from money. The total assets have gone up, yes, as have the total liabilities. The money isn't generated from thin air.
Just think through it: my family lends me some money because they don't have anywhere to put it, and I know people who need it. I keep a bit of it to one side, in case they need some back, and lend the rest on to someone else at a slightly higher rate than I give my family, to take account of the work I'm doing. How much money is there? I have a few per cent of the original, the people I gave it to have the rest. No money has been created. What also exists now is a debt from the company to me, which I in turn owe to my family, and this is considered a debt on one side of the deal and an asset on the other.
All FRB means is that there is an intermediary doing the loaning, and the loan appears on both columns of their ledger: asset and liability. If I acted purely as an intermediary, and put my family in touch with the people I knew to lend the money directly, charging a small commission, the effect would be the same, and my profit would be the same, but the bank wouldn't have assets and liabilities, and people like you would have to find another catchphrase to get frothy about.
I love it when people use the phrase "fractional reserve banking". It just means that the rest of the comment is going to be deluded nonsense.
Yes, it's long been one of my amber lights as to the level of fiscal comprehension likely to follow. I think we should tax the use of the term until people either bother to understand what it actually is, what it actually means, and what it actually does, or just give up and admit they don't understand FRB, or indeed finance at all.
Socialists seem to use the term more than anyone I know in the City, perhaps because it is one of the few terms they're vaguely familiar with and mistakenly believe using a few terms they don't properly understand adds credence to their view. It doesn't, of course, because anyone that does understand finance can see straight through postings by those who don't.
The point you seem to have missed is that debt is being "monetized." Banks do not loan "money" per se, that is credit symbolic of existing value. They loan future money - Wimpy's promise to pay tuesday for a hamburger today. They accept your promise to work your butt off so that you can buy a house and they can collect interest which will roughly double or or more the amount you actually need to pay. Banks are allowed under the FRB system to loan a certain amount based upon what they have in reserve. In addition if you were to deposit the loan you received from them back into the same bank, that loan then - at a discounted rate - becomes part of their reserve. That can then also be loaned, and that cycle can be repeated over several iterations: house-car-boat-credit card-... All the bank actually loans is your or someone else's promise to work long enough to create the value, plus interest at a compound rate. Also, if you look closely at your example, the one thing you are not doing is making a living. So, out of that "bit" you set aside, or out of the interest made to repay that loan you are extracting a living yourself, and the "value" you added to the transaction is debatable. Monetizing debt is inherently inflationary and cannot be avoided - and hasn't been during the entire span of western history. The problem with banks is not that they are bad some how. They impede the research into and development of any better methods of reconning values and costs, or where "money" should come from. At present in the US, although the Constitution places the creation of moeny squarely on the shoulders of congress, with the exception of [relatively] tiny amounts of cash printed or coined at government mints, essentially ALL money in circulation is monetized debt issued by private sources (banks - that is).
It's much easier to keep all of this straight if we make the simple distinction between money and credit. Also known in monetary circles as base money and then money (which is where some of the confusion comes from, but the distinction is the same in both cases.)
Money, or base money, is what is created by the central bank. Coins and note,s yes, but also some electronic money. Credit, or money (in the other definition) is what is created by the FRB system, the banks etc.
Yet another set of definitions is to use M0, M1, M2 and so on. M0 is purely that central bank money creation. M4 is all of that plus all of the credit creation by the FRB system.
And the important point for us here, talking about Russia and Rosneft, is that creation of more base money, more M0, is much more inflationary than creation of more M3 or M4 (bank credit etc). I won't bore you with technical details as to why this is so but it is (OK, because the multiplier of how much more more money and credit can be created on the back of it is much higher).
And that's what has really been done. Some bank credit (which would be in M3 or M4, but not in M2 or lower) has been replaced by the issuance of new currency, M0. This is also monetisation of debt and is highly inflationary, comparatively. Go too far with this (and "too far" is a flavour, to taste) and you get Zimbabwe.
You're talking about the "loanable funds" model of how the banking system works. It's true for non-bank entities that don't get to issue their own credit as being equivalent to cash. If you're a bank (or any other entity whose credit is traded as if it were "money") then the financial system works differently.
Have a read up on MMT (Modern Monetary Theory) if you're interested in learning about this way of looking at the financial system.
Sorry, it is YOU that doesn't understand FRB.
The spreadsheet works as you say, but is exactly irrelevant.
Because you don't understand what money is either. As it is used in practice, money is not a heap of a thing, it is a velocity. I (continue to) work my standard working week, and I get to spend £X per year on stuff that I want, which in turn depreciates over time - iPhones over a couple of years, food rather more quickly.
FRB works by hugely inflating the velocity of money, to a precisely arbitrary extent.
Let's assume a sample 5% tier1 capital ratio requirement. Bank has £1M, so it lends out £20M.
I take the money, spend it in the real economy. Each of the suppliers I pay money to, put that into their bank- bank#2. Bank 2 has £20M of deposited assets, so it can (and does) lend out £400M. Etcetera to happy pig land. What stops this diverging in practice is that money is also used as a medium of exchange, taking out some of the exponential feedback.
Key point #1: The amount of circulating money scales exactly inversely proportional to the arbitrary capital ratio requirement. Drop that to 2.5%, and quantity of money sloshing about in the economy doubles. It is not "fixed" like "grandmas family bank"
Key point #2: None of the banks have any incentive to care about the debit side of their balance sheet. If (when) the bad loans become due, they rely on government to square it.
Key point #3: That is why (and when) inflation occurs. During the boom time, we all buy stuff because the spreadsheet says we can afford it. Actually, we can't, it is illusory. Then bust times come, there is no larger pot of money to raid, and governments have NO CHOICE but to print money. The inflation occurs during the boom time from FRB, but becomes apparent later.
Key point #4: why do I say only money velocity matters? Because, the £50K in my bank account is a convenient fiction. Actually, I get paid £50K a year, and spend it. Nothing, absolutely nothing, changes if I add a 0 to those numbers. Very small fraction of population have more than 2 months savings.
Banks creating money to make loans indeed isn't counterfeiting. It's only check-kiting... and this created money is backed by the collateral on the loan, if not by the gold in Fort Knox. So the system just allows the supply of money to grow to a level commensurate with the real wealth of the nation, rather than allowing a lack of gold-backed money to prevent people from working and producing.
However, the system is still fragile. Things like a collapse of real estate values can cause collateral for a lot of those loans to stop having enough value to actually back the created money corresponding to it. So, while the banking system is indeed not a scam, as people from Social Credit and so on might have you believe, it's not as rock-solid as the gold standard either.
@Mage, RE: "Giant country and actually for every Intel, MS, Google there are 10,000 fails or mediocre companies." Indeed there are many fails for each success, and few of the successes reach the magnitude of an Intel, Google, or Walmart. But the "crony capitalists", whoever they may be, do not prevent people from trying, often succeeding, and very rarely succeeding wildly; and in general they are due little credit for the success, or blame for the failure of new businesses.
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I thought the reason the Saudi's were doing it was to screw up investment in western shale oil which would wipe out a lot of their customers.
Worse, from their point of view is that if the US/UK don't need to obtain oil from the middle east then we have no further geopolitical reason to attempt to stabilise the middle east.
You see, Saudi Arabia funded most of the terrorist organisations. Given, not because they have any particular love of them but because if you don't pay them then they start operating in Saudi Arabia, and paying them was simpler and not particularly harmful. Now they have a large group of terrorists they funded setting up a country on their doorstep. Oops. Still, it's ok. The US/UK can be relied on to do the dirty work in removing ISIS. As long as we don't get fed up, and tell the middle eastern countries to deal with it themselves instead of paying terrorists protection money.
It'd actually be good for the middle eastern countries to deal with this sort of thing themselves. Western countries developed through civil wars, revolts and revolutions and the middle eastern countries need to do the same to progress.
At the moment I think a lot of people would be quite happy to leave the middle eastern countries to it. However, we can't because we actually have to buy oil from them. But not for long, if shale oil takes off. That we might be in a position to say "your on your own" genuinely scares them.
From their point of view, dropping prices by 35% screws up shale oil investment, keeps us in the middle east to deal with the problem they created by funding terrorists for years and it also dents ISIS's income from oil revenue.
There's also the matter of Israel, probably the only "decent" country in a region full of "bullies." And they have the scars to prove it, too. Basically, they're the OTHER reason we have to pay attention to the Middle East, as the Jews are pretty much Old Testamentarian. When someone hits them, they hit back, turning the place into a powder keg (rumors fly it would be an atomic powder keg, at that). If someone gets crazy enough to decide to do something big in Israel, odds are it'll be the precursor to World War III.
Israel is more tolerant of religious nuts than most of their neighbors, There are huge numbers of fanatically religious Jewish, Christian and Muslims that crowd into the old cities. Mostly they get along better between rather than within religions. The orthodox argue orthdoxy not with Christians or Muslims, but with other orthodox. The flavours and varieties of Islam and Christianity also by and large reserve their special bile for their erring co-religionists. So, in old Jerusalem, the rock throwing riots you run from are not between religious groups but within them. The shopowners will just slam the shutters and share a cup of coffee with shoppers trap inside while the rock-throwing debates are conducted. With a little luck, the trapped shoppers buy something.
In other ways Israel is nearly as cast-ridden as South Africa used to be before Mandela. Israelis of Palestinian-muslim decent are right at the bottom of the heap, competing with out-of-country labor for a very small amount income. There are plenty of patriotic, muslim Israelis of bedouin descent, who can get quite peevish if you mistakenly treat "Israeli" as a synonym for "Jewish." They aren't Jewish, they ARE Israeli, and they have aboslutely no use for Hamas of any other out-of-country bunch that lobs rockets and suicide bombers at Israel, even if some of that OOC group are relatives. They could well be in the house or on the bus that gets hit. I've been there and talked with them and listened to their hopes and wishes.
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"The US/UK can be relied on to do the dirty work in removing ISIS."
Well, not really. Outright military occupation has failed to destroy either the Taliban or Al Qaeda. In fact, Al Qaeda now controls more territory worldwide than it did before the US et al occupied Afghanistan.
First thing: A homegrown guerilla force always has had home turf advantages that make it very hard for an foreign occupier to defeat it. The availability of effective weapons of war in the post WWII world tilted the balance further. With AK47s, RPGs, shoulder-launched missiles, a wide variety of explosive devices, etc, the homegrown guerilla force is virtually unbeatable in any long-term sense.
Second thing: In traditional military action, sowing chaos upon the enemy will eventually result in his defeat. (Bust up the Third Reich's military-industrial complex, disrupt the fatherland, and the army will falter and crumble.) But that doesn't work when fighting terrorists -- because terrorist organizations thrive best in social chaos. Bomb granaries and social centers, as the US has done in Anbar, and locals will cooperate with ISIS more often, its recruitment will rise, arms and money will accrue, etc. ISIS will get stronger.
The US and UK will fail to destroy ISIS, just as they have failed to destroy the Taliban and Al Qaeda.
The banking aspects of the Russian bear-trap are beyond my ken -- but it makes sense on the face of it that an inefficient system does not become more efficient when a corrupt planned economy is replaced by a corrupt cronyist economy. At least so far, a corrupt corporatist economy with a capitalist veneer seems to be better.
"The banking aspects of the Russian bear-trap are beyond my ken"
As described by TW, it sounds remarkably like what Our Friends in the City call 'quantitative easing', complete with an extra touch of re-hypothecation of 'assets' as collateral for further loans (also much loved by Our Friends in the City).
Obviously it couldn't be that though, because QE and re-hypothecation are Good Things (according to Our Friends in the City).
Nick Kew's post (reference timestamp needed but not available) has more details.
Happy New Year.
As Krugman and similarly minded economists will happily tell you, there's a difference when you borrow in your own currency versus borrowing in somebody else's. And similarly, the dose makes the poison. Not all expansions of the money supply end like Zimbabwe.
A little bit more inflation back in 2008-9-10-11 would also have done a heck of a lot to refloat some of those underwater loans.
There are definitely parallels between QE and what the Russians have done. Creation of more M0 in order to increase M4 for example. The point being the difference in what people are trying to do. With QE, we've noted that we're at risk of general deflation. This is bad. So, let's print lots more M0 in order to have a bit more inflation. We'd like to have 2% or so (that's the BoE target). That's what we're actually trying to do.
Russia has what, 10% inflation? QE, more base money, isn't the right solution there. But they're doing it anyway. Tsk.
The cure for what ails you does depend quite a bit on what it is that ails you.
".....Outright military occupation has failed to destroy either the Taliban or Al Qaeda....." Maybe not destroyed but most definitely reduced to the point of hiding in caves behind their womenfolk. Both the Taliban and AQ had the ISI giving them protection and shelter in Pakistan, but that looks likely to change given the recent army school atrocity.
"....In fact, Al Qaeda now controls more territory worldwide than it did before the US et al occupied Afghanistan....." Really? So which bit has an actual AQ government and structure? True, AQ is openly active in more areas of the World now than in 2001, but that is mainly because of alliances with groups that were already sympathetic to AQ, not due to AQ's own success, and is far different to actually controlling anything. AQ still depends on alliances with groups like Al Shabaab and Boko Haram and does little actual control of anywhere. Their ability to control and coordinate anything has been ripped to pieces by the CIA, especially by the killing of Bin Laden, so much so that groups like ISIS openly disregard AQ as leaders of the Islamist movement. As AQ's star wanes so more of those alliances decline as the active Islamists bent on jihad seek more successful groups like ISIS.
"......A homegrown guerilla force always has had home turf advantages that make it very hard for an foreign occupier to defeat it....the homegrown guerilla force is virtually unbeatable in any long-term sense...." Tell that to the IRA (Ireland) or the MNLA (Malaya) or the PFLOAG (Oman), or the Mau Mau (Kenya), or the Simbas (Congo, and one of Che Guevera's less appealing revolutionary outings), all defeated on what they considered home turf. Even Rhodesia/Zimbabwe only saw a government loss due to Western sanctions and political interference, and not any guerrilla victory. The 'inevitability of the revolution' and that an organised military cannot defeat guerrillas is just a propaganda myth.
".....But that doesn't work when fighting terrorists -- because terrorist organizations thrive best in social chaos....." Not so. The Anbar Awakening showed that Iraqi Sunnis could be persuaded not just to abandon AQ but to also take up arms against fellow Sunni Islamists. The problem has been that the Nouri Al-Maliki Shia-dominated Iraqi government has undone all of the work done by the US and allies in Anbar. That is why one of the first things the US insisted on in the current crisis was the removal of Al-Maliki.
".....Bomb granaries and social centers, as the US has done in Anbar....." And your proof of those claims comes from where? Al Jazeera?
".....The US and UK will fail to destroy ISIS, just as they have failed to destroy the Taliban and Al Qaeda....." AQ is a massively diminished organisation, a shadow of their former threat. They are reliant on 'lone wolf' attacks as their operational base has been gutted. The Taliban are still hiding in the hills (and their Waziristan boltholes are about to get a lot less secure after their senseless school rampage), and whilst they are desperately trying to call the Alliance withdrawal a 'defeat' the truth is they are really in control of nowhere. And ISIS is already being pushed back out of Iraq and back into Syria. For Assad, ISIS was his carefully calculated saviour that he used to convince the West there are worse things than his rule. ISIS will linger for a few years but is already an organisation facing destruction, and their brutality will mean the World will largely turn a blind eye when Assad thanks them for his survival by eliminating those that escape death or capture in Iraq.
> if you don't pay them then they start operating in Saudi Arabia
You haven't been to Saudi Arabia much, have you?
I left the country a few years ago (pre-Arab spring) but back then the situation was highly unstable, to put it mildly. In fact, Libya and Egypt were oceans of calmness compared to Saudi.
Not that you would hear about it in the news, mind.
"...I thought the reason the Saudi's were doing it was to screw up investment in western shale oil which would wipe out a lot of their customers..."
Not at all old lad. The House of Saud (with a little prompting from that nice Mr Obama) has its prime intention as severely harming Iran - their implacable anemy/arch-rival - whose export of oil is the only thing keeping the Tehrani economy anything like afloat. Depress the price of oil, and the general populace in Iran become somewhat disenchanted with the Ayatollahs...
Mr Obama is pefectly happy to see Tehran deep in the mire, and with the added bonus of buggering up Boris, he has had a pefectly happy Christmas - with it all effectively done through proxies.
The EU's rush (under US prompting) for expansion eastwards has fuelled Boris's natural age-old paranoia regarding being encircled by the enemy. with the enemy at the gates. The EU foray towards the Ukraine was a step too far from Boris's point of view.
Also, in reply to Arnaut the less, who states "With the possible exception of Angela Merkel, please let me have the name of a single leader of a major first world country who is not a putz.", the delightful Frau Merkel might not be a putz, but she is a dyed-in-the-wool authoritarian not-so-ex Osti apparatchik who views German hegemony over an enlarged European Union as the Fourth Reich.
Interesting times...
You are spot on in terms of description, you just missed the whole picture.
It was not just Saudi selling oil under cost. It was USA too. Ever since the Suez crisis, USA has maintained an immense oil reserve. If we plot the amount of oil in reserve it has been dropping from the moment the Ukraine conflict started. The current stock is nearly at zero and this has hurt the Russian economy 10 times more than all the embargo measures.
There are two long term aims here:
1. Destroy as much as possible of the current energy relationships worldwide to ensure market for USA as an oil exporter. Eu is "wheened off" Russian gas dependency. Nice ain't it? Well, I am not so sure as it is replaced short term by gas imports from USA shale, long term from Eu being forced to allow USA shale industry in. As all patents on shale exploration are held by USA corps there is only one shale way - it is the USA way or the highway for the next 10+ years (probably more as USA will extend these patents at least once beyond the 17 years normal patent term).
2. Destroy Russia as the sworn enemy. When the Soviet block (and union) collapsed there was a turning point for about 10 years when Russia could have become a democracy. That opportunity was lost because a number of external powers inclusive of USA, UK, Saudi and Qatar sponsored actively "freedom fighters" along its Southern borders. It is wonderful when a freedom fighter rgoes and blows up a bus with hostages somewhere near Rostov-na-Don or takes a few pregnant women for human shields from a maternity ward. Fantastic thing to sponsor ain't it? Well we did. In a reality like this democracy does not grow - and surprise, surprise it did not. We should be thankful that Putin emerged out of this particular west sponsored event. It was a matter of luck (or some interesting "coincidence") that general Lebedev died in an accident at about that time. Otherwise we would have been at the gates of WW3 with this policy.
As far as USA happy to see chaos in the Middle East it is the same story - destroy existing oil supplies, benefit gas suppliers to "replace Russia" (Qatar which was nobody 10 years ago) short term and benefit the shale exporters short term, the industry as such long term. After all, what are the lives of 140 million people versus the profits of USA oil producers and shale gas exploration intellectual property holders.
Anonymous Coward, by “USA has maintained an immense oil reserve”, did you mean the Strategic Petroleum Reserve? If so, note that it was established after the 1973–1974 OPEC embargo, not after the 1956 Suez crisis. Also, its current stock is well above zero.
The US still has law in place that prohibits the export of crude oil. Refined petroleum products can be shipped out of the US but not crude. Many of the multinationals that were once American companies would now like to shipe crude out of country. Skilled refinery help out side the US would increase profit margins when the out put was shipped back.
As for your last comment, I do care and if you had relatives being slaughtered by Putin's criminal thugs you might care as well.
Putin has created a hell in the East of Ukraine, and I for one will never forget or forgive.
Align yourself with him because its convenient and because you hate the US or the EU is contemptible.
Hate any of them, but do it for the harm they do. Do not forgive them and next year pretend it never happened!
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Putin has created a hell in the East of Ukraine, and I for one will never forget or forgive.
But Donchik, you're of course welcome to hold your own point of view, but specifically when did Putin create this hell? By when, I mean on which exact date?
....some clues....was this before the 2004 externally funded 'Orange Revolution'? or was this creation/inception of his hell before the 2013 new externally funded Color Revolution was started in Ukraine, or was it....? context is everything, events are seemingly part of a long and complicated, almost unbelievable narrative...precision is important
I also have relatives in this war zone, they didn't choose to have a war, but I think it's beyond doubt that the list of people who did choose a war is somewhat longer and wider than the single name you've offered
I'm not Putin aligned, although as I prefer my news/discussions to be accurate, I sometimes recently choose Russian propaganda to be more believable than American propaganda - I recognise propaganda as news sources were banned during my life in KSA and I had to secretly buy a powerful radio to listen to the BBC WS. Now I wouldn't bother, I'd spend my time collecting fossils from the desert.
> I also have relatives in this war zone, they didn't choose to have a war
Neither have my friends, a close-knit group which includes both Ukrainian and Russian speakers. Their attitude (which in my experience is representative of large sectors of the population) is one of "there are things that could be improved for everyone, let's talk it out". However, they have no voice.
Curiously, I have a friend from Western Ukraine and another, ethnically Russian but born in what nowadays is Turkmenistan and living in Ukraine, whose father was a somewhat high-ranking Soviet Army officer and both have used the same words (they're mutual friends too, so might have had this talk at some point): "The same old big boys' game", referring to certain powerful people within the country who are more than happy to ally themselves with whichever foreign actor is willing to help them achieve greater power or make more money. A bit sad really.
The comparison with Northern Ireland can only be taken so far, btw, since in my experience things are nowhere near as sectarian out East as they used to be back in the day in the Northern counties (and maybe still are? I have no idea).
What was the name of that old hag from the US Department of State, btw? The one of "Fuck the EU" fame, who was hand-picking the future president of Ukraine before the coup d'État? :-(
Actually Putin is doubly guilty. Latterly he has fueled the conflict in Eastern Ukraine by supplying arms and men to support the rebels. Formerly the Putin economic and political model adopted by Viktor Yanukovych and supported by Putin ended badly for Viktor when, understandably Ukrainians rejected his Russian styled Kleptocracy and embraced closer links with a less corrupt more accountable EU model.
The Putin model where a Kleptocratic minority of super rich oligarchs embezzles vast amounts of money and the working and middle classes a bribed with some of the proceeds of Oil revenues to turn a blind eye failed in Ukraine because Viktor could not afford to bribe the electorate as Putin has done in Russia.
Putin is guilty twice firstly for exporting the Russian political and economic model to Ukraine which ultimately led to Ukraines rapid lurch to the West and secondly for fueling the resulting conflict by supplying men and arms to the rebels.
The cost base does matter but what is more important is the $ value used for state budget long-term planning. For Saudi Arabia it is around $85-95, don't remember the precise figures.
This implies Saudi Arabia does this involuntarily and cannot afford to do it long-term without risking socal-support-related protests. This also implies US has most probably forced them to lower the price to hurt Russia or they both conspired, the upside for Saudis being better long-term profits after putting Russia into a difficult position.
One more thing to remmeber is Israel pays and trains ISIS as well as US and others so Syria can be removed as the obstacle to building Europe-bound oil and gas pipelines. Israel is also developing huge gas deposits in Eaestern Medi. waters and has already proposed to EU building pipelines ending in Southern Europe. That puts American pressure on Russia in a whole new perspective, given US politicians being largely controlled by money or blackmail by Jewish organizations.
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