I assume everyone on the FFFT board shorted oil and the ruble to take advantage of the New Cold War.
Russian corporations have taken on debt from Western institutions. It's estimated that these Russian companies need to repay $650 billion, and as they are shut out of international markets they can't refinance their debt.
It's often been mentioned that Putin could use defaulting on loans to punish the West. We'll see.
Angela Merkel's Germany could be one of the nations hardest hit by the fallout from Russia's financial meltdown. German industry is the biggest trading partner with Russia, more than 350,000 jobs are tied to trade between the countries.
Beyond that, more than 6,000 German companies have registered offices in Russia with a combined turnover of €40 billion and employing 270,000 people.
Russia has built up a pretty impressive currency reserve. Now it is deploying that reserve to protect its economy, which the central bank expects to sink by as much as 4.7 percent next year. It’s spent well in excess of $80 billion dollars defending its currency.
The question is how much more it is will to spend of the $416 billion dollars it has left.
The next stop could be capital controls. That would stop the bloodletting.
It’s not only Russia that’s taking a hit from sanctions. With oil prices collapsing to possibly 40 dollars a barrel, we may be filling up cheaply but we’re all in for a bumpy ride.
When sentiment sours, it hurts emerging markets as money pours into safer investments and locations. Turkey and Indonesia have seen their currencies hit multi-year lows. They're only recourse to scrap much needed infrastructure projects and social spending.
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