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[Sergarr]

The news here were explicitly saying about the currency market activity going down severely compared to the previous two days.

Incidentally this also points towards that version with Rosneft and 600 billion RUB credit.

[Sheb]

Indeed Knit Tie, but there are only so many way to prop up currencies. It could just be the Rosneft credit creating this spike and now the rubles will resume its gentle downward slide.

Also, I've seen report of the CB announcing "Seven technical measures", but no english report of what those are. Do you know something about this?

[Helgoland]

Anyway, I think I've polished my argument on why I support Russia in this conflict. Anybody wants to know?

Since nobody else seems to have answered: Yes, of course!

[Sheb]

Oh, yes, of course. Excuse me for not saying so earlier Knit Tie.

We should create a club of Future Veterans of World War III and get a drink sometime. Any chance of you dropping by Belgium any time soon Knit Tie?

[Knit tie]

Sorry, guys, inebriation break.

[mainiac]

I couldn't agree with that man more - NATO should take steps to defuse the situation by offering security guarantees to Russia, not by posturing. Russians are not the kind of people who are intimidated by military might, trying to threaten us will only antagonise us further.

So the Russian people are like all other people in the world.

You see, there's one tiny flaw with his premise on why inflation is an active consequence of an inflation rate hike, which is, again, the exact opposite of actual monetary policy theories at the worst, and at best, irrelevant.

It's called the Neo-Fisherite view and the problem is with the assumptions.  It assumes that normal market activity will continue in abnormal circumstances.  If you knock out any one of the legs the whole thing falls apart.  For instance:

Suppose nominal AAA interest rates are 3% and real AAA interest rates are 2%.  The central bank hikes rates by 10%.  Well now all those people lending to AAA parties need to loan at 13% to maintain the same margin so prices shoot up.  Inflation!  But wait, we just assumed that AAA borrowers are going to want to keep borrowing at a 13% interest rate when they had previously borrowed at a 3% rate.  What if they just chose not to borrow instead?  If they chose not to borrow then instead of producing inflation you just produced unemployment.

There are a number of similar assumptions you can use to unravel the Neo-Fisherite view but I think that's the most straightforward.

[Sergarr]

? Why would the lack of credits cause unemployment ?

[mainiac]

A AAA creditor borrows money to spend, either hiring employees itself or buying products from another business that in turn hires employees.

[Sergarr]

Wouldn't they be able to do the same without credits, just on revenues?

I mean, in the long-term, taking credit will always be an un-favorable variant, unless you've some way of using money from said credit to increase the profit margin, yes?

[Sinistar]

Found this article today, don't know if it's been posted already because I haven't been following this thread lately.

Some interesting thoughts from a guy who was closely involved with Gorbachev/post-Gorbachev era of Russian economics, amongst other things. I think it's worth the reading, but he'll also be on BBC 4, probably discussing this topic more. Might be interesting.

[mainiac]

Wouldn't they be able to do the same without credits, just on revenues?

I mean, in the long-term, taking credit will always be an un-favorable variant, unless you've some way of using money from said credit to increase the profit margin, yes?

Companies make investments that pay off over time.  That's the purpose of corporate debt.

[Vilanat]

If russia's economy collapses tomorrow, would they still get to host the 2018 world cup?

[a1s]

If russia's economy collapses tomorrow, would they still get to host the 2018 world cup?

Get to? Almost definitely, Russia might be out of the G8, but they're pretty far from being denied already confirmed events.
Will they? Maybe. It all depends on how you define "collapses". Unlike most countries, Russian tax bases only needs 2 things- International demand for oil and a bare-bones functioning transport system (railroad or pipeline). Every factory in the country can close, and dollar can cost 250 rubles, but they will still be able to host the world cup, unless someone develops cold fusion by 2017.

[Sergarr]

Oil is needed not only for energy, but also for creating plastics.

I assume the demand on plastics is not going to go down any time soon.

[smjjames]

Oil is needed not only for energy, but also for creating plastics.

I assume the demand on plastics is not going to go down any time soon.

Except that the demand for oil in energy use is far bigger than the demand for plastics. I doubt Russia would be able to make budget by supplying oil for plastics only. Maybe if they tried to corner the plastic market....