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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: one_less who wrote (823682)	12/19/2014 11:25:20 AM
From: combjelly	1 Recommendation Recommended By tejek Read Replies (1) \| Respond to of 1577079

True. But many prominent conservative voices have had a man crush on Putin. To the point where I was embarrassed for them. The qualities they admired the most are the very same ones which have amplified the hurt that the drop in oil prices have inflicted on the Russian economy. And the Russian economy is headed for severe pain. Russian companies are very highly leveraged. And that debt is denominated in dollars and euros. But their assets are denominated in rubles. As the value of the ruble drops, their debt goes up, which drives the ruble even further down. As a result, Russia is in for a very sad 2015. Putin is claiming that the Russian economy will take two years to recover. For that to happen, oil prices have to recover. Which may happen. Or may not. It all hinges on what the Saudis do. Now there are several members of OPEC who are hurting badly right now. But the Saudis are realistically the only member who can move the price of oil up. And, for whatever reason, so far have declined to do that. As to why, there are probably a lot of reasons. There is the threat of shale oil in the US. There is the threat of ISIS. There is the threat of Iran. There is Russia meddling in Syria and the ME in general. The idea has been floated that SA and the US are colluding to hurt Russia and the other named actors. Still, whatever the reasons, there is just no reason to believe that the Saudis will be cutting back on production any time soon. So where does that leave the Russian economy? No place good, that's for sure. Because there just isn't a floor to the ruble any time in the next few years. And that corporate debt is going to be extremely bad news. Because the debt was not used to increase assets for those companies. The oligarchs used a technique that Romney pioneered in the 1980s. That is, get control of a company, have them take on a bunch of debt which is used to pay off the ones in control. Romney would then take the company with its new burden of debt public. Which isn't really an option for the oligarchs. But, they've stashed most of their stolen wealth overseas. So it does Russia no good at all. So a wave in bankruptcies is in the cards for Russia. Which is not going to be good for Putin. As an aside, our very own oligarchs are playing a similar game on a global scale. For the past few years, they have been playing a new round of "what can possibly go wrong?" where the hot item is to give loans to larger companies in the third world. Particularly in, but not restricted to, India. Now this isn't necessarily a bad thing and usually is a good thing. But the sheer volume of the loans being written could be a very bad thing. If some event were to drive down the value of their currency, like say an economic down turn, their debt is denominated in dollars and euros, not their local currency. Wouldn't it be ironic if, just as our economy starts to really grow, the sociopaths on Wallstreet manage to crash the global economy in a new way?