Friday, December 26, 2014
Back in the USSR, don't know unlucky you are
To paraphrase the Beatles, Flew in on Aeroflot. Didn't get to bed last night. I’m Baku in the U.S.S.R. Man I had a dreadful flight. Well, the Ukraine girls really knock me out. They leave the West behind.
Vladimir Putin’s proxies shut down a radio station operated by Radio Free Europe in Baku, the Azerbaijan, capital this week. Can the little Green Men be far behind?
Putin is trying to promote a conflict between Armenia and Azerbaijan that will justify intervening to protect all Russian speakers and vodka drinkers.
While the U.S. is reporting the strongest growth in 11 years, Russia is likely to see a 5 percent decline next year. There’s no money for lipstick, beetroot will have to do.
The Russian president has told government employees to take 10 days off, and no celebrations please. The country’s beloved vodka will be subsidized to make sure it is available.
The country has had to begin bailing out banks. It seems Putin and President Barack Obama have exchanged places. Fracking has helped make the U.S. the world’s leading producer. OPEC has refused to cut production even though the price has dropped almost 50 percent.
Russia depends on energy production for two-thirds of its income. The country’s deputy minister is considering cutting production because prices are so low. Analysts say it won’t cause prices to rise.
It “may cut its oil output due to low global oil prices and the lack of investment into the country's energy industry,” Deputy Prime Minister Arkady Dvorkovich told the official Chinese news agency, Xinhua.
The Russian Central Bank had been able to slow the slide of the ruble, but it began weakening again Friday. It was 53.90 to the dollar, compared with less than $30 in January.
Putin, a former KGB agent, and not an important one at that, appears to misunderstand how currencies and economies work. He is trying to move to a virtual barter economy,, avoiding the dollar.
Visa, Master Card and other credit cards cut off the Crimea, seized by Putin’s soldiers in March. Russia’s own credit rating was likely to be lowered very soon, and foreign currency was in short supply.
“As long as oil remains at these levels, the devaluation risk will persist,” Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow, told Bloomberg. “The holiday of the rising ruble will end at the start of next year since there are no fundamental reasons for its strengthening.”