(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . Really - Russia is so screwed at this point and they have no way out of this. None at all. [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags'] Date: 2023-01-07 I am not sure how to explain this exactly in such a condensed way — here is my best try. To produce a barrel of oil — it has a cost. Russian Ural oil costs about 43 dollars a barrel to produce, less on shore and more offshore. But about 43 dollars on average. Russia is getting about 50 dollars a barrel for Ural oil now. Actually it is worse than that since 50 a barrel has other costs coming out of that number. It is heavily discounted on the market. And will continue to be. And even that assumes the price of competing product holds up. So basically what they expected was a profit of 57 a barrel has turned to less than 7 and very likely to drop. On an ever decreasing output too. Flow through drops too much and the pipes all the way to the well head are toast. If that happens they have no oil out of those lines at all and will take years and years to fix it. And this is all going to drop like a hammer when it drops. The real value of any currency is simply what you think it is worth. So one might think the value is related to the output value of its products (really does not account for volatility in the currency so it is very simplistic) But is theoretically true in general. So right now what is that number? It sure is not 57 a barrel net. It may well go to net zero soon. It is Russia’s main output. So really — what is a ruble worth here?? The market on that currency is so thin and manipulated that a strong wind could blow it over here. I think if it is true as Jason says that Russia is looking to increase taxes in this shitstorm they know it is over. I do think it is likely that Russia will seek to convert some part of Russian bank deposits into some kind of war bond deal. Once they start raising taxes that is the next step to attempt normalization of the currency, to contain it, to contract the medium, I think. It is part of the reason Russia is screwing people out of money wherever they can. Talk about pissing people off. Cannot possibly work in any long term perspective — but would sure increase black market costs to get hard currency in their hands. Remember — no matter what, Russia has to import at least between 200 and 300 billion dollars a year of goods to just keep going. How do they do that with a worthless currency? It is all a death spiral. Like they can try and contract the circulating medium but it just increases volatility — makes it worse than the original problem in the end. It has a domino effect in reality. Honestly — any currency that has a black market in it is NOT a real currency in any event. To kill a country — kill its currency. I actually did my Western War thesis on this kind of thing. It was a “how to” paper in a way really. That is, in a crisis the first thing you do is take free market capitalism and chuck it out the window. Starts with that. About how you could purposely corrupt a currency to that end. And there is sure more than one way to corrupt a currency that is not monetized. Cannot be monetized. Putin calculated he could in a way with energy exports — did not work. Cannot work in a global economy. I think it is a key failure point in the entire war. What little foresight or ability he has to look beyond rose colored glasses. In reality — really does not matter just how you corrupt the currency you know. Watch the black market in that currency now. I think they maybe have a few months until the shit really hits the fan — maybe less. Probably less. That is what I would be looking at right here. I am paraphrasing this but as Memminger (the CSA Treasury Secretary) says - like the tide of the moon one may delay a result — it does not change the outcome. He knew the CSA was so F-cked by 1863. A real smart guy. Russia is in an even worse position here. They are already losing the war! None of what I said is new in history. You can trace the thrust of this all the way back to Thucydides or Sparta for that matter. Same principles. I will cut this off here — otherwise it can go on for at least 50 more pages. Sorry if you don’t understand all the terms here. Best I can do and keep it short. I did my best to condense it. Even this short cut is too long I think. I will add this though — maybe it makes it more understandable. The south in the Civil War could have used cotton to stabilize its currency in Britain. But instead they tried to use it in an extortion attempt to get an intercession by Britain. How did that turn out for them? Russia is trying to do the same thing — maybe that makes this more clear. It will sure turn out the same way. Same idea. This has all happened before. None of this is new. I think maybe I should say this too - volatility in a currency could be defined as the speed of which it has to change hands. It is normally 4 to 1 — that 1 dollar is actually worth 4 dollars in circulation. Speed up volatility and it has a bad reaction — a whole other story. If you slow it down too much then it also has a bad reaction. First inflationary the second deflationary. Kind of a delicate balance. I don’t have to go into the implications, right? That without inflation you can never finance a war — within certain boundaries. Deflation is sure death. And that difference is a pubic hair sometimes. Memminger was a talented finance person — and even he could not control it in the end. What chance do you think Russia has here? They are already losing the fucking war for Christ’s sake. At least at the time Memminger submitted his report to the Confederate Congress they were winning. Maybe you should take a look. Dated January 10, 1863 — Memminger’s report to the Confederate Congress. You can see how bright he really was — I extensively drew on that in that paper I wrote. No matter how smart he was — did not help at all. Could not change the outcome at all. I think he was gifted in finance. Did not matter in the end. Neither will Russia be able to overcome this. [END] --- [1] Url: https://www.dailykos.com/stories/2023/1/7/2145839/-Really-Russia-is-so-screwed-at-this-point-and-they-have-no-way-out-of-this-None-at-all Published and (C) by Daily Kos Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/dailykos/