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Economic War #177721
03/12/2022 11:43 AM
03/12/2022 11:43 AM
Joined: Oct 2001
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ConSigCor Online content OP
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ConSigCor  Online Content OP
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Joined: Oct 2001
Posts: 19,231
A 059 Btn 16 FF MSC
The West Declared Economic War On Russia, And Now Russia Is Striking Back In A Major Way

March 10, 2022 by Michael Snyder


Did you think that the Russians were just going to sit back and take whatever economic sanctions that western powers decided to dish out? Of course the Russians were going to strike back, and they definitely have the ability to cause quite a bit of pain. Unfortunately, economic wars have a way of becoming shooting wars, and if leaders on both sides continue to escalate matters we could soon cross a point of no return. As it is, relations between western governments and the Russians have totally broken down. The Russians are never going to forgive us, and western governments are never going to forgive them. So that means that many of the economic “punishments” that are now being implemented are likely to be permanent.

Without a doubt, the sanctions that have been imposed on the Russians have done a lot of harm. The Russian ruble has collapsed, there have been extremely long lines at ATM machines and banks, and economic activity inside the country has been greatly disrupted.

But anyone that thought that we would get out of this unscathed was just being delusional.

In recent days, a whole host of western corporations have announced that they are pulling out of Russia, and the Russians are now saying that they could simply seize all of their assets…

Russia said it could seize the assets of Western companies that have suspended operations in the country.

Dozens of American, European and Japanese companies from almost every sector of the economy have abandoned joint ventures, factories, stores and offices in the last two weeks in response to Russia’s invasion of Ukraine and the ensuring sanctions.

Over the past few decades, western corporations have built up an enormous presence in Russia, and now much of that could be taken away without any compensation at all.

Ouch.

The balance sheets of some companies are about to get “adjusted” in a major way.

Do you think that their shareholders will feel good about achieving a “moral victory” even though it means losing so much shareholder value?

Many major financial institutions in the western world are about to get hammered as well.

According to CNN, very little of the $121,000,000,000 that Russian entities owe to western banks is likely to ever be repaid now that war has started…

International banks are owed more than $121 billion by Russian entities, according to the Bank for International Settlements, which suspended Russia’s membership on Thursday. European banks have over $84 billion total claims, with France, Italy and Austria the most exposed, and US banks owed $14.7 billion.

Goldman Sachs (GS) earlier disclosed that it had credit exposure to Russia of $650 million in December 2021.

U.S. banks only stand to lose 14.7 billion dollars, and that will definitely hurt.

But the amount of exposure that European banks have could potentially be absolutely devastating.

The Russians are also hitting back by restricting exports. On Thursday, the Russian government released a list of over 200 different items which will not be allowed to be exported…

“The list includes technical, telecommunication and medical equipment, vehicles, agricultural machinery, electrical equipment – more than 200 items in total, including railway cars and locomotives, containers, turbines, metal and stone processing machines, monitors, projectors, consoles and panels,” the Kremlin statement says. “This measure is necessary to ensure stability in the Russian market.”

A lot of the items on that list don’t really matter, but the fact that Russia has now decided to suspend fertilizer exports is a really, really big deal…

On Thursday, Russian Minister of Industry and Trade Denis Manturov said Russia decided to suspend fertilizer exports. This comes when global food prices are at record highs, and European fertilizer makers are struggling to produce nutrients ahead of the spring growing season, increasing global food inflation risks.

President Vladimir Putin said the fertilizer export ban was a move to ensure stable domestic food prices. This is another sign of growing protectionism worldwide as countries grapple with soaring food prices. Putin said fertilizer markets are deteriorating, making food a lot more expensive.

In previous articles, I have explained that even before the war started some types of fertilizer had doubled in price, some had tripled in price and some had actually quadrupled in price.

Now fertilizer prices are likely to soar even higher, because the Russians are a major player in the fertilizer industry…

.. on the eve of the sowing season, European (& American) farmers are left w/t Russian fertilizers. RUS share in the world market is a little less than a 1/3 of the world production of potash fertilizers, about 10% of nitrogen fertilizers & about 20% of complex fertilizers.

This move is especially going to be painful for farmers in Europe.

Without fertilizer from Ukraine or Russia, they are going to be facing a “supply shock” of epic proportions.

We will also want to watch how Russian export restrictions affect the tech industry…

Today, #Russia accounts for 80 % of the market for sapphire substrates – thin plates made of artificial stone, which are used in opto- & microelectronics to build up layers of various materials, such as silicon.

They are used in every processor in the world – AMD & Intel are no exception. #Russia’s position is even stronger in special chip etching chemistry using ultra-clean components. RUS accounts for almost 100% of the world’s supply of some rare earth elements used for these purposes

When I ran for Congress, developing U.S. sources of rare earth elements was a hot button issue for me.

Sadly, not much progress has been made since that time. Today, the U.S. remains exceedingly dependent on foreign sources. China actually dominates the global market far more than anyone else does, and so if we ever go to war with China we are going to be really, really hurting in this area.

Before I end this article, I want to give an update on the price of gasoline.

The average price of a gallon of gasoline in the United States has now shot up to $4.31, and in Los Angeles some consumers are now paying nearly 8 dollars a gallon…

Gas prices are now nudging $8-a-gallon in Los Angeles, with drivers forming lines at Costco pumps across the US to fill up ahead of potential further increases.

Snaps taken at a Mobil gas station beside on the border of Beverly Hills and West Hollywood on Wednesday afternoon displayed eye-watering prices of $7.95 for premium gas.

In this case, this is something that we have largely done to ourselves.

Ever since he entered the White House, Joe Biden has pursued policies that have driven up the price of gasoline, and now the war has caused worldwide panic.

Biden is trying to beg the Saudis to pump more oil, and he may be successful. But as I have repeatedly warned, the long-term outlook is exceedingly bleak.

Gasoline prices will eventually go much higher than they are now.

Food prices will eventually go much higher than they are now.

And the shaking of our financial system has only just begun.

The Biden administration wanted a showdown with the Russians, and now they have it.

Unfortunately, their foolishness is going to cost all of us dearly.


"The time for war has not yet come, but it will come and that soon, and when it does come, my advice is to draw the sword and throw away the scabbard." Gen. T.J. Jackson, March 1861
Re: Economic War [Re: ConSigCor] #177722
03/12/2022 11:45 AM
03/12/2022 11:45 AM
Joined: Oct 2001
Posts: 19,231
A 059 Btn 16 FF MSC
ConSigCor Online content OP
Senior Member
ConSigCor  Online Content OP
Senior Member
Joined: Oct 2001
Posts: 19,231
A 059 Btn 16 FF MSC
The Economic War Between The United States And Russia Just Shifted Into Overdrive

March 8, 2022 by Michael Snyder


Economic conflicts have a way of becoming shooting wars, and so we should all be deeply alarmed by what we are witnessing. With each passing day, authorities in the United States and authorities in Russia are imposing even more measures which are intended to punish the other side economically. Thankfully, our militaries are not shooting at one another yet, but an economic war has already started and it just shifted into overdrive. On Tuesday, Joe Biden announced that his administration has decided to ban all imports of Russian oil and natural gas…

“Today I am announcing the United States is targeting the main artery of Russia’s economy. We’re banning all imports of Russian oil and gas and energy,” Biden said at the White House. “That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine.”

About the same time, the government in the UK also announced that it will be banning Russian oil…

The U.K. government will ban all imports of Russian oil, its latest sanctions move against Vladimir Putin’s administration over the war in Ukraine.

The measure — taken in concert with the U.S. — will be phased in over the rest of 2022, Business Secretary Kwasi Kwarteng said. The ban applies to refined products such as diesel — which the U.K. relies on Russia for about a third of its imports. It won’t apply to natural gas.

Will these moves hurt the Russians?

To a certain extent.

The rest of Europe has not joined the U.S. and the UK in this boycott yet, and Russia will always be able to sell massive quantities of oil and natural gas to China.

In response to this latest move, Vladimir Putin signed an order which will ban the export of certain raw materials…

Within hours of Joe Biden announcing a far-reaching ban on all US imports of Russian oil – while warning Americans that gas prices are about to “go up further” – Vladimir Putin is reported to have signed his own counter-measure decree.

Russia’s RIA news agency is reporting that the new decree blocks all exports and raw materials from Russia “of certain materials” – with state media reports noting the specific list will be made public in two days.

We will have to wait and see what specifically will be on that list, but I have a feeling that it will definitely include nickel.

On Tuesday, trading of nickel was suspended after it suddenly more than doubled in price…

The London Metal Exchange on Tuesday suspended the trading of nickel after prices more than doubled to surpass $100,000 per metric ton.

The LME said in a statement that trading will be suspended for at least the remainder of the day.

A global shortage of nickel is going to severely hurt industries all over the planet.

And of course Russia could decide to cut off all oil and natural gas exports to the western world as well. If that happens, natural gas prices in Europe would soar to catastrophic levels, and the Russians are warning that we could eventually see the price of oil reach $300 per barrel…

Russia has threatened to close a major gas pipeline to Germany and warned of $300 oil prices if the West goes ahead with a ban on its energy exports.

“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said Monday in an address on state television.

“The surge in prices would be unpredictable. It would be $300 per barrel if not more.”

Unfortunately, we are not talking about a short-term crisis.

Western powers are never going to forgive Russia, and Russia is never going to forgive the western powers. So a lot of the moves that are being implemented now are likely to be permanent.

And that is truly a nightmare scenario.

Right now, many Americans are complaining about the rising price of gasoline. On Tuesday, it hit another brand new record high…

After rising dramatically following Russia’s invasion of Ukraine, the price of gas has reached a new record, topping an all-time high that stood for nearly 14 years.

As of Tuesday morning, the average national price for a gallon of regular gasoline touched $4.17, according to AAA, the highest price ever, not accounting for inflation. That was up from $4.07 on Monday and $3.61 a week earlier.

But this is just the beginning.

Not too long from now, $4.17 for a gallon of gasoline will look like a rip-roaring bargain.

Needless to say, higher gasoline prices are going to be very painful for average American families that are just trying to survive from month to month. According to Yardeni Research, the average household “will spend an additional $2,000 per year in gasoline on top of an extra $1,000 in food expenses” in 2022…

The latest research note from Yardeni Research estimates the average household will spend an additional $2,000 per year in gasoline on top of an extra $1,000 in food expenses. Adding this all up, the typical household will spend $3,000 less this year on other things.

Ouch.

Speaking of food, the war in Ukraine has absolutely paralyzed shipping in the Black Sea, and it has essentially resulted in “a shutdown of the world’s second-largest grain exporting region”…

The war in Ukraine has severely hobbled shipping in the Black Sea, with broad consequences for international transport and global supply chains. Dozens of cargo ships are stranded at the Ukrainian port of Mykolaiv, shipping trackers said. An estimated 3,500 sailors have been stuck on some 200 ships at Ukrainian ports, according to London-based shipping tracker Windward Ltd. More ships are stranded around the globe than at any point since World War II, maritime historians said.

The result is a shutdown of the world’s second-largest grain exporting region. Ukraine accounts for 16% of global corn exports, and together with Russia, 30% of wheat exports.

As I have explained to my readers many times, we struggle to feed the entire planet even in the best of years, and this is definitely not going to be one of the best of years.

Global hunger was rapidly spreading even before we got to 2022, and Time Magazine is reporting that the price of wheat has risen by a whopping 70 percent over the past few months…

The war has already driven wheat prices 70% higher in Chicago this year and is threatening to upend global food trade. Russia and Ukraine are vital suppliers of grains, vegetable oil and fertilizers, which means that supply disruptions will be felt all over the world. Wheat prices have surpassed levels last seen during the 2008 global food crisis—which helped spark widespread protests—and a United Nations index of food prices hit a record in February.

What we are witnessing is going to have a devastating impact all over the planet.

For example, Egypt imports more wheat than anyone else in the world, and they normally get almost all of it from Russia and Ukraine…

Egypt — the world’s largest wheat importer — gets roughly 60% of its wheat from Russia and 25% from Ukraine, JPMorgan analysts wrote in a research note last week.

So what is Egypt going to do now?

Meanwhile, the price of fertilizer continues to soar to unprecedented heights, and experts are assuring us that a “global food crisis” is dead ahead…

“Half the world’s population gets food as a result of fertilisers… and if that’s removed from the field for some crops, [the yield] will drop by 50%,” Svein Tore Holsether, head of agri company Yara International, told the BBC.

Known as “the breadbasket of Europe,” Russia and Ukraine export around a quarter of the world’s wheat and half of its sunflower products, such as seeds and oil.

“For me, it’s not whether we are moving into a global food crisis – it’s how large the crisis will be,” said Holsether, noting that increasing gas prices were causing a steep rise in the cost of fertiliser.

I wish that I could get everyone to understand how serious this is.

The global food crisis that you have been hearing about for years has now arrived, and the poorest areas of the planet are going to be hit the hardest.

This war in Ukraine could have been avoided so easily, but there is no turning back the clock now.

A chain of events has started that nobody is going to be able to stop, and things that were once considered unthinkable will soon become commonplace.


"The time for war has not yet come, but it will come and that soon, and when it does come, my advice is to draw the sword and throw away the scabbard." Gen. T.J. Jackson, March 1861

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