Did world war 3 just start?

[ArcadiaGP]

House passed a bill for more sanctions on Russia, and wants to send weapons to Ukraine

Russian rouble plummets after US Congress passes tough sanctions bill | World news | The Guardian

US Congress passes Russia sanctions, arms for Ukraine

 

[OneShotFOGE]

Russian interests rates have jumped to 17%. Also the Ruble has fallen to historic lows. Its not about avoiding a recession. Its about avoiding full-scale financial turmoil.

 

[smokingman]

Russian interests rates have jumped to 17%. Also the Ruble has fallen to historic lows. Its not about avoiding a recession. Its about avoiding full-scale financial turmoil.

Think the fall in the Ruble has anything to do with the Russian version of SWIFT going live yesterday(12/15/2014)? "Isolated" Russia Begins Testing De-Dollarization-Driven Payment System | Zero Hedge
I can imagine a few ruffled feathers at the IMF,FED,EU,and current operators of SWIFT who's trades settle only in "US Dollars".

India,China,Turkey,Japan,Iran,Egypt,Venezuela,Brazil,Switzerland,Dubai,New Zealand,Australia and others already have trade deals in place that cease using US Dollars in favor of using each others currencies.
The largest of those deals is with China and Australia with 50% of all Australian exports going to China.Now all of that trade takes place without the US dollar(as of Aug 2014).

I think it is already a war,with currency and financial instruments instead of bombs.I also think Russia's central bank is playing no small part in all of this.The fall of the Ruble since 2007 has been fairly epic.It was falling while the price of oil went up 60% from 2008-July 2014 so I really doubt much of a link with the price of oil.The mainstream media is blaming the fall on the price of oil,if that where actually the case wouldn't the Ruble have increased in value from 2008 to mid 2014 instead of losing value the entire time(During this time Russia also built up 500 billion in foreign reserves)?

Adding some information.
http://www.investopedia.com/terms/t/tbvps.asp

TBV of loans in Rubles of a few banks(the only ones i could find actual tbv ratios for).
Unicredit 28%
Commerce bank 27%
Societe General 26%
ING 20%
HSBC 4%
Bank of America has 5.8 billion in Ruble based assets(the 5.8 billion is USD exposure calculated back in June),but I could not find the tbv to get a percentage.
Now think of the losses due to the fall in the Ruble.They are staggering.

 

[OneShotFOGE]

It certainly is a war. Like you said, an economic war or a cold war. Saw a wire earlier today saying that the US plans a Nuclear Missile Station in Europe in response to Russian aggressions. Its interesting to watch.

Plus, you know that the US and OPEC are behind the collapse of oil. They did this to hurt Russia's economy.

 

[T.Lex]

I don't buy the OPEC link, at least not that way.

Thanks to fracking and other energy incentives in the US, we keep more of our own oil now (as a percentage of what we use). From what I read over the last month or so, demand (for foreign oil) is down so supply is (relatively) high. So, market economics being what they are, prices go down.

Now, I will grant you that OPEC could choose to drop their own production, which would bring down the supply. But, it would also bring down their actual revenue, which becomes problematic.

IMHO the various countries are acting in their own self-interest, which just happens to coincide with messing with Russia's economy.

 

[zippy23]

when will the one world currency begin?

 

[T.Lex]

Uh oh... bad sign for Russia.

Russians might not be able to buy iOS devices anymore.
BBC News - Rouble turmoil leads to Apple halting online sales in Russia

Oh the tragedy!

 

[OneShotFOGE]

I don't buy the OPEC link, at least not that way.

Thanks to fracking and other energy incentives in the US, we keep more of our own oil now (as a percentage of what we use). From what I read over the last month or so, demand (for foreign oil) is down so supply is (relatively) high. So, market economics being what they are, prices go down.

Now, I will grant you that OPEC could choose to drop their own production, which would bring down the supply. But, it would also bring down their actual revenue, which becomes problematic.

IMHO the various countries are acting in their own self-interest, which just happens to coincide with messing with Russia's economy.

OPEC always drops their production when prices get too low. Thats why we havent seen cheap gas for decades. And it doesnt matter whether we use OPEC oil, or US found oil. Its a global market. Oil is oil. No matter where you use it, all oil affects the price globally. OPEC has no problem in losing actual revenue. They are literally swimming in money. This is a price war. They are losing money, with the hope of knocking fracking out of business so that they can make more money going forward. OPEC is acting in self interest and we are benefitting from the Russian collapse. Perhaps its a coincidence, but it seems that the two countries came together with a mutually beneficial deal.

 

[T.Lex]

OPEC always drops their production when prices get too low. Thats why we havent seen cheap gas for decades.

Yeah, but that's not what's happening. OPEC isn't dropping production.

I think you and I are mostly on the same page, though. I lean more towards coincidence.

 

[OneShotFOGE]

Yeah, but that's not what's happening. OPEC isn't dropping production.

I think you and I are mostly on the same page, though. I lean more towards coincidence.

I didnt say that OPEC is dropping their production. I understand that they havent, which is why we have such cheap gas. Which btw, awesome! Cheap gas. I may buy a couple jerry cans to fill up and toss in the garage for some sort of emergency. But yeah, we're mostly on the same page. What I said in the post prior is simply my theory. Its all speculation and I wont say that its right. It makes sense to me, but I dont know.

 

[LockStocksAndBarrel]

OPEC wants the price drop to harm our domestic production. Already read an article that some rigs are going to be mothballed because the low prices are killing ROI. Once they get our production slowed down, prices will rise again.

 

[BFP]

Russia is on the precipice of financial collapse. They are less of an economy and more of an oil company, poorly run at that. While our media likes to portray Putin as this tough guy who's bigger than life, he is on the ropes, and may not politically survive this current state of events.

Saudia Arabia seems to be the one pushing OPEC into continuing it's scheduled production. I'm not sure what the driving force in that decision is, break the US oil industry? Cut ISIS/ISIL's profits from black market sales? Break Russia?

From what I have read, 70 USD/Barrell is the break even point for US producers. Does this create another bust cycle just as US production is ramping up again?

It will be interesting to see this play out.

 

[mrjarrell]

At least one "American" company has already gone bust due to the price of oil, more will surely follow. Many, if not most, of these companies are highly leveraged and already existing in debt up to their eyeballs. A continuing slide will do them no good, or the burgeoning new American and Canadian oil booms. Russia's feeling it, badly, too. But, the US will suffer a collapse of an entire new industry if the low prices continue.

 

[spencer rifle]

I fear that backing the Russian bear into a corner will not end well.
We've had LOTS of experience with leaders looking for foreign conflict to distract from domestic failure.
Time to inventory the bomb shelter.

 

[T.Lex]

Here's a really good, and relatively short, article on the economic situation.
BBC News - Russia economy: What is the risk of meltdown?

Russia relies on oil and gas for half its tax revenue and needs the price of a barrel to be at $100 to balance its books. Instead, the price is closer to $60. The value of the rouble has plummeted pretty much in tandem, leading to a sense of panic in the markets.
Even before Russia's annexation of Crimea from Ukraine, Russia's economy was in trouble. But then came Western sanctions - and Russia's counter sanctions - which have made things worse.
...
Many Russian commentators see a perfect storm and fear a return to financial meltdown of 1998, when the rouble fell through the floor and prompted Russia to default on its debt. Interest rates soared to 100%, the currency was devalued, an IMF bailout failed and capital controls were brought in.

"I remember 1998 very well and we have really come back to those times," Senior Credit Analyst Egor Fedorov of ING Bank in Moscow told BBC News.
These days, Russia's reserves and finances are in a far better state, but with the rouble in freefall and a Central Bank apparently failing to respond, the problem is sentiment.

Interesting graph, too:

The graph actually kinda makes me wonder about a broader 'conspiracy'....

 

[BogWalker]

So, is OPEC letting the price slide in order to knock Russia out of the market perhaps?

 

[mrjarrell]

So, is OPEC letting the price slide in order to knock Russia out of the market perhaps?

Russia's collateral damage for the Saudi's. Their targets are the US oil boom and Iran. If they can hurt them they'll be satisfied.

 

[BogWalker]

Russia's collateral damage for the Saudi's. Their targets are the US oil boom and Iran. If they can hurt them they'll be satisfied.

I can believe that. Tell me, are the oil industries of OPEC nations largely government run? I don't know much about them. That would certainly allow them to weather the storm with government money while privately run US companies are forced into collapse.

 

[mrjarrell]

I can believe that. Tell me, are the oil industries of OPEC nations largely government run? I don't know much about them. That would certainly allow them to weather the storm with government money while privately run US companies are forced into collapse.

Virtually all of them are government run. Even in places where the big oil companies do the work, there's still billions to be made for everyone.

OPEC - Wikipedia, the free encyclopedia

 

[BFP]

Russia's collateral damage for the Saudi's. Their targets are the US oil boom and Iran. If they can hurt them they'll be satisfied.

There's plenty of collateral damage that is favorable to the Saudis. I don't necessarily believe that the U.S. oil industry is a target, the Saudis are heavily invested in the U.S. The big targets are Iran and ISIS. Keeping mind, initially Saudi Arabia was the driving force behind maintaining production, now they're all on board.