There certainly is no defending Putin's actions over the last few weeks. Well, to be honest, it is hard to justify a lot of what he did over the last decade.
That said, there is also the bias of the Western media. Putin is by no means stupid. In fact, the "leadership" in the West takes the prize for biggest dumbasses in this equation.
What makes then so foolish?
The prize is awarded for politicizing the financial system. This will go down as one of the dumbest moves in the history of the world. We are now watching the stages of the global financial system crumbling before us.
Why is that? We will cover that in a bit. Before going down that path, let us take a look at the "genius" move by Putin (after all, if you are in a room full of 5 years old, it is hard not to be a genius).
Russian Energy
Did you know that Russia is a major energy producer? I know it is a well kept secret but perhaps you were in the inner circle that realized that.
Of course, this is said in jest. It is a well known fact that Russia is one of the largest producers (and exporters) of both oil and natural gas. When it comes to the global energy market, Russia is a major player.
It is also no secret that the EU is heavily dependent upon Russian gas for such luxuries as heat. So you would think that this is something important to protect.
Since Putin invaded the Ukraine, the West went "nuclear" with counter financial moves. Everything tied to Russia (or Russians) was open game. Some of the larger Russian banks were kicked off the SWIFT network. Russian holdings in other central and commercial banks were grabbed. Whatever the West wanted to take, it did.
Even the Swiss joined the mix, a break from tradition when the country remained neutral no matter what was taking place. Naturally, as a financial hub, that is the smart thing to do. No more.
One thing that the West did exempt from sanctions is energy. The Russians can use SWIFT to send messages about energy transactions. This makes sense since the West, the EU in particular, needs Russian energy. Gas is at the top of this list.
The moves by the West appeared to hit the target. Over the last few weeks, the Ruble crashed. This is causing massive disruption within the country. For this, the West appeared to be in control.
That might have been the case until Putin threw the checker board aside and started playing chess. Here is where the politicization of the financial system was completely moronic.
Let us look at the EURO versus the Ruble.
Oops. How did that happen? What caused the Ruble to skyrocket when the entire Western world is cracking down on Russia?
President Vladimir Putin announced that Russia will demand “unfriendly" countries pay for Russian natural gas exports only in rubles from now on.
Currency weaponization is a dangerous game. It appears Putin quickly reversed course.
Of course, the Europeans have no choices, especially the Germans. They are fully dependent upon Russian gas for energy. The only saving grace is we are moving towards Spring so the weather might break some.
Other Russian Exports
The challenge when taking on Russia from an economic and financial standpoint is that what they export is needed. They are not like China manufacturing a bunch of stuff in Walmart that, honestly, most could do without.
Let us look at the list of what they export according to Wikipedia:
Notice the importance of all that stuff. Even the 3rd heading on the list if Unspecified Commodities. In short, people need what Russia exports.
Not only are they a major player in energy, they are also that in food. They are big producers of wheat and oils (non-petroleum). We also know they are a huge exporter of fertilizer that is used for food production.
All of this is now on the table. While the West is intent on crushing the Russian economy, it is also taking a lot of product off the market. This might seem fine until we see the necessity of what Russia ships all over the world.
So who is affected?
Here is the list:
Look at who is at the top of the list.
One view is this EU can really hinder the Russian economy. That is very true. Yet, there is a problem: Russian can do the same to the Europeans.
When things like steel and iron are cut off, guess what happens? Manufacturing has to stop. So all those electric vehicles that Germany wants built, the steel will have to be sourced from elsewhere.
Russia is a major commodity exporter. That means what countries get are used to make other products. What happens when it stops?
This is something the West obviously did not fully consider.
Killing Trust
To be honest, Russia is a bit player in the grand scheme of things. Their economy was screwed over the next couple decades since the demographics of that country are horrible. There was no way to keep going at the same rate when the country is aging quickly.
Therefore, what is taking place now is only accelerating the decline in that country, at least from an economic standpoint.
In this regard, the West is winning.
However, what will be the long term implications of this? The financial system is built upon one thing only: trust. When that is destroyed, so is everything else.
What will the Foreign Direct Investment look like over the next couple decades. Today, Putin and Russia is the bogeyman. For that reason, the West decided to take their assets like taking candy from a baby.
The question is who will be the bogeyman tomorrow? Or next week? Perhaps it is a different country. Or maybe it isn't even a country but an industry. What if it is decided they simply do not like your particular industry and the "leaders" decide to wage financial war?
Do these people realize what happens when external investment dries up? For this United States, this could be very bad. For the EU, it is totally devastating. The move in the Ruble compared to the EURO is very telling. It is simply another way the EU is ensuring its demise (something I covered on many occasions).
This is another stake that is going through the global economy. We are rapidly heading towards a demise. The West would have been better off taking military action against Russia as opposed to weaponizing the financial system. By going on a seizure campaign, they ensured that the trust level, internationally is getting obliterated.
Ultimately, this could be beneficial for crypto-economic system yet they are nowhere near developed enough to even begin to replace what is being lost.
I wonder how long it will be until other commodities and exports on that list will have to be paid in Rubles.
Putin might end up crushing the EURO all on his own.
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