How Russia's elite may have a financial shield against international sanctions
CNBC's Robert Frank joins 'Squawk Box' to report on how Russia's elite may have a buffer against any pain from potential sanctions.
Related: The Monday Morning Quarterbacking Of The Russian Situation.
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While the "Talking Heads" has been saying for a while now that "harsh sanctions" would deter Putin from actually attacking Ukraine, for a while it seemed obvious to me that they wouldn't.
I was pretty sure that despite what the "experts" were saying (that sanctions would be effective), I was pretty sure they were wrong.
But I couldn't figure out why.
Then I found this video and it explains the reason . . .
Could you do a short "Executive Summary" in text of the reason?
It's a CNBC video excerpt with Robert Frank explaining that Russia learned a lot from the 2014 sanctions. They've reduced their dependence on dollar-denominated securities.
They've built up a $630b reserve of gold and foreign currency, which is 2 years worth of imports.
Their debt/GDP ration is only 18%, they have large surpluses, and oil is at $100/barrel.
After 2014, they've restructured most of their debt and financial underpinnings away from the USD and more toward the Euro and gold.
Does that help?
Thank you Jack. As well, Russia has improved its relationship with China, and much of what Russia may need and not be able to get from the west, they may be able to get from China.
Hi Buzz.
I know you can't access YouTube, but I was wondering if you could see the video (or even the text) by copying the title and pasting into your favourite search engine? The title is:
You should get quite a few results (as this is one of the major Stock Market programs in the U.S. and I believe man, many people re-post either the video or the text version.
Or through China.
We're not likely to sever trading relationships with China any time soon, so there really isn't anything the Chinese can't import and then re-sell to the Russians.
On the reverse of that, I'm sure China will be very interested in all the lithium, palladium, platinum, titanium and everything else coming out of the mines in Ukraine.
And even if Europe were to cut off getting gas and oil from Russia, or the banking system that enables Russia to be paid for it, which isn't too likely, I'm sure Chine could use every bit of it.
Now the question is-- is Putin going to conquer and annex just those two Russian majority areas-- or is he going to go for annexing all of Ukraine?
(In either case there's no doubt in my mind that he will be successful).
I read an article yesterday that suggested that the west needs to put a hurt on the entire Russian government along with the oligarchs. It talks about revoking visas and denying them entry for the duration. So, they can have all the money in the world, but they'll have to 'enjoy' it in Russia. No more spring in the Rivera, summer in London and fall in New York. Kick their asses out of the EU and the US and send them back to the 'Motherland'.
Well, Dulay, although you consider that to be a massive deprivation, they will be able to enjoy Winter in Sanya, South America and Cuba, Spring in the Middle East, Summer in Tibet, and the Fall in Beijing and Shanghai. I, for one, ,know that China alone has more to see and enjoy than any person could possibly experience in a lifetime. The photo-essays that I have posted on NT over the years show just a tiny taste of what is here.
Yet their villas aren't in China Buzz. Maybe that's why Xi is supporting Putin, he wants the high-end real estate market to skyrocket.
If you are talking about wealthy elites, they can obtain villas elsewhere. Central and South America. Areas bordering the Pacific-- and Pacific Islands.
True, it sounds like this will cause a boom in high end real estate outside of the EU.
Not so much. There aren't that many of them. That's why we call them oligarchs.
Most of them have yachts they could live aboard indefinitely, and this isn't going to last very long.
A couple hundred high end real estate deals ain't nothing to sneeze at.
Actually, no.
The EU just froze the assets the Duma, Federal Assembly and Putin and instituted a travel ban.
Their yachts still have to dock, land skiffs and or land their helo somewhere. I mean, if nothing else they need to buy provisions, especially water.
Where oh where will they get enough caviar and vodka?
Across the globe? It's really not a drop in the bucket.
Definition of oligarchy
Which is a nice symbolic gesture.
But they cannot freeze assets in Panama, the Caribbean banking havens, or for any of the anonymously owned US shell corporations in privacy havens like Wyoming.
They can't actually even freeze assets in Swiss banks. The Swiss have agreed to do so in this instance, but even that assumes the assets in question can be traced to the people in question, who live in permanent readiness for their barely stable country to become unstable.
All of these people have teams of lawyers who have spent years putting systems in place to protect against sanctions or just against Putin going crazy.
Alexandria. Or Algiers. Dubai. Guangzhou.
That assumes they weren't in the Caribbean already.
Haven't we already established that their world just got MUCH smaller Jack?
We weren't talking about an oligarchy Jack, we WERE talking about oligarchs:
oligarch
Blah, blah, blah.
Yes Jack, the Western world doesn't control the WHOLE WORLD, nor is the world perfect.
No. We haven't.
A small part of their assets are frozen, they're not fugitives. And the world is a much bigger place than the EU.
And we were talking about how small a group they are. By definition, you cannot be an oligarch if it's a large group of people.
OK, so we agree that these Russians are not going to cause a massive boom in high-end real estate and that they can indeed live in their other villas, yachts, mansions, or whatever.
What country wouldn't be happy with hundreds of multimillionaires flooding their high-end real estate market?
You keep asserting that even though the definition of oligarch mentions NOTHING about quantity Jack.
It's all about money and political power, both of which have historically been a small percentage of EVERY society yet have always had an outsized effect on EVERY society, for good or for bad.
No Jack, we do not agree.
BTW, your statement is a strawman too.
Well done.
The US, for a start. We wouldn't notice it.
Of course it does. This is just you grasping at whatever straw you think people will believe so you don't have to admit you got shit wrong.
Why didn't you cite the entire definition? Oh... that's right... because it would have proven you wrong.
Yet we don't call Warren Buffet an oligarch. Because he's one of a very large number of rich people in the US.
By which you mean it's correct but you're out of ways to refute it.
Trump et al sure as fuck would notice it. Seriously, who the hell do you think OWNS Trump Tower condos Jack? Hint: Rich Russians and Chinese.
Again, NO.
Jack, aren't YOU the one that posted the definition of the WRONG word?
Why yes, YES you are.
Did I miss it or did YOU admit YOU got shit wrong?
Let me check...nope, not a peep.
Oh FFS:
So explain how there is going to be a sudden spike in demand for shit they already own. There are nearly twice as many $15m+ condos for sale in Manhattan alone than there are Russian billionaires.
Math is your friend.
It's a small group. That's why we call them oligarchs.
Delusion isn't yours.
You're hilarious.
Now do some math.
Despite your claim, math is irrelevant.
I'm sure you wish it was.
However, that's never actually the case, regardless of your "feelings" on the matter.
If you don't want math to prove your posts wrong, don't post things where the math will prove you wrong.
Utterly ridiculous.
I cited the definition of oligarch Jack. There is no predicate for quantity, despite your ad nauseam false proclamations. Every member can see that for themselves.
But hey...
Germany is their shield.
Nope.
Seven counrries border Ukraine-- Germany is not one of them.
(Eight If you count Turkish access across the Black Sea).