Putin has been planning on invading Ukraine and rekindling the glorious Russian Empire of old for more than 20 years. All one had to do was to listen to his speeches.
This guy right here, this beady eyed thug.
When Putin seized Crimea (Sudetenland analogies, please), he began to build massive currency reserves to weather what he knew was coming — economic sanctions. Right now, he is sitting on more than $600,000,000,000 in reserves which would normally be enough for two years of survival.
Putin miscalculated
Economic Fortress Putin — having now invaded a peaceful, non-threatening neighbor with almost 200,000 soldiers, who have killed children and old women while bombing cities with horrific weapons — is facing a slightly different economic environment. Let me detail it for you:
1. The American and NATO regime of sanctions has begun to take shape, joined by steady allies like Australia and Japan.
There is more work to be done, but disconnecting some Russian banks from the SWIFT system is a cold-blooded, pro move and it will hurt like stepping on a nine inch nail that somebody has spent an hour sharpening.
That nail goes right through your arch, comes out the top, and is Hell to get off. It also hurts like Hell.
2. Today the Russian Ruble was down as much as 40% against the USD. It’ll settle at about 30% until tomorrow when it will really hit the fan. Boom!
Give me one reason why anybody on the planet wants to own a Ruble.
3. The Russian Central Bank has raised interest rates from 9.5% to 20%. This means credit is gone in Russia including consumer credit.
The absence of consumer credit will make the Russian economy contract by as much as 40%. Ouch.
4. The combination of a weak Ruble and high interest rates will trigger massive inflation — a Ruble buys a lot less imported goods today than it did last week. That means prices for imported goods will skyrocket. This is called inflation.
High inflation, a weak currency, high interest rates are a Witch’s Brew that is toxic and fatal. [Talking about you, Weimar Republic.]
5. A run on the banks is underway in which Russian citizens are cashing out of their Rubles into foreign currencies. This is going to get uglier — uglier than 7-beer bar goggles can penetrate.
The banks will not be able to get more foreign currency because of how weak the Ruble has become and Putin isn’t going to share any of his currency reserve.
Under the sanctions regime, no Russian banks can tap into the Forex world. Sorry about that. Not sorry.
6. Today the Moscow Stock Market delayed its opening and then it closed for the day.
Once this baby opens, there will be a sell off like the Mother of All Sell Offs. People will get out of stocks and try to get into foreign currencies. Good luck.
7. When the NATO/US kicked some of the Russian banks off the SWIFT system, credit cards and ATMs in Russia will shortly not work.
The Russian economy is only as big as Italy’s. They cannot stand against the whole world economically. Sporty, meet Dicey.
So what, Big Red Car?
One more thing, if I may. OK, a couple more things:
1. Domestically, Russians do not find the idea of invading Ukraine to be a popular decision. The young Russians all want to move to Kyiv.
Why not? It’s free.
There will be unrest in Russia. There will be massive riots in the streets of European capitals and the US.
The oligarchs will not be happy. Putin’s Swiss banker will not be happy.
2. Nobody in the world believes that Ukraine posed a threat to Russia. Putin made the classic error — he failed to get the people behind the threat and thus the war before going to war.
3. The Russian army is not very good. It is a conscript army with one year draftees. You can barely teach a soldier to march and shoot straight in a single year.
They do have a lot of tanks and massive firepower.
4. One free man, a patriot equals ten conscripts. When you are fighting for your home, your hearth, your family, your kids, your survival, your Internet access — you fight hard AF.
5. Putin has managed to solidify, energize, and motivate NATO to do its bloody job. Germany is threatening to spend 2% of its GDP on defense.
6. Nobody in the world likes or respects Putin. He is a thug.
Time to finish the job, Big Red Car?
Yes, dear reader, it is time to finish the job, to throw the knockout punch. It is time to end the Biden War On Energy and drive crude oil prices back to where they were when Biden took office.
This one move will force Putin to live under a bridge and be a huge spur to the American economy simultaneously. It will also cure male pattern baldness and make your hair thicker and more lustrous. It will cure that nasty toe fungus you keep ignoring.
It is time to unleash the monster that is the US oil business. It is time to spur production back to Inauguration Day levels. At 13.1 MM barrels a day, crude was $20/bbl and gasoline was $1.50/gal.
1. The Russian economy is small — the size of Italy’s economy. We can crush that little ballet dancer. Let Jabba the Hutt (the American oil business) sit on her.
2. More than half of Russian governmental revenues are derived from energy.
3. At $100/bbl for crude oil, we are funding Economic Fortress Putin and the Russian war machine. Do you want to fund Economic Fortress Putin and the Russian war machine?
At $20/bbl, Russia cannot afford to engage in war and Putin cannot feed the Russian War Machine or build cash reserves.
4. The US imports more than 600,000 barrels of Russian crude every day. Let’s stop that nonsense today. Good God, let’s do this today.
Russian imported oil = 700,000 bbl/day. Keystone XL Pipeline = 900,000 bbl/day. See how nice that works?
Bottom line it, Big Red Car
We are in the early innings, but I like the trends. Let’s neuter Economic Fortress Putin, let’s defund the Russian war machine.
We can do this. It is the world v Putin, so let’s tee it up. Who’s with me?
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.
God bless Ukraine and its fierce leader. Shoot straight. In the storm clouds that encircle your country, be the storm!
