One of the parlament members floated the idea of seizing (*) people's savings to offset the effects of the sanctions.
Though "floated" doesn't quite capture it - he apparently "explained" that this will be necessary and "reminded" that the government will have no choice but to "arrest" the savings of Russians to deal with the crisis. To a question of whether these funds will be repaid, he said that it'll take several generations to to do so, at which point it will all be eaten by an inflation.
They are all puppets, so it doesn't matter who said it exactly and in which context. It's the message that matters. And the message is chilling.
There were reports (hard to verify obviously) over the weekend that places like jewelry stores were busy as people were trying to change their rubles to a hard asset.
Do people who live in Russia keep a lot of money in a bank and/or as rubles, or do they keep it in something like USD/EURO and convert as needed? This drop is obviously extreme, but it's not like the Russian economy was great before.
I expect it will be like in any not-so-rich country: most people are stuck with the national currency, while middle and upper classes store their wealth in foreign currency.
USD savings accounts are accessible to everybody with a bank account and pretty popular. Although recently less so, because interest rates dropped to almost zero.
A dollar account at an Russian bank doesn't help if the Russian government seizes accounts so. And witg Russian banks being partially cut of from SWIFT, those accounts might be harder to come by.
Indeed. Though I think this is the measure of last resort for them. Right now they announced a very steep base rate hike and ordered exporters to sell 80% of inbound currency and these measures seem to be working - ruble rebounded from the high of 110 per USD early in the morning and is now trading at around 95-100.
You are right in that ultimately wealth will be transferred, but circumvention costs resources, especially with the extreme sanctions Russia is facing. If oligarchs now have to resort to loading gold bullion on submarines bound for South America then we did a good job
I'm not intimately familiar with what was in the Panama/Pandora/etc. papers, but if I recall correctly it was a lot more "run of the mill" tax evasion, exploiting loop-holes, and the like. In these cases, I'd guess governments weren't always highly incentivized (or were actively disincentivized) to deal with these sorts of actions.
In the present case, where governments are highly incentivized and the sanctions are quite specifically targeted, I'd expect more of an impact. Will it be enough? I suppose we will see.
One challenge I've seen is that it isn't like all these assets are just labeled with the owners' names. As a result, it make take time to actually enforce such sanctions, possibly too much time to have an immediate impact. Perhaps the threat will be enough, but, again, we'll see.
You are correct in that it's difficult to sanction some oligarch using gray markets for one-off transactions.
But it's very easy to sanction a corporation that is trying to do cross-border trade. If you're selling apples to Poland, your customers - legitimate businesses in Poland - aren't going to be making recurring payments to you through some weird Hawala scheme. They live in Poland, they aren't going to be flouting their country's sanctions laws.
While oligarchs may be fine, the Russian economy can be completely strangled, by cutting off its ability to pay for imports, or get paid for exports.
This also pisses on any remittances the Russian diaspora sends to their relatives back home.
In the long term, I fully expect a proxy banking system to be set up through either China, or one of Russia's satellites, to take care of the needs of the elite. I also expect that the West will either shut down, or keep open particular Russian exports on a case-by-case basis. It's why not every Russian bank has been cut off from SWIFT. If Europe hits a cold snap for instance, there'd still be a channel to buy natural gas...
Especially since they had a lot of time to prepare. But you can't move all your wealth at once, especially if you are not sure if a big event will happen. So it is likeky that they just diversified more outside of Russia. But they will likely still loose a lot.
They’re theoretically going to be frozen, not seized.
More likely that it pushes south florida real estate prices even higher even faster. Just the perception and expectation should do that. Less units that could even be on the market.
I expect them to be firesaled by the oligarches themselves. Get them liquidated before they're frozen, and get that desperately needed western currency that doesn't need to flow through embargoed Russian banks; a desperation life raft.
I had to do some digging to find any details on what these individual sanctions actually entail.
It looks like we're talking about freezing assets and imposing travel bans. One would have to assume that the oligarchs in question are smart enough to have anticipated this and took preemptive measures to safeguard their assets. I would also guess that enough of their wealth has been held outside the reach of foreign entities to begin with.
What do these sanctions aim to achieve? Do we think that the oligarchs are going to turn on Putin? I am guessing that there is nothing they can do to depose him. That's an obvious source of danger for Putin and I am sure he has taken every precaution to ensure that the oligarchs cannot take him down, even with a unified front. We have to remember who we are dealing with here. Putin has proved himself to be a ruthless dictator. I bet he has agents in position to assassinate any one of these individuals at a moment's notice.
I also do not believe that economic sanctions are enough to stop a determined Russian government from waging war. Once again, sanctions would have been anticipated. One has to assume that Russia has taken measures to mitigate the potential impact ahead of the invasion. Even without preemptive stockpiling, I am guessing that Russia is not going to run out of resources needed to wage war anytime soon and even in the long term.
I have analyzed Russia's imports and exports and it looks to me that they are capable of surviving permanent economic isolation from the west, at least in terms running a war economy. Russia seems to be quite economically self-sufficient on that front. Its common imports with strategic value consist of industrial equipment and electronics. China, its biggest trading partner, will not stop providing these goods to Russia. I am not knowledgeable enough about the chip market or related goods like neon gas that was discussed here a few days ago. But once again, I would assume that Russia has plans for how to procure or manufacture military related hardware.
As for exports, yes, losing income from energy exports to the west will certainly hurt. But once again, there is no reason why more of those exports won't be shifted to China. With global demand slashed for Russian gas and oil, China should be able to buy these from Russia at very attractive prices. It would take a complex analysis to estimate how much Russian trade can be shifted to non-western partners but my gut tells me it would be a substantial amount.
There is no question that Russia's economy will contract without Western trading partners. But ultimately, who will this really hurt? I've been making the case that this will not materially impact Russia's ability to wage war in any way. If this was a serious weakness then Russia would not have invaded Ukraine to begin with. Logic would dictate that Russia has spent years preparing for this.
As for the day to day economy, I am not sure how much of a trickle-down effect this will have on your average citizen. Jobs will be lost but the energy sector is probably not doing much to enrich your average citizen beyond a source of income. Oligarchs will take a hit on personal wealth but I have already talked about how I do not believe they will be doing anything to overthrow Putin. My guess is that the loss of energy revenues will impact citizens most directly in terms of a potential contraction to social safety net payments.
My overall point is that I believe Russia can handle being plunged into a second Cold War from an economic perspective. Putin's actions indicate the desire and willingness to do so. It seems that Putin is hell-bent on restoring the Soviet Empire with him at the helm as Stalin 2.0. The Soviet Union collapsed because of the economic and bureaucratic failures of Communism. In Putin's view, both of these problems have been resolved. As an autocrat, he can pursue a consistent agenda for years to come. He is economically unhampered by the baggage of central planning and can rely on consistent future trade with what is soon to be the world's largest economy.
I was born in Ukraine and started school right after it gained it's independence. I still remember being taught propaganda about Lenin and the glory of the Bolshevik revolution in kindergarten. I feel terrible for the Russian people and hope that my countrymen will persevere for everyone's sake.
> If this was a serious weakness then Russia would not have invaded Ukraine to begin with.
Your analysis on whether your opponent has made a mistake cannot assume that they are so smart they'd never make a mistake.
For one, many people in Russia barely can afford food, and many medicines are imported. Prices on basic food were increasing over the past year, and not with sanctins further rise is inevitable.
There could be food riots.
Its like a stock trader looking at the market, saying to himself 'if the stock was undervalued, it's future gainst would already be priced in by the efficient market, therefore no stock is ever worth buying"
> analysis on whether your opponent has made a mistake cannot assume that they are so smart they'd never make a mistake.
why not? You assume they are perfect logical agents, capable of making any true deductions from known information. After all, this is what you'd do in chess.
The errors they could make are things like forced errors or deliberate misinformtion from the west.
> There were reports (hard to verify obviously) over the weekend that places like jewelry stores were busy as people were trying to change their rubles to a hard asset.
This is business as usual in a currency crunch. Already happened twice in my memory (2008, 2014) - some people would panic-buy expensive items like plasma tvs. This is not indicative of some systemic collapse.
Also interesting that average age of people in the line was about ~30, I have the feeling that a large part of the population (older people) have no idea what is going on.
The older population knows exactly what's going on and already keep their savings stuffed in the mattress. The younger generations are now having to learn the hard way.
Yesterday I was at a local branch of my bank. There was a queue (~5 people), but the ATMs worked and the cash was plentiful, no unusual withdrawal limits. Photos are probably not fake, because the demand for cash is obviously there and some banks may have logistical problems with resupplying ATMs.
~95-99% of humanity across recorded history was ruled by dictators and autocrats of various stripes and colors.
Liberal democracy is the weird historical aberration, I'm not sure that claims made from its perspective are as normative as you think. Given some political trends we're observing, and its poor overall track record in dealing with relatively simple crises (COVID), it's still too early to tell whether or not it can survive in the long term.
That's not quite true though is it. I suggest you read some Viktor Frankl and Scholznitsen. The type of leader a country has always has something to do with its citizens. It's not a one way street. If enough citizens stand up to dictators, you get a better system.
After all, almost all countries had kings and dictators at some point, and eventually some got rid of them.
There's room for nuance here, though -- while "democracy via revolution" is a good backstop[1], it's self-evidently a higher-friction method of regime change than electoral democracy. People in the USA or EU are more responsible for their government than Russians.
[1] Interestingly the French Declaration of the Rights of Man from 1789 includes the right of "resistance to oppression"
The comment is primarily about other countries governments and their wide lenience toward Putin, not about the Russian people. Without such leniency and appeasement (usually in the name of the oh-so-important "good economic relations"), no autocratic system can exist for long in todays world.
The US has a long, rich history of calling a foreign leader "dictator" then installing a new government. We kind of got tired of it because it's actually extremely unethical.
Why would Russia go back to communism without Putin? He didn't cause the downfall of Communism. Their default could be many things, but reinstating the USSR is not one of them.
Would a smart and well-connected Russian keep their savings as a Ruble deposit in a russian bank? It’s too late now, but I’d like to imagine that some individuals kept their stock market savings with international broners.
The rationale is that you cannot do both support a dictator and plunder your own people, and then enjoy the benefits of European lifestyle without European rule of law based justice.
A businessperson probably not, but let's say, a software developer with a relatively good salary? Not sure if they would have any other options than Russian banks (or banks that would be affected by such a confiscation, even if they're not based in Russia)...
There's always an option to invest the money using foreign brokers like Interactive Brokers (they even have russian UI and support) who did not boot russians previously. Or buy a property and rent it, which is a popular option too. Or cash out the foreign currency and keep it under the mattress.
Maybe the cryptocurrency sceptics on HN who live in stable western countries without any fear of their savings disappearing overnight can now understand why it is a valuable invention.
I’m not so sure. The volatility of crypto makes it really unattractive to me as a place to keep most of my money. Sure that volatility seems pretty tolerable if my national currency plunges 30% overnight but that’s a pretty unusual thing to happen. So I really wonder how crypto is supposed to help regular people who just a few weeks ago thought this war wasn’t going to happen.
>Sure that volatility seems pretty tolerable if my national currency plunges 30% overnight
I feel like that addresses the Ruble.
>but that’s a pretty unusual thing to happen.
Is the larger point. If you can magic 8 ball your country's future with all certainty, then yes, it is a good idea. Otherwise it's just speculative investment with your actual savings?
So they must have solved the problem of writing completely bug-free software then? Otherwise leaving your money with an unpatchable service seems like a really bad idea.
I can see you didn't click the link otherwise you will have read the section about that.
"They" didn't solve that problem, it is not the solution to all problems in finances. So, whats your point? Vaccines does not prevent 100% of infections, does that means that they are worthless?
Which section are you referring to? The one that says "Coding errors and hacks are common in DeFi"?
You said that the contract, i.e. the software, is immutable. This means that it can't be patched. If it can be patched it's not immutable, excepting semantic trickery like each version of the contract being immutable while what "the contract" points to can be changed in order to patch it.
Fair point, I shouldn't have mention that you can put your stable coins into a DeFi protocol because even if that's interesting is not the point of the answer.
I wanted to address that in the world of crypto there are stable assets pegged to some other FIAT if you want that.
Sorry if this becomes long but I need to explain my point of view. I live in a country that is not as authoritarian as Russia but is not a free economy like the US, people don't trust on FIAT and on banks because it had happened before that they took all our savings [1]. Even if this might seem like an isolated event, it happens every day. For example, if you work remote for a company abroad, the gov will exchange your USD on a wire transfer for the local currency and then not allow you to buy back USD. Our currency had a 60% of inflation last year.
I don't like the speculative aspect of crypto currencies, its volatility creeps me out. I wouldn't want to put my life saving on this. But I can see its value to circumvent corrupt governments and to make a free world. I do believe in humanity, the Putins are an exception and when you give people the opportunity to collaborate, most of them will choose to have a peaceful living.
Now, going back to your Turkish bonds vs DeFi. The difference is you can't buy those anonymously and at any point the gov. or exchange. They actually pay that much because no one wants to buy them, primarly because they don't trust they are going to pay that much. In a way, you can think of DeFi protocols are immutable math functions [2].
It's true. Crypto-currencies operate in a black market and therefore enable people to circumvent financial regulations. But circumventing regulations put up by incompetent governments doesn't address the root of the problem which is the fact that you have an incompetent government, and this has a whole range of consequences that go beyond mere currency issues, and that you won't be able to "circumvent" with or without crypto-currencies. So, in my opinion, you really need to address the problem and abandon the illusion that crypto-currencies will fix anything.
it is interesting that you referred to “black market”. If you come from a working democracy where what is “just” is close to what is “fair”, then “black market” can make you think of drugs, weapons, or these sort of ilegal things. But I want to let you know that in some countries we have to go to the black market to buy another FIAT with less inflation because it is illegal to exchange our currency even to protect our savings.
So, yeah we can call it black market but I like the term “free market”.
Say the central bank of XYZ set a fixed rate of 100 $xyz per USD but it becomes illegal to buy USD and no any bank is willing to sell you USD. In a country like the United States you might hedge against inflation by buying some treasuries.. but in other places they just make it illegal to do anything else.
This automatically creates a “black market” of USD where the price is whatever the people are willing to pay, in the end the free market finds its way.
Again, a black market is not a free market. A free market exists within a legal framework in which rules are enforced. In contrast, a black market is a clandestine market, where illegal transactions take place. This means, for example, that participants in the black market don't have legal recourse in the event of fraud.
“ In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions.”
The definition doesn’t say anything about legal, illegal or regulated.
So, you have a different definition to most economists.
It is a market where prices are self regulated by supply and demand, without coercion. It perfectly suits for the exchange of of FIATs (or crypto) between parties.
You can call it whatever you want, anyways.
I recommend “Free to Choose” from Friedman as starting point.
You're mistaken. Most economists understand the difference between a free market and a black market in the same way that I do (I am an economist myself). The very definition of free market that you quoted implies the existence of a legal framework and of an authority with coercive power, since some behaviours are prohibited:
"In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities."
Further, a market in which fraudsters can commit fraud with impunity is also not a free market but a dysfunctional market.
At any rate, the notion of free market is only vaguely defined, as it's not an important theoretical construct in economics.
As far as crypto-currency markets are concerned, these are not a single market, but many different markets, some of which are heavily regulated, so it's hard to argue that it's a free market.
My point is exactly the opposite, incompetent gov are a byproduct of having too much power to control the money supply. Do you think Putin will still be in power if he couldn’t control the economy, ie if he had no money? In that case, what’s the point of the sanctions?
The cicle which I am most familiar with, goes by like this: gov destroys private enterprise and free economy thru regulations and expropriations, unemployment goes up and people gets dependent on hand outs, the remaining jobs bears all the costs. Unemployed sees gov are they gods, they will kept voting for them forever, even if they live in complete missery, it is all they have.
Well, this theory is easily refuted by the fact that there are governments that have the same degree of power and control over the economy and don't wreck the economy. Some governments cause hyperinflation, but most don't, even though all are in control of the money supply. The fact that a government can mismanage the economy doesn't mean that it will mismanage the economy. In fact incompetent governments such as the Argentinian government are not that common. In many parts of the world the rule is for governments to be competent, or at least to be competent enough to not cause an economic catastrophe.
Unfortunately data is not in your side. Most countries do not have economic freedom, moreover the less the economic freedom the worse the living conditions [1].
You might think that any country controls their money supply, that’s a fact. But can Biden for example, double the monetary base with his sole signature?
People in those countries could have great aspirations, to have a fair system, a working democracy, a better government and all that… but don’t forget they also need to live in the meanwhile, while fixing all those problems.
I’m not a user of crypto currently, but I see it as a way of shifting power. Similar to what the internet did for information.
All I'm saying is crypto is not going to make the institutions of your country work any better. Don't create the illusion that crypto solves a problem that it doesn't solve.
if such a fantasy situation were true, it would mean world governments would have vastly less leverage to pressure Russia to end their attack, greatly increasing the chance of a longer and possibly more widely-involved war, and in the more general sense making such countries much more comfortable for war mongering despots to flourish (for some awful definition of "flourish"). The Russian financial situation is a feature, not a bug, of a regulated financial system.
The financial system is controlled by the US, so it's just another weapon for the US to wield. Countries that want to remain sovereign (independent of the US) like China and Russia would do well to avoid it, and create an alternative system.
One could argue cryptocurrencies don't solve any problem (good luck convincing Russians and Argentinians, but anyway). But they are "non-state" and they "rival state-backed" currencies.
Cryptocurrencies are absolutely a "non-state" and "rival state-backed" asset class, but I'd say it's mostly arguable, given the instability, illiquidity, and general inability (in most places) to exchange crypto for goods and services, whether they are "currencies".
That would not be unusual for Russia, and they'd first threat to throw out your immediate family.
In the soviet era, there was a period of political persecution focused on people suspect of having gold or hard currencies. People would be held indefinitely, and subject to harsh torture, until they let go of their assets. Good if you have some, worse if you actually don't. See Aleksander Solzhenitzyn, somewhere near the end of the first volume. And of course, the people torturing were part of the same organization that brought up Vladimir Vladimirovich Putler.
I would say the exact opposite. So much pressure can be applied against an oppressive fascist regime thanks to the fact that the world is still using fiat. Russia cannot be trusted as a trade partner when Putin, just one guy alone, decides to put at risk more than 25% of worldwide wheat export just to satisfy his personal dream of a lost past glory. He is using nuclear threats to satisfy his own ego. That type of insane behaviour should be completely inacceptable in a global economy and has to be exponentially expensive to do if we want stable peace.
Trust between trade partners is one of the most important element of an economy but for ideological reasons crypto-currencies enthusiasts believe that should instead be delegated to a protocol. I think it's a fundamental mistake.
This. Sure, in the micro, maybe crypto helps Russian citizens protect assets during a difficult period, but so can gold. And, in the macro, these fiat levers are much more punitive to the regime and the elites that support it.
Not to mention crypto can help the wealthy targets skirt sanctions.
On balance, given that we are dealing with a war of aggression and loss of life, I'm grateful for these tools. And, even to the extent it causes some pain for the Russian people, that further erodes support for the regime's unjust campaign and turns up the heat on them.
Yes, they spent the past ~10 years preparing for Western sanctions by buying gold and foreign currencies. They were warned by western countries before 2014 and took the time to adjust their strategy.
IMHO the most interesting change they did is to become self-sufficient regarding their food production, and even net exporter of wheat, corn, and other cereals. They correctly identified that was a risk and made necessary changes to reduce it to the point where they can leverage their position against other actors.
> He is using nuclear threats to satisfy his own ego.
I think its more likely Putin is having to deal with a complex internal financial crisis which could affect Russian national stability. Putin may have something personal to gain from this, but there are bigger problems afoot if Russia descends into chaos. Something, mostly likely financial in nature, has happened to trigger the invasion into Ukraine. Raw access to resources?
So, whether a small portion of economic value is locked up on chain (or not) is unlikely to be relevant at this point.
> Trust between trade partners is one of the most important element of an economy but for ideological reasons crypto-currencies enthusiasts believe that should instead be delegated to a protocol.
Trust (assets) shared between trade partners which is not on-chain can be more easily manipulated as needed in a perceived crisis. We can see the US backed sanctions against Russia's interest are not being applied to Russian fuel exports, but instead target the wealth holder's stored assets. That implies a desire for control over the decision making process itself.
Cryptocurrency based assets would be more resistant to being influenced in this way and would limit the ability to manipulate the wealth holders, but only if their assets were on-chain.
I don't see how cryptocurrency changes this much, given the trust in raw assets relies on physical control of the asset, not a protocol that defines (or limits) how the asset is controlled.
It is in everyone's best interest this crisis in Russia and adjacent regions is addressed. How it is addressed, philosophically, is the real debate here.
> Something, mostly likely financial in nature, has happened to trigger the invasion into Ukraine.
I think he believe parts of his rhetoric. Of course the majority of what he communicates is posturing and lies but we can see recurrent themes in his speeches and articles. My understanding is that he really sees Ukraine as part of the Great Russia empire he wants to build and saw an opportunity to take action following events in the Western world from the past decade or so: instability in the US before and during Trump, Brexit and other fragmentation of Europe, NATO seen as weak and useless, US switching its focus to Asia instead of Europe, the way US left Afghanistan, rise of US and European isolationism, etc.
Those people aren't just cynical crony capitalists who want to make money for themselves. They have a clear fascist view of the world, with an ideal based on a "natural order" of the strong dominating the weak and dreams of a lost glory of the past. They developed a historical, spiritual, and political view of the world that defines their culture as the one that should dominate.
True, but I would argue that oppressive facist regimes pretty much exists because they can print their money to rip off common and working people. I am sure that if you ask russians if they are willing to give away their hard earned money to buy tanks in order to support a crazy dictator they probably will answer no.
Whilst hoping that their savings don't get further devalued by extreme price volatility.
In the last month I have watched my crypto holdings fluctuate by something like 50%. There is no way in hell I would use crypto as a store of value for anything I cared about under those conditions.
The 1% analog is redundancy in traditional currencies. Outside the developed economies a huge chuck of transactions is still done with physical cash.
I imagine it would be a lot more convenient to have some hard currency at hand when fleeing a conflict zone. One might need to bribe border guards at some remote location with unreliable (or non-existent) internet connection, to get to safety.
I assume you mean "seizing people's savings"? And although they're (probably) all puppets, it's still significant that this opinion came from "deputy from the Communist Party Nikolai Arefiev", and not from a member of Putin's own "United Russia" party, which is significantly more capital- (and oligarch-) friendly...
I think you should remove the word "probably". Even if you put it in parentheses, you give the small possibility that they are not puppets, which is untrue. Every single person in the Duma is specifically pro-Putin. Maybe there a some sleepers around Putin who appear to be pro-Putin in public, but in reality wait for the right conditions to assassinate him, but that's just speculation.
I'm beginning to wonder if financially crippling the entire nation (and all of its innocent civilians) was the correct alternative to fighting. Possibly just as bad. Gonna have a lot of people starving, homeless, and in poor health. Putin will re-align the remaining pieces of the economy to focus on the war effort, and the Russian elites.
Oh come on. MAD is a well-understood notion, and has been since the cold war. If the various Soviet leaders weren't insane enough to initiate it, why would Putin? Nobody wants nuclear war. It's a bluff.
That's an interesting perspective. So you would say any economic disincentive used against a country is a violation because the population is impacted by the economic pains? Are reparations a violation of the same in your mind?
It seems any/many actions taken against an adversary will have knock-on effects of the population of the adversary, whether financial/economic or militaristic.
Does the focused nature of the sanctions thus far not change your calculus? Or is it SWIFT only that you're referring to? What about: banning private Russian flights from air space throughout Europe; FedEx refusing to make deliveries to Russia; Arming Ukraine to enable a quagmire, costing the Russian government several billions per day to sustain their effort, and harming their economic position; even broad and impactful tariffs could be seen as a Collective Punishment?
I'm having a hard time determining what actions are not a violation of the Collective Punishment ban under your generous interpretation, short of direct military conflict. I don't think incentivizing hot war was the intention of those rules. My understanding was that they are meant to apply to POWs and noncombatants under rule of a warring party.
This is a ridiculous comment. Putin started an unprovoked war against a country of 40 million. He's using the full power of the Russian state in this war and has access to nuclear weapons. He's currently engaged in indiscriminate shelling of civilians[1] (how's that for collective punishment).
What's your alternative to sanctions? Do nothing? Move NATO troops into Ukraine and start WWIII?
"on account of the acts of individuals for which it cannot be regarded as collectively responsible"
which is up for debate in this instance. I don't agree with you.
I do think the literal bombing of residences and hospitals, false flag operations, wearing the enemy's uniform, etc. etc. all constitute provable warcrimes which should be investigated. Not that I want to devolve into whataboutism, which I realize I'm skirting close to.
It's not up for debate. The Russian army acts on behalf of Russia. Therefore the whole of Russia is collectively responsible for the actions of the Russian army.
I know nothing about money except how to save and how to spend them. Can someone explain the gist of what "securities" are and what the goal of blocking specifically sales of them is?
A "security" is something that has a notional value. You can buy and sell the different types of securities on an exchange.
So it's synonymous to an asset (i.e. something of value that you are prepared to buy or sell).
The exchange does nothing more that manage the buying and selling of these securities to guarantee no one gets ripped off.
One party hands over the security, the other party hands over the cash and the exchange manages the deal on behalf of both parties (for a small fee).
Now the exchange can call a halt to trading (i.e. stops all buying and selling) when it see the market is in trouble. The exchange just calls a halt in an attempt to slow the fall of the market.
These halts are used to try and smooth out extreme fluctuations in the market.
So in this case it looks like the price of Russian securities has collapsed (i.e they are becoming dramatically worth less than they were a few days ago) and the exchange has been temporarily blocked the buying and selling Russian securities in the hope their value stabilises.
Currently the exchange is just seeing a collapse in price of the Russian securities and they want to slow that fall.
No this is not a 'normal' blocking of trading in securities due to turbulance in the market. It is still allowed to buy Russian securities. It is also allowed to Russians to sell Russian securities. The Russian exchange has specifically forbidden foreigners to sell Russian shares.
https://www.politico.eu/article/russia-central-bank-bans-sal...
So if this is the case (and I don't doubt what you are saying) then that means Russia has decided to turn it's functioning market into something that is no longer a market.
Only because we now have a situation where any foreigner holding a Russian security can no longer sell that security.
That action has instantly made the security worthless (i.e. value of zero) to the foreigner.
So while these actions might stop the price drop in the short term, it will never last only because the market created is no longer reflecting the true value of the security.
They are now only being held artificially high because no one can buy and sell them.
to the best of my knowledge, crypto isn't considered a security because it is in a legal grey area of definitions. It acts like both a currency and an investable asset. Also, the security denotation has regulatory implications. In the US, securities are regulated by the SEC. An alternative to a security is a commodity. Commodities are essentially raw materials that are used to produce other goods/services such as wheat and oil. Commodities are regulated by the CFTC, which has its own set of regulations which is normally less stringent than the SEC's. Normally, any new asset that is considered a security needs to pass the [Howey Test](https://www.investopedia.com/terms/h/howey-test.asp). Some cryptocurrencies currently do, but are still not considered a security necessarily since it's still an ongoing discussion.
Securities are company shares. The goal of blocking foreigners from selling them is more or less to confiscate the money that they paid to own those shares.
I was going off the investopedia definition, which claims warrants and convertible bonds are securities [1]. As far as I understand, those are a type of derivative. But I hadn't understood that some other types of derivatives are not considered securities. It all makes a bit less sense to me now...
Yeah this is how I understand it. The goal for Putin is to steal as much as possible while he still can from the only people in the world who believed in him, the people who invested in Russian securities over the past two decades.
BP are going to resign from the board of Rosneft and stop taking dividends. As far as I can tell they aren't planning to try and sell their equity at this time, instead they will be "treating it now as a financial asset".
For BP, their Rosneft stake goes to zero in one way or another. The local oligarchs will take over the operation, like factories and employees, and kick out any foreigners that still have boots on the ground. They are not going to ask or call BP.
It does not matter what paper agreements say, as most of legal frameworks will throw out from the window during the time of a war.
Looks like a reasonable response to "freezing" (read, seizing) assets of the Central Bank of Russia and the credit rating downgrades. Not only it plays role of deterrence to some extent (destabilize our markets and your investors will suffer), but also significantly limits amount of liquidity which will be able to leave the Russian market, thus helping to support their currency.
Note that even with the old exchange rate Russia was able to accumulate sizable reserves. Now it not only spends its liquefiable foreign assets, but also introduced requirement for exporters to convert into rubles 80% of their foreign revenue.
I really don't understand what I'm missing here: How the fuck are cryptos useful to Russian or Ukranian people right now? I mean, they can't buy stuff with it (you know, like food), and if you exchange it to Ruble, why not start with Ruble in the first place?
I know that Ruble will be in a free fall, but cryptos are not stable either. So it's like buying Ruble, but with extra steps.
There are basically two outcomes for someone involved in a war. Either their world will end, or they will have to live after the war. Which is a roundabout way of saying that on an individual level the economic calculations aren't that different from usual. They still need to plan on living a life after the current conflict, and will need to preserve their savings despite a rather predatory government looking for logs to throw into the fire of war.
What ordinary people desperately need is assets they can hide from their government to preserve some wealth. However, because it is 2022, they also have the option of assets that literally nobody can take off them. It'd be worth a shot, maybe the legal situation will be different in 5-10 years and if they invest in a crypto they'll be able to trade it for something.
I like their odds in literally anything more than odds in the Russian rouble. So crypto would make sense.
> However, because it is 2022, they also have the option of assets that literally nobody can take off them.
Don’t oversell it: this is a government with advanced internet monitoring capabilities and little concern about civil liberties. Make one opsec mistake or transact with someone who does, show unexplained money, etc. and then it’s “turn over the key if you want to see your children out of prison”. Blockchains are exceptionally risky here because they require a lot of visible network activity and leave a full history of your activity for the authorities.
There is a high cost for the Russian government to do that - they have to organise some thugs, analyse the blockchain, set up back channels to on-sell the crypto, etc, etc. With the ruble they print more. Maybe update some numbers in a database. Very low cost. The harder it is to execute, the more likely it is for families to preserve some wealth.
And they can skim off the top of all Russians at once. Even bitcoin is a pretty uncontestable step up - fiat currencies are bad for storing wealth at the best of times but this is really not the best of times. This is the time to flee a sinking ship.
> assets they can hide from their government to preserve some wealth
I doubt that a government who pioneered cyberwarfare will be unable to locate your bitcoins; and once you do that, to acquire them they only need some goon with a monkeywrench - of which, I'm sure, there is no scarcity in Russia right now.
I expect it's easy to send funds via crypto to and from there and regardless of sanctions from the west. It's unlikely to be the only solution even after swift and other bans but it's an easyish extra option, especially for those already familiar with the ecosystem.
Ok, let's say it is easier and cheaper to send funds via crypto (which I'd argue is not generally the case). I'm a Russian in Russia and somebody sent me some Bitcoin. What do I do next to use this money?
Localbitcoin/local crypto/localmonero and similar (e.g. asking at a crypto meetup forum) are an option if bank transfers don't work. Bitcoin ATMs if you really are in a hurry and willing to take a potentially high exchange rate hit.
Otherwise there's exchanges which still operate within Russia for the time being and some business (tho too rare to be useful but In a big city, if you don't have funds others than what was sent to you, you might be able to buy more than otherwise) accept it though I wouldn't rely on that too much unless you know a specific one.
However, not everyone can receive or send rubles as easily to/from the west especially after the SWIFT and related bans. Either way, it doesn't hurt to have the extra option.
I've been seeing them occasionally in big cities since 2014-15 though again it's never worth it at least for me - the exchange rate is typically pretty bad and I'd rather wait but go through a low fee/feeless option.
Nearest is in Kiel, just short of 600 km away. If I drive to it it will take about eleven hours and involve driving in four countries to drive almost 1000 km.
Find another person who accepts Bitcoin and do business with them. Neither of you has to exchange to rubles to participate in the economy.
At some point the flow does have to exit to something that a corporation or ministry controls; so an exchange business will necessarily appear, even if it's extremely high risk; someone will be in a position to pull strings. It's not a stretch when you look at how countries with weak local currencies have been operating for decades, just usually with USD as the preferred trade currency instead.
We're talking about savings here. Buy crypto stablecoins, store somewhere encrypted. Then move out of Russia and collect your savings. Or wait it out until the dust settles.
Anyway, do you have a better way how to store wealth or savings in such situations? Crypto seems like a very good option.
I'd wager most Russians don't have savings, and need money today to feed themselves. And for most people just moving out and collecting our Bitcoin savings is not a viable option, not even in the future.
I don't have a better way, but I'm just saying that crypto is also not a good way.
According to Wikipedia median Russian wealth is only a bit over 5 kUSD per person. Ukraine 2.5 kUSD. I haven't been able to find figures for actual savings in Russia but this page https://www.expertmarket.com/credit-card-processing/countrie... gives figures for the countries that save most. Russia is not on the list, but for comparison Norwegians mean annual savings are almost 5 kUSD per year.
So Russians might not be on the edge of starvation but I imagine that a substantial minority could find themselves close to that edge quite quickly.
The median US citizen's savings is around $5k, and the US is the richest country on Earth (or so I'm told) [0]. So, my point stands: Most people don't have a lot of savings, and don't have the luxury to just save money for a later date.
That is bank account value (typically spending money and emergency fund) and does not include retirement savings (401k, ira) or other wealth stores (house, car) so it’s not really an accurate picture of long term savings.
As much as I dislike the whole crypto space, I can see how crypto stable coins (which comes with it's own risk...) could help Russian people secure their savings against government seizing and also fight against the devaluation of their currency.
I think it's naive to think that the Russian government can't interfere with funds held in crypto by Russian people. In the least, they can prevent them converting it to fiat currency.
Russia is likely to outlaw cryptocurrencies for that reason (of course the rich will be able to do it with no punishment). But the small citizen will just get visited by putin's police and beaten within an inch of dying, before being told to never touch crypto again, on the mere suspicion they are using cryptocurrencies.
In this particular case it is more likely that the other side has a high percentage of oligarchs who have had plenty of time and ability to divest to crypto and other assets outside of government control. Most of the people on the street wouldn't even know where to start. So welcome to the other side, same as this side, same as it ever was.
You are misreading my response. It was because HN is known to be anti-crypto. So I meant 'welcome to the pro crypto side'.
And to your response, maybe instead disallowing all people crypto, let's make it easier for everyone. Times like this make it more clear than ever that crypto is not just a "solution looking for a problem".
Don't forget that legal way to buy Bitcoin is through the certified exchanges that require ID verification. Meaning, these certified exchanges will comply with all the sanctions and getting money back in your bank might not be trivial and risky.
I am saying that conversion back to RUB (actually something you can use to pay for gas/food/rent) is still going to be problematic. Meaning that you're supposed to pay tax and if amount of money is somewhat significant, you might get your bank account auto-blocked.
LocalBitcoins is blocked, but there are still analogues (not with greatest rate, but anyway).
Russia <-> Crypto relationship is complicated and recently Central Bank proposed additional restrictions, but its not approved yet.
> I am saying that conversion back to RUB (actually something you can use to pay for gas/food/rent) is still going to be problematic.
I suspect - but absent evidence this is speculation - that you can probably pay with gold and 'hard' currency easily right now in Russia, this was the case before the iron curtain fell (illegal, of course) and I don't see why it would be any different today. People hate being paid in a currency that loses double digit percentages of value overnight.
Well, a google search for "localbitcoin arrests" has about 317,000 results.
Also, if you want to arrange buying bitcoin (with rubles) in person with a stranger on the internet, and arrange physical meetup in some secluded spot in Moscow, then getting arrested might not be your only worry.
With a vast graph containing every wallet and exchange you ever traded with. The onramps to crypto are becoming more and more monitored by law enforcement agencies to the point that remaining pseudonymous is beyond all but the most paranoid.
It doesn't matter how you exchange ownership. You still need to obey the law.
Have you tried taking more than 10k € across an airport?
And just because you normally can't move money to north Korea, if you do this with P2P you are equally breaking the law. Same for Iran and Venezuela I believe
Why would you buy Russian securities for bitcoins? I mean literally? You buy securities for profit. In current political situation buying anything from Russia is more like making a donation to terrorist organisation. So why anyone on Earth will be doing that?
Because great companies can be bought for pennies on the dollar? It’s irrelevant now because they’re trying to prevent foreigners from selling and the sanctions are probably going to get worse but if I was a Russian with good savings I would probably buy. It’s unlikely that there will be any actual war in Russia itself which means the aluminum plants pipelines etc should be fine (although maybe limited in who they can trade with).
What do you think about selling software with Russia? I’m unbalanced between taking their money for my software, or not taking that money and it stays in Russia and they’ll hack my software…
> In current political situation buying anything from Russia is more like making a donation to terrorist organisation.
I don't agree with that statement.
(a) Russian stocks have crashed hard already, and if you believe war is already priced in, you could buy in low, sell high at a later date, and donate proceeds to Ukraine rebuilding efforts, effectively creating a Russia->Ukraine money funnel
(b) Putin might be a terrorist, but most Russian civilian businesses are most certainly not. Many of them don't support attacking Ukraine, as evidenced by the numerous protests in Russia, and likely a whole lot of other people that would protest but are afraid to. The way I see it, "Russia" isn't attacking Ukraine, a corrupt leader of Russia is.
I think you're directionally correct. It's too late for Russia to amass any amount of BTC to mitigate sanctions. They need to exchange something of value for the BTC, and right now, everything they own is worthless or (figuratively) radioactive. However, every time currencies, banks, and payment systems are disrupted, demand increases for alternative trade and transfer mechanisms.
Yeah I was thinking about this - surely the incentives for Russians to buy crypto just went through the roof? Is it worth anyone's money to receive rubles in exchange though.
Ironically, the countries that Russia would have been able to trade with in BTC (China, India etc) are the countries that are most resistant to crypto.
This is because major countries with their own currencies do not like having dollarized economies. Trade with the west could be done in BTC because there is no blanket prohibition on business with Russia just mostly their financial institutions. Promoting CIPS is probably the best option.
Please don't post unsubstantive and/or flamebait comments to HN.
Edit: We've had to ask you this more than once before, and ban accounts that don't stop, so please stop. It's not what this site is for, and it destroys what it is for.
Please do not take HN threads further into ideological flamewar hell. Definitely not cool.
Edit: We've had to ask you this more than once before, and ban accounts that don't stop, so please stop. It's not what this site is for, and it destroys what it is for.
I think the underlying point is not about the actual Canadian truckers, but the fact that Canadian truckers got all their donations canceled by a central authority.
You might think that the central authority was right because the truckers were all 'crazy conspiracy people', but the underlying point remain : if you're in a line of politics that can get you on the wrong side of a central authority that can stop you, might be better to go for solutions that are less dependent on central authorities.
Indeed. Towards what the GP comment was saying, maybe they need to ask how this road to hell was paved with good intentions? Especially for cryptocurrencies, Signal and the internet.
The same technology used by Ukraine donators is also used by terrorists, criminals and extremists. Maybe ask why they use it? Or even in the case for Signal, the same users who want privacy and want to chat securely and send MobileCoin to each other, the same extremists are doing just that on Signal and financing their criminal activities with MobileCoin to each other; with that being completely untraceable.
All these libertarian technologies can be used by anybody, including the 'crazy conspiracy people' which some of them once thought that mass-surveillance was happening to everyone vs those who said: 'If you have nothing to fear, you have nothing to hide'.
Those 'crazy conspiracy people' they speak of built those tools and it's a double-edged sword since anyone can use them.
I think that the point is, Canada has demonstrated that, by using laws allegedly designed to combat terrorism, governments can easily cease FIAT assets and accounts from political opponents... or everybody.
or, charitably, I don't know why you would buy crypto when you can buy bucks or euros, maybe you should ask people who are buying crypto instead of bucks or euros why they do it. If the answer sounds like crazy conspiracy talk then you may have an answer.
Can you please stop posting unsubstantive and/or flamebait comments? I don't want to ban you but you've been doing this repeatedly, and if you keep it up we'll have to. It's not what this site is for, and it destroys what it is for.
So you can have a Ruble-like crash of your investment every 3 months with Bitcoin? Have any of the clowns suggesting crypto like a broken record ever looked at a 1yr chart of that?
Swiss government just anounced in a press conference, that they will implement the EU sanctions. Accounts of the listed persons would be frozen effective immediately.
Cash Swiss francs remain a popular way for Eastern Europeans to save and hide wealth. This demand can impact the exchange rate even with sanctions in place.
>a popular way for Eastern Europeans to save and hide wealth
Save - I'd not think it's not a popular instrument, and it's hard to buy lots of it. (Technically you can trade it as forex and the let the position open?). Hide - as in "cash under the blanket": 1) moving cash in the EU is regulated (ie 10k euro), and to do that they'd have to have an account in CHF send money (in any other currency to), and then withdraw in cash. I am not sure how many banks offer CHF accounts outside Switzerland.
Ironically, Russian central bank recommended complete ban of crypto like 3 weeks back while their finance ministry was pushing to make it more main stream. I guess people at the Central bank didn't get the memo about the rogue invasion. Its the same story in many countries including India, EU, IMF. Central banks don't see beyond their own noses when it comes to also taking geopolitics into account. Seems like they all study the same stale theories in universities and give the same stale recommendations.
The job of the Russian central bank is to safeguard the Russian economy.
It reminds me of German civil servants who ran the numbers and advised Hitler that the country was going to lose. Recommendations are worthless when politicians ignore them and declare war anyway.
>It reminds me of German civil servants who ran the numbers and advised Hitler that the country was going to lose. Recommendations are worthless when politicians ignore them and declare war anyway.
As a westerner I have some serious unease about this economic warfare that has really just kicked off. This is only going to create a significantly worse and more destabilized situation. I don't think this is going to cow Putin into behaving, more like send him into a rage. Overthrowing a regime through macroeconomic warfare doesn't sit well with me.
You should have "serious unease" about Russia invading a neighboring country and threatening other Western nations militarily. What would you suggest as an alternative to this "economic warfare" as you call it? What would "cow Putin into behaving"?
I sympathize but this is still better than direct war. The alternative is what -- allow Putin to run roughshod over Ukraine and expand his capacity to imperil our security?
Lots of options available to us. We just hit the nuclear economic warfare button - they are going to hit back hard and in many ways. Expect, at the very least, a lot of hacking security disruptions. Russia won't hold back anymore if we squeeze them like this. A trapped animal is the most dangerous one.
Literally everything is possible - do you seriously want me to enumerate all the different possibilities to attack and/or pressure Russian interests by the US?
Russia is the new sick man of Europe, ironically enough given the old Russian empire used the term originally to describe the aging Ottoman empire. They seem to be the only ones that can't see it.
They don't have anything that anyone particularly wants anymore. Germany can switch to LNG. USA is net energy positive these days (although the shale might only last another 10-15 years). And finally nukes just aren't worth that much with MAD.
Destabilizing situations has historically worked out terribly for the US. While that might seem like the best route forward - it bears considerable risks for the world.
Though "floated" doesn't quite capture it - he apparently "explained" that this will be necessary and "reminded" that the government will have no choice but to "arrest" the savings of Russians to deal with the crisis. To a question of whether these funds will be repaid, he said that it'll take several generations to to do so, at which point it will all be eaten by an inflation.
They are all puppets, so it doesn't matter who said it exactly and in which context. It's the message that matters. And the message is chilling.
https://news.ru/economics/v-gosdume-prokommentirovali-vozmoz...
* fixed the typo, kudos to rob74