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Russia's laughable economic threats against the U.S.A
Fortune ^ | 03/05/2014 | By Christopher Matthews

Posted on 03/05/2014 5:37:37 AM PST by SeekAndFind

While stock markets believe that the U.S. and Russia will avoid an economy-destabilizing conflict, representatives of both countries continue to lob threats of sanctions at one another.

The latest came from Sergei Glazyev, an advisor to Russian President Vladamir Putin, who said on Tuesday that the Russian government would consider selling its stockpile of U.S. government debt if America and the EU went forward with threatened trade sanctions, according to the Russian news service RIA Novosti.

"We hold a decent amount of treasury bonds -- more than $200 billion -- and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner," he said. "We will encourage everybody to dump U.S. Treasury bonds, get rid of dollars as an unreliable currency, and leave the U.S. market."

The saber rattling of great powers is often made up of empty threats, but this one is particularly laughable. Russia's $200 billion in U.S. government debt is part of its foreign exchange reserves, a fund built up by the Russian government to help protect it against financial crises, stabilize its own currency, and to enable banks and other businesses to function during financially stressful times.

In other words, Russian investment in U.S. government debt isn't some kind of altrusitic action to help their buddies over in North America pay their bills. It's a fund that the Russian government has built to help its economy function in a world that trades primarily with U.S. dollars.

(Excerpt) Read more at finance.fortune.cnn.com ...


TOPICS: Business/Economy; Foreign Affairs; News/Current Events; Russia
KEYWORDS: putin; russia; threats; ukraine

1 posted on 03/05/2014 5:37:37 AM PST by SeekAndFind
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To: SeekAndFind
All of our "smart" people in the academic-governmental complex have their blinders on and are engaging in some woefully tragic wishful thinking.

We are weak, and Russia is strong. Elections have consequences. And this is it.

2 posted on 03/05/2014 5:42:42 AM PST by Timber Rattler (Just say NO! to RINOS and the GOP-E)
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To: SeekAndFind

It won’t be so funny if the Russians responded to sanctions by curtailing energy supplies to Europe. The EU would go into an economic tailspin and the usual supplicants would be besieging Germany for aid. The bottom line is that Crimea will be bloodlessly reincorporated into Russia and Germany will never agree to serious sanctions against Russia. Putin is being portrayed in the West as a thug but within Russia he is a nationalist hero who is reassembling and reinvigorating Russia. The world is also noticing. The power of the West is declining.


3 posted on 03/05/2014 5:47:18 AM PST by allendale
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To: SeekAndFind

The U.S. is also in too precarious a position to be starting a financial food fight. A run on the dollar would destroy us and then the world economy.


4 posted on 03/05/2014 5:47:36 AM PST by oldbrowser (Civil service unions are the real government)
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To: SeekAndFind

Calling it “laughable” isn’t wise. Russia holds a lot of the world’s oil supply and they are now getting friendlier with the ChiComs.

The man-child currently occupying the Oval Office is failing, and the mavens at Fortune Magazine ought to recognize the fact.


5 posted on 03/05/2014 5:48:58 AM PST by SoFloFreeper
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To: SoFloFreeper

I wouldn’t take this article too seriously. Look at the author.


6 posted on 03/05/2014 5:54:40 AM PST by miss marmelstein (Richard Lives Yet!)
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To: Timber Rattler

Kleptocracies are typically very weak economies. Russia is heavily dependent upon energy exports much of it thru ...wait for it ...wait ...Ukraine.


7 posted on 03/05/2014 5:56:25 AM PST by Justa
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To: Justa

And the EU heavily depends on those exports...


8 posted on 03/05/2014 6:01:31 AM PST by EBH ( The Day of the Patriot has arrived.)
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To: EBH

Mostly Germany at, something like 26% which could be replaced with coal and oil at the great consternation of the communists, err, I mean Greens. They both serve the same master.


9 posted on 03/05/2014 6:07:18 AM PST by Justa
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To: allendale
“The bottom line is that Crimea will be bloodlessly reincorporated into Russia ...”

I've been saying this for quite some time. Crimea was part of Russia for hundreds of years before the Ukrainian Nikita Khrushchev gave it to the Ukraine in 1954 as part of his bid to succeed Joseph Stalin. Putin is methodically putting back together Greater Russia (not exactly the old Soviet Union), comprised of areas with small majorities or large minorities of ethnic Russians. This does not bode well for the Balkans, and is eerily reminiscent of Adolph Hitler's pre-war annexations of Austria and the Sudetenland.

10 posted on 03/05/2014 6:10:50 AM PST by riverdawg
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To: allendale

If Russia cut off energy to Europe, where would they get the money they need to pay their bills? I don’t think they could find new customers very easily, and all the pipelines run from Russia to the EU.


11 posted on 03/05/2014 6:19:57 AM PST by proxy_user
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To: proxy_user
If Russia cut off energy to Europe, where would they get the money they need to pay their bills?

Who's going to force them to pay those bills?

12 posted on 03/05/2014 6:24:19 AM PST by EricT. (ARBEIT MACHT FREI- now get back to work you taxpaying peasant!)
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To: riverdawg

More like Hitler marching into the Rhineland. Donetsk, would be the Sudetenland.


13 posted on 03/05/2014 6:25:01 AM PST by dfwgator
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To: EricT.

Well, the bills already incurred, nobody. But if they expect new food imports, they’re going to have to pay for the food they’ve already eaten.


14 posted on 03/05/2014 6:25:52 AM PST by proxy_user
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To: miss marmelstein

http://business.time.com/author/christopherrmatthews/

The author is not the same person as The MSNBC host, if that was the point. Thanks.


15 posted on 03/05/2014 6:27:54 AM PST by jttpwalsh
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To: jttpwalsh

He needs to change his name - quick!!!


16 posted on 03/05/2014 6:28:26 AM PST by miss marmelstein (Richard Lives Yet!)
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To: miss marmelstein

:)


17 posted on 03/05/2014 6:32:42 AM PST by jttpwalsh
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To: SeekAndFind

I am amazed reading the comments that many do not understand the concept of USD Reserves. Even the USSR needed a USD reserve. All the countries on the verge of collapse, Ukraine, Argentina and Venezuela all have one thing in common, they are running out of US Dollars. If you want a predictor of the next country in Crisis look at USD reserves and you will find India and Turkey with dwindling reserves.


18 posted on 03/05/2014 6:35:56 AM PST by 11th Commandment ("THOSE WHO TIRE LOSE")
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To: proxy_user
I don’t think they could find new customers very easily

First, if Putin is serious, they are just pipelines. They can rot for all he would care.

Second, Putin doesn't do things willy-nilly. I would suspect he has alternative plans...that will be "unexpected" as usual by the US regime. LOL.

Third, new customers? China is a hungry beast needing to be fed.

Prime Minister Vladimir Putin’s two-day trip to China, which provides a conspicuous footnote to Hillary Clinton’s coinciding European tour (or perhaps – vice-versa – it is Clinton’s trip that is the nagging footnote to Putin’s meeting), has once again witnessed Beijing’s eagerness to gobble up obscene amounts of Russian gas. “China is a colossal market,” Putin reminded reporters after his talks with Chinese Premier Wen Jiabao on Tuesday. “The diversification of supplies is a very important direction for Gazprom.” “We have plenty of gas,” said Vice Prime Minister Igor Sechin. “We could give to the Chinese as much as they want. But Miller (Gazprom CEO Aleksey Miller) is in charge of negotiations.” China and Russia: Allies of circumstance

I think many are falling for this MSM propaganda tripe and believe it. Be very much forewarned, that Putin has his ducks in a row as the article linked from 2009 points out. Actually, the article from CNN, demonstrates just how short lived public memory actually is and how much they do not comprehend the world around them.

19 posted on 03/05/2014 6:39:23 AM PST by EBH ( The Day of the Patriot has arrived.)
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To: 11th Commandment

I would just be careful depending on the USD reserve.

There’s been a lot of talk, even at the UN, about setting a new reserve currency.

I’d have to do a major search for it, but there have been articles posted here on FR regarding China’s currency as a potential new reserve.


20 posted on 03/05/2014 6:43:01 AM PST by EBH ( The Day of the Patriot has arrived.)
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To: SeekAndFind

Uh.

If the rest of the world decides to isolate America economically and politically, we’re f***ed.


21 posted on 03/05/2014 6:54:05 AM PST by chris37 (Heartless.)
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To: chris37

RE: If the rest of the world decides to isolate America economically and politically, we’re f***ed.

Of course. But why would they want to do that?

Russia is more “isolatable” at this point in time than the USA IMHO.


22 posted on 03/05/2014 6:59:47 AM PST by SeekAndFind
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To: SeekAndFind

Isolation of the US isn’t on the table.

However the loss of reserve currency status for the FRN (Federal Reserve Note) is.

The shift would probably be to the SDR, at least if it happens before the Gold price resets. The renmimbi isn’t ‘large’ enough to be a reserve currency at this time.

After the Gold price resets the new reserve currency - whatever it is - would have to be gold-backed.


23 posted on 03/05/2014 7:13:32 AM PST by agere_contra (I once saw a movie where only the police and military had guns. It was called 'Schindler's List'.)
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To: SeekAndFind

Laughable? Really. Russia and China, united politically, economically, and militarily give the US a very real warning about our precarious US Dollar and it’s uncertain future as the World’s Reserve Currency, and it is “laughable?” I would say this smells of cold sweat fear masquerading as bravado. Mr. Matthews, no doubt, fears for his portfolio.


24 posted on 03/05/2014 7:13:43 AM PST by SkyPilot
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To: SkyPilot
German imports 70% from Russia its Fossil fuels. Europe is broke and has nothing but debt and are so weak to do anything.

Putin knows all this and had the luck of Obama as US President its over plain and simple.

25 posted on 03/05/2014 7:17:07 AM PST by scooby321
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To: scooby321

As you say, energy is power.

If Palin were President and fast-tracked LNG export permits, America would be exporting natural gas and able to vastly undercut GAZPROM.

Unhappily: Obama is President. Not only is he an immature homosexual man-child; his energy policies have allowed Russia to start growing back into the original footprint of the Soviet Union.


26 posted on 03/05/2014 7:23:56 AM PST by agere_contra (I once saw a movie where only the police and military had guns. It was called 'Schindler's List'.)
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To: SeekAndFind

Because they can.

And there is not a thing we can do to stop them if they do.


27 posted on 03/05/2014 7:39:33 AM PST by chris37 (Heartless.)
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To: EBH
Clearly the US Dollar is not the solo world currency anymore. Regional currency are emerging with the Euro and Yuan. But here is some interest points--

When China established regional Yuan trade, this only increased its USD reserve because they were not paying for import with USD reserves... ops on their part.

When the EU trades with Ukraine it is in USD- WHY- because its agriculture export is all in USD.

Article points out that USD reserves in Russia helps prop up the Rubble. Without $200B in USD, the Rubble would easily lose half its value.

As long as the Dollar is the currency of trade for Oil (and add grain), it will continue to be the primary world reserve currency. With the US dominate in Agriculture and now oil, USD will be around a while..

28 posted on 03/05/2014 9:04:50 AM PST by 11th Commandment ("THOSE WHO TIRE LOSE")
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To: SeekAndFind

Hardly laughable. Russia and Chinahave been working on destroying the dollar as the world’s reserve currency. They will succeed.


29 posted on 03/05/2014 9:07:52 AM PST by wolfman
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To: 11th Commandment
In addition to the points you made, the US is still the second-largest exporter in the world. Other countries must buy these exports with USD, regardless of its reserve currency status. The only exports from Russia that are viable on the world market are energy, precious metals, and military equipment (and most of the latter are bought on credit from shaky third-world countries). The US will likely become the largest oil producer in the world in 2016, despite the best efforts of the Obama administration to prevent this from happening. The US energy revolution has completely transformed the power relationships we took for granted in the second half of the 20th century. That is why Putin is grabbing what he can now; it's a defensive play for what portends to be a century of decline for the Russia of 1990.
30 posted on 03/05/2014 11:46:45 AM PST by riverdawg
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