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Wednesday, December 17, 2014

Rouble Freefall

As I predicted sometime ago, Russia would end up raising rates (as it did yesterday to 17%) in order to try to fend off the reality of the market.

As I also predicted, raising rates would not work (as the UK learned to its cost when it raised rates to try to prevent it being thrown out of the ERM in 1992). The rouble is in freefall and Russia now faces imposing capital controls, further wrecking the economy.

The question that the West needs to ask itself is this, is pushing Russia to the brink of economic collapse really a sensible policy both economically and geopolitically?

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