Tuesday, September 30, 2014

Russia: Capital Control Likely To Happen, Keep The Pressure On Putin

That's right.  Make it hurt.  It looks like the Russian central bank may adopt controls to keep capital from leaving Russia and plunging its economy into a deep recession or worse.  This stemmed from the sanctions imposed by The US and the EU over Putin's ego trip into Ukraine.  If anything, this further damage the former KGB colonel's legacy and won't do squat to reintegrate his Soviet empire pipe dream.

So, what's next?  For the West, we keep the pressure on.  We give him wiggle room so the dude can save face but that's the least of his worries as he'll soon face pressure at home as the Russian economy further falls into a recession.  Just how far it'll go depends on whether Putin cares more about himself or his people.  You and I know what the answer to that is.

Furthermore, it may push Russia into China's arms.  And China itself faces some difficult decisions over the Umbrella Revolution in Hong Kong.  Two repressive regimes deserving of each other. 

However, Putin has done the political math.  Look weak in the short-term but turn Russia around and join the West or become a second-class citizen in China's hegemony.  Because believe me, Russians will not be treated as equal partners by the Chinese.  And Beijing would be just fine with that.

Source:  Bloomberg.

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