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"The sanctions have already had a profound impact on the market valuations of Russian companies" And all that means is that somebody else can pick up the physi
by neilwilson 5y ago
"The sanctions have already had a profound impact on the market valuations of Russian companies"
And all that means is that somebody else can pick up the physical capital for next to nothing. Which is what the nationalisation process Putin announced allows. Essentially if the West pulls out, then the Russians will confiscate everything physical and carry on producing in the same way. All that is lost is the monetary value extraction to the West, which is then diverted to the Russian Treasury.
"Their ability to conduct a military campaign is going to be severely limited by the lack of available inputs and capital as well, in a mechanical way."
How is it? What are the Russians, Russia being a country that can put people on the International Space Station, lacking in physical terms? They always have as much money as they require because they have their own currency and it has a floating exchange rate which means that it always circulates within the Russian currency area no matter what.
That means Russia can provide whatever liquidity is required to allow internal production to continue, and the Russian tax system - which requires payment in rubles - can be relied upon to drive the system.
Russia doesn't need up to date Western equipment. Guns and bullets made 1980s style will still kill people very effectively.
So they have all the available physical inputs, and all the necessary physical capital. Monetary capital is never an issue in a nation with its own currency. Plus if the West doesn't want Russia's exports, they can move people from that industry to the War Machine.
The only people that lose there is the West. Less natural resources in circulation, higher prices, less output. China, on the other hand, gets an energy discount which will be reflected in the cost of Chinese output.
I doubt very much that sanctions will impede the Russians. What it may do is get the West to re-evaluate what they believe. In particular whether 'the mighty dollar' really is that mighty after all.
What people seem to forget is that the value of the ruble in US dollars is utterly irrelevant to Russians in Russia. The price of their bread in rubles is unlike to change because of it, nor is the availability of that bread.
If we want to stop Russia, we have to put boots on the ground. I'm not sure the West is ready to face up to that uncomfortable truth.
- mannerheim 5y ago> Russia doesn't need up to date Western equipment. Guns and bullets made 1980s style will still kill people very effectively. What about planes? Helicopters? SAMs? Drones? India has cancelled their order of MiG-29s - it seems unlikely this is because of pro-Ukraine sentiment. It could be because they no longer have confidence in the performance of MiG-29s. But most likely it is because India does not believe Russia will be able to manufacture those planes as a result of sanctions. Guns, bullets, tanks, APCs, artillery - these Russia may be able to continue to produce. But these alone are not enough to win a war against another nation-state.
- neilwilson 5y agoRussia is a country that builds rocket engines and exports machine tools They ship these things to Turkey to help build nuclear power plants. https://sdelanounas.ru/blogs/145486/ https://sdelanounas.ru/blogs/145486/ The idea that a country like Russia cannot make mere aircraft - particularly once it suspends enforcement of the West's patents and copyright - is likely wishful thinking.
- mannerheim 5y agoYet Russia has to come crawling to China for parts for airlines - who has refused to provide them.[0] Modern aircraft are rife with specialised electronics - where is Russia going to get them? Perhaps Russia will be able to build fighters up to the standards of the 1980s. But sanctions will cripple its ability to build modern fighters. Another matter entirely will be Russia's ability to find engineers who are able to design military hardware for them. They had already been suffering brain drain prior to the invasion and sanctions, and currently there is a flood of emigration. Not just to the West, but even places like Kazakhstan and Kyrgyzstan. Flights from Moscow to Tbilisi reached almost $2k. True, bread and housing will be just as available and affordable to a Russian engineer. But if he wishes for any of the comforts of the West, those will be unavailable to him. And not to mention income - for instance, Roscosmos engineers before the invasion supposedly made only around $10k a year. [0]: https://www.reuters.com/business/aerospace-defense/russia-says-china-refuses-supply-aircraft-parts-after-sanctions-2022-03-10/ https://www.reuters.com/business/aerospace-defense/russia-sa...