Looks like sanctions will be lifted on Venezuela.

Oil is expensive now.

Venezuela wouldn't take rubles if we tried. Ever watch the news? The ruble is dropping like a rock.

 

Yes, but once Russia takes over the Ukraine, if will control almost 50% of commodity market.
Russia is going to dictate price of ruble, not US or Europe.

 

As long as the ruble is weak, no one is going to use it if they can avoid it. If it's still dropping, everyone will be running away.. That's ignoring the sanctions, which you seem to have forgotten about..

 

Yea, but those sanctions can only work if they are applied to one country.
US cannot sanction whole world.
You do realize that countries like Venezuela, (essentially most of South America), South Africa, China etc support Russia,
After operation in Ukraine is completed, and China takes over the Taiwan, 80% of the commodities plus 80% of semiconductors will be in the hand of countries that are not friendly to the United States.
Sure US can sanction them to its own annihilation.

 

I'm doing cancer treatment and don't wear a mask 'cept at the hospital. What are you talking about?

 

So not the point.

For a number of reasons, Venezuela has little to no interest in rubles. Business across the world is dropping Russia... they are in the oil business. Russia is even having trouble finding shippers..

Don't worry, this will all be painfully obvious shortly.

 

I guess you guys do not realize what is going on.
This is the end of Globalization.
Businesses that are dropping Russia will have to drop China as well.
That essentially means those businesses will cease to exist.

 

Hardly, Covid has decreased the appetite for convoluted supply chains, so what we're looking at is simplification due to a restructuring of manufacturing. These sanctions will be temporary.

 

That is not the case. Sanctions, no matter which country imposes them, do have a global effect because of the SWIFT partnership agreements. Even China, albeit reluctantly, will comply with sanctions in place in order to stay in the SWIFT banking system. Considering that the $$$$$$ is the international currency, a collapsed ruble will mean that the $$$$$$$ will be in high demand and will only be used to exchange goods and services, even in Russia. The Russian banking system only recourse is to lower their interest rates, increase the supply of the ruble to its populace, and to hold on to the international $$$$$ reserves by any means necessary. And that will be barely enough to keep the Russian economy afloat.

 

I to pee in your cheerios, but Covid disrupted global supply chains, not change them into more simplistic ones. All the global supply chains are intertwined with each other, especially global industries such as automobiles, heavy machinery equipment, and durable and nondurable goods. What Covid did do is yank the demand for such products and services temporairily, but now, such demand is slowly increasing, cautionsly increasing.

 

Yes and no. First, there are (albeit costlier) ways to still engage in international trade even cutoff from SWIFT. Iran is totally cut off from SWIFT but still manages. Second, there are alternatives to both SWIFT and currency $ which have emerged which will now find a greater impetus for their expansion and more wide usage. Finally, these sanctions will eventually see domestic but interdependent industries relying on some foreign supplies and parts become more self sufficient and independent. This happened even in the most foreign supply reliant industry in Iran, namely automobile manufacturing where the domestic content of automobiles being produced is now nearly 100% for many/most models, even ones which only a few years ago had as high as 40% foreign content.

 

There is no other currency that is stable enough for banks to use, which is why SWIFT is so important to the nation's economy. We no longer live in a world where a singular country can isolate itself from the rest of the world. For your idea to work, that country would have to produce 100% of its raw materials, manufacture those raw materials into durable and nondurable goods, and have the populace willing to go along with the idea. That will not work. It does not work in NK because the black market controls the economy there, and it will not work in PRC or in Russia. PRC desperately wants and holds onto the US $. Crytocurrency, or any other tradeable currency does not even come close to the US $.

 

There are 3 different issues: 1- short term: Russia will face problems, just as Iran did. 2- medium term: Russia will adjust, probably even better than Iran (and Iran has adjusted) as Russia has even more going for it 3- longer term: new currencies, and alternatives to SWIFT, will be involved in a much larger percentage of trade.

As far as the domestic production, it is just an empirical fact looking at Iran's experience, backed by a lot of simple economic logic, that it will get a major shot in the arm.

 

Companies are looking to get more stability in supplies. Sometimes that's shortening the chain, other times it contracts or paying up front. But between costs and uncertainty, some shortening is expected. Sometimes that means new factories that are closer. That can take time, so we will have to wait to get the numbers that definitively tell the tale.

 

To put the issue in perspective, I will post 2 reports about Iran's automobile manufacturing industry. One from 2019 after "maximum pressure" campaign landed arguably its most effective punch (outside of currency devaluation and inflation) on Iran automobile industry, The other from this year:

https://www.automotivelogistics.med...utomotive-industry-left-to-rust/38720.article
Iran’s automotive industry left to rust
By Ian Henry17 July 2019

https://www.mordorintelligence.com/...butes around,of the total domestic production.
IRAN VEHICLE MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2022 - 2027)

https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production
List of countries by motor vehicle production

https://www.economist.com/finance-a...ng-stockmarket-reflects-its-resilient-economy

see also, e.g.
Iran Steel Production

Iran's steel sector still booming despite sanctions - Tehran Times
Iran maintains its place among world's top 10 steel producers

 

many on chemo do, as it lowers their immunity

as a cancer survivor, that went through chemo, I remember being concerned during that phase, glad covid was not around back then, wish you well on your battle with cancer

 

That's true, but more stability does not mean more simplistic supply routes. What they may do is concentrate their supply chains in more politically stable areas such as certain South American Countries, ME countries, and cerain SE Asian countries other than China. Factories located in the United States are not coming. It is too expensive to hire people here and have the ability to sell the products not only here, but globally. Would work if the products WERE only sold in the United States.

 

Of course Russia will adjust. But the more important question is how much will they adjust. To put it in comparison, a person who loses their leg from the knee down will adjust. Depending on the prostethis will depend on how much they can adjust. The more basic or cheap the prostethesis is, the less chance of getting everything back to normal before the leg was lost. Same with Russian economy. Russian can do without McDonalds, that is the "expensive" restaurant in Russia, so to speak. They cannot do without Apple or PC style computers from the West. There may be some good substitutes from China, but that would mean changing the Russian attitudes towards Chinese products. Russian consumers are worse than US consumers about their attitudes towards Chinese products.

I cannot reiterate this enough, there are new currencies. Besides the Dollar, the Euro is the second most stable currency in the world. Because of those sanctions, the Euro is not available. The British pound is not available. The Japanese Yen is not available. The Chinese Juan is pegged to the US dollar, hence those pesky sanctions. And then there is cryptocurrency, which is not stable whatsoever and would not be able to handle even the Keynan economy, let alone Russia. The Russian Central Bank wants the war to stop and thier banking system is almost at a collapse right now and may collapse in the next three months if all the sanctions remain in place.

 

I didn't say anything about making stuff here...

I did say they would "concentrate their supply chains".

 

Your view of things isn't dynamic. Changes bring other changes. Change in attitudes and spending habits. Change in production. Different routes and mechanisms to purchase those items where there is demand for imports. Iran has gone through all of it and more for a long time.

https://thediplomat.com/2022/03/can-chinas-swift-alternative-give-russia-a-lifeline/
Can China’s SWIFT Alternative Give Russia a Lifeline?
https://www.ft.com/content/e8705d48-bfea-4f95-af3b-af13c1e4305d
Iran’s experience signals banning Swift will not work as expected
It was broad financial sanctions and fines, not cutting off access to the messaging network, that had the biggest impact.

As for consumer goods, those sanctions don't work at all. There are hundreds of stores selling apples and iphones in Iran, despite sanctions so strict that even Iranians in the US and elsewhere have been refused service at apple stores. Yet, do a google search for apple stores in Tehran and you will find plenty. Or go to a tech mall in Tehran...

This report is older but nothing has changed
https://www.reuters.com/article/uk-apple-iran-idUKBRE86C0B120120713
Despite sanctions, Apple gear booms in Iran

 

You are overtly overgeneralizing the situation to meet your limited viewpoint. For starters, people naturally are reluctant to change. Some change is easy and some change is hard, depending on the facts and circumstances. I have known adults deny that they have Type 2 diabetes, cancer, and other serious illnesses. We saw this with Covid where they held the attitude "it will never happen to me." And eventually, Covid killed them or one of their loved ones. That is human psychology, without the bias towards certain viewpoints.

As for China, China has been working on replacing the US dollar, SWIFT and other avenues for at least two decades now. Even your own article states "Moreover, comprising only 3.2 percent of international transactions, the RMB has yet to make a strong argument for many global banks to join an RMB-based financial messaging network." It may work regionally, but not globally. Hence the problem. And CIPS is not allowed in most of Europe, including Switzerland, nor the US. So, I don't see this as a realistic alternative.

As for Iran, there is no sanctions in Iran for said products. However, payment for said products is the problem. Those stores deal primarily in US $ for all internaitonal transactions, not the Iranian local currency. And the average Russian will face costs of 100% to 200% if they go through the Iranian route.

That's the problem here for the average Russians. These broad sanctions are going to hit the average Russian because they cannot get money out from their bank ATMs in Russia, the Russian banks are fast running out of cash researves, especially the 7 that were booted from SWIFT, and there has already been bank runs that have severely weakened the Russian monetary system. Russians do have one thing going for them though, they are more patient than their average Western or US counterpart, but their patience does has limits. And that is too risky of a game for nearly all central bank managers in Russia.

 

There is no such thing as moral high ground except by the victorious.
We lost that the minute Biden became a absentee candidate.

 

Oil is a world pool commodity. If Russia’s crude is being somehow withheld from the pool, it will have the effect of pushing up prices prices. But allowing it in, keeps prices down (which actually hurts Russia). The big change was the ear popping drop to $25ish under Trump. That was killing Russia.
PERSONALLY, I would be worried about grain prices. That’s gonna sting.

We can afford a temporary increase in gas prices but it is stone stupid not to increase US oil output when it is a signature away. [/QUOTE]

 

Oh, if only it were a mere signature away. Alas! That is a myth.

 

Opinions are opinions and we can agree to disagree. But lets be clear on the facts: those products are most definitely subject to US sanctions on Iran! In fact, primary US sanctions prohibiting practically any form of trade involving a US person or product with anyone in Iran have been in effect for decades and where not (with minor exceptions) not lifted even under the JCPOA (which removed mostly secondary US sanctions, i.e. the ones that told other countries they couldn't trade with Iran either).

Forget sales to Iran and Iranians in Iran, even Iranians living in other countries have run into problems including buying apple products
https://www.nbcnews.com/news/world/iran-trade-sanctions-get-personal-apple-stores-flna841089
Iran trade sanctions get personal in Apple stores

https://www.huffpost.com/entry/apple-store-refuses-to-sell-ipad-to-iranian_n_1609734
Apple Store In Georgia Refuses To Sell iPad, iPhone To Farsi-Speaking Customer, Citing Company Policy

And it isn't just American companies and products: Even the JCPOA was in effect

https://www.theguardian.com/sport/2...ss-out-on-winter-olympics-samsung-smartphones

Iran furious as athletes miss out on Winter Olympics smartphones
Row after Iranian Olympians in South Korea were not given gift of latest Samsung handsets