Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. Also available as a podcast.
March 21, 2022 — The surprising strength of economic sanctions deployed multilaterally against Russia this month has been exceeded only by the surprising strength of the heroic Ukrainian resistance to the invasion of their territory. True, it is hard to imagine sanctions bringing the Russian economy to its knees faster than Russian troops are able to complete the hundred-mile advance to Kyiv from the border. But sanctions have gone macroeconomic. Ultimately, the Russian economy will suffer severely and lastingly.
In December 2021, two months before troops entered Ukraine, US President Joe Biden warned that severe sanctions would impose “a terrible price” on Russia: “I made it absolutely clear to President Putin … that if he moves on Ukraine, the economic consequences for his economy are going to be devastating.” Many viewed these threats as exaggerated rhetoric, a threat without much credibility behind it.
It was possible to see why. At least since the turn of the century, US presidents have had a poor record of matching word and deed in foreign policy. There were even more grounds for skepticism regarding warnings from Europe. Germany, for example, had spent the preceding decade making itself more dependent on Russia for its energy. Altogether, western sanctions imposed when Putin seized Crimea in 2014 had not had the desired effect.
More generally, most international sanctions historically have accomplished relatively little. Experts tend to view them usually as just a way for a country to register a clear protest, one of the few options in between armed intervention and doing nothing. But this case is different.
* * *
It is easy to lose track of the impressive variety of sanctions that have been trained on the Russian economy. They can be classified into roughly seven categories.
- Russian exports of oil and natural gas. A lesson from the history of sanctions is that they need to be multilateral to succeed. On March 8, Biden formally banned US fossil fuel imports from Russia. This step was not very impactful in itself: The US gets little of its energy from Russia; and in any case the global market makes oil fungible. But it was necessary for the global effort.
On the same day, the UK announced that it will phase out its imports of Urals crude by the end of the year. Most important is the EU, especially Germany, which gets much of its energy in the form of natural gas pumped through pipelines from Russia. The first dramatic signal that multilateral sanctions would be serious this time came February 22: the unexpected, but welcome, decision by German chancellor Olaf Scholz to suspend the Nord Stream 2 pipeline. The EU, also on March 8, announced plans to cut its gas imports from Russia 2/3 by the end of 2022 (not yet oil), and more later.
It is too bad that China has chosen the wrong side. But the EU and other countries that back sanctions bought more than twice as much of Russia’s oil last year as did China and other countries not backing sanctions.
Russia seeks to deploy economic weapons of its own. Does a boycott against a country have different effects from an embargo by that country? What determines whether a severing of trade links takes the form of a reduction in global demand for Russian oil, thereby lowering its price and maximizing damage to Russian oil producers, versus a reduction in the supply of oil from Russian producers, raising the price they receive? (“You can’t fire me. I quit!”)
My colleague Ricardo Hausmann has a smart idea for how to inflict maximum damage on Russia, and minimize damage on oil-importing countries. The US, Europe, and an alliance of others could drastically reduce their collective demand for Russian oil and gas, not via a quantitative limit, but via a punitive tariff. He mentions a tariff rate as high as 90 %. Rather than the windfall of a higher price accruing to Russian producers, the tariff revenue would go to the importing governments – who could turn around and domestically distribute it in crowd-pleasing ways.
- Penalties against other Russian exports. Canada on March 3 became the first to suspend Russia’s status as a Most Favored Nation trade partner, in order to apply higher tariffs on its products. (All WTO members get the favorable MFN standing, excluding a few rogue states. But under the rules it can be suspended on national security grounds.) The US, EU, and the rest of the G-7 countries have followed suit.
- “Self-sanctioning.” Many multi-national corporations are getting out ahead of their governments, avoiding business with the pariah nation. This is why Urals crude is selling at a steep discount relative to the Brent benchmark index.
- Embargo on exports to The country is dependent on some particular products of US and European firms, especially technological goods like semi-conductors, lasers, navigational equipment and telecommunications equipment. Being cut off from these exports is likely to inflict severe damage on Russia’s economy, including its military. A prominent example is spare parts for American-built airplanes, without which even domestic air travel is likely to become increasingly difficult over time.
Closely related is the withdrawal of foreign investors, that is, the suspension or termination by western companies of operations that they had set up to sell into the market locally. PepsiCo, Unilever, Zara, Ikea, and Goldman Sachs are just a few such corporations. More are likely to follow.
- Financial sanctions. Intended to be a central component of the last effort, in 2014, the effects of financial sanctions turned out to be rather limited. Worse, the Moscow government spent the subsequent seven years building up its financial defenses. With the aid of substantial current account surpluses, Russia’s central bank accumulated $643 billion worth of international reserves, equal to an impressive 40% of GDP [$1,500 billion]. Furthermore, the Bank of Russia, almost alone among central banks, deliberately shifted the composition of its international reserves out of dollars, and into renminbi, other currencies, and gold (22 %).
Before the invasion, cutting off Russian banks from the global financial system, via the SWIFT messaging system or otherwise, seemed an ambitious goal. In the event, the US and its allies were able to accomplish that and a lot more. The US Treasury, together with the EU, Japan, other G-7 countries, Switzerland, Korea and Singapore,. jointly took unprecedented bold action on February 28. They denied the Russian authorities (the central bank plus the sovereign wealth fund) access to their foreign exchange reserves and other overseas assets, thereby disarming the carefully prepared defenses.
As a result, the ruble plummeted 30%, on top of earlier declines, bringing it below one cent in value. The depreciation will rapidly feed into inflation, which was already running 9 % (in the 12 months up to February).
- Sanctions on elites. For some years, penalties targeted at key individuals have been a growing component of “smart sanctions.” This time, the sanctions are notable for including Putin himself and for getting serious about depriving oligarchs of their ability to travel freely and of access to their overseas assets, including real estate in London and yachts in the Mediterranean.
- Much of the world is shunning Russian participation in international sporting events and cultural activities. This might matter more than we economists think it does.
* * *
A macroeconomic perspective can help tie things up. The three biggest categories of sanctions — namely penalties on exports from Russia, penalties on imports into Russia, and financial sanctions — could be viewed as three different mutually enforcing ways of achieving the same objective. Even to the extent that Russia is able to physically ship or pump oil and natural gas out of the country, that is of little benefit if it cannot get paid for it. And even to the extent it is able to get paid for its oil, the money is of little use if an embargo prevents it from buying needed imports.
The steps enumerated here will re-orient economies away from Russia on a long-term basis. An LNG terminal in Europe, once built, will not be unbuilt. The 11th-largest world economy will be 11th-largest no longer, falling behind Brazil and others in the GDP rankings. The Russian standard of living will be severely impaired; but beyond that, so will the country’s geopolitical leverage. If the Kremlin leadership had an ounce of sense — which, evidently, it does not — it would think ahead, see the eventual outcome, and call off this unprovoked and tragic invasion.
This post written by Jeffrey Frankel.
Menzie has come out many times against tariffs saying they are counterproductive, but if European nations do that this time, well that’s okay?
The US, Europe, and an alliance of others could drastically reduce their collective demand for Russian oil and gas, not via a quantitative limit, but via a punitive tariff. He mentions a tariff rate as high as 90 %. Rather than the windfall of a higher price accruing to Russian producers, the tariff revenue would go to the importing governments – who could turn around and domestically distribute it in crowd-pleasing ways.
Well, that could be said for any tariffs anyplace. Collect the money and send it back out. Who defines “crowd-pleasing”? What would be “crowd-pleasing”? Rebates on taxes? That would please me. Free Krispy Kreme donuts? That would be unfair to diabetics.
How about if Europe and the U.S. and an alliance of others drastically developed their own internal sources of the “stuff” they import from Russia? You want more of something produced locally? Then restrict it less and tax it less. Then let the market distribute the results in “crowd-pleasing” ways.
“Menzie has come out many times against tariffs saying they are counterproductive”
This is so incredibly not true. Look Bruce – Dr. Chinn works very hard to make his posts informative. So could you just once try to understand what he has written before writing such an incredibly incomplete, stupid, and dishonest statement?
Free Krispy Kreme donuts?
This made me laugh as one could get a Krispy Kreme donut if one got vaccinated. Except there are not Krispy Kremes in Brooklyn. But I hear from your neighbors that you are protesting your local Krispy Kreme for its attempt to get people vaccinated. After all to a MAGA hat wearing like you – getting vaccinated is a Communist plot.
BTW – the original Bhagwati paper was published in 1965 and he published a 1968 journal article as a follow-up. Of course Kelly Anne Conway has banned you from reading either.
Menzie’s point is most often, if not always till now, that trade sanctions are counter-productive as economic policy; the home country doesn’t benfit economically from imposing sanctions on other countries. His (and Frankel’s) point now is that sanctions will weaken a criminal regime so that the regime may regret its criminal action and will certainly lose capacity to commit crimes now and in the fuure.
Did you not grasp he difference? Or did you simply choose to ignore it?. Same question as always for you – ignorant or dishonest?
It is comical that you pretend to have anything to say about anything.
He is definitely both ignorant and dishonest. Tariffs are clearly counterproductive to the GDP growth of both parties. However, the goal is not always GDP growth. Sometimes reduced GDP is the price one country is willing to pay in order to hurt/punish another. When tariffs are designed by someone who know what they are doing, the economic self-harm can be much less than the harm inflicted.
Russia has clearly demonstrated that it is a very dangerous rouge nation. Adding tariffs will cost the west some money, but it is a price we are willing to pay to reduce the size of Russias economy to a point where Putin can no longer be a credible threat to Europe.
“He is definitely both ignorant and dishonest.”
There does seem to be a consensus on this but please Bruce Hall is also very persistent flaming his various disinformation campaigns. Why he spread COVID-19 disinformation – one can only speculate except that is what Trump minions do. Now this disinformation campaign is to the benefit of Putin so maybe the persistence of how much Putin is paying Bruce Hall.
Lucy,
My “disinformation” has become more and more accepted as actual “information”. But feel free to stick with your narrative.
• CDC recognizes the limited usefulness of masks [Walensky]
• CDC recognizes vaccinated persons can be infected (viral load) and infectious (transmission) [Fauci]
• CDC data shows children are least affected by COVID (928 COVID-related deaths over more than two years for children under 18-years old out of more than 1 million total COVID deaths) and vulnerable to vaccination consequence (heart problems) [VAERS] makes vaccine mandates for children questionable at best.
Now, back to the real present issue. NATO is now planning to move a significant amount heavy military equipment into the Baltic countries. What will be the Russian response? Now think it through before you respond. We’ve been attempting to cripple the Russian economy (your oil tariff proposal is another form of provocation) and now NATO wants to poke the bear with an implied increased threat in the Baltic states.
https://www.euronews.com/2022/03/22/us-ukraine-crisis-nato-newnormal
This is all about Russian perception and mentality whether or not you or I or anyone else agrees with them and we had better recognize the importance of that perception when we take actions.
https://edition.cnn.com/2022/03/22/europe/amanpour-peskov-interview-ukraine-intl/index.html
Ironically, we refused to arm Ukraine with large weapon systems (opting for infantry shoulder-fired weapons) which would have been a deterrent against the Russian invasion. Then NATO kept the pretense that they were going to welcome Ukraine into the fold which Russia saw as a provocation. Perhaps we wanted Russia to be bogged down in a proxy war. Is the plan to have another proxy war in the Baltic states? Yes, the Russians are the aggressors. Without a doubt. But what role did NATO play in escalating the situation? What role did the US, half the planet away, play? Imagine our reaction if China created “security alliances” with Central and South American nations… or Cuba. They may have already taken the first step. https://www.voanews.com/a/china-expands-influence-in-central-america/6456733.html
At what point does Russia view the West’s actions as an existential threat… economic ruin… military threats… international isolation? At what point does Russia say, “fuck it”, and use what they have been holding back to “remedy” the situation? Tactical nukes? Is that then followed by general warfare?
Ivan,
Thank you for pointing out that: >Russia has clearly demonstrated that it is a very dangerous rouge nation. Adding tariffs will cost the west some money, but it is a price we are willing to pay to reduce the size of Russias economy to a point where Putin can no longer be a credible threat to Europe.
So, when Trump placed tariffs on Chinese products because they were thought to be a “credible threat” to US national interests, that was okay? See, that’s the problem with intent. You can take the same economic action and say it is noble or ignoble depending on which side of a debate you want to take. If tariffs are bad because they cause the people in the country which imposes the tariffs to pay higher prices, then they can’t be good of themselves. You have to rely on an external factor (a “bad actor”) to justify your action. Then you are caught in a bind when someone else defines your side or your ally as a “bad actor” to justify the same action.
You remember how NATO justified the bombing of Serbia because they were “bad actors” toward the Albanians living in their country? Well, the Russians used the same justification for bombing the “bad actors” in Ukraine who were supposedly mistreating the Russians in Eastern Ukraine. It’s not pleasant when your own justifications come back to haunt you. It only shows that, in the end, it’s always an “us good; them bad” argument. In these examples, I would argue that the those doing the bombing were both “bad actors” just as with tariffs, they are counterproductive economically… cut off your nose to spite your face.
“At what point does Russia view the West’s actions as an existential threat… economic ruin… military threats… international isolation? At what point does Russia say, “fuck it”, and use what they have been holding back to “remedy” the situation? Tactical nukes? Is that then followed by general warfare?”
You actually think Putin is the victim here? First of all – this is stupid but then we are talking about Bruce Hall who writes nothing but stupid things. But more importantly – you are JohnH must be in a competition for Putin’s favorite pet poodle. Trent Lott would have a good name for both of you – traitors.
Of course if Putin goes nuclear, you will blame us for hurting his poor little feelings.
Bruce Hall Please read and understand macroduck‘s response. In general tariffs make no economic sense, which is why Trump’s tariffs didn’t make any sense. Trump and his clueless MAGA supporters wrongly believed that tariffs would have positive economic effects. That’s very different from Hausmann’s proposed tariff. In this case the objective is to inflict economic damage via tariffs, but doing so in such a way that Russia feels most of the pain. Understand the difference?
2slug,
So, it is just a matter of “who suffers the most” with you rather than questioning the entire strategy of mutual economic pain? Why isn’t military confrontation against military aggression just as justified? Why do you support Biden’s decision to not send military aircraft to the Ukrainian Air Force? Oh, because then we are in danger, too. So, better to let the Russians kill thousands of people and destroy a country’s infrastructure and economy as long as we don’t have to get involved, right? We can still feel morally superior because our sanctions hurt them more than us, even if it did nothing for the people being invaded.
Yeah, let’s just say I read MD’s defense of the above, but I just don’t agree with it.
Hey Brucie – we know you never read what Hausman wrote and even if you did, his clear explanation of the incidence of a tariff on Russian oil is going to be WAY OVER your feeble ability to comprehend. So I decided to make this really easy for Putin’s favorite little poodle:
‘A punitive global tax on Russian oil – at a rate of, say, 90%, or $90 per barrel – could extract and transfer to the world some $300 billion per year from Putin’s war chest, or about 20% of Russia’s 2021 GDP.’
Reducing GDP from $1.5 trillion a year to only $1.2 trillion a year would put a hurt on Putin’s regime, which is probably why you really hate this idea. We trust Putin gave you an extra bone yesterday.
Lucy,
Who pays that $90/barrel? Not Russia.
“The US, Europe, and an alliance of others could drastically reduce their collective demand for Russian oil and gas, not via a quantitative limit, but via a punitive tariff. He mentions a tariff rate as high as 90 %. Rather than the windfall of a higher price accruing to Russian producers, the tariff revenue would go to the importing governments – who could turn around and domestically distribute it in crowd-pleasing ways.”
When we were all a lot younger – didn’t Bhagwati write a seminal article on tariffs v. quota noting what would have been the tariff revenues for the importing nation’s government could end up in the hands of the producer if we used quotas in lieu of tariffs? So yea – a steep tariff on Russian oil would be a good idea.
Is Mosler’s idea of offering Russia US statehood a better idea? Is the MMMT (Modern Mother%<《$ing Monetary Theory) solution of Universal Generous Inflation-proofed Dollar-denominated Basic Income even better? What if you laid individual Russians not to obey Putin's orders and beamed in (i.e. Starlink) uncensored internet so Russians could self-organize?
What if you paid individual Russians not to obey Putin’s orders and beamed in (i.e. Starlink) uncensored internet so Russians could self-organize?
rsm,
More realistically, I suggest we have President Biden shoot into Moscow on a beam of light and offer Putin some Krispy Kremes for stopping the invasion. That ought to work at least as well as what you propose here.
How realistic was giving Ukraine uncensored, unjammed internet, before Musk did it?
Why does anyone listen to anything economists say about anything? Are we addicted to dismality?
So, in one sentence, you suggest nobody listens to economists, and in the next that everybody listens obsessively to economists. That’s some high-quality thinkin’ right there.
“The first dramatic signal that multilateral sanctions would be serious this time came February 22: the unexpected, but welcome, decision by German chancellor Olaf Scholz to suspend the Nord Stream 2 pipeline. The EU, also on March 8, announced plans to cut its gas imports from Russia 2/3 by the end of 2022 (not yet oil), and more later.”
The “unexpected” in the first part does not really make sense: The capacity of NS1 and the other pipelines was not fully used end of 2021, therefore, suspending NS2 means that Russian NG exports require working pipelines via Ukraine. Therefore, war may mean self inflicted damage to exports, the step was actually expected but does not inflict direct damage by the EU. It was a political signal.
The reduction of NG importes of course damage Russian economy because pipelines chain sellers to buyers, a substitution of the EU is not possible. However, a higher demand of the EU for LNG will affect many of the current importers of LNG.
nordstream 2 is part new capacity and part redundancy, more reliable supply for the german.
did the german shut down nordstream 1? i have not heard?
the german has unilaterally kept buying russian gas, and the russians keep sending!
how they keep the pipeline through kiev running for russian economic advantage is interesting!
curiouser and more curiouser!
“how they keep the pipeline through kiev running for russian economic advantage is interesting!”
The Ukrainians also have an interest to get NG. 🙂
Yes the situation is strange, but no surprise for me.
Experiments are necessary to validate theory. I would love to see Hausmann’s idea tried.
But not now. We know that confronting Russia’s criminal behavior will be economically expensive for the rest of the world. We have to accept that. The first priority is aiding Ukraine. Second is avoiding harm to he rest of the world.
We should try to impose as much cost on Russia as possible with as little cost to ROW as possible. In the very short term, though, getting agreement, working out compliance, assessing impact and diplomatic messaging take effort. As much effort as possible aimed at hurting Russia, with as little second guessing as possible, is needed. I favor grinding away at Russia’s capacity to commit international crime long after hostilities end in Ukraine – plenty of time for experimentation.
Holy Cow!
pgl, Kudos. That was so different than your normal, fact-free comment.
Sanctions are more effective than everyone [in the so-called Free World] getting on Zoom and singing in unison “imagine.”
Well done piece, Jeffrey. I have no particular disagreements.
My main concern/caveta has to do with the degree to which all this will filter down to the “average” Russian, the non-Muscovite or major urban person who really believes the now total state media propaganda, outlandish as it is, with some reports saying Putin’s support level has actually risen since the invasion started, although I view those as not all that reliable, and I suspect those were taken in the immediate aftermath of the invasion, with support likely to weaken as time goes on and the various initial favorable forecasts clearly become discredited.
Anyway, I think your final point that what may make your Russian equivalent of our “heatland MAGA” types sit up and notice might well be the banning of Russia from international sporting events, with banning from the Wotld Cup the one that might make your most “regular” and normally apolitical types sit up and notice. That is sort of like banning the US from having the super Bowl, a very big deal for lots of people there. Hard to know how that has sunk in yet, although, of course, the government is going to claim that “everybody is out to get us” and many Russians do have a sort of victim mentality that will go along with that.
Regarding the economic impacts, I suspect that the effects on those outside major urban areas will not be all that great, and they can be again written off by appealing to wartime suffering and needing to resist the meanie outside world out to get them and under the thumb of Nazi NATO, etc. It is ironic that the people most likely to be impacted negatively by cutting off imports and multinational company operatinos will be those urban intellectual types who have been anti-Putin for some time. More rural types will probably not see shortages or only somewhat more rapidly rising prices for basic fundamentals like housing, clothing, food, and energy. Again, cutting Russia out of World Cup competition may upset them more than shutting down McDonald’s or reducing the amount of oil income going into Russia that they were not getting anyway.
Support for the leader always to up when a country enters major military conflicts. That has been used by GOP sitting presidents just before reelection time. However, if/when the population begin to feel real pain from that conflict, they begin to ask whether it was really necessary.
However, we have to be careful not to be so effective that we allow Putins narrative of “the west is trying to destroy us” to be cemented into the Russian publics mind. If the Russian masses begin to see this as an existential fight against the west for the survival of Russia – then Putin will gain support.
Meanwhile, can we please, please put some effort into making virtue of necessity when it comes to hiher prices for fossil fuels?:
https://www.commondreams.org/news/2022/03/20/unthinkable-scientists-shocked-polar-temperatures-soar-50-90-degrees-above-normal
“Scientists expressed shock and alarm this weekend amid extreme high temperatures near both of the Earth’s poles—the latest signs of the accelerating planetary climate emergency.”
Among his multitude of MAGA hat dishonest screeds, Bruce Hall’s latest is to criticize Biden’s proposal to raise carbon taxes from a paltry $10 a ton to a more effective $50 a ton. Reasonable people like you might suggest $50 is actually too low. But poor little Brucie can’t stand the fact that this corrective to the negative externality highlighted here might make him pay a wee bit more for gasoline. Is Brucie boy too stupid to get externalities or just another totally self centered MAGA type?
We’re holding Republican voter registration drives at gas stations in the county.
Without masks I presume. Who knew T. Shaw is today’s Typhoid Mary!
It seems to me that the high tariffs would accomplish the same thing as an embargo. As Mr. Frankel points out, the rise in price wouldn’t go to Russia, but instead to the importing country. The price of oil would likely still rise. Russia would still reap a windfall, but not as much. That’s my non-technical take on it.
Being cold blooded about it, watching this unfold has been fascinating and baffling. It has been one surprise after another for three weeks with no likely end of the surprises.
The literature on the distributional impacts of quotas v. tariffs dates back to the 1965 and 1968 papers written by Jadesh Bhagwati. I’m sure our host has some excellent lecture notes which could be applied to this particular idea.
https://www.msn.com/en-us/news/politics/watch-a-former-bush-appointed-judge-praises-ketanji-brown-jackson-for-upholding-the-rule-of-law-which-is-literally-under-attack-in-ukraine/ar-AAVkNoO?ocid=msedgntp
A Republican with definitely strong credentials highly recommends that Ketanji Brown Jackson be placed on the Supreme Court. Now if we have a few Republican Senators who bother to listen rather than their usual pandering to the traitor in Maro Lago.
Bah! I call it sanction theater.
I’ll believe they are serious about sanctions when they confiscate anonymous mansions in London and New York. I’ll believe they are serious about sanctions when they frog-march Swiss and London and New York bankers down the street in handcuffs for facilitating money laundering. I’ll believe they are serious about sanctions when they ban anonymous shell corporations in Delaware and anonymous billionaire trusts in South Dakota. I’ll believe they are serious about sanctions when they close the hedge fund loophole for know-your-customer rules that allows them to do business with anonymous billionaire investors with absolutely no reporting.
It’s all international strutting and posturing but when you get down to it, for the individuals involved, it’s just shadowy business as usual.
I am not going to get into the tariff versus simple banning debate but do want to note that while many sanctions regimes have not been effecrtive (still waiting for the Cuban government to fall after how many decades of them by the US?), we have seen some that have been effective. The key is to get enough nations on board to really make them work, as well as having them properly targeted, whatever mechanism they use.
So two successful ones we have seen have been South Africa and Iran. The former, getting going seriously in the 1980s, involved the vast majority of nations in the world, including pretty nearly all of South Africa’s major trading partners. We know indeed that they contributed to a persistent negative GDP growth situation in the nation that fed into the rising anti-apartheid movement and played a major role in weakening the resolve of apartheid’s defenders. They worked.
The other was the sanctions regime put in place in 2011 by President Obama with the support of leading EU nations as well as Russia and China against Iran to bring it to the negotiating table for nuclear weapons. These indeed also led to a declining Iranian economy, which led to the election in 2013 of the relatively moderate Rouhani as president, who indeed entered into negotiations that led to the JCPOA agreement in 2015. The sanctions were removed (althoguh ones by the US tied to human rights abuses remained on), and the Iranian economy shifted to positive GDP growth while adhering to the agreement. Of course, Trump undid all this in 2018 by withdrawing from the agreement and reimposiing sanctions, essentially forcing the Europeans to go along with them despite them opposing his move. Iran has since enriched more uranium than ever, and the Rouhani government has been replaced by a hardline regime. As it is, the economy rerturned to negative growth, and there have been reneweed negotiations with a renewed agreement possible.
So economic sanctions can have a real impact if enough nations are involved, and it looks like a lot are involved with these against Russia. The economy will be severely impacted, even if as I have suggested, the impact on some portions of the population might be limited somewhat.
I had to laugh at this. Economists seem so cocksure of the dire consequences for the Russian economy which they barely know, but mostly ignore the serious potential blowback on the US economy, which they claim to understand in depth.
Yves Smith starts to peel that onion, which is a lot bigger than economists seem to realize. I believe the word Yves uses for the potential problem is obliquity.
https://www.nakedcapitalism.com/2022/03/russia-sanctions-trade-shock-fulfilling-the-fears-of-smoot-hawley.html
JH,
You may be laughing, but the link you provided is basically worthless. It is true the sanctions hurt those imposing, but there is no doubt they will hurt the Russian economy more than those imposing them. The problem, as I have noted, is that Putin may for awhile be able to use this to mobilize his people against the meanie outsiders out to get them, much as in Cuba the US sanctions have provided a permanent excuse for chronic economic failure.
JohnH and Bruce Hall are a like in one way – they see this invasion of Ukraine as opportunity to make jokes. Rather disgusting in my view.
Lucy,
I don’t joke; I challenge… especially one-dimensional thinking.
You seem awfully cocksure about who’s cocksure – claiming “economists” barely know this and only claim to know that when you so clearly never know what you’re talking about. How did you, the dullest tool in the drawer, become so full of yourself?
Here’s a thought: Do the work. Go find out how much of Russia’s income relies on energy exports. Go find out Russia’s microchip demand is met by domestic production. See whether it’s possible to figure out how much harm sanctions can do.*
I don’t actually think you’re able to do this sort of research, but maybe it will keep you busy for a while – like giving a barking dog peanut butter.
*Or just ask an Iranian, ya dope..
How about addressing the issue that Yves Smith and I raised? As of last week, the only people addressing blowback to the US on Project Syndicate were Farid Zakari (not an economist) and Nouriel Roubini. definitely and economist.
One of the reasons that a lot of economists got inflation so wrong was that they just dismissed supply chain issues as something that would just cure themselves in shorter. They didn’t bother to dig deeper. Yves Smith did post a piece, which I linked to, that talked about how intractable the problem was.
The same could happen with Russian supplied materials that a tightly integrated world depends on. But what I see is a whole bunch of economists celebrating prematurely about how we’re going to get those damn Russians this time! And damn the torpedoes, which we’ll just ignore in our fervor for getting Putin!
JohnH: I believe it is “Fareed Zakaria”.
By the way, re: no economists on blowback — some guy wrote:
That guy is “James Hamilton”, who runs this blog. I believe you did not read his post (it’s at the very end of the blogpost). In fact, I’m not sure you read at all.
Ummm—I did not say that no economists wrote… But I did say “ the only people addressing blowback to the US on Project Syndicate were…”
IMO publishing on Project Syndicate is a pretty good indicator of establishment economists’ conventional wisdom…and the paucity of analysis on the blowback on the American economy is telling. In a democracy, shouldn’t open discussion of benefits as well as costs of a public policy be of paramount importance?
JohnH: Oh, I didn’t understand that PS was your indicator. Must confess, I don’t have a subscription, don’t read.
Perhaps the esteemed economists here could suggest a site whose intent is to engage an educated public in matters of economics and public policy.
“ Project Syndicate, which Ezra Klein described as “the world’s smartest op-ed page,” provides commentaries on a wide range of topics, from economic policy and strategies for growth worldwide to human rights, Islam, and the environment.”
https://en.wikipedia.org/wiki/Project_Syndicate
Other sites, tend to be oriented towards insiders, feature one or two economics columnists, or publish economics opinion pretty randomly, resulting in a highly fragmented engagement of economists with the educated public. Or perhaps economists, like the Obama administration, prefer to shun public engagement and instead focus on the insider game? This would certainly not be good for democracy, which requires a highly informed electorate.
“One of the reasons that a lot of economists got inflation so wrong was that they just dismissed supply chain issues as something that would just cure themselves in shorter. They didn’t bother to dig deeper.”
A LOT of economists addressed supply chain issues. But of course you are too lazy to have noticed as usual. Huh – a lot of those discussions appeared on this very blog. But did JohnH read these posts? No – he was too busy writing his usual gibberish about how dumb economists are. Troll extraordinaire.
“IMO publishing on Project Syndicate is a pretty good indicator of establishment economists’ conventional wisdom”
JohnH doubling down on his usual stupidity. Now I would say Project Syndicate beats those “economists” at the National Review and on Fox and Friends who JohnH prefers to listen to.
Oh wait – James Hamilton wrote something on this topic on this very blog but that does not count as it did not appear on the front pages of the NYTimes.
Yeah, it’s true that a LOT of economists threw out the words “supply chain.” But few went beyond the catch phrase to actually dig into what was really going on or what the likely impact would be. Most just blithely assumed that the free market would solve the problem in short order…without understanding the intractable nature of some of the root causes.
Supply chain managers saw the problem as anything but transient months before Powell and his arsenal of economists, but who listens to supply chain professionals? (They have the wrong credentials.)
Cavalier economists seem to be going down the same path by ignoring the potential for a wide range of problems (not just oil) arising from sanctions on Russia.
“Go find out how much of Russia’s income relies on energy exports.”
Hausman has done the work and presented it in the paper Dr. Frankel linked to. Alas JohnH is too lazy to bother to read what is already in front of his own nose.
OK macroduck. ““We are experiencing a major crisis,” IEA Executive Director Fatih Birol said at a press conference on Friday. “Oil markets are in an emergency situation. And not only that — it may even get worse than today in the next few months.” https://www.bloomberg.com/news/articles/2022-03-18/iea-says-world-could-ease-russia-oil-crisis-by-restricting-cars
IEA lays out a plan for a 2.7 million reduction of consumption. Ain’t gonna happen. The ghosts of Jimmy Carter loom large in politicians memory, so nobody will implement what’s required to achieve it.
From what I can see, economists here have downplayed the severity of a potential shortage. At least they examined it. But what about wheat, uranium, fertilizer, computer chip raw materials, and a lot of stuff that hasn’t occurred to them to look at yet? Where are et he economists who are factoring in these additional, potential problems?
There are lots of economists opining about Russia’s economy. which is not their specialty…even though we how yet to see much about the US economy, which presumably they do know something about.
So far as I can see, they are MIA, preferring to be patriotic rather than look at the costs of sanctions, they cheer Biden’s economic war. As with military warmongers, they never see an economic war they didn’t like because they ignore the economic downside.
“From what I can see, economists here have downplayed the severity of a potential shortage.”
Is your name Mr. Magoo? Oh wait – the only thing you watch is Fox and Friends where no economist is ever featured. Do you even realize that everyone here knows you write the dumbest comments ever? Seriously dude – a little self awareness might do you good.
As I expected, you really weren’t up to the task of doing simple research. Instead, you found some other people who did research (Roubini) or who didn’t do research, but you tyought maybe they did (Yves Smith). Then you go with “from what I can see” and “far as I can see”, which is pretty much a statement of the problem – you don’t see so good. You’re opinions aren’t worth much, however persistently you noise them around.
Macroduck: you’re always free to refute my assertion by linking to economists who have actually assessed the blowback of sanctions…but you’re apparently too lazy…or those analyses don’t exist.
When economists shun their responsibility to analyze the effects of public policies, others like Yves Smith step into the void.
Macroduck: you’re always free to refute my assertion by linking to economists who have actually assessed the blowback of sanctions…but you’re apparently too lazy…or those analyses don’t exist.
When economists shun their responsibility to analyze the effects of public policies, others like Yves Smith step into the void.
‘So far as I can see, they are MIA, preferring to be patriotic rather than look at the costs of sanctions, they cheer Biden’s economic war. As with military warmongers, they never see an economic war they didn’t like because they ignore the economic downside.’
This is clearly Putin’s invasion of another country. But of course Putin has hired JohnH as his chief spokesperson. Hey JohnH – how are you quarters in the Kremlin?
So patriots are supposed to be “good Germans” and not ask about the costs offer Führer’s policies?
JohnH,
So are you actually suggesting here that “the Fuhrer” in all this is Biden and not Putin? Woe, you really are a bot.
It does seem that there are some Russians standing up against the actual fascist in this situation, the latest apparently being former top economic adviser and official, Anatoly Chubais, now apparently resigned from his latest position and having left Russia. Do you think economic officials in the US should be resigning and leaving the US to protest the higher prices of oil and wheat and potash arising from the sanctions the US is imposing on Russia for Putin’s unjustified war criminal invasion of Ukraine? Is causing oil prices to be higher a war crime equivalent to unjustifiably invading a neighnring nation and bombing maternity wards and theaters containing children?
JohnH
March 23, 2022 at 1:53 pm
One of the many STOOPID replies to Macroduck. And of course his nonsense replies to me. This troll never shuts up – does he? A complete waste of time. But to compare Biden to Hitler? Yes – JohnH is Putin’s favorite little poodle.
The troll who told us Putin would never invade chirps
An pgl’s assessment of the impact of sanctions on the American economy is? Nada. Just the usual jibber jabber.
Gee JohnH – I actually decided to read what people like Dr. Hamilton wrote and actually made a few comments on his excellent analysis. My apologies for not acting like you – which is to NOT read as you are too dedicated to chirping nonsense like your latest.
Funny…I didn’t see any mention of wheat, fertilizer, nickel, silicon, uranium, or the other critical inputs to the global economy that Russia exports. Supply chain disruptions? Inflation? Where’s the analysis of the potential disruption?
Economic growth and inflation do not depend on just oil prices and monetary policy. Apparently pgl still doesn’t understand the lessons of the supply chain disruptions of the past year…little inputs can cause major disruption and inflation.
JohnH
March 23, 2022 at 7:11 pm
Another childish pointless rant from the troll that never quits. Dude – EVERYONE hear is laughing at you.
Your boy tells us that unarmed Ukrainians would not be harmed? You are delusional
Cocksurety: finally a subject with which you have a deep personal acquaintance.
Hausman: “At issue is something called tax incidence analysis, which is taught in basic microeconomics courses. A tax on a good, such as Russian oil, will affect both supply and demand, changing the good’s price. How much the price changes, and who bears the cost of the tax, depends on how sensitive both supply and demand are to the tax, or what economists call elasticity. The more elastic the demand, the more the producer bears the cost of the tax because consumers have more options. The more inelastic the supply, the more the producer – again – bears the tax, because it has fewer options. Fortunately, this is precisely the situation the West now confronts. Demand for Russian oil is highly elastic, because consumers do not really care if the oil they use comes from Russia, the Gulf, or somewhere else. They are unwilling to pay more for Russian oil if other oil with similar properties is available. Hence, the price of Russian oil after tax is pinned down by the market price of all other oil. At the same time, the supply of Russian oil is very inelastic, meaning that large changes in the price to the producer do not induce changes in supply. Here, the numbers are staggering. According to the Russian energy group Rosneft’s financial statements for 2021, the firm’s upstream operating costs are $2.70 per barrel. Likewise, Rystad Energy, a business-intelligence company, estimates the total variable cost of production of Russian oil (excluding taxes and capital costs) at $5.67 per barrel. Put differently, even if the oil price fell to $6 per barrel (it’s above $100 now), it would still be in Rosneft’s interest to keep pumping: Supply is truly inelastic in the short run. Obviously, under those conditions, it would not be profitable to invest in maintaining or expanding production capacity, and oil output would gradually decline – as it always does because of depletion and loss of reservoir pressure. But this will take time, and by then, others may move in to take over Russia’s market share.”
A really nice discussion of the incidence of the proposed tariff on Russian oil. Hausman continues with his excellent analysis:
“In other words, given very high demand elasticity and very low short-term supply elasticity, a tax on Russian oil would be paid essentially by Russia. Instead of being costly for the world, imposing such a tax would actually be profitable. A punitive global tax on Russian oil – at a rate of, say, 90%, or $90 per barrel – could extract and transfer to the world some $300 billion per year from Putin’s war chest, or about 20% of Russia’s 2021 GDP. And it would be infinitely more convenient than an embargo on Russian oil, which would enrich other producers and impoverish consumers.”
Is this last sentence correct? This is where Bhagwati’s early writings on quotas v. tariffs comes in.
This is not so straightforward as in fact US has been buying Russian oil partly because its type fits our refineries. Not so obvious substitutes are quite as available as Hausman claims. And in the short-run, as Jim Hamilton noted, demand for oil in general is quite inelastic.
Hausman has overseen a lot of useful data gathering on trade compositions by country. But I think his analytical arguments are somewhat overrated, frankly.
I think taxing is a lot better – even if a part of it is transferred to consumers. With banning the cost is almost 100% transferred to consumers because it create a shortage. I also think the proceeds from the tariffs should for the most part go to rebuild Ukraine (let Russia pay for that).
It is a very good thing that Trump is no longer commander in chief:
https://www.msn.com/en-us/news/world/trump-says-he-would-send-nuclear-submarines-to-go-up-and-down-russia-s-coast-to-pressure-putin/ar-AAVlAda?ocid=msedgdhp&pc=U531
First of all – he is clueless about the nuclear arsenals of Russia v. the US. And of course his idea that we could put Chinese flags on US fighters and trick Putin is about the dumbest most dangerous idea ever with only one exception. That exception is the latest bone head suggestion from this complete moron. Yes we have nuclear submarines but come on man – can someone get Donald J. Trump a damn map. What Russian coast – it is virtually a land locked nation with exception of a short coast along the Black Sea.
Trump needs to see in Maro Lago and keep his ignorant yap shut.
can someone get Donald J. Trump a damn map.
He’d only take a Sharpie to it and redraw the borders to his liking.
Trump’s comment is dumb. But in fact Russia has by far the longest coastline of any nation in the world, with only Canada rivaling it (actually Canada might beat it, close call). Start at Vladivostock, go northeast to the Bering Strait, then west across the northern coast of the Eurasian land mass all the way until one hits Norway. That is Russian coastline all the way, a very long distance.
In the winter the coast line you note is all ice
pgl,
Not around Vladivostock, although that is far from the main part of Russia.
https://www.globalsecurity.org/military/world/russia/warm-water-port.htm#:~:text=Novorossiysk%2C%20Russia%27s%20largest%20warm%20water%20port%20on%20the,Northern%20Sea%20Route%20from%20Southeast%20Asia%20to%20Europe.
This discussion notes that much of the foreign affairs of the Tsars was driven by a desire to one day have a warm weather report. I realize Donald Trump is too stupid to know this but I am a bit dismayed that Barkley seems not to have gotten my simple point. Having a port on the Artic Ocean is not exactly that useful during the winter months.
OK, pgl, Vladivostock is ice locked during winter, but it is open three quarters of the year. But do note that the original context of this discussion was Trump’s unwise suggestion that the US send its nuclear submarines to patrol Russian coastline to threaten Russia. This does not only apply to portions of that coastline that are “warm water ports.” A section that is open at all for any period of time is a candidate. You and surprisingly 2slugbaits somehow missed this and suggested that aside from the Black Sea section there simply is no coastline at all that could ever be patrolled by nuclear submarines. It is true that we are now only at the end of winter. But soon increasingly large portions of its coastline will be open, and in summertime very large portions of it are open.
This was just a silly sideshow. And, as it is, even if a port is iced over, a US nuclear submarine could easily operate from a further out location and still threaten Russia, e.g. out into the Sea of Japan from Vladivostock, even when it itself is iced in. The problem with Trump’s suggestion was never that somehow US nuclear submarines could not threaten Russia from near its coastllines.
pgl,
Oh, and while we are at it, Murmansk in the north is ice free year around, even if St. Petersburg further south is not. But the Russian navy uses Vladivostock year round. They use ice breakers to get in and out. But, again, for threatening nuclear submarines they do not need to enter an ice free port to threaten. They can do so from further out where there is no ice, although for most of the northern coast the Arctic Ocean is iced over for most of the year.
Let me put all this in perspective. The ptoblem with Trump’s comments was not his stuff about the coastline. It was that we should be threatening Russia at this point with what is on our nuclear submarines, which are strategic, not tactical nuclear weapons. The subs do not even need to be near a coast, that is their point. They float around far out in the oceans away from shore, where somebody might spot them and get them. They are the ultimate deterrent, able to fire ICBMS to strategic targets even if DC and our planes and land-based missiles are gone. They do not need to go near any coastline to make that threat, indeed, they should not be doing so. Tramp talking about having them do so was stupid on multiple levels, but most importantly in that no way a US prrz would follow through on such a threat, to destroy the world if Putin did not immediately stop his invasion. Would be a total fail.
As it is, one can get pretty close to St. Petersburg, even in the height of winter, if one wanted to threaten a coast. The port is iced in during winter, but the Gulf of Bothnia and most of the Gulf of Finland that St. Pete is on are not.
He really think that Russia is not aware that we can rain nuclear weapons on them any time? This guy had his fingers near the red button, yet is clueless about the strategic terror balance and think it is something you could get some kind of gain from playing with? Thank god we have a competent leader in the white house at this time.
https://www.msn.com/en-us/news/politics/us-ukraine-quietly-try-to-pierce-putin-s-propaganda-bubble/ar-AAVncsO?ocid=msedgdhp&pc=U531
A story on how Ukraine and the US are countering the persistent lies from Putin. Now I wonder when this campaign is going after the pro-Putin poodles here (yes Bruce Hall et al. – we are calling you out).
Lucy,
Yes, tech communications providers such as Microsoft, Apple, Facebook, Twitter, et al can and do have an outsized influence on public opinion. We saw that in the US in 2020. But those “lies” to which you refer are often positions from a different perspective. For example, were the “lies” about Hunter Biden’s laptop which were effectively censored by those communications providers really lies? Or were they information that could be harmful to the favorite son of the communications providers?
https://www.msn.com/en-us/news/politics/the-new-york-times-admits-authenticity-of-hunter-biden-s-laptop/ar-AAVcQ2V
But, hey, here is your chance to once again shoot the messenger without actually addressing the message.
Meanwhile, back at the energy supply problem…
Apparently, there is a stew of territorial, immigration and gas supply issues that has Spain in a bind. Algeria, which provides Spain with a large part of its natural gas supply, is in a long-standing territorial dispute with Morocco, which shares a border with Spain’s last (?) territorial holding in Africa.
Till now, Spain has remained neutral in the territorial dispute, but Morocco is using immigrant flows to pressure Spain, and Spain has folded, backing Morocco’s claim.
Reuters reports Algeria cares more about gas exports than border politics, but that’s speculation. Haven’t hard fri Algeria yet:
https://www.reuters.com/business/energy/algeria-seen-unlikely-use-gas-pressure-point-spain-row-2022-03-22/
ltrʻs last comment appears to be on March 4, now 18 days ago…
Are you telling us that Xi decided to imprison her for utter incompetence?
Interesting observation. I have just checked, and it looks that she last posted a couple of times on March 7 on a thread that started on March 4, with her last post being about China hosting the paralympics. Curiously on that thread and day our very own Moses Herzog made his repeated claim again that ltr is a “he,” which I chastised him for two days later. I doubt this comment by Moses drove her off, but who knows?
I have my own reasons for thinking she is still lurking about on the internet, although I am not sure. In any case, this is a curious development, and while her repeating of CCP posts got tiresome, she made many useful and informed comments on many other matters. I, for one, will miss her if indeed she has left us for good for whatever reason.
BTW, I never thought she was a paid agent. She might have moved to China, but it was clear in the past that she had lived in the US and I think initially grew up here and was educated here. But, who knows?
Oh, ltr/anne, wherefore art thou?
Hausman also notes: “According to the Russian energy group Rosneft’s financial statements for 2021, the firm’s upstream operating costs are $2.70 per barrel.”
I tried to use the link but it seems for now such links to the financials of the Russian oil giants are failing to work. I tried the other day to check out the financials for Lukoil and had the same issues. It seems we have cut off financial reporting for publicly traded Russian oil companies!
https://www.newsweek.com/ted-cruz-ketanji-brown-jackson-crt-1619-project-1690686
Ted Cruz used his time questioning Ketanji Brown Jackson to grand stand to the racists who he must consider his base. I get there have been some incredibly racist Senators during our long history but Cruz is campaigning to be the most racist baffoon ever.
would they please hurry up and get russian oil off the market.
i need to short energy so i have cash to buy the recession!
There is a common intellectual failing behind a lot of the hand-wringing over sanctions. There are situations in which no good outcome is available. We often refer to these situations as “news”. That’s how we got the expression ” no news is good news.” The intellectual failing is to think at people who have to deal wih situations in whih yere is no good outcome are to blame for bad outcomes. Yes, sanctions on Russia will cause harm outside Russia. Failure to use sanctions would leave the rest of the world with either no response or war with Russia as the only alternatives. See? No good outcomes.
Brucey and Shawshank and Nameless wann to blame Biden. Johnny wants to blame economists. (Doesn’t he always?) Equally dumb. Neither Biden nor economists are to blame for the fact that there are no good outcomes when a nuclear armed, commodity-exporting criminal regime attacks its neighbors.
It has long been understood that trade sanctions are an alternative to war. Trade sanctions don’t cost as mqny lives, but they still involve costs. Belly-aching about he cost of trade sanctions implies one of four alternative views:
– War is preferable. This was the position Shrub supporters took with regard to the second Iraq war. Nice job, guys
– No response is preferable to either trade sanctions or war. Tha appears to be the view held by anonymous in comments here, as well as perhaps by some others.
– Trade sanctions are appropriate, but we are using the wrong ones. More on this below.
– Who the heck cares? This is the position of comment brats who just like to annoy others. A prime example is Johnny squacking about mean old economists when millions of Ukrainians are under seige and thousands are dying.
So the view that trade sanctions are appropriate, but we are using the wrong ones is apparently at the heart of the sanctions against Russia. Trade sanctions have been criticized as largely ineffective, something countries do when they want to appear to be doing somethig, but don’t want to go to war. War by proxy is another alternative to direct military conflict, but an alternative that has been pretty terrible for the proxies. So what’s an alliance to do?
NATO leaders and their allies seem to have decided to rehabilitate trade sanctions as an effective alternative to war. Sanctions have twice brought Iran to the negotiating table. Those sanctions were draconian. Both Putin and the punditocracy seemed to think sanctions against Russia would be toothless. Instead, a big old set of fangs have been sunk into Russia’s economy. The examples of Iran and Russia may change the future of economic diplomacy. Evidence that NATO and her allies have the stomach to absorb economic hardship in support of their international interests puts heft behind future warnings of sanctions.
https://www.msn.com/en-us/news/politics/republicans-are-attacking-a-dark-money-group-s-support-for-ketanji-brown-jackson-despite-blocking-democratic-led-bills-to-disclose-donors-at-least-10-times-since-2010/ar-AAVn8Ac?ocid=msedgntp
So an organization named Demand Justice thinks Ketani Brown Jackson should be on the Supreme Court. So does a lot of highly credential Republicans but it seems the racists in Trump’s little cult has decided that Demand Justice is DARK MONEY supporting a dark woman I presume. But wait – the issue of getting rid of dark money in politics is something the same Republicans have blocked at every turn. After all Trump packed the Court with right wing Federalists had picked by right wing DARK MONEY groups. Ah but those dark money groups are made up of white people so I guess that makes it cool.
One could argue that the most, deeply ironic, successful sanction was the American oil embargo, which was the key trigger in Japan going to war with the United States.
“the fact that there are no good outcomes when a nuclear armed, commodity-exporting criminal regime attacks its neighbors.”
How can economics even account for such an irrational action? If one irrational actor can shock prices, how much information do prices actually contain? If prices are so efficient why wasn’t Putin priced in already?
Why does economics completely fail to explain this war? Is it because economics is junk science, really equivalent to psychics, at best?
You are not only an idiot – you are now writing some very disgusting garbage. Go somewhere else little troll.
rsm,
You do know that there are probability distributions, right, and that events can occur in the tails of these distributions?
Putin had himself convinced, with none of the sycophants around him daring to doubt it, that his forces would easily subdue the Ukrainians. I noted here before he invaded that even Xi in China was concerned after their meeting in Beijing that he seemed to have the idea that his forces would be welcomed as liberators, much as Bush thought about American ones in Iraq. I note that it looks like much of official US militaty and intel opinion, which was accurately forecasting that he would invade big time, also agreed with this, which lay behind the move of the US embassy out of Kyiv, a move I opposed because I both thought US should show support for the Ukrainian government and also that if there was an invasion the Ukrainians would do better than forecast, which has come to pass.
Also, even though US leaders was forecast that Putin would invade, most observers on the ground in Ukraine and elsewhere thought this was unlikely, or that what was more likely was a much smaller incursion probably focused on the Donbas region and expanding the territory controlled by the separatist republics, something that would have been not illogical given Putin’s recognition of them. But he followed that recognition with his lying claim that the Ukrainian govenment was a bunch of Nazis engaging in genocide in those republics, thus justifying a full-scale invasion to de-nazify the place, which has failed.
In any case, a priori it was not completely irrational of Putin to make the invasion, given what he and even US intel thought would be the outcome ,a quick and easy victory for his forces, although the US was busily trying to help the Ukrainians prepare a post-conquest resistance, something that also had the Ukrainian government somewhat annoyed with, along with the US moving its embassy to Lviv, whic his getting bombed anyway.
As it is, prices reflect current information. Oil prices were lower when the markets were expecting Putin would not make a full-scale invasion. When he did invade, then they rose sharply on the basis of the new information. What is unreasonable about this? Looks like the markets are working pretty well, frankly.
As for your final question, why is it the role of economics to “explain this war”? That is driven by egomania and geopolitical ambitions inspired by the writings of the fascist Aleksandr Dugin. Nothing to do with economics, or not much. Big deal.
You really ask completely silly questions most of the time. If your brother was as stupid as you are, no wonder he is dead from making bad investments. Sorry.
From Delong an article: The Economics of the Second World War.
A section was not encouraging about economic sanctions. At least back in those days.
Bruce Hall is having a hard time to get a date with another dude so he writes this?
Bruce Hall
March 24, 2022 at 9:38 am
Lucy,
My “disinformation” has become more and more accepted as actual “information”.
He spins a few bullet points that are more lies about COVID19without links to the real discussion. I guess even members the gay community refuses to date a serial liar.
Bruce Hall writes an incredible amount of stupidity as in his review of the Ukraine situation. First this moron writes: NATO is now planning to move a significant amount heavy military equipment into the Baltic countries.
But no – NATO is not doing enough. After all those weapons that we have already given Ukraine that have killed 15 thousand Russian soldiers already are not the right kind of weapons? Could he be more stupid. Well yea!
“This is all about Russian perception and mentality whether or not you or I or anyone else agrees with them and we had better recognize the importance of that perception when we take actions.”
This Putin poodle is worried about how his boss feels? Seriously? The death of Ukrainians are not important to Bruce Hall? Go figure!