Newton’s third law says for every action there is an equal and opposite reaction. Since things became tense between Ukraine and Russia, we’ve been getting a primer on the relative strength of diplomatic, economic, financial, and military actions and reactions. (more…)
Russian President Vladimir Putin sure has stirred up a hornets’ nest. Why is annexing the Crimean Peninsula and possibly Ukraine, such a priority for the Russian leader? When asked, Putin has indicated Russia’s military influence is necessary to protect Russian-speaking populations in Ukraine. However, The Economist has a different take on Putin’s actions: (more…)
Okay, so Russia sending troops into Ukraine’s Crimean Peninsula did unsettle world markets. At least it did on Monday.
Like a diver plummeting off a cliff, markets in various parts of the world lost value last Monday as investors responded to the possibility of war between Ukraine and Russia. The New York Times said it like this:
“The escalating crisis in Ukraine created turmoil in global markets on Monday, hitting stocks from Wall Street to Ukraine and causing a spike in oil and natural gas prices that could reach into consumers’ wallets. But despite fears that the conflict between Russia and the West over Ukraine could shift into a military confrontation, analysts said there was little risk of global financial contagion or of major blowback to Western economies.”
Perhaps that was the reason markets generally did so well during the rest of the week. That and the fact Russian President Vladimir Putin seemed to pause for a breath and, possibly, a reconsideration of strategy after the Russian stock market lost about $58 billion on Monday. (That’s more than the cost of the Sochi winter games.) There were other economic consequences, too. A rapid decline in the value of the ruble led to a sharp rise in short-term Russian interest rates, and the Russian central bank was compelled to spend about $12 billion defending the country’s currency.
Meanwhile, back in the United States, the bull market celebrated its fifth birthday. During the last five years, the value of investors’ holdings in U.S. stocks has increased by about $16 trillion, according to Wilshire Associates as reported in Barron’s. As if that weren’t remarkable enough, last week the Federal Reserve reported the net worth of U.S. households rose by nearly $3 trillion during the last quarter of 2013. It’s enough to make you wonder whether the cost of quantitative easing, which expanded the Federal Reserve’s by more than $3 trillion, was worth it.
If you think Russia could have found a colder place to hold the winter Olympics than Sochi, where the average January 2014 temperature was 51° Fahrenheit, you’re right. In some Siberian towns, negative double-digit temperatures are considered the norm during winter months. If you thought Russia sending troops into Ukraine’s Crimean Peninsula would unsettle world markets, you would have been wrong. (more…)
