Cory and I would like to know if you folks would like to hear from Roger Wiegand in future editorials. Please do weigh in on this question.

Here is the upcoming front page from Trader Tracks:

HIS REPORT WILL BE IN TRADER TRACKS NEWSLETTER PUBLISHED 12-5-14

Trader Tracks Newsletter Comments on Russia 12-2-14

Bad Stuff Happens When You Play with Unintended Consequences.

Russian Woes Worsen as Recession Looms With Banks in ‘Panic’

“Russia’s economic crisis deepened as the government acknowledged it’s heading for recession and a former central banker spoke of “some panic” in the financial system as oil prices plunged.” Roger: Oil dominates as income for Russia. They are taking a triple beating with low oil prices, nasty Western powers’ sanctions and an overall Greater Depression II trading malaise. Some would say who cares but this drastically affects Europe already in the tank. When Europe collapses, they can take down New York Global banks who extended massive loans to the ECB and individual nations. Falling Dominoes!

“Speaking a day after President Vladimir Putin said Russia scrapped a proposed $45 billion pipeline to Europe, the government predicted the economy contracts next year and canceled a bond auction. It was forced to pledge 39.95B Rubles ($740 million) to support OAO Gazprombank, at least the third lender to secure a capital injection since U.S. and European Union sanctions curbed their ability to borrow.  Roger: Russia is economically unraveling with unprecedented speed.

The economy is succumbing to penalties imposed over the conflict in Ukraine as the plummeting ruble stokes inflation and a -30 percent drop in oil prices erodes export revenue. Russia may enter its first recession since 2009 in the first quarter, according to Deputy Economy Minister Alexei Vedev. Roger: Baloney! They are deep into Greater Depression II right now!

 “The elements of instability” afflicting Russia’s economy range from structural to geopolitical, Vedev told reporters inMoscow today. “One of the key factors is the lower price of oil.” Urals, Russia’s chief export oil blend, will probably average $99 a barrel in 2014, a downgrade from an earlier forecast for $104, he said. Its price is forecast to drop to an average of $80 next year, according to Vedev. Roger: How does that compute with Western oil at $70 with and a long-range sell-off?

Gross domestic product may shrink -0.8% next year, compared with an earlier estimate of 1.2 percent growth, Vedev said. The forecasts are still preliminary and do not reflect the government’s unified position, Finance Minister Anton Siluanov told reporters in Moscow. The revised outlook shows the toll on economic output of Russia’s worst confrontation with theU.S. and its allies since the Cold War. GDP will probably shrink or show zero growth this quarter and decline in the next three months on an annual basis, Vedev said. Roger: The GDP shrinking is probably more like -5% and getting worse.

In the latest sign of the pressures facing the government, it agreed to channel aid to Gazprombank from the National Wellbeing Fund, one of Russia’s two sovereign wealth funds with $80 billion in assets. That follows decisions to help state-owned lenders VTB Group and Russian Agricultural Bank bolster their capital by allowing them to convert loans worth 239 billion Rubles into preferred shares. Profits have plunged as banks increase provisions for bad loans decline in the Ruble.

 “We will get through this situation,” said Sergey Dubinin, chairman of VTB’s supervisory board who led the central bank in 1998 during the government’s debt default. The free-floating ruble and higher borrowing costs are a “bad combination” for the Russian economy, he said at an event in London today. The Bank of Russia shifted to a free-floating exchange rateahead of schedule last month after its rules-based interventions drained billions from its currency reserves. Policy makers have also raised their main interest rate four times by a cumulative 400 basis points since March to rein in inflation.

The ruble has weakened almost -30% against the dollar in the past three months, the worst performer among more than 170 currencies tracked by Bloomberg. It extended declines today and traded -5.1% weaker at 53.8060 per dollar as of 6:36 p.m.in Moscow. Russia has been targeted by U.S. and EU sanctions with penalties curbing access to global capital markets and stoking outflows. Putin denies unrest involvement that began after he annexed the Black Sea peninsula of Crimea in March.Net capital outflows are set to surge to $125 billion in 2014, more than the $100 billion predicted earlier, according to Vedev.That would be the highest annual total since 2008, when $133.6 billion left the country, according to central bank data.

Russia may use more than 500 billion Rubles from the $88.9 billion Reserve Fund to finance the budget next year, said Maxim Oreshkin, head of the Finance Ministry’s strategic planning department. GDP forecasts of the ministries of finance and economy coincide for next year under the Finance Ministry’s “optimistic” scenario, which assumes an $80 oil price, Oreshkin said. Inflation will end the year at 9% in 2014 and slow to 7.5% at end-2015, Vedev said. The Ruble’s devaluation will contribute +2.4% points to consumer-price growth this year and +3.2% points in 2015, he said. Inflation accelerated to +8.3% in October, the fastest since July 2011.

Retail sales, predicted to grow +0.6% next year, may instead plunge -3.8%, according to Vedev. Unemployment may rise to +6.4% in 2015, more than predicted earlier, and real wages will probably shrink -3.9%, he said. “Some very strong factors have already done the damage for GDP growth next year,” Vladimir Miklashevsky, a strategist at Danske Bank A/S, said.  “Extremely tight monetary policy by the central bank, capital outflows, the weakening of the Ruble, and sanctions are contributing to accelerated inflation and the cost of capital.” –Olga Tanas, Moscow & Lyubov Pronina, London 12-2-14 Bloomberg.netRebuttal arguments by Trader Roger, Trader Tracks Newsletter on 12-2-14