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Seasonal Shutdown

Well, it only took a few hours from my last comment about the blood in the Russian interbank market, before the first of the Russian banks needed rescuing. An estimated $531 million to rescue National Bank Trust is just the first order of business for the CBR. Clearly there is a huge level of work to do before the Russian financial sector can even begin to recover, even if-for the time being- the oil price seems to have stabilised at around $60/bbl.

After the crash, investors are beginning to put prices on Russian risk- and these are hugely discounted. For some Russian assets, there is simply no bid at all, so although a floor might be visible in some areas, it is still the case that international appetite for Russia is exceptionally low. This is not just because of sanctions, it is also because there is the growing realisation that the economic impact of Putin's aggressive incompetence will be long lasting, and in some sectors the damage is permanent.

Both policy makers and investors now live in a different world, and the transformation of the image of Vladimir Putin from strategic master to thuggish and incompetent bungler is almost complete.

The Russian crisis will be exercising many minds over the coming months, and although the Kremlin is in real trouble, it could be some time before any kind of deal emerges. Until then, the threat of the regime remains real and very dangerous.

I will take a break from my renewed blogging activity over the Christmas season, but will return with some thoughts on both wider Europe, and the place of my own country- the UK- within it over the coming years.

Merry Christmas.  

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