sábado, 28 de febrero de 2015

Mensajes desde Kiev

El blog “Mish’s Global Economic Trend Analysis” viene posteando seguido sobre la situación económica en Ucrania, claramente fuera de control en estos últimos días. Acá va una seguidilla de mensajes que le envían los lectores desde Kiev (http://globaleconomicanalysis.blogspot.com). El primero es del 25 de Febrero:

Título: Ukraine Hyperinflation; Currency Plunges 44% in One Week! Actual Black Market Rates; Poroshenko Gives "Ultimatum" to Central Bank to Fix Exchange Rate

Texto: I hear various reports of what the hryvnia actually trades for on the black market in Ukraine. I believe the reports, but they come in piecemeal.

Today, I have an actual black market link to share thanks to reader Oleg from Crimea. In response to “Ukrainian Currency Comparison: Budget Rate vs. Official Rate vs. Interbank Rate vs. Street Rate”, reader Oleg Writes:

-Hello Mish! There's more to the black exchange rate than meets the eye in Ukraine.

First of all if you use the "legal" currency exchange places you can only exchange up to 3000 hryvnias per day. Then there is an extra tax on the exchange.

None of that applies at the black market of course. Often black market outfits operate from the same official currency exchange kiosks, you just need how an what to ask for.

A number of "online exchanges for people" sprang up where people say how much of what they have and what they ask for it. Of course, such sites are subject to manipulation.

I am from the Crimea originally, and I am grateful it's no longer at the top of the news.


Currency Limits

The official foreign exchange limit is 3000 hryvnias per day, down from 15,000 a year ago. That's less than $100 a day. That limit is posted in Changes in Currency Control Rules (in English).

The Exchange Tax, not in English, is up from 0.5% to 2.0%.

In a second email Oleg comments: "It's a pretty widespread practice to ask around when you need to sell dollars/euros because there are tons of willing buyers at a very competitive price compared to official exchange places. Of course, going straight to the black market is risky in many respects. However, importers frequently turn to such exchanges because they need currency and cannot obtain it by official means."

Black Market

As I said previously, no one gets the "official" rate exchanging hryvnia for dollars other than corrupt banks officials taking advantage of the rigged system.

I am not sure who gets the interbank rate and in what quantities. But anyone who needs hard currency above and beyond what they can get at the interbank rate has little choice other than the black market sites that have sprung up.

Black Market Exchange Site

Please consider the appropriately named Black Market Exchange.

The site amusingly warns "Please note that the violation of the order and conditions of sale and purchase transactions of foreign currency, the perpetrators of such violations shall be liable in accordance with Art. 162 of the Code of Administrative Offenses, according to which the illegal purchase, sale, exchange, use of currency values ??as a means of payment or collateral - entail a warning or a fine of thirty to forty-four times the income of citizens with confiscation of currency values."

The way it works is by phone. You see an exchange rate you like, make a call to the posted phone number, meet and do a deal.

The word "course" translates as "exchange rate". Some of the offers are nonsensical. Scroll down to offers that have a strike-through. Those allegedly represent completed transactions at the shown rate.

I do not believe some of the executed transactions. Others look reasonable.

Currency Converter

The Currency Converter, part of the same website, seems more reasonable.

Rates Revisited

Yesterday, I noted The Dollar on the Interbank Market was Fixed at Around 33.5/USD.

Ukraine's international newspaper, The Mirror (available in English), reported on February 16, Ukrainian Government Changes Rate to UAH 21.7/USD in 2015 Budget.

The "official" rate yesterday was 28.29/USD.

I can now complete a table whose last line yesterday read like this "Street: Unknown but assuredly higher". We can now reasonably quantify "unknown".

Exchange Rates

2015 Budget: 21.1
Official: 28.29
Interbank: 33.5
Street: 38.5

All of the above for Monday, 2015-02-24.


At the beginning of 2014, the exchange rate was 8.21 per dollar. From 8.21 to 38.5 is a decline of 78.6% in just over a year.

This morning in Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands? I quoted "Ellen" who lives in Kiev.

Ellen, who lives in Kiev writes "Today $1 is worth 36 hryvnias on the black market. A Week ago it was 20 hryvnais. No one knows where the bottom is. People buy anything just to get rid of hryvnias."

That's a decline of 44.44% in one week! And if you use the 38.5 black market rate, the weekly decline is 48%.

In my book, that is hyperinflation, complete with that attitude that does with it: "People buy anything just to get rid of hryvnias."

And where will it stop?

Full Scale War

Ukraine's deputy foreign minister announced a "Full Scale War" on Saturday.

For details, please see "Prepare for Full-Scale War" says Ukraine Deputy Foreign Minister: "With What?" asks Mish; Ukraine Lie of the Day.

Ukraine is broke. It has no means to fight a war. Nonetheless, Ukraine is dedicated to fighting the impossible to win war, with foreign currency reserves dwindling.

Insistence on more fighting will produce more of the same results. Except now the US is involved in a not-so clandestine way (See Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands?)

Poroshenko Gives "Ultimatum" to Central Bank to Fix Exchange Rate

To put the finishing touches on the hyperinflation story, at a live press conference on the currency market, Poroshenko ordered the Chairman of the National Bank and the Finance Minister to Stabilize the Hryvnia at the "Budget" Rate of 21.5 hryvnia per dollar.

During an online broadcast, Poroshenko issued an ultimatum demanding the head of the National Bank of Ukraine, Valerie Gontareva, stabilize the hryvnia at a level which was guided by Cabinet in approving changes to the 2015 budget.

Poroshenko is not only a military fool, this rate change by mandate while fighting a stupid war proves he is an economic fool as well. Of course Mish readers knew that long ago.

I advise Hontaryevoyi to get out of Ukraine while she still can.

Addendum - Street Rates in Lviv

Reader John, who speaks Ukrainian, and whose father payed a key role in the Ukrainian resistance in WWII, has a sister who lives in Lviv, a beautiful town in Western Ukraine. He got "street" rates from his sister, just moments after I posted the above.

John writes: Hello Mish, My sister just returned from grocery shopping and advised that prices have further skyrocketed and are getting outrageous. The population will be subsisting on potatoes and beets and not much more.

Street Rates

SELL 1 USD = 25.00 UAH
SELL 1 EURO = 28.00 UAH
BUY  1 USD = 39.00 UAH
BUY  1 EURO = 45.00 UAH

Ukraine faces an IMF funding decision on March 11. Clearly it's not going well. I knew that was the purpose of the ultimatum. John provided the date.

Black market street rate in Lviv is now 39-to-1 if you want to buy dollars.

El post que sigue también es del 25/ 2:

Título: Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands?

Subtítulo: Free Speech Vanishes - Total Media Thought Control

Texto: I have a couple emails from Ukraine to share, one from two days ago, one from yesterday. Both are from "Ellen" who lives in Kiev (name changed).

Two Days Ago From Ellen: “As you know, the Debaltsevo pocket situation is resolved. It's not as bad as it could have been in terms of casualties. However, this was a crashing defeat of Poroshenko's generals.

I don't know how many more losses our society can take, but people are very angry. Currency keep plunging every day. Today it takes 30 hryvnias to buy one US dollar. It seems we have default without official announcement of it.

There is a new problem: total media thought control. In Ukraine we used to have free speech, but not any longer. War propaganda is everywhere and if someone doubts official policy, the journalist will be cast out or put in prison.

It is worse now than under Yanukovych. There is an atmosphere of fear everywhere. Today, a new law was passed, and now the president can switch off any TV news channel, any paper.
Total mobilization is underway. Anyone who refuses to join the army will go to jail.

Putin opened the border for Ukrainians who don't want to join the army. Millions of men from Ukraine went to Russia. Not many want to go to war. One defeat after another discourages people.

Many think Debaltsevo was breaking point. Some say separatists will take new areas with less resistance from Ukrainian army. Hard to say. Many think Mariupol, a city of 400,000 people is next. If separatists storm Mariupol it will be a bloody mess world haven't seen for long time.”

UAE Sells Arms to Ukraine, Currency Plunges More

Yesterday From Ellen: “News today is Ukraine will buy arms from UAE, perhaps arms that Americans previously sold to UAE. Poroshenko signed the contract, but we do not know what exactly Ukraine is buying.

It seems pretty much like Ukraine is in default. Today $1 is worth 36 hryvnias on the black market. A Week ago it was 20 hryvnas. No one knows where the bottom is. People buy anything just to get rid of hryvnias.

The only thing missing from a default is the announcement. I guess Poroshenko waits for bail out money from IMF and America. No one is in a hurry to bail us out because they know the money will be stolen by our corrupt officials.

We never seen prices rise so fast. Poroshenko came to power with 1 dollar around 9-10 hryvnias and now it's 36. Meanwhile his chocolate factory profit has gone up 8 times. His friends are also doing very well. People in Ukraine are very angry. Maybe this anger will be out on the streets soon.

Best regards, Ellen

No-So Clandestine US Weapons Shipments

Colonel Cassad describes UAE anti-tank offerings in Arms supplies to Ukraine.

“Given that Obama, despite pressure from the Pentagon and the Senate, has not yet taken a decision, it seems that a "buffer" scheme has been activated, whereby a country dependent on the U.S. is prepared to ship arms to Ukraine, essentially becoming a sort of middleman through which American weapons systems are sent to Ukraine. These can come in the guise of "arms from the UAE", with the U.S. seemingly uninvolved.

Specifically, the UAE has the BGM-71 TOW US antitank system, long ago discussed in relation to the pumping up junta troops' defensive lethal weapons.”

TOW Anti-Tank Missiles

BGM-71 TOW Description: Wikipedia describes the BGM-71 TOW as a "Tube-launched, Optically tracked, Wire-guided" anti-tank missile. First produced in 1970, the TOW is one of the most widely used anti-tank guided missiles."

An optical sensor on the sight continuously monitors the position of a light source on the missile relative to the line-of-sight, and then corrects the trajectory of the missile by generating electrical signals that are passed down two wires to command the control surface actuators.

Lethal Aid

On February 7, Stratfor wrote US Considering Lethal Aid to Ukraine:

“A significant portion of the anti-tank weapons Ukraine owns are old and likely inoperable. Moreover, only a few effective weapons such as the 9K115-2 Metis-M, indigenous Skif missile and RPB-29 are in its stockpiles. If the United States or its NATO allies were to transfer Javelin anti-tank guided missiles or heavier crew-served TOW missiles to Kiev, it could give Ukrainian troops a credible capability against separatist and Russian heavy armor.”

That just happened. Expect Russia to respond in kind. And expect more deaths.

Renewed Fighting Around Mariupol

Earlier today Yahoo! News reported Ukraine Rebels Fill Hospital as Clashes Flare Around Mariupol: http://news.yahoo.com/ukraine-rebels-fill-hospital-clashes-flare-around-mariupol-193156428.html

US Radar System Falls Into Rebel Hands?

One of the problems in sending top-notch equipment to Ukraine is what happens to it. For example Colonel Cassad reports:

"Among the trophies in the Debaltsevo area was a damaged American mortar counter-battery radar system.  The junta claims that during the flight of the 128th Brigade its soldiers were able to wreck it. But there is some doubt seeping through these claims. It is likely that the radar, in one condition or another, passed into the hands of the Novorossia Armed Forces, which means that it will get to Russia and be studied, as happened with American hardware captured during the Olympic (2008 Russia-Georgia) war."

I do not know the equipment, or the significance, but if Cassad thinks it happened, history suggests it probably did.

Say Something Against the Draft - Go to Jail

Ellen commented "Total mobilization is underway. Anyone who refuses to join the army will go to jail".

It's a bit worse than that. If you call for a boycott of mobilization, you will be arrested.

Please consider Prosecutor Calls for Arrest of Journalists who Protest Mobilization.

“In mid-January, journalist Ruslan Kotsaba recorded a video in which called for the abandonment of the mobilization.

His wife reported that he had been arrested on suspicion of "SBU gosizmene". The adviser to the chairman of the SBU Markiyan Lubkivsky commented on the detention of journalist as follows: "Given that the actions R.Kotsaby there are signs of a crime under Part 1 of Article 111 and Part 1 of Article 114 of the Criminal Code, he announced that suspicion."

I need a better translation of "??" vs. Google translation of "suspicion of SBU gosizmene".

I suspect that phrase and/or Part 1 of Article 111 and Part 1 of Article 114 pertain to treason or subversion.

Anti-Draft Agitation - Eight Years in Prison

Here's a literal headline translation that's easy to understand: "For Agitation in Social Networks Against Mobilization Can Collect Up to 8 Years".

Conscription of Minivan

Here's a final post that shows who we are supporting.

The prosecutor's office in Kharkov starts Criminal Proceedings on a Corporation's Refusal to Turn Over Minivan for Military Use.

“In Kharkov, prosecutors opened criminal proceedings on the failure of one of the companies within the mobilization region to transfer a minivan for the needs of the APU.

The prosecutor's office of the Frunze district of Kharkov started criminal proceedings under Part. 1, Art. 364-1 (abuse of authority by an official of the legal entity of private law) of the Criminal Code against the leadership of one of the machine-building enterprises of Kharkov.

According to the District Attorney Stanislav Pieve, officials Ltd. refused to give within the framework of the mobilization for the needs of the Armed Forces of Ukraine technique.

"At the request of the district military office to provide vehicles in the company announced its absence. However, as it turned out, the management of concealed information about the presence of a van," - said Pieve.

Hiding a Minivan

Sheesh. From the last paragraph above, it appears this company was charged because it concealed a minivan.

For now, I believe this type of thuggery is primarily happening in Eastern cities not under separatist control. I don't think they would dare do this in Kiev yet.

If they did, I would expect an uprising if not takedown of Poroshenko. Recall that Ellen said "Maybe this anger will be out on the streets soon."

The problem is, the asshats associated with Poroshenko are even worse than he is.

Read more at http://globaleconomicanalysis.blogspot.com/2015/02/emails-from-kiev-free-speech-vanishes.

Este último post, a su vez, es de ayer:

Título: Panic in Ukraine Over Food, Empty Stores and Protests; Strategic Food Reserve Empty

Texto: Here's a brief update from "Ellen" who lives in Lviv, a city in Western Ukraine.

“Hello Mish

We have quite a panic over the collapse of currency. People buy any food product that can be stored. Everyone wants to rid of Hryvnia. We haven't seen anything like this since 1991 when the Soviet Union collapsed. Stores are empty.

It is hard to say what exchange rate this days, somewhere between 34 and 42

There were riots in downtown today. A group of protesters was beaten up by police. They marched through downtown and gave a last warning to government officials. Next time they said they will shoot some officials.

Ukraine is on a brink, but the West is not in a hurry to give us money. Perhaps they want something.  Maybe they know the money will end up with corrupt officials who will steal it.

Either way, the few billion dollars they promised in March won't save our economy, not after this panic started.

Best wishes, Ellen”

Strategic Food Reserve Empty

A curious thing happened today. To quiet protests over food, president Petro Poroshenko ordered the minister of the food reserve to fill the shelves of stores with flour, sugar, canned meat, and buckwheat from the reserve.

Well guess what? There was no food in the reserve. It has either been looted (like the vanishing gold), or it was fed to the army.

Here is a nice translation from Russian by J. Hawk: Ukraine's Strategic Food Reserve... Runs Out Of Food.

“Ukrainian food prices are rising at a rate faster than in the ‘90s. But the Yatsenyuk government is still blaming the situation on the ignorance of the population and speculation by supermarket chains.

They used to blame currency exchangers, now they are blaming supermarket directors. However, you can’t feed the people with such tales.

The government’s “economy block” hastily summoned the director of the Ukrainian State Reserve Vladimir Zhukov. They demanded that he open the storehouses and fill the shelves with flour, sugar, canned meat, and buckwheat from its stores. In response the keeper of Motherland’s strategic stores revealed a terrible military secret to Yatsenyuk and Poroshenko: the storehouses are empty.

It would seem Ukraine’s Black Hour is here.

J.Hawk's Comment: There indeed were earlier reports that the strategic reserve was being "unsealed" to support military operations on the Donbass. The army has to eat, after all, and maintaining several tens of thousands of soldiers for nearly a year is likely to make a dent. The second factor was the junta's desperate need to earn hard currency to somehow plug up the many budget holes opened up by its adoption of "European Choice" neoliberal economic policies. Therefore anything that could be sold, was sold, including Mariupol's huge grain reserves. Finally, there's the small matter of corruption. One gets the impression Ukraine is a giant organized style "bust-out" operation, whose objective is to stash as much loot in foreign accounts and then leave the mess for someone else to clean up. To say that the Kiev junta has some kind of a strategy would be giving them entirely too much credit. It's a collection of loosely coordinated individuals pursuing their own venal agendas and living hand-to-mouth, without any thought given to Ukraine's long-term prospects.

Here is a link to the original article that J. Hawk translated: Ukraine State Reserve Doesn’t Even Have Buckwheat. Everything was Stolen.

Buckwheat is a Russian staple. I believe, "out of buckwheat" would be the equivalent of Japan being out of rice.

Mish note: One person accused me of bias over the word "junta". I did not choose the word. I quoted someone, just as I quote Colonel Cassad.

In context, it certainly appears J. Hawk went out of his way to not just translate, but to mention the possibility reserves were unsealed to feed the army.

Read more at http://globaleconomicanalysis.blogspot.com/2015/02/panic-in-ukraine-over-food-empty-stores.

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