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.
Oleg
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.
Hyperinflation?
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.”
Ellen
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.