Monday, March 17, 2014

Obama Crimea Sanctions Badly Backfire: Russians pull +-100 billion from US Federal Reserve Bank

The war of 1812 has for some, come to mind. Specifically: the sanctions by America against the British and the French, which benefited the British and hurt American business so much that USA shipping secretly attempted illegal trade. Barack Obama has announced frightening, comprehensive sanctions against 7 Russian politicians/consultants. 100 Billion US Dollars in Bonds were withdrawn from the American Federal Reserve Bank this past week, creating extensive speculation that the rich among the Russians are limiting their exposure in case of future American asset freezes, at the cost of America losing possession of 100 billion dollars, and perhaps more in normal bank accounts, which America could have used to increase her economy and security currency-wise. Maybe less talk of costs against Russians might have stopped such a capital flight. Imagine if investors withdrew 100 Billion Dollars from South Africa, would financial watchers feel concern?

'A record $100 billion in withdrawals of Treasury bills is raising speculation that the Kremlin and Russian oligarchs are yanking their money out of the United States to avoid upcoming sanctions over Ukraine.
'The massive outflow over the past week came as President Obama and other top US officials repeatedly warned Russia would face a “cost” if it didn’t reverse course in Ukraine.
'The total amount of foreign-held US Treasury securities dropped to $2.86 trillion — lowest in more than a year.
'Last year, the most moved out in a week was $32 billion.
'Analysts said that if the switch was made by Russia, it would represent about 80 percent of that nation’s US Treasury holdings.
'“This is only speculation on our part, but it seems likely that the Russian authorities had more than $100 billion of Treasury debt in custody at the Fed, and it doesn’t seem implausible that they moved it to a jurisdiction where it would be less vulnerable to a US asset freeze,” Lou Crandall at Wrightson ICAP LLC told The Wall Street Journal.'
(New York Post | 'Treasury bills hints at Russian move' at 15 March 2014

Perhaps a quote by the Britannica Encyclopaedia is appropriate:

'Jefferson, however, chose to exert economic pressure against Britain and France by pushing Congress in December 1807 to pass the Embargo Act, which forbade all export shipping from U.S. ports and most imports from Britain.

'The Embargo Act hurt Americans more than the British or French, however, causing many Americans to defy it. Just before Jefferson left office in 1809, Congress replaced the Embargo Act with the Non-Intercourse Act, which exclusively forbade trade with Great Britain and France. This measure also proved ineffective, and it was replaced by Macon's Bill No. 2 (May 1, 1810) that resumed trade with all nations but stipulated that if either Britain or France dropped commercial restrictions, the United States would revive nonintercourse against the other. In August, Napoleon insinuated that he would exempt American shipping from the Berlin and Milan decrees. Although the British demonstrated that French restrictions continued, U.S. Pres. James Madison reinstated nonintercourse against Britain in November 1810, thereby moving one step closer to war.

'Britain's refusal to yield on neutral rights derived from more than the emergency of the European war. British manufacturing and shipping interests demanded that the Royal Navy promote and sustain British trade against Yankee competitors.

'[...]

'Immediately after the war started, the tsar of Russia offered to mediate.'

("1812, War of." Encyclopædia Britannica. Encyclopædia Britannica Deluxe Edition. Chicago: Encyclopædia Britannica, 2012.
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