Hryvnia
[courtesy Google Images]
“Ukraine’s central bank chief and finance minister tried to calm market panic on Wednesday after a collapse of the Ukrainian currency forced the bank to halt most commercial foreign exchange trading, saying the rapid fall was “irrational”.
“Central bank chief Valeria Gontareva and Finance Minister Natalia Yaresko told a hastily-convened news conference that the economy and currency would be stabilized by donors, including $8 billion from an International Monetary Fund bailout this year, with the first tranche expected within weeks.”
$8 billion is about the same amount of currency that the IMF, ECB, etc. are sending to Greece.
It’s interesting that the funds for Ukraine are coming from the IMF but there’s no mention of funds from the US-which sponsored last year’s overthrow of the lawfully-elected, pro-Russian Ukrainian government and replacement by the current, pro-US Ukrainian government.
I’m surprised that the US isn’t also being credited with giving money to subsidize the current Ukrainian government. Are such US subsidies secret? Or is the US government too broke to continuing to subsidize Ukraine?
“Earlier on Wednesday, the central bank halted all currency trading by banks on behalf of their clients for the rest of the week, saying excessive demand for dollars was “unfounded”.
Not true.
The hryvnia is losing value (purchasing power) by experiencing “official” inflation of 25% (and “unofficial” food inflation of up to 91%), while the dollar is deflating and becoming more valuable. Therefore, it only makes sense that Ukrainians seek to preserve their own wealth by escaping their own currency and looking for safe havens like fiat dollars or gold (up 100% in terms of hryvnias in just the first two months of A.D. 2015).
“‘There are no fundamental reasons for such a severe fall in the hryvnia rate. The central bank sees none, the government sees none, and the IMF sees none,’ Gontareva said.”
See no reason, hear no reason, say no reason, hmm?
It might be true that there’s no “fundamental reason” for the fall in the value of the hryvnia insofar as “fundamentals” refer to objective economic concepts like the money supply, inflation, GDP, etc. But the hryvnia is a fiat currency that has little or no tangible reality and whose value is determined primarily by subjective forces like “public confidence”.
The current, US-supported government of Ukraine seems unable to suppress the rebellion in east Ukraine, unable to sustain the Ukraine economy and has therefore lost the confidence of the people of Ukraine and the world. Without that confidence, there’s plenty of reason for the “severe fall in the hryvnia rate”.
The hryvnia is falling because nobody has confidence in the current government of Ukraine. Unless that government can do something dramatic to reverse recent Ukraine failures confidence will continue to fall and hyperinflation will continue to rise until (at least) the current government is deposed and replaced by another government that inspires public confidence.
“‘These irrational movements are linked solely to irrational market instability which is driven more by fear than by an understanding of what is going on in the market,’ she said. ‘As soon as we start getting real help from our international sponsors . . . we are looking into the future with perfect calm.'”
Bunk. These currency “movements” are not irrational. They reflect the failures of the current Ukrainian government and resultant loss of public confidence.
Ukraine is no better off than Greece. Both nations’ survival depends on “international sponsors”. Both nations are “dependents” that can’t support themselves, can’t repay their debts, must rely on the financial support of outside nations. Both nations-like all dependents-can look forward to a future marked by poverty and chaos.
“Yaresko said the funds expected from the IMF would be ‘an anchor that would provide for the stabilization of the economy, including the currency market.'”
More bunk. The $8 billion for Ukraine will provide no more “anchor” than the $8 billion heading for Greece. These funds are not “anchors” that will provide stability. They are blood transfusions for desperate nations heading for bankruptcy and collapse.
“Yaresko later told reporters that Kiev could begin negotiations with creditors within a week of the IMF decision on previously-announced plans to restructure its external debt.”
What does “restructure” mean, boys and girls?
It means “write-off “some significant portion of existing debt because Ukraine is too insolvent to pay its debts-just like Greece.
“Restructuring” means to repudiate some significant portion of a “sovereign government’s” existing debts without having to openly admit that that “sovereign” is bankrupt. “Restructuring” a politically correct way to view the emperor without having to see or admit that he’s butt-nekkid.
“Restructuring” means that the sovereign-debtor and creditors alike are conspiring to conceal the fundamental fact of sovereign-bankruptcy.
Why conceal?
A: In order to deceive the world into believing that 1) the creditors who were fool enough to lend currency to the sovereign-bankrupt haven’t lost billions of their assets; and, 2) deceive the world into believing that world’s fiat monetary system is still viable.
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