From Ambrose Evans-Pritchard:
Russia is battening down the hatches. The central bank was forced to raise interest rates this morning to 8pc to defend the rouble and stem capital flight, $75bn so far this year and clearly picking up again.
The strange calm on the Russian markets is starting to break as investors mull the awful possibility that Europe will impose sanctions after all, shutting Russian banks out of global finance.
…Lars Christensen from Danske Bank said the inflexion point will come if the EU does in fact impose “Tier III” measures aimed at crippling the Russian banking system, as now seems likely. “That is when the lights will turn off for the Russian market. We will see capital flight of a whole different nature,” he said.
The world is entering a dangerous phase. Having escalated the conflict in Eastern Ukraine into a proxy war, the Kremlin seems unwilling or unable to back down despite rising US and EU sanctions. This is not another Afghanistan. The stakes are far higher. The 100th anniversary of the outbreak of WWI reminds us that Eastern Europe is a tinder box for major global conflicts. While a ‘hot war’ is unlikely — both sides have too much to lose — Eastern Ukraine could well ignite another cold war. Peace proves elusive.
Peace is an armistice in a war that is continuously going on.
~ Thucydides ( c. 460 – c. 395 BC), History of the Peloponnesian War
Read more at Calm before the storm as Europe poised to join economic war against Russia – Telegraph Blogs.