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Misguided Souls Still Do Not Understand This Simple Truth: Sanctions Don’t Work

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58 comments on Misguided Souls Still Do Not Understand This Simple Truth: Sanctions Don’t Work

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Here We Go Again

Sanctions Don’t Work! Period!   

When have sanctions ever dislodged anyone?

Q: Venezuela?
A: No

Q: Iran?
A: No? 

Q: Cuba?
A: No? 

Q: Any Country?
A: No

Fantasy Idea and Rebuttal 

Fantasy Idea: An embargo of Russian energy would see Russia’s GDP completely collapse. 

Fantasy Rebuttal: No, it wouldn’t because China won’t go along, India won’t go along, etc. 

Percentage Terms vs Actual Dollars

In percentage terms Russia suffers more than the EU. But what about in total dollar or euro terms.

It’s 100% clear the EU suffers more. And what if Russia stops all its key exports in response?

Checking in With Chancellor Olaf Scholz

German Chancellor Olaf Scholz has warned that Germany will face dire consequences if energy imports from Russia are completely stopped.

What About France?

French president Emmanuel Macron is worried about an energy shortage. 

Clandestine Finance System Helped Iran Withstand Sanctions Crush, Documents Show

Please note Clandestine Finance System Helped Iran Withstand Sanctions Crush, Documents Show

Iran established a clandestine banking and finance system to handle tens of billions of dollars in annual trade banned under U.S.-led sanctions, enabling Tehran to endure the economic siege and giving it leverage in multilateral nuclear talks, according to Western diplomats, intelligence officials and documents.

According to the documents and Western officials, the clandestine banking system works like this: Iranian banks that serve companies barred by U.S. sanctions from exporting or importing engage affiliate firms in Iran to manage sanctioned trade on their behalf. Those firms establish companies outside of Iran’s borders to serve as proxies for the Iranian traders. The proxies trade with foreign purchasers of Iranian oil and other commodities, or sellers of goods for import into Iran, in dollars, euros or other foreign currencies, through accounts set up in foreign banks.

Trump’s “Historical Trade Deal” With China Final Results Are a Big Zero

The results of President Trump’s historical trade deal with China are in. Chad P. Bown has the results in a series of Tweets.

Trade wars are neither good nor easy to win.

For details, please see Trump’s “Historical Trade Deal” With China Final Results Are a Big Zero

SF is now boycotting most of the United States

Image courtesy of Mission Local

On the laughable side, Mission Local reports SF is now boycotting most of the United States

 A March 4 memorandum from City Administrator Carmen Chu reveals that San Francisco will not enter into contracts with businesses headquartered in most of the United States — 28 states in all. Official travel to those states is also forbidden. And this list includes some surprises: Nevada, New Hampshire, North Carolina, Wisconsin.

As a result of this vast boycott, San Francisco is constraining the number of businesses it can ink deals with, which all but certainly inhibits quality and drives up costs. It also adds onerous time constraints to the contracting process, which leads to poor outcomes and also drives up costs. 

Let’s Check in With Chicago

Heading Back to the Reality

A quick reality check suggests that Germany will have to buy more Russian gas now to prepare for a shortage of Russian gas eight months from now. 

What About the Ruble?

https://twitter.com/varunramg/status/1507848364712501252

Ruble Update

Sanction Battle Cry!

The Ruble has regained 40% of its loss since invading Ukraine. 

This leads to the inevitable battle cry.

Dear Venezuela Please Send Help!

How stupid is this?

U.S. Officials Meet With Regime in Venezuela, to Discuss Oil Exports to Replace Russia’s

Senator Rubio Chimes In

Senator Rubio says “I am working on legislation that would impose sanctions on #China if we catch trying to use their Cross-Border International Payments System (CIPS) to help #Russia get around SWIFT sanctions“

Great Idea Senator!

Let’s halt global trade altogether!

What can possibly go wrong? I am sure Biden can work out a deal with Venezuela that will save us all.

Let’s ban all of Russia and China too (on top of Venezuela and Iran). 

Oil Irony

Please note the Oil Irony: US and UK to Ban Russian Oil, Russia Threatens the Same

A Global Food Crisis Looms as the US Sanctions the World

Also note A Global Food Crisis Looms as the US Sanctions the World

China the Big Winner

Finally, recall my March 8 post US Sanction Policy Drives China Into Russia’s Loving Arms.

Time for tougher sanctions?!

This post originated on MishTalk.Com.

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58 Comments
Newest
Oldest Most Voted
Zardoz
Zardoz
4 years ago
It’s been a month. If this is still going on in a year, I’ll believe sanctions don’t work.
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StukiMoi
StukiMoi
4 years ago
Economics teaches that gains come from application of resources: Labor and capital. As well as risk.
“Sanctions” involved neither to any extent. Hence, will forever remain nothing more than the childish fantasy of the free-lunch crowd, as far as any potential gains.
For those specific individuals closest to, in particular US but also UK, administrations; there are, no doubt, personal benefits. Since neither wealthy Americans nor wealthy English have any ability to create any value anymore either way. Hence aren’t particularly negatively affected by lessened trade and a worsened business environment. Yet, they are, at the same time, the ones whose livelihoods most directly derive from “advising” and facilitating navigating new, arbitrary, sanctions regimes. After all, competent people will now have to confer, at great cost, with those sorts of ambulance chasing, privilege peddling laggards, before engaging in almost anything. SO, the leeches get another revenue stream. Paid for by productive people. Same old theft racket as before. Nothing new under the fading sun.
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Felix_Mish
Felix_Mish
4 years ago
More sanctions listed with guesses on how they turned out so far – some successful, some not:
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Casual_Observer2020
Casual_Observer2020
4 years ago
I think many misunderstand the point of sanctions. The point is exactly for things to get bad in order to cause a revolution.
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whirlaway
whirlaway
4 years ago
Reply to  Casual_Observer2020
M’kay. A revolution? Where? In Germany? France? LOL
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Casual_Observer2020
Casual_Observer2020
4 years ago
Reply to  whirlaway
Lol. Things are worse in Russia.
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StukiMoi
StukiMoi
4 years ago
Reply to  Casual_Observer2020
What Russia has to offer Germany, there are few, if any, substitutes for. While what Germany has to offer Russia, there are mostly plenty fairly, even of not entirely, close ones.
And furthermore, the ability to make what is currently being made in Germany, can be learned by Russians. Cue McDonalds restaurants somehow still feeding Russians, even some working for the Kremlin directly, despite “pulling out.” If Russian Gas “pulls out” of existing pipelines to Germany, things are trickier….
In fact, for any aspiring Brian tired of current negativity, one of the positive developments which could result from this, is a de facto weakening of vastly overblown and over-enforced “IP” “laws.” Russians (and Ukranians…) (and everyone else..) should just go about building anything they can build efficiently themselves. Screw ambulance chasers and other leeches attempting to insert themselves into value adding processes on the basis of nothing more than idiocies like supposed “ownership” of the likes of “one-click patents.” Instead, reverse engineer all you can. Learning from others, then improving upon it or simply adapting it to ones own specific situation, is how humanity progressed, back when it did.
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whirlaway
whirlaway
4 years ago
Reply to  StukiMoi
Excellent points. For Germany, there is no off-the-shelf substitute for Russian natural gas. However, for Russia, there are substitutes for German-made cars and other consumer durables. There is China. In fact, pretty much all of the consumer durables that we buy in the US *are* made in China.

But don’t try too hard explaining that to the TDS-afflicted, Russiagate-brainwashed stupid liberals!

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Casual_Observer2020
Casual_Observer2020
4 years ago
Sorry but it worked against Venezuela. Even Venezuelans are returning and Maduro has seen what happens in Russia doesn’t work.
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whirlaway
whirlaway
4 years ago
Reply to  Casual_Observer2020
Of course, they have to write such crap. What else can they do when the US had to go back and beg Maduro for oil??!!

Btw, why didn’t the US go to Juan Guaido instead? Isn’t he the “real” leader of Venezuela?!

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Casual_Observer2020
Casual_Observer2020
4 years ago
Chinese debt trap diplomacy also doesn’t work.
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Felix_Mish
Felix_Mish
4 years ago
Where and when have sanctions worked?
Lists a couple/three.
Interesting question: What’s the alternative to sanctions? Maybe nothing much. I have been long convinced that US Cuban sanctions were great for the Castro brothers and bad for everyone else. Forget sanctions. Just let Russian style socialism be its own reward.
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FromBrussels
FromBrussels
4 years ago
A QUESTION FOR MISH….or any other pundit for that matter ….WHY does Germany refuse to pay for gas and oil, or whatever russian resources, in Ruble , which would in fact be a normal thing to do ?? What happens with $ and Euro payments , are they automatically being frozen or even confiscated under the present circumstances or what ?
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Scooot
Scooot
4 years ago
Reply to  FromBrussels
“What happens with $ and Euro payments , are they automatically being frozen or even confiscated under the present circumstances or what ?”
From memory of my banking days decades ago, effectively yes. All foreign banks have Nostro accounts with a bank in the host country of the currency. So for example a Russian bank would have a USD Nostro account with a US bank. A US bank would have a Ruble Nostro account with a Russian bank. Therefore if a German company buys gas from a Russian company in USD, their bank has to instruct a US bank to debit it’s Nostro account and transmit the USD to the Russian Bank’s USD Nostro account at it’s US bank. Clearly sanctions are going to interfere with this. Whereas, if the German company pays in Rubles, they can buy Rubles without any interference, and their Ruble Nostro account holder, being a Russian Bank, can debit their account and transmit it to another Russian Nostro account without a problem.
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SmokeyIX
SmokeyIX
4 years ago
After sanctions, the oligarchs still have more money than they can ever spend. It’s Russian Orthodox church girls who have to leave their impoverished villages and go down to China to have sex with 12 to 20 businessmen and blue collar workers every day and night just to survive. The luckier ones might be mail order brides to Chinese men who can’t find Chinese wives because of the gender imbalance in China.
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FromBrussels
FromBrussels
4 years ago
Reply to  SmokeyIX
sure sonny sure …. You really wanna talk sexual ‘abuse’ ? I d suggest you start with things goin on in the fn US of A !
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davidyjack
davidyjack
4 years ago
Sanctions are a tool to apply pressure to Russia to stop the war. Less money for Russia means less ability to wage the war. The other tool is weapons supply and economic aid to Ukraine. Very few expect sanctions alone to cause Putin to back down.
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Jojo
Jojo
4 years ago
Reply to  davidyjack
Yes, the goal of sanctions are to bring pain to the businesses and consumers of a country and cripple their economy. They’ve done that in places like Iran, Syria and Venezuela where their economies are in shambles and the population is suffering. The sanctions will do similar in Russia but they take time to do their work.
Like stock market trends, authoritarian governments can hold out for much longer periods of time than anyone would expect, especially when they have multiple millions or billions of dollars stashed away.
One benefit of sanctions and Putin’s war is that the Russia brain drain is accelerating. Media stories estimate that at least 200k of the young and smart have bailed on Russia so far and the longer the situation continues, the more that will join. Russia is losing its future with this outward migration and perhaps the West can benefit from these educated people.
Because sanctions take time to work like a slow poison, USA+NATO needs to accelerate and maintain strong military support of Ukraine.
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FromBrussels
FromBrussels
4 years ago
Reply to  Jojo
wishfull thinking !
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Esclaro
Esclaro
4 years ago
What this illustrates is the folly of doing business with Russia and China. We should immediately embargo everything from China. By becoming self reliant we can eliminate all trade with them and repudiate any US debt they hold. Walmart should be forced out of business as a front for Chinese goods. I have never shopped there.
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KidHorn
KidHorn
4 years ago
Reply to  Esclaro
Everything manufactured has Chinese parts in them. We would have to stop all imports outside of agricultural products.
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Six000mileyear
Six000mileyear
4 years ago
Reply to  Esclaro
The US is perfectly capable of becoming self-reliant, but doesn’t want to because of suffering from indulgence withdrawal.
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Webej
Webej
4 years ago
Previous rounds of sanctions against Russia were also going to decimate the economy. They didn’t.
The 2014 sanctions were going to to foment regime change among Russian malcontents. They didn’t.
If you don’t stop, I’m going to shoot myself in the foot!
Energy is not some consumer product … it IS the economy.
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Jojo
Jojo
4 years ago
Reply to  Webej
Germany says it is moving quickly to cut the cord on Russian energy.
“Every supply contract that is terminated hurts Putin,” said the country’s vice chancellor and economic minister.
March 25, 2022, 11:11 a.m. ET
BERLIN — Germany released a report on Friday showing that the country was cutting its dependence on Russian energy sooner than many thought possible.
Robert Habeck, the vice chancellor and economic minister, said Germany expected to cut its imports of Russian oil in half by the midsummer and nearly end the imports by end of this year.
The need for Russian coal could be halved in “the coming weeks,” he said. And he estimated that Germany could be free of Russian gas by the middle of 2024, if all goes well.
….
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FromBrussels
FromBrussels
4 years ago
Reply to  Jojo
blablablabla sonny ……in case you didn t know …..Russia s got 50% of ALL natural resources, your solar panel or whatever won t save your fn a ss
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JRM
JRM
4 years ago
Reply to  Jojo
Yep NYtimes a reliable source!!!!
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Jojo
Jojo
4 years ago
Reply to  JRM
Far more reliable than you.
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Casual_Observer2020
Casual_Observer2020
4 years ago
Reply to  Webej
Not as much as it was. The world can survive with a lot less energy consumption as they did during covid.
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whirlaway
whirlaway
4 years ago
Reply to  Casual_Observer2020
Yeah. The “solution” is to lock down everything. For ever. Energy problems solved. LOL
Stupid Russiagaters!
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Dean_70
Dean_70
4 years ago
Sanctions are the tool that politicians use so they can brag about being tough when elections approach. They never discuss the results of sanctions.
Sanctions appeal to emotions and sway votes so they are effective.
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Webej
Webej
4 years ago
Reply to  Dean_70
Sanctions are effective in immiserating that part of a population that already has the hardest time surviving.
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Billy
Billy
4 years ago
Sanctions do work. First, with the help of the media, it spreads the message that our government is doing something that makes the citizens feel good about it. Second, the loopholes and exemptions allow companies like Blackrock continue to profit from this war with even higher margins. Third, it allows China, Brazil, and many European countries to continue to support Russia while getting a deal on oil and gas.
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Lisa_Hooker
Lisa_Hooker
4 years ago
Reply to  Billy
Sanctions force new relationships and methods of exchange. After all, more networks and redundancy improve resiliency and stability. All for the good, eh? Sanctions never force things to go back to the way they were.
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Network Admin
Network Admin
4 years ago
Looks like the goal of sanctions is to create instability in EU, and it will work very well.
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KidHorn
KidHorn
4 years ago
Reply to  Network Admin
I have to wonder how many EU countries are only sanctioning because they fear the repercussions if they don’t. Including US sanctions against them. At some point it seems they’ll have to choose the lesser of two evils. Sanctioning Russia or being sanctioned by the US.
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TexasTim65
TexasTim65
4 years ago
Reply to  KidHorn
Correct. They have to toe the line of Uncle Sam.
Actually the French are the one country least toeing the line as there are plenty of French companies still doing business in Russia as Macron has said they won’t pull out of doing business there.
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Webej
Webej
4 years ago
Reply to  KidHorn
No. Most of them think we can cut out fossil fuels if we just all really want to and put our shoulders to the task.
These people think reality is having meetings.
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Roadrunner12
Roadrunner12
4 years ago
Reply to  KidHorn
Once more refugees start crossing the border will help the Europeans make up their mind quicker.
Good talk from the Grayzone, Not sure why all my links do not show up anymore, looks like I really have been sanctioned.
The battle for Ukraine, with ex-UN weapons inspector Scott Ritter – YouTube
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ColoradoAccountant
ColoradoAccountant
4 years ago
“The A students go into science and medicine. The B students go into business. The C students go into politics.” My University of Colorado professor/state legislator.
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Webej
Webej
4 years ago
Reply to  ColoradoAccountant
A grade students are overrated … it is a measure of compliance.
Real talent rarely goes for the compliance obstacle course.
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Tony Bennett
Tony Bennett
4 years ago
2yr and 10yr separated by 5 bps.
Inversion this week?
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Lisa_Hooker
Lisa_Hooker
4 years ago
Reply to  Tony Bennett
15:49 CDT 2/10 delta now 2.53 bps.
15:51 CDT 2/10 delta now 1.73 bps.
Whoa Nellie!
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Tony Bennett
Tony Bennett
4 years ago
“The Russian economy on track to be cut in half”
…
Where is POTUS pulling this from?
Everything I’ve found forecasts 10% to 20% decline for 2022 (and much smaller decline for 2023).
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Dutoit
Dutoit
4 years ago
Russia has a big superiority in missiles, especially hypersonic ones. I think that the USA should also ask the help of Kim Jong-un to improve the efficacy of their missiles.
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JONZDOG
JONZDOG
4 years ago
Reply to  Dutoit
Russia has a long history of claiming military capability they’ve yet to truly master
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Webej
Webej
4 years ago
Reply to  JONZDOG
Maybe you should check out the performance of the Patriot system or the F-35.
By the way, those oil systems in Riyadh that keep being hit by the Yemini are being protected by American Air Defense complexes !!!
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KidHorn
KidHorn
4 years ago
No one is more broke than the US. If we continue to supply arms to Ukraine, we can keep the war going forever, but it’s going to cost us way more than it will cost Russia. Russia can dig in and supply their troops far more cheaply and easily than we can supply Ukraine. They don’t have to ship anything thousands of miles. They just have to drive 100 miles.
Russia is forcing people to pay for energy in Rubles or gold or bitcoin. So, most of the world is going to buy rubles in forex to trade with Russia. This will push up the price of Rubles. If Rubles appreciate too much, people will buy with physical gold. Gold delivery is something the west will try to avoid at all costs. The last thing our fake financial system wants is price discovery for gold.
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Maximus_Minimus
Maximus_Minimus
4 years ago
Reply to  KidHorn
There can’t possibly be enough Rubles on the market, it’s not a reserve currency.
The buyers will have to buy Rubles from the Russian central bank, which can print it at will.
Wait, what? Only the FED has the right to print dollars as it pleases.
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TexasTim65
TexasTim65
4 years ago
Reply to  Maximus_Minimus
I think there will be plenty of Rubles. Russia will recycle them back to China, India and other places when they import stuff from there. Then Germany and other countries will be able to buy Rubles to pay for gas.
The goal of demanding payment in Rubles is to get the Ruble back to where it was before sanctions caused it to crash. It’s a smart move.
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Webej
Webej
4 years ago
Reply to  TexasTim65
Not just the exchange rate … they will be forced to break their own sanctions and do business with the Russian CB.
Or see their economy peter out and all their voters switch radically.
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Maximus_Minimus
Maximus_Minimus
4 years ago
Reply to  TexasTim65
It was a jab at the masters of the universe who think they can print, manipulate, intimidate, subvert and still look smart, educated and cultured.
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Lisa_Hooker
Lisa_Hooker
4 years ago
Reply to  KidHorn
Nah. The easiest way to manage this situation is for the US to surreptitiously buy weapons from Russia and sell them to Ukraine. This is a time honored tradition with the US and Great Britain. And profitable. Like telling Europe not to buy natgas from Russia and then offering to SELL LNG gas to Europe.
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Roadrunner12
Roadrunner12
4 years ago
This is incredibly insane. The US engineered a coup in 2014 with the aid of neo nazis. Since then the US has supplied the Ukrainian nazi groups, Azov, Aidair and C14 with arms. The Ukrainian nazis have continued to gain power since then and now are Zelensky has placed Neo Nazis in power. The Azov, Aidar C14 Neo Nazi groups are now firmly entrenched in government.
And what would you expect with Neo Nazi groups in power, the opposition party is gone, they control all media, they shoot their own people and use them as human shields. Anyone not towing the Neo Nazi narrative in Ukraine now disappears or get thrown in custody.
The US has now basically installed a Neo Nazi government in Ukraine. We can only imagine the blowback from that as now the Neo Nazis terrorize their own people and where do they go from there?
The ultimate irony is we cheer this. Incredibly insane. All this sanctioning is to support a Neo Nazi government in Ukraine fight the Russians.
Links not working, have to type following in search.
How Ukraine’s Jewish President, Volodymyr Zelensky, Made Peace with Neo-Nazi Paramilitaries on Front Lines of War with Russia – Toward Freedom
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dbannist
dbannist
4 years ago

This is a rare point of disagreement with Mish for me:If the only measuring stick of whether or not sanctions work is if there is regime change then yes, sanctions clearly do not work. Fidel Castro was never seriously threatened with regime change in Cuba and remained in place for nearly 50 years. Clearly, sanctions did not work to dislodge him.But what if regime change isn’t the ONLY measuring stick? How do you measure regional influence? That’s a much harder metric, since it requires one to know what the influence of a country like Cuba, Venezuela etc. would be were there no sanctions. That, of course, is impossible to know without Dr. Strange on hand to see all the possible outcomes.It’s pretty unarguable, in my opinion, that sanctions have absolutely resulted in greatly diminished regional influence. Venezuela, for instance, is a shadow of its former self, and almost never makes the news anymore. South America no longer is pressured by Venezuela because the country is flat broke and produces a tiny fraction of the oil that it could. Venezuela was still providing 4 million barrels of oil a day to the USA like it used to and they decided to join Russia and embargo us, we’d be in a world of pain right now. Thankfully, sanctions got us off their oil and they exert no control over us in that manner.So you need to consider all the measuring sticks, not just the one labeled “regime change” to determine if they work.

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FromBrussels
FromBrussels
4 years ago
Reply to  dbannist
Yeah sure but it was all about regime change ….again ! Now american and british mther fckers, unfreeze Venezuelan assets for once and fn all …THEY AIN T YOURS ! T H I E V E S ! Gangsters !
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Lisa_Hooker
Lisa_Hooker
4 years ago
Reply to  dbannist
Sanctions are much better at creating abject poverty for the masses than reducing influence in the region. But they can ge effective at both. E.G. Kill thousands of commoners to disadvantage a few elites.
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Roadrunner12
Roadrunner12
4 years ago
Reply to  dbannist
“Thankfully, sanctions got us off their oil and they exert no control over us in that manner.”
Sanctions never got you off their oil, the shale oil revolution got you off their oil and that is coming to an end. The US will now again become reliant on other countries oil.
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lamlawindy
lamlawindy
4 years ago
Reply to  dbannist
The hyposcrisy of the US federal government dealing with Pres. Maduro is breathtaking. In essence, Pres. Biden is saying, “Let’s make nice with this tyrant in Venezuela so that we don’t have to deal with this other tyrant in Russia.”
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