BREAKING NEWS - Malaysian airliner crashes on Russian-Ukrainian border

[Admiral Yi]

Because practically engaging in significant dollar transactions either requires dealing with a US bank or branch or dealing with an overseas bank that itself has a correspondent account with a US bank.

Why is that?

[The Minsky Moment]

Because practically engaging in significant dollar transactions either requires dealing with a US bank or branch or dealing with an overseas bank that itself has a correspondent account with a US bank.

Why is that?

First, because to have secure and liquid access to dollars, you have to be have some access, indirect or direct to the Fed or to the big US money center banks.   That is essential for any financial institution engaging in trade finance, since a lot of trade is conducted in US dollars even if there is not a US party and even small deals can involve tens of millions of dollars.  It also can be needed for clearing and settlement purposes - every day there are a huge amount of interbank transactions (checks, wire transfers, etc.) that have to be settled; the Fed and the big US banks have created very efficient systems for doing so and thus pretty much every significant bank uses that system, either directly or indirectly via correspondent relationship.

[Admiral Yi]

OK, that makes sense.  I thought the US had some weird supranational power to regulate 3rd party dollar transactions, but if it ties back to money creation at the Fed that makes a lot more sense.

But to clarify, the US can't do anything about dollar balances already sloshing around overseas, right?

[DontSayBanana]

OK, that makes sense.  I thought the US had some weird supranational power to regulate 3rd party dollar transactions, but if it ties back to money creation at the Fed that makes a lot more sense.

But to clarify, the US can't do anything about dollar balances already sloshing around overseas, right?

What it sounded like to me was not directly, no, but since the US can seize "an equivalent amount" from the general correspondent, the odds that the general correspondent won't turn around and claw back the actual funds to cover their own loss are virtually nil.

[Syt]

Because practically engaging in significant dollar transactions either requires dealing with a US bank or branch or dealing with an overseas bank that itself has a correspondent account with a US bank.

Why is that?

First, because to have secure and liquid access to dollars, you have to be have some access, indirect or direct to the Fed or to the big US money center banks.   That is essential for any financial institution engaging in trade finance, since a lot of trade is conducted in US dollars even if there is not a US party and even small deals can involve tens of millions of dollars.  It also can be needed for clearing and settlement purposes - every day there are a huge amount of interbank transactions (checks, wire transfers, etc.) that have to be settled; the Fed and the big US banks have created very efficient systems for doing so and thus pretty much every significant bank uses that system, either directly or indirectly via correspondent relationship.

This.

Our payments to Russia were almost exclusively in USD. The banks would route the money automatically through appropriate correspondence, but every once in a while we'd have a doctor throw a hissy fit because we supposedly used the wrong correspondent bank (we didn't have influence over what bank would be chosen), and having to squeeze info for a Russia-internal correspndence bank as was often required (or card numbers in case of joint accounts) was always a joy. It became even more fun when Scotland took over our payments clearance (not to mention that the accounting software (PeopleSoft) couldn't handle Russia's default 20 digit account numbers).

It didn't help that incoming money from abroad above $6000 or so (i.e. 80% of our payments) wold get frozen on arrival by the finance authorities, and the recipient would then have to provide documentation why he or she receives the money. Mind you, those were doctors, not accountants. Every typo, every wrongly transliterated letter from Cyrillic to Latin could spell doom, meaning the payment was returned (minus horrendous charges) and you had to start new. And our clinical staff in Russia had a habit of having up to three different spellings for the same name n a payment form ...

[The Minsky Moment]

What it sounded like to me was not directly, no, but since the US can seize "an equivalent amount" from the general correspondent, the odds that the general correspondent won't turn around and claw back the actual funds to cover their own loss are virtually nil.

Yes, but what usually happens is the Feds don't have to invoke that authority.  Typically they can get the foreign banking authorities to cooperate and issue a freeze order that directly applies to the overseas bank; the correspondent seizure power is a backstop in case the furriners don't play ball.

[The Minsky Moment]

But to clarify, the US can't do anything about dollar balances already sloshing around overseas, right?

If the balances are in the form of bank balances, then they almost certainly can for the reasons stated - invariably there is a linkage back into the US system.

If the balances are in cash, then it is a different story.  Hence the practice of international criminal organizations dealing in large bundles of cash.  But there are serious limitations and inconveniences involved in cash-only transactions.

[Syt]

Well, the political situation has caused the WWE to dust off a tried and true gimmick, the "Evil Russian" (or Bulgarian posing as Russian in this case):

[Admiral Yi]

Read an article in Harper's a while back about lucha libre, the Mexican wrestling circuit, which is trying to expand in the US.  One of the heels, a gringo, has the schtick of yelling at all the kids that they're illegals and he wants to report them all to la migra.  And, AFAICT, only the faces wear masks in lucha libre.

[Razgovory]

So are these sanctions really going to hurt Russia?

[Syt]

Read an article in Harper's a while back about lucha libre, the Mexican wrestling circuit, which is trying to expand in the US.  One of the heels, a gringo, has the schtick of yelling at all the kids that they're illegals and he wants to report them all to la migra.  And, AFAICT, only the faces wear masks in lucha libre.

I honestly don't know.

[Syt]

So are these sanctions really going to hurt Russia?

Well, Vienna hotels and luxury shops are moaning that they have a big dent in their revenue because Russian rich folk stay home.

[celedhring]

Read an article in Harper's a while back about lucha libre, the Mexican wrestling circuit, which is trying to expand in the US.  One of the heels, a gringo, has the schtick of yelling at all the kids that they're illegals and he wants to report them all to la migra.  And, AFAICT, only the faces wear masks in lucha libre.

I've seen plenty of masked Lucha heels ("rudos") myself.

[Tamas]

Almost 500 Ukrainian soldiers had to retreat into Russia/deserted to Russia depending on which news source you are listening to.

[mongers]

Almost 500 Ukrainian soldiers had to retreat into Russia/deserted to Russia depending on which news source you are listening to.

I saw the RT report on this and their spin is these Ukrainians deserted/defective, which I don't buy for one second.

However another of their 'reports' that gets aired a lot, is about the poor supply situation amongst the Ukrainians units, which I can believe given the level of corruption in the region. If there's some element of truth in that, then I say these Ukrainians soldiers, regular or militia, gave themselves up because they ran out of ammunition and got box in on the border by separatists. TINA.