How did the world debank Russia?

Adam: [00:02:29] Hello and welcome to comedian versus economist. We demystify the world of money and help you get a handle on the bigger picture. My name's Adam, and we're joined, as always, by my little older brother and real life economist Thomas. Hi, Thomas.

Thomas: [00:02:43] Yeah, g'day, Adam. How are you going? 

Adam: [00:02:45] I'm going very well. Thank you. Now, Thomas, you would have heard Bryce and Alec at the start of our show talking about Fin first and all, my lord, I am so pumped for Finn first. If you haven't saved the date already, it's 15th of October this year in Sydney. Head over to Equity Mates dot com slash Finn fest. It's going to be massive, Thomas, you and I are going to be there. I'm pretty sure at this point I'm certainly going to pull out all the stops to get there, but there's a bunch of expert speakers and guest DJs and booze. It's an inspiring and empowering event for investors of any level of experience, even me. Thomas, I think I'm probably going to get something out of it. So stick it in your diaries 15th of October 2022. It is all kicking off. Equity Mates FinFest powered by stake. Thomas, we've got a massive show on today, as always, and we're going to check in on the ASX share market trading game and see how we're performing or not performing as the case may be. We're also asking on the show today, How are you feeling like economically? We'll have a look at Westpac's consumer sentiment survey results, and John Travolta's hair wasn't the only oil shock in the 70s. We're going to take a look back in time to see what we can learn about the current oil crisis. And it's cold in Russia, but that's not what's frozen their currency reserves, so we'll find out what that's all about as well. But first, Thomas no doubt still a lot of cleanup going on as a result of the flood situation where you are. I want to say a big thank you to everyone who donated money to the Mullumbimby Neighbourhood Centre. Very much appreciated in your area, I'm sure. But Thomas, I know a lot of people are keen to hear how you've been getting on. So you got back there about a week ago now. What's what's the latest on the flood situation for you? 

Thomas: [00:04:38] Yes, it's a bit of a shock coming back. Like it's never really flooded here in Mullumbimby before. But yeah, we've got really smashed by at this time. And just like that shock of getting flooded in places, you never expect a flood like our place. You know, we'd never been in a flood zone before. Old Ken across the road's been in his house for 80 years and it's never flooded there. But a flood of this year? Yeah, so it's pretty epic. Like there's a lot of damage out in the hills, like a lot of the bridges are still out there, still doing helicopter drop offs for medicines and essential supplies, and part of a crew called Resilient Byron, which is sort of a disaster management sort of network, sort of community led. And we've been organising sort of walking trips out. So people have been, you know, getting ropes and climbing gear and stringing up rope bridges and getting across rivers. The rivers have rerouted themselves and a lot of places. And really, 

Adam: [00:05:34] that's a that's a big shift. Like you think about rivers rerouting themselves, that's yeah. 

Thomas: [00:05:40] And then and just massive landslides like, yeah, whole houses getting washed away. Friend of mine just had boulders coming through her house, just smashing through, and she had to run from her life. Her car got buried completely. Yes, it's it's pretty full on. And I mean, I think I think I don't I haven't seen official numbers, but I think just in our area, which is only a small portion of the affected area on the East Coast, I think there's probably like 5000 homes that have become become uninhabitable. Wow. Through the floods and where we were and how people talk about a housing crisis beforehand and rents had gone up, you know, 30 percent since Covid. So we're already in a housing crisis and we've now lost 5000 homes. It's just crazy. The house up the road, actually just the other day caught fire a couple of days after the flood because they plug because the what? Yeah, they're wet. Yeah, yeah. But the water, the water came in and went up to the roof line and then so all the electrics are out and they plugged in and dehumidifier to try and to try and dry things out and then just feast and caught fire. So that's a pretty brutal. And so there's this sort of stories like that as people try to get their houses back, the flood, the floodwater does a lot of damage. I'm learning. And the brutal story is that for a lot of people is the it becomes uninsurable because it come once the structures get damaged. Because if it's like a pine house, pine seems to rot quite quickly. If it gets damaged, it becomes uninsurable as a rental. And so there's a lot of stories I'm hearing of people who the floods come through. Everything gets covered in mud. They spend five days a week cleaning, you know, going through the mud, throwing out stuff there's just like is. Believable how much rubbish there is around just massive mountains at the front of people's houses, all up and down the streets, so much stuff. So he just gets thrown out and then they spend, you know, days scrubbing and cleaning and disinfecting and trying to get it back to something habitable, only to then be told that they can't live there. They've got to get out because it's uninsurable. So, wow, it's pretty horrific. 

Adam: [00:07:54] So do you have any sense of kind of how long this cleanup is going to take like? Is it still too early to kind of to make the call? Or is it are we talking years? 

Thomas: [00:08:05] I think it'd have to be years. Yeah, like, I mean, fully like is going to be a long road. I mean, it's incredible. Like, it's it's just amazing. You know, I do go through periods where I lose faith in humanity, but then like seeing 

Adam: [00:08:21] cryptocurrency, I think the invention of cryptocurrency was probably the last of that effort. 

Thomas: [00:08:28] But not like seeing people come together. And you know, there's people coming down from the Gold Coast and from Brisbane, just coming to volunteer. Just there's like there's a big whiteboard out the front of the neighbourhood centre where people come and post jobs and say, Look, I need two volleys to come and help me clean out my garage and then people are rocking up and saying, I've got six hours today to do some work. Where can I go? So it's it's just amazing the things that people are doing in the way people are coming together. It's really beautiful, particularly. It's sort of like at that community level, like we've got the army on the streets here now. There's army trucks rolling around, right soldiers out here doing this and that, and the SES has been here and they're all doing amazing stuff. But like the community led stuff, it has been really inspiring to watch people just putting their hands up and organising trekking missions out into the hills to check on people and do medicine drops and all that sort of stuff. 

Adam: [00:09:23] Did you call them volleys? 

Thomas: [00:09:25] Yeah, yeah. 

Adam: [00:09:26] Well, there's a there's a definite corporate sponsorship opportunity there for Dunlop to get involved. If you're listening Dunlop, I think you could get behind the Dunlop volleys. Good. 

Thomas: [00:09:41] So I've taken the week off work and I'm working full time with the Brazilian bar and helping like with the coordination effort. So you'd like this, there's all these people who need need help and then there's all these people come to offer help. And so we're yet coordinating that work. And yeah, realising like as an economist, you know, it's all about coordination. And like we had, we had a three tonne truck come down from Brisbane with packed full of clothes and furniture. And then it ended up just driving around because no one was able to take it like all the donation centres were already full, right? And everyone's saying, like, Are we just this great? You've come down, really appreciate it, but I just can't. I don't have anywhere to put this stuff, and I so I don't even know what happened to it. In the end, I thought, 

Adam: [00:10:24] You know, you're going to like regardless with the story of how you this, you just came and said, Step aside, everyone, I'm an economist. Let me distribute this thing since we've got a supply issue here. Yeah, yeah, yeah, no, no. 

Thomas: [00:10:46] You and they talk about the second flood, like there's the first flooded with the waters, but then there's the flood of all the support and all the help.

Adam: [00:10:53] But where are they all staying? I mean, or the people coming to town? Are they staying in? 

Thomas: [00:10:57] I think they do stay dripping, dripping down the right and heading back. Yeah, yeah. And this people now Mullumbimby sort of found its feet now by and large, like like, there's still a lot of work to do, but the emergency level stuff is mostly sorted. But Lismore, which is around the corner, is is in a lot of trouble. So now let my wife and I went over to Lismore yesterday to to spend the day cleaning, cleaning out there. So how do you? Yeah, it's a really interesting question about you got all these people keen to do stuff with all this energy and wanting to get, you know, get engaged and get active. But then how do you how do you pair them with jobs that actually need doing and making sure that, you know, the huge amount of food that's being cooked going out to places? And how do you make sure that all that's landing where it needs to land? It's a really, really interesting logistical challenge when phone networks are down and internet's down and really patchy. And yes, it's super interesting times. 

Adam: [00:11:51] All right. Well, yeah, you mentioned you're working with Resilient Byron, and we'll put a link to the donate page of that organisation that registered charity doing some good things around the moment in the area. That's where you're focussing your time. A big thank you to everyone who donated money already, though in any way. I think every little bit helps, so I very much appreciate it. All right, Thomas. Unless you've been living under a rock, you would be well aware that the ASX share market trading game is in full swing. It's been going for a few weeks now. The game has started. But if you haven't joined yet, there is still time you can still join in on the fun. In fact, if you haven't joined yet, you're probably. We're winning. I think I saw a stat today that says it's only 25 per cent of participants are in profit at this stage, which is quite remarkable given I figured it was fairly easy to make money in the in the share market. But turns out it's not so easy. So, yeah, curious to know Thomas. How you tracking with your portfolio? 

Thomas: [00:12:53] Yeah, I'm not in that 25 per cent. I'm I'm down. I mean, to be fair, it is, you know, it's a sideways market. The ASX 200 has gone sideways since we checked in a fortnight ago. So in that environment, you can't rely on just the market to drive growth. You've got to look, you've got to be picking your individual stocks and picking picking those winners. I mean, I would note that like the leader is all Zesco just just a couple hundred dollars ahead of Johnny Cash. And they're they're sitting at fifty five thousand. So they're up about 10 per cent in, you know, two to four weeks. So they're doing very well. Ten per percent, it's pretty handy in that time frame is pretty impressive. So hats off to them if you're one of those guys, if you if you're sitting around 55 grand and, you know, let us know what you're doing and we just going to copy trade you, that 

Adam: [00:13:40] would be awesome. Yeah, I just clicked on Johnny Cash's profile here to try and see if I could copy trading, but I can't. I can just see his performance and how much better it is than mine. Um, so we do get a ranking, of course. Thomas, do you wanna go first with your overall ranking? And then I'll say, 

Thomas: [00:13:57] Yeah, I'm you know, I'm ranking at twenty seven hundred. So in the top twenty eight hundred, so pretty happy with that. 

Adam: [00:14:04] In the top 20 800, there's four thousand four hundred and sixty six participants. You're in the bottom half and he just, yeah, right. Well, my ranking is three thousand five hundred fifty one. Ooh, ooh, ouch. Wow. I'm playing the long game. Yeah, in this short game, I'm playing the long game.

Thomas: [00:14:28] And what is your what did you buy? What did you do when you go? 

Adam: [00:14:32] Well, look, I, as anyone that listened to the episode we did with Alec and Bryce, my strategy was to get on board with Australian sports team sponsorships. But when I went looking at turned out that most of them were either foreign owned or they weren't available. And so I did get a couple, but they're just to sort of turn out to be the big player. So I bought some Woolworths. I know I didn't buy Woolworths. That was on my watch list. I bought CBA, which is the only one that's been in the green at the moment. So Commonwealth Bank is up. Yeah, I bought like five grand worth of Commonwealth Bank. I bought some Ampol, which is up today off the back of some news that they're going to do some stuff that I didn't understand that people seem to like it. I thought that I thought that with the crisis in Ukraine, that cybersecurity was going to go gangbusters. So I I loaded up ten grand on the hack ATM and I thought that was a smart play. Turns out people just, I think, say that as like, you know, sort of spooky kind of value stocks. So that's down that's down quite a bit about some Qantas. And I was buoyed by the fact that Qantas today announced that they're they're going to resume flights, first class flights to London. So given I don't know that you've ever seen the price of a first class ticket anywhere, there's going to be some good margin on those tickets, for sure. And then BHP, I thought, would do well out of a commodities crisis. Turns out not so good. They're just kind of tracking along. So. So that's where I'm at. Although today, Thomas, you'll be pleased to know I tried to take a macro lens to what's going on, and I just loaded up on gold. There was a gold ETF. Yeah, and then another gold and precious metals ETF. So I dropped. I dropped my final 10000 that I'd been holding on some gold. So there you go. So that's me. And if you're following any of my suggestions, then you would be. You'd be down about $2000 from your starting position of 50000 or so. Sorry, No. 48000 742. So you'd be down about $300. Yeah. Which I think is an important lesson. Like someone said to me the other day, they're like, Oh, you know, I don't, I don't invest. It's it's too much like gambling. And I think this is probably a good lesson. If nothing else to come out of this is I just deployed $50000 kind of straight up. Not really. It's far from like educated, informed decisions just following my nose a little bit so not well researched. And I'm not saying you can't lose a lot of money in, you know, trading shares, but I'm down, you know, I'm down thirteen hundred out of $50000. So unlike gambling, where if you if you put $50000 on your favourite horse. And it lost you would be down $50000. I think that's an important distinction to make when you're thinking about about trading verses versus gambling, but still, I'm I'm not winning in either. 

Adam: [00:17:40] However, you look at it. What do you got in your portfolio than if you a high flying off around the 2700 ranking mark? 

Thomas: [00:17:50] Well, I've been a bit distracted, so I haven't deployed all of my money yet, which is probably that's what's that's what saved me. So I went long on the Hack ETF as well. I'm still thinking that there might be a bit of bleed over from Russian cyber attacks. I also went long on the better shares oil hedged ETF. Hmm. Yeah. Yeah, which which popped a little. I got in a little before, but then it sort of come off its recent highs, but I'm holding that. Still, it's a gamble, but you know, you're playing a short run game here with with the ASX game. So it is is a bit of a gamble. But I still think I still think this could get a little or the oil prices could could pop. Still, there's a few analysts saying that they could get some, some big, big numbers still. So yeah, I'm going to hold that one for a little bit longer. See how it goes. I don't see it dropping anytime soon anyway. So no. Yeah. And that and that's that's all I've got for the moment. 

Adam: [00:18:45] So right? And what what do you what do you make of the outlook then for for the ASX is going to continue flatly, I think. 

Thomas: [00:18:51] Yes, I think is looking for direction. And so I think it's hard to see sort of any drivers pushing it north. There's still a lot of uncertainty coming out of the global outlook with the Ukraine and everything. US inflation printed really high last week, highest level in 40 years. So that that sort of inflation, why are we still in the mix? Yeah, like the risks overall still seem a bit tilted to the downside. I think, yeah, I think and until we get a bit more direction out of the Ukraine, I think sort of sideways is that is the game for the moment. 

Adam: [00:19:27] Spoken like an economist sitting on the fence. Nicely played. Yeah. All right. As I mentioned, there is still time to play. We'll stick another link to the ASX share market trading game in the show notes. And yeah, hopefully you can get on board and hopefully do better than us. If you've got any hot tips, if you want to just just brag and tell us how you going? Happy to read out some names on the show. If you are Johnny Cash and you're listening, then tell us what you're on, Johnny and share the love. Let's get some more savvy listeners out there. A big news Thomas Westpac did a survey. They did a consumer sentiment survey and good news. In fact, good news for the show. Their consumer sentiment survey, 46 percent of respondents had an opinion on economic news. That proportion is up from twenty eight point five per cent a year ago. So I think we can safely attribute increased economic awareness to comedian versus economist that's been running for about the same time frame. Yeah. Thoughts? Yeah, definitely correlation there. 

Thomas: [00:20:35] Yeah. So this is a Westpac consumer confidence survey. This is a monthly survey, something we get every month, but they also have some special questions. So they do ask about they do a recall question. So what what do people recall from recent news coverage?

Adam: [00:20:49] This is this is the best theory, they said. They said there was a significant lift in the proportion of respondents recalling international news, lifting from 6.9 per cent a year ago to eighteen point six per cent in today's survey. Respondents recalling international and what's going on here. Was it like a year ago? Only 6.9 per cent of respondents could recall international news. Hey, have you ever heard of America? No. I mean, like, I think I think it's still like you've got the war in Ukraine, which is like this epic global shift in the geopolitical landscape. 

Thomas: [00:21:38] And there's 18 percent of people are 

Adam: [00:21:40] off the table. Yeah, yeah. 80 percent. Four fifths of like now you what? You're right. And I like this economy. It can't be right. The question? The answers must be wrong in the survey. You can't have eighteen point six per cent of people unless I don't know who they're asking. Was it a specific news story? Did they ask? Hey, do you know what Joe Biden had for breakfast? I'm like, No, you know? 

Thomas: [00:22:09] Yeah, I don't know. I don't. I haven't actually read the report. I don't think they mentioned that. They just talk about recall in general terms that it's an eighty 87 percent thought the news on the internet. International conditions was negative. All right. Yeah, I got that one right is 

Adam: [00:22:25] one of the 18 percent of people that. Read the read through to the World News section of the Australia, they decided that most of them thought it was bad news when there was a war on. Yes, they were. We're in touch as a nation. We're in touch with the news cycle, right? So what else did we learn from the consumer sentiment survey? 

Thomas: [00:22:49] The consumers have said they don't like floods. 

Adam: [00:22:51] Apparently, that's the thing we learnt. The consumer confidence in Brisbane 

Thomas: [00:22:56] was down a massive eleven point two per cent over Melbourne. It was just down 3.4 per cent right, which is still substantial but more driven by international factors. 

Adam: [00:23:07] So this does take into account the flood situation. Yeah, yeah. Right? 

Thomas: [00:23:12] Yeah, yeah, yeah. So that's sort of knock things around a bit. So I mean, I think I think the general gist of this is is that the flow of news lately has has been negative. There's the floods, obviously the war in Ukraine. There's also inflation concerns is higher interest rates. Most people surveyed think that the interest rates are going to rise. So all of that sort of none of that's great for consumer sentiment, typically. And so it's it's a tough time for consumers right now. The exception to that is the job market. So consumers still feel pretty pumped about their job prospects. But the flow of news has been negative for the past month. And so in that context, we talk about the ASX tracking sideways for the better part of a month. That's not bad, given that the flow of news has all been pretty grim. So it could maybe take some heart from that. 

Adam: [00:24:02] My apologies, Dollars. While you were explaining something in intricate detail, I was googling fairly few. Uh. Right? So you are part of the 80 per cent, 82 per cent that's blissfully unaware of international news. All right. On that note, why don't we pause here? Grab a quick word from our sponsor and be back with more. Comedian versus activist right after this. Welcome back here on comedian versus economist, don't forget, you can always send us an email CV at Equity Mates dot com or via the website Equity Mates dot com forward slash CV. You can also get us on Facebook and Instagram at CBC podcast. Shoot us questions your comment. Maybe share share with us some of your stock tips for the ASX share market game. Any and all correspondence will be read, that's for sure. But Thomas, there's a commodity crisis. I believe that's unfolding. We've seeing the price of oil go through the roof. I saw fuel in my neck of the woods up over $2 today. That's just that's insane. What's going on? 

Thomas: [00:27:10] So there is a bit of a commodity crisis. We knew that be sort of an oil and energy crisis given Russia's oil and energy exporter. But yeah, it's it's bled out into a commodity crisis, which is interesting. Like it's it's not it's difficult to sort of pin this on on anything exactly in. The stuff that I'm reading is it's a bit hard to sort of connect the dots. I think I think it's I think it's just about disruption. Like, I think it is one thing we're learning from Covid and from this experience is that once once the economy sort of sets up at its networks and it all sort of starts running smoothly and you have these just in time inventories and it kind of relies on all these supply chains working quite fluidly and smoothly. And once you get a major disruption to any part of the network, it creates sort of these ripples of shock throughout the entire network. And I think that's what we're seeing here, like Russia is a commodity exporter, not a major commodity exporter, but still significant player in the scheme of things. It's kind of effectively been cut off its from from the global economy at some sense, and that's sort of just creating a whole lot of this dislocation. And in that dislocation, prices are soaring because people are kind of scrambling to cover their positions and nations are scrambling to secure the commodities they need. And that's creating a sort of a commodity boom across the cycle. So it's not just energy, it's not just energy and minerals is what we're also talking about. Wheat prices and room oddities. And it sort of seems like there's a boom in everything real, which is sort of interesting. And there's also sort of what you expect in a high inflation environment. Commodities tend to perform well in high inflation because they're real and that they hold value. So there's part of that going on. But yeah, it is interesting. It's not it's not super clear-cut why it's sort of such a broad based commodity boom. 

Adam: [00:29:09] So when we talk about commodities and you talk about broad based commodity boom, I don't think I'm even clear on what a commodity is and what a commodity isn't like. Can you? Can you help me out? And then hopefully some of the listeners out there understand when we hear about commodities, what are we talking about? So you mentioned food, you mentioned like grain, wheat, whatever wheat minerals. 

Thomas: [00:29:29] I think I think the basic definition is is anything unprocessed. Like if you just dig it up out of the ground or pull it off a plant and don't do anything to it, then it's a commodity. Once you put it into some kind of factory process and transform it into something else, then it becomes a good. And then it becomes that sort of like the broad definition, I think. So if it's a sort of a raw substance, unrefined, unprocessed, then it's a commodity. I think that's how I understand it. 

Adam: [00:30:02] I don't really think of my local florist as trading in commodities they know. Yeah, right. So it could be anything. So oil's a commodity. Yeah, that's the big one. It's the one that everyone's kind of talking about what's pushing fuel prices up? Yeah, yeah. But then there's all these other ones, the wheat and all that kind of kind of stuff. Mm-Hmm. Fuel and food are the big. That's the one that's going to get everyone the the most worried, right? 

Thomas: [00:30:27] Yeah, I think that's right. I mean, food's much broader than than energy. So energy is pretty concentrated in oil and gas. And so disruptions to the oil and gas market have big implications on the global economy. With commodity food commodities, it's a bit more it's a bit more substitutable like to an extent. You know, there's if wheat gets too expensive, people might just switch towards rice, for example. There's obviously big limits to that. But so so yeah. Yeah. So it's not it's not as concentrated in just a handful of of commodities like the energy market is the thing. That's why the energy is such a pain point for the global economy. 

Adam: [00:31:06] And so it's something like this happened in the 70s, if I'm not mistaken. Is there any are there any parallels between this or what happened in the 70s? First of all, I 

Thomas: [00:31:13] was seventy three had the OPEC oil shock, so Israel invaded Palestine, and that was supported by a number of Western countries and OPEC, the Organisation of Petroleum Exporting Countries, which was led by Saudi Arabia and. The number of Arab countries they wanted to stand in solidarity with Palestine and so enforce an embargo on all the countries that were supporting the Israeli war. And so they just stopped exporting oil and in that oil prices effectively tripled over that period and it created in the US there was rationing, you know, gas stations ran out of fuel, though there were limits on how many how much customers could buy. The days of the week, they could buy that sort of thing. So. Yeah. And that created a massive shock because particularly the US economy at the time was really oil dependent and just wasn't ready for like a three fold increase in oil prices. Yes, that that was what happened. That's the oil shock of the of the 1970s 1970s. This time around, it's not. I mean, there's parallels, obviously like this Big Oil producers just gone off line. But it's quite a different beast to write. I mean, it's interesting the political there is a sort of a political dimension to it. I think like Goldman Sachs, commodity analysts are saying that there's a bit of defensive stockpiling going on now because people are sort of seeing that the space is disrupted and disrupt the ball. Nations are feeling like, OK, I need to secure my supplies. And so there's a bit of stockpiling. While in the middle of this shock, then nations are going out and trying to stockpile oil as well, which just increases demand. 

Adam: [00:32:59] These are the same governments that told us not to panic buy toilet paper or something. Yeah, yeah, that's right. Panic buying, panic buying, energy commodities, panic buying energy. It's not. The US is planning to get rid of more oil coming tomorrow. We restocking the oil shelves. Just everyone calm down, right? Thomas, I've heard there's a freeze on Russian currency reserves. Obviously, there's a lot of sanctions being imposed on Russia at the moment. Can you tell me what's going on with the freeze on their their reserves? 

Thomas: [00:33:35] Yeah. So yes, it's interesting. So one of the things that the effectively the West has debunked Russia and the D Bank, the Russian central bank. So the Russian central bank had a large stockpile of reserves. So after the Crimea war and there was a bunch of sanctions imposed on on Russia back in 2014, the central bank went out and doubled its holdings of foreign reserves, foreign currency, foreign bonds and gold, yet had 860 billion dollars just sort of parked like it had built up that war chest of foreign reserves, but it didn't bring it home. It kept a lot of that, those foreign reserves in foreign nations and in the markets where it was going to use them as more convenient to leave the gold in in London or whatever it, wherever it ends up. So that didn't bring it home 

Adam: [00:34:27] a bit lucky. Like having it in your state US wallet? Yeah, yep. 

Thomas: [00:34:32] Yep, exactly. 

Adam: [00:34:34] Putin, Putin had it in his strike. You as well. Yeah, yeah. Yeah. 

Thomas: [00:34:40] Um, so they had a they had it over there and it was sort of Russia's insurance policy because they thought, Well, if if sanctions come and people don't want to trade with us, we'll have the reserves that we can still buy, the stuff we need for the time and and ride out the sanctions. And maybe we'll be sweet. But what happened was, is that, yeah, the West is just frozen. That money is going like not we're keeping it. You can't have it right? Yeah. So can they do that? Well, they did. 

Adam: [00:35:08] Yeah, yeah. Yeah, it's just like, you can't do that. Well, we just, yeah, um yeah, 

Thomas: [00:35:18] that is that it's yes, stored in France, Germany, Italy, the UK, Canada and the US. So that spread it around. But all of those nations got together and went, You know, we're just freezing it. You can't have it. Yeah. And so that's just we have yeah, it starves Russia for foreign reserves. As a result, the ruble collapsed the rubles down 40 percent, a massive fall in the currency. The central banks trying to prop up the currency give it some support, but they don't have the foreign reserves to buy, which is normally how you support. So they've had to lift interest rates, their cash rates up from nine and a half percent, up to 20 percent. But that obviously feeds through the whole economy because now there's a massive doubling in interest rates that feeds through to the, you know, mortgages and everything in Russia. So that's hurting the Russian population. Yeah, they've also introduced money controls, so they've stopped people sending money abroad. Governments, firms that are earning us Dollars have to hand over 80 percent of them in exchange for rubles. So they're not letting foreign companies hold on to their own foreign reserves. 

Adam: [00:36:19] And is this just the Russian government? I mean, we've heard a lot about oligarchs in the last few weeks. Is it just the Russian government money or is it kind of? 

Thomas: [00:36:27] Yeah, no, this is the Russian government. They started with the oligarchs, the freezing their assets on February 27. That was the first thing that they did, so they named like this person. We're going to freeze their assets held in overseas banks. We're going to seise their yachts or whatever. And that was the first thing and that was that was expected. They then cut them off from the swift system, which is the communication system that underlies the financial system. That was a bit of a surprise, but not like two out there. But then they and then after that, they froze reserves of the Russian central bank. And that is big. Like, that's you know, they banked Russia effectively and said, like, not where you just we just taking your money. And so that really undermines the trust of the financial system. And I think China in particular will be taking note of that going like, OK, well, if they can do that, that's that's next level that they're ready to deploy that. Mm-Hmm. And that the fact they did it to Russia, who is part of the G-20 and the G7, you know, and a significant player that that's, you know, they have they have frozen assets of like Venezuela and country smaller countries like that in the past. But to do it to Russia through a, you know, UN Security Council member, it's a big story. It's it's really big. 

Adam: [00:37:42] This is actually Ren like I've had this happen to me. Would you believe I had I had the 

Thomas: [00:37:48] G7 Security Council 

Adam: [00:37:50] to defend you? Oh yeah. In a way, I had a I had an online betting account and and I'd been doing some, some matched betting arbitrage kind of some arbitrage work. And I've built up this balance in this in this online betting account up to about fifteen hundred bucks. And I decided it was time to cash in and I went to cash it in and I said, No, we think you, we don't. We don't think you're you're playing with your own money. We don't think you're playing by the terms and conditions, which I was outraged that obviously I was a kimberlé, but I had to go and get a 

Adam: [00:38:30] let's go, get a JP 

Adam: [00:38:33] to witness 

Adam: [00:38:34] my my employ my medical payslip 

Adam: [00:38:40] to prove that I had enough money to cover the bets that I was making, which weren't large. I think it was just that didn't. Probably they triggered that. I was maybe up to some shenanigans and and they didn't want to release the money. So I had to go. I had to go to a library, 

Adam: [00:38:55] public library and say, and you know, I tried to get my funds released from a bookie phase where there was space and stuff. Uh, yeah, that's eerie 

Thomas: [00:39:05] parallels with what's going 

Adam: [00:39:06] on in Russia at the moment. I did want to ask, is this the time that Russia moves to bitcoin? 

Thomas: [00:39:13] Uh, yeah, that's an interesting question. I mean, it is kind of the proof case for bitcoin and one of the, you know, the the key points selling point of bitcoin is that it can't be debunked. You can you keep your money protected from the government or from the financial institutions in particular. And that's sort of one of the use cases for bitcoin. So it is positive for that. At the same time, though, the oligarchs are using cryptos in bitcoins to protect their wealth from these kind of sanction measures. So like, that's you know, you can argue the toss on whether that's a good or a bad thing. I don't see Russia going full bitcoin in the process, but you know, you never know 

Adam: [00:39:51] how it helped my crypto portfolio. Typically, if they did, I imagine. Very good. All right. Why don't we leave it there? Thomas, thank you again for your company this week. Best of luck with the ongoing flood clean up. There's plenty of work to do. Don't forget you can put a link in the show notes if you would like to donate some money to the cause. Always very much appreciated a lot. In the meantime, lots of other great shows to get years around. Get Started Investing feed Equity Mates Investing Podcast You're in Good Company Talk Money to me. Crypto Curious and don't forget Fin Fest. We are calling all bulls and bears and party animals. If that sounds like you get along. Thank you for tuning in to comedian versus economist this week. We look forward to talking to you again very soon. Bye for now.