Defense! Defense!

Alabama, Oregon, Florida State, and Ohio State have made it to the first college football four-team playoff, a new era for the collegiate sport.  All of these teams are led by strong quarterbacks (even Ohio State’s third stringer looked impressive against Wisconsin) and have potent offenses capable of scoring virtually at will against most opponents.  Their offensive potencies have carried them far into the season, but these schools would not be in a position to compete for the national title without some equilibrium provided by their defenses.  According to a USA Today ranking, not one of these top four ranked teams has a defense positioned in the top 10.  Nonetheless, the teams still keep defensive squads because balance is required to succeed even when you have standouts in key offensive positions.

For years, the Russian Federation’s economy has been able to thrive with a strong offense led by energy exports.  Whether you approve of coach Putin’s play calling or not, petroleum helped pay for the most recent Winter Olympics, is funding the continued annexation of Crimea, and has kept Russia’s patient citizens content via a state-driven economy.   But recent global pricing dynamics have left Russia’s star player sidelined.  As energy costs have fallen, so have the nation’s revenues.  When coupled with U.S. led trade sanctions, Russia’s economy is far from the red-zone.

Now, their central bank is on the field because other segments of the Russian economy are not strong enough to withstand the decline in petroleum prices.   As the world’s energy prices fall, the Russian ruble is suffering a similar fate since the economy is so closely tied to crude oil   In order to keep its currency from collapsing, the Russian central bank has stepped in to play defense.  For a currency to fall in value, the volume of sellers must be greater than that of willing purchasers.  Buying the currency was the first play called by the central bank in an attempt to keep the value from falling too far.  However, the central bank can only do a finite amount of buying.  Despite selling copious amounts of its foreign currency reserves to fund the purchases, the ruble continued to slide.  Next, the central bank raised its overnight lending rate to 17.0 percent in order to entice other investors to buy ruble denominated debt.  So far, the results have been nil.  Defending a currency and an economy has a limited playbook, and Russia’s offensive star is not in a position to help.

When the Ducks’ offense takes the field against the Seminoles, they will rely heavily on their Heisman Trophy winning quarterback.  But when Florida State has the ball, Marcus Mariota will be off of the field because teams must plan for times in which their opponents have possession.  Russia has only practiced for offense and now its central bank is lining up a defense that appears ill prepared for the strength and speed of its global market opponents.      (by C. Cox)