Like bond markets, politics has a well-definedcredit cycle.

But instead of following the boom-bust pattern of finance, politicalcredit markets swing between the spotlight-hogging that takes place during good times and the blame-gamesmanship when things go wrong.Thats important to keep in mind now, as the momentumof the US economy becomes more difficult to dismiss.



The ruble has been one of the worlds worst performing currencies this year and was down another 5 percent on Monday, trading at 56 rubles per dollar in early afternoon in Moscow, wiping out some of the gains it made last week.

The fall came as the Economic Development Ministry issued a report showing the economy shrank by 0.5 percent in November compared with a year earlier. The ministry attributed the year-on-year decline in the economy, Russias first in five years, to a sharp drop in manufacturing and investment.

The economy has been buffeted by a combination of lower prices for the countrys crucial oil exports and the impact of Western sanctions.

Stabilizing the ruble is a priority for the countrys monetary authorities. The Central Bank in past weeks raised its key interest rate to 17 percent and said it will offer dollar and euro loans to banks so they can help major exporters that need foreign currencies to finance operations.

The banks foreign currency reserve has now dropped below $400 billion for the first time since August 2009, as the government has been selling the currency on the market to support the ruble.

Many Russian companies and banks have been locked out of Western capital markets following the sanctions imposed on the country for its involvement in Ukraine.

The government on Monday announced new steps to prop up the banking sector. Prime Minister Dmitry Medvedev told a government session that he has just signed a decree to provide a total of 1 trillion rubles (or $19.6 billion) to Russian banks. The list of the banks and the amount that each of them will receive is expected drawn up by mid-January, according to Deputy Prime Minister Igor Shuvalov.

Shuvalov said the measures should help lsquo;lsquo;the banking sector be more stable in the new circumstances and safeguard it from new shocks if they do occur, he was quoted by Tass.



Anybody who lived through the oil bust of the 1980s in Houston learned the hard way that falling energy prices are a distinctly mixed blessing.

Sure, gasoline costs drop and people standing at pumps marvel at plunging prices, but all too often those cheaper gas bills are an ominous economic indicator. In this case, in the last week of 2014, theyre a direct result of the dramatic decline in the price of oil, Houstons bellwether commodity, which has dropped more than 40 percent in 2014.

And although Houstonians might reassure themselves with the idea that their economy is more diverse than it was before the oil bust, the citys fate is still inextricably entwined with the price of oil and gas. About 38 percent of all the regions jobs are directly tied to the energy industry, according to the Greater Houston Partnership.

Texas has enjoyed relatively high and stable oil prices for the last five years, with the cost of crude nearly tripling between 2009 and 2012, peaking at $138 a barrel. But last month, OPECs failure to agree on production curbs - coupled with the fact that hydraulic fracking has made the US the worlds largest producer of oil -- sent the price of crude plunging. On Dec. 26, its around $60 a barrel.

So Texans are reading some disconcerting economic forecasts. That price drop prompted JPMorgan Chase to draw parallels with the 1980s oil bust and warn that Texas could fall into a regional recession. Meanwhile, Fitch Ratings declared that Texas has the most overheated housing market in the nation, specifically citing the white hot home price hikes in Houston.

But economic forecasts are as common as crystal balls, and their messages are sometimes contradictory. Talk to other economists and youll hear that Houstons economy will do just fine in 2015, perhaps growing at a slower pace but continuing to add jobs at a rate that other cities would envy.

Being one of the most overheated in a country where the housing market is pretty depressed is not quite the same thing as being overheated when the whole economy is doing well, said Steven Craig, an economist with the University of Houston.

Ask consumers about Houstons economic prospects and youll generally hear optimism.

Look at the Detroits of America, the Detroits, places like that, said Zach Van Lieu, as he filled his gas tank in west Houston. I think Houstons still booming, so I dont think theres anything to worry about here.

And its easy to form that opinion looking at all construction cranes towering over the skyline. But a construction boom isnt necessarily a harbinger of an economic boom.

You know, if the oil price stays where it is or even recovers a little bit but not back to where it was, I think theres a good chance that construction is going to slow down, especially second half of the year, Craig said.

Still, the Houston area has some aces up its sleeve. Low oil prices provide the petrochemical industry with cheaper feedstock. And industries along the Houston Ship Channel plan more than $35-billion in expansion next year.

When petroleum is cheap, petrochemicals do better, Craig said. And so, thats good for us. I really dont think its going to be a reprise of the 80s



BERLIN (Reuters) - The German government expects low oil prices to boost growth in Europes biggest economy by 0.2-0.3 percent next year, Der Spiegel magazine reported on Sunday, citing an internal economy ministry memo.

Prices for oil have fallen by around 45 percent to about $60 a barrel since June.

The ministry, reported Der Spiegel, expects oil prices to remain at low levels in the long term and believes they will increase only to about $80 a barrel by 2018.

The memo also stated that Germany would pay some 12 billion euros less to oil producing countries than it did in 2014, a 25 percent reduction, said Der Spiegel.

The ministry declined immediate comment.

The government expects the economy to expand by 1.3 percent next year after predicted growth of 1.2 percent this year.

Arab OPEC producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of next year, they said last week.

(Writing by Madeline Chambers; Editing by Mark Potter)