

An ad for Trust Bank in Moscow, featuring Bruce Willis, says, "Trust is just like me, but a bank". (Reuters/Nikolay Korchekov/Files)

There are two lessons everybody eventually learns this time of year: Santa isn't real, and you can't trust Russian banks that run ads with Bruce Willis saying "When I need money, I just take it."

The latest news is that Trust Bank, Russia's 32nd-largest by assets, is getting a 30 billion ruble, or $531 million, bailout from their central bank. That makes it the first Russian domino in what figures to be a long line of them as the country's economic crisis turns into a currency crisis that morphs into a financial crisis—which will only make the economic one even worse.

Trust's problem, though, was just run-of-the-mill greed. It promised depositors very, very high interest rates—as much as 8 percent on dollar accounts—to try to lure customers away from other banks. But that meant it'd have to earn very, very high returns on its investments to stay solvent. It couldn't do that. Nobody in Russia can, now that the economy, which insofar as it exists, is just one big oil exporting business that has crashed with crude prices. And the bank couldn't even borrow money to cover this up, because Western sanctions have cut it off from international credit markets. And Russian banks, who know how doomed they all are, won't lend money to each other on anything other than punitive terms. So it was bailout or bust.

That's going to become a familiar phrase in Russia as long as oil prices stay low. As Saudi Arabia's oil minister points out, you can't start drilling a well again after you stop. That means Russia, along with North Dakota shale producers, are going to have to choose between not drilling any oil or drilling oil that they'd take a loss on at current prices. The Saudi's bet, of course, is that they can force prices down low enough—which considering they just said they might increase output, they certainly seem to be doing—to force their competitors out of business. The longer this lasts, the less accurate it will be to say that Russia has an "economy."

The math is brutal. Russia's central bank projects that GDP will shrink 4.7 percent if oil stays at $60-a-barrel. But it's even worse than that, because Russia has sacrificed its economy to try to save its currency. It's jacked up interest rates to 17 percent to try to prop up the ruble, and, on top of that, set off a credit crunch by signaling that it will cut back on central bank loans to its nearly-bankrupt banks. Instead, it will use its $414 billion war chest of dollars to try to bail out the government, the banks, and the ruble.

Russia's going to have spend more of that than it thinks, though, as its self-inflicted monetary wound turns its nasty recession into an even nastier depression. Not only that, but it's going to find out that $400 billion doesn't buy as much as it sounds like. That's because it's actually more like $200 billion. Think about it this way. If Russia spends half its reserves and the ruble is still floundering around, then Putin might as well announce that he's the weak gazelle. Markets will pounce. After all, if $200 billion isn't enough to save the ruble then why would another $200 billion be either? The speculative attacks won't end until the ruble collapses, no matter how much Russia tries to fight it by raising rates.

Putin might want to brush up on his Hemingway. Because Russia, like everybody else, will go bankrupt two ways: gradually, and then suddenly. Even Bruce Willis can't stop that.