Re: On a more serious note...
What a load of old tosh!
Fistly the Rusian ecnomy isn't all that big, compared to the rest of the world. In normal times a collapse like this would be only a tiny blip. In these fevered times it's possible that it could start an emerging market meltdown, that plunges the world back into recession. On the other hand, there was always going to be a withdrawal of liquidity from emerging markets, because the US have stopped doing QE. This has been happening for months, with the odd big blip in the market, but so far no collapse. What makes things easier now is that the oil price has collapsed. So although Turkey is getting hit now, it will probably recover, because its oil is only costing half as much, and it's able to produce lots of exports. Whereas 70% of Russia's exports are oil/gas, and that's just halved in value. So they've taken a 35% hit in export value over about 3 months. Painful. Not to mention that Russia's main gas market (the EU) has cut it's demand for Russian gas by a third this year, as liquid natural gas has got cheaper and more plentiful, and trust in Russia has collapsed.
There is a problem for emerging market countries that have heavily borrowed in dollars, while they were cheap, as the dollar is now heading north, so repaying their loans will cost more. Russia being one of these countries. That's one of the main worries about the global economy - after the continuing Eurozone clusterfuck.
But the economic impact of Russia's problems on the EU is minimal. Germany is the biggest trading partner. I really can't see Russian problems causing China anything more than a blip.
As for sanctions ending cooperation, I doubt it. This crisis should be reinforcing to the Russian government that they actually need the West. They chose to align their economy more with the international one, after the Soviet experiment in going it alone turned out not to work so well. They've done quite well out of it, and this is a good sign of the costs of saying fuck-you to everyone else. Whether that's a sign Putin and co will choose to ignore, I can't judge. I used to think he was a very rational calculator - but his actions in the Ukraine looked like some pretty short-termist gambling, that's turned out horribly badly. So maybe he's not so rational after all?
Anyway the Russians like their imports now. So they'll probably want hard currency. And the ISS gives them hard currency, while supporting their hi-tech space industry. Apparently that now uses a lot of foreign-made parts, which have just doubled in price. So the ISS cash ought to be welcome. The profit on that has just also doubled, as they get paid in hard currency, so can buy the parts, but then that gets twice as many roubles, so can give all their suppliers and staff a pay rise (to cushion inflation), whilst still improving profits. Exports are yummy when your currency collapses, and not to be lightly spurned.
As for sanctions, even the new ones Congress have passed are all still pretty minor. The US and EU have been very careful to only use the most limited sanctions, to make a point. They didn't aim to have this catastrophic effect (even though they always could have), but to ramp up the pressure slowly and give Putin space and time to back down. A lot of what Congress has passed gives Obama the power to impose new sanctions, which he doesn't have to use. In my opinion it would be worth offering Russia a deal to help prop up the Rouble now. The problem is Putin has lied and broken so many deals over Ukraine, that it's hard (probably pointless) to give him the reward before he's actually delievered on the promise. I guess we could just do it anyway, and hope for the best - and it's also a good way of giving confidence in the other emerging markets under attack.
By the way, we didn't sponsor the Chechen fighters. The West were specifically also worried about islamist fighters training in Chechenya - which is why we didn't protest about the hideous Russian human rights abuses there (which made Iraq look like a picnic in comparison). There was a hell of a lot of security cooperation with Russia (particularly in Central Asia), as the US in particular were keen to build a closer relationship with Russia, precisely so this kind of stuff didn't end up happening. The Russians created their own terrorist problem in Chechenya with no help from anyone else at all. Although I'm sure the usual suspects in the Middle East were funding the jihadis, as have been in Pakistan, Syria, Libya etc.
I would not like to think what will emerge now and frankly he was spot on in his interview at the 20 summit in Melbourn - some people are playing with fire without understanding the full consequences of what they are doing.
That is certainly true. Putin has now invaded two of his neighbours and effectively annexed some of their territory. In the case of Crimea, explicitly so. And that's something that's not happened in Europe since WWII. Even the Germans, who's foreign policy consensus has been built on trying to build bridges with Russia since the 1960s, have taken a step back and decided to try another tack.
Putin has crossed a line from being prickly, hard to deal with and (possibly over-) protective of Russian interests - to looking like an outright threat to the territorial integrity of some of his neighbours. And we have military alliances with some of them. He's also playing with fire diplomatically by doing stupid things like lying about using Russian troops to annex Crimea and in Ukraine. Then doing deals on ceasefires, while sending in more troops and arms and lying about it. This is the worst kind of Kevin-the-teenager type of diplomacy. Perhaps he thinks it's funny to face people down and outright lie to their faces. But how do you make peace with people who can't trust you? If you break treaties and agreements then no-one will give you a concession before you've delivered on your half of the bargain first. And this is very hard to stomach and embarrassing. And embarrassment is something that dictators can't take much of, because dictators maintain their power by the illusion of invincibility. Once that goes, no-one's scared of the threats any more. And then you can no longer make the odd example, you have to go and massacre or imprison thousands of people in order to stay in power. And that's bad for the self-image. If you're still playing the democrat, father of the nation role (and after all he can probably still genuinely win elections), it really hurts the self image to have to send in the troops to stay in charge. Also trust is vital in economics too, not just diplomacy. And Putin's regime aren't trusted. That's why the rouble collapse. Everyone wants to get their money out of Russia, where it's safe from being stolen.
I always thought Putin was Bismarck. Not a believer in democracy, but willing to use it, and subvert it just enough to stay comfortably in power. While keeping the people on-side with a mix of nationalism and improving the economy. Also a rational and seasoned political / diplomatic operator. That was certainly the mark of his first 2 terms as President. Now he seems to have lost the plot.