As we await Western sanctions against and/or negotiations with Russians, it’s important to note that the economic consequences of Russian brinkmanship over Ukraine are already taking a toll. Here’s how Jason Karaian put it at Quartz yesterday:

Strongly worded statements, threats of travel restrictions, and summit no-shows. So far, these are the relatively mild diplomatic implications for Russia of its incursion into Ukraine, as few in the West can stomach an open military confrontation with Moscow over its apparent occupation of Crimea.

But the markets are punishing Russia much more swiftly than the diplomats. A wide range of Russian assets—stocks, bonds, and the ruble—plunged in value today. To shore up the ruble, which is plumbing record depths, Russia’s central bank unexpectedly hiked interest rates today. It ratcheted up the benchmark one-week rate from 5.5% to 7%, and traders report that the central bank has also been spending billions of dollars in currency markets to stem the fall in the value of the ruble….

Russia only recently vanquished double-digit inflation. An extended fall in the value of the ruble could push inflation back up, further denting the country’s economic prospects.

And so, perhaps for the first time since unrest broke out in Ukraine, Putin may be finding that his actions have costs—not the costs that world leaders threaten to impose in vague communiqués, but the pain that results from thousands of nameless, faceless transactions in stock, bond, and currency markets as investors flee the uncertainty and instability sown by Moscow’s unpredictable intentions in Ukraine. These are attacks that cannot be repelled by troops and tanks, but the damage they cause is every bit as real.

Remember the extended period when U.S. conservatives asserted that the entire problem with the American economy was “investor uncertainty” over tax rates caused by Barack Obama’s willingness to cave to GOP budget demands? Want to see some real investor uncertainty? Look at Russia right now.

UPDATE: After Vladimir Putin’s odd press conference when he nonetheless
tamped down expectations of direct military action against Ukraine, Russian markets rewarded him with a rebound.

Ed Kilgore

Ed Kilgore is a political columnist for New York and managing editor at the Democratic Strategist website. He was a contributing writer at the Washington Monthly from January 2012 until November 2015, and was the principal contributor to the Political Animal blog.