(This article was originally published on Real Money, Dec. 16 and updated for timeliness and clarity today.)

NEW YORK (TheStreet) -- The Russian ruble has to win the award for the most dramatic chart of the year. Take a look: 

The Russian central bank raised rates to 17% from 10.5%, a hike that would make even Paul Volcker stand in awe. If you don't know how these things work, rate hikes deter speculators from shorting your currency, because that is the rate that you have to pay to borrow it. In a currency crisis like this, rate hikes are often successful at restoring order to the FX markets, but they do so at great cost: economic growth.

You see, it is unlikely that Russia will manage positive growth next year with interest rates at 17%. It is very likely they will be in recession. That, combined with an almost 50% drop in the price of oil, means that 2015 will be a very bad year for Russia. Economist Tim Duy observed yesterday that the International Monetary Fund typically gets involved in situations like this, but perhaps not on behalf of countries who have a habit of invading their neighbors and redrawing the map.

And that is the thing the people are concerned about. There are a lot of parallels with Germany in the 1930s, including economic sanctions that are possibly counterproductive. As long as the narrative persists that Russia's travails are a result of Western interference, Vladimir Putin has the latitude to pretty much do whatever he wants. If he wants to steal blinds and annex more territory, I don't see the U.S. putting up much of a fight.

But that is neither here nor there. We are trying to judge Russia on its investment merits. I was bullish on Russia earlier in the year, because it had the cheapest stock market in the world, at price-to-earnings ratio of 5. Now it is even cheaper, with its P/E less than its dividend yield. There are very few occurrences of this in history, and they nearly all resulted in stocks going higher. But remember that you have to take into account moves in the currency. If Russian stocks appreciate 30% but the ruble declines 30%, you're no better off.

These are the types of trades for knife-catchers and gamblers, of which I am neither.

Emerging markets have been getting blasted pretty much across the board. Brazil is getting killed. The Mexican peso is collapsing. Venezuelan bonds will surely default, and so will Ukraine's. Petro-states like Nigeria are falling apart. It's grim. All of this is made worse by a rising U.S. dollar, which puts pressure on emerging markets.

One last point: I think it's interesting that Russia has gotten to this point without the media really labeling it a currency crisis, which is what it is. I remember a currency crisis in 1997 that might not have been as severe, and it got a name: the Asian Financial Crisis. That resulted in stocks going down 14%. It's getting choppy, but the market doesn't seem to be pricing in the amount of global pain that's out there right now. I think it will soon.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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