"Plunging oil prices and economic sanctions have pushed Russia's economy to the brink of collapse. "Couldn't happen to a nicer dictator than Vladimir Putin," you might be thinking, but it could have repercussions for all of us.

Russia's currency, the ruble, crashed to record lows against the U.S. dollar on Tuesday, accelerating a months-long selloff. Russia's central bank jacked up interest rates in the middle of the night, desperately trying to stanch the bleeding by enticing investors to keep cash in the country. The bank raised its key rate to 17 percent from 10.5 percent, the biggest hike since Russia's ruble crisis in 1998. If that effort did any good, it was hard to tell. (Story continues below chart.)"...

..."The central bank's failure means it will have to keep trying, either by raising rates again or potentially by cracking down on the flow of capital out of the country. Neither option is good, as they can stifle borrowing and economic growth, which was already in deep trouble.

Russian GDP might shrink by a terrifying 4.5 percent next year, the central bank said Monday, especially if the price of crude oil hangs around $60 a barrel.

Oil traded around $54 a barrel in New York on Tuesday, after free-falling from nearly $100 a barrel in August. Russia is the world's second-biggest oil exporter after Saudi Arabia. The oil price crash has starved the country of a major source of economic power. Throw in Western sanctions over Putin's adventures in the Crimea and Ukraine, and the Russian economy has ground to a halt.

So, mission accomplished, right? We've punished Putin. But beware of blowback.

The 1998 crisis brought down hedge fund Long Term Capital Management, which shook the entire financial system. The Federal Reserve had to ride to the rescue of LTCM, recruiting banks to bail it out. The current ruble collapse is starting to look worse than the 1998 debacle: (Story continues after chart, which is courtesy of tradingeconomics.com)"...