General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsAchilleaze
(15,543 posts)The Republican family-values role model and ripoff artiste is about to get stiffed, reamed, and re-evaluated.
Grasswire2
(13,646 posts)OMGWTF
(4,321 posts)Kablooie
(18,708 posts)czarjak
(12,171 posts)dchill
(39,724 posts)gratuitous
(82,849 posts)boston bean
(36,408 posts)dchill
(39,724 posts)Irish_Dem
(55,624 posts)dchill
(39,724 posts)Irish_Dem
(55,624 posts)dchill
(39,724 posts)Diablo del sol
(424 posts)Ill cover 200
Irish_Dem
(55,624 posts)honest.abe
(9,238 posts)Total economic collapse?
former9thward
(33,104 posts)Bond holders do not get paid. That is about it. It happened before in 1998.
honest.abe
(9,238 posts)On Friday, February 25th, S&P Global Ratings was the first rating agency to open the flood gates of Russian downgrades. In just one week, Russias local and foreign currency sovereign debt rated has plummeted from investment grade BBB- to CCC-, a level showing that a default is imminent. S&P also announced that it also downgraded its transfer and convertibility assessment to 'CCC-' from 'BBB-'. The ratings remain on CreditWatch with negative implications. CreditWatch Negative means that S&P could downgrade Russian debt even further.
On Wednesday, FitchRatings downgraded the Russian Sovereign from BBB to B, and this Friday, FitchRatings downgraded 100 Russian issuers including 32 banks local and foreign subsidiaries and six government related issuers, as well as companies in the consumer and health, homebuilding, insurance, natural resources, telecommunication, transport, and utilities sectors.
Defaults will push Russia even faster toward an economic crisis that will be far worse than the 1998 crisis. In the mid-1990s, Russia was an economy in transition from a centrally planned economy and embroiled in a costly conflict in Chechnya. The spillover from the Asian crisis and oil in the $10-25 range were the nails in the coffin for the Russian ruble. In that crisis, no government or company was closing off the Russian economy.
https://www.forbes.com/sites/mayrarodriguezvalladares/2022/03/05/imminent-russian-defaults-will-lead-to-an-economic-crisis-worse-than-in-1998/?sh=5db6a3f327bd
former9thward
(33,104 posts)But in 1998 China was not nearly as strong as it is now. China will be helping Russia this time. Also in 1998 as your post points out oil was in the $10-$25 range. It is touching $130 now. That will help the Russian economy.
honest.abe
(9,238 posts)We shall see.
former9thward
(33,104 posts)The majority of the world's nations are not participating in the sanctions. President Biden mentioned today that even much of Europe will continue to use Russian oil and gas.
honest.abe
(9,238 posts)erronis
(16,445 posts)I know there were very large loan payments due - perhaps in the real-estate sector.
Of course there are these circular dependencies and layers of obfuscation that make tracing who owes/owns what very difficult.
Igel
(35,892 posts)It would be fairly hard for them to pay the bondholders.
Tomconroy
(7,611 posts)seize Russian assets. Private Russian debt will be shaky. Russia won't be able to finance basic infrastructure improvements. They will be barred from the world of credit and large Russian corps will suffer as well. Want to buy a Gazprom bond?
Alexander Of Assyria
(7,839 posts)And the hard currency and reserves of all banks frozen its economic Armageddon.
Stuart G
(38,726 posts)Tomconroy
(7,611 posts)A Great Depression basically
Russia prints rubles and prints and prints and prints
Captain Zero
(7,307 posts)Ink might be embargoed.
AZLD4Candidate
(6,119 posts)Go it, Pootie Poo. Start a depression AND a hyper inflation.
FakeNoose
(34,774 posts)Nobody else will accept the Monopoly money, but it still means something within their own borders. I guess maybe Putin has enough bitcoin to pay Deutsche Bank. But if he doesn't, the game is over.
I can guarantee you that Deutsche won't accept rubles.
LetMyPeopleVote
(152,036 posts)Achilleaze
(15,543 posts)Achilleaze
(15,543 posts)NightWatcher
(39,353 posts)Anybody else think now would be a sweet time to finish that Cold War and just go in there and hang Old Glory from every flagpole in sight? I think that once putty's gone, we can take the place with no bullets, just the promise to bring cannabis and re-open the McDonalds.
Lets finish this with a W.
ProudMNDemocrat
(18,455 posts)No money, no war.
AZLD4Candidate
(6,119 posts)Come on, Pootie poo. Do it!
erronis
(16,445 posts)PortTack
(34,007 posts)Okay...but if they have no money, how is he going to resupply these forces? Rocket launchers, jets, helicopters and tanks need fuel, soldiers need to eat.
As of right now Russian factory workers are being half salaries, russian citizens that had any savings find their savings now being taken by the state.
erronis
(16,445 posts)No tyrant wants to see his henchmen staring at him hungrily....
TomSlick
(11,591 posts)How much sovereign debt does Russia have? Who holds the notes? What is the remedy (if any) for the debt holders in the event of default? Why would anyone loan money to Russia or buy Russian debt?
I'm not being snarky. I am sincerely curious.
PortTack
(34,007 posts)Seems Putin planned it knowing this invasion was part of his plan
Yo_Mama_Been_Loggin
(112,825 posts)leftieNanner
(15,538 posts)He probably gave Putler (love that name) an IOU.
I will gladly pay you Tuesday............
ToxMarz
(2,210 posts)'trump' golf courses.
WarGamer
(14,290 posts)So the lender gets screwed.
Kaleva
(37,623 posts)He devalued the currency by half, IFIRC, thereby reducing what Prussia owed by 50% and doubled taxes so state income remained the same.
WarGamer
(14,290 posts)I wouldn't be surprised if the gov't institutes price controls too.
They will lose access to SOME foreign products, those from the EU and USA... but they can get all that from China and India.
honest.abe
(9,238 posts)Response to honest.abe (Reply #37)
WarGamer This message was self-deleted by its author.
honest.abe
(9,238 posts)panader0
(25,816 posts)It'll be less soon.
Evolve Dammit
(18,015 posts)honest.abe
(9,238 posts)SIMON WAEVER
The South American nation and its state-oil company, Petroleos de Venezuela S.A., defaulted on a combined US$60 billion more than four years ago. The U.S. imposed sanctions forbidding trading of the securities in 2019, following a contested presidential election the year prior. Now, some of the bonds trade at just pennies on the dollar.
JPMorgan Chase & Co. said on Monday it will remove Russian bonds from all of its widely tracked indexes, further isolating the nations assets from global investors. Venezuelas dollar bonds were also removed from the banks benchmark indexes in 2019 after sanctions curbed trading.
Nonpayment could be tied to Russias unwillingness to pay foreign creditors because of sanctions imposed by the U.S. and its allies. There is some uncertainty surrounding whether U.S. banks will be allowed to accept coupon payments from Russias Ministry of Finance, according to Morgan Stanley. Payments to foreign investors will depend on sanctions introduced against Russia and exemptions established by the relevant licenses and permits, according to the Finance Ministry in Moscow.
The potential for significant further selling will put additional downside pressure on prices, Waever wrote. We see very little incentive for any investor to step into Russian sovereign bonds at this point.
https://financialpost.com/news/economy/russia-set-for-a-venezuela-style-default-morgan-stanley-says
Also see here:
https://www.democraticunderground.com/?com=view_post&forum=1002&pid=16459384
Evolve Dammit
(18,015 posts)Money and sanctions will hurt, but not stop the insanity.
Joinfortmill
(15,804 posts)IronLionZion
(46,701 posts)iemanja
(54,052 posts)Is this a bank loan? A loan from the IMF? Their deficit?
iemanja
(54,052 posts)An article is always preferable to a tweet because it provides information.