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Started By
Message
re: Update pg 23: Russia,IMO, will default on its sovereign debt within six months
Posted on 12/16/14 at 7:09 pm to Big Scrub TX
Posted on 12/16/14 at 7:09 pm to Big Scrub TX
quote:Can Joe Investor buy CDSes online? Genuinely curious if that's the case.
Iosh, answer me this: if you believe it was 100% chance Russia was going to default in the next year, why would you not go out of your way to buy CDS that implied the same chance was only 4%?
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Posted on 12/16/14 at 7:34 pm to Big Scrub TX
You've made it clear you disagree. At this point you are just derailing the thread for everyone else who couldn't give a shite about the things that are annoying you. Please excuse yourself and leave the thread.
This post was edited on 12/16/14 at 7:36 pm
Posted on 12/17/14 at 9:39 am to Big Scrub TX
Wow, you are incredibly butthurt about LSURussian making some solid commentary. Jelly much?
Posted on 12/17/14 at 9:52 am to Tigerlaff
So it looks like the central bank announced today that they would be willing to bail out the banks and financial firms. Rouble has gained back a chunk of ground, but is still hurting.
If Obama signs further sanctions at the end of the week, I'd be curious to see how hard it nudges the value down. This will perfectly play into Putin's "Western financial meddling" rhetoric.
I'm with Russian on the true amount of dollar reserves on hand; they keep hinting at more foreign exchange auctions but don't seem to want to follow through with it.
If Obama signs further sanctions at the end of the week, I'd be curious to see how hard it nudges the value down. This will perfectly play into Putin's "Western financial meddling" rhetoric.
I'm with Russian on the true amount of dollar reserves on hand; they keep hinting at more foreign exchange auctions but don't seem to want to follow through with it.
This post was edited on 12/17/14 at 9:54 am
Posted on 12/17/14 at 10:04 am to Tigerlaff
Why people feel the need to validate their self importance by interjecting negativity in an otherwise informative topic that many on here have little firsthand knowledge of but are interested in just blows my mind.
Get over yourself dude!
Get over yourself dude!
Posted on 12/17/14 at 10:06 am to Tigerlaff
quote:Here is a link explaining why the rouble strengthened today, which I think is just temporary.
Rouble has gained back a chunk of ground, but is still hurting.
Ministry of Finance is selling its dollar reserves to prop up rouble
I'm trying to understand the logic of the Ministry of Finance and NOT the Central Bank of Russia using its reserves to intervene in the currency market. I don't remember that ever happening before.
And the article says the Min of Fin only has $7 billion in reserves to use. Compare that to the CBR's "reported" reserves of over $400 billion. Very strange.
Posted on 12/17/14 at 10:13 am to LSURussian
quote:
I'm trying to understand the logic of the Ministry of Finance and NOT the Central Bank of Russia using its reserves to intervene in the currency market.
This is why I'm calling BS on the hard currency reserves the bank has real access to. That and the recent dumping of gold reserves. shite looks totally shady and they are probably hiding something.*
Imagine the response if the bank were to come out and admit that they only have a fraction of those reserves on hand.
*In my non-professional, armchair, totally conjectural, college football scandal, Auburn bagman opinion, that is.
This post was edited on 12/17/14 at 10:17 am
Posted on 12/17/14 at 10:25 am to Tigerlaff
quote:You may have nailed it.
This is why I'm calling BS on the hard currency reserves the bank has real access to. That and the recent dumping of gold reserves. shite looks totally shady and they are probably hiding something.*
The implication of the Min of Fin using its money is twofold: (at least twofold, maybe more....)
1) The dollars Min of Fin is using are usually intended for the government to buy goods on the international market, such as materials it needs to manufacture military stuff because almost no foreign manufacturer or raw goods exporter will accept Russian rubles.
2) Those are Russian tax dollars the Min of Fin is using. That means there is less money to pay for any and all government services that might require dollars and not rubles.
The actions of the Min of Fin really smack of desperation to me.
ETA: One other thought... In October alone the Central Bank of Russia spent $15 billion of its reserves buying rubles. The Min of Fin only has $7 billion total in its reserves. The CBR spent $700 million in just two days last week to buy rubles.
This post was edited on 12/17/14 at 10:36 am
Posted on 12/17/14 at 3:54 pm to LSURussian
The Central Bank of Russia today bailed out all the banks in Russia without spending a single ruble.
What this means is the Central Bank of Russia will turn a blind eye away from bankrupt banks, just like it did during the Soviet days.
If the Russian banks adhered to international accounting standards they would have to write down the value of their Russian bonds and also base all of their loans on the now very much devalued ruble.
If assets are written down then for the balance sheet to balance, capital must be written down also. In the case of the massive unrealized losses on the banks' books from the government bonds drop in prices and the devaluation of the ruble, it would probably wipe out most if not all of the capital of the banks in Russia resulting in bankruptcy.
This is a very creative approach to bailing out banks without spending any money to do so.
quote:LINK
The Bank of Russia said lenders won’t have to write down the value of assets affected by the weaker ruble and falling bonds, allowing banks to use the third-quarter exchange rate in valuing risk-weighted assets.
What this means is the Central Bank of Russia will turn a blind eye away from bankrupt banks, just like it did during the Soviet days.
If the Russian banks adhered to international accounting standards they would have to write down the value of their Russian bonds and also base all of their loans on the now very much devalued ruble.
If assets are written down then for the balance sheet to balance, capital must be written down also. In the case of the massive unrealized losses on the banks' books from the government bonds drop in prices and the devaluation of the ruble, it would probably wipe out most if not all of the capital of the banks in Russia resulting in bankruptcy.
This is a very creative approach to bailing out banks without spending any money to do so.
Posted on 12/17/14 at 3:57 pm to LSURussian
Long term how will this... err... "creative" approach impact the Russian banking industry? I have to think that foreign investors, already wary, are going to be most unhappy.
Posted on 12/17/14 at 4:01 pm to LSURussian
Another non-professional, armchair, totally conjectural, college football scandal, Auburn bagman here with a question:
When you say:
Does this affect only their bonds but everyone else holding Russian bonds are fricked?
Or does it mean everyone gets to party like it's 1989?
I get that it might not matter (Assumption: Russia probably holds the majority of thier own bonds and they give less of a frick about foreign owned debt than their own debt). But kind of a fascinating situation.
When you say:
quote:
The Bank of Russia said lenders won’t have to write down the value of assets affected by the weaker ruble and falling bonds, allowing banks to use the third-quarter exchange rate in valuing risk-weighted assets.
Does this affect only their bonds but everyone else holding Russian bonds are fricked?
Or does it mean everyone gets to party like it's 1989?
I get that it might not matter (Assumption: Russia probably holds the majority of thier own bonds and they give less of a frick about foreign owned debt than their own debt). But kind of a fascinating situation.
Posted on 12/17/14 at 4:03 pm to LSURussian
Interesting.
CNBC had several more folks on today, including Immelt, addressing Russia. Most feel Russia will weather this. Cramer, who I hate, said we should sell USTreasuries at a premium. Said Russia would jump all over USTs purchase because of the Ruble.
Said Russia would be "funding" our debt.
I swear, I think the guy puts a little too much Meth in his coffee.
CNBC had several more folks on today, including Immelt, addressing Russia. Most feel Russia will weather this. Cramer, who I hate, said we should sell USTreasuries at a premium. Said Russia would jump all over USTs purchase because of the Ruble.
Said Russia would be "funding" our debt.
I swear, I think the guy puts a little too much Meth in his coffee.
Posted on 12/17/14 at 4:05 pm to Arksulli
RCB must have been afraid to run out of cash in order to pull this slick little maneuver, don't you think?
Posted on 12/17/14 at 4:07 pm to ironsides
quote:The Central Bank of Russia only has authority over the banking sector.
Does this affect only their bonds but everyone else holding Russian bonds are fricked?
What the CBR is telling the banks it oversees is "We won't count your bond and ruble devaluation losses against you. We'll just pretend the losses aren't there."
The losses are still there. They don't go away. But the banks won't have to report the losses under the new directive from the CBR.
Think of it as the CBR giving banks a financial milligan on the govt bonds it holds along with any losses resulting from the ruble devaluing.
If an individual owns a Russian govt bond, he will still have the losses which he would have to take if he sold his bond and there's nothing the CBR can say to change that.
Posted on 12/17/14 at 4:14 pm to Arksulli
quote:The attitude of Russia has always been 'f*ck the foreigners.' But, you're right, it's another reason to never invest in Russia any more money than you can afford to lose because the chances are you will lose all of it.
I have to think that foreign investors, already wary, are going to be most unhappy.
Google "Paul Tatum, Moscow" and see what happens to foreigners who invest in Russia who refuse to lose money just because a Russian says so.....
Posted on 12/17/14 at 4:18 pm to Sid in Lakeshore
quote:That's possible. It probably has more to do with every major bank in Russia is now technically insolvent if they wrote down their assets to current market prices.
RCB must have been afraid to run out of cash in order to pull this slick little maneuver
And Russia doesn't need all of its big banks to be closed down simply because of the small accounting technicality of a bank having no tangible capital.
Posted on 12/17/14 at 4:20 pm to LSURussian
quote:
The Bank of Russia said lenders won’t have to write down the value of assets affected by the weaker ruble and falling bonds, allowing banks to use the third-quarter exchange rate in valuing risk-weighted assets.
Everyone just keep dancing!
Posted on 12/17/14 at 4:22 pm to NC_Tigah
quote:Russia will continue no matter what happens.
Most feel Russia will weather this.
And I'm reminded that Enron Corporation had a AAA credit rating up until the day before it declared bankruptcy.
Posted on 12/17/14 at 4:26 pm to LSURussian
quote:"Smartest guys in the room"
I'm reminded that Enron Corporation had a AAA credit rating up until the day before
Posted on 12/17/14 at 4:30 pm to NC_Tigah
quote:
"Smartest guys in the room"
Yep, that's how they thought of themselves.
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