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Update pg 23: Russia,IMO, will default on its sovereign debt within six months
Posted on 9/29/14 at 11:36 am
Posted on 9/29/14 at 11:36 am
The last time Russia defaulted on its debt was in 1998.
The Russian government halted all government bond sales since July and it just held its first bond sale on Sept 24 since that time. The yields exceeded 9%, a full 100 basis points over the previous auction. The 9.37% rate compares to the US rate on similar term bonds of 2.55%.
The ruble has lost 9% of its value against the US dollar since the Crimea invasion and lost a full 1% today.
The Central Bank of Russia announced today it is considering intervening into the currency market to prop up the ruble's value. That is the last governmental measure available before a currency collapses, like the ruble did in 1998.
The Russian government halted all government bond sales since July and it just held its first bond sale on Sept 24 since that time. The yields exceeded 9%, a full 100 basis points over the previous auction. The 9.37% rate compares to the US rate on similar term bonds of 2.55%.
The ruble has lost 9% of its value against the US dollar since the Crimea invasion and lost a full 1% today.
The Central Bank of Russia announced today it is considering intervening into the currency market to prop up the ruble's value. That is the last governmental measure available before a currency collapses, like the ruble did in 1998.
This post was edited on 1/18/15 at 11:10 am
39
Posted on 9/29/14 at 11:38 am to LSURussian
Will they blame the "Uniate scum" for this as well?
Posted on 9/29/14 at 11:41 am to LSURussian
outside of forex, how can one financially benefit from this insight?
Posted on 9/29/14 at 11:43 am to LSURussian
Paying for wars and a drop in commodity prices (this is mainly the problem IMO) puts the squeeze on Putin.
I look for more saber rattling to follow as Putin tries to get the focus off the Russian economy.
I look for more saber rattling to follow as Putin tries to get the focus off the Russian economy.
Posted on 9/29/14 at 11:46 am to LSU0358
I got called pretty much a dumbass a while back for saying sink the commodities that the Ruskies (no offense LSUR) make their $ on and the situation would remedy itself.
Posted on 9/29/14 at 11:47 am to LSURussian
In 1998 how badly was the average Russian affected by the default?
BTW - thank you for all of the information that you provide concerning Russia.
BTW - thank you for all of the information that you provide concerning Russia.
Posted on 9/29/14 at 11:57 am to LSURussian
Best question is above.
This post was edited on 9/29/14 at 11:59 am
Posted on 9/29/14 at 11:59 am to LSURussian
quote:
The Central Bank of Russia announced today it is considering intervening into the currency market to prop up the ruble's value. That is the last governmental measure available before a currency collapses, like the ruble did in 1998.
by actually increasing rates b/c of 'too high inflation' (around 7.5% I think)
this is pretty amazing; they're bringing it all on themselves. It's quite pathetic
Posted on 9/29/14 at 12:02 pm to Hawkeye95
quote:Don't invest in Russia is my best advice, which has been my advice for more than a decade.
outside of forex, how can one financially benefit from this insight?
Posted on 9/29/14 at 12:02 pm to Radiojones
actually helped them over time (though the '08 events hurt everyone, especially EM). But with all the geopolitical hoopla currently, they would have a heck of a time coming out of a default again.
This post was edited on 9/29/14 at 12:04 pm
Posted on 9/29/14 at 12:12 pm to LSURussian
Boy, that Putin sure is showing the world how it's done.
Posted on 9/29/14 at 12:15 pm to Radiojones
quote:I happened to be working in Russia when the collapse happened. It was an economic apocalypse for the average Russian. The ruble fell from 6 to the U.S. dollar to 16 to the dollar overnight. Russians caught holding rubles therefore lost 75% of their money's purchasing power overnight.
In 1998 how badly was the average Russian affected by the default?
Yeltsin's Finance Minister announced on nationwide TV on an August Sunday night the government was going to default. (Of course he never used the word "default." It was just a "suspension of paying government debt, but it was NOT a default."
) At the same time the Central Bank of Russia announced it could no longer support the ruble's value by buying rubles because it had run out of hard currency reserves.
By midnight that Sunday night average citizens were already lining up at banks waiting for them to open Monday morning so that they could withdraw their US dollars which they had deposited in the bank. Of course, the last thing the Russian banks wanted to do was pay out US dollars to anyone. So, most banks never opened on Monday....or Tuesday or for the rest of the week. Some banks never opened again. There was no such thing as government deposit insurance such as FDIC so many bank customers lost all their money.
Overnight almost every Russian bank became technically capital insolvent. They were holding Russian government bonds, as much as 70% of their earning assets, and overnight those bonds dropped to nearly being worthless.
Posted on 9/29/14 at 1:40 pm to LSURussian
quote:
Overnight almost every Russian bank became technically capital insolvent. They were holding Russian government bonds, as much as 70% of their earning assets, and overnight those bonds dropped to nearly being worthless.
would this spell the end of putin?
Posted on 9/29/14 at 1:49 pm to Hawkeye95
I doubt it. He would just blame the US and the West for it and he'd be partially correct.
Russians love to hate foreigners.
Russians love to hate foreigners.
Posted on 9/29/14 at 1:54 pm to LSURussian
was the currency implosion responsible for yeltsin's departure in 1999? Or just coincidental?
Posted on 9/29/14 at 1:58 pm to Hawkeye95
Yeltsin had become a 24 hour a day drunkard by then. His daughter and son-in-law were effectively running the government. His government was not entirely responsible for the financial collapse but he was a convenient scapegoat for it.
Posted on 9/29/14 at 2:02 pm to LSURussian
Would you mind explaining how he would be correct about that in any capacity?
Not upset, just honestly curious. I am clueless when it comes to this...
Not upset, just honestly curious. I am clueless when it comes to this...
Posted on 9/29/14 at 2:03 pm to LSURussian
thanks for your insight
Posted on 9/29/14 at 2:13 pm to DByrd2
quote:He will just say the economic sanctions put on Russia by the West caused a capital outflow, hurt their oil exports, yada, yada, yada.
Would you mind explaining how he would be correct about that in any capacity?
And he'll remind the Russian people it's the price they paid to regain part of their Motherland, i.e., Crimea.
So, it's the foreigners fault for the Russians' problems....as usual. You have to remember EVERY bad thing that ever happened to Russia was the fault of foreigners.
For example, Russia's army was defeated in WWI because the Czar's wife, the German niece of Kaiser Wilhelm of Germany, was passing along military secrets to her uncle. That's why the German army kicked the Russian army's arse and why Russia had to sue for peace. That also brought on the Russian Revolution in 1917. All because of a foreigner married to their Czar.
Even the 1998 financial crisis in Russia was the fault of foreigners. Too many foreign banks loaned too much money to Russian banks and to the Russian government. Those foreign institutions knew that Russia would never be able to pay back what was owed. The foreigners did it in order to destroy Russia's economy.
See how they think?
This post was edited on 9/29/14 at 2:15 pm
Posted on 9/29/14 at 2:23 pm to LSURussian
The Ruble isn't worth the paper its printed on
but those people sure love those benefits
but those people sure love those benefits
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