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Banks: try to shutdown Russian economy Also banks: "Why can't we get our money back out of Russia?" Sometimes I can't tell if all of this is just a dumb joke.

by moltke 5y ago

awb 5y ago
This is a really big misunderstanding of the situation. Governments sanctioned Russia. The banks that withdrew voluntarily were fully aware of the financial consequences.
- simonblack 5y ago
  Don't you just love it when people enjoy shooting themselves in the foot? Think it's smart to block 300 billion of Russian cash reserves? Welcome to your own (possibly fatal) cash-flow problems when a mere half of that cash can't come your way.
  - awb 5y ago
    Who is “your” in this scenario?
    - simonblack 5y ago
      Western banks and creditors. People can't complain about not being paid if they won't allow their debtors to pay. That leads to cash-flow problems for all concerned. There used to be an old business saying which is still relevant: "Never let your Ego get in the way of your cash-flow."
      - awb 5y ago
        Governments imposed the sanctions, not the banks. And no bank that withdrew from Russia voluntarily is complaining to my knowledge. It sounds like you’re accusing someone of being hypocritical, but I don’t know who specifically. Do you have any quotes of any western banks / creditors acting hypocritically?
        simonblack 5y ago
        Governments imposed the sanctions, not the banks. If the Government isn't listening to banks when we're talking about hundreds of billions of dollars in sanctions, there's something completely broken in a top-heavy FIRE economy. And especially when we're choosing to use economic instead of military warfare. Bloomberg reports: Signs of looming financial damage are becoming apparent at many of the world's biggest money managers, including BlackRock Inc. and Pacific Investment Management Co. But it’s not likely to be limited to these giant funds. Because much of Russia’s debt was rated investment grade just weeks ago, the securities were pervasive across global fixed-income portfolios and benchmarks, meaning the impact could ripple across pension funds, endowments and foundations. “This will be a monumental default,” said Jonathan Prin, a portfolio manager at Greylock Capital Associates. “In dollar terms, it will be the most impactful emerging-market default since Argentina’s. In terms of broader market impact, it’s probably the most broadly felt emerging-market default since Russia itself in 1998"... https://www.livewiremarkets.com/wires/risk-of-huge-us-150-billion-russian-debt-default-with-consequences-for-investments-in-china https://www.livewiremarkets.com/wires/risk-of-huge-us-150-bi...
        awb 5y ago
        Sorry, I still don’t understand what you’re getting at. I think the government was fully aware of the tradeoffs of the sanctions and potential Russian default.
        simonblack 5y ago
        We're probably talking past each other. I don't think the Government was fully aware of the consequence of their actions. The point of the Government's sanctions is to cause problems and distress for Russia economy. But sanctions are a two-edged sword and end up with you causing problems and distress for your own economy too. Many US investment companies expect regular interest payments from Russia. Actually, most them are dependent on those payments of interest to maintain their cash flows. If their cash flows get affected, they are at risk of collapsing themselves. Some of those investment companies are supposedly "too big to fail" and will require being bailed out by the taxpayer if they are near collapse. That causes fear, uncertainty and doubt in the financial circles, and that is definitely not wanted in an industry that requires plenty of investor confidence. Now, if the Government blocks the use of Russia's cash reserves such that payments can not be made to and from those accounts, Russia is prevented also from paying those interest payments to the US investment companies that are relying on those interest payments to maintain their own cash flows. I can't believe that the Government would have put sanctions on Russia's cash reserves without previously talking to those financial companies whose livelihood depends on free access to international transfers. If the Government did talk to the banks/investment companies and went ahead with the sanctions anyway, they are guilty of putting their own economy at risk. That's sheer stupidity: You can't prevent Russia from paying interest by blocking their cash reserves and then complain that your economy is at risk. If the Government did not talk to the banks/investment companies (those are the same thing really after the repeal of the Glass-Steagall Act), they are again guilty of putting their own economy at greatly risk. Something is incredibly broken if the Government just barges ahead and makes stupid decisions without looking at the financial disasters that follow for the financial industry in the US's top-heavy FIRE economy as a direct consequence of their economic warfare on Russia. I would not be at all surprised if the blocking of Russia's cash reserves leads directly to end of the USD as the World's Reserve Currency, and quite soon. Hopefully, I was a bit clearer for you this time. At the cost of being rather long-winded about it. :)

Banks: try to shutdown Russian economy Also banks: "Why can't we get our money back out of Russia?" Sometimes I can't tell if all of this is just a dumb joke.

by moltke 5y ago

Banks: try to shutdown Russian economy Also banks: "Why can't we get our money back out of Russia?" Sometimes I can't tell if all of this is just a dumb joke.

awb 5y ago

This is a really big misunderstanding of the situation. Governments sanctioned Russia. The banks that withdrew voluntarily were fully aware of the financial consequences.

simonblack 5y ago
Don't you just love it when people enjoy shooting themselves in the foot? Think it's smart to block 300 billion of Russian cash reserves? Welcome to your own (possibly fatal) cash-flow problems when a mere half of that cash can't come your way.
- awb 5y ago
  Who is “your” in this scenario?
  - simonblack 5y ago
    Western banks and creditors. People can't complain about not being paid if they won't allow their debtors to pay. That leads to cash-flow problems for all concerned. There used to be an old business saying which is still relevant: "Never let your Ego get in the way of your cash-flow."
    - awb 5y ago
      Governments imposed the sanctions, not the banks. And no bank that withdrew from Russia voluntarily is complaining to my knowledge. It sounds like you’re accusing someone of being hypocritical, but I don’t know who specifically. Do you have any quotes of any western banks / creditors acting hypocritically?
      - simonblack 5y ago
        Governments imposed the sanctions, not the banks. If the Government isn't listening to banks when we're talking about hundreds of billions of dollars in sanctions, there's something completely broken in a top-heavy FIRE economy. And especially when we're choosing to use economic instead of military warfare. Bloomberg reports: Signs of looming financial damage are becoming apparent at many of the world's biggest money managers, including BlackRock Inc. and Pacific Investment Management Co. But it’s not likely to be limited to these giant funds. Because much of Russia’s debt was rated investment grade just weeks ago, the securities were pervasive across global fixed-income portfolios and benchmarks, meaning the impact could ripple across pension funds, endowments and foundations. “This will be a monumental default,” said Jonathan Prin, a portfolio manager at Greylock Capital Associates. “In dollar terms, it will be the most impactful emerging-market default since Argentina’s. In terms of broader market impact, it’s probably the most broadly felt emerging-market default since Russia itself in 1998"... https://www.livewiremarkets.com/wires/risk-of-huge-us-150-billion-russian-debt-default-with-consequences-for-investments-in-china https://www.livewiremarkets.com/wires/risk-of-huge-us-150-bi...
        awb 5y ago
        Sorry, I still don’t understand what you’re getting at. I think the government was fully aware of the tradeoffs of the sanctions and potential Russian default.
        simonblack 5y ago
        We're probably talking past each other. I don't think the Government was fully aware of the consequence of their actions. The point of the Government's sanctions is to cause problems and distress for Russia economy. But sanctions are a two-edged sword and end up with you causing problems and distress for your own economy too. Many US investment companies expect regular interest payments from Russia. Actually, most them are dependent on those payments of interest to maintain their cash flows. If their cash flows get affected, they are at risk of collapsing themselves. Some of those investment companies are supposedly "too big to fail" and will require being bailed out by the taxpayer if they are near collapse. That causes fear, uncertainty and doubt in the financial circles, and that is definitely not wanted in an industry that requires plenty of investor confidence. Now, if the Government blocks the use of Russia's cash reserves such that payments can not be made to and from those accounts, Russia is prevented also from paying those interest payments to the US investment companies that are relying on those interest payments to maintain their own cash flows. I can't believe that the Government would have put sanctions on Russia's cash reserves without previously talking to those financial companies whose livelihood depends on free access to international transfers. If the Government did talk to the banks/investment companies and went ahead with the sanctions anyway, they are guilty of putting their own economy at risk. That's sheer stupidity: You can't prevent Russia from paying interest by blocking their cash reserves and then complain that your economy is at risk. If the Government did not talk to the banks/investment companies (those are the same thing really after the repeal of the Glass-Steagall Act), they are again guilty of putting their own economy at greatly risk. Something is incredibly broken if the Government just barges ahead and makes stupid decisions without looking at the financial disasters that follow for the financial industry in the US's top-heavy FIRE economy as a direct consequence of their economic warfare on Russia. I would not be at all surprised if the blocking of Russia's cash reserves leads directly to end of the USD as the World's Reserve Currency, and quite soon. Hopefully, I was a bit clearer for you this time. At the cost of being rather long-winded about it. :)