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Russia Defaults on Foreign Debt for First Time Since 1918

83 points by olalonde 4y ago

sofixa 4y ago
- thrown_22 4y ago
  I'd wait 6 months before I call it stupidity. Winter is coming and Germany doesn't have enough energy to keep people from freezing to death. What does it matter that Russia would collapse in 5 years under sanctions if Europe does so in 6 months?
  - threeseed 4y ago
    EuroParl just approved plans to have 80% gas stockpiles by November: https://www.europarl.europa.eu/news/en/press-room/20220616IPR33214/parliament-approves-plans-to-restock-gas-reserves-before-winter https://www.europarl.europa.eu/news/en/press-room/20220616IP... And of course Russia isn't the only place to get gas.
    - thrown_22 4y ago
      I'm seeing a law, not a plan. There's a difference, e.g. everyone is to be over 7 foot tall by January 1st. is a law. A plan would involve a series of steps on how we get everyone to grow a foot or more in 6 months.
      - Fronzie 4y ago
        The Netherlands has started burning more coal, so Germany can have more gas. Drilling more gas from Groningen can be done at a moments notice, and will be done before either Dutch or German houses are without heating
    - selivanovp 4y ago
      You can have any plans, but if you have no sources to fill those stockpiles, such plans worth nothing. Qatar refuses to supply without decades long contracts. USA is unable to supply EU. Not to mention, that even filling EU reserves to 100% won’t let you pass the winter, as storage facilities are just helping during high demand months like during winter or hot summer, but if the flow of gas from Russia stops, most EU countries gonna deplete their reserves in a few weeks.
- serial_dev 4y ago
  Are you keeping a diary of what is going through your mind? I'm not so sure about any of the things you mentioned. He has gained significant territory in Ukraine in less than half a year which is not slow unless you expected he would concur the largest country in Europe in a week (in which case watch less Hollywood movies). The different NATO invasions all around the world are multi year projects, but Putin is delusional? Afghanistan was what, 20 years? And what about the economic ruin? Who ran out of baby formula? Don't the whole Europe and US had record breaking inflation of forty some years? And we are running to Venezuela, Saudi Arabia (the good guys this month) to get oil, and somehow we (the West) are winning? And may I remind you, "winter is coming" and half of Europe's heating runs normally on Russian gas. I wish I had your unshakable trust in how good the West is doing in this conflict.
  - threeseed 4y ago
    a) He has gained significant territory at huge expense. And the gains are almost certainly temporary since unless Russia mobilises their reserves etc. they won't have the manpower to hold such vast swathes of land. b) Baby formula issue had nothing to do with Russia, was a US only issue and was quickly resolved with Australia companies brought in to backfill supplies. c) Inflation is partly to do with Ukraine but far more to do with the post-COVID rebound where interest rates were low and central banks were behind the curve and too slow to react. d) You can't really call this a East versus West situation when countries like Japan have imposed strong measures and both India/China being very opportunistic in buying oil etc but not willing to really stick their neck out to support Russia.
    - cudgy 4y ago
      > He has gained significant territory at huge expense. And the gains are almost certainly temporary since unless Russia mobilises their reserves etc. they won't have the manpower to hold such vast swathes of land. Not sure how you’ve reached this conclusion other than a wild guess. The state of the war and huge progress made by Russia indicates the opposite. Russia is unlikely to give up the land they’ve taken without a fight and so far they are winning the fight and will continue to make progress. Very few if any independent military experts believe otherwise unless the US or NATO decide to intervene, which is not going to happen.
- 88840-8855 4y ago
  - sofixa 4y ago
    > So far he has managed the situation fantastically If you don't count the tens of thousands of dead and millions displaced, the destruction of the most modern parts of the Russian army, and all that? > Rubel stable When will people stop parroting this propaganda piece? The ruble is stable because it's exchange rate is purely theoretical. > no unrest at home Because anyone protesting against the war was beaten up and sent to prison for up to 15 years. > many friends support him, incl. Russia, India, Brazil, South Africa. Check out the UN resolution condemning the war. The only "friends" supporting him are the likes of North Korea. > Inflation explodes in the West Due to a pandemic and a war, most people understand that. In Europe most people are accepting of that due to the threat that Russia is. Also, inflation in Russia is also huge, in the double digits, and the worst is yet to come ( according to the chief of their central bank, who says next quarter will be worse). > more death in Ukraine Ukraine managed to fend off the initial Russian invasion on its own. Seeing the brutality of the Russian occupiers, you can't know how many would have died under Russian occupation. And good for you you've managed to convince yourself Ukrainians don't matter. > pledge to rebuild the Ukraine while ALL Ukrainians that I am personally helping say that this money will be lost in the corruption swamp I somehow doubt there are many Ukrainians focusing on corruption after the war. You know, the existential war for Ukraine's existence. The rebuilding of Ukraine will be extremely important and easily verifiable. Some of the money might go into corrupt pockets, but those people would get lynched if found out due to the national trauma involved.
    - egorfine 4y ago
      > those people would get lynched if found out due to the national trauma involved. I wish. They are being found out during these days and not lynched. Some may not even suffer any consequences. Source: am Ukrainian.
      - sofixa 4y ago
        Really? Considering the state of Ukraine at the moment, I'd really think anyone caught stealing in a literally life and death situation would get a fast track sentence. Do you have any sources (Ukrainian is fine, i kind of understand it)?
- cudgy 4y ago
  Well, you’d have to look at his diary entries going back to at least around 2007, since that is when the modern Ukraine conflict technically begins. Not to mention Russia has been skirmishing with Ukraine since 2014. You might want to bone up on your history of the Ukraine region. It’s not like Putin woke up one morning in a suddenly delusional state a few months ago and realized that this new country called Ukraine sprung up on the border and the United States and NATO were flexing their interests there.
lifeisstillgood 4y ago
Had to go check the domain was not some troll - https://en.m.wikipedia.org/wiki/BNN_Bloomberg https://en.m.wikipedia.org/wiki/BNN_Bloomberg
- jeffbee 4y ago
  Ha right, I did the same, because of https://twitter.com/durkeetowner/status/1541112626159173633 https://twitter.com/durkeetowner/status/1541112626159173633
- xputer 4y ago
  Made me think of this: https://en.m.wikipedia.org/wiki/BNN_(Dutch_broadcaster) https://en.m.wikipedia.org/wiki/BNN_(Dutch_broadcaster)
- AH4oFVbPT4f8 4y ago
  Somehow I've never seen the mobile version of wikipedia, this is a great link, thanks!
JonathanBeuys 4y ago
What's interesting is that the Ruble trades 50% higher (in USD) than before Russia's invasion of Ukraine. Why is that? Shouldn't the value of a currency reflect two things, the strength of a nation's economy and the soundness of the currency? The strength of the Russian economy surely went down, right? So it can only be due to the soundness. The market seems to expect Russia will not expand the Ruble supply more than the USA will expand the Dollar supply?
- HWR_14 4y ago
  The short answer is an attempt at price fixing by the Russian government. You won't be able to get as many USD, say, as the official exchange rate claims. But if a Russian owes you USD, the Russian government considers the debt paid if they send you rubles at the posted rate.
  - JonathanBeuys 4y ago
    Shouldn't Russia sending Rubles instead of Dollars to pay USD denominated debt decrease the value of the Ruble? Additional supply -> Lower price.
    - deleted 4y ago
      [deleted]
    - nicbou 4y ago
      It creates additional demand for the rubble, since it has more users. Right?
    - HWR_14 4y ago
      > Shouldn't Russia sending Rubles instead of Dollars to pay USD denominated debt decrease the value of the Ruble? No, because the people buying the Rubles aren't buying them on the open market. The people buying the Rubles are the people owed USD that are buying them for the rate the Russian Central Bank dictates with no choice in the matter. Plus, it provides a price floor. If I owe you $1,000,000 USD, but I can pay you 50,000,000 Rubles instead, I'm incentivized to buy Rubles up until it reaches 50 Rubles : 1 USD. > Additional supply -> Lower price. The supply isn't changing at all. The demand, whether natural or forced, is what's exploding.
Aperocky 4y ago
Cursory check suggested that Russia defaulted on its debt in 1998. https://en.wikipedia.org/wiki/1998_Russian_financial_crisis https://en.wikipedia.org/wiki/1998_Russian_financial_crisis
- roflyear 4y ago
  I think the difference is ruble-denominated vs other debt. I'm not sure what the difference means in practice.
- eis 4y ago
  This is mentioned in the article. It was local debt, not foreign. During Russia’s financial crisis and ruble collapse of 1998, President Boris Yeltsin’s government defaulted on $40 billion of its local debt. The last time Russia fell into default vis-a-vis its foreign creditors was more than a century ago, when the Bolsheviks under Vladimir Lenin repudiated the nation’s staggering Czarist-era debt load in 1918.
- maxnoe 4y ago
  According to the article you linked only on domestic debt in 1998.
- t_mann 4y ago
  Wikipedia: "On 17 August 1998, the Russian government ... declared a moratorium on repayment of foreign debt." Unilaterally declaring a moratorium may be considered a default event, but ultimately it depends on what exact definition you're using. Wikipedia doesn't say how the rating agencies treated that event, their collective view is usually seen as authoritative in such situations. If you have a copy of This time is different on sovereign debt crises by Harvard economists Carmen Reinhart and Kenneth Rogoff lying around, you could check how they classified this event (my hinge is that they'd count it as one). I agree, it's a strange to borderline misleading headline, especially if the article fails to discuss the technicalities of this moratorium. PS: I'd argue that 1998 was in some sense "more" of a default than this, because defaults are usually related to the borrower being unwilling or unable to pay, which was the case in 1998. Forcing a solvent and willing party into missing a payment by closing their bank accounts is really a bit of a different story.
romanovcode 4y ago
This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. I don't think situation like this ever happened before. Actually if I think about it it's even worse. It's a person who goes to bank to pay off his debts but bank refuses to take their money and forecloses the house as well as confiscates property. I know, I know. The Russian government is doing atrocious things but this "forced default" could actually have negative consequences. Who would trust this bank in the future?
- threeseed 4y ago
  I think it's more a case of a person going to bank to pay off their debt and offering them gold instead of dollars which the bank refuses. But all of the gold buyers don't want to deal with you because you're a criminal.
  - deleted 4y ago
    [deleted]
  - kstrauser 4y ago
    I think it’s closer to taking out a loan in gold and offering to pay it back in Schrute Bucks. Lenders want to be repaid in the agreed currency. (Also, if you don’t have access to the agreed currency because you invaded another country and are committing war atrocities, and no one will do business with you, then sucks to be you.)
- deleted 4y ago
  [deleted]
- number6 4y ago
  > However, none of the underlying bonds have terms that allow for settlement in the local currency. > This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. The bank wanted to be payed in BTC but you offered LUNA instead. Even if you had the Dolar amount in LUNA token, for your debt, who would swap theese for BTC?
- 4y ago
jamesredd 4y ago
Technically the West defaulted on Russia's debt by seizing Russian assets and blocking their use of Swift. Russia delivered the obligation of its debt payments to the West and the creditors had their assets stolen by Western governments who continue to withhold the payments.
- t6jvcereio 4y ago
  Right, and this is a good thing. We can't let them think they can get away with invading Europe just because they can afford their debts. Power doesn't come only in the form of tanks.
  - ElectricalUnion 4y ago
    > Right, and this is a good thing. We can't let them think they can get away with invading Europe just because they can afford their debts. Power doesn't come only in the form of tanks. By this same logic then we can't let the US get away with invading the rest of the world just because they can afford their debts.
    - t6jvcereio 4y ago
      > By this same logic then we can't let the US get away with invading the rest of the world just because they can afford their debts. How do you know someone eats up Russian propaganda? Easy, when you tell them "Russia did a bad thing", their response is "the USA also did bad things".
      - selivanovp 4y ago
        How do you know someone eats up USA propaganda? Easy, when you tell them “USA did a bad thing”, their response is: we’re the good guys, we’re exceptional, so we can do whatever we want to do, but you must do what we told you.
      - ghostwriter 4y ago
        > How do you know someone eats up Russian propaganda? "Rules for thee but not for me". Consider that they might just be trying to understand your code of values and whether you're capable of walking the walk according to the same moral principle that you're so eagerly preaching them with. Has justice been done to the past victims of the US aggression? Has punishment reached their perpetrators?
88840-8855 4y ago
Hold on, let us be more precise than the Western propaganda wants it to be. 1) Russians have money 2) Russians signaled that they want to pay 3) Again, Western sanctions are hitting against the own people, Russia cannot pay because the West excluded them from the payment mechanism 4) Russia has set up its own payment mechanism and is ready to fulfill the payment obligation fully in Rubels 5) The risk for all Western people is now to claim that money as financial trades with/in Russia are illegal now and they will face punishment by the West Just a sad story. My wood pallets supplier here in Germany went bancrupt a few days ago as the product was coming from Russia and is sanctioned now. The house (with 35 units) is already 6 days without hot water. The company that manages the building got an alternative: delivery in 2 weeks, price +200%. This is not my war, I oppose those sanctions. I have the feeling that the G7 reaction is wrong and I disagree with it. I am SO CLOSE before going on the street for the first time in my life. I FULLY disagree with all the current Western anti-Russian politics.
- fabian2k 4y ago
  So Russia should be able to invade anyone they want without repercussions? We obviously don't want a direct war between Russia and NATO/EU countries, so economic sanctions are pretty much the only tool left.
  - 88840-8855 4y ago
    Russia should be punished in the same way Europe has punished the US for its aggressive invasions. Anyway, I will protest against this if the government cannot fix it asap. My friends have voiced similar opinions. And your point is wrong. We ARE already in a direct war with Russia. And it was our decision.
    - t6jvcereio 4y ago
    - polotics 4y ago
      Can you explain why you think that?
kkfx 4y ago
Just two notes: "public debt" is no debt but just an old classic scam operated by few banksters. I suggest to rediscover for instance how the USA FED born https://www.heritage-history.com/index.php?c=read&author=carr&book=pawns&story=american https://www.heritage-history.com/index.php?c=read&author=car... the scam is well described by a scammer letter at the end of the page in a short bullet list. Before central banks the scam was the same with "notes" (around 1300) but was the same. And people keeps accepting it. Beside that paying rubles because other central banks do not exchange dollars or euros is not "default" is just the TRAGICOMIC example of the aforementioned scam, that have no practical effect of a sovereign and armed country, but have effect on individual citizens not in that very country but in any country where the same scam is applied. Long story short: we are in a cyclic neoliberalism crisis, where people all over the world mass-protest, strikes are more and more bigger and spread etc, witch happen to be the time neoliberals élite need a war to steal someone else resources and justify with the war any sufferance in between. Of course Russian or China government are not that different, but being not in Russia nor in China it's not my interest, it the interest of their people revolting or keep going. My interest is ANNIHILATING actual oppressive western ruling class in my own country (EU) before they annihilate me. For that a mass general and peaceful strike SUFFICE. If just anyone stock a bit of food, water and stop working for a month anything breaks and oppressors must made an U turn and surrender not to foreign power but to their own people. That's how Democracy works. Since that's unlikely, most people are obeisant subjects drinking propaganda at a very high rate, my point is that I doubt we can have a Democracy for the next 10-20 years at least, and in that very case I question my own values to other people that allow such obscenity oppression to exists. Or I question myself if a new feudal society it's not "natural" to a certain extent, since many are unable to be Citizen. Of course, a feudal society means a neo-bourgeois society, not ones with very few rulers like WTO, WEF, WB, IMF, WHO etc as background dictators managing proxy-puppet states as they wish, the quantity of people who happen to be Citizen is not that little.
- 411111111111111 4y ago
  You seriously think that the EU is am oppressive regime? From previous comments I'm guessing that you're from France, and I cannot comprehend how you got that idea. It's ministry is corrupt as hell and every so often another scandal gets reported on, without any consequences to the politicians in question, so it's not like it doesn't have significant issues... But that doesn't make it into an oppressive regime. Where exactly do you think you're getting oppressed? Maybe with the millions of stimulus french farmers get each year? Or with the suggestions for the regional governments? The sovreignity remains in the hand of each member state.
tpoacher 4y ago
This is all so surreal to me as a non-economist. The playground analogy here is like you gave your money to some kid, "Rusty" in the playground to buy a sandwich yesterday. Rusty buys a sandwich, and next day they come to pay you back. They in fact do pay you back by leaving some money on your desk. But then, before you've had a chance to put them in your pocket, some kid "Amanda" who fancies herself the class president (even though no-one voted for her), grabs the money from the desk and says "man, it sucks that Rusty didn't just pay you; what an ass, eh? We'll just put this in the 'class fund' for now". Meanwhile Rusty is like, hey I paid my debt the minute I put your money on your desk, so, sucks to be you I guess. Yes, I get the part where Rusty was really mean to Ursula this morning, and that Amanda (who had been pretending to be Ursula's friend to get back at Rusty for a while now, and was what prompted Rusty's tantrum in the first place) made this edict about anyone giving Rusty sandwich money should not expect to get it back. And I get the part that it doesn't really matter if I gave the money yesterday, before all this started. Tough luck, I'm involved now. I also get the part where I'd be reluctant to buy Rusty another sandwich if it meant Amanda would keep grabbing my money (though, in all honesty, I wouldn't trust my money with Amanda now either, given the whole "class fund" shenanigans), but ... seriously, that can't be the whole story, can it? Is the main story here really that we are all schoolchildren in dire need of a headmaster?
- nocturnial 4y ago
  I think you're confused because you heard a lot of different goals of the sanctions. For me, the sanctions aren't about stopping the current war, but about stopping future wars. In your analogy... Rusty doesn't know how to make a baseball bat. We supplied rusty with baseball bats because we thought he would use it to play baseball games. Instead he used it to threaten his class mates. We took that supply of baseball bats away from him because we can and don't want him to threaten Suzy like he did with Ursula. It doesn't matter to me what Rusty wants to trade to get those bats. I don't supply bats or anything that can be traded to bats to Rusty in order to protect Suzy and I'll give Ursula whatever she needs to protect herself. Sincerely, Amanda
  - tpoacher 4y ago

83 points by olalonde 4y ago

thrown_22 4y ago
I'd wait 6 months before I call it stupidity. Winter is coming and Germany doesn't have enough energy to keep people from freezing to death. What does it matter that Russia would collapse in 5 years under sanctions if Europe does so in 6 months?
- threeseed 4y ago
  EuroParl just approved plans to have 80% gas stockpiles by November: https://www.europarl.europa.eu/news/en/press-room/20220616IPR33214/parliament-approves-plans-to-restock-gas-reserves-before-winter https://www.europarl.europa.eu/news/en/press-room/20220616IP... And of course Russia isn't the only place to get gas.
  - thrown_22 4y ago
    I'm seeing a law, not a plan. There's a difference, e.g. everyone is to be over 7 foot tall by January 1st. is a law. A plan would involve a series of steps on how we get everyone to grow a foot or more in 6 months.
    - Fronzie 4y ago
      The Netherlands has started burning more coal, so Germany can have more gas. Drilling more gas from Groningen can be done at a moments notice, and will be done before either Dutch or German houses are without heating
  - selivanovp 4y ago
    You can have any plans, but if you have no sources to fill those stockpiles, such plans worth nothing. Qatar refuses to supply without decades long contracts. USA is unable to supply EU. Not to mention, that even filling EU reserves to 100% won’t let you pass the winter, as storage facilities are just helping during high demand months like during winter or hot summer, but if the flow of gas from Russia stops, most EU countries gonna deplete their reserves in a few weeks.
serial_dev 4y ago
Are you keeping a diary of what is going through your mind? I'm not so sure about any of the things you mentioned. He has gained significant territory in Ukraine in less than half a year which is not slow unless you expected he would concur the largest country in Europe in a week (in which case watch less Hollywood movies). The different NATO invasions all around the world are multi year projects, but Putin is delusional? Afghanistan was what, 20 years? And what about the economic ruin? Who ran out of baby formula? Don't the whole Europe and US had record breaking inflation of forty some years? And we are running to Venezuela, Saudi Arabia (the good guys this month) to get oil, and somehow we (the West) are winning? And may I remind you, "winter is coming" and half of Europe's heating runs normally on Russian gas. I wish I had your unshakable trust in how good the West is doing in this conflict.
- threeseed 4y ago
  a) He has gained significant territory at huge expense. And the gains are almost certainly temporary since unless Russia mobilises their reserves etc. they won't have the manpower to hold such vast swathes of land. b) Baby formula issue had nothing to do with Russia, was a US only issue and was quickly resolved with Australia companies brought in to backfill supplies. c) Inflation is partly to do with Ukraine but far more to do with the post-COVID rebound where interest rates were low and central banks were behind the curve and too slow to react. d) You can't really call this a East versus West situation when countries like Japan have imposed strong measures and both India/China being very opportunistic in buying oil etc but not willing to really stick their neck out to support Russia.
  - cudgy 4y ago
    > He has gained significant territory at huge expense. And the gains are almost certainly temporary since unless Russia mobilises their reserves etc. they won't have the manpower to hold such vast swathes of land. Not sure how you’ve reached this conclusion other than a wild guess. The state of the war and huge progress made by Russia indicates the opposite. Russia is unlikely to give up the land they’ve taken without a fight and so far they are winning the fight and will continue to make progress. Very few if any independent military experts believe otherwise unless the US or NATO decide to intervene, which is not going to happen.
88840-8855 4y ago
- sofixa 4y ago
  > So far he has managed the situation fantastically If you don't count the tens of thousands of dead and millions displaced, the destruction of the most modern parts of the Russian army, and all that? > Rubel stable When will people stop parroting this propaganda piece? The ruble is stable because it's exchange rate is purely theoretical. > no unrest at home Because anyone protesting against the war was beaten up and sent to prison for up to 15 years. > many friends support him, incl. Russia, India, Brazil, South Africa. Check out the UN resolution condemning the war. The only "friends" supporting him are the likes of North Korea. > Inflation explodes in the West Due to a pandemic and a war, most people understand that. In Europe most people are accepting of that due to the threat that Russia is. Also, inflation in Russia is also huge, in the double digits, and the worst is yet to come ( according to the chief of their central bank, who says next quarter will be worse). > more death in Ukraine Ukraine managed to fend off the initial Russian invasion on its own. Seeing the brutality of the Russian occupiers, you can't know how many would have died under Russian occupation. And good for you you've managed to convince yourself Ukrainians don't matter. > pledge to rebuild the Ukraine while ALL Ukrainians that I am personally helping say that this money will be lost in the corruption swamp I somehow doubt there are many Ukrainians focusing on corruption after the war. You know, the existential war for Ukraine's existence. The rebuilding of Ukraine will be extremely important and easily verifiable. Some of the money might go into corrupt pockets, but those people would get lynched if found out due to the national trauma involved.
  - egorfine 4y ago
    > those people would get lynched if found out due to the national trauma involved. I wish. They are being found out during these days and not lynched. Some may not even suffer any consequences. Source: am Ukrainian.
    - sofixa 4y ago
      Really? Considering the state of Ukraine at the moment, I'd really think anyone caught stealing in a literally life and death situation would get a fast track sentence. Do you have any sources (Ukrainian is fine, i kind of understand it)?
cudgy 4y ago
Well, you’d have to look at his diary entries going back to at least around 2007, since that is when the modern Ukraine conflict technically begins. Not to mention Russia has been skirmishing with Ukraine since 2014. You might want to bone up on your history of the Ukraine region. It’s not like Putin woke up one morning in a suddenly delusional state a few months ago and realized that this new country called Ukraine sprung up on the border and the United States and NATO were flexing their interests there.

Had to go check the domain was not some troll - https://en.m.wikipedia.org/wiki/BNN_Bloomberg https://en.m.wikipedia.org/wiki/BNN_Bloomberg

jeffbee 4y ago
Ha right, I did the same, because of https://twitter.com/durkeetowner/status/1541112626159173633 https://twitter.com/durkeetowner/status/1541112626159173633
xputer 4y ago
Made me think of this: https://en.m.wikipedia.org/wiki/BNN_(Dutch_broadcaster) https://en.m.wikipedia.org/wiki/BNN_(Dutch_broadcaster)
AH4oFVbPT4f8 4y ago
Somehow I've never seen the mobile version of wikipedia, this is a great link, thanks!

JonathanBeuys 4y ago

What's interesting is that the Ruble trades 50% higher (in USD) than before Russia's invasion of Ukraine. Why is that? Shouldn't the value of a currency reflect two things, the strength of a nation's economy and the soundness of the currency? The strength of the Russian economy surely went down, right? So it can only be due to the soundness. The market seems to expect Russia will not expand the Ruble supply more than the USA will expand the Dollar supply?

HWR_14 4y ago
The short answer is an attempt at price fixing by the Russian government. You won't be able to get as many USD, say, as the official exchange rate claims. But if a Russian owes you USD, the Russian government considers the debt paid if they send you rubles at the posted rate.
- JonathanBeuys 4y ago
  Shouldn't Russia sending Rubles instead of Dollars to pay USD denominated debt decrease the value of the Ruble? Additional supply -> Lower price.
  - deleted 4y ago
    [deleted]
  - nicbou 4y ago
    It creates additional demand for the rubble, since it has more users. Right?
  - HWR_14 4y ago
    > Shouldn't Russia sending Rubles instead of Dollars to pay USD denominated debt decrease the value of the Ruble? No, because the people buying the Rubles aren't buying them on the open market. The people buying the Rubles are the people owed USD that are buying them for the rate the Russian Central Bank dictates with no choice in the matter. Plus, it provides a price floor. If I owe you $1,000,000 USD, but I can pay you 50,000,000 Rubles instead, I'm incentivized to buy Rubles up until it reaches 50 Rubles : 1 USD. > Additional supply -> Lower price. The supply isn't changing at all. The demand, whether natural or forced, is what's exploding.

Aperocky 4y ago

Cursory check suggested that Russia defaulted on its debt in 1998. https://en.wikipedia.org/wiki/1998_Russian_financial_crisis https://en.wikipedia.org/wiki/1998_Russian_financial_crisis

roflyear 4y ago
I think the difference is ruble-denominated vs other debt. I'm not sure what the difference means in practice.
eis 4y ago
This is mentioned in the article. It was local debt, not foreign. During Russia’s financial crisis and ruble collapse of 1998, President Boris Yeltsin’s government defaulted on $40 billion of its local debt. The last time Russia fell into default vis-a-vis its foreign creditors was more than a century ago, when the Bolsheviks under Vladimir Lenin repudiated the nation’s staggering Czarist-era debt load in 1918.
maxnoe 4y ago
According to the article you linked only on domestic debt in 1998.
t_mann 4y ago
Wikipedia: "On 17 August 1998, the Russian government ... declared a moratorium on repayment of foreign debt." Unilaterally declaring a moratorium may be considered a default event, but ultimately it depends on what exact definition you're using. Wikipedia doesn't say how the rating agencies treated that event, their collective view is usually seen as authoritative in such situations. If you have a copy of This time is different on sovereign debt crises by Harvard economists Carmen Reinhart and Kenneth Rogoff lying around, you could check how they classified this event (my hinge is that they'd count it as one). I agree, it's a strange to borderline misleading headline, especially if the article fails to discuss the technicalities of this moratorium. PS: I'd argue that 1998 was in some sense "more" of a default than this, because defaults are usually related to the borrower being unwilling or unable to pay, which was the case in 1998. Forcing a solvent and willing party into missing a payment by closing their bank accounts is really a bit of a different story.

romanovcode 4y ago

This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. I don't think situation like this ever happened before. Actually if I think about it it's even worse. It's a person who goes to bank to pay off his debts but bank refuses to take their money and forecloses the house as well as confiscates property. I know, I know. The Russian government is doing atrocious things but this "forced default" could actually have negative consequences. Who would trust this bank in the future?

threeseed 4y ago
I think it's more a case of a person going to bank to pay off their debt and offering them gold instead of dollars which the bank refuses. But all of the gold buyers don't want to deal with you because you're a criminal.
- deleted 4y ago
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- kstrauser 4y ago
  I think it’s closer to taking out a loan in gold and offering to pay it back in Schrute Bucks. Lenders want to be repaid in the agreed currency. (Also, if you don’t have access to the agreed currency because you invaded another country and are committing war atrocities, and no one will do business with you, then sucks to be you.)
deleted 4y ago
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number6 4y ago
> However, none of the underlying bonds have terms that allow for settlement in the local currency. > This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. The bank wanted to be payed in BTC but you offered LUNA instead. Even if you had the Dolar amount in LUNA token, for your debt, who would swap theese for BTC?
4y ago

jamesredd 4y ago

Technically the West defaulted on Russia's debt by seizing Russian assets and blocking their use of Swift. Russia delivered the obligation of its debt payments to the West and the creditors had their assets stolen by Western governments who continue to withhold the payments.

t6jvcereio 4y ago
Right, and this is a good thing. We can't let them think they can get away with invading Europe just because they can afford their debts. Power doesn't come only in the form of tanks.
- ElectricalUnion 4y ago
  > Right, and this is a good thing. We can't let them think they can get away with invading Europe just because they can afford their debts. Power doesn't come only in the form of tanks. By this same logic then we can't let the US get away with invading the rest of the world just because they can afford their debts.
  - t6jvcereio 4y ago
    > By this same logic then we can't let the US get away with invading the rest of the world just because they can afford their debts. How do you know someone eats up Russian propaganda? Easy, when you tell them "Russia did a bad thing", their response is "the USA also did bad things".
    - selivanovp 4y ago
      How do you know someone eats up USA propaganda? Easy, when you tell them “USA did a bad thing”, their response is: we’re the good guys, we’re exceptional, so we can do whatever we want to do, but you must do what we told you.
    - ghostwriter 4y ago
      > How do you know someone eats up Russian propaganda? "Rules for thee but not for me". Consider that they might just be trying to understand your code of values and whether you're capable of walking the walk according to the same moral principle that you're so eagerly preaching them with. Has justice been done to the past victims of the US aggression? Has punishment reached their perpetrators?

88840-8855 4y ago

Hold on, let us be more precise than the Western propaganda wants it to be. 1) Russians have money 2) Russians signaled that they want to pay 3) Again, Western sanctions are hitting against the own people, Russia cannot pay because the West excluded them from the payment mechanism 4) Russia has set up its own payment mechanism and is ready to fulfill the payment obligation fully in Rubels 5) The risk for all Western people is now to claim that money as financial trades with/in Russia are illegal now and they will face punishment by the West Just a sad story. My wood pallets supplier here in Germany went bancrupt a few days ago as the product was coming from Russia and is sanctioned now. The house (with 35 units) is already 6 days without hot water. The company that manages the building got an alternative: delivery in 2 weeks, price +200%. This is not my war, I oppose those sanctions. I have the feeling that the G7 reaction is wrong and I disagree with it. I am SO CLOSE before going on the street for the first time in my life. I FULLY disagree with all the current Western anti-Russian politics.

fabian2k 4y ago
So Russia should be able to invade anyone they want without repercussions? We obviously don't want a direct war between Russia and NATO/EU countries, so economic sanctions are pretty much the only tool left.
- 88840-8855 4y ago
  Russia should be punished in the same way Europe has punished the US for its aggressive invasions. Anyway, I will protest against this if the government cannot fix it asap. My friends have voiced similar opinions. And your point is wrong. We ARE already in a direct war with Russia. And it was our decision.
  - t6jvcereio 4y ago
  - polotics 4y ago
    Can you explain why you think that?

kkfx 4y ago

Just two notes: "public debt" is no debt but just an old classic scam operated by few banksters. I suggest to rediscover for instance how the USA FED born https://www.heritage-history.com/index.php?c=read&author=carr&book=pawns&story=american https://www.heritage-history.com/index.php?c=read&author=car... the scam is well described by a scammer letter at the end of the page in a short bullet list. Before central banks the scam was the same with "notes" (around 1300) but was the same. And people keeps accepting it. Beside that paying rubles because other central banks do not exchange dollars or euros is not "default" is just the TRAGICOMIC example of the aforementioned scam, that have no practical effect of a sovereign and armed country, but have effect on individual citizens not in that very country but in any country where the same scam is applied. Long story short: we are in a cyclic neoliberalism crisis, where people all over the world mass-protest, strikes are more and more bigger and spread etc, witch happen to be the time neoliberals élite need a war to steal someone else resources and justify with the war any sufferance in between. Of course Russian or China government are not that different, but being not in Russia nor in China it's not my interest, it the interest of their people revolting or keep going. My interest is ANNIHILATING actual oppressive western ruling class in my own country (EU) before they annihilate me. For that a mass general and peaceful strike SUFFICE. If just anyone stock a bit of food, water and stop working for a month anything breaks and oppressors must made an U turn and surrender not to foreign power but to their own people. That's how Democracy works. Since that's unlikely, most people are obeisant subjects drinking propaganda at a very high rate, my point is that I doubt we can have a Democracy for the next 10-20 years at least, and in that very case I question my own values to other people that allow such obscenity oppression to exists. Or I question myself if a new feudal society it's not "natural" to a certain extent, since many are unable to be Citizen. Of course, a feudal society means a neo-bourgeois society, not ones with very few rulers like WTO, WEF, WB, IMF, WHO etc as background dictators managing proxy-puppet states as they wish, the quantity of people who happen to be Citizen is not that little.

411111111111111 4y ago
You seriously think that the EU is am oppressive regime? From previous comments I'm guessing that you're from France, and I cannot comprehend how you got that idea. It's ministry is corrupt as hell and every so often another scandal gets reported on, without any consequences to the politicians in question, so it's not like it doesn't have significant issues... But that doesn't make it into an oppressive regime. Where exactly do you think you're getting oppressed? Maybe with the millions of stimulus french farmers get each year? Or with the suggestions for the regional governments? The sovreignity remains in the hand of each member state.

tpoacher 4y ago

This is all so surreal to me as a non-economist. The playground analogy here is like you gave your money to some kid, "Rusty" in the playground to buy a sandwich yesterday. Rusty buys a sandwich, and next day they come to pay you back. They in fact do pay you back by leaving some money on your desk. But then, before you've had a chance to put them in your pocket, some kid "Amanda" who fancies herself the class president (even though no-one voted for her), grabs the money from the desk and says "man, it sucks that Rusty didn't just pay you; what an ass, eh? We'll just put this in the 'class fund' for now". Meanwhile Rusty is like, hey I paid my debt the minute I put your money on your desk, so, sucks to be you I guess. Yes, I get the part where Rusty was really mean to Ursula this morning, and that Amanda (who had been pretending to be Ursula's friend to get back at Rusty for a while now, and was what prompted Rusty's tantrum in the first place) made this edict about anyone giving Rusty sandwich money should not expect to get it back. And I get the part that it doesn't really matter if I gave the money yesterday, before all this started. Tough luck, I'm involved now. I also get the part where I'd be reluctant to buy Rusty another sandwich if it meant Amanda would keep grabbing my money (though, in all honesty, I wouldn't trust my money with Amanda now either, given the whole "class fund" shenanigans), but ... seriously, that can't be the whole story, can it? Is the main story here really that we are all schoolchildren in dire need of a headmaster?

nocturnial 4y ago
I think you're confused because you heard a lot of different goals of the sanctions. For me, the sanctions aren't about stopping the current war, but about stopping future wars. In your analogy... Rusty doesn't know how to make a baseball bat. We supplied rusty with baseball bats because we thought he would use it to play baseball games. Instead he used it to threaten his class mates. We took that supply of baseball bats away from him because we can and don't want him to threaten Suzy like he did with Ursula. It doesn't matter to me what Rusty wants to trade to get those bats. I don't supply bats or anything that can be traded to bats to Rusty in order to protect Suzy and I'll give Ursula whatever she needs to protect herself. Sincerely, Amanda
- tpoacher 4y ago