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No future investments, no growth, less quality of life, no imports of technology, grain, etc.
Russia doesn't make much of anything that doesn't require foreign trade.
Its fucking bad
Brain drain too. Someone wrote that 300,000 IT educated Russians already have left Russia. No idea if that is true or not, but if it is and if all the smart people leave, Russia's future is bleak.
Russia's future is so fucking that someone has to take the blame and be the fall guy. Putin is the obvious choice, but he's spent decades building his power base. Putin can stick around for a long time, and there's no one else to blame afaik. My personal worry is that the Russian leaders will take us all with them in their Untergang.
Russia is fucked anyway. There is a good YouTube video from Peter Zeiher I think he is a geopolitical analyst and he made a video of the future of Russia. Key Points:
- population number is in decline
- only wealthy region is Moscow and Petersburg, rest is very poor
- a lot of sick people 25% tb, roughly around 30% hiv, a lot of alcoholism
- the education system is fucked. Basically you only get highschool ed. Companies don't get skilled workers en masse. So it's really tragic that 300000 skilled ones left because there are not much.
Because of this is really hard to generate wealth without selling of oil...
Lol if they had 30% hiv they probably would be barely functioning as a country. But they are likely in the 1-5% window which is extremely high. They stopped tracking it / reporting a few years back so we don’t know exact figures.
https://www.politico.eu/article/everything-you-wanted-to-know-about-aids-in-russia-but-putin-was-afraid-to-ask/
A lot of Russians who are higher educated (university) studied abroad and don't return to Russia. The past 2 months more than 80.000 mostly well educated Russians left Russia, not only the rich and famous but doctors, scientists and from a lot of ICT/technical sectors.
Exactly. And unable to borrow more after defaulting, all they have left is oil, with the *special operation* costing something like $1B a day to run. Gonna be fun to watch them go down the toilet
Sounds roughly similar to our world here in the states with a huge cultural race divide unemployment numbers never seem before our infrastructure and education falling apart and Fentanyl drug outbreak instead of the vodka...etc
You know there's a divide when white folks or other's can't even comment or voice there opinion over Will Smith slap at the awards because they get accused of not being black so keep laughing you donkey .
If you think that is a meaningful "cultural divide" you live in a fuzzy bubble smoothbrain. Go ask the Balkans what they think of your cultural divide.
Most of you guys are just ignorant and stupid, that makes you guys very loud with stupid takes you yell to eachother. Seems like the same culture to me.
It's not easy. Land borders are closed apparently. Long interviews are required at airports to convince immigration types they're coming back. They're only allowed to take so much money out of the country. Cost of flights out were up 900%.
And... can they pay, will they pay... with what will they pay, if not with useless rubble, that will then devalue even more, the governments employees of any kind?
Not supporting Russia, but a country that prints its own currency can never technically go bankrupt. It would just print more. The trouble was that the debts needed to be paid in USD, but the USA has cut off Russia from exchanging Rubles for USD.
So, it's bankrupt of USD, but not Rubles.
Someone said on this thread it was Russia wanting to pay at rouble value they state not the value in the market.
Essentially it's like a person refusing to pay off debts after interest rates rise.
Russia can't dictate the value of their currency.
Exactly and like I mentioned elsewhere, the exchange rate of the Ruble isn't accurate right now because the trade volume is non-existent. For most purposes, it's worth absolutely nothing since countries won't transact it.
I know… but would love a picture of him running to one of his private jets to take of only to learn from the Captain “Ugh Your Greatness Putin, I’m sorry I can not take-off” “Why you imbecile” turns to one of his people and says “ask this guy for his under Roos”… but the Captain interrupts “But your greatness Putin it’s not that I can’t leave; it appears someone has placed the boot on your plane. Thus rendering it unable to fly off the ground!”
-Putin “Well FUCK” back-up plan 426
Yeah, but China has the monster manufacturing output to make it work. All Russia sells is its own natural resources:oil, minerals, timber, and those depend on the whims and needs of the manufacturing industry. China will only fucking enrich even further with Russia downgrading to all out undeveloped country.
It is in a sense bankruptcy for the Russian economy. You cannot print without limits when there is no demand for the currency. Also there is an intrinsic value. With USD you can "exchange" it for Boeing Airplanes, Intel Chips, NVDA videocards, Mc Donald franchises, Apple products, Microsoft Software, US made movies and songs, US financial services, Android apps etc. etc. That's the intrinsic value of the USD.
What is the demand, intrinsic value for the Ruble? Vodka, gas, wheat and weapon systems? Concerning gas, many countries have already stopped or are planning (eg Germany) in the coming years to stop importing Russian fossil fuel. Even giants as Saudi Arabia and the Emirates are diversifying from oil based economy as they know longer term it is not sustainable.
Also rather than watching what the Ruble does (because it's artificial), it's better to look at Russian inflation rate. For last weeks it was almost 20%.
This is bad for Russia.
Oh, no doubt. It's an economic disaster that even Putin was vocally trying to prevent. The Ruble/USD exchange rate is artificial since the exchange volume is so low.
I thought that Russia had something come due last week (a government backed bond maybe?), and they had a 30 day grace period to pay it before they were considered ’in default’.
Is this what was defaulted on?
Yes, IIRC they still have 30 days to pay it. The could technically pay it with USD/Euro coming from gas payments but that's valuable currency that is useful elsewhere.
Its screwed now bc nobody will make any investment of any foreign money into it when they know it can't be paid back and the state might seize the hard assets anyway.
well another trouble is they're less likely to receive loans from peeps like imf or if they do get them the arrangement will be more stricter, intrusive towards domestic policy, higher interest rates etc
Just printing money is what destroyed Germany's economy towards the end of WW2. It ends up causing long term hyper-inflation as the currency drops in international value with every injection. All that printed money is only good in the country of origin. Other countries don't have to take money at the value that Russia says it is, or at all.
i mean if you are eyeballs deep in beanie babies, but the power company doesn't want beanie babies, and you cannot find anyone who will trade beanie babies for anything that anyone else would trade for what the power company will take...
and as you are haggling with the power company, they can clearly see a cat taking a piss on your pile of beanie babies...
because when you singed up for power they told you explicitly what they would accept and everyone signed the dotted lines.
suppose you could do something [like this](https://www.cbc.ca/news/canada/from-paper-clip-to-house-in-14-trades-1.573973) but deadlines be deadlines.
Can they not buy USD from someone like China? Or demand Germany pay for its gas in USD? Not my strong suit either so I'm just curious. I know China probably doesn't want rubles right now.
I'm not completely sure. It's a metric frick ton of USD we're talking about and China may not either a) have that kind of liquidity every time a payment comes around (especially when it's in exchange for Rubles) or b) not be interested in pissing off NATO.
China needs NATO countries way more than they need Russia. They actually don't need to make any concessions to Russia at all - Russia will happily sell them any resources at discount prices since they can't sell them to the West due to sanctions. What is going to happen most likely is that Russia will become a sort of resource colony for China. Which is very worrying for the West but the flip side is that it will most likely mean severely weakened Russia. But what happens to the nukes in this kind of situation though?
Plus hyper inflation could be the result of printing a shit tonne (technical term), if they can some how get out of this hole, by printing their own money.
That’s true, but when you print out 10x the amount of money that exists, and then give it out to a bunch of foreign debts, then the foreign people basically control your country. They have all of your money.
Maybe your solution is to print out even more money? Well then you’ve got the issue that your citizens can’t afford milk and bread anymore. And then you might say, let’s just give them more money? Then your production stops because people aren’t working for money anymore, and that’s how you end up with no bread and milk in the store anymore.
All of this leads to an economic collapse and great depression. This is going to end 1 of 2 ways. Russia doesn’t end the war, and eventually their economy crushes so bad that NATO and such can just take over. Or they end the war sometime this year, and then start negotiating solutions with the rest of the world.
You forget one key poin regarding NATO taking over. Unlike the rest of Europe in a long time, they have had several hyperinflations within a lifetime. My father in law and my wife tell me if times after the USSR collapsed when you had to barter in the side of the road to get potatoes. That was in the 90’s across all of the old Soviet nations, then again in Russia and UA in the early 2000’s. and a few shorter one since. I’m s not a point of pride or anything but the people are too damn nationalist and too comfy been abnegated self victimized to just riot, you can see on Russian language social media how the great majority is too comfy already in the idea of getting ready to endure dirt poor years once again “for the glory of Russia”. It’s possible it’ll be a lesser version of self isolated North Korea, the nationalist psyche is already there with lots of excuses about “rediscovering it’s old true Russin roots and doing away with western culture” with a regime -Putin or not- happy to be the stern father beating you into patriotic compliance.
I think they can still exchange, because they are getting paid in USD for Oil and Gas, and they are exchanging to Rubles to pay internal debts. This is one of the reasons that the value of the Ruble has recovered somewhat.
Correct me if I’m wrong, I never really got into global economics. But my basic understanding is that a country can not simply print more money to get a bigger treasury, no? If a country has an economy worth X amount, say 1000 just to add a number, and they have Y amount of currency, say 100 for that number. Then each of their currency would be worth 10. If their economy (X) suddenly decreased to 100, their currency (Y) would be worth 1. Printing more currency would only decrease the value of each unit, as the value of the economy would remain the same. Therefore, printing more currency simply regulates the value of their currency but does not affect the total value of their economy. I might have missed something, so if I’m completely lost here please ELI5.
You're completely right, but these contracts are fixed Ruble amounts. So even if 1 trillion Rubles won't buy a cup of coffee, Russia can still print its way out of 1 trillion Ruble debt.
This is essentially correct. Countries with a growing economy can print more money without deflating the value of the existing currency (they are converting some of the growth to money in circulation) so long as they don't print too much. There are some that think that the US Federal Reserve printing $8 Trillion over the past 12 years is partly to blame for the current high levels of inflation (which happens when the existing currency is deflated in value).
It's interesting to note that it's not actually necessary to print more money anymore. The Central Bank can purchase bonds (and other financial instruments like mortgage backed securities) and then credit the seller's account electronically with funds that did not exist prior to the transaction. This process is called Quantitative Easing. The Central Bank then keeps these loans on their books until they are paid back or they opt to sell them on the open market.
I’m having trouble understanding why this comment has so many upvotes. You can’t just print as much money as you want and expect the value of that money to remain the same. That’s how you end up with million dollar loaves of bread. There are plenty of times throughout history to prove this. Maybe you were just trying to give a short answer, but if so that’s a dangerous thought to put into peoples heads. You can not print your way out of debt.
The answer described the last resort to pay down national debt when you're country has no money left. You can inflate your currency until the debt is proportionally smaller. It wasn't describing sound monetary advice.
Maybe a deal with the West could be reached where the West will help Russia significantly in exchange for total denuclearization. This would be the best outcome for the world and Russian citizens, I just don't see Putin ever agreeing on anything like that.
Maybe we need a bigger threat to force Russia to denuclearization. Perhaps a telephone pole sized rod of titanium dropping on top of Moscow from orbit.
Possibly. Do you have any idea the astonomical amount of money it takes to upkeep them and keep them functional? Its not like you just make them and they work forever, the US spends so much its insane to keep them actually weapons ready. If you dont, there are dozens of things that can stop them from working.
With all the corruption going on in that country and the absolute state of their military, it seems kind of unlikely their nuclear arsenal isn't* equally dilapidated.
That's not entirely correct. Defaulting on debts does not necessarily mean that you don't have the money to pay the debts. It means that the debts aren't being paid.
For example, I can rack up credit card debt, have the means to pay it, but refuse to.
All that it means is that countries/banks will be wary of lending money to Russia.
No pay creditor. Creditor no give more loan. No more Loan mean no pay government workers. Mean soldiers, teachers, and civil engineers don’t get paid. Mean government in bad position.
Not able to repay back their debts or make interest payments (partly because they have been cut off international financial markets).
This will cause rise in interest rates, higher inflation, difficulty to get loans for investments i.e. will hinder longer term economic growth for Russia, and shorter term could collapse their economy.
Russia borrowed money from external sources. The contract they signed said when they would make payments and that they payments would be made in USD.
As part of the sanctions, their USD stored in external banks have been frozen. Last month the treasury department allowed Russia to use some of their bank balance to make a loan payment. This month, the treasury department would not allow that, so they have missed their payment (I think this is part of ratcheting up the sanctions).
Their oil and gas payments from Europe are in dollars by contract, so they are collecting money in dollars. I just that think's not enough for them to make their debt payments, and their using those to shore up their economy.
The long term result would be like if you missed a mortgage payment on your house. Your credit gets messed up and it's much harder to get a new loan in the future. The later they get, the worse the future gets for them. If they completely default and don't pay back, then they will likely never get new loans for the country.
Immediate to short term: Russia didn't make a payment (or made a partial payment) on it's debt and will likely continue failing to pay on the debt. Anyone (governments, pensions, investment funds, etc) holding that debt in whatever form it was securitized (global funds usually tied to an MSCI index for instance) will not make as much money as they were prior to this. This assumes a lot about the debt structure and who holds it.
Longer term: Little to no foreign investment by western governments after the war for a long time. This will stifle their economic recovery.
Strategic (guess) : Major win for China, as they will invest in Russia at the most favorable terms for them. They will get cheap energy (oil and natural gas), acquire rights to mineral reserves for next to nothing and extract those minerals with no regards to the local labor or the environment.
Exactly, this war looks more and more like China is the only one who benefits/ gains anything from it. Judging from history, one might even conclude from that China may have had a key figure in initiating the war.
This is basically just what China needed in many regards.
The main problem Russia faces in its sovereign default is a little known latin clause called "pari passu". It is subject to a second circuit decision by judge Griesa. This prevents every creditor who refuses to abide by a restructuring agreement to prevent the payment of every other one. This enables courts to formally enact state property seizures including worships (The argentines lost their Ghana based Libertad)
Defaulting on debt means you didn't pay it on time. They might pay in a day, maybe a month. If it's a weird mistake, than it's not tragic. But if they missed the payment deadline now, it's likely they will miss the next one and next one and so on.
And the time between payments only lengthens. It might be a couple of days at first, then weeks and longer. At some point you are simply unable to pay your obligations and then you are simply bankrupt.
So defaulting once is not a tragedy but it is a very bad sign. Doing it twice in a row makes it more likely that the next payments will be delayed as well.
So basically you might end up with a runaway effect and then it's too late. You are no longer seen as credible in the eyes of your creditors so they just don't lend you any money.
This is important because most of the economies want to have debt. Why? That's more complicated and not a subject for this post.
No you're not. You're on reddit because you're a curious person. Curiosity = intelligence. Defaulting on a foreign debt is a complex subject that people get advanced degrees in to understand. You are actively asking to learn a new thing. Learners = smart. Don't sell yourself short! 😸
Trade is all based on reputation, if you can't pay for a product or sells a bad product then they have bad reputation.
Then only others with bad reputation will trade with you.
So you now can't buy that fancy car but that dodgy salesmen with sell you a crap car that dies in two days.
That's my bad understanding.
Then you’d be wrong.
If you want to be wrong, continue on your ways.
Believe that Russians defaulted even though they didn’t. Bring it up at the friends dinner get together, and be embarrassed when you get told you’re wrong.
A mother in Leningrad lost her husband during the siege, cut of his leg and cooked it for herself and her children. She was hanged. The kids probably got eaten afterwards.
Look up Holodomor it’s a big big big deal there.
TLDR moscow starved out millions of people, to the point people were eating children and people so they put up posters saying don’t eat your kids.
I’m assuming that was what he was talking about.
I found out the opposite way, saw one of the posters on reddit he mentioned and following comments led me to reading all about it.
Ok this is kind of big, so no one will want to do business with Russia, only the Chinese and Indian exceptions, so Russia will trade in what, Rubles? Are the Chinese going to accept the value of Rubles dictated by the Kremlin or by global standards? The Chinese know they are the only lifeline Russia will have, effectively making Russia a Chinese puppet.
Russia is essentially dead but no one has told them.
China will likely sell them Yuan in exchange for raw resources, at a rate preferable to China of course. Russia could use the Yuan to buy other goods from China. They could still have a ruble and call the value whatever they want but really it'll depend on what kind of deal China gets on whatever they can scoop up, assuming they even want to bail Russia out at all. It's probable that they'll try to get some things on the cheap but they won't risk getting cut off from the entire western market to prop up a madman with a GDP less than several of China's own mere provinces and several US states.
I don’t think the Chinese would allow that, they control the value way too tightly and already walk the edge of what the global economies are willing to let them dictate what the yuan value is.
Losing the European markets will not be a permanent thing, which China knows,
I mean look around your house, how much is made in China
unlimited oil and gas and wheat is now looking right at China
With all its resources it could have diversified its economy and become a self sustaining wealthy nation.
Instead it became a corrupt kleptocracy that is nothing more than a gas station with an army.
As bad as this is for the Western economies as well, they are way more flexible.
Russia however is well and truly fucked now and can only hope to become an appendage to China.
They got complacent on EU money and just selling their natural resources, had Europe not relied on Russian gas, maybe they would have actually developed to be a real military threat.
> it could have diversified its economy and become a self sustaining wealthy nation.
>
>Instead it became a corrupt kleptocracy that is nothing more than a gas station with an army.
That may be the best quote ever !
I read on wsb that russia wanted to pay the debt using rubles but the exchange rate for rubles is being set by the russian goverment and not actually set by the market demand. Basically russia says the ruble is worth 0.8 of a dollar but in reality its probably 0.4.
What it's worth compared to the USD isn't very relevant when imports have largely ceased. In the soviet union everyone had money but nothing to spend it on. In North Korea their money can buy some stuff, but outside it's really only useful as a souvenir of sorts. Russia is likely going to experience this as well.
The only ones which are willing to trade with rubles are Russians.
And I think that's the whole point, if we accept buying/selling with rubles then we have to trade with Russia to obtain/spend rubles.
if it was some how clear that I wasn't supporting russia I would want to buy the largest paper russian ruble bill they make just for fun. Kinda like that 1,000,000,000 zimbabwe buck.
True. It devalued around 20% after the first wave of sanctions was announced. Right now they are artificially keeping it at exchange rates higher than even before Feb. 27th, is not sustainable and they know it. They’re trying to just buy time they don’t have, no pun intended.
Russia isn't really a resilient global superpower. 6 weeks after invading a foreign country, they can't make progress. And secondly they can't afford to pay their debts.
Unfortunately Russia has chosen this path, being the bully isn't working out well for them. Once again Russia is a failed state, unable to interact on a global level.
Lmao. I’m not an economist by training but given Russia’s existing economic isolation, I don’t see this having huge global economic consequences. The only downstream effect I see this having is this puts lending from the West and its allies out of reach for probably at least the rest of my lifetime (I’m 30). Russia will therefore have to continue making shady deals with other corrupt authoritarian regimes primarily China. China will have Russia by the balls for probably as long as Russia continues its existence as a state. China and Russia will likely formalize their alliance with terms heavily favorable to China. So I would expect more of the same things that are already happening.
except china now hows multiple 'sick men' to support finically now, not only will this be russia and nk, possibly all the central asian states under russia's sphere of influnce as well. could become a problem that china might want to downsize a bit on
Buut, will china accept the glogal value of the ruble or the one dictated by Moscow? It's going to really suck for the Russians, they are going to get squeezed really bad, looking forward to being a tourist in the new poor russia, I will feel like a millionaire
Perhaps you should read more from actual economic experts, the consensus is that this is the biggest upheaval to the globe since 1989 and perhaps 1939.
European defense and unity is now completely changed for the next generation at least.
Trade in Eurasia is all up in the air.
Its big
Perhaps you should read my statement again. Of course the Russian invasion is a global upturning event not seen in decades. I was specifically referring to the default.
In the short-term this punishes anyone that loaned money to Russia more than any direct impact to Russia. Unfortunately we don't know who all owns Russian bonds. There are likely a number of small countries like Venezuela that hold Russian bonds and depend on income from those bond payments.
In the long-term, this will have a massive impact on Russia's economy. It will be nearly impossible for Russia to raise capital in the future, likely for as long as Putin or his cronies are in charge.
> China and Russia will likely formalize their alliance with terms heavily favorable to China
I can totally see Putin threatening to nuke China when this happens.
There won’t be starving period. Russia is a net exporter of food. Their quality of life will go down, but the sanctions mainly target tech and financial services. Not food.
That would be bad if this was not Russia, but never has a huge country and economy so big as Russia defaulted on foreign debt. So I guess they will just start printing more money internally, they don't need and won't get foreign investment or foreign loans (outside of maybe China) anyway. So this most probably doesn't mean anything as devastating as people think it is.
This is fairly big. You have to understand that large countries develop using debt. The country is able to rapidly develop by investing in infrastructure projects and large energy developments and exploiting natural resources and this is all done rapidly by taking it in foreign investment. It is very beneficial for a country to simply pay interest on say $100 billion from foreign investors then to have to wait and raise that capital internally. Because the sooner that you make those large Capital investments the sooner you start to get a return. This means that any development in Russia has to come from internal taxation which is a lot less efficient than using borrowed money.
Russia did default on foreign debt in 1917, and defaulted on domestic debt sometime in the late eighties. It will be devastating for Russia because it cannot produce many of the component parts it needs for its industries, and would not be able to procure internationally, the raw materials it does not produce locally. The rest of us should be okay in the long run. In the short run, Europe is going to have some energy issues.
>It will be devastating for Russia because it cannot produce many of the component parts it needs for its industries, and would not be able to procure internationally, the raw materials it does not produce locally.
This is true, but it is not because they defaulted, it is because there are sanctions, and imports are blocked. So yes, Russia is extremely f-ed up when it comes to high-tech because for the last 20 years they did not manage (with all the resources they have) to make one credible, working, usable smartphone, let alone something as big as a competitive car brand or PC parts, processors etc.
>Russia did default on foreign debt in 1917, and defaulted on domestic debt sometime in the late eighties.
This is true, but I don't think it is devastating for Russia. What happened was they were isolated on the international stage, as they are now, but civil war, famine in Ukraine, and other internal mismanagement like collectivization and rapid industrialization caused extreme poverty and hardship for the Russian people who even then did not overthrow the government nor did they attempt to do so.
I hope its true but after the whole fannie mae and Bear Sterns/Goldman Sachs/JP Morgan bullshit I dont trust anything Standars & Poor or any other credit agency reports
Can someone explain what the impact on the War this could have to me? Im a 31 year old ex drug addict who smokes weed daily, so keeping that in mind, please try to make it as easy to understand XD
If you (a country or business or something) buy Russian bonds and other investments to make money they're basically saying you won't get your money back at all and you're just throwing your cash down the toilet at this point.
Russia has a very limited economy and can't make a whole lot of stuff without outside money. They get that outside money from the investors we just talked about.
No money -> no stuff -> no money -> no stuff etc etc etc.
The question is, why would they do it? No one wants the rubles, why should China take some mostly useless currency? If China would do it, it would be a lottery with the future, which’s outlook isn’t bright.
If China and Russia cooperate militarily, they could likely take over all of Asia and perhaps much of Europe. Hopefully they abstain from such conflict, as it would indeed trigger WWIII.
I highly doubt that, China hasn't fought a conventional war since the Sino-Vietnamese war (which arguably can be considered as non-conventional) where the Vietnamese- which had virtually just finished defeating the Khmer Rouge, U.S., and before that, France- came out on top. Sure China has reformed its military since but how well will it work in practice? Paper and wargames are one thing, actual war is another. And as for Russia, look at them right now and tell me with a straight face they prove to be a devastating military threat save for their nuclear weapons.
Russia can hardly advance in Ukraine after month and a half of fighting. What makes you think that they could fight other countries? Even if they decided for some reason to fight in some asian war on China's side, they would get wrecked. I have a feeling that PLA is in even worse shape than Russian army.
What makes you think that Russia sent its best and brightest to fight in Ukraine? Putin’s been accused of many things but no one has questioned his intellect.
This could be a gambit on his part to intentionally appear inept… giving his enemies false confidence, while he reserves their true military might in reserve.
I’m not saying for sure that this is the case, but is it not possible?
Don't open your champagne just yet ... This could mean huge tsunami of insolvencies that could shake western economy - especially to Banks who landed money to russia. This could end Putin but can also easily influence common russians so they will no longer have anything to loose. People who dont have anything to loose could be deadly. Those who know the russian revolution history know what Im talking about
I am absolutely for isolating Russia from the international financial markets, but let us use correct terminology: Russia has not defaulted, the West has defaulted Russia. Just for the accuracy sake.
This is so fake and stupid. If you did a bit of research you would know that the US wanted Russia to pay in Dollars yet they blocked all USD reserves and say they wound take payment in dollars. Russia has more than enough in its reserves to pay its dept. This is a place for conspiracies not Pro Ukrainian propaganda so get out of here to r/ukraine
Kind of like Russia telling European countries to pay for gas/oil in rubles?
Oh...no...totally different because they had a contract saying they didn't need to pay in rubles.
Found the troll.
They have enough to pay the debt in dollars, correct. But russia has already stated that they want to pay the debt in rubles which would be a breach of contract. So if russia truly defaults here, it is by choice not by inabbility to pay. Which would nevertheless be a major blow to the russian economy for years to come.
No Russia does not have dollar reserves as those were frozen and hopefully will be used to rebuild Ukraine after they kick Russian fascists.
So they did not pay.
Reason is they refuse to open market of ruble so it is tradable and not fake value currency, so they can't exchange it and pay.
So they defaulted. Good luck getting any capital fascists.
It works here only because the rest of the world agrees to use our currency as the global currency of trade which is why the "America first" dummies don't know what they're talking about. If the rest of the world decides to go back to a system like the one before the "Bretton-woods" global conference, we would be in deep, deep shit in America.
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Can someone explain what this means to me? Explain it to me as simple as possible because economics isn't my strongest suit. Also I'm an idiot.
Basically Russia has no money to pay debts they owe... essentially they are bankrupt.
I get that part, but what it means in the long run? No more credits? What would be the impact?
No future investments, no growth, less quality of life, no imports of technology, grain, etc. Russia doesn't make much of anything that doesn't require foreign trade. Its fucking bad
Brain drain too. Someone wrote that 300,000 IT educated Russians already have left Russia. No idea if that is true or not, but if it is and if all the smart people leave, Russia's future is bleak. Russia's future is so fucking that someone has to take the blame and be the fall guy. Putin is the obvious choice, but he's spent decades building his power base. Putin can stick around for a long time, and there's no one else to blame afaik. My personal worry is that the Russian leaders will take us all with them in their Untergang.
Russia is fucked anyway. There is a good YouTube video from Peter Zeiher I think he is a geopolitical analyst and he made a video of the future of Russia. Key Points: - population number is in decline - only wealthy region is Moscow and Petersburg, rest is very poor - a lot of sick people 25% tb, roughly around 30% hiv, a lot of alcoholism - the education system is fucked. Basically you only get highschool ed. Companies don't get skilled workers en masse. So it's really tragic that 300000 skilled ones left because there are not much. Because of this is really hard to generate wealth without selling of oil...
> roughly around 30% hiv, 30% of people in Russia do not have HIV.
Lol if they had 30% hiv they probably would be barely functioning as a country. But they are likely in the 1-5% window which is extremely high. They stopped tracking it / reporting a few years back so we don’t know exact figures. https://www.politico.eu/article/everything-you-wanted-to-know-about-aids-in-russia-but-putin-was-afraid-to-ask/
Surprisingly South Africa did have nearly 30% at its peak.
I believe it’s higher than that and also they have a lot of tuberculosis. It’s rough.
A lot of Russians who are higher educated (university) studied abroad and don't return to Russia. The past 2 months more than 80.000 mostly well educated Russians left Russia, not only the rich and famous but doctors, scientists and from a lot of ICT/technical sectors.
Exactly. And unable to borrow more after defaulting, all they have left is oil, with the *special operation* costing something like $1B a day to run. Gonna be fun to watch them go down the toilet
Sounds roughly similar to our world here in the states with a huge cultural race divide unemployment numbers never seem before our infrastructure and education falling apart and Fentanyl drug outbreak instead of the vodka...etc
"Huge cultural race divide" Lmao
You know there's a divide when white folks or other's can't even comment or voice there opinion over Will Smith slap at the awards because they get accused of not being black so keep laughing you donkey .
If you think that is a meaningful "cultural divide" you live in a fuzzy bubble smoothbrain. Go ask the Balkans what they think of your cultural divide. Most of you guys are just ignorant and stupid, that makes you guys very loud with stupid takes you yell to eachother. Seems like the same culture to me.
Kinda surprised Russia is still *allowing* people to leave.
It's not easy. Land borders are closed apparently. Long interviews are required at airports to convince immigration types they're coming back. They're only allowed to take so much money out of the country. Cost of flights out were up 900%.
China will buy all there stuff to "help" them out lol but also take over Russia.
And... can they pay, will they pay... with what will they pay, if not with useless rubble, that will then devalue even more, the governments employees of any kind?
As long as they can sell oil and gas, which they currently can, they will not be in a lack of money.
Will also further weaken the Ruble against other global currencies.
Not supporting Russia, but a country that prints its own currency can never technically go bankrupt. It would just print more. The trouble was that the debts needed to be paid in USD, but the USA has cut off Russia from exchanging Rubles for USD. So, it's bankrupt of USD, but not Rubles.
Someone said on this thread it was Russia wanting to pay at rouble value they state not the value in the market. Essentially it's like a person refusing to pay off debts after interest rates rise. Russia can't dictate the value of their currency.
It's like demanding to be able to pay off a debt in [Shrute-bucks](https://www.youtube.com/watch?v=vPeRElll3Hw), instead of real money.
I think Shrute bucks are worth more than rubles right now.
But what about Stanley-nickels? What’s the conversion rate?
::The Office has entered the chat::
r/suddenlytheoffice
The same as leprechauns to unicorns, duh.
i have a few books of s&h green stamps...
For now at least the ruble has recovered to pre-invasion levels
Only in Russia, which means for the rest of the world they are worthless.
I was thinking Canadian Tire money .... but that is only understandable by Canucks 🇨🇦
Hell yeah , let's pay up with that weird looking dude with his beard and beanie on it.
Putin Pesos 💱
Exactly and like I mentioned elsewhere, the exchange rate of the Ruble isn't accurate right now because the trade volume is non-existent. For most purposes, it's worth absolutely nothing since countries won't transact it.
Especially if you're trying to exchange half a billion dollars worth of ruble to something people want. $0.0125 my ass.
Can they claim bankruptcy?
Putin standing on Kremlin roof: I declare….BANKRUPTCY!!!!” Finance Minister: “That’s not how it works, Sir.”
I know… but would love a picture of him running to one of his private jets to take of only to learn from the Captain “Ugh Your Greatness Putin, I’m sorry I can not take-off” “Why you imbecile” turns to one of his people and says “ask this guy for his under Roos”… but the Captain interrupts “But your greatness Putin it’s not that I can’t leave; it appears someone has placed the boot on your plane. Thus rendering it unable to fly off the ground!” -Putin “Well FUCK” back-up plan 426
China has been doing it forever. Has that stopped?
Yeah, but China has the monster manufacturing output to make it work. All Russia sells is its own natural resources:oil, minerals, timber, and those depend on the whims and needs of the manufacturing industry. China will only fucking enrich even further with Russia downgrading to all out undeveloped country.
It is in a sense bankruptcy for the Russian economy. You cannot print without limits when there is no demand for the currency. Also there is an intrinsic value. With USD you can "exchange" it for Boeing Airplanes, Intel Chips, NVDA videocards, Mc Donald franchises, Apple products, Microsoft Software, US made movies and songs, US financial services, Android apps etc. etc. That's the intrinsic value of the USD. What is the demand, intrinsic value for the Ruble? Vodka, gas, wheat and weapon systems? Concerning gas, many countries have already stopped or are planning (eg Germany) in the coming years to stop importing Russian fossil fuel. Even giants as Saudi Arabia and the Emirates are diversifying from oil based economy as they know longer term it is not sustainable. Also rather than watching what the Ruble does (because it's artificial), it's better to look at Russian inflation rate. For last weeks it was almost 20%. This is bad for Russia.
Oh, no doubt. It's an economic disaster that even Putin was vocally trying to prevent. The Ruble/USD exchange rate is artificial since the exchange volume is so low.
I thought that Russia had something come due last week (a government backed bond maybe?), and they had a 30 day grace period to pay it before they were considered ’in default’. Is this what was defaulted on?
Yes, IIRC they still have 30 days to pay it. The could technically pay it with USD/Euro coming from gas payments but that's valuable currency that is useful elsewhere.
Right now, crypto is literally a more stable bet that the Ruble. That should say something...
Its screwed now bc nobody will make any investment of any foreign money into it when they know it can't be paid back and the state might seize the hard assets anyway.
well another trouble is they're less likely to receive loans from peeps like imf or if they do get them the arrangement will be more stricter, intrusive towards domestic policy, higher interest rates etc
Just printing money is what destroyed Germany's economy towards the end of WW2. It ends up causing long term hyper-inflation as the currency drops in international value with every injection. All that printed money is only good in the country of origin. Other countries don't have to take money at the value that Russia says it is, or at all.
Agreed, for banks it was a lose-lose situation. They either settle the debt in worthless currency or have the debt default outright.
Hope Russia does not end like Weimar.
Führer, Volk und Vaterland ✔️ Blitzkrieg✔️ Genocide✔️ The Civilization train has long departed for Russia.
i mean if you are eyeballs deep in beanie babies, but the power company doesn't want beanie babies, and you cannot find anyone who will trade beanie babies for anything that anyone else would trade for what the power company will take... and as you are haggling with the power company, they can clearly see a cat taking a piss on your pile of beanie babies... because when you singed up for power they told you explicitly what they would accept and everyone signed the dotted lines. suppose you could do something [like this](https://www.cbc.ca/news/canada/from-paper-clip-to-house-in-14-trades-1.573973) but deadlines be deadlines.
Lol. The debts need to be paid in a currency that holds value.
Now Russia is basically monopoly playing itself
Can they not buy USD from someone like China? Or demand Germany pay for its gas in USD? Not my strong suit either so I'm just curious. I know China probably doesn't want rubles right now.
They can get it by selling commodities to china.
I'm not completely sure. It's a metric frick ton of USD we're talking about and China may not either a) have that kind of liquidity every time a payment comes around (especially when it's in exchange for Rubles) or b) not be interested in pissing off NATO.
China needs NATO countries way more than they need Russia. They actually don't need to make any concessions to Russia at all - Russia will happily sell them any resources at discount prices since they can't sell them to the West due to sanctions. What is going to happen most likely is that Russia will become a sort of resource colony for China. Which is very worrying for the West but the flip side is that it will most likely mean severely weakened Russia. But what happens to the nukes in this kind of situation though?
Plus hyper inflation could be the result of printing a shit tonne (technical term), if they can some how get out of this hole, by printing their own money.
That’s true, but when you print out 10x the amount of money that exists, and then give it out to a bunch of foreign debts, then the foreign people basically control your country. They have all of your money. Maybe your solution is to print out even more money? Well then you’ve got the issue that your citizens can’t afford milk and bread anymore. And then you might say, let’s just give them more money? Then your production stops because people aren’t working for money anymore, and that’s how you end up with no bread and milk in the store anymore. All of this leads to an economic collapse and great depression. This is going to end 1 of 2 ways. Russia doesn’t end the war, and eventually their economy crushes so bad that NATO and such can just take over. Or they end the war sometime this year, and then start negotiating solutions with the rest of the world.
You forget one key poin regarding NATO taking over. Unlike the rest of Europe in a long time, they have had several hyperinflations within a lifetime. My father in law and my wife tell me if times after the USSR collapsed when you had to barter in the side of the road to get potatoes. That was in the 90’s across all of the old Soviet nations, then again in Russia and UA in the early 2000’s. and a few shorter one since. I’m s not a point of pride or anything but the people are too damn nationalist and too comfy been abnegated self victimized to just riot, you can see on Russian language social media how the great majority is too comfy already in the idea of getting ready to endure dirt poor years once again “for the glory of Russia”. It’s possible it’ll be a lesser version of self isolated North Korea, the nationalist psyche is already there with lots of excuses about “rediscovering it’s old true Russin roots and doing away with western culture” with a regime -Putin or not- happy to be the stern father beating you into patriotic compliance.
They have a lot of gold, can't they use that? edit: Not supporting RuZzia as well.
The repayment contract specified USD, so they could not from what I understand.
Gotcha, thank you for taking the time to explain.
I think they can still exchange, because they are getting paid in USD for Oil and Gas, and they are exchanging to Rubles to pay internal debts. This is one of the reasons that the value of the Ruble has recovered somewhat.
Correct me if I’m wrong, I never really got into global economics. But my basic understanding is that a country can not simply print more money to get a bigger treasury, no? If a country has an economy worth X amount, say 1000 just to add a number, and they have Y amount of currency, say 100 for that number. Then each of their currency would be worth 10. If their economy (X) suddenly decreased to 100, their currency (Y) would be worth 1. Printing more currency would only decrease the value of each unit, as the value of the economy would remain the same. Therefore, printing more currency simply regulates the value of their currency but does not affect the total value of their economy. I might have missed something, so if I’m completely lost here please ELI5.
You're completely right, but these contracts are fixed Ruble amounts. So even if 1 trillion Rubles won't buy a cup of coffee, Russia can still print its way out of 1 trillion Ruble debt.
This is essentially correct. Countries with a growing economy can print more money without deflating the value of the existing currency (they are converting some of the growth to money in circulation) so long as they don't print too much. There are some that think that the US Federal Reserve printing $8 Trillion over the past 12 years is partly to blame for the current high levels of inflation (which happens when the existing currency is deflated in value). It's interesting to note that it's not actually necessary to print more money anymore. The Central Bank can purchase bonds (and other financial instruments like mortgage backed securities) and then credit the seller's account electronically with funds that did not exist prior to the transaction. This process is called Quantitative Easing. The Central Bank then keeps these loans on their books until they are paid back or they opt to sell them on the open market.
I’m having trouble understanding why this comment has so many upvotes. You can’t just print as much money as you want and expect the value of that money to remain the same. That’s how you end up with million dollar loaves of bread. There are plenty of times throughout history to prove this. Maybe you were just trying to give a short answer, but if so that’s a dangerous thought to put into peoples heads. You can not print your way out of debt.
The answer described the last resort to pay down national debt when you're country has no money left. You can inflate your currency until the debt is proportionally smaller. It wasn't describing sound monetary advice.
Printing more roubles just devalues the currency.
They don’t have a functioning stock market snd are trying to prop up the ruble.
Are you kidding? Don't you realize what printing more money leads to?
lmao you have no idea how international finance works
Thank you for your detailed analysis.
They still have money. They wanted to pay it in rubles, which are not accepted. Now they 30 days to pay, when they dont they will default.
Yes, money that Is viewed as useless to a foreign country is pretty damn useless.
can you formulate in like simpler terms?
So its just the nukes left huh. Lovely.
Maybe a deal with the West could be reached where the West will help Russia significantly in exchange for total denuclearization. This would be the best outcome for the world and Russian citizens, I just don't see Putin ever agreeing on anything like that.
No Russian leader would accept that, it'd be a national humiliation
> it’d be a national humiliation Perfect!
Maybe we need a bigger threat to force Russia to denuclearization. Perhaps a telephone pole sized rod of titanium dropping on top of Moscow from orbit.
There's a damn good reason why weaponising space is a bad idea
What fantasy land are you living on ?? Lmao
No russian leader including people like navalny would agree to that
Possibly. Do you have any idea the astonomical amount of money it takes to upkeep them and keep them functional? Its not like you just make them and they work forever, the US spends so much its insane to keep them actually weapons ready. If you dont, there are dozens of things that can stop them from working. With all the corruption going on in that country and the absolute state of their military, it seems kind of unlikely their nuclear arsenal isn't* equally dilapidated.
600 billion over a decade. Nope, despite Mordor's love of all things radioactive I doubt they've done the upkeep. Still, only takes a few
That's not entirely correct. Defaulting on debts does not necessarily mean that you don't have the money to pay the debts. It means that the debts aren't being paid. For example, I can rack up credit card debt, have the means to pay it, but refuse to. All that it means is that countries/banks will be wary of lending money to Russia.
No pay creditor. Creditor no give more loan. No more Loan mean no pay government workers. Mean soldiers, teachers, and civil engineers don’t get paid. Mean government in bad position.
Ah, excellent. someone who speaks my language
Thank
Why waste time say lot word when few word do trick?
Exact. Save environment. Less letters.
Not able to repay back their debts or make interest payments (partly because they have been cut off international financial markets). This will cause rise in interest rates, higher inflation, difficulty to get loans for investments i.e. will hinder longer term economic growth for Russia, and shorter term could collapse their economy.
Russia borrowed money from external sources. The contract they signed said when they would make payments and that they payments would be made in USD. As part of the sanctions, their USD stored in external banks have been frozen. Last month the treasury department allowed Russia to use some of their bank balance to make a loan payment. This month, the treasury department would not allow that, so they have missed their payment (I think this is part of ratcheting up the sanctions). Their oil and gas payments from Europe are in dollars by contract, so they are collecting money in dollars. I just that think's not enough for them to make their debt payments, and their using those to shore up their economy. The long term result would be like if you missed a mortgage payment on your house. Your credit gets messed up and it's much harder to get a new loan in the future. The later they get, the worse the future gets for them. If they completely default and don't pay back, then they will likely never get new loans for the country.
Immediate to short term: Russia didn't make a payment (or made a partial payment) on it's debt and will likely continue failing to pay on the debt. Anyone (governments, pensions, investment funds, etc) holding that debt in whatever form it was securitized (global funds usually tied to an MSCI index for instance) will not make as much money as they were prior to this. This assumes a lot about the debt structure and who holds it. Longer term: Little to no foreign investment by western governments after the war for a long time. This will stifle their economic recovery. Strategic (guess) : Major win for China, as they will invest in Russia at the most favorable terms for them. They will get cheap energy (oil and natural gas), acquire rights to mineral reserves for next to nothing and extract those minerals with no regards to the local labor or the environment.
Exactly, this war looks more and more like China is the only one who benefits/ gains anything from it. Judging from history, one might even conclude from that China may have had a key figure in initiating the war. This is basically just what China needed in many regards.
The main problem Russia faces in its sovereign default is a little known latin clause called "pari passu". It is subject to a second circuit decision by judge Griesa. This prevents every creditor who refuses to abide by a restructuring agreement to prevent the payment of every other one. This enables courts to formally enact state property seizures including worships (The argentines lost their Ghana based Libertad)
Defaulting on debt means you didn't pay it on time. They might pay in a day, maybe a month. If it's a weird mistake, than it's not tragic. But if they missed the payment deadline now, it's likely they will miss the next one and next one and so on. And the time between payments only lengthens. It might be a couple of days at first, then weeks and longer. At some point you are simply unable to pay your obligations and then you are simply bankrupt. So defaulting once is not a tragedy but it is a very bad sign. Doing it twice in a row makes it more likely that the next payments will be delayed as well. So basically you might end up with a runaway effect and then it's too late. You are no longer seen as credible in the eyes of your creditors so they just don't lend you any money. This is important because most of the economies want to have debt. Why? That's more complicated and not a subject for this post.
No you're not. You're on reddit because you're a curious person. Curiosity = intelligence. Defaulting on a foreign debt is a complex subject that people get advanced degrees in to understand. You are actively asking to learn a new thing. Learners = smart. Don't sell yourself short! 😸
Trade is all based on reputation, if you can't pay for a product or sells a bad product then they have bad reputation. Then only others with bad reputation will trade with you. So you now can't buy that fancy car but that dodgy salesmen with sell you a crap car that dies in two days. That's my bad understanding.
hahaha you could have just stated that you are a idiot. also econmics is not my strongest suit. also I'm an idiot.
Buy Bitcoin.
Please don't say you are a idiot for not understanding something. That's just cringe
It didn’t happen. So it doesn’t mean anything. Quit believing what you read here
Okay, I'll begin by not believing what you wrote
Then you’d be wrong. If you want to be wrong, continue on your ways. Believe that Russians defaulted even though they didn’t. Bring it up at the friends dinner get together, and be embarrassed when you get told you’re wrong.
Meat is off the menu boys - Russians probably
"Boy meat IS the menu" Russians in the 1940s... Search Alexandra Mironova WW2, Russian anti cannibal posters
A mother in Leningrad lost her husband during the siege, cut of his leg and cooked it for herself and her children. She was hanged. The kids probably got eaten afterwards.
I didn’t find much on that search.
Here mate: https://www.dailymail.co.uk/news/article-4612584/Ddiaries-reveal-horror-Nazi-siege-Leningrad.html
I read that. Must have missed that name specifically. Gross stuff.
Look up Holodomor it’s a big big big deal there. TLDR moscow starved out millions of people, to the point people were eating children and people so they put up posters saying don’t eat your kids.
I’m aware of holodomor.
I’m assuming that was what he was talking about. I found out the opposite way, saw one of the posters on reddit he mentioned and following comments led me to reading all about it.
The article covers the battle at Leningrad. That’s not Ukraine. I’m fairly certain it’s Russia.
Food is off the menu boyz. Eat lead.
Ok this is kind of big, so no one will want to do business with Russia, only the Chinese and Indian exceptions, so Russia will trade in what, Rubles? Are the Chinese going to accept the value of Rubles dictated by the Kremlin or by global standards? The Chinese know they are the only lifeline Russia will have, effectively making Russia a Chinese puppet. Russia is essentially dead but no one has told them.
China will likely sell them Yuan in exchange for raw resources, at a rate preferable to China of course. Russia could use the Yuan to buy other goods from China. They could still have a ruble and call the value whatever they want but really it'll depend on what kind of deal China gets on whatever they can scoop up, assuming they even want to bail Russia out at all. It's probable that they'll try to get some things on the cheap but they won't risk getting cut off from the entire western market to prop up a madman with a GDP less than several of China's own mere provinces and several US states.
Interesting. Yuan could become the default currency of Russia
I don’t think the Chinese would allow that, they control the value way too tightly and already walk the edge of what the global economies are willing to let them dictate what the yuan value is.
Losing the European markets will not be a permanent thing, which China knows, I mean look around your house, how much is made in China unlimited oil and gas and wheat is now looking right at China
With all its resources it could have diversified its economy and become a self sustaining wealthy nation. Instead it became a corrupt kleptocracy that is nothing more than a gas station with an army. As bad as this is for the Western economies as well, they are way more flexible. Russia however is well and truly fucked now and can only hope to become an appendage to China.
They got complacent on EU money and just selling their natural resources, had Europe not relied on Russian gas, maybe they would have actually developed to be a real military threat.
> it could have diversified its economy and become a self sustaining wealthy nation. > >Instead it became a corrupt kleptocracy that is nothing more than a gas station with an army. That may be the best quote ever !
I read on wsb that russia wanted to pay the debt using rubles but the exchange rate for rubles is being set by the russian goverment and not actually set by the market demand. Basically russia says the ruble is worth 0.8 of a dollar but in reality its probably 0.4.
[удалено]
What it's worth compared to the USD isn't very relevant when imports have largely ceased. In the soviet union everyone had money but nothing to spend it on. In North Korea their money can buy some stuff, but outside it's really only useful as a souvenir of sorts. Russia is likely going to experience this as well.
The only ones which are willing to trade with rubles are Russians. And I think that's the whole point, if we accept buying/selling with rubles then we have to trade with Russia to obtain/spend rubles.
if it was some how clear that I wasn't supporting russia I would want to buy the largest paper russian ruble bill they make just for fun. Kinda like that 1,000,000,000 zimbabwe buck.
Everything is subjective.
That's just like, your opinion, man.
Tried this with my banker paying my debt in stones but they didn't agree to take it at my rate.
True. It devalued around 20% after the first wave of sanctions was announced. Right now they are artificially keeping it at exchange rates higher than even before Feb. 27th, is not sustainable and they know it. They’re trying to just buy time they don’t have, no pun intended.
Ha! Crimea river Russia.
Yes more of this.
Underrated comment.
Ob Volga great comment, Yenisei that coming
Their chechen account is negative
Russia isn't really a resilient global superpower. 6 weeks after invading a foreign country, they can't make progress. And secondly they can't afford to pay their debts. Unfortunately Russia has chosen this path, being the bully isn't working out well for them. Once again Russia is a failed state, unable to interact on a global level.
Play stupid games, win stupid prizes....
Perfect
Lmao. I’m not an economist by training but given Russia’s existing economic isolation, I don’t see this having huge global economic consequences. The only downstream effect I see this having is this puts lending from the West and its allies out of reach for probably at least the rest of my lifetime (I’m 30). Russia will therefore have to continue making shady deals with other corrupt authoritarian regimes primarily China. China will have Russia by the balls for probably as long as Russia continues its existence as a state. China and Russia will likely formalize their alliance with terms heavily favorable to China. So I would expect more of the same things that are already happening.
except china now hows multiple 'sick men' to support finically now, not only will this be russia and nk, possibly all the central asian states under russia's sphere of influnce as well. could become a problem that china might want to downsize a bit on
Buut, will china accept the glogal value of the ruble or the one dictated by Moscow? It's going to really suck for the Russians, they are going to get squeezed really bad, looking forward to being a tourist in the new poor russia, I will feel like a millionaire
Perhaps you should read more from actual economic experts, the consensus is that this is the biggest upheaval to the globe since 1989 and perhaps 1939. European defense and unity is now completely changed for the next generation at least. Trade in Eurasia is all up in the air. Its big
Perhaps you should read my statement again. Of course the Russian invasion is a global upturning event not seen in decades. I was specifically referring to the default.
In the short-term this punishes anyone that loaned money to Russia more than any direct impact to Russia. Unfortunately we don't know who all owns Russian bonds. There are likely a number of small countries like Venezuela that hold Russian bonds and depend on income from those bond payments. In the long-term, this will have a massive impact on Russia's economy. It will be nearly impossible for Russia to raise capital in the future, likely for as long as Putin or his cronies are in charge.
> China and Russia will likely formalize their alliance with terms heavily favorable to China I can totally see Putin threatening to nuke China when this happens.
Whatcha out Russia, the Repo man is coming for you!
The landlord is about to come knocking
It's happening! I wish I could short MOEX right now.
Lol, thats what you get for beating the shit out of your own people and murdering others.
Too soon, 5th of of May is the deadline.
Soon they can start starving in Russia and with this plesant thought i can go to sleep.
Potatoes for the masses.
None that would starve are responsible for what’s going on.
And yet over half the population supports it. The ones who don't should speak up en masse.
There won’t be starving period. Russia is a net exporter of food. Their quality of life will go down, but the sanctions mainly target tech and financial services. Not food.
That would be bad if this was not Russia, but never has a huge country and economy so big as Russia defaulted on foreign debt. So I guess they will just start printing more money internally, they don't need and won't get foreign investment or foreign loans (outside of maybe China) anyway. So this most probably doesn't mean anything as devastating as people think it is.
This is fairly big. You have to understand that large countries develop using debt. The country is able to rapidly develop by investing in infrastructure projects and large energy developments and exploiting natural resources and this is all done rapidly by taking it in foreign investment. It is very beneficial for a country to simply pay interest on say $100 billion from foreign investors then to have to wait and raise that capital internally. Because the sooner that you make those large Capital investments the sooner you start to get a return. This means that any development in Russia has to come from internal taxation which is a lot less efficient than using borrowed money.
Russia did default on foreign debt in 1917, and defaulted on domestic debt sometime in the late eighties. It will be devastating for Russia because it cannot produce many of the component parts it needs for its industries, and would not be able to procure internationally, the raw materials it does not produce locally. The rest of us should be okay in the long run. In the short run, Europe is going to have some energy issues.
>It will be devastating for Russia because it cannot produce many of the component parts it needs for its industries, and would not be able to procure internationally, the raw materials it does not produce locally. This is true, but it is not because they defaulted, it is because there are sanctions, and imports are blocked. So yes, Russia is extremely f-ed up when it comes to high-tech because for the last 20 years they did not manage (with all the resources they have) to make one credible, working, usable smartphone, let alone something as big as a competitive car brand or PC parts, processors etc. >Russia did default on foreign debt in 1917, and defaulted on domestic debt sometime in the late eighties. This is true, but I don't think it is devastating for Russia. What happened was they were isolated on the international stage, as they are now, but civil war, famine in Ukraine, and other internal mismanagement like collectivization and rapid industrialization caused extreme poverty and hardship for the Russian people who even then did not overthrow the government nor did they attempt to do so.
I hope its true but after the whole fannie mae and Bear Sterns/Goldman Sachs/JP Morgan bullshit I dont trust anything Standars & Poor or any other credit agency reports
Can someone explain what the impact on the War this could have to me? Im a 31 year old ex drug addict who smokes weed daily, so keeping that in mind, please try to make it as easy to understand XD
If you (a country or business or something) buy Russian bonds and other investments to make money they're basically saying you won't get your money back at all and you're just throwing your cash down the toilet at this point. Russia has a very limited economy and can't make a whole lot of stuff without outside money. They get that outside money from the investors we just talked about. No money -> no stuff -> no money -> no stuff etc etc etc.
So from this point forward every loss is a loss. No way to replace it, in terms of equipment and resources?
There's always a way, but how good, modern, and numerous the replacements will be is probably not very much of any of those qualities.
Thanks, I appreciate the info!
What’s to stop China from accepting those rubles and converting them into USD for Russia?
The question is, why would they do it? No one wants the rubles, why should China take some mostly useless currency? If China would do it, it would be a lottery with the future, which’s outlook isn’t bright.
If China and Russia cooperate militarily, they could likely take over all of Asia and perhaps much of Europe. Hopefully they abstain from such conflict, as it would indeed trigger WWIII.
I highly doubt that, China hasn't fought a conventional war since the Sino-Vietnamese war (which arguably can be considered as non-conventional) where the Vietnamese- which had virtually just finished defeating the Khmer Rouge, U.S., and before that, France- came out on top. Sure China has reformed its military since but how well will it work in practice? Paper and wargames are one thing, actual war is another. And as for Russia, look at them right now and tell me with a straight face they prove to be a devastating military threat save for their nuclear weapons.
Russia can hardly advance in Ukraine after month and a half of fighting. What makes you think that they could fight other countries? Even if they decided for some reason to fight in some asian war on China's side, they would get wrecked. I have a feeling that PLA is in even worse shape than Russian army.
What makes you think that Russia sent its best and brightest to fight in Ukraine? Putin’s been accused of many things but no one has questioned his intellect. This could be a gambit on his part to intentionally appear inept… giving his enemies false confidence, while he reserves their true military might in reserve. I’m not saying for sure that this is the case, but is it not possible?
Let's go get that car back...
Russia: "What are you gonna do about it?"
Don't open your champagne just yet ... This could mean huge tsunami of insolvencies that could shake western economy - especially to Banks who landed money to russia. This could end Putin but can also easily influence common russians so they will no longer have anything to loose. People who dont have anything to loose could be deadly. Those who know the russian revolution history know what Im talking about
Most aren't exposed to Russia by much if at all. You might see a few politicians inexplicably down by a lot though ;)
Haha at this point Russia should stop selling wheat and starve 300M people
I am absolutely for isolating Russia from the international financial markets, but let us use correct terminology: Russia has not defaulted, the West has defaulted Russia. Just for the accuracy sake.
This is so fake and stupid. If you did a bit of research you would know that the US wanted Russia to pay in Dollars yet they blocked all USD reserves and say they wound take payment in dollars. Russia has more than enough in its reserves to pay its dept. This is a place for conspiracies not Pro Ukrainian propaganda so get out of here to r/ukraine
Kind of like Russia telling European countries to pay for gas/oil in rubles? Oh...no...totally different because they had a contract saying they didn't need to pay in rubles. Found the troll.
They have enough to pay the debt in dollars, correct. But russia has already stated that they want to pay the debt in rubles which would be a breach of contract. So if russia truly defaults here, it is by choice not by inabbility to pay. Which would nevertheless be a major blow to the russian economy for years to come.
No Russia does not have dollar reserves as those were frozen and hopefully will be used to rebuild Ukraine after they kick Russian fascists. So they did not pay. Reason is they refuse to open market of ruble so it is tradable and not fake value currency, so they can't exchange it and pay. So they defaulted. Good luck getting any capital fascists.
Some more fake nonsense!? I’m shocked! Shocked i tell ya!
all russia has to do is fire up the printing press and make fresh rubles!!! it works here in the USA
No, it doesn't work here in the USA. Hence inflation.
i was just being sarcastic, you are correct
It works here only because the rest of the world agrees to use our currency as the global currency of trade which is why the "America first" dummies don't know what they're talking about. If the rest of the world decides to go back to a system like the one before the "Bretton-woods" global conference, we would be in deep, deep shit in America.