AFAIU this is equivalent to Russian default

[terr]

https://www.bloombergquint.com/busi...ert-defaults-with-ruble-payments-to-creditors

According to Saturday’s decree, payments will be considered executed if they are carried out in rubles at the Central Bank of Russia’s official rate.

On March 2, Russia made payment on a 11.2 billion ruble coupon for 339 billion rubles of bonds known as OFZs due February 2024. While Russia’s National Settlement Depository received the money, foreign bondholders weren’t paid because of the central bank’s order barring foreign payments. That triggered a debate over whether or not that constituted a default.

Russia has $117 million worth of coupons on dollar bonds coming due on March 16 that don’t have the option to be paid in rubles, the JPM strategists said.

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It will be interesting to watch if Russia decides to pay dollar-denominated coupons in rubles (according to the decree), thus breaking the contracts.

 

[Pricechange]

Wall street figured out that the entire $400 billion of reserves frozen at the US central Bank was offset by $400 billion of Russian bonds held by US and Europe. They also figured out that Russian is completely engaged in the Chinese version of Swift and can sell oil, gas, grains ect.. to all of the non western world.

This decree above offers Europe a way out of this dilemma. So, it is in fact, the opposite of a default. It is a beginning of a restart of trade. An open door ..if you will.

However, it also allows Russia to be declared in default by the US. Which would allow the US a reason to default on its $40 trillion of debt. This, they would term a Global Reset. Davos would allow it. Europe hopes to completely avoid it and to continue life as we once knew it after a restart of normalization..

 

[terr]

Moody's just lowered Russia's rating from BBB to Ca. That's the last step before full default.

"Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery in principal and interest."

Next one (it is coming) is C:

"Obligations rated C are the lowest-rated class of bonds and are typically in default, with little prospect of recovery in principal and interest.

 

[piezoe]

Wall street figured out that the entire $400 billion of reserves frozen at the US central Bank was offset by $400 billion of Russian bonds held by US and Europe. They also figured out that Russian is completely engaged in the Chinese version of Swift and can sell oil, gas, grains ect.. to all of the non western world.

This decree above offers Europe a way out of this dilemma. So, it is in fact, the opposite of a default. It is a beginning of a restart of trade. An open door ..if you will.

However, it also allows Russia to be declared in default by the US. Which would allow the US a reason to default on its $40 trillion of debt. This, they would term a Global Reset. Davos would allow it. Europe hopes to completely avoid it and to continue life as we once knew it after a restart of normalization..

There will be no default on U.S. issued Treasury securities. The Central bank can buy them back in strong dollars whenever it is to the U.S.'s advantage to do so. The money needed to buy all of the Treasuries issued was "printed" and spent into the economy before the Treasuries were issued. That money returned to the government side when the Treasuries were auctioned. The only constraints for the U.S. are inflation and productivity of the U.S. economy, but these are, indeed, very real constraints!

 

[piezoe]

There will be no default on U.S. issued Treasury securities. The Central bank can buy them back in strong dollars whenever it is to the U.S.'s advantage to do so. The money needed to buy all of the Treasuries issued was "printed" and spent into the economy before the Treasuries were issued. That money returned to the government side when the Treasuries were auctioned. The only constraints for the U.S. are inflation and productivity of the U.S. economy, but these are, indeed, very real constraints!

Naturally, Russia also holds U.S. Treasuries as part of its foreign exchange reserve. The U.S. will of course continue to credit interest to Russia's Reserve account, but these payments will also be impounded.

 

[M.W.]

I remember a game that very young kids played on birthday parties. It was called The Travel to Jerusalem. Music played and all kids walked in circles around a bunch of chairs with the the count of the chairs being one less than the number of chairs. When the music stopped the kids were tasked to rush to sit on a chair and the remaining kid without chair was ejected from the game. The current mickey mouse economy reminds me of this game. When the music stops its over. As long as the indebted bondservants can be made believe that they can survive the game they keep their mouths shut. Nowadays for many people life is all about just surviving until the next day or month. As long as this system works a domestic economy can print its own money and binge on its own debt. But the moment inflation causes the masses to become unable to pay for their bread on the table and service their mortgages it's game over.

There will be no default on U.S. issued Treasury securities. The Central bank can buy them back in strong dollars whenever it is to the U.S.'s advantage to do so. The money needed to buy all of the Treasuries issued was "printed" and spent into the economy before the Treasuries were issued. That money returned to the government side when the Treasuries were auctioned. The only constraints for the U.S. are inflation and productivity of the U.S. economy, but these are, indeed, very real constraints!

 

[ipatent]

The Russian national debt is very small.

 

[piezoe]

The Russian national debt is very small.

In terms of real debt, small but not insignificant. And how would you like to buy Russian bonds denominated in U.S. dollars now? And once Russia defaults on those foreign currency denominated bonds, do you think foreign investors will be happy to purchase more such bonds, other than at draconian interest rates. It might pay to review the history of Argentinian bonds issued in foreign currency. Do not forget Russia can not pay the interest on those foreign currency bonds by simply printing Rubels. Unlike so-called U.S. "debt", Russia's debt, so far as it is denominated in foreign currency, is real!