Russia faces ‘perfect storm’ as reserves vanish and derivatives flash default warnings

Financial Crisis - Public Domain

Russia’s foreign reserves have dropped to the lowest level since the Lehman crisis and are vanishing at an unsustainable rate as the country struggles to defends the rouble against capital flight.

Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.

Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.

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1 thought on “Russia faces ‘perfect storm’ as reserves vanish and derivatives flash default warnings”

  1. Watch Russia carefully. On the one side of things they are going bankrupt fast. On the other they are developing military force weapons at a pace that hasn’t happened in a good number of years.
    It would do most of us well in the world to ask them what are their intentions towards everyone else? Because if it is military conquest, then we are all in a lot of trouble both here and in Russia. War comes at a price no one can afford long term.
    During the 30s, Germany did the same thing! Germany went out and conquered most of Europe by 1941.
    Roosevelt made a deal with a devil when he allied us with Russia in World War II. I maintain that the war was lost without Russia on the Western Front.
    I would predict that they will move into the Middle East next and go to war for the Oil. The real question here is how will it be handled by all nations all over the planet when they become the aggressor?
    Any country in the world that thinks that nuclear weapons are an answer has been misled.
    There is a reason why our country and others have been backing away from nuclear weapons as a war weapon. That reason is it leaves most of the planet and the environment dead. I get the feeling that someone has lied big time to them on that score.
    The bottom line is we all need to be profitable. We all need a way of making a living. Right now we are facing a depression that hasn’t been this severe since the early 30s.
    To bring the world back to some resemblance of prosperity will take genius level people from all over the world.
    We are going to need Russia and China just as much as they need us.
    In 1970, Nixon faced a bankrupt country because of a war we should never have been in. China came to our rescue with cheap retail goods that took the place of imports from Europe. It also destroyed a lot of our retail industry that was in place and could not compete with those prices. Instead of war, industrialization of China gave everyone a certain amount of prosperity for a while. It was never meant to be a permanent solution and when Nixon went out of office the entire thing fell apart. Reagan came along. His answer was 18% interest on housing. It was hard on us, but it brought world wide investment back to this country.
    I am saying a military solution with Russia is not acceptable to anyone both here or in Russia.
    So we need to give them a way to feed themselves not cut them off at the knees with restrictions.

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