This page has been archived and commenting is disabled.
42 Billion Reasons Why Putin's Time May Be Running Out
Russian municipal bond risk is surging once again (at 6-week highs) heading towards crisis-levels as Bloomberg reports numerous regions (including Chukotka - across from Alaska, Belgorod -near Ukraine, and three North Caucus republics) are prompting concerns as debt-to-revenue levels top 100% (144% in the case of Chukotka).
Risk is on the rise once again...
The clock is ticking for President Vladimir Putin to defuse a situation he set off in 2012 with decrees to raise social spending. That contributed to a doubling in the debt load of Russia’s more than 80 regions to 2.4 trillion rubles ($42 billion) in the past five years and it all rolls within the next two to three years.
As Bloomberg details, threats to municipal finances are snowballing as sanctions over Ukraine choke access to capital markets, forcing local governments to fund social outlays with costlier bank loans.
While regional debt sales are down 53 percent so far this year, Moody’s Investors Service estimates borrowing will grow as much as 25 percent in 2015, driven by spending on health care, education and utilities.
The squeeze is putting regions in jeopardy. They’re facing "an increasing likelihood of defaults," S&P warned in June. At least one non-rated local government delayed a principal repayment on a bank loan in the first quarter, it said.
"A default by a large region could block market access for the Finance Ministry itself," said Karen Vartapetov, associate director of S&P’s Moscow office. "Right now the federal center has an opportunity to help regions. In three years, there may be fewer resources, while regional debt may be bigger, and that will result in greater risks."
Local administrations are running a 625 billion-ruble deficit, up 42 percent from 2014, according to S&P. Seventy-five regions had a budget gap last year, the Higher School of Economics in Moscow said in a May report.
Even The Russian Central Bank is nervous...
"Because of the high debt burden, access to market sources of financing may be partly closed for some regions," it said. "In addition, these regions may have difficulties with refinancing existing debt because banks are becoming more selective in assessing regional risk."
Charts: Bloomberg
»
- 25031 reads
- Printer-friendly version
- Send to friend
- advertisements -
Okay, Vlad, go look up the Fed. Buy those bonds back with printed rubles. What's the problem?
It is a race to run up debt so you can buy the most shit and have it for yourself in your hands before the collapse, right?
LOL, did Zerohedge had a change in managment lately? Shit article counts are way up.
Funny it's couched in terms of "Putin's time running out", when the default of an unincorporated U.S. territory is no problem for Obama.
Funny how so many are so worried for the 'hated' Ruskies. I don't think Putin gives 2 shits, and will manage just fine, thank you very much. ZH propaganda IS thicker than usual, True Dat
ZH is happy to accept money from propagandists of all countries. They also like ad exposures and clicks. So starting arguing with me and then refresh the page to see if I repsonded!!!
Well, with Russia´s bank account frozen in the UK, perhaps ZH didn´t get paid....hence, the ship is now taking a different course rather than the one so many of it´s passengers thought they were on.
Dopple Ganger Post! Shizzit
With total Sovereign Debt to GDP at 14%, Russia is not at all in a difficult situation with Municipals. In fact, US Municipals are in far worse shape. Further, funding from AIIB/BRICS Bank will be available to Russia. More propoganda.
Today's articles have sucked pretty badly. I am glad that I am not the only one that noticed that.
Exactly MsCreant. $18 Trillion+ reasons the U.S.'s time may be running out:
http://www.usdebtclock.org/
Hey Eb, its more like a 220 trillion dollar debt with a 5 trillion yearly deficit !!!
eye opening Kotlikoff interviw here:
http://usawatchdog.com/financial-system-will-collapse-just-a-matter-of-w...
Good post...there is many great guests there..
but Greg went stupid about Iran yesterdays interview with Catherine Austin Fitts, she of great stable mind.
Many englishes
Very wow
Such post
possibly better than your second language, i'm guessing.
World Debt Comparison compare countries:
http://www.economist.com/content/global_debt_clock/
The story is all there.
Public debt as percent of GDP
Japan 254.9%
Portugal 153.6%
Greece 148.9%
UK 101.5%
France 100%
Vlad should ask for wartime reparations since it was the Fed that gave Trotsky $20million to fund the Bolshevik Revolution, which led to the mass murder of 60 million Russians and the starvation of 30 million Ukrainians.
the suit seems a tad farfetched even if the original assertion is not. probably closer to individual firms and financiers than the fed but who really knows?
http://www.wildboar.net/multilingual/easterneuropean/russian/literature/...
sounds like a wiff of desperation by somebodies-prolly having breakfast about now in a certain white house on the east coast
The problem is internal. Russia's capital assets remain largely in the hands of oligarchs. Formerly Soviet assets were looted by Yeltsin-connected criminals and mobsters, with the assistance of Harvard professors like Larry Summers and Jeffrey Sachs. A lot of transaction costs were picked up by American taxxpayers, courtesy of the Clinton administration, and the IMF. BUT the problem is, if your capital is in the hands of criminals, it is highly illiquid. If they invest or loan it, what recourse have they against default? None, because they stole it in the first place. That means Russia is dependent on foreign capital markets to cover costs.
The pillaging and rape of the Soviet Union bore a lot of parallels to the pillaging and rape of Greece, btw. Capitalism is sure interesting,
I may be a bit jaded here, but 42 Billion sounds handable by Russia, certainly not the trillions I hear about when we talk Europe, China or the US.
#41
Yeah, 'with some reagions reaching debt to revenues of 100%'. I thought the measuring stick was debt/GDP...
If my mortgage equaled my income, which it doesn't, I wouldn't be sweating.
Pocket sand!!!
Does make sense that Russia is driving down not only metals prices but the prices of commodities in general.
Certainly has happened in the past.
"Just bad luck" I guess.
$42 billion. What's the interest rate in Russia? Quite high already, I expect that they will find a solution.
Puerto Rico has $70 billion. What's the interest rate in Puerto Rico? Is the clock ticking for Obama? $70 billion is just a rounding error for congress these days.
He strains at a gnat and then swallows a camel.
>>> Puerto Rico has $70 billion. What's the interest rate in Puerto Rico?
$70 billion is less than 10% of the USA annual defense budget. Chickenfeed.
It's just 0's and 1's sitting on large Netapp disk array. As long as there are enough spare disks in the array, there's no problem.
Careful there, citizen.
I say we borrow 42 billion from the fed at .25 % interest and loan to the russians for 3% !!! Shit man, we will be rich on the spread !!!
Ok, so after years of praising Vlad as the new political messiah and the defender of the world against USSA domination now 0H decides it is time to switch the course :)?! Hilarious ...
They don't stick to one agenda, they present various points of view, as they should. Other people write most of this stuff, not them.
Luc is right. Vlad could probably raise any shortfall by passing the hat around here.
Lets see, Greece somewhat conatained-for now, and then no Putin? What r we gona do with ourselves around here???
moar beer
"While regional debt sales are down 53 percent so far this year..."
This isn't really a bad thing outside of Bizarro World.
So the banksters are now worried that Putin is not borrowing from them due to the santions. I am pretty sure that the Chinese will be glad to replace the western loansharks.
Next up, all of Putin's alias' stolen in the Ashley Madison hack! ;-)
Remember Scarface's quote about getting women?
...when you get the power, then you get the women.
Putin is likely the single most powerful individual on Earth.
Like I always say, if I'm going to live in an authoritarian state I might as well go with the big bare chested, horse back ridin, bear rastlin, Siberian tiger pettin-type instead of the pansy ass, limp wristed, "can't we all just get along" while lying in your face bitch-type.
At least ya know what you're gettin ;-)
Please, that "honor" belongs to Janet Yellen for the moment.
#41
What?! Vlad has the whole Russian State Ballet Theater to chose from and you think he would lose his time with Gamma level pussy nobody wants anymore even in USSA?!
https://youtu.be/sLKZCtnmxQU
Government ballerinas being operative words or just pussy? Thanks for making my point.
Nice to be king eh? ;-)
Ashley Madison clients = filthy whore bags. 1 in 3 people in US has a STD. I'm guessing 3 out 3 of Ashley Madison membes have it, too.
I'm guessing your odds of catching a STD are zero.
Who is the debt owed to exactly? and what's to stop Putin from saying "Get stuffed"?
bloomberg is terrible
If they don't owe it to Zion, all will be okay.
That is also the moral of what is happening in China right now. It's bad, but then there aren't Zionist wolves waiting at the door to make it worse by trying to take a pound of flesh from the dying corpse.
Liberty is a demand. Tyranny is submission..
HEY VLAD! just stay cool. just keep in mind the empire is always goin' to be changing the goalposts, mostly to get you. coupla 100 megatoners - well placed - changes the whole equation
Ya, gets us all killed.
Your a moron.
#41
It is bad policy to make a 5th grade level grammar error when calling someone a moron.
Can't disagree with that, I'll leave it unchanged as an object lesson for others.
#41
A country with 12 freaking time zones and 4 small mountain regions and one eskimo village in bumfuck Kamchatka or somewhere are at 100% debt/revenue is going to bring Putin down? If the United States was so lucky with thousands of municipalities in the red from Stockton,Detroit, Illinois,Cali. Da joos nooos is sure getting desperate and absurd. What a freaking joke, why does anyone read Reuters, Bloomberg, FT, WSJ,NYT when its article after article of beyond stupidity for even a mildly rational thinking person? Its like its being written for children.
Pure toilet tissue, all of em.
who wrote this shit...
I am not worried. Russia has low debt, and a presidential decree to take over the central bank and print more Rubles in secret can come.
Hey, if Janet can do it. what's the problem? Rubles for all....
Russia used to issue gold and silver money 110 years ago, hopefully that will make some kind of appearance in bonds.
Interest rates are so high it should be easy to get China to invest.
Have any of Bloomberg witches ever heard about massive pipelines and gas lines from Siberia to China. They are building massive infrastructure for that and need millions of people to work there, that's why massive investment to raise standard of living there and attract people to harsh climatic environment. They already pay anyone in Siberia triple or ever five times what they pay in Moscow. Even Soviets did that.
All this money is sound investment in people that will pay off and bring hundreds of billions from trade with China. Also for political reason Putin wants to increase population in far east areas of Russia to counter Chinese expansion.
There is good debt and there is bad debt. And this kind of debt seems to be good debt that will pay off of course depends how it is executed.
Rates in Russia will continue to drop because thanks to Obama's sanctions, there is demand for local bank loans. They can't go to Europe and get 2% loans anymore. 15% local is too high. Rates will come down because their central bank knows their rates matter now. Bond prices will rise. The currency will strengthen unless Russia purposely stops it themselves. Russian bonds are not nearly the risk they are presented as for the forseeable future.
Funny how western media always writes these stories about other nations while glossing over what a FUKED up nation USA is.
Au contraire, we say the same about Hollande ;-)
Yeah , but we're doing it on purpose-the fast track to serdom and debt servitude. We'll all be happier when we are slaves. Most Ameirkans will believe and accept this once it becomes a fait accompli.
Let's see, Russia has a 42 Billion municipal bond problem as opposed to the US with 2 TTTTTTTTTrillion in unfunded pension obligations, just for starters.
Yeah, that Putin guy is in some serious deep shit.
Bloomberg and his minions are serial morons.
has Publicus now started writing for ZH? lol
This isnt an article its a fecking "tardicle"
Bloomberg said Russia's economy was on the verge of collapse wek after week when the sanctions first started...waiting for them to note a correction to that forcast (he said sarcastically knowing that correction would never happen).
imperialism will solve russia's cash problem
the communist kind of imperialism
westwardl ho!
Yes the EU's still got the hump about the huge rotting piles of fruit and other perishables gathering bacteria in the waste dumps.
Sour Grapes Anyone?
It is easy to know exactly where this article came from, because I saw it on Yahoo before it hit here:
http://finance.yahoo.com/news/42-billion-debt-trap-putin-071106044.html;...
From Bloomberg By Anna Andrianova...
Standard Disclaimer: The Tylers are sinking to a new low, reprinting Bloomberg articles...Not to mention Bloomberg has the absolute crappiest website there is when it comes to finance these days.
https://twitter.com/andrianovaanna
Standard Disclaimer #2: She is not even an attractive media whore...
Fact #1/2 'Russo-Afghan War 1979- 1989'
Saudi Arabia along with the USA/CIA covert operations colluded in funding the clandestine war. The Saudis matched $ for $ US secret funding (defense dept/ secret congressional expendentures unbeknowst to the taxpayers?). By 1984 the USSA was funding the Afghan War matched with Saudi monies tothe tune of half a billion dollars FY 1985! All monies went to Pakistan's ISI and Army under the watchfull eyes of CIA Director William Casey!?!
The Saudis just provided money in the beginning but under Prince Turki (SA),.. it became itself the prototype of America's CIA.Called 'GID'! Casey would visit THe king and all his underlings discussing how to destroy Russia. It was a twofer for both the USSA and Saudi's. Low oil/ energy prices for US consumers and a gurrantee from America that the Russian's would never step foot into its domain (Warm Water Ports of the Persian Gulf)!
Fact #2/2 The Oil Glut of 1980 through early 1987!?! http://en.wikipedia.org/wiki/1980s_oil_glut
Note: Today, the Saudi's are aligning with Russia since the new King has taken charge. Iran is a problem, as is Iraq. Syria can be diplomatically (sequestored) quarantined, but, Turkey could be the 'Key' for Russia. Iran will ?play? Russia against the USSA (but not radically as Erdogan [certainly a far cry from the Great`Ataturk'] of Turkey played all sides-- a disastrous venture that his hand must be played or severed?)... but I suspect that Iran will have moar antipathy towards Obama and a overly generous-cup of empathy for Putin and China's Xi, having saved their,... 'Shia`ism`Favor?
jmo Ps The Ayatollah is a History freak and reads incessantly.
Russia's foreign currency reserves are over 500 billion US....this is crap propaganda.
All these analyses have been made by US companies...What a waste of space by ZH.
ISIS propaganda machine is more effective than those American MSM.
What a stupid article! Take a look at US municipal debt-to-revenue ratios and tell me who has the bigger problem - us or Russia. I live in a small town and we falsely pride ourselves on having a municiple debt-to-revenue ratio of only 150% versus Detroit and others with 1500%. I like ZH, but you need to recognize half the half the articles Bloomberg puts out are just crap.
This crap is from Bloomberg. Say no more.
dup its always the same, only worse
Doom and gloom from Bloomberg. And just a day or so agao, Bloomberg is saying that Russia is a top investment opportunity. So what is it, Bloomberg - gloom-and-doom, or everything-is-coming-up-roses?
It's Easy - Follow Puerto Rico - DON'T PAY IT! Isn't that what everything is leading to? Somebody has to man up and say Fuck You, I ain't paying! might as well be Vlad!
Black gold says its 65% certain Russians will not starve
.
Vladimir Putin is only 60% sure
shit bloomberg article. California has more muni debt ready to blow up than Russia combined.
F@#king Bloomberg? BLOOMBERG?!
With new wave of falling oil price the expectations may realize much earlier than in 3 years, obviously that there is only one way to support regions from default is to start printing rubles en masse..Eventually devaluation of currency would be in a very close time period from now -i would not be surprised to see ruble plunging to 75 vs USD in august..Imagine where yields of russian corporate bonds should go if they are at their 12 s...
With new wave of falling oil price the expectations may realize much earlier than in 3 years, obviously that there is only one way to support regions from default is to start printing rubles en masse..Eventually devaluation of currency would be in a very close time period from now -i would not be surprised to see ruble plunging to 75 vs USD in august..Imagine where yields of russian corporate bonds should go if they are traded at average 12th ytm now...
$42 billion!
That's about what it costs to stage the Olympic games. No problem to the largest country in the world.
Putin is quite the moderate. Supposedly the opposition would have already bombed Kiev in to the stone age.
Russia should cancel the unnecessary football championship and they save immediately 30mld. Morons, why are they keen to hold that stupidity?
HA
HA
HA
HA
HA
HA
This whole argument forgets the ONE Plank the world marches on today : USD Reserve's intertwining like the strings of the Gordian KNOT, to Saud OIL's fount.
Putin has one feather in his cap : Gazprom and Oil.
He has one Achilles heel : Ruble.
The West will press on his heel and try and suppress his quilted feather, to raise havoc in his Kingdom.
But in order to do so they have to control Saud; and that...in the current Sunni rout of petromonarchies, both at the hands of more rabid and more Shia, is a cold sandwich that could turn red hot.
With current reserves, Putin could just write a check and make everybody whole.
OK, Russian municipal debt may be in some trouble. But can it even come close to the problems that are evident in the American municipal bond markets? Would you rather own a bond issued by the government of St. Petersburg or Chicago?