Aug 20, 2009

Russia: Cash Reserves Fall, Zombie Risk Rises

Global markets may have stabilized, but Putin’s government continues to burn cash at a mind-boggling rate.

NEW YORK (MarketWatch) -- Russia's international reserves declined by $2.8 billion to stand at $400.6 billion during the week ended Aug. 14, the central bank reported Thursday in a statement posted on its Web site.
To anyone else, $400 billion may seem like a lot of money. However, most of Russia's reserves are already spoken for (mostly as collateral on foreign debt). With only $400 billion left in the tanks, Russia moves closer to a dangerous financial tipping point.

Back in December 2008, Moody's Investors Service Vice President Jonathan Schiffer (a man who's opinion means a lot for Russia's credit rating) spoke publicly about the very, very bad things which could happen if the country's foreign reserves ever fell below $350 billion: risk of default, Night of the Living Dead kind of bad things.

But why loose sleep over minor details? Just picture the beautiful slopes of the Sochi Olympics...with zombies!

(Ok, zombie banks.)


Anonymous said...

One solution is to stop propping up the ruble. Duma Deputy Anatoly Aksakov -- who is member of Just Russia -- last week called for a 30-40% devaluation to finance the budget deficit to avoid tax hikes. In response Duma Speaker Boris Gryzlov asked to remove Aksasov from the Banking Council while his United Russia buddies called Aksasov "unpatriotic."

So P&D, it is anti-Russian to talk about zombie banks! So keep shoveling those greenbacks into the fire!

Pirates(and)Diplomats said...

All true patriots will kindly remain quiet while we run the ship onto the reef.

Anonymous said...

I don't think judging a 2.8B drop as an issue. The currency reserves drop or raise between 1-11B each month, as seen since Oct. Also having 400B still in reserves is still the second largest reserves in the world still.

Not that Russia doesn't have it economic issues... is surely does. But judge it via economic decline instead.

Btw... love the site & the Zombie references...
Keep up the great work!

Pirates(and)Diplomats said...


Anonymous said...

nice post. thanks.

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