Better and Better
Just a few of today’s dropping shoes:
- S&P lowered its outlook on Russia.
- Gold and foreign currency reserves fell $15 billion in the last week due mostly to the central bank’s attempts to defend the ruble–and the ruble continued to decline.
- The cost of debt insurance on Russian government bonds rose 135 basis points, to US Treasuries plus 769 bp.
- Sberbank shares fell 10 percent (they are now worth far less than $1, and have fallen more than 80 pct this year). MICEX suspended trading on the shares–the shares of the bank that the government has provided extensive support.
- Credit default protection on Russia’s pride, Gazprom, rose 188 bp to 15.6(!) percent.
- CDS protection on Sberbank rose to 13.4 percent.
I could go on, but you get the picture. Yet, at least in the domestic media, Putin and Medvedev continue their Alfred E. Neumann (What? Me Worry?) routine. It is very, very, sad. And it makes the probability of a blowup all the more likely.
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