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The lenders to Russian oligarchs and mafia are as corrupt as the borrowers,
why would you lend in the knowledge that your institution won't be repaid
unless some of those funds find there way back to personal accounts? It is
convenient for the lenders to cry default and blame Governmental force
majeure, the private hedge fund investor / US/European tax payer/ investor
loses out on concrete well publicised political problem whilst the lenders
and associates fill their sacks - Russia is a black hole, most of the
lending is in Switzerland and the US. This system of extortion is called
communism - the only change since the wall came down is US and European
lenders waiting in line.....
>Gerrit,
>
> US$40.00 billion was sent this few weeks by World Bank to Russia,
>but was credited to the mutlinational banks,it was said just to give
>more money ending in the Russian Mafia's pocket, the money never left
>America because they were credited to the acounts of the Mafia in US
>banks. So Russia is just an endless hole to cover up. Their problems are
>so big , the current level of monetary aid is just a drop of the bucket.
>Thankfully the world has the ultimate creditor, the American taxpayer.
>.
>Can't imagine why Russia has so much foreign loans through these
>years.(post Gorbachev), Aren't their purchases mostly (importations)
>just food and grains whose value is should be just comparable to their
>arms exports. Since they export also lots of oil and preciuous metals
>(before, as prices were not as bad as these days) and not very much
>importation luxury items,motor vehicles or industrial machinery. Also a
>lot of foreign investments from West Germany and others in the private
>sector specially in the oil drilling sector, so where did all those
>hundreds of billions foreign aid , loans and invetsments go the last ten
>years?
>
>Are they all just payments and ransom for nuclear weapons threat ? Then
>the whole world is a hostage right now, huh?
>
>
>
>Gerrit Jacobsen wrote:
>
>>
>>
>> However the Russians have chosen to play the game with their own
>> rules:
>>
>> The Russian government had kept their currency stable and borrowed
>> mainly heavily in RUSSIAN ROUBLES (and not in Dollars). The
>> investment banks and hedge funds bought these treasury bills (GKOs)
>> then hedged this Rouble exposure with Rouble/Dollar forward
>> contracts - which they settled with Russian banks. The Russian
>> Rouble debts ballooned over the last year and interest rates went up.
>> However the hedge funds and the investment banks felt that the high
>> interest rates and the currency hedge would give them a limited
>> downside if things should turn ugly.
>>
>> What the investors did not think about was that the Russians could
>> invent a new approach to solve their problems:
>>
>> 1. They just refused to pay their treasury bills and replaced them
>> with fresh discounted debt.
>> 2. they devalued their currrency
>> 3. they forbid their banks to honor the forward contracts.
>>
>> With these three measures they blocked all possible escape routes
>> that the investors could have had and basically cheated the
>> international investors out of several billions of dollars.
>>
>> This experience is news to many bankers and they haven't digested it
>> fully. In any case it has made them extremely risk aware.
>
>
>
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