Russian default risk tops Iceland as crisis deepens

[girl gone mad]

Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland's debt before it sought a rescue from the International Monetary Fund.

Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe.

Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe's ERM crisis in 1992. The CDS spreads on Ukraine's debt have topped 2,800, signalling total revulsion by investors.

http://www.telegraph.co.uk/news/worldnews/europe/russia/3248672/Russian-default-risk-tops-Iceland-as-crisis-deepens-financial-crisis.html

[CJCRANE]

1. WTF is going on..?

This is starting to feel like the global financial collapse that the conspiracy theorists predicted.

[dipsydoodle]

2. Not sure it was ever a conspiracy theory.

Unless I'm mistaken, and someone can direct me elsewhere, this is a purely USA homegrown issue solely as a result of the credit default swop market in the absense of any intelligent form of finacial regulation.

[CJCRANE]

5. Conspiracy theorists were predicting this

even before "sub-prime mortgage" became the buzzword last year.

Same with 9/11. Some people predicted it quite accurately a few months or even years before it happened.

And just the same with 9/11 is that Bushco were warned repeatedly and did nothing to prevent it.

[HereSince1628]

4. Yep, n/t

[muriel_volestrangler]

3. Russia? The oil-rich country, that was going to lend to Iceland itself?

Hmm - written by Ambrose Evans-Pritchard, who normally has an agenda when he 'reports'.

The fall in oil prices will have meant their income has fallen drastically, but for that matter, OPEC has just agreed to cut production to prop up the price. I think A E-P is exaggerating things here.

[girl gone mad]

6. I didn't read it that way.

It was a fairly straightforward article, full of facts, figures and quotes. Not a lot of editorializing.

It's not just oil prices that are collapsing, it's also the metals market and a RE bubble that rivaled any in the world.

President Dmitry Medvedev said yesterday that disaster could still be kept at bay. "We can avoid a banking, forex or debt crisis and get through today's difficulties. Russia has not yet got in this difficult situation. It must avoid this," he said.

Hans Redeker, currency chief at BNP Paribas, said markets no longer believe Russia is strong enough to guarantee the estimated $530bn of foreign debts accumulated by its companies during the break-neck expansion of the oil boom. "The surge in Russian CDS spreads is paralysing the whole system. The government can offer very little help to the banks at this point because its own sovereign debt is in question," he said.