# How much of a real issue will Russia's (financial) default be? **URL:** \ **Category:** Factual Questions\ **Tags:** ukraine-invasion\ **Created:** [March 15, 2022, 11:12am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099 "2022-03-15T11:12:19Z")\ **Posts on this page:** 13\ **Page:** 2
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [March 17, 2022, 10:00pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/21 "2022-03-17T22:00:51Z")
Yes. Same as when Greece was going to default, or Argentina did. The IMF and the western powers were busy trying to save the collective behinds of their favourite banks, not so much trying to rescue a country’s finances. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [March 18, 2022, 2:53am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/22 "2022-03-18T02:53:32Z")
> [@RitterSport](#): > > they are already not getting any additional loans from anyone They are not getting additional loans from the advanced Western countries because of the sanctions. However China and the third world are not participating in these sanctions. But if Russia defaults, it will make China and the third world leery of making loans. And if they still make the loans they will demand higher interest rates. ---
**Author:** ![Al128](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/al128/32/16541_2.png) [@Al128](https://boards.straightdope.com/u/Al128)\ **Post date:** [March 18, 2022, 3:12am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/23 "2022-03-18T03:12:48Z")
> [@RitterSport](#): > > I’m not sure what you think forcing Russia to default on its debt would do – it would take them financially - off-grid… for years or decades … being bankrupt AND fighting a war is a lose-lose proposition. Didn’t cost the usa anything, stresses your “Boss”-status (you are the financial gatekeeper) and hurts the russians … why not go for the low-hanging-fruit that would just need one signature? If nothing else you can create another (domestic) front - when they will eventually have to stop paying pensions, and/or laying off civil-servants etc… ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [March 18, 2022, 3:17am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/24 "2022-03-18T03:17:48Z")
> [@Al128](#): > > Didn’t cost the usa anything Except having Western banks and lenders mad at you, and arguing that the US is needlessly contributing to economic pain in Europe and North America, instead of focussing on Russia. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [March 18, 2022, 4:00am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/25 "2022-03-18T04:00:33Z")
@Al128 Forcing someone to default on their debt payment to you doesn’t make a lot of sense to me. It just absolves them of the blame. I would expect any creditors would see that Russia was willing to try to pay but was forbidden from doing so, and treat that differently than a true default. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [March 18, 2022, 11:52am UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/26 "2022-03-18T11:52:59Z")
Yes. Does it really matter if they pay or don’t, if western banks (and any other banks that want to be tied into the western banking system) are effectively forbidden from making new loans by the sanctions? As for paying pensions and such - that was a problem in Greece, where using Euros, they could not print their own money. Every other country, including 1990’s Russia, they simply pay out pensions and savings in the local currency - just that at a certain point, your monthly pension is barely enough to buy you a cup of coffee or a bunch of bananas. ---
**Author:** ![Al128](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/al128/32/16541_2.png) [@Al128](https://boards.straightdope.com/u/Al128)\ **Post date:** [March 18, 2022, 12:09pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/27 "2022-03-18T12:09:40Z")
well, first off, thx for the constructive debate!!! > [@Northern\_Piper](#): > > Except having Western banks and lenders mad at you, and arguing that the US is needlessly contributing to economic pain in Europe and North America, instead of focussing on Russia. Let’s face it … the “west” is in a non-military war with Russia, and the only reason it is non-military is b/c of nukes, right? … In this war scenario who the fork cares about western banks? we had trillions in gov’t help to prop them up in 2008+ … 115 million is nothing - heck thats 2 or 3 penthouses in London, Paris or NY. the NICE thing is when taking them to default is that you now can ask back for the whole principal, and not just “this month’s car payment” … and their debt goes from $115.000.000 to $115.000.000. **000** ,- in a day - another headache for Mr. Putin . > [@BigT](#): > > @Al128 Forcing someone to default on their debt payment to you doesn’t make a lot of sense to me. It just absolves them of the blame. I would expect any creditors would see that Russia was willing to try to pay but was forbidden from doing so, and treat that differently than a true default. I see that 180° the other way round _… Aggressor invaded peaceful country, get’s a bloody nose on the battefield, got hit by the worst set of sanctions ever and had to declare bankrupcy less than 1 month after …_ **NOW THAT IS A POWERFUL NARRATIVE** that should dissuade in similar situations in the future — that’s the stuff that ends up in history books! > [@md-2000](#): > > As for paying pensions and such - that was a problem in Greece, where using Euros, they could not print their own money. Every other country, including 1990’s Russia, they simply pay out pensions and savings in the local currency - just that at a certain point, your monthly pension is barely enough to buy you a cup of coffee or a bunch of bananas. Isn’t that the whole “mechanics” of sanctions? … to put pressure on the populace to “act”'… we WANT inflation in russia to skyrocket (this will create another domestic front for Gospodin Putin when you have 1000s or 10.000s in the street b/c of hunger) … and if you can do so by signing a document, I am up for it! ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [March 18, 2022, 12:13pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/28 "2022-03-18T12:13:24Z")
> [@Al128](#): > > had to declare bankrupcy less than 1 month after But, no one would be fooled by that narrative. They were capable of paying and wanted to pay and actually tried to send money. If western banks just decide not to accept it, or western powers block the payment, everyone will know that the default was not Russia’s fault. China will lend to them or not regardless of whether they had defaulted on this payment. It’s not like President Xi has to go to his credit analysts before extending a loan. ---
**Author:** ![Al128](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/al128/32/16541_2.png) [@Al128](https://boards.straightdope.com/u/Al128)\ **Post date:** [March 18, 2022, 12:19pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/29 "2022-03-18T12:19:41Z")
> [@RitterSport](#): > > But, no one would be fooled by that narrative. They were capable of paying and wanted to pay and actually tried to send money. If western banks just decide not to accept it, or western powers block the payment, everyone will know that the default was not Russia’s fault. I think that is inmaterial. The message of the narrative is: You chose to take on “the whole world” with and assault-war in europe, the “whole world” can crush you without boots on the ground. It is not about “whose” guilt … it is about **projecting the POWER to send you into bankrupcy** if there is “widespread consensus” … without putting in danger 1000s of western soldiers a HUGE deterrant that IMHO has not been used - and was yours to have for free ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [March 18, 2022, 12:27pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/30 "2022-03-18T12:27:31Z")
We’re already sending them into a depression-level downturn, and letting them pay off loans drains even more currency. A fake or technical default doesn’t add anything, in my opinion. This is really veering into GD or IHMO territory. The FQ answer is, it appears that a Russian default won’t be too bad for the rest of the world, not as bad as the last time they did it in the 90s. Maybe the global economy is just more diversified, or maybe they are simply a smaller part of the world economy than they were in the 90s. I didn’t see credit markets teetering on the edge, in case they did default. Russia’s bonds were trading very low, but they didn’t seem to be taking the rest of the world with them. ---
**Author:** ![Gyrate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gyrate/32/3588_2.png) [@Gyrate](https://boards.straightdope.com/u/Gyrate)\ **Post date:** [March 18, 2022, 1:00pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/31 "2022-03-18T13:00:55Z")
It depends what your goal is: Forcing default is a long-term pain for Russia, but at the expense of short-term losses for the creditors and the danger of feeding into the narrative that Russia is being unfairly persecuted. Plus making the whole thing due now is meaningless if Russia can’t/won’t pay any of it. Allowing the payment reduces Russia’s dwindling and much-needed reserve of foreign currency and avoids the losses to the creditors, and incentivizes them to keep paying (and reducing their reserves further) each time until they actually default. Odds are that those dollars/euros/etc will be coming from some of those oligarchs if they aren’t already. Downside is that Russia doesn’t take the economic hit of default now, but as noted if they were able to pay and weren’t allowed to, that hit would have been muted anyway. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [March 18, 2022, 3:19pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/32 "2022-03-18T15:19:57Z")
> [@Al128](#): > > Isn’t that the whole “mechanics” of sanctions? … to put pressure on the populace to “act”’… we WANT inflation in russia to skyrocket (this will create another domestic front for Gospodin Putin when you have 1000s or 10.000s in the street b/c of hunger) … and if you can do so by signing a document, I am up for it! Exactly. I was just replying to the post that the effect is to stop paying pensions, etc. Instead, it simply takes people back to the old Soviet days - “we pretend to work and they pretend to pay us.” ---
**Author:** ![Al128](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/al128/32/16541_2.png) [@Al128](https://boards.straightdope.com/u/Al128)\ **Post date:** [March 18, 2022, 11:43pm UTC](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099/33 "2022-03-18T23:43:35Z")
well it’s somewhat of a moot point since they evidently allowed for the transfer … but I’d love to know what the technical discussion had been with that regard. [Previous page](https://boards.straightdope.com/t/how-much-of-a-real-issue-will-russias-financial-default-be/961099.md?page=1)