Opinion: Vladimir Putin and the Terrible, Horrible, No Good, Very Bad Debt Default

Opinion: Vladimir Putin and the Terrible, Horrible, No Good, Very Bad Debt Default

Max Schwartzman

In retaliation for invading Ukraine, countries around the world have put huge sanctions and trade restrictions on Russia, essentially crippling its economy and severely hurting its people. But with its economy in shambles, Russia has struggled to pay its foreign debt recently, but what happens if the nation defaults on those debts?

 

“Investors still believed there was a 50% chance of a Russian default in the next 12 months,” Research firm MSCI told Markets Insider

 

Only a heads or tails decision from national bankruptcy, Russia will need to make payment of over $2 Billion to foreign investors on April 4 or face a default. 

 

“I don’t think it’s realistic that Russia comes up with the $2.2 billion,” Jay Newman, former Elliott Management portfolio manager and author of Undermoney, told The Post.

 

A Russian default could mean a lower nation credit rating and a raising of interest owed to investors, according to Investopedia. Should it happen, it’s likely that the Russian economy will collapse in its entirety. 

 

The Institute of International Finance predicted that the sanctions against Russia “will wipe out fifteen years of economic growth.”

 

Despite the fears of foreign investors and Russians alike, there’s relatively little panic over the news in the United States, which has become a leader in sanctioning Russia for its invasion of Ukraine. 

 

“U.S. inflation is not going to be affected by a default in Russia,” Hans Humes, CEO of Greylock Capital explained to ABC News.

 

Russia has all together borrowed approximately $480 Billion, according to ABC News, with finances the owed currently mostly from foreign investors. 

 

As Putin continues to push on in his effort to capture Ukraine, the Russian economy continues to suffer, hurting the Russian people tremendously. As the economic crisis in Russia worsens the lives of wealthy and poor alike the question persists, will Putin end up with a violent defenestration?