Russia's Credit Rating Cut To Just Above 'Junk'

[okaawhatever]

Source: NPR

Saying that "the tense geopolitical situation between Russia and Ukraine" could accelerate the already heavy flow of money coming out of Russia, Standard & Poor's on Friday cut that nation's credit rating to just above "junk" level.

What's more, S&P says it doesn't expect things to improve anytime soon:

"In our view, Russia's political institutions remain comparatively weak and political power is highly centralized. Protesters, opposition members, nongovernmental organizations, and liberal members of the political establishment have come under increasing pressure. We do not expect the government to decisively and effectively tackle the long-standing structural obstacles to stronger economic growth over our forecast horizon (2014-2017). These obstacles include high perceived corruption, comparatively weak rule of law, the state's pervasive role in the economy, and a challenging business and investment climate."
Also looming: More economic sanctions from the U.S. and its allies as they try to dissuade Russian President Vladimir Putin from further interfering in Ukraine's affairs.

Bloomberg News says the downgrade puts Russia "on par with Brazil and Azerbaijan."

The BBC writes that "analysts said other credit rating agencies were likely to follow suit. 'Russia is going backwards as reflected by developments in relations with Ukraine and the West,' said Timothy Ash, analyst at Standard Bank. He said the move was 'bad for investment, bad for capital flows, and bad for broader political, economic reform and institutional reform.' "

Continued at Link

Read more: http://www.npr.org/blogs/thetwo-way/2014/04/25/306762479/russias-credit-rating-cut-to-just-above-junk

[Common Sense Party]

1. Cutting junk. Great. Another circumcision thread.

[jberryhill]

2. Naw, they were cut "just above junk"

Must be one of them navel piercing fads.

[Common Sense Party]

7. I just squirm when I see "cut" and "junk" in the same sentence.

[MADem]

3. I'd say Brazil has a leg up over Russia--the have Carnevale, great beaches, great weather...

and they aren't running around stealing property from their neighbors, either.

[Common Sense Party]

5. Great soccer.

Scary favelas, but still...

[AgingAmerican]

8. Actually...

The favelas felt a lot safer than the 'normal' neighborhoods in Rio.

[Common Sense Party]

9. Not when the Rio police are sweeping through them, though.

[AgingAmerican]

10. True that

nt

[muriel_volestrangler]

22. Or in riots just a few weeks before the World Cup starts

I'm surprised this didn't get a bit more coverage on DU (only 1 OP, unanswered, in Latin America):

Brazil protesters in Rio clashes over dancer's death

Deadly protests have broken out in the Brazilian city of Rio de Janeiro following the death of a young man allegedly beaten by police.

A man was shot dead during the violence on Tuesday night in the Pavao-Pavaozinho neighbourhood.

Demonstrators from the favela set barricades of tyres alight, leading to the closure of streets in the nearby tourist area of Copacabana.
...
The unrest started after the discovery in Pavao-Pavaozinho of the body of Douglas Rafael da Silva Pereira, a 26-year-old professional dancer.

http://www.bbc.co.uk/news/world-latin-america-27121677

Also:

Armed men torch 34 buses in Brazil

A Brazilian bus company says at least six armed men stormed into one of its garages in an industrial Sao Paulo suburb and set it ablaze, burning 34 buses.

Urubupunga's general manager Miguel de Albuquerque says the aggressors were heavily armed and held four of the company employees while they torched the buses in the suburb of Osasco. No one was injured.

http://news.yahoo.com/armed-men-torch-34-buses-brazil-151325063.html

[AgingAmerican]

28. Yeah they had riots at Copacabana too

After cops beat a dancer to death.

Sao Paulo reminds me of that movie, 'Escape from New York'. At least some areas do. It seemed a lot safer there than Rio though.

*on edit
Should have read your article before commenting lol

[Thinkingabout]

4. Maybe we could get Snowden to ask Putin if Russia's credit rating matters.

[dipsydoodle]

18. He wouldn't need to so.

The rating is of importance if Russia wants to sell external bonds. I don't think Russia needs ro so - they'll pull $16 billinr so from the IMF loans to Ukraine.

Russia must also be benefiting at present from the current inflated price of oil due the situation in Ukraine. Odd that isn't it.

[AgingAmerican]

6. Russia is becoming right wing

I hope they just love the benefits that come along with it...

Ultranationalism = stupid

[former9thward]

11. Rating companies are poor predictors.

Investors routinely ignore ratings companies’ decisions. In almost half the instances, yields on government bonds fall when a rating action by Moody’s and rival Standard & Poor’s suggests they should climb, or they increase even as a change signals a decline, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back as far as the 1970s. When S&P downgraded the U.S. government in August 2011, bonds rose and pushed Treasury yields down to records.

http://www.bloomberg.com/news/2014-04-25/russia-s-rating-cut-to-bbb-by-standard-poor-s.html

[karynnj]

12. In this case, the ruble is worth more than 10% less in dollars than a year ago

That is NOT forecast or speculation - it is simply fact. (Note the same is true if you speak of in terms of euros - the fall is of the Russian currency.)

[former9thward]

14. Yes and Brazil is doing poorly also.

Is that because of sanctions? Economies and currencies go up and down for a host of reasons -- as anyone who went through the 2008-2009 period in the U.S. should know.

[karynnj]

15. I didn't say the reason was sanctions

There are many signs of weakness in Russia's economy - the fall of their currency being one - the fall of their stock market another. Here is a link to the value of a Russian composite index of stocks - MICEX Index is cap-weighted composite index calculated based on prices of the 50 most liquid Russian stocks of the largest and dynamically developing Russian issuers presented on the Moscow Exchange. MICEX Index was launched on September 22, 1997 at base value 100. The MICEX Index is calculated in real time and denominated by Moscow Exchange in Russian rubles. It has fallen nearly 15% year to date. (Further note it is denominated in rubles that have also lost value - meaning the value in dollars fell even more.)

http://www.bloomberg.com/quote/INDEXCF:IND

[LanternWaste]

20. Who is predicating this effect solely on sanctions?

Who is predicating this effect solely on sanctions?

[former9thward]

23. Read though the thread.

[karynnj]

25. You are one of the people thinking it says this

Most are saying that the Russian economy is already weak. A very strong robust economy might be able to endure sanctions from some of the biggest economies in the world, but a country already doing poorly will find things worse.

Not to mention, you ignore that the US and EU have a very limited set of options. Military action is not going to happen - and that is a good thing. Ignoring a flagrant violation of a country's borders sets a very very bad precedent. Unfortunately, it is hard to see how ANY hardship in Russia creates a push for Russia to pull back. The problem is there are no good options -- and this is the best of the few that exist.

[former9thward]

27. The best option is to stop trying to encircle Russia.

Since the end of the Cold War the U.S. has been encroaching on Russia by expanding NATO and creating bases all over Asia. If Russia was putting bases in Canada or Mexico we would be screaming bloody murder. Kennedy was willing to end the world because Russia had put missiles in Cuba -- even though we had them in Turkey.

[Adrahil]

30. Capital is steadily leaving Russia.

In addition to simply having a crappy economy, at least some capital is fleeing due to fear of sanctions.

Russia's economy is fairly fragile.

[former9thward]

33. Fine, you buy the line it will have some affect in Russia.

I don't. The Russians faced down the Nazis and lost 20,000,000. Something modern America would never be able to do. I'm sure they will get through this just fine.

[Adrahil]

34. So basically, your position is we're powerless to do anything?

Heck, let's just invite Putin to retake all the Soviet States, since obviously we can't do anything about it. All hail Putin!

I, on the other hand, will actually pay attention to what's happening in their economy.

[former9thward]

36. Not a question of power.

I don't want us to do anything. It is not our concern. We have been trying to encircle Russia since the end of the Cold War. We have set up bases and missiles in Eastern Europe and Asia around the Russian nation. Think what we would say if Russia was doing that in Canada or Mexico. But I guess we can be the bully everywhere.

[Adrahil]

37. Surrounding?

Seriously, no one considered that even a thing, except Russia. Frankly, if they didn't have nukes, they would barely register on a global scale.

[dipsydoodle]

21. Ruble has fallen to its 2009 value.

[uhnope]

16. Putin's pursuit of full dictatorship will wreck the country again, just like the Communists did

while wrecking half of Europe

[BeyondGeography]

17. Yes, but Russia still has the moral high ground because we are genderless and infertile

[okaawhatever]

19. They will probably claim Standard & Poor's is a CIA front company. nt

[jtuck004]

24. S&P. These would be the same thieving, lying bastards who helped steal money from people by

falsifying the credit rating of derivatives invented by the Wall Street banks who were donors to the Presidential Campaigns, yes?

So? How ignorant would one have to be to listen to them now, to lend them any credence?

They are traitors, and should be in prison.

[Adrahil]

31. There we go! Knew one of you folks would be along soon! NT

[jtuck004]

38. We travel the country, planting apple seeds whereever we go. n/t

[Turbineguy]

26. On that news,

I believe I'll have a beer!

[Cha]

29. What's a dictator to do?

[davidpdx]

32. Nope, sanctions have had no effect on Russia

Nothing to see here, move on.

[Blue_Tires]

35. BBC radio this morning said like $50 billion in investments have been pulled out of the country

so the sanctions are having an effect...