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On October 31 2024 18:35 0x64 wrote:
In french news, I feel like they are almost information blocked the war. It is never even mentioned.
So yeah, posting here. While it's cool that the trolls got banned, they let you know the news by knowing the exact opposite they are claiming is happening.
North Korea keeps sending more troops.
Russia is slowly taking back Kursk pocket.
Russia is very slowly pushing in the south east.
Ukraine is trying to setup the preconditions for a negotiated peace. Including losing a bit of land but gaining Nato membership. Some Nato countries, such as the US, don't want to make that guarantee so Ukraine has position of surrendering or keep fighting.
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United States43250 Posts
Historically the world, including Russia and China, were united in opposition to NK's nuclear ambitions. Nonwestern powers recognized the inherent danger of a rogue nuclear state that had absolutely no ties or dependencies on any other nation led by a dictator with absolute power (family are regarded as akin to gods). Most nations can be at least trusted to act in their own interests which aren't compatible with a nuclear exchange but NK can't be trusted to do shit.
As recently as 2017 Russia was sanctioning NK missile development.
It's a sign of true desperation that Russia has been compelled to do a U turn and is now selling their Soviet inheritance of missile/submarine/nuclear tech to NK in exchange for help with the war. If Putin had any alternative he would not be doing this but his army has failed to achieve the imposed deadline on retaking Kursk and the manpower required does not exist.
China cannot be happy about this. They've previously considered NK both their sphere and their problem to solve. Russia stepping onto their turf and making the NK problem a hundred times more complicated for them surely won't be appreciated.
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It kind of makes sense since Russia turned into a rogue state itself. Begets can't be choosers. Of course they'd prefer to have stronger and more same allies but that list is not a long one.
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I was wondering if any Russian posters could confirm what I have been hearing that most(basically all) debt owned by Russian businesses is on a floating rate, so even if they took it out 5 years ago they would be paying the 21%.
That seems impossible to manage. Even if you could survive I can't imagine any business taking out a loan to grow or get better.
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On November 01 2024 06:02 Billyboy wrote:
I was wondering if any Russian posters could confirm what I have been hearing that most(basically all) debt owned by Russian businesses is on a floating rate, so even if they took it out 5 years ago they would be paying the 21%.
That seems impossible to manage. Even if you could survive I can't imagine any business taking out a loan to grow or get better.
Not a Russian poster, but this is what they have been doing for a while now. The interest rate was at 18% during the summer and has increased since.
Part of the problem is also that businesses start borrowing money during those high interest rates in anticipation of them going down in the future - and the opposite of that has happened, making the problem even worse. They also hope that if the interest rates don't go down and they cannot afford them anymore, the government will eventually bail them out.
The Russian government has issued bonds at >16% and locked that in over the next 15 years.
Also, for reference: The Russian central bank's "worst case scenario" predicted 20-22% interest rates for 2025, with all of them assuming that things will start to calm down a little in the following years, presumably in the assumption that the war would either end in 2025 or at least enter a calmer phase. They have already blown past their "Persistent inflation scenario", which models a continuation of the war and high government spending for at least the next 3 years.
All of that is part of the reason why anyone with any economic knowledge has been ringing the alarm bells about the future of the Russian economy for a while now. You can basically print money and increase the interest rate to cover short-term deficits, but you are ruining the long-term prospects of your economy doing that. It's clear that the Russian central bank was NOT prepared for the invasion and its consequences, and a lot of the measures taken by it have been fairly drastic as a result of it.
This is not sustainable. Large, modern economies can take quite a beating, but they cannot take it indefinitely. For a while it might look like things are okay, especially when you just look at exchange rates and ignore everything else, but at some point the whole system collapses. If the war continues, it's not a question of IF the Russian economy collapses, but WHEN. And the longer the conflict drags on, the more dire the consequences. That and material shortages are some of the reasons why people have been saying for a while now that Russia cannot keep this kind of invasion going for long. They will eventually run out material, with a stalemate being the post possible outcome, and their economy will eventually buckle and break under the strain. The cracks are already there for anyone with eyes to see them.
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Seems like the only options are either stagflation or hyper inflation and both are super hard to deal with. I have a hard time believing anyone is going to look back at this as Russian win no matter how much land they gain. On top of the money stuff a big part of Putin's goal is more ethnic Russians and they have lost a massive amount, not to mention those who make new ones. It is a catastrophic failure.
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Russian Federation612 Posts
On November 01 2024 06:02 Billyboy wrote:
I was wondering if any Russian posters could confirm what I have been hearing that most(basically all) debt owned by Russian businesses is on a floating rate, so even if they took it out 5 years ago they would be paying the 21%.
That seems impossible to manage. Even if you could survive I can't imagine any business taking out a loan to grow or get better.
It's not true. Fixed rate was always prevalent in Russian debt, both individual and business. In 2019 only 29% of business debt was on floating rate. Now it's around 50, but the surge was caused by the increase of exchange rate, not visa versa.
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Why would an increase in the exchange rate cause a surge in floating rate loans?
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On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans?
If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end.
I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice.
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On November 02 2024 04:03 Yurie wrote:Show nested quote +On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans? If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end. I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice.
Certainly inflation expectations and the expectation of future interest rates is a major factor in determining how long to fix the interest rate on a loan. That doesn't really answer how the exchange rate affects the decision though.
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On November 02 2024 04:54 RvB wrote:Show nested quote +On November 02 2024 04:03 Yurie wrote:On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans? If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end. I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice. Certainly inflation expectations and the expectation of future interest rates is a major factor in determining how long to fix the interest rate on a loan. That doesn't really answer how the exchange rate affects the decision though.
Maybe it's not the exchange rate, but rather the inability for Russian companies to get foreign investments/loans, leading to more local loans, which might in turn be offered at flexible rates? And beggars can't be choosers...
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On October 31 2024 18:35 0x64 wrote:
In french news, I feel like they are almost information blocked the war. It is never even mentioned.
So yeah, posting here. While it's cool that the trolls got banned, they let you know the news by knowing the exact opposite they are claiming is happening.
If Ukraine was doing well it would be all over the news.
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United States43250 Posts
On November 02 2024 06:36 iPlaY.NettleS wrote:Show nested quote +On October 31 2024 18:35 0x64 wrote:
In french news, I feel like they are almost information blocked the war. It is never even mentioned.
So yeah, posting here. While it's cool that the trolls got banned, they let you know the news by knowing the exact opposite they are claiming is happening. If Ukraine was doing well it would be all over the news.
Ukraine is doing well. They’re almost 3 years into a war with Russia and they’re holding parts of Russia which the Russian military have been unable to take by the deadline of Oct 1 imposed by Putin. Russia has been forced to go cap in hand to NK for help defending its own land.
Ukraine doesn’t have more land than they had in 2021 but the bar for Ukraine has been raised so many times that somehow their achievements over the last few years are taken for granted.
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On November 02 2024 06:36 iPlaY.NettleS wrote:Show nested quote +On October 31 2024 18:35 0x64 wrote:
In french news, I feel like they are almost information blocked the war. It is never even mentioned.
So yeah, posting here. While it's cool that the trolls got banned, they let you know the news by knowing the exact opposite they are claiming is happening. If Ukraine was doing well it would be all over the news.
What's your definition of doing well? Is Russia doing well? They're barely inching forward whilst cumulating tons of casualties. Ukraine is barely being pushed backwards, meters at a time, whilst sustaining 1/4 of the casualties Russia is, 3 years into what was supposed to be a 3 day conflict. That, in my book, is doing pretty well.
If you look at the end goals here, meters of land isn't what's going to decide this conflict. It's going to be who can hold out the longest. It's a contest to see whether Ukraine can hold off long enough, with low manpower and equipment struggles, until Russia's economy tanks (Or at the very least have to switch out of a wartime economy). Most indicators point to this conflict either ending outright next year, or for certain parameters to start drastically changing.
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It's so crazy that in a few months it will be 3 years since the war started - and with no end in sight.
Russian economy might hurt a lot but I think Russian leaders won't be willing to stop any time soon, unless there will be good enough progress so they can claim the goals were achieved.
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Russian Federation612 Posts
On November 02 2024 04:54 RvB wrote:Show nested quote +On November 02 2024 04:03 Yurie wrote:On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans? If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end. I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice. Certainly inflation expectations and the expectation of future interest rates is a major factor in determining how long to fix the interest rate on a loan. That doesn't really answer how the exchange rate affects the decision though.
My bad, mistranslated combination of terms "key rate" and "refinancing rate" of Russian Central Bank. Basically its what Yurie said. In Russian modern history periods of crisis in general always took from few months to couple of years (1993, 1998, 2008, 2014, 2022) after which interest rates were normalizing. Assuming war will be over within 1-2 years, business has a strong reason to expect the interest rates to go down, so no reason to take fixed rate. As is there is no reason to take floating rate with 6% key rate (2019 values) as it was one of the lowest in Russian history overall.
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Maybe I should update my previous summary from very slowly to slowly in the south east. The pace has been very slow up until August and slow since then.
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On November 02 2024 08:59 Ardias wrote:Show nested quote +On November 02 2024 04:54 RvB wrote:On November 02 2024 04:03 Yurie wrote:On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans? If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end. I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice. Certainly inflation expectations and the expectation of future interest rates is a major factor in determining how long to fix the interest rate on a loan. That doesn't really answer how the exchange rate affects the decision though. My bad, mistranslated combination of terms "key rate" and "refinancing rate" of Russian Central Bank. Basically its what Yurie said. In Russian modern history periods of crisis in general always took from few months to couple of years (1993, 1998, 2008, 2014, 2022) after which interest rates were normalizing. Assuming war will be over within 1-2 years, business has a strong reason to expect the interest rates to go down, so no reason to take fixed rate. As is there is no reason to take floating rate with 6% key rate (2019 values) as it was one of the lowest in Russian history overall.
I think that explanation misses the supply side effects Acro mentions. Without any external financing Russian corporates have to rely more on banks. Corporate bank loans are usually floating rate because banks have floating rate liabilities (deposits).
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On November 02 2024 08:13 ZeroByte13 wrote:
It's so crazy that in a few months it will be 3 years since the war started - and with no end in sight.
Russian economy might hurt a lot but I think Russian leaders won't be willing to stop any time soon, unless there will be good enough progress so they can claim the goals were achieved.
I think they can't stop. The war is sustaining their economy and I can't imagine everyone is going to instantly start relationships again when it ends. And even less if any international companies are going to be willing to invest because they will know that at any point Putin could do this again and their investment will be all gone. My bold prediction is this war lasts for at least as long as Putin is alive.
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On November 02 2024 17:49 RvB wrote:Show nested quote +On November 02 2024 08:59 Ardias wrote:On November 02 2024 04:54 RvB wrote:On November 02 2024 04:03 Yurie wrote:On November 02 2024 01:52 RvB wrote:
Why would an increase in the exchange rate cause a surge in floating rate loans? If you think the spike is temporary or you cannot afford that interest rate long term you gamble on it going down soon. The war is likely to end in a negotiated peace or stale mate in 2 years or so at the current pace (based on nothing). So if that is true then locking for longer than that is a bad choice, assuming interest rates drop after the war end. I think many in Russia assumes it will not last 2 years more, making that an even more reasonable choice. Though a 1 year tied interest rate is likely a good choice. Certainly inflation expectations and the expectation of future interest rates is a major factor in determining how long to fix the interest rate on a loan. That doesn't really answer how the exchange rate affects the decision though. My bad, mistranslated combination of terms "key rate" and "refinancing rate" of Russian Central Bank. Basically its what Yurie said. In Russian modern history periods of crisis in general always took from few months to couple of years (1993, 1998, 2008, 2014, 2022) after which interest rates were normalizing. Assuming war will be over within 1-2 years, business has a strong reason to expect the interest rates to go down, so no reason to take fixed rate. As is there is no reason to take floating rate with 6% key rate (2019 values) as it was one of the lowest in Russian history overall. I think that explanation misses the supply side effects Acro mentions. Without any external financing Russian corporates have to rely more on banks. Corporate bank loans are usually floating rate because banks have floating rate liabilities (deposits).
I think it would be both, but mostly your explanation. The decision on variable for personal is purely based on whether you think rates might rise or might fall. People betting they do not get higher than 21% makes sense to me because that is crazy high, but they might be betting wrong as I don't see any reason for Russia to lower it, or ability too.
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EPT
