S&P Warns Russia Over Using Funds

Moscow Times ^ | 09/12/08

[TigerLikesRooster]

S&P Warns Russia Over Using Funds

12 September 2008

NEW YORK -- Standard & Poor's warned Russia on Thursday that its BBB+ sovereign credit rating would be put at risk if Moscow uses money from its national wealth and pension funds to support battered financial markets.

S&P's statement was made in response to Finance Minister Alexei Kudrin's comment earlier Thursday that Russia was considering using the cash to buy securities in the domestic market, which has suffered a significant drop in value this year.

"Any use of public funds -- including the National Welfare Fund, which was originally established to shore up Russia's inadequately capitalized pension system -- to prop up asset values in financial markets would carry negative implications for Russia's sovereign rating," S&P said in a statement.

The ratings agency said it suspected Kudrin's statements were an attempt at verbal intervention to stabilize the markets and therefore bore no implication for the investment grade rating.

The benchmark RTS Index is down more than 43 percent so far this year.

[TigerLikesRooster]

Well, these days, Hank Paulson is a role model for international financial community. You can't blame them for following the steps of Greenspan/Bernanke/Paulson, even if it will lead Russian economy to hell basket.

[TigerLikesRooster]

Ping!

[mick]

Well said Ping !

[mlocher]

I know this is way too early to say, but could it be that the free market can do a better job of stopping Putin than America’s military?

[SwankyC]

"Any use of public funds ... -- to prop up asset values in financial markets would carry negative implications for Russia's sovereign rating," S&P said in a statement.

With all these bailouts, I wonder if that same rule applies to the US?

[TigerLikesRooster]

Yes, free market in serious downturn. Works better than military. However, as in war, there are casualties, that is, financial casualties on U.S. side.

The same thing will occur in China, N. Korea, and Iran(and anti-American Muslim states.) They won't have time to gloat over American economic problems, because theirs will go down harder and faster. Their regime will be at risk.

[ANGGAPO]

I will bet that after reading the S&P proclamation the Russians are shaking in their boots. ;-)

[mlocher]

I figured I would get a response like this, and your point is very well taken. (No smile necessary!) If market dictates things, it will be over the long haul, not the first event. But there is the risk to Russia of Western dollars leaving the country in droves. This cuts jobs, pisses off the proletariate and makes things difficult for the burgousie. (sp?) Russian peasants have a history of revolt.

Have a great day!

[RSmithOpt]

Thanks for that ping......and you are correct in that the domino effect will pick up in speed int he countries you mentioned.

[ImJustAnotherOkie]

Since when has a Russian Dictator favored logic over power.

He will only give concession from a pine box.

[M. Espinola]

If oil and natural gas prices were to crash so will the corrupt Russian dictatorship.

[ImJustAnotherOkie]

That may be why all the threats and aggressive action against all the old satellite states trying to take a great step backward. As I understand they are up against a wall in oil development much like Iran.

[M. Espinola]

The steam would be removed from Putin, Hugo the Iranian régime and the rest of the Moscow supported Axis of Evil if oil and natural gas prices would crash back to 1999 prices levels, which will not likely happen in the near future.