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Russia to bridge budget deficit with bond issue
Published: 12 March, 2010, 14:39
Edited: 16 March, 2010, 23:18
Russia's budget deficit in January and February reached $6.6 billion, according to the Finance Ministry. The government hopes to limit the annual deficit to about 7% in 2010 and fill the gap between income and spending.
What is reported is the manner of today's economic hypothesis. As I understand all entities (Countries. etc.) sell debt being bonds, etc. to assist in balancing their operating budget. These thoughts may assist all entities but maybe Russia even more. As I understand in reading reports Russia mentioned having a strong basic materials situation (oil, natural gas, gold, iron ore, etc.) has left it in a difficult situation by not being diversified. In looking back in history the United States was much the same in the 1800s - early 1900s. They used Silver and Gold as a basis of collateral for currency, bonds, etc. Today as an example the currency issued in these times being Paper, Gold, and Silver will bring amounts that are one thousand (1000) times or more than their original value/amount at times! My point humbly offered is that there are people in Russia, the United States, etc. that are much smarter than I. They are able to devise a bond or similar instrument that actually rewards the investor, the common person, and if attempted to be manipulated by the robbers, would stop them! The difficult situation as described above is actually one, being the opposite and very positive when done properly. Good luck to all in this world of today...............
Russia defaulted on souvereign debt in 1991, 1996, 1998, 1999 and 2000. Investors received at average 18% of the money everytime it happened. I bet a lot that only high risk oriented speculators will be interested in the Russian bonds so expect high high interest rates. btw. it is significantly cheaper to consume the available funds than pay interests on bonds so why Russia does it?
I am only a normal person, the thoughts about Russia now being a democracy in going forward from this moment have to be positive and exciting with its vast resources. Much like the United States things that have happened even one second ago we cannot change, we can only learn from them. I collect early United States Currency and Coins. Even the mundane issuing/selling of Bonds can be made exciting! As an example has anyone seen the early currency issuances (Pape Currency, Paper Bond Certificates, coins, etc.) of the United States, for the artwork was extremely beautiful. If a person takes the time to look up how much these early items have appreciated, it would astound them! The issuing of Russian Debt could be done in a similar manner for I am sure with the many hundreds of years of culture in Russia, they can produce truly beautiful artwork. Now that there is a democracy in Russia your Bonds can be tied to any of your bountful tangibles that as reported you felt previoulsy being so focused on, may have been slowing the growth factor. With this it seems your Bonds would be of the highest rating. If I were allowed by my Country and Russia I would like to buy something of renowned beauty producing a profit. When the Bond is paid if requested (1,2,3,4,5 10, 20 years,or it could be tied to a growing index with people not wanting to turn them in) it is marked accordingly (or a tear off bottom portion leaving the beautiful artwork for framing; having an Identificdation number, each is unique) and returned to the person. The simple point I try to bring forward is that in a democracy now, truly amazing things can happen even in the normal non-exciting events. Profits are suddenly derived where not considered possible in the past! We are all on this earth for a limited time, one must think/act positively, if not what is the outcome?
Count Cash, I like the way you put it: "continual financial attack as part of warfare from the wall street cronies". Wall Street Cronies is the biggest legal crooks in the world. They take RCP or CPP (Canadian Pention Plan) money, then when it is time to pay it back with interest they return less than 70% of borrowed funds. Explonation is very simple: "We are not a bank. For this money always risk involved. Market did not do well this time. It will do good in a long run, thererfore, you have to wait may be 20 years more." Nobody is responsible for our failure. As a result Wall Street Cronies earn big buck. Elderly people are suffering. They have to save money on food, hydro, heat. Most of them sit in cold house and eat only two times a day, counting every penny left after investing they pention plan in Wall Street Cronies. This is modern Canada and it lasts almost 40 years. Pathetic.
Financial management and balance are key here. We must never forget that Russia is under continual financial attack as part of warfare from the wall street cronies, who are conducting continual financial attacks in Europe, against Russia and against the rest of the world in general. Having a correct level of balanced debt on the books, both domestic and international, can be a good thing, if it is used wisely to secure increased economic activity. However, we must be careful, that this debt does not turn into a weapon for the financial terrorists to use against us. We must also make sure that the finace raised is not just burnt on paying todays expenditures, without using it productively for generating a better tomorrow.