Connect with us

Red Pill

News

Ukraine’s American Finance Minister is aiming to force a haircut on all creditors, including Russia

Ukraine’s American Finance Minister has announced a broad restructuring plan with a wide range of severe haircuts for creditors, and she wishes to include Russia in the group of creditors who are about to get their heads shaved.

Published

on

0 Views

Post originally appeared on The Automatic Earth blog, and it is well worth the reading.

When money managers talk outside their narrow field, nonsense is guaranteed to ensue. No better example than this Bloomberg piece on Ukraine’s ‘debt restructuring’ plans, which are as much a political tool as they are anything else at all. Ukraine’s American Finance Minister has announced a broad restructuring plan with a wide range of severe haircuts for creditors, and she – well, obviously – wishes to include Russia in the group of creditors who are about to get their heads shaved.

And despite all obvious angles to the issue that are not purely economical, Bloomberg presents a whole array of finance professionals who are free to spout their entirely irrelevant opinions on the topic. If you didn’t know any better, you’d be inclined to think that perhaps Russia is indeed just another creditor to Kiev.

Putin Plays Wildcard as Ukraine Bond Restructuring Talks Begin

As Ukraine begins bond-restructuring talks, it finds itself face-to-face with a familiar foe: Russia. President Vladimir Putin bought $3 billion of Ukrainian bonds in late 2013. The cash was meant to support an ally, then-President Yanukovych.

That is, for starters, a far too narrow way of putting it. Russia simply wanted to make sure Ukraine would remain a stable nation, both politically and economically, because A) it didn’t want a failed state on its borders and B) it wanted to ensure a smooth transfer of its gas sales to Europe through the Ukraine pipeline systems. Whether that would be achieved through Yanukovych or someone else was a secondary issue. Putin was never a big fan of the former president, but at least he kept the gas flowing.

While his government fell just two months later, Russia was left with the securities. Now, those holdings take on an added importance as Putin’s stance on the debt talks could affect the terms that all other bondholders get in the restructuring. Russia, which is Ukraine’s second-biggest bondholder, has maintained that it won’t take part in any restructuring deal. Here are the three most likely tacks – as seen by money managers and analysts – that Putin’s government could pursue.

Here’s the biggest issue here, one which Bloomberg conveniently omits. Not only was Russia left with the securities after the Maidan coup (or revolution if you must), but the money provided through them to Ukraine began to be used to organize and fund various battalions and other groups, thrown together into a Kiev ‘army’, that started aiming for and at the Russian speaking population in East Ukraine. 6000 of them did not survive this.

The same would have happened in Crimea (Moscow is convinced of this) had not Putin made it part of Russia before that could happen. Do note that one of the very first decrees issued by US installed PM Yatsenyuk and his ‘cabinet’ was one that banned Russian to be used as an official language by millions of people who speak only Russian. That Yats withdrew the decree within a week didn’t matter anymore, the game was on right then and there.

Ukraine, after gaining a lifeline from the IMF, included Russia’s bond among the 29 securities and enterprise loans it seeks to renegotiate with creditors before June. Finance Minister Natalie Jaresko has promised not to give any creditor special treatment. The revamp will include a reduction in the coupon, an extension in maturities as well as a cut in the face value, she said.

Russian Deputy Finance Minister Sergey Storchak said March 17 that the nation isn’t taking part in the debt negotiations because it’s an “official” creditor, not a private bondholder. If the Kremlin maintains this view, it would be “negative” for private bondholders as “other investors will be more tempted to hold out as well,” according to Marco Ruijer at ING. He predicts a 45% chance of a hold out, while Michael Ganske at Rogge in London says it’s 70%.

Here’s where we get into la-la land, with money managers speaking out on things they don’t know anything about. Which can then be used to lead up to a goal-seeked conclusion, as we will see. Because of the situation I painted above, Russia cannot and will not take part in the ‘debt negotiations’ the west tries to shove down its throat through Jaresko’s restructuring plans.

If only because as soon as the restructuring has given Kiev some financial breathing space, is will use it to reinforce its troops and go after its Russian speaking compatriots again. It’s a not a finance issue at all, it’s life and death, and that makes percentages thrown around by money guys behind desks in high rises not just futile, but positively inane.

There is little precedence of sovereigns and private bondholders taking part in the same talks, given that a nation’s debt considerations include a “foreign-policy dimension,” according to Matthias Goldmann at the Max Planck Institute in Heidelberg, Germany. Ukraine and Russia may need to find an “appropriate forum,” such as the Paris Club, for separate negotiations, he said.

Holding out can lead to two outcomes: Russia gets paid back in full after the notes mature in December, or Ukraine defaults. The former option is politically unacceptable in Kiev, according to Tim Ash at Standard Bank, while the latter would likely start litigation and delay the borrower’s return to foreign capital markets, which Jaresko expects in 2017. “Russia will be holdouts, to try and force a messy restructuring,” Ash said by e-mail on March 19.

No, Russia is not interested in a ‘messy restructuring’. It will simply refuse to throw Kiev’s aggression against its own people a lifeline, and it will insist on finding that “appropriate forum”, instead of the one Jaresko tries to force it into. Russia will demand to be paid in full, and if that means a Ukraine default, it is fine with that. Don’t forget that the $3 billion in bonds is by no means the only debt Ukraine owes Moscow. There are many billions in unpaid gas purchases, and undoubtedly many other bills.

If Russia holds out and litigates, there is a “real threat” that Ukraine will deem the Eurobond an odious debt, Lutz Roehmeyer at Landesbank Berlin said. This refers to a legal theory that a nation shouldn’t be forced to repay international obligations if they don’t serve the best interests of the country and its citizens.

Nice theory. Why don’t we have Greece use it too? Russia would obviously never accept this. At the very minimum, gas would stop flowing through Ukraine to Europe.

The chance of Russia joining the talks is about 10%, according to ING’s Ruijer and Rogge’s Ganske. If Russia joins it would be “somewhat positive as all investors will be treated equally, and then it can be resolved quicker,” Ruijer said.

These guys really have no idea what’s going on. They see the planet exclusively in dollar terms. And they have no idea why they said 10%, might as well have been 5% or 25%. Hot air.

Bank of America said in a note last week that Ukraine will seek a principal reduction of about 35% in its opening salvo, which may be rejected by creditors. It said that bond valuations around 40 cents on the dollar, indicate a probability of a 20% reduction in principal as well as a reduction in interest rates. Ukraine’s benchmark 2017 dollar notes traded at 37.8 cents on the dollar on Thursday.

Sounds like things in the real world are already much worse than in BoA notes.

“By participating in the talks, Russia would have a better chance of getting a deal it wants,” Liza Ermolenko at Capital Economics, said. “However, it seems that politics, rather than economics, will be behind whatever Russia decides to do.”

No kidding, Liza.

There is no collective-agreement clause which could make any deal binding for Russia, Anna Gelpern, a Georgetown law professor, said.

And there we get to the core of the matter. If Jaresko wants to force anything on Russia, she’ll have to move outside of the law. Which I’m sure she, and the US cabal that rules Kiev, would be more than willing to do, but it would mean a default no matter what happens, simply because time is of the essence, and the issue would drag on for a long time.

The restructuring of each bond must be agreed to by a majority of its holders, according to Olena Zubchenko, a lawyer at Lavrynovych & Partners, a legal adviser to Ukraine during the bond issue to Russia in December 2013. The Eurobonds are governed by English law and traded on the Dublin Exchange. The Russian bond has a covenant allowing the holder to call it if Ukraine’s public debt tops 60% of economic output, which the IMF said took place last year.

Another noteworthy detail: Russia could have called the bonds quite a while ago, but has so far decided against that. They could still do it at any moment, though. And since the IMF has approved another loan to Ukraine recently, and Capitol Hill has agreed to send deadly offensive weapons to Kiev, they have good reason to do it. The Jaresko idea of ‘we will saddle you with losses, so we can go kill more Russian speaking people’ will certainly not appeal to Moscow, not will it be condoned.

“It’s a kind of nuclear option, evaporating their leverage,” Rogge’s Ganske said. “If Russia accelerates, then Ukraine has to pay or default on it — i.e. game over.”

This bond issue is of course just one of many ways in which the west seeks to aggravate Russia. If and/or when the US starts shipping arms to Kiev, and the internal civil war restarts, Russia will have to take measures. Which is exactly what the west has been trying to provoke it to do for at least a full year now. It is therefore Russia’s task to find those measures that take ‘the other side’ by surprise and leaves it scrambling for answers.

Over the past year and change, after the Kiev putsch and the subsequent aggression on the side of the newly installed ‘government’ against its own citizens in East Ukraine, Russia has always insisted on talking about the EU and US as its ‘partners’, even as the language thrown at it deteriorated at a rapid clip. It must already be about a year ago that Hillary Clinton first referred to Putin as Hitler. As for the anti-Moscow utterances by the Kiev ‘government’, let’s not even go there.

The Russians have shown recently that they understand very well what the intentions are behind the NATO build-up and all the hollow accusations and innuendo in the western media. They have also made clear that they are ready and prepared to activate any and all defense systems, including nuclear, at their disposal.

Russia sees the world as one in which multiple major powers can govern together. The US sees Russia as a power that must be defeated by any means necessary, and subdued. One of these worldviews must prevail in the end. Perhaps we won’t know which one that will be until the third power, China, raises its voice. What we do know is that Russia will back down only so far, and then it will no more.

References:

http://www.theautomaticearth.com/2015/03/kiev-moscow-bonds-and-haircuts/

Advertisement
Comments

Latest

10 signs that America is in MUCH worse trouble than we all thought

You may find it difficult to believe some of the things that I am about to share with you. Instinctively, most of us know that America is in trouble, but recently it has been impressed upon me that things are much worse than I originally believed.

Published

on

A homeless man sleeps under an American Flag blanket on a park bench in the Brooklyn borough of New York City. As of June 2013, there were an all-time record of 50,900 homeless people, including 12,100 homeless families with 21,300 homeless children homeless in New York City.

Our cities are becoming cesspools, our nation is falling apart all around us, and it seems like the number of sick, twisted and depraved people is multiplying.

We still have a relatively high standard of living for the moment, but the only reason we can maintain that standard of living is because we are on the greatest debt binge in human history. And once that bubble bursts, I fear for what this nation is going to become, because things are getting really bad out there.

Support The Duran – Browse our Shop >>

The following are 10 signs that America is in much worse trouble than we all thought…

#1 America is “the most dangerous country in the developed world to give birth in”

We all know that our healthcare system is rapidly deteriorating, but I figured that the U.S. would be at least in the middle of the pack when it comes to women dying during childbirth. Sadly, I was completely wrong

The U.S. is the most dangerous country in the developed world to give birth in according to a report.

About 50,000 women are “severely injured” during childbirth, and about 700 women die every year. Half of these deaths could have been prevented, as could the injuries, if correct safety procedures had been followed, according to an investigation by USA Today.

#2 America is absolutely teeming with sexual predators

When I read stories like the one I am about to share with you, it makes me want to vomit. According to a report that was just released, more than 300 “predator priests” were identified in just 6 Pennsylvania dioceses

A landmark grand jury report identifies more than 300 “predator priests” in six of Pennsylvania’s Roman Catholic dioceses, the state Supreme Court said Friday in ordering the findings released. (Tap here to read the court ruling.)

The justices said the report on clergy child sexual abuse going back decades and allegations of cover-up efforts will be made public but without the names or “individual specific information” of priests and others who have challenged the findings, at least in the initial version to be released.

#3 America has a massive problem with pedophilia

This is particularly true in Hollywood, and actor Elijah Wood has decided to go public about it

The actor, in a new interview with the Sunday Times, is accusing Tinseltown of having a pedophilia problem, saying “a lot of vipers” are preying on children in the business.

“Clearly something major was going on in Hollywood. It was all organized. There are a lot of vipers in this industry, people who only have their own interests in mind,” he said. “There is darkness in the underbelly. What bums me about these situations is that the victims can’t speak as loudly as the people in power. That’s the tragedy of attempting to reveal what is happening to innocent people: they can be squashed, but their lives have been irreparably damaged.”

#4 America is full of people that are looking to take advantage of others

During the recent horrific wildfires in northern California, authorities say that there was “a lot of looting”

With so many people locked out of huge areas of the city, looters had moved in to take advantage, officials said, adding that police patrols are being increased and hat National Guard troops are being brought in to help.

“We’re experiencing a lot of looting and are beefing up our security,” Redding Police Chief Roger Moore told a crowd of about 250 residents Saturday afternoon. And Shasta County Sheriff Tom Bosenko received a round of applause when he announced the first arrest of a suspected looter.

#5 America has way too many politically-correct control freaks that want to ruin all of our lives

I never dreamed that the day would come when plastic straws would be banned in the United States, but now it is actually happening

Only in California can you go to jail for offering restaurant patrons a straw. According to the ordinance, first-time offenders will be given a written warning. Second-time offenders will face steeper consequences. Based on the city’s municipal code, penalties for straw-peddling will include a “fine not exceeding one thousand dollars ($1,000), imprisonment for a term not exceeding six (6) months.”

The West Coast is home to many a plastic straw ban; the city of Seattle, WA, was the first city in the U.S. to ban plastic straws in early July. But in the Emerald City, a violation only warrants a $250 fine. California is not to be outdone in their regressive-progressive politics.

#6 America is a nation of addicts

Today, I came across a survey that found that nearly half of all Americans admit to shopping online (one addiction) while drunk (another addiction)…

If you’ve poured yourself a glass of wine or two and then started browsing Amazon, you’re not alone — and you may well have spent more than you meant to. A new survey finds that Americans who shop online under the influence spend over $40 each time.

Gin drinkers actually spend the most, about $82 on average, while whiskey drinkers are the cheapest buzzed buyers, according to addiction treatment facility the Archstone Recovery Center. They polled over 1,000 people who reported purchasing an item off of Amazon while under the influence of alcohol.

#7 America is on a path to financial suicide

The federal government is already 21 trillion dollars in debt, and it is being officially estimated that we will hit the 30 trillion dollar mark by 2028.

#8 America seems to have an endless supply of cruel people

Down in Louisiana, authorities have arrested 5 people that locked an autistic woman that they were related to in a cage and forced her to eat her mother’s ashes

A Louisiana woman living with autism was locked up in a cage, threatened and abused and forced to eat her mother’s ashes by five people, who were indicted this week by a federal grand jury in New Orleans, officials said.

The indictments accuse five family members of abusing their 22-year-old relative until June 2016, according to court documents released by the U.S. District Court for the Eastern District of Louisiana.

#9 America’s major cities are rapidly being transformed into cesspools

The following is an excerpt from a letter that was recently penned by Portland’s police chief

Our City has become a cesspool. Livability that once made Portland a unique and vibrant city is now replaced with human feces in businesses doorways, in our parks, and on our streets. Aggressive panhandlers block the sidewalks, storefronts, and landmarks like Pioneer Square, discouraging people from enjoying our City. Garbage-filled RVs and vehicles are strewn throughout our neighborhoods. Used needles, drug paraphernalia, and trash are common sights lining the streets and sidewalks of the downtown core area, under our bridges, and freeway overpasses. That’s not what our families, business owners, and tourists deserve.

#10 America is inhabited by way too many idiots

These days just about anyone will do just about anything for 15 minutes of fame, and one of the worst examples of this was when Florida resident Robby Stratton walked into a convenience store with a live alligator

The man, identified by WJAX as Robby Stratton, is seen on video posted to Facebook walking into the store in Jacksonville with the gator’s mouth taped shut.

Stratton approaches the counter and asks the man behind it: ‘Y’all got beer still? Y’all ain’t out, are y’all?’

He then sees someone in the back of the store and says: ‘Is he taking the last bit of beer? You aren’t taking the last bit of beer are you?’

Stratton planned this stunt well in advance, and he made sure to have it recorded so that he could post it on Facebook.

This is what America has become. We need to take a long look in the mirror, because we are in an advanced state of decline.

Hopefully the American people will start to wake up, because the time to turn things around is quickly running out.

Via The American Dream

Continue Reading

Latest

Democrat Party Exodus: Millennial white men not welcome (Video)

The Duran – News in Review – Episode 44.

Alex Christoforou

Published

on

Public demonization, identity politics, and forcing equality of outcome throughout society, is driving white male millennials away from the Democrat Party.

Young white men are increasingly turned off by the Democrats’ embrace of identity politics. An entire generation of voters has become disillusioned with what was once considered an inclusive, working class left, and has now morphed into a social media lynch mob obsessed with the destruction of “The Patriarchy” and “toxic masculinity”.

RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou unpack the reasons behind a millennial white male exodus away from the establishment left, and towards Trumpism on the right or progressive ideology thought on the left. Remember to Please Subscribe to The Duran’s YouTube Channel.

Via Spiked

A hock poll by Reuters/Ipsos reveals that the Democrats are shedding millennial votes, with support dropping by nine percentage points since 2016. This shift is most pronounced among white millennial men, who now favour Republicans over Democrats by 11 percentage points. In 2016, Democrats led Republicans in this group by 12 percentage points. There has been a staggering swing of 23 percentage points in just two years.

The poll shatters a number of widely held assumptions. Firstly, that young people are naturally drawn to the Democrats. Secondly, that the chaos and incompetence of Donald Trump’s rule are enough to turn voters blue. While two thirds of those polled dislike Trump, that distaste does not translate into either a rejection of the GOP as a whole or into support for the Democrats.

Democrats are clearly yet to come to terms with their defeat in the 2016 presidential election. Since then, the party has devoted a great deal of energy to pushing allegations of Russian meddling – a story of little interest to ordinary voters, who have long since accepted the outcome of a fair and free election. Similarly, baseless and shrill accusations that Trump is a fascist have clearly been ineffective in drumming up support for an alternative. Opposition to Trump is one thing, but most voters are none the wiser as to what the Democrats actually stand for.

But while the Democrats may be uninspiring to millennials as a whole, the party is actively alienating young, white men. Today’s identity politics is impossible for millennials to avoid, whether they are confronted with it on campus or through clickbait comment pieces. In the identitarian worldview, ‘white men’ are responsible for all the world’s woes – the phrases ‘white people’ and ‘white men’ are practically shorthand for evil. Listicles reveal the ‘37 things white people need to stop ruining in 2018’, magazines declare that ‘white men must be stopped’, while even respectable outlets like the Washington Post ask ‘why can’t we hate white men?’.

But rather than reject the divisive politics of identity, the Democratic establishment and its cheerleaders have embraced it. During the election, Hillary Clinton namechecked and explicitly targeted a number of demographic groups. At the same time, her team told the media they were confident they could win without the support of white men. Many commentators agreed. ‘Hillary Clinton doesn’t need white men’, insisted the Washington Post – supposedly because they make up a declining share of the electorate and can therefore be ignored. Of course, we all know what the result was – white voters were crucial to Trump’s election upset. Nevertheless, liberal commentators are still urging the Democrats to ‘get over’ white working-class voters in the upcoming midterms. They are surplus to electoral requirements, outsiders to the ‘progressive coalition… in all its multicultural, multiracial splendour’, according to one writer.

Democrats insist that white voters are electorally irrelevant. But when they disappoint the party and decide not to vote for it, they are painted as backward and irrational. Clinton’s defeat was rationalised by her allies as a ‘whitelash’ – not a rejection of a wildly unpopular candidate, but an outburst of racist rage. Clearly, white male millennials are picking up on this kind of language and are beginning to think that they are not wanted by the party.

A truly progressive party ought to be able to give voice to concerns that bridge racial and gender divides. It ought to have a more honest understanding of its past failures and a clear programme for the future. But if the Democrats continue to shirk responsibility for their electoral defeats, and continue to embrace identity politics, it won’t just be young, white men who abandon them.

Continue Reading

Red Pill

For gender neutrality, English schools forbid girls from wearing skirts

Teachers hope it will make things “fairer for transgender pupils and eliminate complaints over the decency of short skirts”.

Published

on

For the sake of making transgender students feel at home, a school in East Sussex, UK, is introducing gender neutral school uniforms, making trousers with a white shirt and tie the norm for all students, regardless of gender. Now, that miniscule number of transgenders doesn’t have to feel like they’re outside of what’s normal. Everyone can be just as genderless as the next.

Sky News

Priory School in Lewes, East Sussex, has introduced the policy to make the uniform the same for all students, regardless of gender.

Teachers hope it will make things “fairer for transgender pupils and eliminate complaints over the decency of short skirts”.

The updated uniform, which the school website says “has been designed specifically in response to the many issues and suggestions raised by parents, students and school staff”, also rectifies the issue of boys having to wear ties while girls do not.

It comprises grey trousers, white shirt, navy jumper and a blue and silver tie.

Headteacher Tony Smith told the Brighton Argus newspaper: “Specifically, it addresses the current issues of inequality and decency.

“Another issue was that we have a small but increasing number of transgender students and therefore having the same uniform is important for them.”

However, one local mother who was not in favour, told the local newspaper: “My daughter said she has got a gender and it’s female, so being gender neutral when she has got a gender is a big deal for her, as she is proud to be a girl.”

The pro-sodomite news site Pink news goes further

He added that this simple but symbolic change would make a huge difference to trans pupils who go to the school in Lewes, Sussex.

Smith said that Priory has “a small but increasing number of transgender students, and therefore having the same uniform is important for them.”

Speaking to PinkNews, he added: “We wanted a uniform for everyone.

“It could have been skirts for everyone, but we wanted to go with a uniform that was easy to source and supply, and that’s not easy for boys’ cuts.”

He pointed out that in the summer, it is now possible for students of all genders to wear shorts or skorts (a combination of shorts and a skirt).

“We wanted a uniform which promotes greater equality,” Smith explained, adding “a number” of trans students welcomed the move when it was announced.

“We’ve done this for positive reasons. For us, it is a greater equality having the same for everybody.”

Some parents expressed disgust with the decision, which stops girls from wearing skirts. One mother of a student said: “If girls dressing differently than boys is now to be considered sexist, then it is equally sexist to have female teachers wearing skirts and not wearing ties.

“If they want this, they must live the values they force on others and go fully gender free. My daughter and her friends are appalled by this.”

As if all of this wasn’t bad enough, one school in Oxfordshire has forbidden boys to wear shorts and told them that they must wear skirts as reported by Independent:

A secondary school in Oxfordshire has reportedly banned boys from wearing shorts in the hot summer months – but said they are free to wear skirts instead if they wish.

Chiltern Edge School in Sonning Common recently introduced a new, stricter uniform policy that states pupils can only wear trousers or skirts.

When one parent asked if their son could wear tailored shorts for summer, he said he was told “no” by staff as shorts were not allowed – but as they had a gender-neutral policy, boys could opt
Father Alastair Vince-Porteous told the Daily Mail: “I was told shorts are not part of the uniform. It’s a shame we can’t be more grown up about it, we aren’t asking for ra-ra skirts or skinny jeans, just grey tailored shorts for two months a year, it’s not a big deal.”

Instead of the miniscule minority of the trans accommodating to the larger body of society, the rest of society must change in order to accommodate them. Meanwhile, one can hear complaints about immigrants not accommodating the culture in which they enter into by learning the language of their new country. But how long until the bureaucratic demands come out that, for fairness’ sake, host countries demand that their citizens learn Arabic or Spanish in order to accommodate immigrants?

Continue Reading

JOIN OUR YOUTUBE CHANNEL

Advertisement

Your donations make all the difference. Together we can expose fake news lies and deliver truth.

Amount to donate in USD$:

5 100

Waiting for PayPal...
Validating payment information...
Waiting for PayPal...

Advertisement
Advertisements

Quick Donate

The Duran
EURO
DONATE
Donate a quick 10 spot!
Advertisement

Advertisements

The Duran Newsletter

Advertisement
Advertisement

Trending