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KoTeMoRe wrote:Neutrality wrote:kvs wrote:
Whenever you hear Standard and Poor's predictions think of this credit worthiness map. Ignore Ukraine as it is an obvious
problem that even the S&P clowns can't deny. But look at those deep, rich green A and AA rankings for the Baltic statelets
and only a BB rating for Russia. Seriously, S&P is utter crap of a ratings agency. On what basis do they evaluate the
debt servicing capacity of Russia? On the 1998 default? Russia has basically 10 times less debt compared to the EU "rich"
countries that average debt loads over 80% of GDP.
That is a very intersting infographic. I'm also wondering on what basis S&P rates the Baltic states higher than Russia. Is anyone here who is up to date on the investment potential of these countries? Really curious to find out.
Actually that's about credit rating. Which is a totally different point than Public debt. For Instance Germany's Public is at over 2.7 trillion (Euro) Debt Nominal, and about 4 trillion (Euro) of total debt. Russia's Public is at 0.244 Trillion debt and 0.55 Trillion Total. Yet the debt for Germany, that cannot sustain it (read about public deficit in Germany and Russia) is deemed far more viable than Russia's. This comes from simply a game of accountants. Germany can roll its debt (borrow amounts to repay what it own) thus pushing the actual reimbursments further. Because its economy is deemed more vital than Russia's. However in absolute terms, as Germany needs more initial input than Russia, both are diversely affected by an economic down turn. For Instance when for RUssia things get worse, they don't get worse by match and Russia shells out money to repay debt. Germany cannot go into austerity mode, because that would even more adversely affect its GDP. That's the only good thing with the dutch disease. The hard currency never stops getting in for the state.
Actually the white numbers indicate debt to GDP ratios. Many countries with this ratio approaching 100% have AAA ratings while
8% Russia with its vast pool of resources to back every cent of this debt, is rated BB. Such ratings are totally absurd. Ratings,
by definition, are based on the risk of not repaying loans and not being able to meet service payment deadlines. So clearly,
Russia should be realistically rated at AAA. I have never seen these US-based ratings agencies use the 1998 default as the reason
for the rating and if they did, people with a clue could tear them several new ones. Russia's capacity to pay in 2015 is a good
10 times greater than in 1998. There is no way in hell Russia has less capacity to pay back loans than resource-free and dependent on
EU handouts Estonia.
sepheronx
