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Saturday, 19 September 11:42 (GMT -05:00)



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Soros Predicts Default in Russia


As you know, after the West introduced several rounds of sanctions against Russia (supposedly for being secretly involved and in the current civil war in the East of Ukraine) coupled with the never ending price collapse in the market of crude oil we have been witnessing since mid 2014, the financial and economic situation in the Russian Federation deteriorated drastically, Market Leader reports. More and more financial experts start giving gloomy predictions regarding the near-term future of the Russian economy as well as Russia’s national currency.

 

 

 


George Soros is one of those prominent financial gurus predicting hard times for Russia. In particular, the famous billionaire and investor assumes that Russia is nearing a noter major default the size of the one seen in 1998 or even worse. The investor estimates the likelihood of Russia facing a default as very high given the sanctions imposed on it by the USA and the EU as well as extremely low oil prices. The thing is that crude oil seems to be the major breadwinner in he Russian family and since the prices are down by over 50%, the income from Russia’s oil export reduced respectively. Eventually, it becomes harder and harder for Russia to service its debt and handle dollar-denominated imports. In other words, there is almost  no way Russia can avoid another major crisis under such circumstances.

At the same time, Soros assumes that if a default is the case in Russia, this will have a devastating impact on the Russian economy. Still, it is likely to affect most European economies located in the Eurozone. The entire global financial system may be affected as well.

Ukraine needs 50 billion dollars urgently to have its economy and financial sector stabilized. With that said, it seems like the Eurozone should currently shift the focus from the forthcoming elections in Greece to saving Ukraine and preventing Russian from defaulting since the existing economic dangers in Eastern Europe may result in a deadly outcome for the common european currency and the Eurozone nations while the Greek issue is less significant at this point.

At the same time, Soros assumes that Putin and Medvedev are incompetent in what they do since they keep on violating objective economic and financial laws for the sake of short-term benefits, which is likely to have serious consequences. In particular, he expects the climax to take place somewhere in February 2015, when Russian people starts buying everything they can in order to get rid of the inflating ruble, which is only going to accelerate the galloping rate of inflation in Russia. The Russian central bank seems to no longer be in control of the financial situation in the country despite raising interest rates. He doesn’t even deny a change of power in Russian under such circumstances…

 

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