Investing in Russia – To My New Anonymous Friend – or Welcome Aboard

 THIS POST WAS ORIGINALLY PUBLISHED MARCH 21, 2007

Investing in Russia – To My New Anonymous Friend – or Welcome Aboard

Debt is the slavery of the free.

Publilius Syrus

In recent two days I have got a new friend. Someone by the name Karolus is posting comments to my older posts. This totally mysterious person claims that he(she) represents “French holders of Russian government bonds” (maybe these ‘holders’ for some mystic reasons relocated to London - my trace route shows that). With the great gusto I want to re-produce this post (the exact language is preserved):

“RUSSIAN INVESTOR ALERT

French holders of Russian government bonds wish to remind all investors that the Russian Federation is still in default today (March 2007) on their estimate of some US$ 80 billion owed to them since the Bolshevik, then the Soviet, and now the Russian Federation governments have all unilaterally repudiated Tsarist debt and refused any form of contact or dialogue with their creditors.We also wish to remind investors that in its Sep. 15th 2006 report entitled "Governance matters: a decade of measuring the quality of governance", the WORLD BANK rated Russia's governance comparable to that of Swaziland, Zambia and Kazakhstan. Russia came 151st out of 208 countries in terms of (...) accountability, quality of regulatory bodies, rule of law, (...). In particular, rule of law (i.e. the courts and the quality of contract enforcement) was judged as effective in Russia as it is in Ecuador, Indonesia, and Bangladesh. Nicaragua, East Timor, and China's ability to control corruption was judged similar to Russia's. Despite these findings, and despite the main rating agencies' knowledge that Russia is in default on US$ 80 billion of Tsarist debt, Russia is rated "INVESTMENT GRADE".French bondholders intend to pursue their claim until full settlement at present value, by any legal means and in any jurisdiction they deem appropriate.EVERY POTENTIAL INVESTOR IN RUSSIA MUST BE MADE AWARE OF THESE FACTS.FRENCH CREDITORS OF THE RUSSIAN FEDERATION STRONGLY ADVISE AGAINST ANY FORM OF INVESTMENT IN A COUNTRY WHOSE SOLVENT GOVERNMENT HAS SYSTEMATICALLY REFUSED TO FULFIL ITS NATIONAL AND INTERNATIONAL OBLIGATIONS, REFUSES ALL CONTACT AND DIALOGUE WITH ITS BONA FIDE CREDITORS, AND REFUSES TO DISCLOSE LIABILITIES WORTH US$ 80 BILLION.”

I am extremely thankful to this unknown person for educational effort (to tell nothing about disclaimer-type). I never realized that Russia is on the same business level as East Timor and Swaziland.
I guess that in the view of Karolus all the world seems to be stupid potheads dealing with such underdeveloped country as Russia. Moody's with its ratings on the Russian Federation's foreign currency bonds and notes, and more recent events, like Japanese Credit Rating Agency assigning A-/Stable and A/Stable ratings to Russia’s foreign currency and local currency long-term debts. Very strange news came today: “International Finance Group, a member of the World Bank Group, said on Tuesday it is going to invest $40 million in Aricom, a Russia Far east-based company".

Hey Karolus, please tell IFC to listen to their peers in the World Bank and forget about Russia!!!
Well, anyways, I welcome enigmatic Karolus on board for free of charge work with me. And also I suggest to Karolus a new topic, which is much hotter – to investigate, for example, the United States public debt, - the amount of money owed by the United States federal government to creditors who hold US Debt Instruments. As of the end of 2006, the total U.S. public debt was $4.9 trillion. Well, this much more than Russian debts to “French holders of Russian government bonds”.

Maybe after these valuations Karolus would issue AMERICAN INVESTOR ALERT and post it somewhere at the NYSE web-site????