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Comment by azalemeth | Hacker News Reader

What does this mean, practically? Market paralysis -- 0 volume, but the "buy price" maintained?

I'd also like to understand this: how does Russia intend to prevent foreign clients from making direct sales of securities to other foreign (or even domestic) clients? Are they saying that they just won't honor those sales?

This sounds like a terrific way to have foreign companies value their Russian assets at near-zero, since it's not clear whether they're actually still securities at that point.

> This sounds like a terrific way to have foreign companies value their Russian assets at near-zero, since it's not clear whether they're actually still securities at that point.

This is my take -- I'm confused by it because I can't believe this is actually it.

But it could be that the central bank is implementing the only token measures it actually can take, to be seen to attempt to satisfy an otherwise impossible, maybe even deranged demand for wish-fulfilment from the Kremlin.

I feel that not enough time is yet being spent asking the question: what if this is all not just figuratively the work of an insane person, but actually the work of an insane person?

This strikes me as a prelude to seizure of foreign-owned assets. In that light, locking trades seems obvious.

Maybe, but I think that's pretty unlikely at this juncture: not only are there not a lot of assets they could seize punitively (I assume the Kremlin is not looking to make enemies out of hitherto neutral countries like India), but any seizure would take Russia's financial status from "pariah, but quantifiably risky" to "unquantifiably risky."

Invading neighbors and rattling your nuclear saber in a world with MAD probably ought to take you to "unquantifiably risky" already.

Right, if France takes an oligarch's house and boat in Nice, why not take a French billionaire's assets in Russia and give them to that Oligarch? Stock in a gas company may not make up for the loss of a house and yacht but it is something.

I suspect it's more of a closed-economy, fortress-Russia mindset we'll see, not compensating some oligarchs.

I doubt there are many French billionaires with personal assets in Russia. Their companies may have some capital in the form of Louis Vuitton shops in Moscow, but that is peanuts in the grand scheme of things. The only really valuable assets are shares in resource extraction companies since that's essentially what Russia's economy is based upon.

I believe you are absolutely correct.

BP's 25 billion stake in Rosneft will most likely be nationalized.

https://www.forbes.com/sites/masonbissada/2022/02/27/bp-drop...

There are probably others I don't know about, as Russia received 30 billion in FDI just in 2019 alone.

I presume all foreign Russian sovereign bond holders are going to be wiped out also?

I don't know what else can one expect after freezing central bank reserves to the tune of half a trillion dollars. Hopefully not a nuclear war.

The corner Russia is being pushed in looks incredibly dangerous. I agree with this tweet:

https://twitter.com/PaulSonne/status/1498075412194332673?t=y...

The consequences of this could severely go out of hand and the chance of nuclear encounter is non-zero at this point.

Nukes will launch before the Putin regime falls. The world needs to punish Russia but not back it into an existential crisis.

That's the scarry thing. What if these thing are already out of control and we pushed the pieces that makes the whole domino chain fail. We wouldn't see it until it's too late.

Jesus, this is scary.

I hope and pray that Russia's nuclear arsenal and delivery systems aren't as operational as everyone, including Putin thinks. I'm hoping the yes men and corruption has led to a system that isn't able to actually launch or detonate anymore. I know it's a stretch, but I'll continue to hope it's so.

The chance of a nuclear encounter is always non-zero. There could always be someone who instead of shooting up a school or church decides to shoot up the world. Or someone sell a nuke to terrorist. If you want to talk probabilities, well, what is the new probability? The answer is that no one has any clue how to even evaluate the probability. And what if the worst happens: Putin says "I'm going to nuke somebody unless you give me Ukraine"? Or he feels like he's losing and just unilaterally decides to take the world down with him? You can't really do anything about those scenarios, so you pretty much have to just assume he won't do that and act accordingly and try not to push him into a scenario where that looks like a good option.

This is all not new. From the 2014 Crimea annexation:

https://thediplomat.com/2014/07/russia-threatens-nuclear-str...

https://www.reuters.com/article/ukraine-crisis-russia-kisely...

Rumors about "Putin has gone insane" also don't help. The man is just continuing his plan from 2014 and earlier now that the U.S. has an indecisive and weak president.

The entire point of MAD is that the chance of nuclear encounter is always nonzero: if you know with absolute certainty that the other powers will never use their nuclear weapons, then you might as well treat them as not possessing them.

I agree that the consequences of this will be dire, but I haven't seen any real evidence yet that they'll be "nuclear exchange" levels of dire. It's more likely that Russia will use its substantial reserves to temporarily preserve the ruble. When that eventually collapses, everyday Russians will begin denominating transactions in foreign currencies and the Russian government will go back to using gold the way the USSR did.

If it is a security you still need to clear the sale with the exchange within a short period of time, even if you made the sale off market.

I don't think there's a guarantee the price will be maintained.

I get it's like the freezing of ~40% of Russia's foreign reserves the US announced. So still the property of their owners - not seized - but cannot be moved either.

This is seizure in all but name. By 'freezing' US dollars indefinitely, you effectively take them out of circulation, allowing you to print the same number of new dollars for yourself without causing inflation.

Looks like the Moscow stock exchange will continue working, while the foreigners wouldn't be able to sell through the accredited brokers. I don't think the direct sales are possible without actual stock certificates, and most stock is traded through the broker accounts without clients getting the certificates.

For some definition of working, I suppose -- having a large portion of your capital base unable to exercise trades fundamentally undermines trust in the exchange itself.

Yeah, it'll be as broken as things are in China..

I mean that there is no such limitations for domestic, so some kind of bid/ask, granted skewed, will still be there.

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