So, Russia is not defaulting after all? As of 20 minutes ago the news is that JPMorgan processed interest payments from the Russian government. Acting as Russia’s correspondent bank, JP Morgan will pass the $117 million in coupon payments to Citigroup, who as the payment agent will distribute the money to investors.
"Would it not be appropriate for those proceeds to be allocated to a common fund to compensate the victims of Putin’s aggression?"
?? No, it is not appropriate to seize funds being repaid to lenders on the basis of emotion - for there is no legal right or claim for anyone but the lenders to possession of these funds - and distribute them to unrelated 3rd parties. None whatever. You admit as much by declining to name any law this would be possible under, instead using the rhetoric of "Would it not be appropriate...?" which simply means "Wouldn't it be cool to seize some money from lenders over here, and give it to this group we feel sorry for over there?" Wouldn't it be cool? means no law at all. Many people think it would be cool to take all kinds of stuff for deserving parties including ourselves, but we shouldn't and can't.
What you are saying amounts to a sort of selective idealism about money. The investments some people made directly in the Russian government, in the full knowledge of how it operates are sacrosanct to you because they happen not to live in Russia, but you don't oppose sanctions against Russians living in Russia because it is fine to punish Russian citizens. Either that or you in fact are against sanctions entirely, because you think it would be better to allow crimes to go completely unanswered and the war machine continue to be fed, I don't really know what you mean.
It is not a stretch to say that if you invest in a corrupt government, not just corrupt but one willing to wage unprovoked wars of brutal aggression repeatedly, you stand to lose that money when the world gets fed up. Investing is a gamble at the end of the day, and these people made a bad one for obvious reasons, and that is one reason why they should pay the price. The other is that it really isn't the foreign investors money anymore when they hand it to the Russian government, until it is returned. All the people that government owes now have claims on it, and you are ignoring those claims just because they don't take the same form as investment.
Finally, you decry emotional responses and appeal to laws, but frankly this is a political matter and beyond the purview of mere laws. Russia has flouted laws, and those who have materially supported Russia cannot expect to on the one hand benefit from that rule breaking and on the other hand expect to work it in their favor. Laws can only exist when there is enough cooperation and agreement for them to have force, especially so international ones. The question really is and can be nothing more than what you say is irrelevant: "Would it not be appropriate."
I agree. Where he lost me is when he said we "shouldn't"; I agree with him on the points pertaining to property rights and their difficulty in being stripped, though. It's a classic is/should argument. We don't, therefore we shouldn't.
Just because you invest, your investment should be backed by the US government? What ever happened to making a bad investment? People shit the bed all the time.
But I'm not making a "should" argument either. My issue is the mixing of the two. Just make your point!
"With regard to war, the purpose of propaganda is to make a particular group of people forget that another group is human. By focusing on a few, simple target ideas that reinforce the notion that another group of people are harmful and inhumane, propaganda is able to unite people in an unrealistic mindset.
[...] Contrary to what one might believe, however, propaganda is often more effective on the educated, rather than the uneducated population. This is mainly due to the fact that educated people tend to read more often, exposing them to more of the media that is pushing the propaganda. On another level, educated people frequently have jobs in academia, management, and media, which in some form make them agents of the propaganda system."
Similarly, the educated are more prone to cognitive dissonance than the uneducated. This may be perhaps because much of education consists of symbol manipulation.
> And should legislation not be drafted that would ensure that it is not bondholders who have the first claim on Russian assets overseas?
Adam in the next paragraph asks if we should be /making new laws/, which would thus provide a legal ability to claim these funds. One of the fun thing about laws is that they can be changed.
"You admit as much by declining to name any law this would be possible under," I cannot reconcile your first comment with this present one.
I certainly agree with your new view, laws can be changed and moreover I think the situation exists above the framework of even international law and instead within the framework of sovereign diplomacy and executive action.
The amount of hypocrisy on display here is enough to make anybody puke: all of these "vaunted investors" have no problem taking profits from investments in Saudi Arabia which has been occupying and bombing Yemen for many years, and just recently beheaded 81 people in one day.
It makes perfect sense that the bondholders, which have a documented, negotiated right to repayment with well-developed international and common law precedents to draw upon should have such recourse as they can muster. These rights have developed over the past 150 years, mediated to some extent, by the IMF, and are essential to international finance upon which many sovereign debtors rely for many purposes. While there has been a lot of bad fallout from time to time from the international financial system and while a victim such as Ukraine certainly should have a moral right to reparations (good luck), (a) it is important to maintain the international financial system upon which both debtors and creditors rely for huge amounts and (b) it is difficult to see how a generalized moral claim could be executed in real life. Let's hope that some means is found to coerce the Russians to pay for the damage they've done (I am not optimistic), but let's also not indulge in pipe dreams about that or overturn an important part of the international financial system.
Another example how private investors try to protect their claims even against the devil. Maybe you should drink a cup of tea with Katharina Pistor and inform us about your findings against our current economic system.
a slightly different point: why is there a presumption of "full" legal standing when you buy debt at 47cents on the dollar. 47 cents is an "impaired" price. Can u buy a broken I-Phone from a scrap yard and then sue Apple when the glass scratches your cheek? No! Heck, the average sheepizen can't even get past arbitration to a real judge. You bought a "broken" item. Yet, Eliott buys debt at 20cents and claims to be made whole! The privilege of capital. Pistor terrritory indeed.
I don't disagree from a moral perspective and I don't think laws of the kind you hint at are incorrect for the circumstance, but I also am not sure that all sovereign bonds can be said to be literally funding the invasion here. The Russian State also pays out billions in pensions that keep impoverished people from starvation, as well as operating facilities for the care of social orphans, a horrific phenomena. Both of these issues reflect poorly on Russian Society writ large that the state has to adopt these roles, but this is a chicken and egg situation, in that the state actively weakens any kind of social capital from developing in Russia and has done so perniciously for the last century.
My point is that the moral calculus of who is culpable for funding Russian aggression is kind of muddy - do investors who provide Russia with tech imports that are used to develop weapons platforms bear more responsibility than bond holders? Hard to say.
Seizing oligarch yachts and villas similarly seems like a rather blinkered approach without redistribution mechanisms to aid Ukrainians suffering right now, and to the extent those are being developed, they should be enhanced.
Does debt covenant law allow for direct "substitution of assets" in egregious circumstances? I don't think this has ever been broached. It's more possible the west countries issue legislation that confiscates from west subjects Russian investment proceeds, that channel, rather than direct sub of assets within the debt itself.
"Would it not be appropriate for those proceeds to be allocated to a common fund to compensate the victims of Putin’s aggression?"
?? No, it is not appropriate to seize funds being repaid to lenders on the basis of emotion - for there is no legal right or claim for anyone but the lenders to possession of these funds - and distribute them to unrelated 3rd parties. None whatever. You admit as much by declining to name any law this would be possible under, instead using the rhetoric of "Would it not be appropriate...?" which simply means "Wouldn't it be cool to seize some money from lenders over here, and give it to this group we feel sorry for over there?" Wouldn't it be cool? means no law at all. Many people think it would be cool to take all kinds of stuff for deserving parties including ourselves, but we shouldn't and can't.
Really like the substack otherwise, though
What you are saying amounts to a sort of selective idealism about money. The investments some people made directly in the Russian government, in the full knowledge of how it operates are sacrosanct to you because they happen not to live in Russia, but you don't oppose sanctions against Russians living in Russia because it is fine to punish Russian citizens. Either that or you in fact are against sanctions entirely, because you think it would be better to allow crimes to go completely unanswered and the war machine continue to be fed, I don't really know what you mean.
It is not a stretch to say that if you invest in a corrupt government, not just corrupt but one willing to wage unprovoked wars of brutal aggression repeatedly, you stand to lose that money when the world gets fed up. Investing is a gamble at the end of the day, and these people made a bad one for obvious reasons, and that is one reason why they should pay the price. The other is that it really isn't the foreign investors money anymore when they hand it to the Russian government, until it is returned. All the people that government owes now have claims on it, and you are ignoring those claims just because they don't take the same form as investment.
Finally, you decry emotional responses and appeal to laws, but frankly this is a political matter and beyond the purview of mere laws. Russia has flouted laws, and those who have materially supported Russia cannot expect to on the one hand benefit from that rule breaking and on the other hand expect to work it in their favor. Laws can only exist when there is enough cooperation and agreement for them to have force, especially so international ones. The question really is and can be nothing more than what you say is irrelevant: "Would it not be appropriate."
I agree. Where he lost me is when he said we "shouldn't"; I agree with him on the points pertaining to property rights and their difficulty in being stripped, though. It's a classic is/should argument. We don't, therefore we shouldn't.
Just because you invest, your investment should be backed by the US government? What ever happened to making a bad investment? People shit the bed all the time.
But I'm not making a "should" argument either. My issue is the mixing of the two. Just make your point!
War propaganda is powerful stuff.
"With regard to war, the purpose of propaganda is to make a particular group of people forget that another group is human. By focusing on a few, simple target ideas that reinforce the notion that another group of people are harmful and inhumane, propaganda is able to unite people in an unrealistic mindset.
[...] Contrary to what one might believe, however, propaganda is often more effective on the educated, rather than the uneducated population. This is mainly due to the fact that educated people tend to read more often, exposing them to more of the media that is pushing the propaganda. On another level, educated people frequently have jobs in academia, management, and media, which in some form make them agents of the propaganda system."
https://web.stanford.edu/class/e297a/War%20Propaganda%20Past%20Present%20and%20Future.doc
Similarly, the educated are more prone to cognitive dissonance than the uneducated. This may be perhaps because much of education consists of symbol manipulation.
> And should legislation not be drafted that would ensure that it is not bondholders who have the first claim on Russian assets overseas?
Adam in the next paragraph asks if we should be /making new laws/, which would thus provide a legal ability to claim these funds. One of the fun thing about laws is that they can be changed.
"You admit as much by declining to name any law this would be possible under," I cannot reconcile your first comment with this present one.
I certainly agree with your new view, laws can be changed and moreover I think the situation exists above the framework of even international law and instead within the framework of sovereign diplomacy and executive action.
You observations are similar to the economic tragedy that took place after WWI, that you highlight so well in The Deluge.
The amount of hypocrisy on display here is enough to make anybody puke: all of these "vaunted investors" have no problem taking profits from investments in Saudi Arabia which has been occupying and bombing Yemen for many years, and just recently beheaded 81 people in one day.
https://inews.co.uk/news/world/saudi-arabia-executions-how-many-people-executed-death-penalty-laws-explained-1521100
Careful, there is only one true evil. Any other discussions may be labeled whataboutism, regardless of their merit.
It makes perfect sense that the bondholders, which have a documented, negotiated right to repayment with well-developed international and common law precedents to draw upon should have such recourse as they can muster. These rights have developed over the past 150 years, mediated to some extent, by the IMF, and are essential to international finance upon which many sovereign debtors rely for many purposes. While there has been a lot of bad fallout from time to time from the international financial system and while a victim such as Ukraine certainly should have a moral right to reparations (good luck), (a) it is important to maintain the international financial system upon which both debtors and creditors rely for huge amounts and (b) it is difficult to see how a generalized moral claim could be executed in real life. Let's hope that some means is found to coerce the Russians to pay for the damage they've done (I am not optimistic), but let's also not indulge in pipe dreams about that or overturn an important part of the international financial system.
these “rights” are based on private law and the state supports this by allowing cases about claims to be adjudicated under their jurisdiction (U.K. and NY laws). https://press.princeton.edu/books/hardcover/9780691178974/the-code-of-capital
Another example how private investors try to protect their claims even against the devil. Maybe you should drink a cup of tea with Katharina Pistor and inform us about your findings against our current economic system.
a slightly different point: why is there a presumption of "full" legal standing when you buy debt at 47cents on the dollar. 47 cents is an "impaired" price. Can u buy a broken I-Phone from a scrap yard and then sue Apple when the glass scratches your cheek? No! Heck, the average sheepizen can't even get past arbitration to a real judge. You bought a "broken" item. Yet, Eliott buys debt at 20cents and claims to be made whole! The privilege of capital. Pistor terrritory indeed.
This is both surreally nightmarish and totally unsurprising...
Of course this would be the situation. We have to protect the rich over everyone.
I don't disagree from a moral perspective and I don't think laws of the kind you hint at are incorrect for the circumstance, but I also am not sure that all sovereign bonds can be said to be literally funding the invasion here. The Russian State also pays out billions in pensions that keep impoverished people from starvation, as well as operating facilities for the care of social orphans, a horrific phenomena. Both of these issues reflect poorly on Russian Society writ large that the state has to adopt these roles, but this is a chicken and egg situation, in that the state actively weakens any kind of social capital from developing in Russia and has done so perniciously for the last century.
My point is that the moral calculus of who is culpable for funding Russian aggression is kind of muddy - do investors who provide Russia with tech imports that are used to develop weapons platforms bear more responsibility than bond holders? Hard to say.
Seizing oligarch yachts and villas similarly seems like a rather blinkered approach without redistribution mechanisms to aid Ukrainians suffering right now, and to the extent those are being developed, they should be enhanced.
Does debt covenant law allow for direct "substitution of assets" in egregious circumstances? I don't think this has ever been broached. It's more possible the west countries issue legislation that confiscates from west subjects Russian investment proceeds, that channel, rather than direct sub of assets within the debt itself.
Are we supposed to feign surprise that propertarians are moral monsters?