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.
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.
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
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
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.
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?