Will Russia really care if U.S. actions make it default on its debt?

Washington Post/Layna Mosley/4-7-2022

“Vladimir Putin is less likely to worry about this than the U.S. government might think. Defaulting on debt might be politically damaging, but losing a war would be politically catastrophic, endangering the survival of Putin’s regime. It would be unsurprising if Putin uses his scarce dollars to prosecute the war rather than to pay off bondholders.”

USAGOLD note: However the politics and perception play out, the net effect is still heavy pressure on the global banking system should Russia default – including the possibility of a black swan event. We should not forget that Russia’s debt default was seen as a passing event in 1998 until we discovered that Long Term Capital Management’s highly leveraged, underwater position in Russian bonds could collapse the entire financial system. (Layna Mosely is a professor of politics and international affairs at Princeton University.)