As the west piles sanctions upon sanctions seeking to crush the Russian economy, moments ago Reuters reported that Russia has made sure that at least those foreigners who have invested in Russian capital markets will have to stay for the ride.
According to Reuters, the Russian central bank – which the US and EU decided will be sanctioned and as a result all transactions will be banned – has ordered market players to reject foreign clients’ bids to sell Russian securities from 0400 GMT on Monday, according to a central bank document seen by Reuters.
Expect more retaliatory steps by Russia, including the weaponization of its energy exports as the tit-for-tat escalates to an unprecedented degree. And while Russia’s actions may be limited in scope in terms of how much damage they can inflict on the west, former NY Fed staffer Zoltan Pozsar has warned that even without direct action from Russia the markets may be facing an unprecedented crisis which approaches the Lehman weekend in scope, or as Bloomberg’s Nikos Chrysoloras puts it “We seem to be tailspinning into chaos. I have covered crises before, but nothing comes even close.”