The latest came from Sergei Glazyev, an advisor to Russian President Vladamir Putin, who said on Tuesday that the Russian government would consider selling its stockpile of U.S. government debt if America and the EU went forward with threatened trade sanctions, according to the Russian news service RIA Novosti.
"We hold a decent amount of treasury bonds -- more than $200 billion -- and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner," he said. "We will encourage everybody to dump U.S. Treasury bonds, get rid of dollars as an unreliable currency, and leave the U.S. market."
The saber rattling of great powers is often made up of empty threats, but this one is particularly laughable. Russia's $200 billion in U.S. government debt is part of its foreign exchange reserves, a fund built up by the Russian government to help protect it against financial crises, stabilize its own currency, and to enable banks and other businesses to function during financially stressful times.
In other words, Russian investment in U.S. government debt isn't some kind of altrusitic action to help their buddies over in North America pay their bills. It's a fund that the Russian government has built to help its economy function in a world that trades primarily with U.S. dollars.
That said, let's assume the Russian government doesn't care about having access to dollar-denominated assets to lubricate the gears of its own economy and decides to dump that $200 billion on the market. What would happen?:
If the situation in the Ukraine were to devolve into a full-scale trade war, the Fed would have the motive and ability to increase those bond purchases. And this is even before you take into account the fact that investors of all stripes would begin flocking to U.S. treasury debt at the first sign of a crisis.
S&P slashed ratings on thousands of municipal bonds this week in a largely symbolic move. No major state and local governments were included, but that doesn't mean they're all in the clear.
By Cyrus Sanati, contributor
FORTUNE -- The S&P downgrade machine cut through the U.S. municipal bond market earlier this week, stripping thousands of securities of their coveted triple-A credit rating. While on the surface the pruning of the muni space MOREAug 11, 2011 10:30 AM ET
The noises coming from Washington's largest creditor sound threatening. But there is no chance -- none -- that China will walk away from the U.S.
By Bill Powell, editor-at-large
FORTUNE -- "The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone..." -- China's state-owned Xinhua News Agency.
It's been MOREAug 8, 2011 10:07 AM ET
S&P has a point: We need to cut more spending. Debunking the Keynesian argument that the forthcoming spending cuts will be a job and growth killer.
FORTUNE -- Congress may have narrowly escaped a debt debacle last week, but it couldn't agree on enough cuts to satisfy Standard & Poor's, which downgraded U.S. sovereign debt after the deal's $2.1 trillion in proposed cuts came in below the $4 trillion the rating MOREShawn Tully, senior editor-at-large - Aug 8, 2011 5:00 AM ET
Wall Street believes that its cool response and analytical reasoning will help alleviate any major panic on Monday. But panic is at its core irrational, and trying to fight it can be futile.
By Cyrus Sanati, contributor
FORTUNE -- Wall Street is jumping to the defense of the United States government following Standard & Poor's decision Friday night to downgrade its sovereign debt. The financial community is circling the wagons in an MOREAug 7, 2011 9:29 AM ET
A deal was reached, but it didn't go far enough to satisfy S&P's original requirements. A debt downgrade still looks likely, but does it really matter?
FORTUNE -- The U.S. might have avoided a debt default and a government shutdown, but the deal Congress reached to raise the nation's $14.3 trillion debt limit does little to improve its long-term fiscal position. After weeks of political wrangling that culminated in a rushed MORENin-Hai Tseng, Writer - Aug 2, 2011 11:13 AM ET
Do central bankers have it in for the world's most widely cited Treasury bond bear?
You might well ask after reading the latest report from the rates strategists at Bank of America Merrill Lynch. They contend that global central bankers are about to spring off the sidelines to buy Treasury debt, in what stands to be the latest setback for the Pimco bond fund manager's giant bet against U.S. government bonds.
Since MOREColin Barr - May 20, 2011 1:28 PM ET
The coming bond market bloodbath won't necessarily look all that bloody.
So says the shy and reclusive Bill Gross, who is out Tuesday with his latest monthly investment outlook. Gross, who runs the world's biggest bond fund at Pimco, has been screaming for months that the sky is falling in the government bond market, thanks to an untenable U.S. fiscal position and all the problems that come with it.
But in the MOREColin Barr - May 3, 2011 1:32 PM ET
How does the rating agency decide when to downgrade its outlook for sovereign debt? It turns out that politics does influence the decision.
Nikola Swann knew that he would be thrust into the firestorm raging in Washington D.C. over America's growing debt burden.
Swann is the analyst at Standard & Poor's who monitors the United States for events that could threaten the country's status as a top-tier borrower. From his perch in MOREKatie Benner - Apr 25, 2011 11:07 AM ET
Equities are looking a lot less interesting as an investment than they did when almost no one wanted them, and Treasuries are looking a lot more interesting than they did when everyone wanted them.
Boy, the market has sure been fun for those of us who held onto our stocks (or bought more of them) two years ago, when it looked like the financial world might be coming to an end.
Rather MOREAllan Sloan, senior editor-at-large - Feb 22, 2011 9:53 AM ET
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