Jul 17, 2026
Hey folks, Mark the economist here: Russia’s ruble, stocks, and government bonds are falling together — and the state has begun financing its war by not paying its bills.
Russia’s financial deterioration is now visible in forward-looking market prices and payment chains, not merely in contested macroeconomic aggregates. This analysis tracks four connected channels: the ruble, the MOEX equity index, OFZ sovereign borrowing, and corporate working-capital stress.
As of mid-July 2026, the MOEX index has fallen to roughly 2,040 — its lowest level since October 2022, down roughly 18% in a month and 28% year over year, after the longest unbroken weekly losing streak in the index’s history. Measured in dollars, the RTS index near 800 puts the market’s dollar value back at mid-2000s levels — two decades of capitalization erased. The ruble has weakened about 8% against the dollar over the past month, to roughly 78.6. In June, the Finance Ministry canceled a scheduled OFZ auction citing market volatility — an unusual break from its weekly rhythm — while pursuing a reported third-quarter issuance program of about ₽1.5 trillion (≈$19 billion). This suggests not a total absence of buyers, but inadequate voluntary demand at the yields, prices, and volumes the state requires, with state banks increasingly absorbing the supply.
The theoretical framework combines Böhm-Bawerk’s and Frank Fetter’s pure time-preference theory of interest with Wicksell’s natural-rate analysis, capitalization theory, financial repression, and working-capital finance. When banks are pressed by sovereign debt, and firms conserve cash by stretching payables and delaying wages, no new real capital is created: purchasing power is reallocated from depositors, suppliers, employees, and private borrowers to the state and distressed enterprises. The evidence is accumulating. CBonds recorded 157 corporate credit events (defaults, technical defaults, and restructurings) in Q1 2026 versus 54 a year earlier. Official wage arrears reached ₽2.88 billion at end-April — nearly double year over year — with arrears traced to late state-contract payments up 62-fold. State companies are reportedly delaying supplier payments by one to three months, and analysts estimate roughly a quarter of the corporate bond market is at risk of default ahead of a ₽5–6.6 trillion repayment wall this year — all against the backdrop of a first quarterly year-over-year contraction in output since 2022 and corporate profits down by roughly a third.
No single indicator proves imminent collapse. But simultaneous deterioration across the currency, equities, sovereign financing, corporate payments, and bank balance sheets is consistent with severe systemic financial stress and sharply shortened economic time horizons — the mechanism behind this channel’s “Great Depression of Russia” thesis.