BTW People, in the past few minutes Russia has been declared as...

BTW People, in the past few minutes Russia has been declared as in default in debt. I have been thinking the implications of this over.

When a sovereign debt holder defaults, this has an immediate effect on that countries sovereign debt rating. I believe it immediately sends the debt of that country to junk status (or below, if dictated by the ratings agency). Big deal, right?

Yes, right, a very big deal. Russia is a swing producer for OPEC, which has a very large sale in the price of oil. They regulate production to meet demand but maximise price for their producers. They effectively function as the market artificial price determinate mechanism.

With Russia now in default, this becomes an issue. All, if not most countries purchase oil based on an IOU. That IOU is ranked against the Sovereign Credit rating of both the buyer and the seller. In this case, Russia being the seller. If Russia is in default with Junk Status, most, if not all (western at least) countries would now be unable (yes, actually unable) to purchase Russian Oil, Gas, and materials such as Iron, Iron Ore, Coal etc at any price. Demand falls in Russia, prices rise for all materials Russia is a major producer of internationally.

The only way to circumvent this is for countries which do not play by the rules, such as China and India to continue purchasing said Russian Gas, Iron, Iron Ore etc at prices dictated in Russia and reducing other foreign imports, freeing them up for countries which can on longer buy them. This may, or may not happen - but it will not be immediate and the effects of the default will be felt today.

So while you cannot buy AVZ today, there are other options out there to keep your hands and minds busy. Make some money, come back and buy the big A-V-Z in weeks to come.