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I love the memory failure of American investors where they always seem to forget about prior bubble bursts and bad behaviors by government. Like we are forgetting about Russia’s debt default and devaluation of 1998.

(Bloomberg) — The popularity of Russian bonds among foreign investors might seem to make them vulnerable if U.S. sanctions force a mass exodus. For the besieged nation’s debt chief, it’s Russia’s best insurance against any future penalties.

“Perhaps if our market were more isolated, the likelihood of sanctions on government debt would have been higher,” Konstantin Vyshkovsky, the head of the Finance Ministry’s debt department, said in an interview. “The latest events confirm it was correct to choose a plan several years ago to integrate the Russian market into the international one.”

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For now, it’s a view largely shared by the U.S.

The Treasury Department has recommended not pursuing the so-called nuclear option of targeting sovereign securities because that would be too damaging to U.S. investors. Foreigners owned a record 34 percent of Russia’s outstanding ruble debt before a rout sent the bonds to their worst week in more than a year. Investors offloaded long positions on concern that the harshest U.S. sanctions to date leave all assets vulnerable.

The U.S. extended penalties on April 6 to include swathes of oligarchs and firms connected to the Russian state, barring investors from holding securities of such major public companies as United Co. Rusal. BlackRock Inc., Stone Harbor Investment Partners and JPMorgan Chase & Co. are the three biggest holders of ruble debt with investments totaling about $4.9 billion, according to data compiled by Bloomberg.

A veteran Russian strategist warns against buying Russian stocks are the selloff.

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And the Russian Ruble is … rumbling?[1]

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Why? Well, it isn’t the first time that Russia...

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