Something Just SNAPPED in Russia… Russians Are in FULL PANIC Mode

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Become a Member Today and Unlock EXCLUSIVE Videos: https://www.youtube.com/channel/UCKfak8fBm_Lhy4eX9UKxEpA/join  Russia has officially released its draft 2027 federal budget, cementing an economy built entirely around prolonged conflict. With defense allocations soaring to a record $205 billion and the federal deficit widening past $65 billion, Moscow plans to finance its war through aggressive corporate taxes and $90 billion in sovereign bond sales. But with OFZ auctions failing, bond yields hitting 16.8%, and over 50 corporate defaults looming, the Kremlin's financial strategy is running into a wall. Discover how military overspending, social cuts, and market panic are pushing Russia toward domestic financial exhaustion.  ⏱️ CHAPTERS: 00:00 - The 2027 Draft Federal Budget: $65B Deficit & $205B Defense Target 02:15 - Tax Hikes & Social Austerity: Windfall Levies to Child Allowance Cuts 04:58 - Sovereign Debt Crisis: Failed OFZ Auctions & The $90B Borrowing Plan 09:04 - Skyrocketing OFZ Yields (16.8%) & RGBI Sovereign Bond Index Collapse 11:33 - Corporate Default Wave: 17-Year Highs & Samolet Technical Default 15:39 - The Alaska Summit Turning Point: Geopolitics of Endless War 17:38 - Total Victory vs. Endless War: Domestic Market Breaking Points  Support us directly as we bring you independent, up-to-date reporting on military news and global conflicts by clicking here: https://www.youtube.com/@TheMilitaryShow/join  #militarystrategy #militarydevelopments #militaryanalysis #themilitaryshow  SOURCES: https://pastes.io/yfvtNQ8g

Transcript

00:01Russia has just released its draft budget. A year of anticipated spending has been outlined for the

00:07Russian people and it's not looking good. War, war and yet more war is on Putin's agenda as he

00:14has made clear that nothing other than Ukraine matters to him. Anybody could guess that from

00:20Putin's actions over the last few years but what Putin and his Kremlin cronies have just done

00:25is show the world what stupid looks like. Putin might think his budget serves his purpose but it

00:31has led to panic stations being manned in Russia's domestic markets. Something is going to snap as

00:37Putin steers his country yet closer toward financial oblivion. But let's look at the situation

00:43right now. Mere months away from 2027 Russia is heading into a new year with a 65 billion dollar

00:49black hole in the federal budget. The Russian government attempted to allay fears related to

00:54that deficit with the late September unveiling of its budget draft for 2027. But the draft did the

01:01opposite. And the reason why is that it has delivered figures telling Russians the deficit isn't going

01:06anywhere with anything positive that the Kremlin tries to claim simply not being believable to the

01:12millions of Russians attempting to survive through Putin's Ukraine obsession. Bloomberg has the details

01:19in its October 1st report on the draft budget. We'll dig into all of that in a moment. First,

01:24everything you see here is researched, verified and produced by real people. If you value that,

01:30subscribe, comment below and consider becoming a member for access to exclusive content.

01:36Chief among the declarations made is that Russia intends to maintain military spending at the insane

01:42and record levels that we're seeing right now. To make that happen, the Kremlin is going to suck up

01:48every available resource to ensure Putin's war isn't forced to end. Higher taxes are coming for

01:54the Russian people. Fees are going to be implemented and every possible source of revenue exploited to

02:00keep the war going. In 2027, the Kremlin says anticipated war spending will reach 205 billion dollars for the

02:07year, which is over 25% more than the original target. A slight decline to about 195 billion dollars in

02:14spending will come in 2028, though that is hardly a salve for the stinging bank accounts of Russian

02:20people and businesses. Taxes galore are going to help the Kremlin fund all of this. Bloomberg says

02:26that gold miners now face a 20% windfall tax. Those in the fertilizer and mining industries are also

02:33going to be forced to watch as the Kremlin takes up to 30% of what it deems excess profits.

02:39Along with the

02:40new taxes will come spending cuts, specifically focused on social programs. The New York Times

02:45reports that Russia is going to cut expenditure on social programs like child and family allowances by

02:517%. That seems like a really smart move when Russia is trying to actively encourage its people

02:57to have more children after the first quarter of 2026, when Russia's birth rate hits a two-century

03:03low. Taxes are also going to be raised on bank deposit interest, asset sales and dividends,

03:09following Russia's earlier decisions to place levies on small businesses and raise value-added tax.

03:15If the Russian people are the stone, Putin is trying to squeeze every last bit of blood out of them.

03:21That alone would be reason enough to panic, especially given that Russia wants to do all of this

03:26while outwardly claiming that the budget deficit will remain about where it is in 2027.

03:32But it gets so, so much worse. What Russia is trying to tell its people is that it expects its

03:38budget deficit situation to look roughly the same in 2027 as it does in 2026. In other words,

03:442027 will be the year that the Kremlin stops the rot, with the years to come reversing the budget

03:49situation. The problem is simple. Nobody believes a word that the Kremlin is saying.

03:56Let's rewind to the draft budget for 2026. According to United24 Media, Russia claimed

04:01that the deficit for 2026 would be $42 billion. However, the deficit is now $23 billion more than

04:09that projection, and we still have just under three months in which it can climb higher.

04:13In other words, Russians have already seen Kremlin projections fall apart spectacularly.

04:19So when the Kremlin claims that the budget deficit won't move at all in 2027,

04:24the only response anybody can have is, pull the other one. After all,

04:29the war spending is only going to get higher. Ukraine isn't going to stop its revenue-sapping

04:34deep strikes. How can the Russian government project no movement in the deficit during 2027,

04:39when everything that has caused the deficit to spiral in the first place is still in play?

04:44It doesn't make sense.

04:46The Russian people can sense it, and it's here that the real panic sets in.

04:51Russia's domestic markets are taking note of everything that the Kremlin is claiming in its

04:562027 draft budget and are reacting accordingly. Putin's problem is that an appropriate reaction

05:02to his insane spending plans is far from what he needs right now.

05:06Let's talk about Russian Federal Loan Bonds, or OFZs.

05:10On September 30th, the Moscow Times reported that the Russian Finance Ministry

05:15had attempted to hold an auction to sell OFZs, which are essentially government bonds.

05:21The auction failed completely. No bids came in at what the Kremlin considers to be acceptable prices,

05:26so no OFZs were sold. This wasn't the first time that something like this happened. Back in July,

05:32Russia was forced to suspend OFZ auctions as a combination of high borrowing costs and weakening

05:38investor demand resulted in too few being sold. Specifically, Russia had a really bad month

05:44of attempted OFZ sales. A June 24th auction was cancelled due to lack of demand. On July 1st,

05:51only $120 million of a planned $1.3 billion of OFZs were sold. July 8th saw another auction get

05:59cancelled, with a suspension following a couple of weeks later. Now the big question, why does any

06:04of this matter? OFZs are everything when it comes to Russia's plans for 2027 to maintain the current

06:10budget deficit ahead of bringing it back down in the subsequent years. For the last several years,

06:16Russia has been using OFZs to plug the ever-growing holes forming in the federal budget that Putin's

06:22Ukraine invasion has created. The idea is simple. The Russian government puts the bonds up for auction,

06:28investors buy them, and the Kremlin gets a chunk of cash it can plough back into the budget.

06:34We saw that during the third quarter of 2026, during which Russia's finance ministry was able

06:40to raise $15.29 billion through bond sales, even with all of its failures. It's here that we start

06:46to see how the domestic markets are reacting to the Kremlin's massive thirst for war money.

06:52According to the draft budget, Russia's finance ministry wants to sell around $90 billion worth

06:57of bonds throughout the year. That's $27 billion more than the ministry anticipated selling for 2027

07:04in its 2026 budget. Again, we see this pattern of Russia's projections being completely unaligned

07:10with the reality that follows. And if you've followed everything that we've told you so far,

07:15you can already see the problem emerging. Russia's grand plan to keep the budget deficit where it is

07:20for 2027 is to sell more OFZs than it ever has before, and more than it anticipated selling a year

07:26ago.

07:26However, there is already a clear decline in the demand for these OFZs. The various auction

07:32cancellations and suspensions that we've seen over the past few months shows us that companies,

07:38banks and investors are wary of ploughing billions into bonds right now. They'll be even warier when

07:442027 rolls around. The new taxes and fees that the 2027 draft budget proposes will ensure that.

07:51So, the Kremlin's big plan for 2027 is to rely on a financial vehicle

07:55that is already faltering in 2026. Presumably, there are actual wizards in the Russian finance

08:01ministry who are somehow going to magically create the demand for OFZs that is already

08:07petering out to nothingness. Somehow, the problem gets worse. Whether Russia gets what it wants with

08:13its OFZs or not, the Kremlin is left in a losing situation. If OFZ sales aren't made, then Russia's

08:20government doesn't get the short-term cash it needs to plug budget gaps. The deficit rises faster,

08:27all projections are proven completely unrealistic, and yet more panic enters the domestic markets.

08:33But let's say Russia gets what it wants. $90 billion of OFZs sell in 2027, and the deficit stays

08:39as it is right now. Even that is a bad situation for Russia, and we're about to explain why. But

08:46before

08:47you the full picture, not just the headlines. Hit subscribe and enable notifications if you want

08:51to be among the first to see what we have coming next. An OFZ is a government bond. All over

08:57the

08:57world, governments use these types of bonds to essentially borrow money from investors. In other

09:02words, each OFZ sold amounts to a debt that the Russian government has to repay. That debt is paid

09:08to investors via the yields offered on these bonds. So an investor puts down a big chunk of cash,

09:14then benefits over the long term from the yields. Another problem emerges for Russia. The yields on

09:20OFZs that Russia wants to sell in 2027 are huge. A short-term OFZ nets an investor 14.5%, while

09:27a

09:27long-term OFZ delivers a yield of 15.5%, which is the highest seen in over a year. The numbers

09:33are

09:33variable too. For example, long-term OFZs were yielding up to 16.8% per year on September 30th,

09:40which is a record itself. And even when the yields aren't hitting such dizzying heights,

09:45Trading Economics points out that OFZs have been yielding more than 14% consistently since October

09:502025. What we have from Russia is a plan for 2027, in which it borrows much more money than it

09:56did in

09:562026 at record-breaking rates. That's somehow supposed to solve the budget deficit issue, even

10:01though Russia's government is putting itself on the hook for enormous amounts of debt. Then we come to

10:07the RGBI Government Bond Price Index. RGBI is the benchmark used to measure the performance of

10:13Russia's sovereign debt market. The index includes all OFZs with a maturity of over one year, and it's

10:19calculated in real time. In the immediate aftermath of the Kremlin's draft budget announcement, the RGBI

10:25fell from 119 to about 110, which is its lowest point in 2026. A drop of one point was recorded

10:32on

10:32September 28th, which was directly linked to Russia's government saying it intends to borrow an additional

10:37$27 billion. A decline in the RGBI means that those who currently hold an OFZ have to take a loss.

10:44At the same time, anybody who might be considering purchasing an OFZ will want higher compensation for

10:51the risk they're taking, meaning higher yields. Yet more reason to panic. When such instability reigns,

10:57how can Russia expect investors to spend more on OFZs? Bear in mind that all of this budget news is

11:03coming against the backdrop of war spending that once again shows that Kremlin projections can't be

11:09trusted. We've already seen whatever projections existed for bond sales and the budget deficit

11:14fall apart. Now we're seeing the same with war spending. According to RBC Ukraine, Russia has spent 40%

11:20more on its military than it planned to spend in 2026. This amounts to $200 billion spent this year,

11:28which is 380% higher than defense spending the year before Putin launched his invasion.

11:33The Russian people now see one very important thing. Whatever money the Kremlin gets its dirty

11:38mitts on is going to be spent on Ukraine ahead of anything else. We'll be coming back to that point

11:43in a few minutes. As the Kremlin attempts to rely on government-issued bonds to prop up Putin's war

11:48spending. Russian companies that issue bonds are having a torrid time. In an October 6th report,

11:54the Russian newspaper Izvestia revealed that over 50 bond issuers could default on those bonds in

11:592026, per experts that the outlet surveyed. If this happens, we'd be seeing a 17-year high in bond

12:06defaults. As for why this is happening, Izvestia points to Russia's prolonged high interest rates,

12:12which are forcing the bond issuers to pay higher yields. It's almost a precursor to a problem that could

12:17soon hit the Russian government, only it's playing out in the Russian business sector.

12:22Already in 2026, 20 Russian companies have defaulted on their bonds, compared to 24 in 2025,

12:29Euromiden press reports. This year has also seen Russian companies miss $490 million in payments,

12:35compared to $410 million last year. Dmitry Orokov, who is the managing director of Russia's

12:41national credit rating agency, says that 20 companies may be an underestimate. However,

12:46taking into account repeated non-payments on several issues of the same borrower,

12:51the number of unique issuers is a more correct indicator. At least 30 companies have made delays

12:57since the beginning of the year, Orokov declares. Smaller companies that issue bonds at higher yields

13:02are more at risk, for the obvious reason that they have to pay out larger sums of money on their

13:06bonds.

13:07But Izvestia notes that some bigger companies have also been affected. For example, Samolet,

13:14which is a property development firm, experienced a technical default on September 28th,

13:19as it only transferred about 25% of its bonds values to their owners.

13:24Russia's high interest rates are to blame for these defaults.

13:27The Russian central bank is doing all it can to bring rates down, having successfully pulled

13:32them down from a May 2025 high of 21% to 14% in July 2026. But the bank can't

13:38just cut the rates

13:39without forethought. That's how you get rampant inflation. And with the annual inflation already

13:44hitting 7.1% in October, the central bank wants to avoid that at all costs. After all, that rate

13:51is

13:51above the upper limit of 7% that the Bank of Russia projected for 2026. Yet another projection has been

13:57proven to be inaccurate. Companies defaulting on their bonds presents another problem for the Russian

14:03economy. If this sort of thing happens too often, and we'd say record-breaking levels are too often,

14:10then banks start introducing tighter credit conditions. Those conditions lead to lower consumer

14:15spending, which snowballs into slower economic growth. That's not ideal for Russia. Economic growth

14:21for 2026 is forecast to be 0.8% by the World Bank, followed by 0.7% in 2027.

14:28That is essentially

14:29stagnation. And it all comes back around to the bonds that the government wants to rely on to fund

14:34Putin's war. Worsening economic conditions inside Russia will translate to even lower demand for those

14:40bonds, meaning less war money pouring into the Kremlin coffers. If the Kremlin is making less money,

14:46then the 2027 draft budget will end up wildly inaccurate, just as Russia's domestic market is

14:52anticipating. Remind us again how Russia thinks it's going to stabilise the budget deficit, Putin.

14:57Is it any wonder that we're seeing so much panic inside Russia's financial circles right now?

15:03The Kremlin has delivered a draft budget that not only promises tax hikes and cuts all over the

15:07country, but serves up numbers that are unrealistic at best and outright ludicrous at worst.

15:13The one plan the Kremlin has to hit those numbers is the sale of government bonds that fewer and fewer

15:19people want. Make it make sense. All of this is happening against the backdrop of the massive war

15:25spending that we mentioned earlier. That $200 billion Russia will spend in 2026 is anticipated

15:32to increase year by year, as the 2027 draft budget tells us. For millions of Russians, the only hope

15:38there is for their country to pull back from the brink of economic oblivion is that Putin wakes up and

15:44realises that his obsession with Ukraine is crippling his country. That simply isn't going to happen.

15:48And we can head all the way to Alaska to understand why.

15:53Back in mid-August 2025, Putin clambered onto a plane and headed to Alaska for a fateful meeting

15:58with US President Donald Trump. At the time, commentators believed this meeting meant good

16:04things for Russia, especially when it came to melting the ice between Russia and the US.

16:09Pun fully intended. That interpretation of events has been shattered by an October 7th report in

16:15Bloomberg, which reveals that the Alaska meeting may have served as the point of no return for Putin.

16:20Russia's president reportedly returned from his meeting with Trump with the impression that the

16:26peace talks would not produce an acceptable deal for Russia. In other words, Putin wouldn't be able

16:32to get the US to agree to pressure Ukraine into ceding vast swathes of its territory. By January 2026,

16:39the Kremlin seemed to have come to the conclusion that any sort of agreement favouring Russia was out of

16:44reach. Not coincidentally, it was around this time that we saw the ramping up of military spending

16:50that has led to a record-breaking 2026, along with more to come in 2027 and beyond. That sums up

16:57what

16:57we're really seeing in the 2027 draft budget. Through this budget, the Russian government is telling its

17:02people that the entire economy is going to be geared toward a long-term war. Not that five years of

17:08fighting in Ukraine isn't long-term, but Russia hasn't been treating it that way, as it still uses the

17:13Special Military Operation moniker. But now Russia is acknowledging what the Ukraine invasion has

17:18become. Worse yet, especially for those in Europe, the draft 2027 budget could also be seen as the

17:24Kremlin attempting to prepare for a new war beyond Ukraine. The point here is that Putin is now

17:30unreachable. As the Atlantic Council puts it, Russia's leader now feels he has only two options,

17:35total victory or endless war. He is a long way from achieving the former in Ukraine,

17:40so Russia is preparing for the latter. At least it's trying, and that's the real source of the panic.

17:46The 2027 draft budget has sent the clearest signal to Russian investors, companies and everyday people

17:51that their leader is ready to sacrifice everything about the Russian way of life to winning Ukraine.

17:57Putin clearly has no interest in a future where Russia coexists with an independent Ukraine.

18:02The panic in the domestic markets may be the only thing that forces him to stop,

18:06as there can only be so much blood to extract from the Russian stone. Eventually, something has to

18:12give. And we're seeing the cracks in the Kremlin's plans forming before those plans have been put in

18:17place, so the giving is going to happen sooner than Putin anticipates. Of course, Putin would much

18:22prefer all of this to be over as quickly as possible, which Russia could achieve by winning in Ukraine.

18:27The problem is that winning is something that Russia hasn't been doing much of recently.

18:32Nowhere is that clearer than in Donetsk, which Russia needs if it's to claim the Donbas.

18:37Ukraine's operation Vivaldi has ruined Russia over three phases, with a fourth to come,

18:42putting the Kremlin further away from victory than it was at the start of the year.

18:46You can find out all about that operation by watching our video. But before you do, if you enjoyed

18:51this video, consider subscribing and let us know your thoughts below. You can also become a channel

18:57member for access to exclusive content we don't publish publicly. And thank you for watching.

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