finance
Notes: 42
"Interest"
"Interest" was a term denoting the rate charged on informal loans in early-1990s Russia. The phrase "ten percent a month" reflects typical lending…
Vadim's Scheme: Currency-Exchange Arbitrage Amid a Volatile Ruble
Vadim's proposal to Roman Peskov is a classic example of the currency arbitrage scheme typical of 1994, built on the spread between buying and…
Acceptance, Annuity, Notice of Assignment
A glossary of the financial and legal terms Roman is suddenly cramming — mapped, term by term, onto exactly who owes what to whom in the fund's…
August 17: the day Russia defaulted on its debt
The events of "Black Monday," August 17, 1998, when Russia defaulted on its domestic debt and the ruble collapsed.
Cash: the Term's Etymology and Tax-Evasion Schemes
From a Latin word for a strongbox to the defining tool of Russia's early-1990s shadow economy — why paying "cash in hand" mattered so much to men…
Dividends in the Context of Russia's 1993 Privatization
How the newly minted mechanics of shareholder dividends collided with hyperinflation, cashless enterprises, and a barely-there legal code during…
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is an analytical metric equal to the volume of profit before deducting…
Syndicated Eurobond Tranches: a Reference Guide
A detailed explanation of eurobonds, syndicated placement, and tranches: how the international debt-securities market works, and who takes part in…
"A Grand and a Half in Greenbacks" in 1993: What It Meant
What $1,500 could buy in 1993 Russia, in a year when the ruble lost two-thirds of its value and inflation ran at 840 percent.
The Mechanics of Import Operations in a Transitional Economy
How import trading companies operated in 1993 Russia: the structure of CIF-basis deals, the role of the customs authorities, the flow of money, the…
GKO Treasury Bonds: the financial pyramid Roman pulls Proma out of before the 1998 default
How Russia's GKO short-term treasury bonds turned into a financial pyramid scheme and triggered the 1998 default.
Freely Convertible Currency (SKV) in Russia in the Early 1990s
Freely convertible currency (SKV, from the Russian "svobodno konvertiruyemaya valyuta") is a currency subject to no restrictions on foreign-exchange…
Investment Banking and Marketing in the Context of the 1990s
In the early 1990s, at the dawn of market reforms in Russia, Western financial terms rapidly worked their way into business vocabulary, often used…
Investors, Angels, and Shareholders: a Confusion of Terms in the Age of "Wild Capitalism"
An investor is a person or organization that puts capital into a project in order to earn a return. A business angel is a private investor who not…
MMM and the Era of Financial Pyramids in 1990s Russia
The MMM company was founded in 1989 by three co-founders: brothers Sergei and Vyacheslav Mavrodi, and Olga Melnikova (Vyacheslav's first wife). The…
Cashing Out: the Shadow Business of a Transitional Era
The shadow-economy institution that let 1990s Russian businesses dodge a suffocating tax code by turning non-cash rubles into untraceable cash…
Overnight: the short-term interbank loan Roman is trying to make sense of
How banks borrow and lend cash to each other until the next business day, and why the rate is always the lowest on the market.
Portfolio Investors
Portfolio investment means putting money into securities (stocks, bonds, and other financial instruments), assembled into a portfolio.
European Currencies Before the Euro
In 1993, Europe was a genuine mosaic of national currencies, each with its own history and its own quirks of circulation. The euro was introduced for…
The Rent-Splitting Scheme for Minimizing Tax Burden
A detailed analysis of the scheme for splitting rental payments into three contracts to minimize taxes: a lease agreement with a minimal fee, a…
RKTs Tushino: the Bank of Russia's Settlement and Cash Center in Moscow's Tushino District
A note on RKTs Tushino, the Bank of Russia's settlement and cash center serving the Tushino district of Moscow -- part of the clearing infrastructure…
Russia's Economic Growth After the 1998 Crisis: From Catastrophe to Revival
This note traces the economic processes that followed the August 1998 crisis, when industrialists' dreams of a ruble devaluation to 9-10 rubles per…
The Stipend: History and Development of Student Financial Support
A detailed history of stipend systems in the USSR, Russia, and the world. From medieval traditions to modern student support programs. The Lenin and…
Stolichny Bank Sberezheniy (SBS-Agro): The Story of One of Russia's Largest Banks
The novel's "Smolensky Bank" is a fictionalized nod to the real Stolichny Bank Sberezheniy, better known as SBS-Agro, one of the largest private…
Ten thousand adds up
"Ten thousand adds up" — what that equals in the year 2000
Limited Liability Partnerships (TOO)
In 1993, Russia used the legal business form known as a "limited liability partnership" (TOO), which was later replaced by the more familiar limited…
The 1991 Currency Reform in the USSR
The infamous 1991 "Pavlov reform" that confiscated large banknotes overnight and shattered public trust in the Soviet government — and why the calmer…
The Accepted Payment Order, Explained
An accepted payment order is a document by which a payer instructs a bank to deposit (freeze) a specific sum in a separate account and to settle with…
The Addict's Scheme: the collateral-chain financing pattern that leaves Proma exposed
A financial-literacy explainer drawing the parallel between drug addiction and a debt spiral built on borrowing against assets bought with previous…
The US $100 Bill, Featuring Benjamin Franklin
The history of the American $100 bill bearing Benjamin Franklin's portrait. Its security features, counterfeits, and why Russians in the 1990s…
The Chechen Avizo Fraud: the Biggest Financial Scam of the Early 1990s
An avizo is a banking document notifying of a transaction on an account. A credit avizo means funds are credited to an account; a debit avizo means…
How a fake endorsement voided a promissory note
How a deliberately misspelled promissory-note endorsement let Zhorik stiff suppliers out of payment — and what an endorsement actually is.
A Briefing on Entrepreneurs' Tax Burden in 1993
Why a 1-million-ruble business in 1993 Russia could lose over 70% of its revenue to taxes before a single ruble reached an employee's pocket — and…
The French Franc: History and Currency Notes
The novel mentions a sum of 48 million francs -- at the time the novel is set (April 1996), this was worth roughly $9.3 million, a very substantial…
The Joint-Activity Agreement in 1990s Russia
The joint activity agreement was one of the most flexible, and at the same time most problematic, legal instruments of Russia's economic transition…
Russia's 1993 Currency Reform
The real, chaotic Russian banknote exchange, a strict thirty-dollar limit per person, that hits at almost exactly the moment this chapter takes place.
The Pay Gap: Silicon Valley and Moscow in 1993
Just how absurd the gap really was between a starting Silicon Valley salary and a Moscow one in 1993 — and why $10,000-15,000 a year sounded modest…
The Promissory Note
The financial instrument — revived in Russia in 1991 after a sixty-year absence — that made Zhorik's forgery scheme technically plausible…
The Voucher: History and Significance
A voucher is a document with a stated face value, entitling its holder to goods or services. Its historical forerunners arose in medieval Europe as…
Voucher Auctions in Russia, 1993-1995
The mass-privatization mechanism that let a handful of insiders quietly buy out entire factories while most ordinary citizens, confused or simply…
The Financial Pyramid Schemes of 1990s Russia
A field guide to the real Ponzi schemes flooding 1993 Russia with impossible promised returns — the actual competition Zhorik is panicking about.
Кэшфлоу
Cash flow in 1996 Russia — hyperinflation, barter, and the survival math behind a buzzword