No matter which side of the fence you are sitting on regarding the Ukraine, one thing appears to be certain: Russia is headed for default. European creditors are going to get hit the worst.

Holders of Russian government dollar bonds with coupons due on Wednesday have not received confirmation of payment as of close of business in London, according to Reuters, raising fears that the Russian default – the first since 1998 – may be imminent (once the 30 day grace period expires).

At issue are two dollar-denominated government bonds which have $117 million in interest due today. Failure to pay – or attempting to pay in rubles instead of dollars – would potentially place Russia in default by its creditors. As discussed last night, the bonds have a 30-day grace period, so creditors can’t officially declare default until April 15.

So far, it seems that the Bank of Canada’s eagerness to raise interest rates has actually sparked the opposite of what was intended.

Canada’s average home price rose more than 20 per cent from the year before in February to $816,720, according to data from the Canadian Real Estate Association.

“Combined with higher interest rates and higher prices, we could be at a turning point where price growth begins to slow down and inventories finally begin to recover after seven years of declines,” Cathcart said.

Inventories can also “recover” due to something else: debtor defaults and foreclosure sales. It probably won’t take long at this point.

Financial markets seem more than a little concerned about the impact of using trade sanctions as the main tool to end the war in the Ukraine.

The London Metal Exchange (LME) cancelled nickel trading on Tuesday after an unprecedented 250% price spike triggered by Western sanctions against Russia.

Prices for the metal, mainly used in stainless steel, soared to a record above $100,000 a tonne amid a vicious short squeeze — the largest-ever on the LME.

It looks like those sparky cars are set to get a lot more expensive going forward:

Russia not only is responsible for about 10% of the world’s production, but Moscow-based Norilsk Nickel (MCX: GMKN) is the biggest provider of battery- grade nickel at 15% to 20% of global supply.

Rising prices due to regulatory edicts, Covid whiplash, green energy boondoggles, and now, war in the Ukraine. Economic dislocations are likely to get worse in the coming months, not better, if this analysis by Monetary Metals is correct. The main takeaway: don’t expect all prices to simply rise in tandem with each other either. This crisis is going to throw a lot of curve balls our way.

And this leads to a phenomenon that would be curious if it were a simple case of money printing. Prices are, at once, both lower and higher. Growers of chickens are getting less per bird, while consumers are paying more. Canadian timber growers are getting paid less, while American home builders are paying more. Russia is getting paid less for its oil (and selling less volume), while freezing Europeans are paying more.

This is what economic discoordination looks like. Wider spreads, with both producers and consumers kept apart by a growing gulf.

If the Bank of Canada insists on doing what these authors insist it will, the result could be a lot worse than rising prices.

Money growth has slowed from its peak a year ago but is still robust. And with pandemic uncertainty declining, this big pool of money is now beginning to move. Over the last few decades, the velocity of money’s circulation — the rate at which a given stock of money moves through the economy — has gradually but steadily trended downward, in large part because low global interest rates have reduced the opportunity cost of holding more liquid assets. Then, during the pandemic, the demand for liquid assets soared and velocity plummeted as people willingly built up their bank account balances.

Are we now facing a situation like that of Russian savers at the collapse of the Soviet Union, when supposedly huge Ruble savings accounts could not buy a fraction of what consumers were led to believe they could?

The “miracle” of zero percent interest rates is actually pummeling the capital structure of the economy into dust. A brief period of rising rates will not undo any of the damage but actually compound it. Buckle up.

What’s surprising about the current economic climate is how little it takes in terms of an increase in interest rates to drive the marginal borrower out of the housing market. Once the defaults begin and protests over mass unemployment take hold, we will long for the days of the kind of peaceful mass gathering we saw over the past three weeks in Ottawa.

But mortgage rates have been rising since August, reaching 3.92% last week, the highest since May 2019. With borrowing more expensive, applications to refinance mortgages have fallen about 45% in the last six months, according to the Mortgage Bankers Association.

Some lenders have already begun to cut back. Mortgage lender Homepoint Capital laid off nearly 10% of its workforce. Better.com, an online mortgage lender, fired around 900 workers in December during an infamous video conference call.