The man who made a billion plus dollars in a day when he bet against the UK pound is making waves once again. Anybody who knows how global finance capital markets’ psychology works would definitely pay attention to this man. This is one person who knows a thing or two about the damage fear can inflict on global asset valuations. I am, of course, talking about no one other than George Soros. Soros has recently made public his concerns about a potential Russian default. He is concerned about the euro because a Russian default might have a very destabilizing effect on global financial markets.

Plausible yet misplaced fears

Thanks to the collapse of global oil prices due to Saudi Arabia’s high risk gambit attempt to make North American shale unprofitable, Russia’s fiscal health is beginning to look more and more shaky. Thanks to an existing raft of EU financial sanctions, Russia’s ruble didn’t have much room to maneuver and quickly shed a large chunk of its value before bouncing back somewhat. Still, it looks like Russia is in for a rough 2015 due to lower oil and gas prices. Energy, after all, is Russia’s predominant export.

Soros’ analysis simply points to history. Russia has defaulted in the past and, assuming oil prices continue to stay stuck south of $50 per barrel, it isn’t very hard to imagine Russia having a tough time keeping its economy afloat. This is all plausible, if that was all there is to the Russian story.

As I have mentioned in an earlier post, Russia is actually stronger than it looks. With comparatively low debt, great infrastructure, and sizable currency reserves, Russia, at a fundamental level, appears to have what it takes to weather low oil prices, fiscal shocks, and sanctions. The key, of course, is the duration of Russia’s woes. As smart and prescient as George Soros, if there is anything to learn from history, it is this: never count Russia out. In finances as in war, counting Russia out might pack quite a bit of nasty surprises. Just ask Napoleon.

Jacob Maslow is a native New Yorker with five children. He left his payroll manager position after finding that his true passion was in writing, and has never looked back.