Yesterday, Fitch Ratings downgraded Russia’s credit to junk status. With the ruble still in a nose dive the chance of a Russian default on at least some of its debt payments is growing higher.

Fitch downgraded Russia’s long-term foreign currency Issuer Default Rating, or IDR, from “B” to “C,” a classification that shows major concern for Russia’s ability and willingness to service its debt.

On the Fitch scale, AAA denotes the lowest default risk and an “exceptionally strong” capacity for meeting financial commitments. A “C” rating is an indication that a default process has begun or that “payment capacity is irrevocably impaired.”

“The ‘C’ rating reflects Fitch’s view that a sovereign default is imminent,” the agency said, pointing to “developments” that have “further undermined Russia’s willingness to service government debt.”

Ed wrote about that possibility of default earlier this week and the Fitch downgrade just confirms that’s likely unavoidable at this point. Trading in the ruble reopened today but the Russian stock exchange remains closed. There’s every reason to think the economic situation is going to continue to get much worse once it does. And yet, the CIA was saying yesterday that they expect Putin to double down on the invasion.

“I think Putin is angry and frustrated right now. He’s likely to double down and try to grind down the Ukrainian military with no regard for civilian casualties,” Burns testified before the House Intelligence Committee. “His military planning and assumptions were based on a quick, decisive victory.”…

The CIA director says he now expects Putin to escalate military operations while the Ukrainians will continue to resist fiercely. The likely result, he says, is “an ugly next few weeks” of fighting for control of Ukraine’s cities, including the capital, Kyiv.

It’s not just economic news that should worry him. He’s already arrested 13,000 anti-war protesters back home and that doesn’t seem to phase him either. This dynamic in which Putin doesn’t seem to be responding to the signals that he’s paying much too high a price for this invasion has some observers worried about what comes next. Thomas Friedman had a column yesterday arguing that Putin only remaining choice at this point is how he wants to lose. So far he seems to be opting for a bigger, bloodier loss.

In the coming weeks it will become more and more obvious that our biggest problem with Putin in Ukraine is that he will refuse to lose early and small, and the only other outcome is that he will lose big and late. But because this is solely his war and he cannot admit defeat, he could keep doubling down in Ukraine until … until he contemplates using a nuclear weapon…

So either he cuts his losses now and eats crow — and hopefully for him escapes enough sanctions to revive the Russian economy and hold onto power — or faces a forever war against Ukraine and much of the world, which will slowly sap Russia’s strength and collapse its infrastructure.

As he seems hellbent on the latter, I am terrified. Because there is only one thing worse than a strong Russia under Putin — and that’s a weak, humiliated, disorderly Russia that could fracture or be in a prolonged internal leadership turmoil, with different factions wrestling for power and with all of those nuclear warheads, cybercriminals and oil and gas wells lying around.

Maybe the indications of looming economic disaster in Russia are overstated. But if they’re not then what Friedman is suggesting is that this could go beyond regime change in Russia to something more like regime disintegration. The free world has dropped a very big hammer on Russia’s economy. Putin is still pretending he can shake it off, but he won’t be able to do that for much longer. Even China probably can’t save him. At some point he’s going to wake up from the dream he’s been having about reforming the USSR and realize he’s been beaten. And when that moment finally happens who knows what he’ll do to hold onto power.