The Russian stock market continues its freefall, and the Kremlin is in full-on panic mode. As the graphic above indicates, the RTS metals index is down 45% from its June position, and the other indexes are hot on its heels. The Moscow Times reports: “Hit by the news that second-quarter economic growth fell to 7.5 percent, from 8.5 percent a quarter earlier, and a year-to-date inflation figure of 9.8 percent, the dollar-denominated RTS fell to 1,309.49 points, a two-year low, closing at 1,334.33, a fall of 4.4 percent. The more liquid, ruble-denominated MICEX fell 3.8 percent to 1,114.67 at the close, its lowest level in 27 months.” And this in a climate of radically higher oil prices! Do you dare imagine what would be happening to this market if oil was still at $60 a barrel? UPDATE: The following day, the market crashed through the 1300 psychological barrier to close at 1298.08 on the RTS, ignoring the reassurances given by “president” Medvedev, as described below. The MICEX was flirting with triple digits, and Russia was warned against artificially inflating the market with a government cash infusion, on pain of a reduced credit rating.
Russian “president” Dima Medvedev’s reaction? Pure gibberish, frighteningly unhinged.
He stated: “In the end these changes are not dramatic. … If the right decisions are made, the situation will straighten out. We will return to the levels that we saw at the start of the year. In any case, I believe this is within the power of the government.” Crazed denial that extreme can only stem from one source: Abject panic. Nobody can help but hear the echoes of the insane denials that used to issue from the Politburo whenever the USSR came a cropper. Is Medvedev actually saying not only that the loss of 45% of the market’s value isn’t serious, but that his government has control over what the market does? Can he really believe such a thing? Doesn’t it occur to him that people may ask: If you can control it, why haven’t you stopped it already?
Dima Medvedev has never run a business and has no training in economics. To put it mildly, he hasn’t got the slightest idea what he is talking about — and in fact, it’s not even him talking. Medvedev is nothing more than the sock puppet of Vladimir Putin, who himself has never run a business or trained in economics either. Both men are products of a Soviet education, and are utterly helpless to even comprehend, much less rectify, the horrific damage they have done to the Russian economy.
He does, though, at least admit that Russia’s economy is the servile slave of America’s, not a self-sufficient safe haven: “We cannot change the situation on say, the American market. The Americans will have to sort out their mortgage system and other financial instruments themselves, though, to put things plainly, they have let us all down.” But if he understands this, then how can he be aggressively attacking the U.S.? Shouldn’t he be supporting it?
Before the Georgia war, President Dmitry Medvedev spent a lot of time talking about modernizing the country, but since the conflict, these plans have been completely ignored. Moscow’s political agenda is now devoted entirely to opposing the West, and especially the United States. The president and prime minister have been giving interviews almost every day, mostly to the Western media but also to Russian journalists. The topics are always the same — the new Cold War, sanctions and who started the war. It seems as though Russia’s leaders are obsessed with these issues. They never got this worked up over the country’s decrepit medical and educational systems, the backward technology and science sectors, the underfinanced pension system or the ailing transportation and housing sectors. All of these crucial infrastructure areas are in a state of deep crisis and urgently require modernization.
How is today’s Russia any different from the USSR? How can it, if it is no different, expect any different fate?