Is Putin’s Russia heading for its own Great Depression? Dave Essel translates the following item from the pages of Novaya Gazeta about ATM cash withdrawal problems in Moscow that he first saw reported by Grigory Pasko a couple of days ago in a brief item on Robert Amsterdam’s blog (the Moscow Times also had a story on banks freezing deposits, perhaps illegally, and we report the latest jaw-dropping plunge in the Russian stock market below).
Banks Restricting Client Cash Withdrawals
A banking panic is now seriously in the cards – due, furthermore, to those very institutions. In Moscow, Globeks Bank is refusing to allow clients to close their deposits before term (in other words telling them that they can withdraw their money and interest only when their deposit has reached the end of its term). Outside Moscow, in the regions, major banks are limiting the maximum amount that may be withdrawn in any one week and are furthermore charging high commission fees of up to 20% on such withdrawals.
The inexorable march to zero: In the past three weeks the Russian stock market has lost half its value and is down 75% from its historic high
Though world markets were up on Friday (2-3% gains were posted in Europe’s major markets), the Russian stock market broke through yet another psychological barrier in its inexorable retreat, and as of 3 pm Moscow time on Friday the RTS dollar index was down nearly 5%. Following yet another horrifying result of double-digit losses the day before (and yet another predictable market shut-down – they occurred three out of five trading days this week alone), as the price of oil fell below the $70/barrel barrier and called Russia’s basic budgetary assumptions into question the RTS broke through the 700 point barrier to stand at 685 (the MICEX ruble index, in turn, was on the cusp of smashing into 500 territory). This means that the market has now lost nearly 75% of the value it established at its high water mark last May. Gazprom was down 8% on Friday, LukOil down 10% and the oil & gas index down over 6%.