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%.
Where would the Russia market stand today if it had simply been allowed to trade without interruption throughout the week? Where would it be if the Kremlin had not become the nation’s leading stock purchasers, taking over Russian firms in a neo-Communist surge of centralization by squandering the nation’s savings to purchase them on the market, creating a Potemkin illusion of demand? The value could well already be zero.
Putin’s Kremlin is also laying out massive dollars to defend the value of the ruble, which is collapsing against the dollar and thereby driving the price of imported goods higher, fueling Russia’s pandemic inflation. It has spent over $30 billion of the national savings in just the last two weeks alone, putting Russia’s credit rating gravely at risk and obliterating a crucial rainy-day fund that should be used to develop the real economy rather than build Potemkin villages in the clouds.