Special Extra: Russia’s Economy, Imploding

How low can it go?

How low can it go?

Over the summer, the Russian stock market reached a new high of 2,400 on the RTS index.  As Vladimir Putin’s crazily provocative statements about a major steelmaker reverberated through the markets, they began to plunge, so that by the time of the Georgia invasion Russia’s markets had lost a jolting 25% of their total value — and this despite historical highs on the price of Russian crude oil.

Then came the even crazier Georgia assault, and the markets plumbed new depths, sinking to a shocking valley below 1600, a startling loss of 800 points or one-third the total value of the summer high.

Finally last week the markets seemed to stabilize a bit, and clawed back a hundred points of their historic losses, and yet any hope of sunnier days proved a typical Russian illusion. 

The Moscow Times reports that on Wednesday:

The ruble fell by as much as nearly 2 percent against the dollar on Wednesday, while Russia’s RTS Index dropped 4.3 percent, pummeled by low oil prices, a tightening market and geopolitical concerns over Russia’s rift with the West over Georgia. In late-morning trade, the ruble dropped past the landmark 25 against the dollar, falling as low as 25.27 after closing on Tuesday at 24.77. During the course of the day the ruble began to regain ground, stabilizing at about 25.15. The dollar-denominated RTS Index fell to close at 1,589.19, nearly at a 23-month low.

Oil prices are falling because demand is falling. Demand is falling because, in no small part, the hysterical, frenzied polices of the Putin administration have made the world think twice about consuming Russian oil. Were it not for aggressively fraudulent efforts by Russia’s central bank to defend and inflate the value of Russia’s currency, there is no telling how low it might fall.

Russia has killed the golden goose, the foundation of its economy, by driving away foriegn purchasers and investors.  In just a few weeks, Vladimir Putin has gone from a perception of a dynamic and intimidating world leader to that of an utter fool and even perhaps a madman, a downfall from which he can never recover.

One response to “Special Extra: Russia’s Economy, Imploding

  1. Well, he fooled me…

    For the past year i have been amazed at the aplomb of putin as he gently huddled $40 plus billion away from the russian economy while at the same time holding his KIA’S to such a relatively small number (less than 12 million).
    Clearly his people believe that because their lives are a little better (relatively speaking of course) he is to be supported and they are to overlook the rest. If anyone ever had a doubt, putin is proof that money can’t buy class.
    In his attempt to emulate Peter the great, it appears that Vladomirovich has only succeeded in becoming merely another Peter.

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