On Monday, crude oil prices jumped 16%, the largest one-day spike in history.
On Tuesday, the Russian RTS oil and gas index closed down (yes, down) nearly 3.75%, and the overall market was down 2.85% to close at 1272. The market is down more than 1,100 points — over 45% — since its May record high and down 400 points — nearly 25% — just in the past month alone.
Russia, of course, is one of the world leaders in crude oil production. But the price spike made Russia’s market go down in value. That’s Russia in a nutshell. And we do mean nut.
After the truly sickening vertical growth recorded on September 18th (just look at the bizarre shape of that trend line!), following the closure of the market to stave off total collapse and a ferocious effort by the Kremlin to force the market to do its bidding, the chart clearly shows how the Potemkin recovery petered out and failed. The Kremlin scrambled feverishly to deny it was purchasing shares to drive up the market artificially, but the data speaks for itself. Yulia Latynina reports: “Russia has allocated 3 trillion rubles ($127.7 billion) to support the country’s financial markets. During one Cabinet meeting on Sept. 18, the government decided to buy shares in Sberbank, VTB and Rosneft to the tune of 500 billion rubles ($21.3 billion).” Signs of a banking collapse grew more and more ominous. The Kremlin was forced to admit that inflation and capital flight are accelerating dramatically.
What the Russophile minions have failed to notice is that the September 18th market spike, though impressive in percentage terms, occurred on a devastated base and therefore was penny ante in terms of dollars — and of course it was tragically short-lived. Anyone who thinks that a proud clan of KGB spies can manage a market economy needs to have his head examined.