As if by order as we publish the full version of the second part of Boris Nemtov’s brilliant White Paper, which shows the fundamental failure of the Gazprom oil monopoly, the Russian stock market had another horrifyingly bad day on Monday, closing below 1,200 on the RTS index, down over 7%. The oil and gas index was down below the market average, closing off over 7.5%.
As the chart above shows, the ridiculous charade that began on September 17th when the Russian government simply closed the market entirely as it plunged towards the 1,000 level, and continued through September 22nd as the state used its vast network of banks to simply create demand for stocks nobody wanted, is now unmasked. The market is heading right back down on the path it had previously selected, currently 50% down from the level it had reached six months ago. The price of oil is plummeting (down over $20/barrel over the past week) as Western demand dries up due to the economic downturn, and Russia stands at the precipice of a bottomless abyss.
And it should strike extra fear into the hearts of Russian investors that the Russia market was long closed before the U.S. bailout deal collapsed, and the U.S. market took a plunge of just under 7% (interestingly, however, it was revealed that the $700 billion “bailout” number was wholly illusory). What ghastly horror may Tuesday morning hold in store for the Russian market? Will the Kremlin’s solution be to shut it down once more? Another fevered round of Kremlin cash infusions was announced in the vague hope of staving off the inevitable with yet another Potemkin sham.