Standard & Poor’s Ratings Services on Monday cut Russia’s foreign-currency sovereign credit ratings for the first time since January 1999, citing capital outflows and the rapid decline of the country’s international reserves. S&P lowered Russia’s ratings to BBB/A-3 from BBB+/A-2 (just two notches above junk status) and assigned them a negative outlook, indicating the likelihood of another ratings downgrade. Reserves are down 22% since August and the stock market is down 75% since May. Russia is projected to run a 3% deficit in 2009.
Ford Motor Company is shutting down its Russian production plant for one month due to lack of demand resulting from Russia’s financial crisis.
The massive Shtokman national gas project is now on hold, for the same reason.
The Kremlin’s response? It is outlawing the use of the term “crisis” in publishing, because in neo-Soviet Russia, no such thing is possible. Oh and, of course, because there is no crisis and it has plenty of extra cash, it is launching a massive new arms race. Meanwhile, it wants everyone to know that the real cause of any “difficulties” Russia may be having is foreigners, particularly dark-skinned migrant workers, and it’s getting ready to expel them all.