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.
I just read a Bloomberg article saying that if China’s economy goes into recession oil could hit $25 a barrel next year.
Iran was recently claiming that they could survive if oil hit $10 but you can hear the fear in their words while it is at $45 to $50. I don’t know exactly how this is all going to play out but It is certainly going to mean crazy days ahead for Russia and Iran.
Launch an arms race, that’s a joke, they haven’t got the money. Face it, Russia will fall harder than developed countries as investors and capital depart the risky ones. We here are in for hard times, but, Russia is in for harder times. The global recession is destrying the emand or oil. Putin can scream it’s a plot to undermine Russia all he wants, but, markets are rational in whom they reward and punish.
Sadly, there are far too many Russians whose tv’s tell them what to think to ever bring Putin’s regime down.
You know, as an American I’m obviously against censorship. But I can’t say the feeding frenzy our domestic media has engaged in since the summer has done much for our country, indeed it has continued to further the declining spiral of our economy. People here need to voluntarily excercise their right to free speech in a responsible fashion. But that will never happen in the land of the Almighty dollar.
Penny… the West is being hurt much more then Russia this crisis. For all it’s problems, Russia’s maintaining a positive growth this year, while the accumulated growth by the EU and US is already offset and they’re in recession.
You can scream that the Russians are falling all you want, but you’re a pot calling a kettle black.