EDITORIAL: What would Stalin do?

EDITORIAL

Another Russian Selection

A couple of months ago, we wrote about something we called a “Russian selection.” Similar to a “Hobson’s choice,” a Russian selection is the typical situation in Russia, where no matter what option you pick you end up with disaster — as for example when in 2000 Russian voters were presented with a choice between a proud KGB spy and a proud Communist apparachik  for their next president, or asked to select between a shameless Kremlin sycophant and a lunatic fundamentalist for their next pope.

And now, Russians face yet another “Russian selection.”   It seems that when Vladimir Putin is confronted with a dilemma of this kind, he takes a page from American Christians, who ask “what would Jesus do?” and queries his Russian variant:  “What would Stalin do?”

micex_usduts30_smallThe chart at left shows the recent progress of the U.S. dollar against the Russian ruble.  Pick your poison, Russians. Do you want your currency stable, as it sometimes is at certain points during this three-week period, or do you want it falling against the dollar, as it is doing at other periods? Either way, you lose.

If the currency is stable, that means the price of foreign goods you need to live a normal life isn’t soaring beyond your ability to to pay for them.  But it also means that your government is squandering literally billions of dollars every day in foreign currency reserves to buy your own currency and artificially inflate its value, a practice that simply can’t go on indefinitely and leaves you without the resources to address other types of more immediate financial emergencies.

On the other hand, if the currency is allowed to fall freely under market conditions in order to save reserves, you may soon face inflation that will leave you with nothing but ridiculously inferior and even dangerous Russian-made products in your cupboard, taking you all the way back to the worst Soviet nightmares of shortages and corruption.

The most important thing to understand about a “Russian selection” is that it’s not a case of Russians being victimized, as some Russians would like to pretend. All these circumstances, from president to pope to economy, are those of the Russian people’s own making.  They could have demanded better choices for leadership, and had they done so they would have better economic choices now.  But the people of Russia didn’t do so, and even now they continue to favor their proud KGB spy/dictator with 80% approval in polls. Even if the polls are rigged and overstate Putin’s popularity by a factor of two, it’s still way too high.  Russians chose lunatic mass murderer Josef Stalin as a major symbol of their country in a recent Internet poll, and for all we can see they had it exactly right:  Russia = Stalin.

Meanwhile, there’s a wild card:  Russia is running out of reserves to the defend the ruble.  Now, it is moving forward with plans to simply ban banks from converting rubles into foreign currency rather than using reserves to inflate the value of the ruble.  It’s akin to simply ordering retailers to stop raising prices, something Putin actually tried not long ago.  It can’t work, and will create an economy in Russia not unlike what we see in Robert Mugabe’s banana republic of Zimbabwe.  Russia as a nation will go the way of the dodo.

In other words, it’s exactly what Stalin would have done.

8 responses to “EDITORIAL: What would Stalin do?

  1. It seems like the action of banning banks from converting rubles into foreign currencies , has stopped the bleeding on friday.

    You think this is going to last and is it a way out of it for the bank so they can keep on dumping the ruble?

  2. People aren’t stupid. All that roosha has done is to create even more of a black market, an “economy in the shadows.”

    I’ll put it this way – in sovok times, sovok roosha was very proud of it ruble. Citizens were not permitted to have foreign currency. There were special stores set up, where only foreign currency was accepted, and only tourists – foreigners – were permitted. Citizens were not.

    One could exchange foreign currency for rubles, for local purchases – at the “official” exchange rate. It took about $1.7 to buy 1 ruble.

    They were very, very proud of the ruble, at a time when noone else in the world wanted them.

    Soooo – what happened.

    Well, on the street, you could get about 8-10 or more rubles for your dollar.

    They called this “shpekoolatsiya” – speculation. And they defined at as a crime, they were so proud of the ruble.

    And people were not shy about asking you to trade, or to buy the jeans that you were wearing.

    Also, they would ask you to go into the “tourist” stores for them.

    People got around the government.

    They’ll do it again.

  3. I’m rereading Radzinsky’s ‘Stalin’ right now and I’m astounded (or maybe not so much) by the similarities.

    Concerning Russian made products, I still can’t understand why Russians don’t demand their Prime Minister drive a Russian car. What would be more Russian than Putin in a Lada?

  4. Well, Putin in a Lada. Not likely, he is a Mercedes man. Typical hypocrite Russian.

  5. elmer

    maybe the U.S should start dumping U.S dollar from in helicopter for Russians.

    Anyway , i hope you are right that russians finds way around this and continue to change their rubles into dollars.

  6. I think he hates the prospect of driving Ladas ever since he was forced to work as a taxi driver for a while.

  7. Blaze,

    Shh, currency exchanges are only allowed for politicians and people wealthy enough to buy policians. Otherwise it would be considered capital gains.

    Politicians like to keep this a secret.

  8. Oh, and taxed as such.

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