Please Stop Lying, Mr. Putin!
Last month, as Russia posted its worst-ever quarter of economic contraction, Vladimir Putin and his spinmasters were saying the worst was over. They said the economy had hit rock bottom, and would turn upwards in coming months. They said that even though Russia’s second-quarter contraction was a horrifying 10%, the contraction would radically diminish in the second half of the year, leaving Russia with an 8% recession by year’s end and growth in 2010.
It was, of course, all lies. Though Russia’s economic contraction in July (9.3%) was less than in June (10.1%) compared to one year ago, the figures for August soared back up to 10.5%, the worst performance of the last three months. Retail sales plunged likewise, their steepest one-month drop in a decade.
Economist Edward Hugh sums it up:
The steady and systematic long term mismanagement of Russia’s monetary policy has now created a veritable Procrustean bed of problems for Russia’s economy and society. Failure to address the underlying inflation problem between 2005 and 2008 meant that large structural distrortions were accumulated in the economy, including a massive problem of commodity export dependence, a problem which effectively turned the country into a veritable disaster waiting to happen if ever there should be a protracted lull in the secular rise in energy prices. That lull has now arrived, and it is not at all clear just for how long we will all need to get to learn to live with it.
Ouch. But you wont’ hear any of that truth coming from Vladimir Putin or his economics ministers, who refuse to change their projection on the 2009 contraction by one iota. Their “strategy” for dealing with the crisis is simple: A torrent of neo-Soviet lies.
One truly devastating bit of data, for instance, revealing the brutal impact of the Putin recession on the general population, would be the next census. So guess what!? Putin has decided there won’t be a census, at least not until the next round of presidential elections has concluded. This is the kind of “mismanagement,” which indeed borders on criminality, that Hugh is referring to when he explains how the Russian economy has been hopelessly run aground. If the people of Russia don’t wake up soon, they will watch Russia go the way of the USSR.