Russia is having as much fun as it can stand and it couldn’t happen to a nicer fascist kleptocracy.
As it stands today the ruble is in a virtual freefall. And unlike the limited sanctions imposed by the West after Russia’s Ron-Paul sanctioned stripping of Crimea from Ukraine and its slow motion invasion of that nation, this is hitting the average Russian in a significant way.
Despite the Russian central bank’s extraordinary move to defend the currency, the ruble’s value continued to slide on Tuesday, presenting President Vladimir V. Putin with an acute set of political and economic challenges.
Scenes that Russians hoped had receded into the past reappeared on the streets. Currency exchange signs blinked ever-changing digits. Russians rushed to appliance stores to buy washing machines or televisions to unload rubles. Unsure of prices, car dealerships like Volvo in Russia halted business, while Apple stopped online sales in the country.
After a middle-of-the night interest rate hike, a sense of economic chaos settled over the Russian capital. The ruble was in free fall, dropping under 80 rubles to the dollar, after opening the day at 64 to the dollar.
Consider that last sentence. Imagine in the course of a single day your wealth was reduced by a third.
The fall of the ruble is important because Russia essentially runs a Third World/colonial economy based on the export of raw materials, but primarily oil and natural gas. Most consumer goods have to be imported. Its other major market sector, organized crime, has divested itself of its ruble holdings and is not affected.
This economic meltdown can be linked to several unrelated events. Via Business Week:
The Russian economy has been in trouble for months, but last night, things got absurdly bad. The value of the ruble dropped as much as 19 percent in the last 24 hours, the worst single-day drop for the ruble in 16 years. Now Russians are reportedly bum-rushing malls to swap cash for washing machines, TVs, or laptops—anything that seems as if it might hold value better than paper money, whose worth is evaporating in real time. The political and economic forces sending Russia into a downward spiral are complex. Here’s what you need to know.
Russia’s economy has been hurt by two big things: the falling price of oil and …read more