Wednesday, December 24, 2014

Economics eventually calls in its cards

For those who are worried about a grasping Russia, take heart. The leadership there has inside the lifelines problems that will soon keep it quite busy with itself. If you are looking to open a present early this Christmas Eve, here's one;
Gallows humour is back in Moscow. Asked what he would do to stop the rouble spiralling out of control, the former governor of Russia’s central bank replied: “I would pick up a pistol and shoot myself.”

This was the week when the country’s long-festering crisis turned virulent. A last-ditch attempt to defend the exchange rate by raising interest rates to 17pc failed within hours, yet the shock is surely enough to set off a chain of corporate failures and push banks over the edge.
Traders in the City watched open-mouthed as the dam broke on Black Tuesday. The event exposed the awful reality that the Kremlin does not have the infinite foreign reserves that many had supposed. “What is happening is a nightmare that we could not even have imagined a year ago,” says the central bank’s deputy chief, Sergei Shvetsov.

The currency has since stabilised at 60 to the dollar. But it has lost half its value in a year. Russia’s $2.1 trillion (£1.3 trillion) economy has shrunk to $1.1 trillion, half the GDP of California.
“The crisis is suddenly filtering into people’s daily lives,” says Bill Browder from Hermitage. “55pc of consumer goods in Russia are imported and these are doubling in price. People are buying anything they can that keeps its value.”
Hey, Putin's song of the day. I wish Pussy Riot would do a cover ... but this will do fine in its place.

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