Tuesday, November 18, 2008

Russia's crumbling economy provides stiffest test yet for autocratic leader - Telegraph

Russia's crumbling economy provides stiffest test yet for autocratic leader - Telegraph:

The Telegraph is a bit dishy, but they call this one correctly... One wonders how much of Russia's currency reserves are tied up in supposedly secure assets that have been rendered worthless by [insert any financial crisis here].
"According to opinion polls, 57 per cent reckon [the Russian economy] is flourishing, up from 53 per cent in July.

The survey's findings are a triumph for the state, proving that the Kremlin has not lost its touch when it comes to manipulating fact. Obeying orders from the top, Russian television has banned the use of words such as "crisis", "decline" and "devaluation". Coverage of the mayhem in the country's stock market, where shares have fallen by 75 per cent since August, is scant.[...]

Last week, the price of Russian oil fell below $50 a barrel. At that price it would become impossible to balance next year's budget, which is predicated on oil prices of $95. Russian officials claim they can tap into a rainy-day fund and currency reserves that are still the third largest in the world. But Russia cannot do that indefinitely, and frittering reserves could frighten away foreign investors – who have already pulled out more than $150 billion.

There is compelling evidence that the crisis has started affecting ordinary people. The middle class has shrunk from 25 per cent of the population to 18 per cent in the past few months alone. Many companies are laying off jobs, and doing so in a manner likely to cause resentment."

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