Russia faces “first made-in-Moscow economic crisis”, Gubaryev says

"I goofed"

"I goofed" 

2014/12/02 • Russia

“Russia is entering the first systemic economic crisis in post-Soviet times” which is of its own making and which has only been “deepened by the fall in world prices for oil” that Moscow and many others want to blame for the problems the Kremlin faces, according to Valentin Gubaryev.

In a commentary in “Gazeta”, the Moscow commentator argues that Russia now “lives in a more ‘terrible’ economic reality,” given the price of oil and the ruble exchange rate with the euro and the dollar, “than even the most alarmist variant” of government projections only three months ago.

And this crisis is both different and more serious than the two others with which it is often compared, Gubaryev says. The 1998 crisis which led to default “was the result of half-heartedly radical in intention and less radical in execution of market reforms,” one that arose” when the political and economic system of post-Soviet Russia was still not put in place.”

Russia’s default at that time was triggered by the decline in oil prices that meant that Russia was earning “approximately three times less than it was spending” and consequently was “not in a position to service its short-term government obligations,” a problem that some are beginning to say is returning now.

And the crisis of 2008-2009 was “to a significant degree not a Russian one.” Instead, the Russian economy simply followed the path downward of the world and “above all the American” economy. But “today we have a serious economic crisis with the label ‘made in Russia,’” one that is the product of the political and economic systems in the country.

In that situation, Russians need to recognize that “no one except [themselves] are going to lead the country out of [this] crisis.”

Russian officials today suggest that the declining value of the ruble is not a bad thing because it allows them to meet their budgets, but while that might be true, meeting the budget by relying on the weakening of the ruble “is in absolute contradiction with the growth of the incomes of the citizens.”

They face rising prices, a reduction of jobs, and the possibility that their incomes will be cut. (Today’s “Nezavisimaya gazeta” features an article suggesting that fears are spreading that the Russian government may cut salaries of government employees, even though the regime is denying this (ng.ru/economics/2014-12-01/4_venesuela.html).

In the first two post-Soviet economic crises, in 1998 and in 2008-2009, the Russian government “tried to apply defensive measures.” In the first, it devalued the ruble and more importantly “cut budgetary expenses.  And in the second, it formed a commission that in extraordinary fashion ensured the liquidity of the most important banks and companies.

Today, however, there is “only silence and inactivity.  The government and the prime minister are silent. The deputies and senators are silent or propose wild legislative initiatives like the confiscation of property of foreigners in Russia … The expert communities are silent.” And the opposition “only criticizes the authorities” but without hope of influencing the situation.

In sum and as a result, Gubaryev says, “both the authorities and society have not begun talking about the threats or formulating programs for getting out of the crisis. They do not even recognize its existence,” and instead, he argues, they are operating only with the hope that something will turn up.

Perhaps oil prices will rise, they think, or the European Union will lift the sanctions or Ukraine will support the Donetsk and Luhansk peoples republics even though Kyiv doesn’t control their territories.

So far, the government’s “social therapy” has been directed to protecting bureaucrats and big business, but “the economy has simply been excluded from the discourse” that the regime promotes.  Moscow media talk about the Ukrainian and European economies as such; they don’t talk about the Russian one but only the details.

There has not been “any serious and honest conversation with people about the difficult situation” in which the Russian economy and hence Russia finds itself. Instead, Russian television viewers are offered a combination of “’dances with stars’ and ‘the struggle with the Banderites.’”

As a result, there is the growing impression, Gubaryev says, that “the authorities are afraid to recognize not just certain errors of their policy but also the complexities of the current economic situation” and fear “questions from the population, especially when, as polls suggest is now the case, “the majority is beginning to recognize” how serious the situation is.

Source: windowoneurasia.blogspot.com

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  • Michel Cloarec

    And it is going to be worst !
    Maybe russia needs some help how to save money. Skip the cost of sending green men to Ukrainia, skip the cost of sending convoys with white trucks to Ua, skip the cost of cargo 200, save money on ammunitions and tanks.
    Borrow money from friends at BRICS club ! Stop to loan money to fascists groups in Europa. Invest in wheel barrow factories ! Black friday on Baluga caviar !

    • Milton Devonair

      Is that cabbage? We have fields of it here that just will go to waste as it guess it wasn’t worth it to harvest it. Glad it rots in the fields here. Deer eat it and we shoot the deer with our AR-15s. Then we eat good. 😀

  • Racquel Simone

    Bolotnaya 2014. He should do everyone a favor and just disappear.

    • Milton Devonair

      That’s like karma–revenge without the personal satisfaction.
      But he had a russian ape army and a bunch of brainwashed peons to prop him up.
      Vlady the chimp has nowhere to go.

  • Paul P. Valtos

    The new sick man of Europe. As Austria went in 1914 so will go Russia in 2015. Putin cares less for Russia’s problems but more interested in war. Wilhelm, the German Kaiser was wrapped up in his army with Von Molke than the economy.; Yup. They will need wheelbarrows to haul rubles to buy bread just as Germany did after WWI.

    • Michel Cloarec

      I recommended also investments in wheelbarrows factories lately, both for rubles and cabages ! Bread too expensive , nobody can take care of 2 wheelbarrows at the same time. It looks so stupid anyway, but funny !

  • Michel Cloarec

    Previous photo, saved as “dinner coming” I use this to feed the moose and deer !

  • Cristian Muñoz

    RuSSian will never learn.

  • Michel Cloarec

    From REUTERS ”

    Putin proposes amnesty for returning capital to
    Russia

    MOSCOW Thu Dec 4, 2014 10:17am GMT

    MOSCOW (Reuters) – President Vladimir Putin proposed an
    amnesty on Thursday for those returning capital to Russia, indicating they would
    not face tax or other penalties. Russian officials have said they expect net
    capital outflows this year to soar…
    Russian officials have said they expect net capital outflows this year to
    soar far above $100 billion (63.72 billion pounds), with the country facing the
    possibility of recession and the rouble sliding against the dollar.
    In a state of the union speech, he said he had asked the central bank and
    government to take strict measures to tackle what he called speculators in the
    foreign exchange market.
    (Reporting By Moscow Newsroom, Editing by Timothy Heritage)
    The former bluff president of Ua ran away to ??? Where will vlad the magnific runs? I don´t want to know, only disapear !!!!