23 December 2008

Russians Not Taking Financial Crisis Well

...the economies of about 700 Russian cities are dependent on a single major local industry or factory. If those factories shut down, the majority of the people in those cities will have no way to make a living. Kremlin leaders do not have a clear strategy for coping with this looming disaster. _MoscowTimes
The corrupt, inept, and oligarchic nature of Russian leadership has never been so plain as in the current world financial deflation and deleveraging. With oil prices low and foreign investment currently shut down, the Russian government's ability to placate its citizens is being strained.
As the crisis is spilling over into the real economy, the people's tolerance level for government policies is reaching its breaking point. Even before the crisis, the people's anger over runaway inflation and their eroding purchasing power had been building up over the past few years. In addition, corruption has gotten markedly worse as the level of monopolization in the economy and bureaucratization of government has increased. All of this is pushing people's discontent to the surface.

...hundreds of banks across the country might go bankrupt in January and February. That could lead to protests by depositors who are unable to retrieve their money, despite the limited government guarantees on bank deposits. In addition, people are upset with the government's decision to increase utility prices for all homeowners in 2009. This might have been tolerable during a time of steady economic growth and rising standards of living, but it is unacceptable in the midst of a crisis. _MoscowTimes
Coming so quickly after the past summer's general euphoria at rising Russian incomes due to high energy prices and Russia's military triumph over tiny Georgia, this economic downturn and a general governmental ineptness to deal with it, has led to widespread discontent, protests, and an upsurge in anti-government feeling.

China is also having significant economic problems due to severely reduced demand for exports, and a shutting down of a large portion of foreign investment. With hundreds of millions of citizens below the poverty level, China's CCP led government is in almost as precarious a position as Tsar Putin's government.

Neither China nor Russia has achieved the type of economy that would largely sustain itself in the face of rising protectionist sentiment and action around the world. Everyone is waiting to see if the US narcissist-elect will set the final protectionist chain reaction in motion. The BRIC nations (Brazil, Russia, India, China) in particular are hoping for a miraculous change of heart from Obama.

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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