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Putinomics in Free Fall

MICEX

As shown in the chart above, ever since the Russian military incursion into Ukraine began the Russian economy has been in a state of free fall.

At present, the MICEX stock index is down 15% from its February high, having shed roughly $100 billion in value.  The chart shows how the free fall radically halted and reversed on March 3, and there’s only one possible explanation for that event:  The Kremlin entered the stock market and began furious buying Russian shares in order to artificially increase demand and stabilize prices. But the Kremlin can’t afford to do that forever, and when it stopped the market went right back into free fall.

The stock market isn’t alone in its woes. The bond market has been obliterated as well, interest rates are soaring and and the value of the ruble is plummeting, meaning inflation on foreign goods, which the Russian consumer depends upon, is raging.

The falling ruble forces the Kremlin to make Russia’s foreign currency reserves to double duty: it must not only buy Russian stocks but also buy the currency itself, in order to prevent devaluation from turning Russian pocketbooks inside out.

And the worst is yet to come.

The EU and USA have just announced that they will soon impose draconian economic sanctions on Russia, choking off already feeble Russian economic growth and putting even more pressure on the ruble and the stock market.

Are the people of Russia really prepared to make such horrific sacrifices in order to pursue bloodthirsty imperialism in Ukraine? Do they even know that such sacrifices are being asked of them? Kremlin-controlled broadcast TV is certainly not telling them, and the Kremlin has just liquidated yet another independent news source, the respected Lenta.ru website.

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8 responses to “Putinomics in Free Fall

  1. mal jones ⋅

    Good news, but not enough, very interesting talk on the Power Vertical blog ,Mark Galeotti and Kirill Korbin two very well known Moscow watchers ( they’r a lot more than that, look them up) are sure that he has gone a little more insane. Mad men can do anything they want, I’m just very sorry my UK government has not done more with the money and houses stashed in london.

  2. Lol ⋅

    Such a shitty biased page you’re running. Trying to boost anti-russian sentiment, are you? Go sit on a wooden splintered dildo, you dirty hater.

  3. elmer ⋅

    http://www.zerohedge.com/news/2014-03-14/gazprom-chairman-sold-all-his-shares-just-russia-invaded-crimea

    “We are sure it is just coincidence – and awkward combination of luck and suspicious timing – but Vedomosti reports that Viktor Zubkov, the Chairman of Russia’s massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible. “

  4. a. bojcun

    i am waiting very patiently for important sanctions
    Obama has done nothing significant and Europe is strongly objecting to any sanctions which will harm their economies. Lithuania excepted

  5. mingthemerciless ⋅

    Parlant de Poutine:
    “Les cons, ça ose tout. C’est même à ça qu’on les reconnaît.”

  6. mingthemerciless ⋅

    Comme disait Lino Ventura…

  7. Pingback: Would Russia still be Russia Without Siberia? | al fin next level

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