Vladimir Putin, Russian President

Danger in Collapse of Russia’s Economic System

The collapse of Russia’s economic system is dangerous. In an interconnected world, there are sure to be unintended consequences. The unfolding disaster brings to mind the 1998 currency crisis. It brought a lot of pain to investors worldwide.

With Putin’s and Russia’s troubles there’re dangers to the world other than economic. Putin blames the West for ganging up on Russia and imposing sanctions. Putin feels Russia has been treated badly over the Ukraine situation as the US supported coup led to the downfall of the Russian leaning duly elected President. The Ukraine was an integral part of Russia for hundreds of years. Western media, led by President Obama, have made statements Putin must feel are inaccurate and are personal attacks.

Vladimir Putin, Russian President
Vladimir Putin, Russian President

The West, especially the US and NATO members, should be more careful in its treatment of Putin. Cooperation is much safer than confrontation. Putin is not the type of man that forgives or forgets.
He blames the US and Saudi Arabia for collusion in the collapse of oil prices.

Expect Putin to find a way to even the score.

The Collapse of Putin’s Economic System

By Henry Meyer and Ilya Arkhipov Dec 16, 2014.

The foundations on which Vladimir Putin built his 15 years in charge of Russia are giving way.

The meltdown of the ruble, which has plunged 18 percent against the dollar in the last two days alone, is endangering the mantra of stability around which Putin has based his rule. While his approval rating is near an all-time high on the back of his stance over Ukraine, the currency crisis risks eroding it and undermining his authority, Moscow-based analysts said.

The president took over from an ailing Boris Yeltsin in 1999 with pledges to banish the chaos that characterized his nation’s post-communist transition, including the government’s 1998 devaluation and default. While he oversaw economic growth and wage increases in all but one of his years as leader, the collapse in oil prices coupled with U.S. and European sanctions present him with the biggest challenge of his presidency.


Russian Stocks Drop 12 Percent
Here’s Why the Russian Ruble Is Collapsing
“People thought: ‘he’s a strong leader who brought order and helped improve our living standards,” said Dmitry Oreshkin, an independent political analyst in Moscow. “And now it’s the same Putin, he’s still got all the power, but everything is collapsing.”

In a surprise move today, the Russian central bank raised interest rates by the most in 16 years, taking its benchmark to 17 percent. That failed to halt the rout in the ruble, which has plummeted to about 70 rubles a dollar from 34 as oil prices dived by almost half to below $60 a barrel. Russia relies on the energy industry for as much as a quarter of economic output, Moody’s Investors Service said in a Dec. 9 report.

New Era

The ruble meltdown and accompanying economic slump marks the collapse of Putin’s oil-fueled economic system of the past 15 years, said an executive at Gazprombank, the lender affiliated to Russia’s state gas exporter. He asked not to be identified because of the sensitivity of the issue.

The higher interest rate will crush lending to households and businesses and deepen Russia’s looming recession, according to Neil Shearing, chief emerging-markets economist at London-based Capital Economics Ltd.

Gross domestic product will shrink 0.8 percent next year under the Economy Ministry’s latest projection. With oil at $60, it may drop 4.7 percent, the central bank said last week.

“How many bankruptcies await us in January?” opposition lawmaker Dmitry Gudkov said on Twitter. “People will be out of work, out of money. The nightmare is only just beginning.”

Read More: Putin and Russian Troubles

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Author of "On the Brink" and "Collateral Damage" techno thriller series and "Torn", a thriller adventure series. Ebooks available at Amazon. Author's Page

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