Scenes From Putin's Economic Meltdown

Politico ^ | December 21, 2014 | Alec Luhn

[C19fan]

Get the hot deals while they last! Whatever’s on your holiday shopping list—buy now, it may never be this cheap again! In a single day this past week, the ruble exchange rate dropped from 59 to 80 to the dollar, further eroding confidence in the Russian economy and ensuring a deep recession next year—but also briefly turning Moscow into the shopping capital of the world. Although this past week’s currency crisis marked the worst fall for the ruble since Russia defaulted on its debt in 1998, no one was waiting in bread lines or starting a run on the bank. Instead, anyone with any cash at all went on a buying spree. Long lines snaked through Ikea branches around Moscow into the early hours of Wednesday morning as people picked up furniture, bedding and other household goods at what had suddenly become bargain-basement prices. Crowds of eager buyers emptied shelves of computer monitors and snapped up flat-screen televisions at consumer electronics chains.

[C19fan]

“That’s a Russian peculiarity, a panic can flare up quickly but it won’t go very deep because no one has any savings,” Nigmatullin said. “An inflation spiral comes when people buy goods at a high price, the price goes up, people see this and buy again, and inflation grows very fast. But here there aren’t many savings and not money to pay high prices.”

Friedman is rolling around in his grave. In a sense the guy is right if there is no monetary response to the shock there will be no inflation. But part of what has triggered the collapse of the Ruble is rumors Putin will order the Central Bank to start running the Ruble printing press 24/7 to bail out the banks and Oligarchs. If that happens there will plenty of monetary fuel to keep inflation going.

[familyop]

While the Dow goes over 18,000.

[eyeamok]

Just the usual and expected circumstances of a debt based monetary system, nothing to see.

[molson209]

While the Dow goes over 18,000.

Like a Hot Air Balloon in a Sky full of Power Lines

[familyop]

Heh. Well said!

[GeronL]

foreign companies with a brain would have stopped selling stuff until the rate stabalised

[Bloody Sam Roberts]

Like a Hot Air Balloon in a Sky full of Power Lines

Excellent analogy. Best I've heard in a while.

[bgill]

That new tv isn’t going to feed them for long. Better invest in their pantries.

[MSF BU]

This is typically explained by foreign buyers investing in the stock market as a safe haven.