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‘Putinomics’ Has the Russian Economy in a Tailspin

The days of Vladimir Putin strutting about the world stage boasting of his economic achievements have come to an end.

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November 20, 2013 - 12:28 am
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The bad economic news has rolled over Russia this month in a manner as devastating in a financial sense as the tsunami that struck the Philippines was in the physical. No matter where you turned, if you were a Russian there was only a gigantic wave of red ink rushing at you full speed.

In a move some called unprecedented in Russian history, Economic Development Minister Aleksei Ulyukayev openly admitted that over the next fifteen years the Kremlin expects Russian economic growth to be over 25% less than the world average, with the result that by 2030 Russia’s share of the world economy will have declined by at least a stunning 15%, from 4% today  to just 3.4% fifteen years from now.

The stunned editors of the leading Russian newspaper Nezavisimaya Gazeta stated in an editorial: “Neither the tzars, nor the Bolsheviks, nor the statists ever once told the population that their country did not have greater prospects.” It was jarring indeed to realize that things might be so bad that not even the Kremlin would take the chance of lying about them.

In other words, the days of Vladimir Putin strutting about the world stage boasting of his economic achievements have come to an abrupt and ignominious end.

Then came the Economist magazine, with a hard-hitting feature item on the collapse of Putinomics provocatively titled “The Crumbling Kremlin.”  The piece almost seemed to be mocking Putin, the former KGB spy, taunting him with the dreaded word “stagnation” that wrought so much despair in Soviet times.

The magazine’s data show that the Russian economy never recovered from the 2009 global economic meltdown. Its post-crisis growth level is consistently a pale shadow of what it knew before.  The magazine shows that Russia experienced nearly $50 billion in capital flight in just the first three quarters of this year alone, and posits that Russia is facing a collapse of a state pension system which it can no longer afford to fund.

And worst of all it notes: “The oil price at which Russia can finance budgeted spending without borrowing has increased from just $34 a barrel in 2007 to above $100 for the years ahead.”

Putin’s country stands totally at the mercy, in other words, of a world oil price over which it has no control.  Ironically, Putin’s main foreign policy objective seems to be undermining the economies of the West, a policy which if successful would only lead to reduced demand for oil with brutal consequences for Russia.

Already beleaguered by illness of every kind imaginable, including a horrific AIDS crisis, Putin’s Russia is not prepared to sustain the type of draconian cuts to pensions and social services that are clearly now in the offing.  A major demographic debacle is inevitable.

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Top Rated Comments   
You haven't gotten the memo. US leftists only care about homosexuals in the USA, in exchange for votes. If they are oppressed by Russia or the Muslims, that is no problem for them at all. Same for women.
52 weeks ago
52 weeks ago Link To Comment
Led by America, fracking is changing the world.

The shut off of the supply of petro dollars flowing into the hands of our ideological enemies, the Islamists and Communists will bring them to their economic knees.

In addition to fracking, the United States needs to start the immediate roll-out of small form factor Thorium reactors. I could stomach a Chris Christie candidacy if he made this a central aspect of the policy he would implement if President.
1 year ago
1 year ago Link To Comment
Maybe Putin should convert to Americanism and borrow a few trillion dollars that he cannot pay back. His economy would be praised by the corrupt West and he could then start to give out free food, phones, houses, medical care and his economy would take off; after all that is the American blueprint for prosperity.
1 year ago
1 year ago Link To Comment
All Comments   (17)
All Comments   (17)
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Wyatt. if you, thought Julie`s st0ry is flabbergasting... on monday I bought a brand new Saab 99 Turbo since I been bringin in $9449 this last five weeks and also 10k last munth. no-doubt about it, this really is my favourite job Ive had. I actually started five months/ago and almost immediately started bringing in minimum $87, per-hour. look at here WWW.j­o­b­s­5­9.C­O­M
51 weeks ago
51 weeks ago Link To Comment
my co-worker's step-mother makes $86/hr on the internet. She has been out of work for 9 months but last month her payment was $16620 just working on the internet for a few hours. read this article ..... http://www.fb49.com
51 weeks ago
51 weeks ago Link To Comment
It is pretty simple.

No one in their right mind would invest money in Russia now and that includes Russians. It is simply too corrupt and arbitary

And so it stagnates.
52 weeks ago
52 weeks ago Link To Comment
Thanks to obama though, Russia seems to be doing very well in global diplomacy.
52 weeks ago
52 weeks ago Link To Comment
What's the chances we could convince Obama he could get back at Putin for dissing him just by approving the Keystone pipeline and opening up public lands for oil exploration and development?
1 year ago
1 year ago Link To Comment
While schadenfreude is certainly in order, this development is ominous.

Russia may choose to increase its critical oil revenue by fomenting conflict in the Middle East. It's weak economic position has already caused Russia to adopt a military doctrine calling for early use of nuclear weapons - because it doesn't have an adequate conventional military and nukes are cheap. Putin could stir up international crises in order to divert the attention of the populace from the poor economy.
1 year ago
1 year ago Link To Comment
Thank you roughnecks at Bakken for freeing America from dependence on such irrational tyrants.
A prediction: Russia will instigate a war in the Middle East to curtail supplies and drive up the price of its oil on global markets.
That's what an ex-KGB officer would do.
1 year ago
1 year ago Link To Comment
Dont worry. Obama and the radical environmentalists are doing their best to crush the entrepeneurs who did what our gov could never do, make us energy independent. If Obama has his way, we will soon be back to the good old days of begging Russia and the Saudis for oil.
52 weeks ago
52 weeks ago Link To Comment
My dentist took one of the river cruises to St. Petersburg to see the cathedral and palaces. It was interesting, he said, but he'll never go back.
1 year ago
1 year ago Link To Comment
The winners are NYC, London, Paris, the Cote d'Azur and Miami, where the Russian billionaire kleptocrats are spending their money. Last year one Russian billionaire docked the world's largest yacht in NY harbor, so his crew of 150 could wait on him and his mistress while she was expecting with their child. Then she delivered in NY, so their child could have the most valuable privilege in the world: US citizenship!
1 year ago
1 year ago Link To Comment
Led by America, fracking is changing the world.

The shut off of the supply of petro dollars flowing into the hands of our ideological enemies, the Islamists and Communists will bring them to their economic knees.

In addition to fracking, the United States needs to start the immediate roll-out of small form factor Thorium reactors. I could stomach a Chris Christie candidacy if he made this a central aspect of the policy he would implement if President.
1 year ago
1 year ago Link To Comment
You had me until you mentioned Chris Christie. I'm still not sure I could stomach him even then.
1 year ago
1 year ago Link To Comment
I know I couldn't.
52 weeks ago
52 weeks ago Link To Comment
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