Economists are especially worried by the mounting flight of capital and increased dollarization of the economysomething that last happened a decade ago when the government defaulted on its foreign debts.
"Some of my friends have converted all their savings into dollars, leaving just 500 rubles to pay the phone bill in their account," said an administrative assistant at a bank, who asked that only her first name, Olga, be used because she was not authorized to speak to the press.
"I've been telling my friends for months to buy dollars while they were cheap, but some of them just wouldn't listen," she said. A recent World Bank report documented the extent to which the decline of oil prices from a high near $150 a barrel to about $50 is wreaking havoc on the Russian government's budget and depleting its foreign-currency reserves.
This is a wicked turn of events just weeks after we have been on the edge of our minds fretting the absolute collapse of the dollar, and this after a snarky Vladimir Putin tried to threaten the West with strong words and stronger acts of aggression against its own former satellites. So it seems that national confidence always resides on a floating scale. At least the Russians still possess a fiscal reserve, despite the relative spoilage of their currency, which is something the United States can't boast as we continue to roll up debt.
Wonder what bad news Putin will have for Hugo Chavez in the near future, as the Russians rush to stop the bleeding while the Venezuelan regime suffers from the same impact of oil prices on its own ego-driven economy?