To quote yet another wise old American saw, 'there ain't no such thing as a free lunch'! 'Vlad the Impaler' has reached across the lunch table and pinched part of his neighbour's meal although I suspect he has yet to realize quite how indigestible it is likely to prove in the eating! Not satisfied with that he is now working on ways to pinch yet more from his neighbor.
As yet he doesn't seem to appreciate that what he has stolen - for reasons which are not totally without merit - are not exactly the crown jewels, more like the cheap baubles, bangles and beads which will require 'loadsa' money just to keep them in the ropey condition in which he finds them. And it's not as though he has oodles of cash to spare. Yes, Russian reserves are enormous but his outgoings on bigger and better military assets will be equally enormous. In the meantime there is not that much available for improving Russian infrastructure and the lives of ordinary Russians. Now, thanks to his nationalistic urges, he has another 2 million Russians to look after and they are on the bread line.
Those Russians who can are voting with their feet and their internet bank accounts. Thus, the brightest and the best are departing and taking their brains with them, and those with money are transferring funds out of the grasping hands of Mother Russia as fast as they can. On top of that, those 'foreign capitalist swine' are taking note, as The WSJ reports today:
“Russia is going backwards” said Tim Ash, the well-followed economist at Standard Bank this morning after the country’s credit rating was downgraded to within one notch of junk by Standard & Poor’s. Weak growth combined with potentially “significant” outflows of foreign and domestic capital were to blame, said S&P. It cut the rating one level, to BBB-minus from BBB.
The stock market sold off, with the MICEX index down 1.5%, and so did the ruble, which fell 0.6% against the dollar to 35.977.
With perhaps just the merest dash of panic the Russian Central Bank has raised interest rates by 0.5% with absolutely no effect on ruble rates:
“The move came unexpected and may reflect the central bank’s growing concerns about the currency and inflation outlook,” said BNP Paribas analyst Michal Dybula. “However, the relatively minor increase in rates will do little to prevent further pressure on the currency if the conflict in Ukraine continues escalating.”
So enjoy the applause and adulation, Vlad, old chap - whilst you can!
