Maybe Mother Russia is still gloating over the Georgia affair, but its show of military might was not so tactical for its economy, where the smart money is leaving in droves (read: at a rate rivaling the 1998 ruble crisis). Is this only the beginning, or is the worst mostly over? (Note: don’t miss the “million-headed hydra of the bourgeoisie” quote in the story after the jump. So necessary.)
Investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 rouble crisis, new figures showed on Thursday.
Russian debt and equity markets have also suffered sharp falls since the conflict began on August 8, with yields on domestic rouble bonds increasing by up to 150 basis points in the last month.
The moves come as President Dmitry Medvedev faces pressure from business leaders concerned that the impact of the global credit crisis is starting to be felt in Russia.
Credit conditions are to be discussed at next month’s “summit of oligarchs”, the Russian Union of Industrialists and Entrepreneurs meeting that former President Vladimir Putin held annually to discuss economic issues.
Vladimir Potanin, head of Interros, one of Russia’s largest industrial groups, has complained about the shortage of long-term credit to Mr Medvedev, the financial newspaper Vedomisti reported on Thursday.
More at http://www.ft.com/cms/s/0/60abb0d4-6fb1-11dd-986f-0000779fd18c.html
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