Now here’s an interesting recipe for growth: how does utter financial
collapse and skyrocketing inflation sound? Writes
the Grouse today:
When the Russian debt markets blew up, there was a massive devaluation of
the ruble, which made it hard for Russians to keep snapping up all the imports
they had been favoring. This meant that the final years of Yeltsin’s administration
bolstered Russia’s declining industrial base and laid the groundwork for a
redevelopment of payrolls and confidence under Putin. Could a similar fate
await Detroit and the rest of the industrial heartland as the dollar continues
its slide? Will Bentonville look to Biloxi rather than Beijing for extruded
I’m pretty sure he’s not serious. But just for the record: the ruble went from
6.29 to 21 to the dollar in the space of just
over a month. An equivalent move would take the euro/dollar exchange rate
from 1.40 to 4.67. Inflation in Russia hit 84% in 1998, after the devaluation.
And the "bolstering of Russia’s declining industrial base"? Are you
driving a Russian car right now, or looking covetously at Russian washing machines?
Er, no. Russia has no industrial base to speak of: its newfound wealth is entirely
commodities-based, and is the consequence not of devaluation but rather of the
fact that prices for everything from oil and gas to nickel and gold have been
soaring over the past decade.
Oh, and did I mention that just about every Russian credit defaulted on its
debts in 1998?
On the other hand, I’ve long been of the opinion that Vladimir Putin and Rudy
Giuliani were somehow separated at birth. If Rudy can build a respectable political
campaign on the strength of his response to a single terrorist attack, just
imagine how attractive he would be in the wake of utter financial and economic