The basis for the return of the world's financial markets to growth were yesterday's statements (heard late in the evening Moscow time) by representatives of the US Federal Reserve System. They effectively promised to "increase liquidity" if the situation…
Text of report by Russian political commentary website Politkom.ru on 10 August
[Report by Ivan Preobrazhenskiy, leader of IA Rosbalt's political desk: "Premature End to Panic"]
The Federal Reserve System in the United States, the Ministry of Finances in Russia, and financial departments in other countries have put an end to the financial panic that arose at the end of last week. Real monetary "injections" for the financial markets, and to a greater extent, even the simple promise to pour money on the fire, were enough, many people think, to avert a second wave of financial economic crisis. However, in reality, it is rather too early to rejoice. And the rouble could still easily be devalued, oil prices go down again, and the US economy enter the stage of recession. After all, the main cause - the gigantic, simply unmanageable debts of those states that after 2008 assumed the obligations of major corporations - has not gone anywhere.
The basis for the return of the world's financial markets to growth were yesterday's statements (heard late in the evening Moscow time) by representatives of the US Federal Reserve System. They effectively promised to "increase liquidity" if the situation on the stock markets does not enter a normal channel, and the United States' debt problem remains as acute. And after this, the American stock markets quietly crept upward. True, not with the fervour with which, before this, they collapsed into the "minus" abyss.
Incidentally, Russia also resorted to measures similar to those employed by the Americans. Here things were not limited to Vladimir Putin's promises alone. In order to stabilize the situation, the Ministry of Finances floated temporarily available budget funds to the tune of 40 billion roubles. In the upshot, the combination of the external and internal factors brought some long-awaited calm to the Russian stock markets. Like the American markets, they resumed their growth. Accordingly, the US dollar exchange rate also fell slightly against the Russian rouble. It may appear that Russians can relax. And that those of them who managed to open "metal" accounts in banks, or who bought investment coins, can altogether grow sick at heart, because the growth of prices on the most important valuable metal virtually stopped. However, such an optimistic conclusion is premature.
The first sign is the continuing, albeit limply, fall of the rouble exchange rate. Against the Euro, if not the dollar. Second, there is the continuing growth in the price of gold. Albeit not such significant growth as in the previous few days, but tangible growth all the same. Finally, the third indirect sign is the bankruptcies of small tourist firms and airlines that have been observed in Russia. It does not testify directly to continuing instability in the financial markets, of course. However, it is painfully reminiscent of the 2008 situation, when the first financial problems also began among tour operators and air carriers, and it all ended with a large-scale market collapse and a pronounced devaluation of the rouble.
In point of fact, it is devaluation that is predicted by many analysts as the first, and most probable consequence of what has happened. In other words, we can expect, if not in the next month or two, then in the foreseeable future, a fall in the rouble exchange rate, and, in parallel, inflation, with all its charms; that is to say, first and foremost, rising prices and tariffs. Even entirely official people do not conceal this. For example, Deputy Finance Minister Sergey Storchak, justifying the need for the population to have roubles in their hands by the fact that they buy bread with these same roubles, nevertheless says: "When it comes to large sums of savings, there is still some sense in turning to exotic currencies. But if it is a question of the comparatively small sums of money that our population has in their hands, it is not worth abandoning the dollar."
So that it is clearly not worth being in a hurry. Even if those who optimistically state that the panic of recent days is not the first phase of an burgeoning new world economic crisis are right, for Russia individually, its own micro-crisis is virtually guaranteed. It is especially likely if oil prices, which ground to a halt rather than beginning to go up, continue over the next few days the fall began earlier, and drop below the 80 dollars per barrel barrier.
Admittedly, it is after the elections that one should most likely prepare for a collapse. It is then that it is most possible. Because, as many experts note, before the elections, political objectives are more important for the Russian authorities than economic ones, and even though accumulated funds are not as considerable as in 2008, all the same, they are entirely sufficient to "stretch" until the spring of 2012 and to elect a president. Well, and after that, he will have six years to combat all possible crises.
Credit: Politkom.ru website, Moscow, in Russian 10 Aug 11
Politkom.ru website, Moscow, in Russian 10 Aug 11/BBC Monitoring/(c) BBC