Yet the devaluation is causing prices to spiral upwards in the shops and may at some point cause a self-feeding crisis if it evokes bitter memories of past currencies crashes. The finance ministry said it expects inflation to reach 10pc in the first quarter of 2015. There is already a dash to buy washing machines, cars and computers before they shoot up in price, a shift in behaviour that signals stress.
The rouble slide is ratcheting up the pressure on Russian companies facing $35bn of redemptions of foreign debt in December alone, mostly in dollars. Yields on Lukoil’s 10-year bonds have jumped by 250 basis points since June to 7.5pc.
Author is looking at Russian Economy from a Western Consumer Economy perspective............
Perhaps its worth remembering 2009-2010 when western economies pretty much went nowhere as consumers stopped all spending.
The new TV's / Washing Machines / Cars / Kitchens that I knew friends were buying over a period of time and discussing completely stopped as nobody was buying. Ensuring food on table and house warm was a bigger issue than new LCD 50inch tV or whatever
Western Govts came up with another Ponzi scheme called TARP / QE where money they didn't have, magically appeared to buy assets worth little to get economies moving. Nobody knows how it will be paid back.
Relatively easy to stop consumer spending as people will just do it and Govts stop spending.
Yup in Russia Western stuff will be dear but lets face it what western consumer goods are not made in China ? and as for Western cars................ the factorys are already in Russia so who loses ? their western owners as their investment is worthless as nobody buying their cars or the Russians buying home produced stuff ?