Now, the Cold War Loser Will Fall
It's too fitting. A year after the US, the winner of the Cold War, spun into financial meltdown, Russia, its vanguished foe, succumbs to the same malady.
What makes Anders Aslund's essay even more noteworthy is, that, unlike the warmongers among the pundit class and the Pentagon who believe Cold War is resumed, Aslund interprets the August War between Georgia and Russia as the «second act» in an economic debacle begun in the 1990s.
Is Anders Aslund being a bit too dramatic when he predicts a «tragedy in five acts», with three acts yet to run?
The Russian stock market is in free fall, plummeting by 60% since May 19, a loss of $900 billion. And the plunge is accelerating. As a result, Russia's economic growth is likely to fall sharply and suddenly.
(...)
Russia is just about to enter the third act of this tragedy, a banking crisis. Numerous medium-sized banks, and some large ones, are set to go under in the stock-market turmoil. Too many big investors can no longer meet their margin calls, while borrowing costs have risen sharply. The recent appreciation of the dollar adds to their hardship.
I'm placing my marker on this prediction. I do it rarely, but the last time I did, Shinzo Abe's government in Japan fell in less than a year. I hope I'm wrong.
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