Wednesday, December 17, 2014

Russian Governor Decides Banning a Word is One Way to Deal with Economy in Free Fall

by Nomad

When you happen to live in a country where the media is under the near-absolute control of the government, how would you know with utter certainty that your motherland is in the middle of a major crisis? 
It's all very simple, comrade.

An Inconvenient Moment 
An article in Russia Today provides us with the answer to the question above. While the world's news media are using words like "free-fall" and "meltdown" to describe the present state of the Russian economy, some officials inside the country have found a novel way to control the discussion:
Authorities in the Central Russia’s Kaluga Region have banned the use of the word ‘crisis’ in public and the measure is already helping to attract investors, according to the local governor.
The governor of Kaluga Oblast, Anatoly Artamonov, told the Russian News Service  
“It is possible that the crisis exists, but we forbid the use of this word.”
Artamonov preferred to use the term  "an inconvenient moment" to describe the historic crash of the Russian currency, which, despite all efforts by the Central Bank, has plunged more than 20% in just one day.

Paralysis on all Levels
This strange bit of denial is yet another demonstration of the government's failure of coherent policy. Artamonov- (voted governor of the year by the Russian Biographical Institute in 2002!) said that the regional authorities were not planning any actual policy response to the.. economic crisis thingy.
Instead, he had chose to hold a "major internal audit of the investment policy and legislation in order to create a better business environment."

Judging by that, reality doesn't seem to have sunk in. Artamonov was talking about providing benefits for small and medium businesses and industrial parks. In an effort not to appear jittery, the officials seem at a loss to do anything too   bold. 
Paralysis seems to have set in. 

Obviously the idea here is to stop international and local investors from stampeding out of the country in a full blown wild-eyed panic.

According to an article in the UK Telegraph, the panic has already begun.  
Wealthy Russians, desperate to get their money out of Moscow in the wake of the Russian economic crisis, are panic-buying in London this week, according to high-end estate agents.
Meanwhile Russia's Central Bank, Elvira Nabiullina, was attempting to find somebody to blame. That blame fell on the usual suspects whenever there's a crisis (there, I said it.) Market speculators and currency traders: in other words, the symptoms of the problem but not the problem.

Идеальный шторм
The Moscow Times reports that Russians themselves are rightfully confused as whom to blame.
In a survey by independent pollster Levada Center released to news agency Interfax on Friday, 80 percent of respondents said they had noticed price inflation, falling quality of life and problems in the wider economy.
But Russians are divided on what to blame. Forty-five of respondents said they were a result of falling oil prices; 33 percent said Western sanctions were to blame; while another 30 percent pinned responsibility on the cost of Russia's annexation of Crimea.
(Americans were just as shell shocked during the meltdown of 2008.It took time for the full effect of the financial implosion to be hit the average person.)

Most international analysts have used that tiresome phrase "a perfect storm" to describe what they see as the true cause. An unprecedented fall in oil prices, extremely bad policy, namely a heavy reliance on energy revenues and a failure to diversify when times were good. Added to that, of course, were the sanctions imposed on Russia, in response to its perceived aggression in Ukraine and Crimea.  

In a country where mortgages and loans are tied to the dollar, a drop of more than 60 percent this year of the Russian Rouble means wiped out life savings and will soon cause the bankruptcy of businesses that do their business or hold debt in international currency.

CBSNews quotes Carl Weinberg, a  chief economist with High Frequency Economics, who paints a very grim picture:
"The end is near for Russia's economic and financial stability. This is an unrecoverable spiral. The combination of economic and financial sanctions by NATO governments and the crash of global oil prices has killed Russia's economy."
If that sounds a little alarmist, then UK news media is more so. The Telegraph article also claims:
Russia has lost control of its economy in the last few days after an interest rate hike by the central bank failed to stem the collapse of the rouble, accelerating the trend of Russian buyers in the UK capital.
Although there has been no appreciable sign of discontent, clearly Russian President Vladimir Putin is under tremendous pressure. The Washington Post notes that Putin is still the hero of the nation.
Putin remains tremendously popular in Russia, but his rule has long been predicated on a basic bargain with voters: They gain economic prosperity and stability in exchange for acquiescence to a political life devoid of real opposition. His half of the deal now appears in question.
Of course, no population has had to endure more hardship than the Russian population in the last 100 years. At the moment, the effects of the present crisis are still to be felt.
At the moment, it's business as usual in Moscow/ As Bloomberg observes, there have been..  
no bank runs, no desertion of retail stores, no sign of consumer hoarding. Only expensive cars and luxury items are selling better than usual, and that's evidence only of bargain-hunting among the Moscow elite.
Six months later, all that could change. Nobody really knows at the moment how much of the present crisis (whoops) is overblown and hyperbolic and how much is a true economic catastrophe.
For a Russian government to attempt to keep a lid on the problem by forbidding the use of the words to describe it comes straight from George Orwell and the principles of  Newspeak in the novel 1984.  
Orwell described a government that attempted to control its people by controlling the language they were allowed to use. By eliminating undesirable words and by stripping such words as remained of unorthodox meanings, a government could make  all opposing modes of thought impossible.

Russia, try as it might, has never completely lost all of its old Soviet ways.

Some habits die hard.. especially during a кризис.