Morphine halts Russian economic crisis in tracks
Yesterday, Russian Finance Minister Alexei Kudrin announced that Russia had passed the crisis like some kind of awful kidney stone. His evidence was, as usual, fuzzy math. The crisis is over, he said, because projections in the fall of Russia’s GDP had slowed from 10 to 8 percent. Phew!
Responding to Kudrin’s rosy prognosis, economist Mikhail Khazin went on the opposition radio station Ekho Moskvy to debunk this in a very interesting interview (in Russian). He equated Kudrin’s announcement to cavemen drawing bulls on a wall and then throwing arrows at them before a hunt. “If you hit [the drawing], it means the hunt will be successful,” Khazin says. “If you say the crisis is over with conviction, the crisis is over.” Moreover, Khazin pointed to the fact that because this, erm, recovery still depends on buoyant oil prices (currently at $67), this is still a very tentative recovery as the underlying causes are not being addressed. It’s like treating a patient exclusively with morphine: “if it hurts more, we’ll just give you more morphine…That is, we’re not treating our economy; we’re not even trying to steer out of it–How do I explain this? Basically, what we’re doing is saying, ‘let’s do something so that we don’t have to think about our problems today.’ That’s what we’re doing.”
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