Oil drops below $50 a barrel. The global auto industry slashes jobs in France, Thailand, Japan, and the United States. The world’s investors look for a safe haven to run to but none is to be found. Perhaps it’s time to stop referring to the current economic situation as a “financial crisis” and call it a general economic crisis? For those still wondering what the hell has happened, I suggest reading Niall Ferguson’s cogent explanation of how “Planet Finance” imploded in his “Wall Street Lays Another Egg.”
And what of Russia? It was only a few weeks that we were told that the crisis was sparing Russia’s “average Joe.” After all, few average Russians have invested in the stock market so the losses were concentrated at the top. Very true. But I’m sure Russia’s oligarchs can withstand having a few billion shaved off their paper stacks. However, for the average Russian, or even the average global citizen, the journey to an economic nadir is not so far.
In fact, there are some indications that Russia’s “average Joes” are no longer as safe as they were assumed to be. Yesterday, I already mentioned how many Russians are panicking and removing their savings from banks. Economic pessimism is in the air. A recent poll by VTsIOM shows that 2/3 (69 percent) of Russians have pessimistic view toward the future of the global economy. Russians see the main evidence for the crisis as: high inflation (23 percent), the decrease in the population’s standard of living (22 percent, a seven fold growth from September when only 3 percent of respondents gave this answer), and unemployment (10 percent, up from 2 percent).
There are other indicators of how the crisis is impacting the average Russian. According to one prognosis, the cost of medication rose by 30 percent this year and is expected to rise another 27 percent in the next.
The other day, the Russian government announced it would raise the minimum employment benefits to 850 rubles ($31.05) from 781 and the maximum to 3,400 rubles, up from 3,124 rubles, beginning next year. The average monthly wage is 17,847 rubles. The government expects that next year about 350,000 people will lose their jobs.
The Ministry of Education announced that it will not reduce credit to university students struggling to pay student loans. The aim is to prevent students dropping out of school if they can’t meet education costs. A good way to stave off unemployment is to keep people in school.
Even Putin set out to calm the public in his speech at United Russia’s Congress. He announced plans to give mortgage relief, tax incentives, maintain and increase pensions, promised to prop up the ruble, and ensured the safety of Russia’s banks.
And just to symbolize how touchy things are politically in the provinces, Pavel Verstov, a journalist and member of United Russia, was expelled from the party as an “instigator of instability” and “for activities inconsistent with the interests of the party.” Verstov’s violation of party ethics was an article he wrote for Verstov.info (which appears to be shut down) reporting that there has been four cases of suicide at the Magnitogorsk Metalworks (MMK) as a result of the economic crisis. Kommersant reports that Verstov wrote the following:
This is the fourth case of suicide at OAO MMK and its sister companies during the crisis. People could not endure the credit burden as their pay constantly shrank. The metallurgists chose the noose out of fear that they and their family would be thrown out onto the street for defaulting on their mortgage payments. A few others, who are less scrupulous laborers at MMK, preferred robbery and armed raids to suicide. Now they agree to participate in [robberies] even more.
Officials from MMK are calling for some blood of their own. Namely, Verstov’s. MMK has sent a request to the local courts demanding that criminal charges be filled against the journalist for publishing “lies.”
So perhaps the immunity of the average Russian “Joe” from the global economic crisis is becoming a thing of the past.