|A number of Russian banks have resorted to government bailouts or takeovers [EPA]|
With the financial crisis infecting global markets, Russia is feeling the chill.
Since mid-September the country’s RTS and Micex exchanges have closed and opened and closed again more than ten times.
The federal regulator has introduced new emergency measures that force the markets to halt trading if prices go up or down by five per cent, an attempt to prevent shares from fluctuating wildly.
At the Micex on Friday there were furrowed brows as traders huddled around computer screens, nobody knows when normal trading will begin again.
Meanwhile, Russia’s real economy is also in trouble.
A number of banks have been forced into to government bailouts or takeovers.
Car dealers and property companies have also been hit as banks scale back on the amount of credit they are willing to offer; this as one of Russia’s biggest lorry manufacturers halts production for a week to weather the storm.
Some companies say that job cuts are on the way.
But the reality is Russians just keep on spending.
Moscow streets are clogged with expensive foreign cars, its mega malls over-flowing with shoppers seemingly oblivious to emerging difficulties.
The credit crunch barely makes the evening news, with a policy of silence in the face of the worst financial downturn in Russia since the ‘Ruble Crisis’ ten years ago.
Back then a decline in world commodity prices hit Russia’s oil dependent economy hard.
Moscow was also engaged in the first Chechen war, straining Kremlin coffers to the sum of $5.5bn.
Now in 2008, Russia is at the end of another war, this time with Georgia, a conflict that damaged investor confidence and contributed to the current down turn.
But the Russian government has no illusions about who is to blame.
Commenting on the present crisis, Vladimir Putin, Russia’s prime minister, said: “Trust in the United States as the leader of the free world and the free economy, and confidence in Wall Street as the centre of that trust, has been damaged, I believe, forever.”
The Russian leadership wants the US to bear the brunt of excesses in its banking sector.
And Dmitry Medvedev, the country’s president, has called for a new global financial system before, as he believes, the old one collapses altogether.
The president has offered the country’s banks, oil companies and exchanges an $86bn package of measures to repay foreign debts and shore up investor confidence.
But will it work? The truth is, if the measures fail, ordinary Russians may soon start feeling the impact of a crisis beyond their immediate control.