Russian Financial Crisis (1998)

Such an event caused many problems in the country. The first problem had been that when banks lost tons of money due to the stock market crash, they also lost the life’s savings of so many hard

Russia is already in debt and it couldn’t really afford to be put into more. Russia’s national debt is around 6,709,506,270,191. Russia is so large that it makes sense that there national debt is so high. In the U.S. our country isn’t big at all compared to Russia and we are in 11 trillion dollars more in debt then they are. Both the U.S. and Russia need to cut back on spending on unnecessary things and focus on reducing the

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

Another repercussion of the Soviet Union’s collapse was the failure of the economies of almost every new post-Soviet country. Most of the economies of the new Republics were left in shambles after the collapse. In Russia, people were not ready for the new economic freedom that resulted from the fall of Communism. Their unpreparedness led to inflation. “Inflation caused prices to go up three hundred percent in the first month, and 2,591 percent by the end of 1992.”( Russian Economy in the Aftermath of the Collapse of the Soviet Union) Just three years after the Soviet Union’s fall, Russia’s inflation rate had skyrocketed to 2591 percent, evidencing that Russians were not prepared for such a rapid evolution, going from a communist economy into a capitalist economy. All post-Soviet countries had the same economic fate as Russia, plunging into worse economic conditions than the United States suffered during its Great Depression. For example, in 1992, the Ukraine had almost a fifteen percent drop in its gross domestic production and Latvia suffered a 33 percent drop. (GDP growth) Many of these countries’ economies are still suffering as a result of the rapid evolution

Financial Crisis of 2007-2008 originated in the United States spread to the financial systems of many other countries, including CIS countries, by means of the domino effect. Bankruptcy of one of the largest Americans Bank, Lehman Brothers Holdings PLC, in someway was a launcher of this global crisis the scope of that can be compared with the Great Depression of the 30s of the last century. No one could have even believed that a crisis in the local market of subprime mortgage loans in the USA would have such enormous affect on the financial systems over the world and crash banking sectors of many countries one by one.

The banking system, stock market, and financial markets in Russia were also seriously affected. Russian government had to pump tens of billions of dollars to rescue financial markets and banking system of the country.

Amid Russian Revolution years there is the chance to watch the Russian economy experiencing a few basic moves, including a portion of the most exceedingly bad things that can happen to a nation. There was war and civil war. The economy endured monetary breaking down, separation, and starvation. There was a breakdown of state limit: government prohibited Vodka.

In this essay, I will briefly explain what happened during the financial crisis of 2007-09, and also discuss the contribution of the government to the financial crisis.

The Russian state has been characterized by its strong heritage of powerful, autocratic leadership. This domination by small ruling elite has been seen throughout Russia's history and has transferred into its economic history. Throughout the Russian czarist period, to the legacy of seventy years of communism; Russia has been a country marked by strong central state planning, a strict command economy and an overall weak market infrastructure (Goldman, 2003). Self-interest, manipulation and corruption have all been present in the Russian economy, and have greatly helped the few as opposed to the many. To this day, Russia still struggles with creating a competitive and fair market.

The socioeconomic conditions that provided the catalyst for the French Revolution and the conditions that existed in19th century imperial Russia, are strikingly similar. Both societies for better or worse functioned under the authority of an absolute monarchy with an inherent structural inequality between the ruling class, and a majority disenfranchised agrarian peasantry. Russia and France differed significantly in economically due to the fact that both revolutions were separated by more than a century of industrial development. However and interestingly both events have as a foundational basis the oppression and reaction of a lower class to spark revolutionary upheaval.

The collapse of the Soviet Union at the end of 1991 marked the beginning of Russia’s transition from a communist system to a market-based economy and democratic political system. Russia, despite being a nation rich with natural resources such as oil, fell into a state of economic instability and continued to weaken throughout the 1990s. The situation escalated until the point of financial collapse on August 17, 1998, resulting in a 90-day suspension on payment to foreign creditors, a default on domestic debt, the devaluation of the ruble and as a consequence, an increase in all debts denominated in foreign currencies. The primary causes of Post-Communist Russia’s economic crisis of the 1990s can be identified as the corporate elite’s influence on parliamentary economic agenda, foreign influence and pressure, the government’s ineffective integration into the global market and its presentation to the international community, as well as the government’s inadequate macroeconomic preparation and management. These causes significantly weakened the power of the state and the government’s ability to effectively instigate economic reform; leading to a large drop in investor confidence and consequently, a devaluation of the ruble, which resulted in the August 1998 economic crisis.

To understand the development and the impact of the financial crisis, the following paragraph gives a general overview about the timeline of the financial crisis and the series of reactions which caused, at the end, the failure of the American banking system and led to a worldwide economic downturn with the result of the global economic crisis. The topic of this paper is the failure of the American banking system, but as the banking systems of the whole world are interdependent, the whole situation and the whole crisis has to be investigated.

The Russian economy has become a fragile since the Soviet Union, officially known as the USSR (Union of Soviet Socialist Republic), collapsed in 1991. The GDP (gross domestic product) fell from USD 516 billion in 1990 to USD 196 Billion in 1999, which was over a 60% decrease. (GDP, F., n.d.) In 1998, the value of the Russian ruble declined, which was known as the ruble crisis. From 1999 until 2008, an upward trend occurred with oil prices, thus improving the Russian economy. However, during the 2008 to 2009 global economic crisis, Russia was one of the countries that was hit the

* The Russian financial crisis of 1998 resulted in a financial collapse and devaluation of the ruble by 2/3. The domestic producers had to reduce their reliance on imported materials and some foreign competitors exited the Russia market.

Devaluation was postponed through heavy international support. The ultimate crisis in August 1998 resulted in a partial government default and steep devaluation