The Financial Crisis Of Russia

Russia’s economy is very complex and also very terrible at the same time. Many other economy’s are also like this but Russia’s is a very interesting thing to learn about. Russia’s economy has many things wrong with it that in the long run could probably affected it in a negative way. But it also has many positive things about it.The negatives and the positives are, in my opinion, are equal in Russia economy.

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

This article analyzes the underlying causes of the current crisis, estimates how bad the crisis is likely to be, and discusses the government economic policies pursued so far (by both the

Russia began its reform with political liberalization, and many believe that Russia’s failure was partly due to focusing on political reform first and they should have begun with economic reforms which China had done. This lead to political turmoil so severe that in 1989-1993 workers were politically neutralized and unable to stop Yeltsin’s liberal market reforms. But, a small group of oligarchs helped to

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.

The financial crisis that happened during 2007-09 was considered the worst financial crisis in the world since the great depression in the 1930s. It leads to a series of banking failures and also prolonged recession, which have affected millions of Americans and paralyzed the whole financial system. Although it was happened a long time ago, the side effects are still having implications for the economy now. This has become an enormously common topic among economists, hence it plays an extremely important role in the economy. There are many questions that were asked about the financial crisis, one of the most common question that dragged attention was ’’How did the government (Federal Reserve) contributed 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.

Exacerbating this economic downturn was Russia’s transition to democracy without preexisting formal democratic political or economic institutions (Evans 2011). Although the economic downturn actually preceded Russia’s transition to democracy, and was actually one of the reasons for the fall of the Soviet Union in the first place, many saw democracy as a convenient scapegoat for Russia’s economic troubles. This growing discontent with the apparent results of democracy combined with Russia’s nonexistent history of, and thus lack of attachment to, democracy paved the way for a strongman such as Vladimir Putin to consolidate power in the name of economic recovery. In this case of democratic failure, performance legitimacy, or the lack thereof, was the main

Prior to the collapse of the Soviet Union in 1991, the Russian economy was heavily controlled and regulated by the Communist party, and following the establishment of the Russian Federation, serious efforts were made by Boris Yeltsin to liberalize and free the economic system. Upon his inauguration, Yeltsin inherited an economy that required immediate attention and felt inclined to radically transform it from a central planning system to a market-based one in an effort to put an end to the problems that the economy at the time caused, including a foreign debt that had reached $97 billion dollars and widespread hunger (Treisman 197). His economic reforms were based on shock therapy, including liberalism, monetarism and privatization, which seemed radical at the time due to their ideological shift in course and velocious nature. However, the declining productivity of the Russian economy, high fixed exchange rate between the ruble and foreign currencies, and chronic fiscal deficit as demonstrated during the Russian financial crisis of 1998, proved that the reforms were neither radical nor steady, but slow and partial. Ultimately, Yeltsin failed at his attempt to radically progress the Russian economy, and instead provoked a series of gradual reforms that proved to be too slow and inefficient in immediately liberalizing and boosting the system.

Upon being officially inaugurated on May 7, 2000, Putin’s boldness and authority acted as a saving grace for Russia and its people. Throughout the 1990s, the state of Russia’s economy, politics, and society as a whole was in constant turmoil and disarray. President Yeltsin campaigned on the basis of drastic economic change that would transform Russia from a bleak totalitarian past to a bright and promising democratic future. In order to fight the stagflation caused by the Soviet’s command economy, Yeltsin enacted measures of “shock therapy” to slowly reconstruct the failing economy. These measures included removing government price controls on numerous products, lifting wage controls on various jobs, cutting military spending to spare the budget deficit, and handing out vouchers to citizens in an effort to

There are several aspects of Russian society that can threaten businesses operating in this nation. Russian participation in the European Social Survey determined they are individuals characterized by a high degree of caution and more pronounced need to be protected by a strong state (Magun & Rudnev, 2010). The strong state applies to multiple facets of Russian society that leads to concerns about property rights and the protection of other assets. There is pervasive government intrusion into business that affects leaders of Russian companies. Economic advisors warned of a danger to economic growth comes from creation of state corporations with a difficulty facing business leaders being uncertainties from a powerful, hostile Russian government (McCarthy, Puffer, May, Ledgerwood, & Stewart, 2008). In certain areas the state hinders economic

* 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.

The period 1995 to mid-1997 was boom time for Russia’s financial markets. The value of the Russian bonds and stocks soared, with the participation of foreigners in these asset markets increasing rapidly. International investors’ optimism about the country’s future was lifted by stabilization policy that followed the advice of Western institutions.