When the Russian stock market closed on February 25, after losing over 60% of its value in under two days, it was news. When it stayed closed the next day, that was news. That it’s still closed three weeks later doesn’t even merit a mention. The daily updates on whether or not that market would resume trading have stopped. That Russian analyst who drank to the death of the market back on Mar. 4 may have seemed overly dramatic at the time, but he was absolutely correct in his assessment.
As Yahoo News reports, Russians are just waking up to the fact that whatever investments they made, any hopes for their financial futures are gone. And it’s not just stocks. "Until February 24 I was sure money in my bank or investment account would always be there to help me," said one young woman. “But I was wrong. I understand that I am now completely unprotected."
That loss of any fiscal security is one of the reasons that Bloomberg reports Russia is suffering an enormous “brain drain” with the country’s “best and brightest” making a “stampede for the exits.” An estimated 200,000 Russians fled the country in the in the first 10 days of the invasion for “Armenia, Georgia, Israel, Kazakhstan, Kyrgyzstan, Turkey—any country that admits Russians visa-free.” Both Turkey and Uzbekistan have added additional flights from Moscow and St. Petersburg. Those flights are leaving Russia full. The ones going back are all but empty.
Economically, Russia is done. The kleptocracy that spent decades skimming from an extraction economy while failing to fund public programs, education, infrastructure, or the military, has discovered that the well has a bottom after all. Moves to nationalize assets of manufacturers and retailers who have idled their operations only help to make sure there will be no second act.
Russia was already near the poorest nation in Europe when it came to the average wealth of citizens. Now that rapidly declining net worth places them far down the list — in the realm of crushing poverty. But at the same time, the cost of living in Russia is soaring and the services provided by the state are decreasing. Whether or not Russia defaults on its debts this week, its money is now fundamentally worthless outside its own borders. Whatever value it maintains inside those borders isn’t clear.
Underscoring all this is Vladimir Putin’s increasing calls for “purification” and spitting out the “scum and traitors.” And new legislation that imposes a 15-year sentence for reporting news that disagrees with the government. And thousands of arrests for protesters.
It was already clear that Putin has a fetish for restoring the Soviet Union—a name that both Putin and his advisers have repeatedly used in recent weeks when describing the Russian Federation. What wasn’t clear is that Putin’s admiration of all things Soviet included the bread lines, famine, labor camps, and political purges. Russia is going to get the restoration it deserves.