What transpired in Russia that led Jordan Weissmann to pen a piece for Slate titled "Russia Is So Screwed"? The country's Central Bank made a surprise decision in a 1am meeting to jack its interest rate from 10.5% to 17% in a last-gasp attempt to stanch the fall of the ruble, which has been hammered this year by sinking oil prices and the impact of the West's sanctions. It didn't work, writes Matt O'Brien at the Washington Post's Wonkblog. The ruble plummeted 11% against the dollar today, its steepest intraday fall in 16 years. Pundits are weighing in on what this means for Russia and Putin, and using "doom" and its synonyms.
- As O'Brien sees it, "It's a classic kind of emerging markets crisis. It's only a small simplification ... to say that Russia doesn't so much have an economy as it has an oil exporting business that subsidizes everything else." Our own oil supply is up, while demand from elsewhere is down. And even that wild interest rate isn't enough to make Russians warm to the ruble. "In other words, there's a well-justified panic. So now Russia is left with the double whammy of a collapsing currency and exorbitant interest rates. Checkmate."
- Writing for Reuters, Timothy Heritage suggests that Putin needs to "act fast" but has some time—though not a lot of options. Heritage talks to one pollster who believes that Putin's "store of support" will last him 18 months to two years, and that the "first signs of discontent" will emerge in spring. "Putin is aware that his predecessor, Boris Yeltsin, resigned early after a financial crisis and that Soviet leader Mikhail Gorbachev's grip on power slipped as the economy crumbled."
- Now isn't the time to gloat about "the abrupt collapse of his regime’s economic clout," writes Geoffrey Smith for Fortune. Smith doesn't see Putin backing down on Ukraine, or backing down in general. In fact, "doubling-down with another foreign policy adventure to distract from domestic problems hardly seems fanciful any more." (Smith suggests Kazakhstan as a potential target.) "The only other way out is for Putin to be replaced in a palace coup ... but anyone with memories of 1991 and 1993 will remember how badly they can go. Barring a rapid turnaround in the oil price, there are only bad and worse outcomes from here on."
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