Russia, August 17, 1998
The Banking Implosion
It is amazing to watch a banking industry collapse in one Black Monday
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I read with great interest, all the wire reports and
Western views of this, most recent Russian financial calamity, but I
must defer opinion to the very people this effect most, the emerging
Russian Middle Class.
Over the last few days I've asked my Russian colleagues what they feel is happening to their country, as Russians who, by working for a Western company in Moscow, are the cream of the emerging Russian Middle Class. On Friday, as the beginning of the default/devaluation (and that is what this is, no matter what euphemism Yeltsin uses), I asked my colleagues what they view of events were. They all agreed that something was up. They knew the banks were not working as usual, and when the dollar dispensing ATM machine in our office ran out, the news gave everyone a sick feeling. Over the weekend, there was a odd calm in the city, reminding me of the calm Florida feels every time there is a hurricane brewing offshore. You know it will hit somewhere, but you just hope it isn't your town. On Monday, when all the banks stopped dealing in dollars, and rumors that SBS-Agro, one of Russia's largest banks, was bailed out by the government, my colleagues started to worry about their payroll. The Russian staff, paid in dollars by a large Moscow bank, were not so worried about devaluation, dollars are still dollars, but about access to those dollars. Since so much is conducted in cash USD here, essentially everything over $250 in value in stores, all residential rent, and most personal services; no USD meant no activity. Today (Tuesday), as most street exchange booths quote 9.5 rrl/USD, my colleagues see a repeat of what has already happened twice in recent memory, the steep decline of the national currency, the steep incline of consumer prices, and the continuing despair of all those who are not paid in USD; pensioners, soldiers, government and provincial workers. I do not sense the feelings of panic, as one might expect, but a attitude of acceptance, as this has happened before, will happen again, and life will continue as it always has. Oddly enough, they feel that the ruble will not stay at 9.5rrl/USD, but will appreciate back to around 7rrl/USD, and that the banks are trying to gain in the panic. They also seem strangely ambivalent about the national government. They laugh at Yeltsin's Friday comments backing the ruble and the economy, but they also know that there isn't much choice in the political field right now. Yeltsin may be a bit drunk at times, but he is still better than the Party Presidents before him. As one woman put it, with a shrug of her shoulders, 'Eta Russeya.' |
