THE COLD RUSSIAN WINTER
While Wall Street consults astrologers and feng shui geomancers for
direction in the Dow Jones, Russian soldiers are wandering Moscow's upscale
Tverskaya Street panhandling for cigarettes. Last month, an army major, in
Central Russia, took to the streets in a tank demanding his wages. The
government promptly paid him and his entire unit. Russian elite Special Forces
units are paid on time, but more than 150,000 retired personnel still wait for
temporary housing. One wire service reports a retired lieutenant colonel is
selling mushrooms on the sidewalk to help feed his family.
If this problem worsens, we refer back to our time-honored conclusion:
Desperate men do desperate deeds. Yeltsin's recent visit to the Northern Fleet
is reminiscent of the same 1993 visit, prior to that year's crushed parliamentary rebellion. This year is different and the shaky
Yeltsin-Chernomyrdin alliance may not hold water as the temperature dips below
freezing.
Throughout this past weekend, Western governments began to breathe a
sigh of relief as Yeltsin struck a tentative deal to establish a new government.
That lasted but a few hours as the Communists, led by Gennady Zyuganov, rejected
the pact. Mr. Z apparently wants a new Constitutional Assembly formed to "take
over" during any future crisis. Shades of the old Kremlin? You betcha.
Russia's currency, during August, challenged the value of the Mexican
peso, nearly achieving parity. A depreciating currency in a tropical climate,
such as Indonesia, Thailand or Mexico, is sufficiently problematic to cause mass
hysteria. Under sub-arctic and arctic conditions, revolution is not far away.
The exchange value of the Russian ruble ranges between the fictitious interbank
rate of 7.8/USD and the black market rate of 20/USD. Brief currency trading last
week suggested 11 rubles per USD. A better yardstick might be the wholesale
price of sturgeon. A week ago, sturgeon went for 50-60 rubles per kilo; Friday,
restaurants could buy it for 100 rubles. Imported alcohol remains unsold in
warehouses as distributors wait for the right price. Real estate prices on tiny
apartments jumped 25% in the past week.
Fortunate are the workers who've had their ruble-paychecks pegged to the
USD, as they escape much of the trauma facing the Russian labor force. However,
getting those dollars is impossible as most banks simply shut their doors,
leaving the employed in only a little better shape than the unemployed. In the
midst of a wild spending spree by Russia's yuppies, luxury stores shuttered
their doors. Those retailers were busy calculating how high they would price
their inventories when the exchange marts reopened. How long will the dollars
stuffed in mattresses hold out? That is the question many fear.
This week's summit in Russia could not get more pathetic. Perhaps, it is
no more than the latest twist in Clinton's saga to escape justice. No Russian
seriously expects any abrupt change to their wretched future arising out of this
summit. DR. DOOM doubts that this shabby PR spectacle will offer anything more
than a brief interlude to Russia's swift race into political upheaval and
Clinton's intermission from his ongoing political suicide.
Since this past winter, DR. DOOM has warned YOU about Russia and other
hot spots and how these tragedies are flinging a powerful US economy into the
same economic gutter. Many of you slid contently into your complacency as the
DJIA ran to a new record high. A bear market struggling with an awakened Russian
bear is a double whammy none of us can truly escape. That this Russian winter
could become a repeat performance of another one, sixty-one years earlier, may
be a forecast DR. DOOM does not feel comfortable in predicting.
What should worry you more, and keep you up at nights, is that we are
still in Act I of a five-act play. Yes, Virginia, it will get worse. In the
interim, we can offer you this link to help gear you up for the next leg of the
drama. You don't have to remain a sitting duck. It may pay not to.
Link to abcnews.com
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