Russia's economy defied skeptics the same way a man defies gravity by jumping off a building. Worked great for the first few floors.
The wartime economy ran hot because Moscow lit the money printer on fire and threw it at defense contractors. Turns out you can create the illusion of growth when you're building tanks instead of letting people buy refrigerators. The budget deficit is widening. Analysts warn pressure could intensify next year. These are the same analysts who've been saying this for eighteen months, but now they get to add "we told you so" to their LinkedIn bios.
Cracks are getting harder to hide. This is what financial journalists write when they want credit for predicting something after it already happened. The cracks were visible in 2022. They were visible in 2023. They were visible last Tuesday when your cousin asked if he should buy rubles because "they're basically free money now."
The skeptics got defied because Russia burned through reserves and jacked up interest rates to levels that would make a payday lender blush. That's not defying gravity. That's flapping your arms really hard and calling it flight.
Retail traders saw "Russia defies skeptics" and started googling "how to buy Russian bonds." They confused temporary accounting tricks with economic miracles. They always do. That's why they're comparing brokerage statements in a Walmart parking lot while their ex-wives drive the Camry.
Next year the pressure intensifies. The year after that it intensifies more. Eventually someone will write "Russia's economy has collapsed" and retail will buy the dip on that too, convinced they're getting in early on the recovery, certain this time the skeptics are wrong, positive the technical indicators don't lie, unaware that the chart they're reading is for Gazprom's mascot merchandise sales.
Photo by Marek Studzinski on Unsplash
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