Moscow News
http://www.mnweekly.ru/
October 30, 2008
Living with crisis
By Marina Pustilnik
I was reading the news this morning and it felt like a body count. The global financial losses from the crisis are close to $3 trillion. Russian citizens have withdrawn 90 billion rubles from the banks. Banks are telling their clients about "temporary difficulties." Nobody wants to help Iceland. The price of oil has fallen to a 17-month minimum. Even Russian restaurant owners are starting to fire staff.
Approval of Moscow's budget is delayed indefinitely, Rosneft and Transneft are asking China for credits, while Malaysia is forced to break off a $470 million contract for European helicopters. Against this body count of losses comes the news that the markets have started the week with amazing growth - but the weary reader shrugs this off as "Oh, it's just a speculative run, not a real growth." News that the oil once again costs $65 per barrel instead of $60 also bring no cheer, although I remember very well that four years ago cheer it was.
It took us all very little time to learn to live the life of relative opulence even if we never had any access to the ubiquitous oil wealth. As our incomes were growing, we were getting used to a different level of living. We went out a lot, started taking three-day weekends to travel somewhere like Istanbul or Prague, discovered organic food and credit/debit cards that are accepted almost everywhere - except for our neighborhood stores and markets, where food costs less, but they only take cash. The oil was flowing and so were the dollars and it was hard to believe the "pessimists" who kept talking about the bubble of oil prices, the bubble of the Russian economy and the overall need to "prepare." We pointed to the huge currency reserves and a separate Stabilization Fund and said: "1998 will not be repeated." To those who told us that the ruble is overvalued, we said: "But look at the Big Mac index! The dollar is supposed to be worth 15 rubles, not 23!" And when I say "we," I don't only mean the Moscow "middle class", which is more like "upper class" to the rest of the country (and even to the majority of the same city dwellers). When I say "we," I mean the active participants of the economic process at all levels. When I say "we relaxed," I mean that the companies started hiring excessively without minding their production costs, that oil producers were pumping and not exploring as if there's no tomorrow, and that consumption was seriously becoming a goal in itself.
I am definitely not the first person to back this thesis, but I feel that it bears repeating: "Crisis is good because it will make us all healthier." Every serious illness has its crisis, and if the crisis is passed successfully, the patient lives and get healthy. I know that at the level where I'm at, I haven't felt the crisis yet, but there are plenty of people who are feeling its impact already. I know the crisis will hit the least socially protected people the hardest. I know we will become thriftier and start reconsidering our money-spending habits. But I also hope that the crisis will mean other things as well: that the domestic producers will start investing in production that will make them competitive against the imported goods; that the government will finally take the example of the United States after 1929 and invest a part of the Stabilization Fund in building the infrastructure, while simultaneously providing work for many people.
I dare hope that someday an honest day's labor won't be considered something to sneer at and a qualified worker or specialist will be as respected as an attorney or an economist. I know that in some respects I am being overly optimistic.
Speaking of the overall economy, it will probably just continue getting worse and worse, until it starts getting better and better. But I'm hoping that in the process there will be enough companies and people who will thrive as result of the crisis - because they are industrious, because they are optimistic, because they will know what matters and what is superfluous. And I hope that by the time the next crisis comes around, these companies and these people will help us all survive it easier than the previous one. And the next crisis will produce new companies and people who are able to work under pressure and so on - until the critical mass is achieved - and we are living in a different country and a different economy. But we first have to survive this crisis - it's not as impossible as one might think.