Russia Goes for Insane British Carry Trade

The grip of insane British monetarist practice on whole swathes of Russian economic activity was dramatized in the December 2009 newsletter of MICEX, one of Moscow's two main stock exchanges. One of the shorts in The MICEX Newsletter section, "Macroeconomic Review," asserted, "In 2010, the possibility of conducting carry trade transactions will contribute to the strengthening of the ruble. Even if the Bank of Russia continues to lower interest rates, the overnight repo rates will remain substantially higher than interest rates in the USA and the EU."

Saner heads, such as Chamber of Commerce and Industry head Academician Yevgeni Primakov, have pointed to the already >$500 billion foreign holdings of Russian corporate debt as a strategic vulnerability of the nation. Yet, London-centered monetarists continue to hype the ability of the Moscow markets to attract speculative capital as a great plus for Russia.

In 2009, even as Russian goods production collapsed and unemployment surged, the Russian RTS stock market surged by 233%. On March 11, 2010, the British wire agency Reuters crowed that the Russian ruble had hit a 14-month high, on the basis of rising oil prices and the carry trade. The London Financial Times of March 12 headlines that "Russia's hot ruble keeps seducing foreign investors."

Even the Central Bank, which is run by veterans of the London-steered radical free marketeers' hegemony within Russia in the 1990s, is alarmed at how rapidly the ruble is surging, which tends to tighten financial resources available inside the country. The Central Bank is lowering interest rates, accordingly. The FT gloats that Russia is still "the weakest link" in the BRIC countries, "but that is not stopping the speculators showing a rational — or perhaps irrational — exuberance for the ruble."