Roger Bootle at The Telegraph is the bearer of happy tidings in an article headed: No one wants Russia to implode but optimists have their work cut out. Well, perhaps "no one" is a bit of a stretch because it certainly doesn't include me! I do realise that there would be a considerable shock to the gas market but, dammit, I'm British and I 'll manage it with typical British pluck not least because the sight and sound of sundry 'gangstapparatchiks' including 'Vlad the Impaler' being swept away in the turmoil of national bankruptcy would do me a power of good. Of course, the Russian people would suffer enormously but then, that's what they do so awfully well!
Apparently, the other day 'Vlad' "described the UK as a small island that no one pays any attention to" but as Mr. Bootle reminds him, and us, we have a GDP of some $2.5 trillion compared to Russia's $2.0 trillion. See, 'Vlad', ours is bigger than yours! Also, a great deal of Russian wealth stems from its gas industry but that is rather like one of my frequent farts (for which I am fined 50p by the 'Memsahib' every time I'm caught!) in that it smells and makes a lot of noise but it ain't gonna last forever! Russia is in dire need of investment, not least because so much of its money is shifted overseas at a rapid and growing rate:
Part of the problem may be a dysfunctional banking system, which tends to restrict lending to small and medium-sized businesses. But over and above this, there is substantial capital flight. The central bank reckons that $55bn of capital will flow out of the country this year (equivalent to 2.5pc of GDP.)
The fundamental issues are the political and legal system, the appallingly high level of corruption and the dreadful demographics. The first two factors seriously inhibit investment, both foreign and domestic. They also directly reduce productivity since even mundane bits of economic activity or investment have to be liberally laced with pay-offs and bribes, with the result that the ultimate return is not as large as it should be.
Well, perhaps I am over-eager because these "events, dear boy, events" always take longer than you think but even so, in my opinion the rise and rise of shale gas could seriously dent current price levels and if the Russians find their main income shrinking who knows what the effects might be. Nothing terminal, I trust!
a small island that no one pays any attention to
The Russian oligarchs seem to pay London a fair bit of attention, to the point that two of the most famous chose it to battle it out in court. Note they didn't choose Moscow.
Posted by: Tim Newman | Thursday, 28 November 2013 at 13:07
Indeed so, Tim, and not the least of the benefits accruable to 'this septic Isle' in the event of the Russian economy taking a dive will be an even *bigger* inflow of oligarchs and, of course, in the finest British tradition our estate agents, interior designers, restaurant managers, wine merchants and, er, 'investment managers' will stand by to do their duty for Queen, country and the Inland Revenue - well, perhaps not too much for them but maybe toss them the odd groat or two!
Posted by: David Duff | Thursday, 28 November 2013 at 13:18
Shale gas has saved the good ole USA for now at least (even as Obama is doing his best to destroy it) and it could breath new life into the ailing UK and the rest of Western Europe. However the EU(SSR) and eco-loons are working furiously to make it's extraction not viable and I fear that they will succeed. These days it appears most of that which is the right thing to do is being subsumed by those who only know how to do things badly or in nobodies interests but their own.
Posted by: Antisthenes | Thursday, 28 November 2013 at 19:22
'No Good Idea Knowingly Left to Develop' is the motto of the Eurocrats!
Posted by: David Duff | Friday, 29 November 2013 at 08:37