Russia Bankrupt and Will Collapse? Not so fast!

As many of you guys have been following the latest stories in the Western media about the great collapse of the Russian economy and Putin's tyrannical regime ending. I think these sensationalist remarks on how Russia is doomed to repeat the financial crisis of 1998 are just ridiculous. I mentioned in an earlier blog article about the dive in the value of the ruble is currently linked to the price of oil, but this doesn't mean Russia will always be like that. Since I'm a huge fan of graphical presentation of statistical data, here is the Bloomberg chart of the current situation here:

This chart is Bloomberg's interactive RUBUSD (Russian Ruble to US dollar) interactive exchange rate chart and I have transposed the price of Brent Crude oil onto it. From the looks of this particular chart, it shows you how interconnected the Russian ruble US dollar exchange rates are with the price of crude oil on international energy markets.This illustration has been put on the Western news media and interpreted as a way to prove that the Russian economy is going to collapse. I believe that the Russian economy will definitely be hurt in the short term as they do not have fully diversified their economy beyond the natural resources as they are currently a rentier economy. A rentier economy is an economy of a state that mostly seeks to sell its natural resources to external economies. In Russia's case, they are not quite a rentier state due to the sheer size of the country's economy and its economic potential.

The Russian economy has a relatively developed economic infrastructure, a highly skilled economy and one of the largest natural resource bases of any country in the world. Articles like this illustrate the sheer potential of the Russian economy, so I think it's too early to say that the Russian economy will not recover in the medium to long term, much to the dismay of Western policymakers. As with every single set of information that is available out there, I believe it's important to take a holistic view of every single economic situation, especially this one.