Is Russian economic meltdown merely a domestic problem? Does it affect other countries as well? Obviously it does, judging by data from Dubai, a popular tourist destination for Russians. According to Dubai Airports, passenger traffic related to Russia plunged 18.2% from a year earlier in November. Cargo volume through Dubai International also dropped 8% from a year earlier in the same month to 205,375 tons.
Has the Ruble currency crisis stop bleeding? Well, it has stabilised for a couple of days ever since Putin administration dramatically raised its key interest rate to 17% from 10.5% on December 16. But it tumbles above 55 rubles to a dollar (testing 60 rubles level), thanks to global oil prices which seems to have resumed its sliding, after failing to find support at US$55 a barrel (WTI). That’s a great news, you may exclaim!!
Obviously many people have been wondering if there’s a blessing in disguise now that the Russian Ruble is as worthless as toilet paper. With weaker Ruble, it means Russian products are cheaper. Let’s see – we don’t need their fighter jets nor do we have any intention taking a ride in a Russian rocket for a visit to the Moon. But we certainly want to splurge on Russian vodka and devour their delicious caviar, not to mention pamper ourselves with their mink fur.
Guess what, some Russians have indeed been splashing their money on caviar. While red caviar, made from salmon roe, is often associated with luxury and wealth, it is less costly in Russia now because of the vast harvest of the fish off the country’s eastern coast. But the Russians who have been boasting about consuming caviar actually belong to the rich and wealthy circles. Although it’s less costly now, caviar is still expensive. Huh? What gives?
Alexandre Petrossian, vice president of Petrossian, the world’s largest caviar distributor, revealed that the Russians have only one farm that produces caviar. It seems all this while the company has been sourcing its product from the United States, Europe, China and Israel after all. The fact is Russian beluga is hard to come by, thanks to overfishing, poaching and pollution. Hence, American producer such as Sterling Caviar, California, supplies to company such as Petrossian.
What about vodka? The two biggest vodka brands are Smirnoff and Absolut but guess what – neither is Russian-made. Absolut, like fellow market heavyweight Svedka, is made in Sweden. Smirnoff, on the other hand is made and bottled in Plainfield, Illinois, despite its website claim that the spirit “traces its heritage back to 19th century Russia”. So you see, while those vodka may have Russian-sounding name, they’re not made in Mother Russia.
Screw the caviar and vodka – I just want their mink coat – you may now scream. You could have seen more Russians wearing mink furs than babies wearing diapers. However, chances are the mink coats you see are made from Denmark, Finland or North America. Denmark is the largest producer of mink, a whopping 75% of fur sales. There isn’t anyone running around catching your minks by hand anymore. Most minks are farm-bred, either in Copenhagen, Wisconsin, or Finland.
Like it or not, it seems you won’t benefit much from a collapsing Ruble. And it isn’t that hard to understand why. Mother Russia has been relying entirely on oil to move its economy for as long as Emperor Vladimir Putin can remember. It’s rather amusing that not a single advisor had ever told Putin about the risk of putting all the eggs in a basket. If only Russia still produces caviar, vodka, mink furs in a large scale, Putin wouldn’t need searching for dollars as crazy as he is now.
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December 31st, 2014 by financetwitter
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