Thursday, December 11, 2008

There's No Flight to Cash in Russia

It's a flight away from cash

Bloomberg reports:

Russians are shifting their cash into foreign currencies and buying things they don't need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 percent against the dollar since August, when Russia's invasion of neighboring Georgia helped spur investors to pull almost $200 billion out of the country, according to BNP Paribas SA...

Property is now a protective investment, not just a status symbol, said Sergei Polonsky, founder of real estate developer Mirax Group, which is building Moscow's tallest skyscraper...

For the burgeoning middle class, investments of choice range from electronics to gold jewelry. Evroset, Russia's largest mobile-phone chain, is telling people to buy anything they can.

'It's better to feel happy that you own something than to fear losing the money you have earned,' Chairman Yevgeny Chichvarkin says in a letter posted at 5,200 Evroset stores. 'If you need a car, buy a car! If you need an apartment, buy an apartment! If you need a fur coat, buy a fur coat!'
Take notes, if Bernanke continues to print money the way he has since, September, this will be the U.S. down the road.

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