KEVIN O'FLYNN, MOSCOW
A CREDIT TO THEMSELVES
You can't trust anyone these days. You go on holiday for a couple of weeks and when you come back the world is teetering on the edge of a financial abyss. Banks are imploding, insurance companies are collapsing - you think they might have insured against such problems - and men and women in Washington are arguing over sums that are so high that you could have flown man to Mars and back and still have change to snap up a few African states.
And yet the whole thing has a somewhat unreal quality to it. First there was subprime mortgages, a subject which has only become slightly clearer after viewing this cartoon explanation (superinvestor.ru/sub/index.htm). Now there are banks who have been able to get in so deep into debt until the moment - a snap of the fingers, a twang of the stocking, the first defaulter flapping their wings in an Amazon jungle - that they realize they have been hiding billions of dollars of debt.
This odd world has been living in a rarefied cloud of its own for a long time.
When at home in Britain, a nice young man often rings me up from India and offers me a five figure sum as a five year loan. Having paid back a previous loan mostly on time, the bank has decided that they must tempt again and again.
Being of sound mind and already in debt up to my Adam's apple, I decline, ask about the weather in Darjeeling and give him the number of a friend in need of quick cash to feed a truffles habit. When I rang up my credit card company last month, they had almost doubled my limit without even telling me.
Way before the credit crunch, there was the credit willy nilly. You want money, take it, please.
Check out the classifieds in any Russian paper and there are columns of dodgy credit dealers, third or fourth parties away from those tables of official credit offerers that hang round in electrical hardware stores or car showrooms.
I've spoken to a few of them and most of them are con merchants who find ways round the system to get credit.
If I break and take these offers and then go belly up, there won't be a line of Senators or a call from Alexei Kudrin offering to buy up my debt. And I wouldn't deserve it even if there was.
Russia has not been shy in sending armored vans full of cash to pump huge sums of money into the stock exchange from the budget. Sums that could have been spent on, well, look around and you'll that there are plenty of very basic things that could be vastly improved with that extra finance.
Russian Newsweek reports that the companies that face the most serious problems as the credit crunch hits Russia are the builders who were using credit to finance construction.
There is probably not much sympathy for them as these are the same builders who are charging what it would cost for a castle in the Czech Republic for a three bedroom flat in Butovo. It would be nice to feel a degree of schadenfreude in the collapse but it quickly fades.
In Britain, the knock on effects of the crisis can be seen as job cuts announcements pile up and newspapers introduce sections on ways to cut down your spending.
Russia will face a liquidity problem, credit will be harder to get, mortgage rates will spike but perhaps not having access to easy money will be a gift rather than a burden. Still, I'm glad that I got my five credit cards when I could.
Kevin O'Flynn, a British freelance journalist based in Moscow
September 30, 2008
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