Word: russia
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...want to take the pulse of Russia, as its oil and gas boom of the past few years comes to a sudden and wrenching stop, leave behind the garish consumerism of Moscow and drive 220 miles (354 km) southwest to the small Russian town of Lyudinovo. For the first part of the five-hour trip the road is a smooth four-lane highway that whisks you past gleaming gas stations and a brand new Samsung TV factory. Then everything slows down. The highway turns single-track and becomes progressively rougher. For the last 20 miles, you bump along the ruts...
...world financial crisis buffets country after country, Russia was never going to be spared. It's in much better shape than it was during the last financial crisis, in 1998, when the ruble collapsed and the country defaulted. This time, Russia has $450 billion in foreign reserves left from the $600 billion it had amassed thanks to the soaring energy prices of the past few years. Its biggest banks, all of them state-controlled, appear to have largely avoided the toxic assets that have been the downfall of so many of their counterparts in the U.S. and Western Europe...
...Today, Russia's finances look a lot less robust. The government budget was based on oil at $70 per barrel, way above the current ? level, and it will consequently swing into deficit next year for the first time since 2001. The stock market has dropped more than 70% in the past year, as the nation's business élite dumped stocks to repay the huge loans they took out to finance acquisitions in Russia and abroad. Capital is fleeing - investors have pulled about $190 billion out of Russia since August - and the ruble is under pressure...
Lyudinovo's woes are not exceptional. The markets for the huge exporting firms that are the foundation of Russia's recent prosperity have suddenly dried up, and that's having an immediate effect on machinery makers and other manufacturers. Construction has also seized up in many places. Last month in Moscow, lack of funding stopped work on a Norman Foster - designed skyscraper called the Russia Tower that was going to be the tallest naturally ventilated building in the world. (See pictures of Moscow...
...steel or autos. In the Urals town of Magnitogorsk, a gigantic steelworks has placed 3,000 workers on forced leave. In Novolipetsk, to the east of Lyudinovo, thousands more have been furloughed since Nov. 14, when the steel factory idled two of its blast furnaces. Alexei Mordashov, one of Russia's best known oligarchs, has shelved an $8 billion investment program at his Severstal metals company that was scheduled for 2009-2011. The government now estimates that companies will lay off about 200,000 workers over December and January, but that's probably an understatement. Yevgeny Gontmakher, an economist...