a 17 August 1998, an event occurred which brought the country to a severe crisis, Russia defaulted on short-term bonds. After a few months the ruble has depreciated three times, the banking system was paralyzed, and the standard of living dropped to critical values, dragging the credibility of the government. In people, this day is called “Black Monday.” However, the beginning of the last was laid a few days earlier.
Everything is under control?
“The devaluation of the ruble will not. It firmly and clearly. My statement is not just my imagination, and not because I would not want devaluation. My statement is based on the fact that everyone is counted. Work on tracking is held every day. The situation is completely controlled,” – said the President of Russia Boris Yeltsin on 14 August 1998. Three days later, the government announced a technical default.
By default most affected Russia’s banking system – losses amounted to 100-150 billion rubles, the volume of GDP decreased by 10%, volume of investments — 15%. The deposits at some commercial banks fell by 15% in ruble terms and in real terms by 52%.
Economy — not a man, she recovered fast enough. The fall of the ruble, odorous exports and accelerated import substitution, contributed to the growth of the industry. Due to the devaluation of the ruble prices of imported goods in the country jumped, and prices of domestic goods abroad fell, which allowed them to occupy the domestic market. Thus, the “Gloria jeans” in that period increased production by 50%; the products of the company “Vimm-the bill-Dann” pushed at the shelves of imported milk; vodka production in 1999 increased by 50%. At the same time, the devaluation of the ruble has helped Russian companies to enter new markets: “Kaspersky Lab” in 1999 opened an office in the UK, ABBYY — in the United States.
The role played by the fact that the Prime Minister in September 1998 was Yevgeny Primakov. “He just didn’t do anything, and this has helped the industry to grow in 1999 by 20%,” recalled Boris Nemtsov, which before the crisis was the Chairman of the government.
“From the point of view of an observer of the Russian government at that time did not correspond to its purpose,” writes the Professor of the Higher school of Economics Martin Gilman, in his book “a Default, which might not be.” Some entrepreneurs, who had large outstanding loans, immediately sold off assets of their enterprises, and something taken out abroad. The authorities in most cases, condoned, and even helped the perpetrators.
Meanwhile, it was required urgently to resolve something affected investors, the collapse of the system of mutual settlements, a decrease in tax revenues, Stripping assets and��the end, something has to be done about the numerous and extremely dissatisfied investors. At the same time it was noted the abuse of the temporary moratorium on the repayment of foreign debts of the banks.
“Around sounded mutual threats, was conceived of the trial.Finally, the widespread statement of one banker: “I would rather eat nuclear waste than invest in Russia,” notes Gilman.
Lessons of default, stash and austerity
Immediately after the August events the probability of hyperinflation and economic collapse seemed very real. In September, the crisis became even more serious due to the devaluation of the ruble and falling confidence in him. In August, prices for consumer goods rose 3.7% in September from 38.4%.
The shortage of cash dollars and even rubles dramatically affected the retail trade, almost completely stopped the importation of imported consumer goods. “Everywhere began to be a queue in the shops; it seemed that here-here will come again Soviet times. Accustomed to the whims of fate, the Russians were skeptical, doomed peace”, – said Martin Gilman.
In his opinion, outside of Moscow and some other major industrial centers, the deterioration of the situation was felt not so sharply. The reason is that the achievements of the previous period had spread to the province, and therefore the financial collapse of its almost not affected.
In November 1998, during a nationwide poll 63% of the surveyed families reported that they had to give up many items of expenditure, and the level of consumption of their families decreased significantly, compared to pre-crisis. And only 11% of households believed that their level of consumption was saved. Such data results in the “Bulletin of public opinion”, published by the Levada Center.
Many families totally refused to purchase consumer goods, clothes and shoes. 33% of respondents have postponed upgrading appliances and electronics, 7% – car purchase, 5% – the purchase of housing. For most new acquisitions were made possible only in the mid-2000s, when the money has more people.
Many families refused to purchase consumer goods, clothes and shoes
21% of families reported that they were forced to abandon medical services, as were not able to pay for them. Even the basic needs of Russians in health and safety was under threat.
The decline in real income could not affect the structure of food, and some traces of the shock were visible even in the polls in mid-2000. A significant number of Russian families has greatly limited the consumption of basic foods: meat and fish, fruits, dairy products, confectionery. If in 1996 year 29% of poor families reported that they had been continually forced to abandon purchases of dairy products, in 2000 such families among the low was 46%.
The causes of the dramatic decline in the standard of living in the first months after the crisis of 1998 is associated not only with faster growth of prices, but also with the growth of debt and irregular payment of salaries and pensions.
According to the survey, only a quarter of Russian families at the time of the crisis had any savings. And if half have savings did nothing to protect them, 37% had at the time of the crisis savings hastened to spend these funds as previously planned purchases, and on goods “in reserve”.
In the majority of other families available funds at the time of default is almost not there: if there was money for a “rainy day”, not for “black months.” Three months after the default of 16% of respondents reported that were in extremely bad situations: bankrupt, unable to pay debts, and 1.6% of those surveyed lost their own business.
Crisis experience very tempers of the people
“The most important people at the time learned very seriously to count money. People used to live in the paradigm of “grab”, “take”, “take”, that is, the management of their liquidity was not our priority. Default many people are taught to have a mandatory stash, including currency. For business and for everyday life. Crisis experience very tempers of the people,” — said the first Deputy General Director of rating Agency “Expert RA” Marina Chekurova.
Simultaneously with the August default on the national surveys were recorded, and the extreme level of pessimism of the Russians in the estimates of their future, in particular, the financial situation of families. 55% of respondents expected further deterioration of the financial situation of their families, 17% believed that their current situation will not change. On the question of how long the majority of people in Russia adapt to the occurred changes, 44% of respondents said that for most people the impact of the crisis irreversible and in the circumstances of the source of improvement there.
