Saturday, October 27, 2007

Meet the New Russian Price Controls, Same As....

Financial Times: Russia is introducing Soviet-style price controls on some basic foods in an effort to prevent spiralling prices from denting the Putin administration’s popularity ahead of parliamentary polls in December.

The country’s biggest food retailers and producers have reached an agreement, expected to be signed with the Russian government on Wednesday, to freeze prices at October 15 levels on selected types of bread, cheese, milk, eggs and vegetable oil until the end of the year.

Drearily predictable consequences of price controls, according to the Streetwise Professor:

Shortages, empty shelves, lines in stores, black markets in foodstuffs. I expect that these developments will lead, in turn, as day follows night, to publicity/propaganda campaigns against “speculators” and “hoarders,” likely accompanied in today’s increasingly shrill and paranoid political environment by some physical attacks on enterprising black marketeers (most likely ethnic minorities.)

In other words, it's "deja vu" all over again in Russia, or "meet the new Soviet-style price controls, same as the old Soviet-style price controls."


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