Financial maven Judy Shelton, who predicted the crash of the former Soviet Union when few saw it coming, argues that Moscow faces the wrath of markets.
Since the attack on Georgia began in early August, the decline in Russian financial markets has accelerated sharply. The benchmark RTS Index of leading Russian stocks has slumped to its lowest level in two years. The ruble has registered its biggest monthly decline against the U.S. dollar in more than nine years as foreign investors rush to retrieve their capital -- some $25 billion in the last three weeks, according to French investment bank BNP Paribas. The amount of debt raised by Russian companies in August has fallen 87% from July levels. The issuance of new equity has come to a virtual halt -- a mere $3 million was raised in August compared to $933 million in July.
Shelton says keeping Russia out of the World Trade Organization won't mean much to Moscow. So markets will have to do to Russia what Western leaders clearly are not prepared to do: exact a meaningful price for Russia's rape of Georgia.
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