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    Economic Criticism of Russia is Laughable: Expert in Global Financial Markets

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    International ratings agencies have downgraded Russia’s sovereign rating, but experts say Russia is, in fact, in a far better situation than most of the countries in the European Union.

    MOSCOW, October 26 (RIA Novosti) - On Friday, the ratings agency Standard & Poor's affirmed Russia's sovereign rating at BBB-/A-3 with a negative outlook, warning that a downgrade may follow if more sanctions are imposed on Moscow over the Ukrainian conflict.

    This places the country’s sovereign debt a notch above junk status, a bellwether point international fund managers often use to determine whether or not foreign debt is too risky.

    S&P also said another cut might come if Russia's monetary policy or exchange-rate flexibility weakens.

    Earlier in October, another international ratings agency - Moody's - downgraded Russia's credit rating to Baa2 from Baa1, citing the same drivers for the downgrade  - the crisis in Ukraine and Western economic sanctions.

    Patrick Young, an expert in global financial markets who regularly contributes to the op-ed pages of the Wall Street Journal and Financial Times, says that Russia now sees incredibly anti-Russian media coming out of the West, driven by certain political forces.

    However, many investors have started to call the supposed infallibility of the ratings agencies into question, as they have been doing since the beginning of America’s sub-prime debt crisis in the late 2000s.

    “Investors are not stupid,” Young told Radio VR. “They will go where they see value. And at the moment there is a large number of investors, admittedly quite intrepid, from the West, they are looking at investing in Russia. Why are they doing it? Because obviously the Russian economy is being pushed down in the court of public opinion in the West; nonetheless, therefore, even Western investors are seeing value that they can get. If ultimately they think that the ratings agencies are highly politicized, they will avoid those ratings agencies and those ratings agencies will lose business.”

    “At its core, Russia is a better economy than it was 15-16 years ago, during the crisis of 1998,” Patrick Young added. “I think anybody who has the benefit of looking out of the window onto a street in Russia today can see the material long-term differences that have been made.”

    In 1998, he said, Russia was a very-very nascent post-communist economy. What we see nowadays is a much more thriving economy that is trading with the world, particularly with its eastern neighbors. It is going to be a very difficult and rocky time, but the situation is difficult already if you are in Europe; particularly if you are one of the 50 or 60 percent of Mediterranean youth who are currently unemployed.

    He also said that Europe would do better to scrutinize its own economy.

    “The European economy is in chaos,” he said. “The reason it is in chaos is because you’ve got an incredibly weak, useless political generation of leaders both at the national level and even worse, at the European Union level, who simply refuse to understand the fact that they can’t go on as they’ve done for the last fifty years, which is like junkies looking for the next [round] of higher taxation to spend money they don’t have; they can’t afford services that are simply not going to work in the future.”

    And at the recent summit of European leaders, Patrick Young added, they were taking turns begging and demanding that places like Britain pay more money.

    “When actually the British economy is growing because British have taken some of the economic medicine that they had to,” he said. “And they are looking to subsidize someplace like France, which is a basket case. For 40 years, the French government has run a deficit, therefore it is almost laughable that you are hearing this sort of criticism made of Russia. These are the growing pains of the Russian economy as opposed to long-term structural issues within the likes of the European Union, [which is] in long-term decline.”

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

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    credit rating, economy, sanctions, rating, Radio VR, Moody's, Standard & Poor's, European Union, France, United Kingdom
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