The End Of World Economy Is Already Here, It’s Just Unevenly Distributed

Once called “new economy stars”, rising global powers of BRIC nations, felt proud to stand on their own. It was the time of hope for their citizens, and it felt like the future is within the reach — drastically moving the whole new generations into the middle class.

For some, moving from poor to middle class at that time felt just like an intermediate step, just a temporary stop towards real true western style prosperity (which itself is a myth, of course).

But small cracks started appearing on the massive new facade, and in just a year it all came crumbling down, unstable under own hopes and dreams.

In 2008, I was working in Moscow as a CEO at a small startup (10 people at the height of the day). A friend of mine was working nearby. A developer, his skills were very much in demand, and so he was making a bit over $2,000 USD a month, not a shocking salary in Moscow, but a good stable money, enough for him to buy a used car (using a credit, of course), and plan his annual vacation with family in Europe. His type was exceedingly common. Then, a crisis of 2008 swiftly hit Russia. Almost unfelt in Canada, it was felt in the United States through massive foreclosures (The Big Short, in cinemas right now, tells this story).

In Russia, though, it felt surreal.

For once, while working in Russia, I amassed some savings, a cool $40,000 USD, and I was contemplating which car to buy (stupid decision for a Finance major), or whether to make a downpayment for a condo in Moscow (another stupid decision in retrospect). Luckily, I did none. But the currency, which started devaluing daily was bringing my savings down — 38K just a day later, 35K next day… in just 5 months currency lost 50%, and so since my savings has been in roubles, that meant just $20K in my pocket (I used the savings to start 500px).

For my friend, however, it was even worse. He got fired in the early stages of the crisis. The global economy stopped abruptly, and all the need for developers at an agency he worked at, simply evaporated. His car payments were in foreign currency, so in a few months he was paying 50% more for the same car (shockingly, at that time, the prices for used cars were going up around 5–10% a month, because new car prices were rising even faster). Few months later he was lucky to find a job, but his pay was cut — he was now making a mere $1,000 USD. All this happened in a flash, a reality check kicked in, and Russians en masse shelved their vacations plans.