Collapse: The imminent end of Putin's regime
The Russian economy is imploding, threatening Vladimir Putin's grip on power.
His Keynesian strategy to counter Western sanctions – based on subsidised spending and artificially low interest rates – has backfired catastrophically, plunging the country into a boom-and-bust cycle that is now entering its most devastating phase.
The housing market, supported by government-subsidized mortgages at rates as low as 7% (despite real inflation estimated at 27% by Dr. Steve Hanke), is collapsing.
Mortgage debt has climbed to more than 40% of bank loan portfolios, while household debt is at a record high of 22% of GDP.
Once dominant in real estate transactions, mortgages now account for just 20% of sales, 80% of which are cash purchases.
Sellers are cutting prices by up to 50% and non-performing loans are exploding, threatening to sink regional banks, which hold 40% of the market.
Developers, crippled by overbuilding during the boom, default on their bonds, leading to widespread losses in the construction sector.
👉The ripple effects are devastating.
The Russian stock market saw all sectors fall sharply, with Gazprom down 16.7%, Ozon down 23.7% and RUSAL down 23.8% in just one month.
Inflation has spiralled out of control, forcing the cost of potatoes to rise 80% this year alone, and car prices are expected to rise 20% after the New Year.
🤔The ruble has lost more than 10% of its value three times in a single month, reflecting deep structural weaknesses.
‼️🚨01€ =113Roubles 🚨‼️
🔥The Russian national budget, calculated on the basis of an oil price of $72 per barrel, is facing serious difficulties as global production increases and prices fall.
Experts predict that the ruble may need to be devalued by 22-35% to support government spending.
International support is lacking. China, facing its own economic difficulties – including an 18% youth unemployment rate and a housing debt crisis – has limited capacity to help Russia.
🙏Furthermore, China does more than 60% of its trade with the United States and Europe, compared to about 2% with Russia, and is unlikely to risk sanctions against a marginal ally.
Public discontent is growing as the economy collapses.
The cost of living is skyrocketing, wages are stagnating and layoffs are increasing.
By 2024, more than 130,000 jobs were cut at 457 companies, including global tech giants like Tesla, Amazon and Google.
The regime's promise of economic stability is crumbling, as is Putin's political contract with his people.
Historically, economic collapse has toppled autocrats, and Russia’s current trajectory reflects those trends. Putin’s failure to stabilize the economy or protect ordinary Russians from hardship is eroding his legitimacy with the public and elites.
📌With growing discontent, broken loyalty from the oligarchs, and an economic tailspin, Russia is on the brink of political upheaval. The collapse of Putin’s regime may no longer be a distant prospect: it is rapidly becoming an imminent reality.