Russian Olympic Games at Sochi

On 16 August 1998 the credit rating agencies – Moodies, Standard & Poors and Fitch – all gave Russian Government bonds close to the highest investment grade rating.

While turmoil spread in Russia – including the theft of $5 billion in loans from the IMF and World Bank – market commentators insisted that it was ‘unthinkable’ that Russia would default on its sovereign debt.

On 17 August 1998 the Russian Government did indeed default on its debt.

The rating agencies did as they had for the Asian Financial Crisis a year earlier, slashed their credit ratings ex post. That’s the value of a credit rating – it tells you what happened in the past.

Skip forward 14 years, and Russia is awash in money from natural gas and oil. So much, that it can afford to waste $51 billion on a winter Olympic Games, more than the past 21 Winter Olympics combined.

Reports of waste and corruption are staggering. Yet despite the huge amount of money being thrown at Sochi, it seems that the town is ill prepared for the event.
It is also interesting to read of how many friends of Vladimir Putin have been awarded contracts.

Corruption has always had its place in Russia – which is seeking to be a member of the OECD – only its prevalence reflected the state of the economy. The oligarchs made their billions when Yeltsin (probably in a drunken stupor) privatised State-owned oil companies at a small fraction of their worth.

This transfer of wealth from the population to powerful friends of the ruler continues. Really not much has changed since Stalin was in charge.

About Samuel J

Samuel J has an economics background and is a part-time consultant
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28 Responses to Russian Olympic Games at Sochi

  1. Steve of Glasshouse

    IOC contracts to Putin and co. Perfect match

  2. blogstrop

    Russia, like the Middle-East, is charging way too much for oil and gas. That’s the only reason they can afford to waste money as if they were Arabs. When is the West going to call the bluff on this scam?

  3. nerblnob

    Russia, like the Middle-East, is charging way too much for oil and gas. That’s the only reason they can afford to waste money as if they were Arabs. When is the West going to call the bluff on this scam?

    When “The West” produces oil and gas more cheaply and in greater quantities. Just at a rough guess.
    And builds a lot more LNG export and import (regasification) plants.

    The predicted “biggest LNG exporter in the world” , Australia, is also the most expensive so you might soon be asking “when is The East going to call the bluff on this scam?”

  4. cynical1

    When is the West going to call the bluff on this scam?

    When the windmills supply sustainable green power?

    So probably never…

  5. Hasbeen

    Wonders will never cease.

    Russian Olympics is pretty much like the US alternate energy under Obama, UK wind power under your present government, & the issuing of mining licenses in some Ozzie states under past Labor governments, & they are probably some of the less corrupt ones world wide.

    Could it be that corruption is pretty common?

  6. Empire Strikes Back

    Could it be that corruption is pretty common?

    Yes it is, but Russia does it “better” than most.

  7. Baldrick

    This transfer of wealth from the population to powerful friends of the ruler IOC continues. Really not much has changed since Stalin Juan Antonio Samaranch was in charge.

  8. coz

    uh huh, no mention of IOC corruption and the use of the olympics as a propaganda vehicle, nor the very questionable choice of terminally toxic Japan as a future host, just like uh Pootin is like uh baaad, he’s some kind of ‘baddie’?

  9. Leigh Lowe

    60 billion well spent.
    I can’t wait to book a holiday in Sochi.

  10. coz

    I’d have to wait for property prices to drop, but in my dreams, I’d emigrate there.

  11. Johno

    Anything that helps expose what a complete waste of money the Olympic Gamed are and tarnishes its reputation is a good thing.

    I have a dream that one day my son will live in a world that politicians stop wasting my money on sports people playing their sport. Why do I have to fund their live style choices!!!!

  12. Fred Furkenburger

    Can we get a “like” button on here somewhere? There are so many good comments here it’s almost impossible to know what to do! But Johno your last comment is magic: “I have a dream that one day my son will live in a world that politicians stop wasting my money on sports people playing their sport. Why do I have to fund their live style choices!!!!” How can we make it so!!!

  13. H B Bear

    The Olympics are usually used as cover for inefficient government expenditure on remediation of contaminated sites, public transport links to places people don’t want to go, crappy public housing and white elephant stadiums.

    Hopefully Putin’s oligarch mates can put the $51bn to better use such as central London mansions, UK Premier League football teams, super-yachts, hookers and whatever else oligarchs spend their money on.

  14. coz

    Sport is a war substitute, I don’t have contempt for it, although it’s not something I gravitate to, I understand and support the need for it, and in a highly competitve society its function as a healthy substitute for war – but lately it’s just another arm of the propaganda/celebrity machine, with its ‘copy what idols do, after all you idolise these idols’ bullshit. Unfortunately for people who do or did enjoy sport and its rivalries, it’s like the television, at some stage you just have to turn it off or throw it out of the house.

  15. incoherent rambler

    This transfer of wealth from the population to powerful friends of the ruler continues. Really not much has changed since

    Russia or Australia?

  16. Talleyrand

    Apropos of nothing Olympic nor Sochi, I am reminded of the old Soviet economist joke about the nature of Russia and its rulers.

    Stalin, Lenin and Khrushchev are travelling on a train. Suddenly the train comes to stop. The leaders look out the window impatiently, and cannot see a cause for the delay.

    Stalin announces “I will get the train moving again comrades” and has the driver and engineer shot, their families tortured. Stalin returns and announces what he has done stateing “Now the train will move”

    After a few minutes there is no change, no movement of the train, and the frustration rises.

    Khrushchev announces “I will get the train moving again comrades” , and rehabilitates the driver, engineer and families. Smugly Khrushchev says “The train has no reason now to not move, we will be on our way now”.

    After a few minutes nothing has changed, and the anger is rising.

    Lenin stands up. Stalin and Khrushchev look in wonder, what will the hero of The Revolution do?

    Lenin moves to the window, and brings down the blinds closing off all view of the outside world all whilst the train remains stationery.

    Lenin then turns and announces to all, “The train dear comrades, it is now moving”….

  17. tomix

    So if Putin was a comic drunk like Yeltsin he wouldn’t be corrupt?

  18. Samuel J

    Nice joke Tallyrand! Like all good jokes there is an element of truth

  19. To be fair to Putin, nothing much has changed since the Tsars were in charge.

    At its core, Russia remains Russia.

  20. Botswana O'Hooligan

    It’s business as usual in the Rodina. I was there when they chopped most of the noughts from the rouble so five thousand roubles suddenly became fifty and yet what was bought for five thousand roubles didn’t change. Once they did that they changed it again so the people got dudded twice. I had to be aids tested each three months but my Russian born wife didn’t. They charged USD 23K rent a month for a piece of land about six hundred square metres we had to develop and build a hangar on, rent money paid to a bank in New York. Local warlord appropriates Aeroflot fleet in Far East and starts his own airline. Fuel bought in USD but paid for in roubles, price in USD converted to roubles and a fee charged, roubles paid for fuel and another USD conversion charged, import duty of 110% charged on equipment each year it was in the country. Apartment rent ten or fifteen times higher than for the locals, a guaranteed apartment lease for two years half as much again as a month by month lease. State declares when it is winter or summer and heating turned on or off despite heatwave or blizzard outside. Womb to the tomb mentality thanks to Marxist Leninism for eighty odd years and it will take another eighty years or another revolution to bring things to what we westerners would call “normal.” As my old great grandfather always said, “poor mother Russia.” A westerner just hasn’t lived until he/she has lived in Russia for years and experienced the silence of Siberia, the snow in the “soft” climate where it doesn’t get much below minus thirty five in winter on the coast, the blizzards, the five salmon runs, the generosity of the ordinary people, the corruptness of the officials, and the sheer beauty of it all. Enjoy Sochi because there are far worse places, and always remember to rear your kids and grandkids in Australia.

  21. Jock

    Is it actually snowing at Sochi? All the photos show little actual snow.

  22. cohenite

    Unfortunately for people who do or did enjoy sport and its rivalries, it’s like the television, at some stage you just have to turn it off or throw it out of the house.

    Or plug it into your computer and watch funny videos about cats getting into boxes.

  23. Rabz

    Is it actually snowing at Sochi? All the photos show little actual snow.

    Oh noes – gerbil worming strikes again!

  24. Demosthenes

    Oh noes – gerbil worming strikes again!

    No chance. Sochi is just a stupid choice – it’s a summer destination in the first place.

  25. Fred Lenin

    Russia is still recovering from 90 years of alp /green , sorry “communist” “government” .ineptitude,corruption nepotism and total lack of any ability to do anupything,you know like the kevvie krap/sleazy giliard, more krap so called government we just got rid of .Russia was full of entitlementers lime Australia ,abotut 10 percent bludging on the rest ,the aparatchiki moved into business with the money they stole from the People ,like williamson and thompsoand the other union crims Both Australia and Russia still have to get rid of the maggots.

  26. Baldrick

    Where do people get off, representing Australia and being supported by the Australian taxpayer, in making political statements at Olympic Games.

    According to ‘their ABC’ (naturally): Gay Australian snowboarder Belle Brockhoff has arrived in the Winter Olympics city of Sochi with a dual mission: win Olympic gold and send Russian president Vladimir Putin a message about homophobia.

    Pull your head in love and keep your mouth shut or take a hike!

  27. Spiro

    Its getting worse in Russia. Beer has now been declared alcohol.

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