Peaks and troughs... blame them on the `Long Wave'

According to "Long Wave" theory, economic activity, measured by changes in the GDP growth rate, fluctuates on a 25- to 30-year Kuznets cycle. Two of these cycles make up a Kondratyev wave, in which the PPI fluctuates between inflationary and deflationary episodes approximately every 55 years.

Kondratyev claimed recession came when new players appeared in the global economy, such as new sectors (information technologies for instance) or new economies, which had previously been on the outskirts of the global division of labour (China).

It is also a fact that Russia has a record of moving contrary to the general economic current. During the Great Depression in the 1930s, the Soviet Union was industrialising. In the 1990s, with a fast-growing global economy, Russia was struggling to overcome a deep crisis following the Soviet Union's collapse. And in the early 21st century it has been able to offer help in solving the problems facing industrialised countries.

But such help requires mutual efforts. Yegor Gaidar, the first Prime Minister in post-Soviet Russia, said cyclic development in modern conditions could provoke a dramatic fall in the global demand for oil and metals, Russia's main exports. Foreign capital outflow might follow the fall in export revenues, which would put an end to the current growth of Russian economy.

At the same time, finance minister Alexei Kudrin asked the West not to hinder investment from foreign states, including Russia: such diversification is needed to strengthen the stability of the Russian economy and finance.

Kudrin also promised that Russia would buy only minor stakes, not more than 5pc, in foreign companies. "This should dispel the fears of Germany, the United States and other countries regarding Russia's growing influence in strategic companies," the minister said.

It's inevitable that the rouble will rise, says Greenspan

Alan Greenspan - the man whose words even in retirement move financial markets - was involved in a closed video conference with a select group of Russian businessmen, Russian daily Izvestia learnt last month.

Greenspan was said not to have mentioned either the current policy of the US regulator nor the plight of the US economy, on grounds that he was not authorised to make such comments.

Instead, it was reported that he spoke about global imbalances and the rapidly growing young tigers of Asia, Latin America and Russia.

As far as Russia was concerned, Greenspan advised the group that inflation was the country's main enemy and the policy of rouble appreciation was the only means of containing it.

High oil and gas prices are driving the rouble upward, he said, adding that not only the energy sector, but also the producing sectors should influence the exchange rate of the rouble.

In reference to the broader credit crisis dominating world headlines, Greenspan reminded his audience that "fear should not dominate euphoria".

Such crises are inevitable, he claimed.

"If it were not for the subprime mortgage meltdown in the United States, the crisis would have struck some other sector of the economy," he said.

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