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Economics – Russian style

January 8, 2009

Many have asked me what the situation is with the gas crisis. From my perspective it’s simply this – Russia deeply desires to once again control Ukraine (and all the rest of the former Soviet countries for that matter) so they have chosen to turn off the gas supply to Ukraine. They (Russia) say Ukraine hasn’t paid a 2 billion debt and Ukraine says it has except for about 600 million in “service” charges. Who is telling the truth? Your guess is as good as mine. How does a czarist leader try to destroy the people of Ukraine? Hit them where it hurts the most right now – turn off the gas and scare them into thinking that they will all freeze to death before Spring. Ukraine says it has “months” of gas in reserve. Do they really? I seriously doubt it. Rule of thumb here is that when the situation is bad then make it sound better and when the situation is good then make it sound even better. Let’s remember what the government did when the Chernobyl disaster happened. They did nothing for 3 days and the way the people found out was to hear it from Finland and others outside of the country. So for the gas situation what is truth – who knows. What we do know is some people living outside of Kiev have limited heat. Even people living on the other side of Kiev have limited heat. I talked with some friends who told me their flat was a mere 55 degrees. That is not warm! Actually my room is only 59 degrees.

There are however two sides to this story and unfortunately the Western press is only playing the gas shut off story. The other side is on 1 December the city of Kiev raised gas heating prices by 105%. Yes, I said 105% – that is not a typo. And to make matters worse, effective 1 January prices have again been increased by 25%. Translated that means we will be charged $9500 per month to heat the Ark. Now you might be wondering what will they do if one doesn’t pay. Official answer – turn off the heat! Also, you may be asking yourself just where is all that money going? Good question! I have no idea.

The economy is in shambles and makes things in the US economy look good. The currency here is propped up by toothpicks and a small breeze will knock them down in 1 second. Food prices have increased almost daily. Why? Well, when companies get served with huge utility increases, employees also get served with increases for their flats then someone needs to foot the bill – i.e. the consumer. So we get hit on both sides of the ledger. We pay more for food and utilities and we need to give increases to our employees so they can live. It’s all just a bit overwhelming sometimes. All I can say is – God is our refuge and strength and I can rest in that promise. That gives me comfort.

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