The Russian RTS market index had been in the mid-130s in the previous week, but by July 20, it had risen to 193. A week later, the RTS was back to 143 and by Aug. 13 it had reached 101. Talk about volatility. Moreover, the banking system had ground to a halt. Clearly the solution did not address the real problem.
Devaluations help countries with trade deficits.
But Russia continues to run a large foreign trade surplus. Russia's difficulty is a massive 10-year depression, and Yeltsin has tried to ward off the political consequences of this in the large cities by keeping their standard of living artificially high, especially in Moscow. With investment being starved, industry could not retool to produce new goods, and agriculture could not obtain machinery, fertilizer and pesticides. Life expectancy for men, already abysmally low under communism at 63 years, fell to 57. Some 3 million people in Russia died who would have been alive if the old life expectancy rates had been maintained.