Russia on the brink?

Much has been made of the meltdown on Wall Street and I won't comment much on it because there is just more info out there than is needed. However, little noticed in all this is that Russia is in a very difficult position.

The Georgian invasion, the rip off of British Petroleum's business in Russia and the fact that oil prices are diving are causing huge problems for their markets. Their major market tanked over 17% today. It was off at one point at 20%. That would be like a 2000, not the 504 that just happened, point drop on the Dow.

I wonder how much of that is related to the current crisis in markets and the pressure the west has been putting on them. I believe that the former is more significant, however I do not discount the latter. I believe that the West is punishing Russia and there is a warning to Putin: back off or we will crush your economy. Putin is wealthy enough to survive it but his billionaire buddies would be very upset. If much more happens he might need to start watching his back.

Unlike the US, Russia does not have much of an industrial base. Their infrastructure is pathetic and the vast majority of its income is from energy. It wouldn't take much to crush their banking system at the moment and it just may happen.

My guess is that Russia has been told to calm down or else.

UPDATE: Russian markets are slated to open tomorrow. A huge amount of rubles have been offered to soften any blows to its banking industry, but will it be enough? Markets normally don't respond well to being shut down. We will have to see.

New Update: Russian markets make huge comeback and this time they were stopped again. Monday will bring a much anticipated opening.