Text 1. Read this article and give Russian equivalents to the underlined expressions.

The worst economic crisis since the last one

Russia 1998

 

Russia has had a rocky economic ride ever since the collapse of the Soviet Union in 1991. The slow progress of reform, and the hijacking of large parts of the new market economy by organised crime, reduced the financial markets to turmoil. Worse, the state taxation system, still geared to the old central command economy, was, by the mid-1990s, producing only a derisory amount of revenue.

 

Put simply, Moscow ran out of money, started to default on wages and pensions, and ranup colossal debts. Domestic and foreign investors demanded ever shorter-term loans, with higher and higher interest. At one point Russia was paying 120% to borrow money

 

The International Monetary Fund stepped in with a comparatively modest aid packageworth $22.6bn, as usual dependent on stiff structural reforms, especially in the tax system.

Luckily, Russia had a leader with a popular mandate and a no-nonsense approach. Vladimir Putin did much to restore domestic and foreign confidence, and the long-stagnantRussian economy was on the move.

 

Asian crisis 1997-98

 

It has been several years since the countries of east Asia have been called the "economic tigers". For two decades, the smaller economies - Malaysia, the Philippines, Thailand, South Korea, Hong King, Singapore, and Indonesia - grew at an astonishing annualaverage of around 8%. Inflation was low, savings were high.

 

They were beacons to the world. Money flooded in; so much of it wastefully spent on grandiose property developments and unsustainable industrial and commercial expansion. When the bubble burst in the late 1990s, the investment tide turned, and money flooded out of the region, putting immense pressure on local currencies.

 

The Thai baht was the first to be squeezed. As its value plunged, the panic spread to neighbouring countries. Once again the IMF rode to the rescue, with a gigantic package worth more than $113bn. One of its more drastic demands was for the closure of 17insolvent banks in Indonesia, which caused a colossal run on the remaining ones.

 

Mexico 1994-95

 

Latin America had been beset by debt crises in the 1980s but, by the early 1990s, Mexico appeared to be recovering strongly. Inflation and the budgetary deficit had both been drastically cut, and the economy was growing well.

 

So well, in fact, that Mexicans started to spend their savings, while the Mexican peso soared in value. The soaring current account deficit was financed by short-term foreignmoney. In December 1984 the government suddenly devalued the peso, with the honourable motive of boosting exports but with the unfortunate effect of destroying foreigninvestor interest in peso-denominated bonds.

 

The government responded, fatally, by issuing new bonds indexed to the US dollar. With investors still spooked by political unrest and economic turmoil, there was a rush to sell the bonds, which the cash-strapped Mexico could not redeem in the promised dollars.

 

Washington and the IMF cobbled together a rescue package worth an unprecedented

$50.5bn. The aid was made dependent on range of radical - some would say humiliating - financial and structural reforms. Mexico launched its long-promised privatisationprogramme, and introduced strict financial controls. It worked; so much so that by 1997 the US loan was paid off along with a large part of the IMF money.

 

Post-war Britain

 

The UK was, after the USA, the greatest proponent of the post-war economic settlement laid down at the Bretton Woods conference in New Hampshire in 1944. A keystone of the strategy was that exchange rates would be maintained at constant levels, underwritten byAmerica's vast gold reserves held in Fort Knox.

The erosion of that cosy arrangement began almost instantly, though the central concept was not finally dropped until the 1970s. And no major currency came under such sustainedpressure than sterling. In every decade since the second world war, governments have feltobliged to take drastic action to protect the value of the pound. Partly they did so to protect Britain's most vital economic interest as a nation dependent on trade. Also, especially in the early years, they suffered delusions of post imperial grandeur, imagining that sterling was still a "world" currency.

 

There were major crises in the late 1940s, and again in 1956 (linked with the Suez disaster), 1962 and 1967 when Harold Wilson, having just devalued the pound and guaranteed higher prices, infamously promised the British people that "the pound in your pocket" would not be affected.

 

The IMF bailed out sterling again in the mid-1970s. In the 1980s the pound sank almost to parity with the dollar, before rebounding to an equally silly height of almost two dollars. In the early 1990s, sterling was unceremoniously bundled out of the European exchange rate mechanism by the machinations of just one man, George Soros.