My July reverie came to an abrupt end on August 15, 1998 when the Russian government defaulted on its debts, many banks collapsed and the ruble fell like a lead balloon. September was marked by a cold rain so miserable it made me long for snow. It was the kind of rain that makes you shiver under your raincoat and two sweaters as the cold water painfully drips down your back. Along with the weather, the economy went into a free fall as a slew of people lost their jobs and savings, pay arrears ballooned, workers faced salary cuts and already gloomy Russians found another reason to be pessimistic. It was like driving off a cliff - and no one knew where the bottom was. Amazingly, the Communists’ calls for a major protest in Moscow largely flopped and support for political extremists barely went up. However, anti-Semitism went up markedly as the public was repeatedly told that the Jews were a major cause of Russia's weakness.
I felt the sour attitude on the street. Clothing got darker, people seemed to push and shove more, and I saw more drunks. Sometimes people would start crying for no reason. The ruble fell fast -- at one point it fell from 6.2 to 6.7 in an HOUR. It then fell again before stabilizing for a short time around 6.9 to the dollar. On a 40 minute walk on Tverskaya, I watched the ruble devalue. Later the same day., I left the Grand Marriott Hotel and the rate was 6.9 -- two blocks later it was 7.1 -- after that it was 7.3 -- and by the end of my walk it was 7.5. Later in the week, the rate was 8 and then it quickly imploded to 9. Now that's a devaluation! People rightly lost faith in the ruble and rushed out to buy dollars as fast as possible. As Russians and expats scrambled to get dollars, banks and even the US embassy ran out of them. To this day, Russia’s hourly news always includes an update on the ruble-dollar exchange rate.