The “virtual economy” problem described by Clifford Gaddy was not solved: about half of Russian industry continued to lose value. But these companies were not represented on Russia’s tiny stock market, which was dominated by oil and gas companies—so the stock market grew and grew. By 2005, the oil and gas rents far exceeded the needs of the federal budget, which allowed money to be deposited in a reserve fund, which, in turn, could be used in an emergency—like when the fires of the pensioners’ protest had to be put out.
