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Look for more aggressive spending after Putin loses ground in Russia

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The weekend's parliamentary elections showed support for Vladimir Putin's "United Russia" party declining to the point where he barely has a simple majority to fall back on. These results are worth a closer look.

Merrill Lynch is out in front noting that Putin is on track to get 49.7% of the total votes, well below the 53% to 56% majority he was expected to bring down a few weeks ago.

This is shocking in light of recent events where Putin was actually heckled in public by Russians tired of his policies. If the trend continues, he might have trouble getting an easy bid in the presidential election next March.

He will probably be reelected, but even an incremental erosion of his once-total power says a lot about where Russia is going.

Look for the Kremlin to boost social spending and otherwise attempt to influence the voting public over the next few months. This will in turn expand Russia's public debt and perhaps create new budget deficits next year.

Traders are already nervous about a lack of fiscal discipline in Russia after the departure of finance minister Alexei Kudrin. This may make sentiment for the RSX ( quote ) worse in the next few months.

After that, all those public projects will leave Russian voters wealthier and the domestic economy on the move.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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