Welcome back to another edition of “This Week in Financial Blunders,” where we examine any and all money-related problems in the news. This week we have two doozies involving the economic backlash from the continuing struggle in Crimea, and a (now) former mayor who fell to the dark side of politics. Read these stories, absorb them and realize things can be far worse than a whiskey shortage.
Cry Cry Crimea
The struggle between Ukraine and Russia over Crimea continues to drag on with dreary news constantly surrounding it. Crimea has gotten the rawest deal out of all of this, as BusinessWeek and other news sources have started reporting on the dragging economy in Crimea on top of their other issues.
Before Crimea’s annexation, it was a tourist destination with 70% of its tourists coming from Ukraine. It’s estimated that half of Crimea’s citizens get some income from tourism. Now is the prime tourist time for the country, and “hotels that normally would have been fully booked in May were barely breaking 10 percent occupancy.”
Crimea is becoming all too aware of how dependent their economy was on Ukraine during this time of unrest. Ukrainian food used to count for 80% of what was on shelves in Crimea, but now any food shipments from them are being blocked by Russian customs agents. Food prices are expected to rise “by 25 or even 50 percent over the next few months.” In addition, Ukrainian-regulated banks have been shut down, and the country switched currencies from Ukraine’s hryvnia to the Russian ruble. Most transactions are cash only now because debit and credit cards are out of the picture.
Russia has promised to bring more money into Crimea and return it to its former prewar glory by way of building a ton of stuff. A promise of $48 billion has been thrown around to rebuild roads, airports and a bridge to the Russian mainland. Also discussed: a “Las Vegas-style gambling zone in Crimea” to boost tourism quickly.
Patrick Cannon, the former democratic mayor of Charlotte, NC, recently owned up to corruption charges he faced for accepting bribes. Cannon was elected mayor of North Carolina’s largest city this past November after being on the Charlotte city council, but the bribery and corruption he’s accused of dates back to December 2009, according to the Chicago Tribune. Cannon admits to accepting “at least $50,000 in bribes in exchange for using his official positions to help several people seeking to do business in the city.” The charges he faces now come from a sting set up back in August of 2010 in which Cannon accepted money from two federal agents, as well as a trip to Las Vegas and use of a “luxury apartment” from one of the feds. In addition, the former mayor is accused of accepting more bribes from “the owner of an adult entertainment club” to keep the business open while it sat in the path of a new light-rail line being built in Charlotte. Again, Cannon has already plead guilty to these charges, and the maximum charges he could face for this include a $250,000 fine and 20 years in prison.
That’s all we have for this week, but feel free to comment below with other stories of financial distress.