I recently spent a few days in Moscow meeting with a variety of economic and financial officials and analysts, both in the public and private sector.

Until July of this year, Russia was rosy: It was growing at an annual rate close to 8%; oil prices were peaking at $140 a barrel; the country was running a large fiscal and current account surplus; it had a war chest of $600 billion-plus of foreign reserves; and its stock market, bond markets and currency values were strong. Policy makers were thinking of turning the ruble into a major reserve currency, at least for the CIS bloc.

This economic and financial success led Russia to flex its geopolitical muscle, challenging the U.S. on a number of political and military issues and using its energy power as an instrument of foreign policy in its relations with the Eurozone and its former Soviet neighbors. The peak of this resurgence of the Russian bear came during the August war with Georgia, when Russia flaunted its military power as the U.S. looked impotent in its inability to defend an ally.

But what a difference a short time makes. Six months later, Russia is in deep economic and financial trouble.

The S&P has just announced that it has lowered Russia's foreign-currency credit rating by one notch from BBB+ to BBB. In less than six months, oil prices have fallen to under $50 a barrel (from the $140-plus peak of July). The stock market has fallen by over 60%, and on some days it has been shut down to prevent a free-fall. The current account surplus has turned into a near deficit and a sure deficit by 2009. The country has experienced a capital flight of over $100 billion and has lost about $150 billion of foreign reserves (now down to about a $450 billion level). It is facing massive external debt-financing problems as its banks financed their lending with foreign currency borrowings and its corporate firms financed massive expansion with foreign currency debt. It is now desperately trying to prevent a sharp depreciation of its currency by aggressive foreign exchange intervention. It may face a large fiscal deficit (2% of GDP) next year, and its GDP growth rate is sharply slowing down, leading the World Bank to predict a rate of only 3% in 2009--with leading local analysts predicting an actual recession (negative growth of as much as -2%) in 2009. (See the recent analysis by RGE's Rachel Ziemba for more on the risks of a hard landing in Russia.)

Given this sudden change in Russian fortunes, there are several key policy issues that the authorities need to deal with. Of course, given the external shocks (terms of trade worsening and a sudden stop of capital and credit), it was important to use the buffer of foreign reserves to avoid a bank run by providing liquidity and capital to banks--and by providing a fiscal stimulus to a country that is sharply slowing down.

But the key unresolved policy issue is what to do with the exchange rate. Until recently, Russia was on an effective basket peg (with 55% for the dollar and a 45% weight for the euro). But with oil prices now down over 60% from the peak of the summer, and with incipient current account and fiscal deficits and a likely recession in 2009, the currency is obviously overvalued. A reasonable estimate of the needed exchange-rate depreciation--with oil at about $50 a barrel in 2009--is 25%. But until recently, the authorities resisted the needed depreciation through aggressive foreign exchange intervention.

Online spending at U.S. retailers on Monday jumped 15 percent over with the comparable day a year ago to $846 million, comScore said Thursday, as consumers sought out bargains in a tough economy.

The Monday after Thanksgiving was nicknamed "Cyber Monday" by the National Retail Federation to describe the surge in online spending when customers return to work after Thanksgiving and shop from their desks.

Online shopping is popular among consumers who want to compare prices for the best deal, so usage can increase in a tough economy when shoppers are paying more attention to costs.

ComScore (nasdaq: SCOR - news - people ) said a 22 percent rise in the number of buyers drove the increase, even though the average amount shoppers spent declined 5 percent. ComScore attributed the drop in dollars per buyer to each buyer completing fewer transactions.

ComScore representative Gian Fulgoni said nearly two million more consumers bought items online this year because of "extremely attractive" prices offered by retailers.

"But because of their reduced spending power, it's also evident that those who did buy were unable or unwilling to spend as much per person as we saw last year," Fulgoni said in a statement.

The most visited retail site was eBay Inc. (nasdaq: EBAY - news - people ), which recorded nearly 13 million visitors, up 45 percent from last year, followed by Amazon.com Inc. (nasdaq: AMZN - news - people ) with 9.2 million visitors.

After 20 years spent studying, coaching and writing about scores of entrepreneurs, I know this about all of them: They don't question their motivation; don't wonder whether or not they are taking risks; don't ask themselves, "Will this work?"

Instead, they just act--passionately, indefatigably, in pursuit of a goal.

Peter Drucker, a god among management theorists, put it this way in his autobiography, Adventures of a Bystander: "Whenever anything is being accomplished, it is being done, I have learned, by a monomaniac with a mission." But there's more to entrepreneurship than mustering monomaniacal passion, observed Drucker, who also wrote: "The entrepreneur always searches for change, responds to it and exploits it as an opportunity."

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So for those looking to tap their inner entrepreneur, I suggest tackling this critical question: What about this world do you want to change?

I have often found that the push for change lies deep within a person's psyche. Their ox has been gored, and they seek justice or even revenge.

Top Story

Massive fiscal stimulus could wind up creating jobs offshore as funds are spent on imports

• Plus: Obama Names Volcker to Economic

President-elect Barack Obama has made a promise: to save or create 2.5 million jobs over the next two years. Estimates of the cost of his high-powered spending program to rescue the U.S. economy start at $500 billion and go way up from there.

But a giant issue lurks: How much of Obama's mammoth fiscal stimulus will "leak" abroad, creating jobs in China, Germany, or Mexico rather than the U.S? This is a question with big economic and political implications—and no easy answers.

One problem is that over the past 25 years the U.S. has become the "consumer of last resort" for the world economy. Imports have risen from the equivalent of 9% of gross domestic product to almost 19%. Even more astonishing, the value of imported goods now is equal to almost 40% of the output of U.S. manufacturing. For some types of consumer goods, such as clothing and consumer electronics, it's increasingly difficult to find items that were not made abroad. As a result, fiscal stimulus that boosts consumer spending in the U.S. may be diffused through the global economy, reducing its impact on jobs here.

At the same time, Obama will face intense political pressure to make sure his intended spending on infrastructure, health-care modernization, and green technology creates manufacturing and service jobs in the U.S. Federal procurement is already governed by a complicated welter of laws mandating minimum "domestic content" for many types of federal purchases, including the Depression-era Buy American Act. That's why, for example, steel for federally funded transit projects typically has to be made in the U.S.

No Sideshow

The scale of the fiscal stimulus will likely ensure a frenzy of lobbying to tweak the existing domestic content rules and add new ones. But the more rules and earmarks that are built into the package to ensure domestic jobs, the more expensive it will get and the more the U.S. will look as if it's retreating from free-trade policies. "Job leakage will continue," says Susan Houseman, a senior economist at the W.E. Upjohn Institute. "For better or worse, Obama and Congress will be under tremendous pressure to plug that leak."

The coming debate over "Buy American" restrictions in the fiscal stimulus is no sideshow. The financial crisis was caused, in large part, by U.S. consumers borrowing trillions of dollars from the rest of the world to buy imported cars, clothes, and gasoline, even as jobs slipped overseas. As long as the U.S. is running a big trade deficit and borrowing from abroad, a fundamental cause of the crisis remains.

Now, whether Obama's stimulus package creates 2.5 million jobs or not, economists believe it is a good idea, given the ferociousness of the downturn. "Without it, you could get a protracted period of negative or weak growth," says Nariman Behravesh, chief economist of IHS Global Insight in Lexington, Mass. "With it, you could get the economy coming out of recession in the third quarter" of 2009.

Vanishing Factories

Yet given the U.S. appetite for imports, hitting the Obama jobs target will be tough. When President Ronald Reagan cut taxes during the deep recession year of 1982, the U.S. was still a relatively closed economy. That meant when consumers started spending, the jobs showed up in this country.

Over the past 10 years, however, the number of manufacturing jobs in the U.S. has plummeted, going from 17 million in 1997 to 13 million today. The part of the Obama plan that props up consumer spending will not bring back those lost factory jobs.

In fact, Obama does aim to get money into the hands of consumers, through extended unemployment benefits and aid to state and local governments that might otherwise lay off workers or raise taxes. J. Fred Giertz, a state budget expert at the University of Illinois at Urbana-Champaign, notes that in 2003, $20 billion of federal assistance was allocated to states, with about half earmarked for Medicaid. How much this time? "Something in the range of 5% to 10% of the stimulus package would be a good guess," says Giertz.

The advantage of these types of spending is that they are fast-acting. The disadvantage: They support the same "U.S. as consumer" mentality that got us into trouble in the first place, along with purchases of imports.

What about spending on infrastructure, health-care modernization, and green technology? All these tend to produce less leakage overseas than consumer spending. But even jobs in these areas have a tendency to slip over the border unless carefully constrained. Spending on infrastructure such as rail transit is more likely to create domestic jobs, in part because it is already covered by federal legislation that mandates a certain level of purchases of U.S.-made goods.

For example, new public transit vehicles generally must have 60% domestic content and be assembled in the U.S. Electric streetcars—a mass transit option to cut pollution that's favored by cities such as Denver and Salt Lake City—would likely be imported from other countries if it weren't for the "Buy American" requirements attached to federal funding.