Speaking at the World Economic Forum in Davos, Switzerland a few weeks ago, Russian Prime Minister Vladimir Putin declared he would break from the recent pastime of blaming America for the world's economic struggles.

"Virtually every speech on this subject [has] started with criticism of the United States. But I will do nothing of the kind. … I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasized the U.S. economy's fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years."

With friends like that, who needs enemies? (And to show Mr. Putin how seriously we take his gesture of goodwill, this column will contain no criticism of Russia and certainly no cheap shots at caviar, vodka, bearded men, or fuzzy hats.)

Pot, meet kettle
Of course, despite the best (read: most incompetent) efforts by American firms such as Bank of America (NYSE:BAC) and GM (NYSE:GM) to post enormous losses and implode our economic system, Russia has been hammered even worse than the U.S. over the past year.

Yet it was not always this way.

Only seven months ago, economic activity in Mother Russia was going swimmingly. The country was riding a wave of cash provided by loose credit and oil prices of more than $140 a barrel, growth and development abounded, and bearded gentlemen in fuzzy hats bathed in vodka and caviar throughout Moscow (perhaps that last part is a bit of a stretch).

Anyhow, things were undeniably good. Then things kind of went … south.

Defining "south"
Buoyed by its seemingly bottomless coffers, Russia adopted a rather confrontational global stance, culminating with its war with Georgia on the eve of the Olympics. Investors, already re-evaluating their risk tolerance in the face of tightening credit markets, became even more skittish when Russian tanks started rolling.

The sell-off of the Russian stock market, which had begun in mid-May, picked up steam. Between Aug. 8 (the start of the Georgian war) and Oct. 24 (a temporary market bottom), Russia's stock market dropped 68% -- including a couple of days in which stocks dropped by double-digit percentages, forcing regulators to stop trading.

In response, the government unveiled a bailout package pledging $86 billion to support banks and corporations and another $6.7 billion to be invested directly into the stock market to prop up equity prices.

Thank you very much
And while our own bank executives were pulled in front of Congress this week to explain the reasons for their astronomical bonuses and failures to increase lending despite taxpayer-funded recapitalizations, Russia may have an even bigger problem on its hands. That's because Russia's bankers took a rather different tack when it came to putting their bailout funds to work.

See, rather than use the liquidity the Russian government pumped into the banks to make loans to restart the economy, Russia's banks used it to make big bets against the ruble.

Let's think that through. The government was boosting the capital levels of the banks so that they could help support the economy through lending. Instead, they kept the funds out of the economy and instead bet against it by speculating on the weakening of the domestic currency, thereby dooming the economy to collapse. Those Russians are cold.

A ruble for your thoughts
Of course, by sabotaging any chance at an economic stimulus, that bet against the ruble turned out to be a pretty good one. With foreign investors pulling money out of the country and domestic companies using what cash they had to pay down piles of foreign-denominated debt, the ruble began to tumble. Normally, exporters (Russia is a net exporting country) like a weak currency because it makes their goods cheaper to foreign buyers. Just ask Japanese exporters like Sony (NYSE:SNE) and Panasonic (NYSE:PC) what they think about the recent strengthening of the yen.

However, the rapid decline in the global economy meant that even at lower prices, there wasn't demand for Russian exports. Worse, the falling ruble made the massive amounts of foreign-denominated debt still held by Russian companies more burdensome.

To end the freefall, Russia has been forced to dip further into its vast foreign reserves. Since the end of July, Russia's foreign currency reserves have dropped 25%, or $116 billion, as the central bank has tried (and failed) to stop the ruble's slide. Since July, the ruble has lost 33% of its value against the dollar, with a dramatic 17% decline in the past month.

Round 2
Although they made profitable bets on the ruble, the Russian banks also had significant foreign-denominated debt that ate up their proceeds. Now that the few Russian companies to which they had lent are being crushed by a combination of dried-up export markets and heaps of debt, the banks face significant loan write-offs and have returned to Moscow for an additional $14 billion in support.

This failed bailout is just adding to the problems caused by falling oil prices. The 2009 budget was originally written under the assumption of oil prices around $95. With prices hovering around $40, Russia is looking at a $181 billion budget shortfall. While the government can draw from its $220 billion sovereign wealth funds to meet its needs, Putin called for a rewritten budget with more realistic assumptions. This will likely mean Russia will have to follow the example of companies like Schlumberger (NYSE:SLB) and ConocoPhillips (NYSE:COP), cutting expenses and postponing expansion projects.

The moral of the story
This economic downturn has repeatedly revealed the flaws of once-invincible companies and countries. As discussed a few weeks ago, some countries are better placed to make it through the storm. The same goes for companies.

Our Motley Fool Global Gains team searches the globe to bring you companies with strong growth prospects supported by strong balance sheets that allow them to survive uncertain times. If you'd like to see what we've uncovered, click here to join Global Gains free for 30 days.

And that, dear Fools, was this week in the emerging markets. It's getting crazy out there.

Nate Weisshaar is a senior analyst for Motley Fool Global Gains. If you'd like to learn more about investing abroad, click here to join Global Gains free for 30 days. There is no obligation to subscribe. Nate does not own shares of any of the companies mentioned above. Bank of America is a former Motley Fool Income Investor pick. The Fool's disclosure policy wears fat laces with pride.