Significant inflationary pressures are becoming more visible every day, starting with the headline inflation rate of 15%. Salaries are growing at double-digit rates, making even some of the most-promising industries, like high technology, uncompetitive very rapidly.

Combined with near-complete nationalization of the main driver of the boom, the oil and gas sector, investors in the private sector have plenty to fear. With so much capital flowing into less-productive government-driven sectors and inflation inhibiting the long-term success of the many of the other most-promising export-oriented investments, it is hard to see how the Russian economy could avoid a meltdown if oil prices continue to decline significantly.

One might say that given that oil and natural-gas prices are still much higher than a year ago, Russia will continue to be a great place to invest. With a trailing price-earnings ratio under 10, Russian stocks certainly don't look expensive on the surface. But remember that commodity producers account for a huge share of profits, and thus the Russian market's P/E could rapidly swing into double digits once the double whammy of declining commodity revenues and rampant inflation hits next year.

Add to that political instability, and the recent slaughter in Russian equities is not all surprising. What's more, it could very well continue for a while.

Can Russia handle a crisis?

Don't get me wrong: I am not trying to predict that the Russian economy is going to crash and go into oblivion in the next few years. But I am definitely worried that if the highly flexible U.S. economy has had troubles dealing with the subprime fallout, the Russian economy might not be able to withstand a crisis quite as easily, when (not if) it occurs.

Fed chief Ben Bernanke's rate cuts and the oil boom certainly benefited Russia more than they did the U.S. in the short term. But however shiny and promising some Russian companies might look today, they are less likely to look as good tomorrow, after the effects of the commodity bubble starts to wear off.

I intentionally did not want to spend time discussing the political ramifications of the Georgian/Russian conflict because it likely won't have much impact on stock prices, as Jon Markman noted in this article.

Does this mean every Russian stock is a sell today? No, I certainly don't think so. But it will certainly take a lot more effort to pick the right ones. Feel free to visit my blog frequently, where I will cover some of my best Russian ideas over the next few weeks.