Putin goes Potty
So, get this.
At a government meeting this past Monday, Russian “prime minister” Vladimir Putin said that it was “some kind of ugly thing, absolutely unfair” that the Russian stock market had lost 80% of its value in the past eight months because “decisions concerning which securities to buy or sell on Russian markets are, for the most part, made abroad. Moreover, the criteria by which these decisions are made have very little connection to the actual state of our economy or Russian companies.”
James Beadle of Pilgrim Asset Managment couldn’t quite agree. Beadle stated: “Russia’s situation has been, as we know, worse than most emerging markets. I put that down to the weak economic environment, the political risk and a lack of domestic investors.” Russia should have plenty of domestic investors, of course, given Putin’s claims of having raised the national income so dramatically. But it doesn’t, because in fact most of Russia’s oil windfall has been hoarded in the hands of a wealthy few, people who are now terrified to invest because Putin’s crazy forieign and domestic policies have left the nation without any sound economic fundamentals to lean on.
Comrade Putin’s remarks are, in other words, completely insane on two entirely different levels.
First, it totally false that Russia’s stock market collapse is the fault of evil foreigners. Did Putin give those same foreigners the credit when the market was roaring last spring? Of course not. Then it was all his doing. Only now, when things go bad, do we here about the role of foreigners. Does he believe that American companies, too, are being “unfairly” victimized? Of course not. Russia alone is the victim. Does he really believe that Russia should be able to attract foreign investment without incurring the risk of foreign judgments? Could he be that insane? This is Sovietspeak, the language of those whose only response to error is bloody violence, repression and concealment.
And second, if Russia’s stock market is really the helpless slave of the whims of the Western powers, is it really such a good idea for the central plank in Russia’s foreign policy platform to be provoking those powers into a new cold war? How can Putin justify taunting the U.S. in Venezuela, tormenting Germany with energy weaponization, and buzzing U.K. with nuclear bombers when those nations are capable of turning off Russia’s financial spigots at a moment’s notice? Shouldn’t Putin be trying to make friends?
Even as Putin was speaking, his generals were announcing yet another escalation of the new cold war’s arms race. As if they’d learned nothing from the financial collapse experienced by the USSR the last time it tried to mix the lethal cocktail of falling oil prices and rising arms race expenditures, as if they had no idea that the nation was experiencing an economic meltdown and that funds were needed for job creation and infrastructure, Russia’s generals plunged heedlessly down their path to self destruction. Reform in light of the crisis? Perish the thought! It was reported that the head of the General Staff, Nikolai Makarov, had signed an order barring officers from publicly discussing military reforms. That’s neo-Soviet Russia in a nutshell!
Thus, simultaneously, the giant ROSNEFT oil concern was announcing it had to take a massive loan from the government, totaling three quarters of a billion dollars, in order to refinance its massive foreign debt and avoid bankruptcy. Only months ago, Russia’s oil companies were awash in a sea of windfall profits and Russia’s “resurgence” was the topic of the day. Now, Russia’s oil companies are on the brink of destruction because the crazed cold war policies of the Putin regime have denied them the basic income they need to operate effectively. Putin has snatched away all their profits to build more nuclear weapons, and he dares to claim that the nation’s economic downfall has nothing to do with his government.
I’m hope Obama will not grant Medvedev a White house ceremony when they meet….
I dont even think Obama should meet them anytime soon because of the rude reception he received from the Russian after he got elected…
If they want to talk , let them talk to Biden or Clinton…Dont give them the attention they crave , specially not in the white house.
Now if only the decision concerning who should be the Russian president could also be “made abroad”!
Let me get this straight, Putin decrying the loss of 80% of the stock market’s value where his citizens didn’t participate. He should be jumping for joy. Imagine if you will, if Russians lost 80% of their savings in a Russian style 401k. Putin would be finished.
Instead, Western and Rich Russians took the hit. Putin should be breathing a sigh of relief.
Putin as all socialists, does not understand VALUE… the assets that before were valued at 80% higher, are still there… he doesnt realize that value only matters if your selling… or trying to use the stocks as collateral… but if not… then the value of the company doesnt matter, does it?
this is why america is not as hard hit as it seems… the 80% reduction was not the actual value of the assets, its the value of the assets production in the future…
a stocks value is the SALE price of a SHARE… not the actual VALUE of a company unless you want to SELL the company and recieve that value…
to give an easier example…
in 1980, you bought a house for 250,000
in 2004, the market value of the house was 500,000
in 2008, the market value plummeted and was 50,000
what changed? (other than taxes assesed at market value).
nothing… the VALUE is only realizable if you SELL… which is why i have to give MARKET VALUE.. the presumptive price at sale at a certain time.
to tie the analogy together…
unless putin wants to sell all the assets and pocket the money, the value of the assets in the market does not matter…
in the house example, the changes in value of the house didnt change the house, the property, me, or anything else, as its not realizable unless i want to leave and i sell it.
if i stay in that house, the price may rise again to 250…
this is why he cant understand value, as so many other socialists exhibit… they dont understand that nothing has value except at the time of transaction between two parties free to exchange property without coercion.
people mess this up in the west too, but for a different reason… in the past stock drops, they were not credit drops… they were equity drops…
the sale value of the stocks fell, and they backed credit loans… and so the loans didnt have backing, and so businesses slow down… in this new fall, credit fell, but business physical value remains, and future values are whats also fallen… because credit is used as a time changer.
now if the markets were less credit based, a drop in stock price wouldnt mean as much because the company wouldnt be using the shares as collateral for bank money… they would use their own saved reserves, and so not much changes…
its the difference between REAL capitalism, and what we have which is not capitalism.. and never was… (in real capitalism, one couldnt use fractional reserves to change time preferences and accelerate… you could only loan what you had, and terms would have to match. so long term loans of 30 years would be VERY hard to get as a loaner would have to not desire the money for 30 years… aggregating 30 1 year loans is not capitalism).
its really silly… because this value doesnt matter other than borrowing…
if they are running on capital not credit, then the companies could actually turn profits in down times and could pay dividends… if that happened, their value would go up and their shares would be traded…
right now, value will not go up till they can figure out who to loan to, and so future value can be assessed based on projections.