September 25, 2009 — Contents

FRIDAY SEPTEMBER 25 CONTENTS

(1)  EDITORIAL:  Banking on Russia

(2)  EDITORIAL:  Russia and the Rogues

(3)  Russian Banks teeter on the Brink of Collapse

(4)  Kasparov and the New Cold War

(5)  Aslund on Appalling Russian Hubris

NOTE:  If Dima Medvedev is serious about improving  relations with the USA, why is a KGB website smearing an important American diplomat with a bogus sex tape?

EDITORIAL: Banking on Russia

EDITORIAL

Banking on Russia

We couldn’t help but be amused by the odd juxtaposition of two recent stories about Russia’s leading financial institution, state-owned Sberbank.  Bloomberg reported that next year Sberbank’s stock might rise 66%.  Meanwhile, Reuters reported that so far this year the banks’s net profits are down a truly breathtaking 92%.  100% is not that far out of reach, it seems.

Let’s do the math.  Mr. Smith earns $100 in profit in 2008.  The next year, like Sberbank, his profit falls by 92%, so he earns a measely $8.  Then, in 2010, his profit increases by 66%.  That is, it rises to $13.28.  Is he doing well?

EDITORIAL: Russia and the Rogues

EDITORIAL

Russia and the Rogues

If Russia were a civilized nation, it’s people would cower in shame upon learning that a leading U.S. diplomat had chosen to lump their country together with the barbaric likes of Iran and China when he singled out the worst human rights offenders on the planet.  In Russia’s case, the legacy of “killings with impunity of human rights defenders” actually makes its offenses seem the worst of the sorry lot.

But Russia isn’t a civilized nation.  So instead, we can tell you without fear of contradiction that Russians will respond not with shame but with benighted pride, condemning anyone who dares criticize them and denying even the slightest need to reform.  Russians will, like the barbarians they are, justify the killings by suggesting the victims asked for it, betrayed Russia, deserved killing.  They will not demand justice now any more than they did during the time of Stalin.

Russian Banks Teeter on the Brink of Collapse

Bloomberg reports:

Russian government and central bank assurances that the nation’s financial industry is on the brink of recovery may be premature as asset quality continues to deteriorate, industry executives said.

“There are few quality borrowers, and banks may cease lending to most companies until market conditions improve,” Andrei Sharonov, managing director of Moscow-based Troika Dialog, Russia’s oldest investment bank, said in an interview in the Black Sea coast city of Sochi. “Companies are losing cash flow and becoming unable to service debt.”

Kasparov and the New Cold War

The Times of London on the new and old cold wars, viewed through the prism of chess:

In 1984, the Orwellian year in which Garry Kasparov and Anatoly Karpov first sat down to play, chess was as Russian as vodka. The rematch that began this week in Spain marks the resumption of a duel between two names as evocative of Russia as Stolichnaya. But why should anyone who is neither a chess buff nor a Russophile still raise a glass to these old rivals?

I can think of at least three reasons: the symbolic role of chess in the Cold War; the equally symbolic role of the Kasparov-Karpov matches in the demise of the Soviet Union; and Kasparov’s present role as de facto leader of the opposition to the Putin-Medvedev regime in Russia.

Aslund on Appalling Russian Hubris

Anders Aslund, writing in the Moscow Times, on the horrifying scope of Russian arrogance:

Do you remember the Kremlin hubris of the summer of 2008? Forget it! The ruble cannot possibly become a reserve currency for the next half-century. To become a major financial center, Moscow needs many years of serious reforms, not even contemplated today.

In June 2008, Prime Minister Vladimir Putin proclaimed, “We have no crisis.” Also President Dmitry Medvedev thought that Russia would escape the crisis and said, “Russia has not yet carried out a number of reforms … and has thereby managed to avoid some serious mistakes.”

Medvedev’s speech to the St. Petersburg International Economic Forum on June 7, 2008, marked the peak of hubris. “We have set ourselves the not very easy goal of setting Russia on an innovative development track and becoming one of the world’s five biggest economies by 2020,” he said. “The transformation of Moscow into a powerful financial center and the transformation of the ruble into one of the leading regional reserve currencies are the key ingredients to ensure the competitiveness of our financial system.” Dreams can be useful if they help people doing the right things, but these mirages were a pure distraction.