Russia sees in credit crisis end of U.S. domination

[CG51]

MOSCOW (http://www.iht.com/articles/2008/10/02/europe/russia.php#): The Russian president said in a speech Thursday that the financial crisis in the United States should be taken as a sign that America's global economic leadership is drawing to a close, reiterating an argument that leaders here have been making for some time, though investors in recent weeks have been fleeing Russia and depositing money in U.S. Treasury bills.

Perhaps inevitably for a country long lectured to by the United States, Russia is using the occasion of the U.S. financial crisis to do some lecturing of its own.

President Dmitri Medvedev said Thursday that the U.S. crisis showed that "the times when one economy and one country dominated are gone for good." Speaking of the United States, Medvedev said the world no longer needed a "megaregulator."
Russia has argued that the freewheeling Anglo-American style of capitalism is to blame for the crisis, a position echoed by Germany and other Continental European nations. Medvedev even called it financial "egoism."

A drumbeat of similar ****ouncements has been heard in Russia in recent days. Prime Minister Vladimir Putin made a major speech Wednesday on U.S. financial "irresponsibility," blaming the plunge of more than 50 percent in the Russian stock market on the global economic slowdown and U.S. financial turmoil, rather than on any troubles endemic to Russia.

"The saddest thing is that we can see an inability to take appropriate decisions," Putin said in his speech after the U.S. House of Representatives rejected the Bush administration's bailout plan. In contrast, the Russian bailout was decided by decree.

"This is not the irresponsibility of some people but the irresponsibility of the system, which, as it is known, claimed to be the leader," Putin said.

Medvedev spoke Thursday at St. Petersburg State University during the eighth annual Petersburger Dialog, a forum devoted to developing relations with Germany and where he met with Chancellor Angela Merkel. Members of Merkel's government have also been critical of U.S. regulators.

Germany will "always support a multilateral approach" to market regulation, Merkel said, adding that officials from the European members of the Group of 8 industrialized nations would meet to discuss new market regulations, Bloomberg News reported.

But in contrast with other European countries Russia's own financial system has been in steep decline over the past weeks, and regulators suspended stock trading three times. As in other emerging markets during periods of turmoil, investors have had a tendency to pull money out of Russia and to deposit it in U.S. Treasury bills.

Since the second week in August, when the war in Georgia and political tension with the West heightened concerns about stability in Russia, $52 billion in net private capital has left Russia, according to an investor note from Goldman Sachs.

Russia has promised a total of about $150 billion for loans to banks, tax cuts and other measures. The moves seek to stimulate the economy, restore liquidity to the banking sector and return confidence in the stock market.

Still, the global credit crisis could trim about 1 percent from Russian growth next year, according to Finance Minister Alexei Kudrin.


http://www.iht.com/articles/2008/10/02/europe/russia.php

[Ordie]

US companies are no longer dependent on the domestic market. Whatever shortages in the US market, American companies can compensate with global marketshare including Russia.

[AlexMartin2]

US companies are no longer dependent on the domestic market. Whatever shortages in the US market, American companies can compensate with global marketshare including Russia.

Can they? We see economic crisis all around the world, not only in US.

And I believe, you miss one very serious problem for US. It's fall of dollar position as world reserve currency. None would want dollar because of US problems. It could worse situation inside US much more than banks problem, IMHO.

And BTW, Russian state duma (parliament) want to pass a new law, enforcing all export sales in rubles. It mean that all oil&gas&metals sales would not be in US dollars. It could be another huge blow to US.

[Honneur et Patrie]

And I believe, you miss one very serious problem for US. It's fall of dollar position as world reserve currency.

Yes, you're right, but don't ever forget that if US$ fall, the huge american debt fall with it... They can turn it as a real advantage!


None would want dollar because of US problems.

Some countries prefer to be payed with Euros! Some oil exporters seems willing to change their exange currency soon!

[Ordie]

Low dollars.
Great bargains for European tourist.
Competitive advantage for US industries such as Boeing.

[Mackie]

Competitive advantage for US industries such as Boeing.

This is why the tanker deal failed. p-)

[AlexMartin2]

Low dollars.
Great bargains for European tourist.
Competitive advantage for US industries such as Boeing.

No no, I didnt mean low dollar. Exchange rate to euro or other currencies is important, of course, but much more important is the "area of use" of dollar.
If this area are shrinking, USA would have serious internal problems, for example inflation, because all these unused dollars could return in US.

[LRPV]

Wouldn't the US Federal Reserve use monetary policy to pull those dollars out of circulation?

[KoTeMoRe]

Yes, you're right, but don't ever forget that if US$ fall, the huge american debt fall with it... They can turn it as a real advantage!



Some countries prefer to be payed with Euros! Some oil exporters seems willing to change their exange currency soon!

Actually not...the debt owners will simply raise the interests of the debt. Plus a falling US dollar means an output gap. You'll need more dollars for your input to produce an equivalent output.

The whole debate about a "monetarist" inflation can run when the timeframe is limited. Here the US dollar is kicking the bucket, durably.


Competitive advantage for US industries such as Boeing

Competitive advantages for Stock goods, not for newly produced ones.

[AlexMartin2]

Wouldn't the US Federal Reserve use monetary policy to pull those dollars out of circulation?

As I understand:
First, USFed PRINTED these dollars. Then they SOLD them to central banks of foreign countries to be used as trade's mediator with other countries, including US of course. If these dollars wouldn't be used in trade, central banks could SELL them back to US, in exchange for something they need (US goods of US property or something else).
And only then they could be out of circulation.

[The Mighty Quinn]

How many zeros in a billion?

The next time you hear a politician use the
word 'billion' in a casual manner, think about
whether you want the 'politicians' spending
YOUR tax money.

A billion is a difficult number to comprehend,
but one advertising agency did a good job of
putting that figure into some perspective in
one of it's releases.

A.
A billion seconds ago it was 1976.

B.
A billion minutes ago Jesus was alive.

C.
A billion hours ago our ancestors were
living in the Stone Age.

D.
A billion days ago no-one walked on the earth on two feet.

E.
A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

While this thought is still fresh in our brain...
let's take a look at New Orleans ...
It's amazing what you can learn with some simple division.


Louisiana Senator,
Mary Landrieu (D)
is presently asking Congress for
250 BILLION DOLLARS
to rebuild New Orleans . Interesting number...
what does it mean?

A.
Well... if you are one of the 484,674 residents of New Orleans
(every man, woman, and child)
you each get $516,528.

B.
Or... if you have one of the 188,251 homes in
New Orleans , your home gets $1,329,787.

C.
Or... if you are a family of four...
your family gets $2,066,012.

Washington , D. C

< HELLO! >
Are all your calculators broken??

Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax < BR>Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago..
and our nation was the most prosperous in the world.

We had absolutely no national debt...
We had the largest middle class in the world...
and Mom stayed home to raise the kids.

What happened?
Can you spell 'politicians!'

And I still have to
press "1"
for English.

[StalinOrgel]

Low dollars.
Great bargains for European tourist.
Competitive advantage for US industries such as Boeing.

... and USA inability to cover huge trade deficit by emission of new $.



And BTW, Russian state duma (parliament) want to pass a new law, enforcing all export sales in rubles. It mean that all oil&gas&metals sales would not be in US dollars. It could be another huge blow to US.


Source, please?

[Vehemence]

How many zeros in a billion?

The next time you hear a politician use the
word 'billion' in a casual manner, think about
whether you want the 'politicians' spending
YOUR tax money.

A billion is a difficult number to comprehend,
but one advertising agency did a good job of
putting that figure into some perspective in
one of it's releases.

A.
A billion seconds ago it was 1976.

B.
A billion minutes ago Jesus was alive.

C.
A billion hours ago our ancestors were
living in the Stone Age.

D.
A billion days ago no-one walked on the earth on two feet.

E.
A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

While this thought is still fresh in our brain...
let's take a look at New Orleans ...
It's amazing what you can learn with some simple division.


Louisiana Senator,
Mary Landrieu (D)
is presently asking Congress for
250 BILLION DOLLARS
to rebuild New Orleans . Interesting number...
what does it mean?

A.
Well... if you are one of the 484,674 residents of New Orleans
(every man, woman, and child)
you each get $516,528.

B.
Or... if you have one of the 188,251 homes in
New Orleans , your home gets $1,329,787.

C.
Or... if you are a family of four...
your family gets $2,066,012.

Washington , D. C

< HELLO! >
Are all your calculators broken??

Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax < BR>Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago..
and our nation was the most prosperous in the world.

We had absolutely no national debt...
We had the largest middle class in the world...
and Mom stayed home to raise the kids.

What happened?
Can you spell 'politicians!'

And I still have to
press "1"
for English.

You forgot one thing. Where do you think all this military spending is coming from? Or research into various fields such as medicine and space exploration? 100 years ago you had none of these things.

[ZhukovG]

not only russia sees that also German finance minister
http://business.timesonline.co.uk/tol/business/economics/article4828377.ece?cfC0C1CC97=14ED0E725!NDQyMTEyNDpyYWRpdXM6cKhcYnLlBDVxyVMU45h+4A==

[ßå$tĮТHÏ¿ð]

Poor Ruskies been getting hammered over the last couple of days in the market. I heard the markets closed until Friday!

[ZeroZen]

America sneeze, the world catches cold.......

[Kilgor]

In Russia, a Struggle for Markets Just to Stay Open


Article Tools Sponsored By
By ANDREW E. KRAMER
Published: October 8, 2008

MOSCOW — At what point is a stock market no longer a functioning stock market?
Skip to next paragraph
Related
Times Topics: Russia

Every day this week, regulators have had to halt trading on Russia’s main bourses, the world’s hardest-hit stock markets during the current crisis.

They closed the RTS and Micex exchanges three times on Monday — and the RTS still managed to lose 19.1 percent, its worst day. Trading reopened at 1 p.m. on Tuesday, and on Wednesday, it was suspended after shares collapsed 14 percent in the first hour.

Regulators said the Micex would reopen on Friday; the RTS was suspended indefinitely.

At issue are two problems. First, Russian companies used shares as collateral to borrow an untold amount of money. Second, the market decline is forcing a spiral of margin-call selling.

“It’s a little embarrassing for Russia,” Rory MacFarquhar, an economist at Goldman Sachs’s office here, said of the daily market closures.

Though the closures sow growing doubt among investors, the larger problem is the leveraging, which has revealed a fundamental and central flaw in the Russian market.

If mortgage-backed securities are the toxic asset in the United States, loans backed by shares are the problem in Russia. A bailout package of more than $200 billion by the Kremlin of loans and tax cuts has failed to stanch the sell-off.

“Russia does have its own problem now,” Mr. MacFarquhar said.

Indonesia, Ukraine and Romania also closed their exchanges on Wednesday, and a rate cut by six big central banks failed to reverse a global rout in stocks.

The Standard & Poor’s index for Russian stocks has fallen 53.2 percent this year as of Oct. 3 — the most of the 30 markets monitored by the S.& P.’s emerging-markets index. The second-biggest drop was in Indian stocks, which fell 51.8 percent.

Russia’s market has fallen further than any other, in spite of trade and budget surpluses, partly because of the unusual ownership structure that took hold after the breakup of the Soviet Union.

A few wealthy individuals, known as oligarchs, obtained huge stakes in companies as Russia privatized. In “loans-for-shares” auctions in the mid-1990s, they became owners of the big mining and petroleum companies in exchange for small loans to the government.

In this sense, Russia is in contrast, for example, to the United States, where large companies have a diffuse stockholder base. Typically, oligarchs hold more than 50 percent in the companies they control, with the remaining shares split between domestic and foreign investors.

As the market here swooned and commodity prices fell, risk-averse foreign investors pulled out. Russia’s war with Georgia and government attacks on private companies also scared away foreign investors. Meanwhile, the oligarchs had, to an unknown degree, pledged portions of their far larger stakes as collateral for loans.

As the smaller investors left and the market dropped, banks made margin calls. The fear is that now the shares that had been locked in the core holdings of the oligarchs will flood the market, at a time when there are no buyers. Just on Tuesday, regulators introduced more sweeping power to suspend trading on the stock exchanges to halt margin-call selling.

Unless trading is closed permanently, however, this measure will not solve the underlying problem.

“At some point, you must let market forces take their course,” Michael Kavanagh, a metals sector analyst at UralSib bank, said.

Also on Tuesday, President Dmitri A. Medvedev said he would submit a bill to the Duma that he said would simplify the rules for the seizure of collateral by creditors, which might encourage new lending.

http://www.nytimes.com/2008/10/09/business/worldbusiness/09ruble.html?ref=worldbusiness

[szr]

Not one of these taxes existed 100 years ago..
and our nation was the most prosperous in the world.
Not even close to being true. We were a backwater one hundred years ago, content with being left alone in our own little hemisphere. We were the boondocks compared to what we'd become after two rounds of World War forced us to engage with the wider world, and fifty years of Cold War forced us to stay engaged.

[Calanen]

Russia is taking the opportunity to put the boot into Washington after Georgia. And the USAs achilles heel is US denomination of oil principally, but other goods, gas, steel etc. Russia knows if that goes - it will be the death blow for the USA.

I hate to say it - but God help us all of it that happens.

[XShipRider]

I take exception to the "no national debt" statement. This country has never been "debt free." It's been relatively low but never zero.

US National Debt 1791-2005 (http://www.cedarcomm.com/~stevelm1/usdebt.htm)


Not even close to being true. We were a backwater one hundred years ago, content with being left alone in our own little hemisphere. We were the boondocks compared to what we'd become after two rounds of World War forced us to engage with the wider world, and fifty years of Cold War forced us to stay engaged.

I believe we overtook Britain circa turn of the last century. This made us the so-called richest nation on the planet.

[jokuvaan]

If somebody sees end of USA domination then there's always somebody who sees Russia going down:


Predictions that Russia will again become powerful, rich and influential ignore some simply devastating problems at home that block any march to power.http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301976.html