The new Russian president is blaming the US for the financial melt down we are experiencing. I am not surprised by his rhetoric, after all, the Russians love claiming how bad the US is and how they have a great system (like the part about not allowing opposition voices). Although the Russian president may think he is being smart in his attacks, he is showing us a great misunderstanding of just how the markets are suppose to be working and frankly, shows us why we should not bother investing in Russia.
Here’s what he said “Failure by the biggest financial firms in the world to adequately take risk into account, coupled with the aggressive financial policies of the biggest economy in the world, have led not only to corporate losses.”
Ok, so the biggest firms in the world, yes that’s right, the world, meaning not US, so how is it the US that is to blame when these companies are allowed to do their business globally, in such places as Russia? Fact is, financial firms blew off the US a long time ago, they are “global.” Meaning, they go where the money is with no regard for national interests. The one thing I will say is that the US Fed is acting like it is in control when it is not, we should have let Bear Sterns fail, that’s called capitalism, what we are seeing is corporate welfare which I do not agree with. At the same time, we have an economy based on 70% consumer spending and we let our dollar get weak, which is about as dumb a move as you can make. But that’s impacting the domestic US market, not so much globally.
Here’s another gem from Medvedev “”No matter how big the American market and no matter how strong the American financial system, they are incapable of substituting for global commodity and financial markets.” I’d like to know what this guy is on, because even my basic finance 101 class back in high school, we learned this fact. The US is one market and one market only. Granted, I know quite a few Wall Streeters who don’t always remember this, but I don’t believe this is endemic.
So we know the new president of Russia really doesn’t have a grasp of economics, lets see what else he says. “Russia is now a global player and understands its role in supporting the global community.” I wonder if he means the part about over priced oil and causing the developing world to remain in poverty as a result while Russia becomes flush with cash at the same time. How is that supporting the global community by causing people to fall further into poverty?
Or is Russia helping us by showing us the Neo-Stalinism with their anti opposition practices and limits on investment by foreign companies in Russia? How is that being a global player? Being a global player means competing on equal terms, we invest in your country and you can invest in ours, if we can’t invest in your country meaning buying entire companies without restrictions, then you are not a global player, just a wannabe player.
So, I guess this is the new face of Russia, flush with cash and ego-economics. Yawn, forget the Russian market, with guys like this in charge they will nationalize your assets at a whim. You are better off investing in Canada, at least they play fair and they have oil too.