Monday, March 03, 2008

Rippling Giant

Liam Halligan writes: Russia is emerging as a global economic giant.

----- And why shouldn't they. Russia spent a dozen years in bankruptcy and default, the last sovereign debt default in 1998-99. The population declined as folks fled the mother country along with banks and businesses. (Russia now offers women incentive to reproduce).

Since Russia's last economic meltdown and with a clean slate the nation is today almost debt free "with a budget surplus of 6 per cent of GDP, and a trade surplus almost twice as much again."

In the last half-dozen years Russia opened its doors to international bankers and business, and although current inflation is 12%, it's only a "blot" according to Halligan.

(US current inflation rate is 2.85% but if you add unemployment, the miseryindex is 9.18%. The miseryindex in 1980 was 21.98% and a low of 2.79% in 1953. With this method and Russia's 6.6% unemployment their current misery index is an 18.6% "blot.")

Halligan refers to Russia as having a 13% basic rate of income tax, but according to this writer the real burden on the salary of a Russian worker would be not 13% but about 40% because of "social costs", medical, pension, etc.

Halligan states "Foreign banks can set up at will. Moscow, St. Petersburg and, increasingly, Russia's regions are rippling with stores bearing Western names and products."

A Burberry hoodie and a Starbucks caffé latte - ain't rippling liberalization capitalism great?

This glowing, optimistic report of Russia's bursting-at-the-seams growth (and a dig at Hillary) has nothing to do with Halligan being chief economist at Prosperity Capital Management, which "currently manages approximately $5 billion in Russian and CIS equities, and is thus one of Russia's largest and best-known international investors. Our clients include European and US private banks, insurance companies, pension funds, hedge funds, and endowments."

Like Venezuela, Russia profits from the US war for oil, while publicly pretending reluctance or anti-war. Halligan claims "... had Russia chosen to join OPEC ... oil would now be way above $150 a barrel, rather than close to $100. Imagine how much that would now be hurting oil importers like America and the UK."

(Imagine how rippling BigOil/Putin/Chavez would be @ way above $150.)

Halligan gives no explanation for his conclusion, that had Russia joined OPEC, oil would now be way above $150 a barrel. Normally when OPEC wants to drive up barrel price they cut production - although of late the price seems driven by anxiety - or whenever Hugo shakes his weenie at the US.

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