Blunder: A New Age for Russia

The PBS News station I watch showed rioting in Eastern Russia last night regarding tarriffs that are being put on cars being imported into Russia! Russians are saying that they don't want to pay more for cars that they'd prefer to buy over the Russian vehicles that they say are poorly built, without ABS brakes & AIRBAGS. It's just another example of how GOVERNMENTS don't WORK ANYMORE! Kinda like the U.S. government, huh?

I hope current Russian government and some of its supporters will learn their lesson. I hate the fact that they can threaten anybody during the up times of oil industry. I hope the more they cut their oil production the more the oil price will go down until social tension will lead to the downfall of its current corrupt & mob government.

Russia is just another giant with foots of mud, only the diversified economies will succed in this crisis.America will be stronger after this.

Let me just get some things straight. It is not Russia that “threatens anybody” and is militarizing Canada and Mexico and has troops in two foreign countries half a globe away. It is actually America who is militarizing former Russia's neighbors, such as Ukraine, Georgia, Latvia, Lithuania, etc. By the way, American ships with nuclear capabilities are in the Black Sea, only 150 km away from Russia, delivering new weapons to Georgia, paying off with your pension plans and social security to the bankers for borrowing more money, since the country is bankrupt.
I do not think that Putin is bailing out oligarchs either. He is trying to prevent Russian companies, that were stolen by the oligarchs from the Russian people, to fall into the hands of the world bankers like the Rothschilds. And the diversification process is not working in Russia either simply because the same forces that are destroying this country, doing the same in Russia. These forces are called Central banks or Federal Reserves with private capital controlling a country's money supply.

to Peter Pan
here in America we use miles not kilometers did not they teach you that in KGB school and please stop spamming us with Putin propaganda!

Excellent quote by Shore. The cure-allism - otherwise known as Friedman or the Chicago Free Market policies - have led to a loss of standards of living and an increase against citizens and loss of democracy in several major countries where it's been tried over the last 30+ years - Chile, Argentina, Poland, Russia, and to an extent China and now the US. If you want to read more - get the book The Shock Doctrine by Naomi Klein (check for it at your library if you don't have the extra cash to spend).

These oligarchs will eventually borrow money from the largest Russian national bank, which is controlled by Putin.

In exchange for these loans, the bank will take controlling interest in these large companies.

Within 5 years, after the recession is over, Putin will be the richest man in the world.

Peter Pan - care to tell us a secret how Latvian and Lithuanian armies of about 5000 soldiers threaten Russia?

Welcome everyone.

Pascual: I do think that Putin especially may have been deluded into thinking that Russia's enormous reserve accounts -- in addition to the retirement of most of the country's foreign debt -- had inoculated it from any possible downturn. Of course, as you, FBEye and Excellent point out, Putin was hardly alone in having fallen into what Shore calls a cognition trap. Surely Putin is taking on board the fundamental frailty of an fossil fuel-centered economy. I'll also be interested to see how, once the deep recession passes, Russia and other major economies act to protect themselves against such vulnerability to another American contagion.

Peter Pan: certainly there is economic rationale behind Putin's financial rescue of the oligarchs, just as there is for the corporate bailouts going on around the world. The fact remains, though, that these figures, such as Deripaska, are not mere corporate titans; they were born as and remain part of Putin's political superstructure. In rescuing them, he is by extension protecting his own flank.

Thanks for the comments. Best Steve

@ FBEye: Restricting imports on expensive foreign cars by levying a higher tax on them is the /single/ best thing that Russia CAN do for its flailing/failing economy. The economic gains of this decision are tremendous.. and despite what PBS or some ticked-off Russian car resellers are saying, this move won't hurt the working class.

Having lived in Russia, let me put things in perspective:

Expensive [keyword: e-x-p-e-n-s-i-v-e] foreign cars are generally only purchased by the people that can /afford/ to purchase such vehicles. Under the proposed changes to the customs laws, higher taxes will only be levied on cars with a high cylinder count and high-volume engines above 2.4L, which excludes most foreign cars on Russia's market today.. except those that can be purchased by the wealthy, such as the numerous Bentley, Lamborghini, and Mercedes Baymach vehicles out on the streets of Moscow today. These are cars that cost upward of $700K.. and aren't even owned by the wealthiest business oligarchs in the US /or/ Europe.
Granted, this leaves a large number of people in the resale business pretty ticked-off, as their profit margin is much, much less.. hence, the interviews you see on PBS.
Despite these tensions, however, most cars that fall into the "sedan" category are excluded from higher customs duty.. hence, this move is not hurting the working class people who will continue to buy low-volume vehicles. People who bought super-expensive vehicles prior to the amended customs law will /continue/ to buy them.. which only profits the State.

In contrast, Uzbekistan [a former USSR State] took an different approach altogether.. an approach that /crushed/ the freedom of choice that the Uzbeks have. The government levied a tax of 200% on ALL foreign cars not manufactured in Uzbekistan. People in Uzbekistan can only buy two types of cars without grossly overpaying: a Daewoo Matiz and a Uz-manufactured Lada. On my visit to Tashkent, the capital, I only saw about 6-7 "foreign" cars.. and I stayed there for a week.

To add insult to injury, the government sells the Daewoo Matiz for $12K, while it's being exported to other countries for $8. Not fair? Tough luck, the locals say. That's getting close to the concept of a "command economy" present in the Soviet Union.

Putin isn't as power-hungry or arrogant as you think.. and this is coming from someone that didn't support him at all during his first years in office. Much of what he does is not very apparent from the get-go.. only later do people realize how smart his decisions really were. Do I always support him? Heck no. Do I support him on this decision? Absolutely.

Ah, all of you Russia haters! I am a US citizen of Soviet origin and advise you to study Russian - you will all need it to look for jobs there, as was the practice during the Great Depression. Also - suggest to unionize - perhaps your jobs would be more secure, or you like this uncertainty and roller coaster of US-version of capitalism? As far as your knowledge of Russian history, modern or otherwise, it is pathetic - but than again, so is your knowledge of US history. The US chickens are coming to roost - watch out, you may have to beg Russia for a bailout in 2009. No wonder most of you hide behind bogus names…

Mikhail

I think Russia will be fine.

Russian foreign politics will change when pretty soon it's reserves dry up. It will not have enough money to buy fuel for it's ships to return from South America trip.

Now if only Mr. Shore, or Mr. Levine for that matter, could sketch out a course of action the Russian government could have taken that would have insulated the Russian Federation from the present Force-9 economic gale sweeping the globe better than the one Mr. Putin chose.

That's right. There isn't one.

I mean, look at what acceptance of Western political/economic models have done for Ukraine and the Baltic States. I mean, at least the Russian government aren't imposing a 15% pay cut across the whole economy, or arresting critics of their economic policy, like that model of Western political and economic governance Latvia is.

The American establishment fools the American people by keeping well-out-of-sight the four extremes that got us to the financial crisis:
"Real Dow & Real Homes & Personal Saving & Debt Burden" at
http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html
The first two are mispricings, and the second two are misbehavings, abetted by mispricings.
Do you think Putin might tell the American people -- maybe at WEF, 1/28?

Everyone, please keep in mind that when anyone mentions "The Rothschilds" and
"World Bankers" in one paragraph...they can only be screaming, "The Jews! The Jews! It's all the Jews fault!"

I'm astounded that writers from Businessweek wouldn't notice this and ignore, but hey, maybe they're part of the conspiracy as well...

For those of you that don't know, some believe that "The Jews!" control world banking and media, and are plotting to rule the planet under a "New World Order" A.K.A the "Black Helicopter Crowd", "The UN", etc...

I love it when these clowns blame everything on "The Jews!"

-osgo

Hey Mikhail, we will nuke russia and take your ******* resources before we beg for a loan!!!

If it matters, I'm in Canada, speak English and Russian.

Both the US and Russia have serious problems. Putin is still resentful of the disrespect he received from the US when he expected co-operation and support. The relationship between the two giants has become adversarial. This antagonism benefits no one.

The US and Russia have to kiss and make up. They have more in common than they care to admit.

M

Russia has more to worry about, Turkey will soon take over the Caucasus in its sphere of influence.

Note to Osgo: right you are about Peter Pan's remark, one that I should have caught. Apologies for that.

For those interested in further reading today on Russia's troubles, take a look at this piece by the NYT's Clifford Levy on depositors' problems at Moscow bank Capital Credit: http://www.nytimes.com/2008/12/29/world/europe/29russia.html?_r=1&scp=6&sq=clifford%20levy&st=cse

Hey Redtek-1, did you ever wonder why America has to worry about terrorism, and why so many people worldwide are rejoicing in America's current discomfiture? It's precisely because of your attitude: Arrogant, self-righteous, entitled, and borderline nuts. Nuke em?!? Give your head a shake! Remember, they have them too...

When you need money, do you go get a loan, or do you just rob the bank? Maybe you see nothing wrong with robbery, but honest folks believe ingenuity and hard work are the paths to wealth and greatness. Those are REAL American values. Values that haven't been completely forgotten yet.

I do however agree with you that Mikhail's post is nonsense.

With regard to Russia-uber-alles postings from Peter Pan and Mikhuil.

Please consider 2 versions:
1. Five generations of soviet brainwashing lead to a rubberstamp approval to whatever tzar-du-jour claims.
2. Something which is impossible under western government transparency: special professional units doing propaganda posting as usual visitors.

So take these postings cum gratis saltis.