|
Posted by on October 2, 2008, 6:34 am
wrote:
> new bywww.mrchat.net
>
> Today, the whole world is being hit by a tremendous financial crisis,
> but Russia is facing a perfect storm. The Russian stock market is in
> free fall, plummeting by 60 per cent since May 19, a loss of $900
> billion. And the plunge is accelerating. As a result, Russia's
> economic growth is likely to fall sharply and suddenly.
>
> One problem is that, after a long period of fiscal prudence, Russia's
> government has shown extraordinary ineptitude. Russia has enjoyed
> average annual economic growth of 7 per cent since 1999. With huge
> current-account and budget surpluses, it had accumulated international
> reserves of $600 billion by July. Its public debt was almost
> eliminated. But the open economy that has bred Russia's economic
> success requires the maintenance of sensible policies to succeed.
>
> The initial American financial crisis barely touched Russia, but the
> global economic slowdown brought about a decline in oil and other
> commodity prices by more than one-third since July, which was a big
> blow. All the other hits, however, have been self-inflicted. The
> Russian financial crisis is high drama, best described as a tragedy in
> five acts.
>
> On July 24, Prime Minister Vladimir Putin initiated the first act by
> fiercely attacking, without evidence, the timid owner of the giant
> coal and steel company Mechel for price-gouging and tax evasion. In
> three days, Mechel's shares lost half their value, triggering the
> Russian stock market's decline.
>
> Then, on August 8, Putin launched the second act of this Russian
> tragedy, his long-planned attack on Georgia. Shockingly, Russia argued
> that it had the right to attack a country that harboured people to
> whom it had just issued passports, scaring all countries with Russian
> minorities. By recognising the "independence" of the two occupied
> territories, Abkhazia and South Ossetia, Russia turned the whole world
> against it.
>
> Russia's leaders have earned a reputation for being unreliable,
> quixotic, and unpredictable, but markets like trustworthiness,
> stability, and predictability. Not surprisingly, foreign investors no
> longer favour Putin's Russia.
>
> Within a week of its attack on Georgia, Russia recorded a capital
> outflow of $16 billion, which has since increased to $30 billion. This
> is a small sum relative to Russia's currency reserves, but plenty for
> the underdeveloped banking system, which experienced a severe credit
> squeeze.
>
> Putin continues to deny that Russia's financial problems were caused
> by his war in Georgia, and it took the Central Bank more than a month
> to provide substantial liquidity injections. But it was already too
> late, as the liquidity problem had become a matter of solidity.
> Overtly, Russian stock valuations look attractive, but by heaping
> abuse on foreigners, Putin has scared them away, while Russian
> investors have no money at hand. With every statement, Putin erodes
> Russia's political risk profile.
>
> As is customary, many Russian businessmen pledged their shares to
> borrow money for stock purchases. As the stock market dives, they
> receive margin calls and are being forced to sell their shares at ever-
> lower prices, causing the stock market's downward spiral to
> accelerate. In Soviet fashion, the Moscow stock exchanges closed for
> four days in a row in the week of September 15, because stocks plunged
> too fast. By denying the problem, the authorities have aggravated the
> lack of confidence.
>
> On international financial markets, the war in Georgia has rendered
> Russian debt and bonds toxic. Interest rates on Russia's bonds have
> risen by 2-3 percentage points, and many Russian creditors no longer
> have access to international capital markets.
>
> Turmoil
>
> Russia is just about to enter the third act of this tragedy, a banking
> crisis. Numerous medium-sized banks, and some large ones, are set to
> go under in the stock-market turmoil. Too many big investors can no
> longer meet their margin calls, while borrowing costs have risen
> sharply. The recent appreciation of the dollar adds to their hardship.
>
> In the fourth act, the real estate bubble will burst. A reasonable
> guess would be that Moscow's astronomic real-estate prices will fall
> by at least two-thirds. That will exacerbate the banking crisis.
>
> In the fifth act, investment will seize up. Why continue building when
> you can neither finance your investment nor sell real estate? Russian
> consumers are already scared and will cut their consumption, causing
> aggregate demand to contract.
>
> In the end, real economic growth will come to a screeching halt,
> perhaps as early as next year. Other factors are likely to aggravate
> the situation. High-level corruption is so rampant that Russia appears
> unable to build major public infrastructure projects. Oil and other
> commodity prices are likely to fall further, and oil and gas
> production have already stagnated. Putin has turned his back on the
> World Trade Organisation and is promoting protectionism, which will
> also harm growth.
>
> Strangely, the most solid parts of the Russian financial system are
> the state budget and the currency reserves, but it is too late for
> them to prevent this tragedy. Neither arbitrary state intervention nor
> brutality will restore investor confidence.
>
> The villain in this drama is Vladimir Putin, who has thrived on eight
> years of rapid growth generated by the market reforms of his
> predecessor, Boris Yeltsin. Russia had a good chance to escape this
> international financial crisis, but, through his ruthlessness and
> ineptitude, Putin has rendered his poor country a prime victim. How
> long Russia can afford such an expensive prime minister?
>
> full newshttp://www.mrchat.net/dummy-article/business/russias-coming-fina=
ncial...
Hi there, my name is hemal, a fx trader from the UK. I focus on OIl,
Gold, GBPUSD & EURUSD. About 60 of my fellow contacts have setup a
free trading chat. We focus on getting 50-100 pips in the London open.
If you would like to join in pop me a message to
hemal_pandya@hotmail.co.uk or PM me with your preferred Username and
Ill send you the details.
Happy trading &
Best Regards
Hemal
P.S Here are some comments from the room..
"makes me about +46 pleased with that"
"took 50 on gold"
"(08:29):
"just closed crude 98.17 - 96.71 +146"
"out of crude 108"
"29 pips on ftse"
"Sorry guys got kicked out, Profit taken at WS1 on FTSE"
"Thanks ...Gold +29...crude+106...usd jpy+14...total...+149"
"out for 29 monkey. cheers"
"117pips on gold, cable, swiss and e/jpy for mr&mrs spitfire!"
"just back gutted closed gold 50 to early my girl can walk to school
tommorow"
"50 pips today guys thank you"
"closed half of gold with 58"
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap