Streetwise Professor

October 8, 2009


Filed under: Economics,Politics,Russia — The Professor @ 8:15 pm

Even to someone who is familiar with facts of the case, this video about the trials (word used advisedly) and tribulations of Hermitage Capital Management in Russia is chilling, and deeply disturbing.  The “moral” of the story, if one can apply this word to the depraved conduct described in the film, is this: agents of the Russian state will stop at nothing to steal from foreigners, and if they fail in that, they are perfectly happy to steal from the state that they allegedly worship.  First corollary: the highest authorities and judicial organs of the self-same state will do nothing to prosecute this threat.  Indeed, they will persecute those who dare bring it to light.

Keep this in mind anytime “anti-corruption campaigns,” or fights against “legal nihilism,” are announced.  Keep this in mind when the heads of state and government tempt foreign investors, and mouth soothing words about a market economy.  The agonies of Hermitage give the lie to all these high sentiments and intentions.

Words mean nothing.  Actions mean everything.  Watch the film to see just how utterly ruthless and depraved the actions of the minions of the power vertical–from top to bottom–can be.

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  1. I’m convinced that Russia isn’t salvageable. It has hit a tipping point of no return. Anyone investing there deserves to be scalped.

    Comment by penny — October 8, 2009 @ 9:35 pm

  2. So … why would anyone invest in russia? I guess the simplest logic is that one can get bribed quite a bit to induce someone to invest in russia …. or if they are in a public company , to use their authority to invest there. Since managers jump from tree to tree in the corporate world….this can often go unpunished. How else can one explain the flocking to russia given all this information.

    Comment by Surya — October 8, 2009 @ 11:33 pm

  3. SURYA: Let me answer your question with a question. Knowing the odds, who would enter a casino and put money into a slot machine? Who, much less someone living on a fixed income? Lots! There’s one, in fact, born every minute.

    Comment by La Russophobe — October 10, 2009 @ 2:27 am

  4. Speaking of “chilling” they are about to do to Browder what they did to Khodorkovsky:

    Comment by La Russophobe — October 10, 2009 @ 2:29 am

  5. Surya, penny and SWP are faced with a dilemma. A contradiction, if you will.

    a) Is Russia really the morass painted by Russophobes? OR
    b) Does capitalism systemically fail?

    I will sit back and look forwards to their attempts to reach a synthesis.

    Comment by poluchi fashist yadernuyu bombu — October 10, 2009 @ 2:36 am

  6. AK–That’s 5 by my count: AK, DR, SO,PF?, PFYB. That’s two more than Eve. Seek help.

    Your alleged dilemma is purely the product of your imagination. Which personality came up with it?

    Your purported dilemma seems to presuppose that Russia is capitalist. As if.

    If there is a capitalist failure, it is of the Schumpeterian variety. See Capitalism, Socialism, and Democracy.

    The ProfessorComment by The Professor — October 10, 2009 @ 10:40 am

  7. My purported dilemma presupposes that the companies investing in Russia are capitalist. Which presumably they are.

    If their expected rate of return in Russia taking into adjusting for risk is negative, why the hell would they invest there anyway?

    (PFG and PFYB are similar anyway. But if you wish I’ll switch back to PFG and keep it that way. 🙂 )

    Comment by poluchi fashist granatu — October 10, 2009 @ 1:49 pm

  8. It’s ironic to read about all the risk in Russia, while just last year, U.S. consumers lost $13 trillion in this country (per Fed Flow of Funds report). Yes, Russia is a gamble, but so is the U.S. dollar, and the DOW 30 is below where it was 10 years ago. We need to re-learn that risk and reward are connected and will always be. So put some money into Russia, but don’t gamble your life’s savings there, or anywhere.

    Art is right, the Russian’s are very nationalistic. There are many good people there, including in business, but the mafia and greedy ex-Red’s will play Western business for fools. As other’s point out, they ripped off even big firms like BP and Shell. They will be nice for a while, take what they can in technology or know-how, then push the Western firm out, gently or not. They also have used people that come here to steal technology, just like the Chinese. That includes students in high tech college labs.

    The traditional Russian ploy with foreigners is to lure them in, promise riches, make them invest, transfer technologies. Then nationalize. Stalin played such game with many western companies – Ford, US Steel, and others. Putin plays a similar game although more subtly, for the time being. Even if your business looks good today you can not be sure about tomorrow. Look at BP, Shell, and others.

    I would never invest a dime in Russia or most of the ex-soviet countries. The mafia literally run everything. I spent two years in freezing weather working for an American subsidiary in St. Petersburg not fun.
    Soviets, pardon me, Russians are not to be trusted!

    Comment by Oleg — October 10, 2009 @ 9:14 pm

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