Streetwise Professor

Traveling and family obligations, so limited time to comment on events. But an opportunity (sitting at the gate in Greenville) to take a few quick hits.

The US announced some additional sanctions today. To indicate how lame these sanctions are, the Russian market (MICEX) was up 2.35 percent when the names on the list (or more accurately, the names that weren’t on the list) were announced.

One notable name: Sechin. Roseneft was down 1.7 percent, and BP, tied to the hip with Rosneft, was down about two percent.

Other than that. Zip. In an inversion of the usual expression, this was a situation to sell the rumor and buy the fact.

The Euro list comes out tomorrow. It is rumored to be even more lame than the US list.

Over the weekend in Malaysia, Obama made it clear that he would coordinate sanctions with the Euros, and that the US would not impose unilaterally sanctions that were much tougher than what the Europeans will agree with. Meaning that given that the EU requires unanimous approval for its actions, Obama is deferring to the Austrians and the Slovenians and the Germans, who are utterly compromised by Russian influence and cash.

Most likely, Obama really wants to do nothing. This allows him to do that while claiming he’s all for solidarity and diplomacy and action. This is the negation of leadership. Leading from behind doesn’t even come close to describing this.

And to think that Obama ran on eliminating cynicism from US foreign policy.

We’ve seen this script before, in Syria. Kerry comes out and makes an angry denunciation, followed by threats. Followed by  . . . nothing.

All the circumstances in Syria were much more favorable to justify action. A true humanitarian crisis. Viable military options, not least because there would not be a direct confrontation with Russia. Crimes against humanity.

Kerry compared Assad to Hitler. Obama threatened to attack. But then the US grabbed the first fig leaf Putin proffered, and bugged out.

If the US will not act aggressively in Syria, it won’t act aggressively-even with respect to sanctions-in Ukraine.

The US sanctions announced today were intended to strike at Putin’s inner circle, but not at Putin himself. Presumably the threat is that he could be targeted next. The NYT ran an article over the weekend about trying to track down Putin’s money.

Fat chance.

First, even if Putin’s name is listed at the owner of some company or companies, they would be separated from the real money by a labyrinth of shell companies, trusts, etc.

Second, paper and electronic records or ownership are essential in countries subject to the rule of law because third party enforcement is relied upon to protect property rights and ownership.

That is NOT the way Putin needs to rely on such mechanisms to enforce his access to and control over his property. Russians are notorious for making huge deals verbally, and relying on, umm, informal means to enforce contracts. Putin’s deals are sealed with a handshake-if that. Maybe there is a piece of paper in his safe. But he has the power of a very scary security apparatus at his beck and call. That is what he relies on to secure his property. No need for the formalities of ownership when the real enforcers are under one’s command.

And this is precisely why he so desperately needs to hold onto power. That power secures his wealth. This also means that trying to trace his wealth and property is a fool’s errand.

There is a Midas-like aspect to Putin’s fortune. There are constraints on his ability to consume it. But he definitely cannot consume it if he loses power. Which is why, like all autocrats, he will only leave office horizontally, at room temperature.

With that happy image in mind, some musical entertainment in honor of Igor Sechin, today’s only meaningful sanctions target. The man with the hockey hair.