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SPECIAL FOCUS Global financial economic crisis

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:12:02 PM EST
President Medvedev: Russia may join OPEC - Regional Europe - HotNews.ro
"We must protect our interests, our income sources, be it about oil or natural gas", said Medvedev. "The measures may include reducing the oil production, participating in the existing oil producers organizations or the participation in a new organization. Our colleagues in the oil cartel asked us to coordinate our actions with theirs", the head of state said.

Russia and OPEC may take steps together, in order to push up the oil price. In 2007, OPEC supplied 43% of the global oil production, while Russia owned a 12.6% market segment.




*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:16:40 PM EST
[ Parent ]
This is potentially a significant development.

For a more complete account:

Asia Times Online: Win-win opening for Russia and OPEC

snip:

Traditionally, fiercely independent Russia greatly values its freedom of action as a non-OPEC producer and has not wanted to be strong-armed into production cuts. As long as the price of oil remained elevated, these key producers (Russia and OPEC) could afford to go their own separate ways on production. Now that the situation is fundamentally changing, with oil's price collapsing, and with no lift in sight, OPEC and Russia are beginning to understand, albeit very reluctantly, how much they really need each other. That was the message of Venezuelan President Hugo Chavez's message to Russian president Dmitry Medvedev during the latter's visit at the end of November to OPEC member Venezuela - Russia and OPEC need to form a tandem on production and price, or else they're all headed for a catastrophe.

Russian leaders have apparently now figured out that Chavez is right - the pain just keeps increasing as the price of oil keeps falling. The mounting problems for Russia's currency, the drain on reserves, the capital flight and market instability are all tied directly or indirectly to the ongoing oil price crisis. The Russian budget requires an average of at least $75 for a barrel of oil this year and next year. Those prices certainly aren't in the cards unless producers quickly agree to work in tandem.


.
by Loefing on Thu Dec 11th, 2008 at 06:05:45 PM EST
[ Parent ]
The Bailout Beat: German Auto Industry Seeks Government Help - SPIEGEL ONLINE - News - International

A day after the United States Congress passed a $14 billion (€10.7 billion) bailout of the American auto industry, carmakers in Germany are hoping to receive similar support, both from European governments and possibly from the US fund.

In an interview given to the Berliner Zeitung newspaper, the president of the German Association of the Automobile Industry (VDA), Mattias Wissmann, pointed to competitive concerns in pleading for state aid for German auto manufacturers. Responding to the US bailout plan, Wissmann said "what's important for us is that all of those who produce in America -- not just American firms -- are treated the same way."




*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:16:53 PM EST
[ Parent ]
Investing in America: Volkswagen Rolls the Dice on Tennessee - SPIEGEL ONLINE - News - International
Despite the crisis facing the industry, the German automaker hopes to boost its US sales with the help of a $1 billion (€762 million) investment in a Chattanooga factory that will produce midsize cars.



*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:17:12 PM EST
[ Parent ]
New Volkswagen Law Takes Effect, Says German Ministry | Germany | Deutsche Welle | 11.12.2008

The amended legislation preserves the German state of Lower Saxony's blocking minority holding of 20 percent in Volkswagen, the biggest European carmaker, compared with a 25 percent stake needed in other German companies.

The law also stipulates that the installation or relocation of a VW auto factory in Germany must be approved by employee representatives on the VW supervisory board, the ministry added in a statement.

German lawmakers gave their final approval to the law in late November, and it replaces a text that was almost 50 years old and was rejected by the European Court of Justice last year.




*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:17:26 PM EST
[ Parent ]
That ought to improve traffic.

(bangs head on desk)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Dec 11th, 2008 at 04:47:30 PM EST
[ Parent ]
Southern Strategy for Industry Restructure | WaPo | 12 Dec 2008

An eleventh-hour effort to salvage a proposed $14 billion rescue plan for the auto industry collapsed late last night as Republicans and Democrats failed to agree on the timing of deep wage cuts for union workers, killing the legislative plan and threatening America's carmakers with bankruptcy. ...

Sen. Bob Corker (Tenn.), the lead GOP negotiator, said the sides were on the brink of a deal on the amendment he had offered. Representatives from the United Auto Workers -- who were present for most of the negotiations -- would not agree to a specific date, Corker said.

"We offered any day -- any day -- in 2009," Corker said. ...

Corker -- a freshman senator who a few years ago was mayor of Chattanooga -- was a strong opponent of the House plan to save the automakers. He and other Republicans had revolted against the earlier plan because they thought it did not go far enough in forcing contracts on the UAW. GM officials have told Congress, for instance, that under the most recent contract, labor costs would be about $62* per hour in 2010 -- $30 per hour in wages and slightly more than that in benefits to current workers and retirees. That's about $14 per hour more than at Toyota's U.S. plants.

Senate cloture front to automotive bill, ROLL CALL
is extension of AMT credits. Note twelve no-votes, thirteen including Obama. Apparently, Mr Kerry was at Poznan.

House ROLL CALL.
HR 7321 reportedly differs with draft Senate bill.

____
*That number is a composite, promoted by GM, of selected union wages, averaged, plus employer pension obligations and benefits expenses for both current and retired union employees. That number is down from $70/hr due to UAW challenge to its accuracy in recent months. Granted, the "Smart Car/Smart Grid" implications of Volkswagon's investment in TN aren't readily available. But I'm thinking that I had better investigate the issue of foreign automaker "alliances" in the US.

Diversity is the key to economic and political evolution.

by Cat on Fri Dec 12th, 2008 at 11:55:04 AM EST
[ Parent ]
Gee, $30 an hour. 60 Grand. A third gone to fed/state taxes, so 40 grand. A couple grand a month for a house, plus property taxes and paint, so now they have 15 grand for food, car, insurance, school expenses, that huge two week vacation, a little vig for the local church...man, they must be livin' large.

No wonder those fuckin' millionaire Senators are after their middle-class lifestyle.

What are they thinking? Who's gonna buy their stupid products if they are paid like slaves.

I wish I was still living over there so that I can leave.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Fri Dec 12th, 2008 at 12:16:13 PM EST
[ Parent ]
Tough Times in Sweden: Auto Woes Threaten to Wreck Volvo and Saab - SPIEGEL ONLINE - News - International
Iconic Swedish brands Volvo and Saab are both US-owned, but they may not benefit from any US auto bailout. As the global car industry slumps, officials in Sweden are scrambling to save their biggest brands -- without running afoul of EU law.



*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:17:39 PM EST
[ Parent ]
I thought I heard that Ford will sell Volvo.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Thu Dec 11th, 2008 at 11:33:03 PM EST
[ Parent ]
There doesn't seem to be a buyer as yet.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Fri Dec 12th, 2008 at 05:55:54 AM EST
[ Parent ]

Swedish car firms get bail-out

Sweden's troubled carmakers, Volvo and Saab, have been given a 28bn kronor (£2.3bn, $3.5bn) government bail-out to help them cope with falling demand.

This comes after the US House of Representatives approved a $14bn (£9.4bn) rescue for US car firms.

Volvo and Saab had been asking for Swedish state support because of the financial woes of their US owners.

The plan consists of a maximum of 20bn kronor in credit guarantees, and up to 5bn kronor in rescue loans.

As well as the credit guarantees and rescue loans, the government said it would also earmark 3bn kronor in research and development funds for the car industry.

Volvo is owned by Ford, while Saab is owned by General Motors, which had warned that without US government help it could soon run out of money.

The Swedish government, which had previously said it would await a US decision on a rescue package before announcing measures, reiterated it would not take over the struggling companies.

"We should not own companies," said Finance Minister Anders Borg.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 03:11:30 AM EST
[ Parent ]
Tories pledge to help defeat Labour welfare rebellion - UK Politics, UK - The Independent
The Conservatives pledged yesterday to help the Government defeat a Labour backbench rebellion to ensure that a shake-up of the benefits system becomes law. Some Labour MPs criticised plans by the Work and Pensions Secretary James Purnell under which almost all claimants would face cuts in their benefits if they did not prepare for or seek work. He said taxpayers' money would no longer be "frittered away" on claimants who "play the system", adding that there were 500,000 job vacancies compared to 200,000 people a month finding work.



*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:17:54 PM EST
[ Parent ]
It's widely believed this will be seriously amended during the committee stage anyway, whatever the tories threaten.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Dec 11th, 2008 at 05:13:29 PM EST
[ Parent ]
Sprachgebrauch: Das Wort des Jahres ist ... - SPIEGEL ONLINE - Nachrichten - Kultur Linguistic usage: The word of the year is ... - SPIEGEL ONLINE - News - Culture
... "Finanzkrise". Kein anderes Wort habe die öffentliche Diskussion in diesem Jahr mehr bestimmt als dieses, befand die Gesellschaft für deutsche Sprache... ... "Financial crisis". No other word had defined public discussion more in this year than this, the Association for the German Language decided...

The choice of the Word of the Year receives much attention in Germany. (The choice of the misnomer of the year, too -- that'll come in March.)

In Österreich dagegen wählte eine siebenköpfige Fachjury unter der Leitung des Grazer Professors Rudolf Muhr den ungewöhnlichen Begriff "Lebensmensch" zum Wort des Jahres. Damit hatte der österreichische Politiker Stefan Petzner tränenreich um den 2008 verstorbenen Jörg Haider getrauert, mit dem Petzner ein besonders inniges Verhältnis pflegte. Die österreichischen Sprach-Juroren würdigten mit ihrer Wahl die Bedeutungs-Ambivalenz und den hohen emotionellen Wert des Wortes "Lebensmensch".In Austria however, a jury of seven specialists under the direction of professor Rudolf Muhr from Graz selected the term Lebensmensch [neologism, lit. "living-man", by meaning c. 'playboy-man'] as the word of the year. Using this word did the Austrian politician Stefan Petzner mourned in tears for Jörg Haider, with whom Petzner nurtured a particularly intimate relationship. The austrian language jurors recognized the ambivalent meaning and the high emotional value of the word Lebensmensch with their choice.

(For those who missed the Klatsch: Austria's long-time far-right leader Haider was gay, and semi-outed by Petzner after his death in a drunken high-speed car crash.)


*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Dec 11th, 2008 at 03:18:14 PM EST
[ Parent ]
Frankfurt Airport Sees Passengers Dwindle in Uncertain Times | Business | Deutsche Welle | 11.12.2008

Fraport said the number of passengers travelling through Frankfurt Airport in November had dropped 7 percent to 3.9 million from the same month last year.

Aircraft movements shrank by 3.4 percent to 38,733 takeoffs and landings, while only the number of intercontinental passenger flights increased by 0.5 percent.     

The operator said passenger levels at Frankfurt -- Europe's second busiest hub after Paris's Charles de Gaulle -- from January to November had also dropped, albeit by only 1 percent to 49.7 million people.




*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:18:29 PM EST
[ Parent ]
Fourth delay for 'green' Boeing Dreamliner - Business News, Business - The Independent

In the fourth delay to the project, US-based Boeing announced that the first flight of the 787 had been put back to spring 2009 and the first delivery delayed until the first three months of 2010.

... Today, Boeing said the new schedule reflected a strike by employees and further production problems.




*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:18:40 PM EST
[ Parent ]
Sterling hits new lows as recession fear bites - Business News, Business - The Independent
Expectations that the Bank of England would soon cut interest rates to zero, or close to it, drove investors to other currencies, particularly the euro. The pound fell to below €1.14 for the first time, with €1 buying 87.7p - the highest since the single currency was launched in 1999.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Dec 11th, 2008 at 03:18:59 PM EST
[ Parent ]
According to "Time" it appears that Alternative Currencies Grow in Popularity

Alternative currency comes in many forms. In addition to time banking, there are Local Exchange Trading Systems (LETS), systems of mutual credit that vary by location. This model was developed by Michael Linton in Canada, though it seems mostly to have taken off in the British Isles; an estimated 40,000 people in the U.K. use these for at least some transactions. (See TIME's Top 10 Everything of 2008)

Similarly, the Community Exchange System (CES) is an online money and banking system and trading marketplace that tracks credits and debits. While LETS's function as clubs that set their own guidelines, CES is administered through an online program that connects local groups to create a global network. The CES website points to more than 100 exchanges in fifteen countries. According to Squires, the Internet has made alternative forms of exchange more viable, as databases can keep account of credits.

In the rarified world of monetary theory, think-tanks are abuzz with ideas about future forms of money. One visionary, Jean-Francois Noubel, the co-founder of AOL-France, foresees "millions of free currencies circulating on the Net and through our cell phones" as money follows the distribution path that media has over the last decade.

Bernard Lietaer, a Belgian economist and author who helped develop the Euro, has proposed the "Terra," a transnational currency backed by established commodities that would co-exist with conventional notes, the monetary equivalent of Esperanto.

In recent years, the impetus for alternative currencies in established economies has stemmed in part from localization movements. Periodically ditching the dollar (or the pound, or the yen) in favor of homegrown currency doesn't merely fortify the local economy, it also builds community: people have a stake in their neighbor's well-being because that neighbor represents both market and supply chain.

Some argue that such transactions are more secure than others because knowing the person you're dealing with (and his family and friends) serves as a kind of social collateral.



"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Thu Dec 11th, 2008 at 04:08:31 PM EST
[ Parent ]
Following is an account of recent revival of local currencies in the US, describing some practical instances of local currency use.

Local currency shows up in Milwaukee

snip:

During a recession, the lease for a restaurant in Great Barrington, Mass., expired. The local bank wouldn't lend restaurateur Frank Tortrello money to move across the street. So Frank decided to print his own. He called them Deli Dollars. Each sold for $9 and could be redeemed for $10 worth of food after six months. Not only did the idea provide Frank with enough money to make his move, but it spread throughout the community. A local farm issued notes with the slogan "In Farms We Trust," featuring the head of a cabbage instead of the head of a president.

snip:

After the creation of federal banking during the Civil War and a federal reserve system in the early 1900s, the variety of money in this country contracted. But in the 1930s, when communities found themselves with products, needs, skills and labor but little money, local currencies made a comeback.
by Loefing on Thu Dec 11th, 2008 at 05:53:48 PM EST
[ Parent ]
Let's see now:

On the front:  Arnie's smiling face

On the back:  The Golden Gate Bridge (of course).

Currency Motto:  "In Twank We Trust"  (Inspiring, isn't it!)

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Thu Dec 11th, 2008 at 07:07:07 PM EST
[ Parent ]
If it's a slice of truffle I'll take it.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Dec 12th, 2008 at 02:13:13 AM EST
[ Parent ]
"microporous tubing" is moving forward; will keep you apprised.  

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Fri Dec 12th, 2008 at 06:56:49 AM EST
[ Parent ]

Top Broker Accused of $50 Billion Fraud
Sons Turned In Madoff After He Allegedly Told Them His Investment Advisory Business for the Wealthy Was 'Giant Ponzi Scheme'

Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday, a day after his sons turned him in for running what they said their father called "a giant Ponzi scheme."

The Securities and Exchange Commission, in a civil complaint, said it was an ongoing $50 billion swindle, and asked a judge to seize the firm and its assets. "Our complaint alleges a stunning fraud that appears to be of epic proportions," said Andrew M. Calamari, associate director of enforcement in the SEC's New York office.

In a separate criminal complaint, Federal Bureau of Investigation agent Theodore Cacioppi said Mr. Madoff's investment advisory business had "deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars."



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 03:21:54 AM EST
[ Parent ]
Calamari vs Madoff vs Ponzi.

Another day in paradise.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Dec 12th, 2008 at 04:01:46 AM EST
[ Parent ]
A stunning fraud. Oh my word.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Dec 12th, 2008 at 05:07:26 AM EST
[ Parent ]
Wheeeeeeeee Late Night Extra:

BBC NEWS | Business | US car bail-out fails in Senate

A $14bn (£9.4bn) bail-out deal for the US car industry has failed to get Senate support, raising fears of job cuts and a possible industry collapse.

Bipartisan talks on the rescue plan collapsed over Republican demands that the United Auto Workers (UAW) union agree to swift wage cuts.

The White House said the plan was American carmakers' "best chance to avoid a disorderly bankruptcy".

Bush - of all people - is now saying that it's possible some of the TARP money could be diverted to Detroit.

Maybe. Perhaps.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Dec 12th, 2008 at 04:08:18 AM EST
[ Parent ]

Markets tumble as auto bail out collapses

Equity markets across Asia tumbled on Friday as the proposed bailout for US automakers collapsed in the US Senate, wiping out the tentative signs of improved sentiment in the region and sending the dollar to a fresh 13-year low against the yen.

The Hang Seng dropped 5.5 per cent to 14,758.39, while the index of mainland Chinese shares traded in Hong Kong lost 6.8 per cent to 7,911.76. The Nikkei ended the day down 5.6 per cent at 8,235.87, while the broader Topix lost 4.2 per cent to 813.37.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 04:26:07 AM EST
[ Parent ]
I think this calls for a new tag:

[dvx's Fail-Out!TM Technology]

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Fri Dec 12th, 2008 at 04:27:04 AM EST
[ Parent ]

Detroit reeling as $14bn auto rescue fails

The high profile effort to agree legislation to lend $14bn to the US auto industry collapsed on Thursday night, leading the Bush administration to hold open the possibility that it would seek funds from its financial rescue plan instead.

Efforts to agree a deal in the US Senate ended in failure when Harry Reid, the leader of the Democratic majority, said negotiations with Senate Republicans were at an end and warned that millions of jobs were at stake as a result.

"It's over with," Mr Reid said. "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight. Millions of Americans, not only the auto workers, but people who sell cars, car dealerships [and] people who work on cars are going to be directly impacted and affected."

Both Democrats and Republicans said the sticking point was a demand to push Detroit to bring down labour costs to a par with foreign manufacturers in the US. Democrats said the move made unrealistic demands on the United Auto Workers union, while Republicans argued that no effort to restructure the industry would work without such a step.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 04:28:53 AM EST
[ Parent ]
Or Class War as it's more usually known.

What is it going to take to clear these shuffling economic corpse sniffers out of politics?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Dec 12th, 2008 at 04:56:13 AM EST
[ Parent ]
me thinks 2 1/2 million out of work in one fell swoop would be a fitting grande finale to the reign of the bushmen!

especially if they all take a bus to washington to 'have a beer' with you-know-who...

jeez, this wait for jan 20 is s-t-r-e-t-c-h-i-n-g out like a guitar string ready to....snap.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Dec 12th, 2008 at 06:48:47 AM EST
[ Parent ]
But GM and Chrysler won't just vaporize off the face of the planet. There is a certain demand for new cars, and since a big chunk of the supply is from the Detroit companies they will still have a business six months from now. It will just be a much smaller business.

Plus, car dealerships are completely independent from the car companies, so whether a given dealer can hang on or not depends on local conditions, not the total size of the manufacturer. So the dealerships won't vaporize, either.

I suspect that the executives at GM and Chrysler have already set up their golden parachute contracts so that they are protected (e.g., end-of-year bonus delivered in cash the week before bankruptcy is declared). Then it is simply a matter of reorganizing, which consists of closing perhaps half of the plants and "laying off" those workers.

After that, you just operate under "don't need to make a profit" bankruptcy rules for three or four years, taking down any possibility of profit by the other manufacturers--just as has happened in the air transport industry that also has excess capacity.

by asdf on Fri Dec 12th, 2008 at 09:22:29 AM EST
[ Parent ]
oh, i agree totally, there is no reason on god's green earth why these companies could not start turning healthy profits within a few short years, but you'd have to give the CEO position to Devilstower, lol!

meanwhile back at the SUV ranch...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Dec 12th, 2008 at 10:17:47 AM EST
[ Parent ]

Dollar slides to 13-year low against the yen

The dollar slid to its lowest in 13 years against the yen on Friday as the US Senate failed to agree on a bailout for the three US automakers.

The dollar fell to as low as Y88.40 against the Japanese currency before stabilising at around Y89.38 in recent trading.

"It seems like they've all but given up," said Yuji Saito, head of the FX group at Societe Generale in Tokyo. "The concern out there is what will happen now and the few choices that are left, which could include Chapter 11, so that leaves no reason for investors to buy dollars."

There was a possibility that the yen could reach Y85 in New York trading time, he said.

The dollar had fallen against the yen and the euro overnight as the talks continued without conclusion and data showed that the US trade deficit had deteriorated. Fears about growing unemployment and the future of the automakers grew as other data showed that the number of new workers filing claims for unemployment benefits jumped to a 26-year high.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 04:24:58 AM EST
[ Parent ]
Meanwhile, the euro is up to $1.3269.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Fri Dec 12th, 2008 at 04:28:43 AM EST
[ Parent ]
Russians Who Invested in Kremlin-Touted 'People's IPOs' See Their Savings Vanish - washingtonpost.com

MOSCOW -- Anatoly Sisoyev always considered himself a patriot. As a child, he lost his father to an accident in the Soviet space program. As an adult, he served 30 years in the military, retiring at the rank of major. His son followed him into the army and was killed in Chechnya at the age of 18.

Through it all, he said, his faith in the Russian government never waned.

So when he heard radio ads two years ago encouraging citizens to invest in the initial public offerings of state-owned companies, Sisoyev lined up to buy shares, first in the oil-and-gas giant Rosneft and a year later in the nation's second-largest bank, VTB.

[...]

Now, as Russia confronts its worst economic crisis in a decade, the value of Sisoyev's shares has plummeted, wiping out most of his life savings. At 65, he is working as a part-time security guard because food prices are climbing faster than his meager pension. In a recent interview, he buried his face in his hands and fought back tears as he explained how he is trying to treat his sick wife by reading old medical textbooks because he can't afford a good doctor.

[...]

Swayed by years of steady growth -- and by an aggressive, state-funded marketing campaign -- hundreds of thousands of Russians ventured into the country's young stock markets to buy shares in the "people's IPOs." Now these first-time investors, many of them elderly pensioners like Sisoyev, are among those suffering the most as Russia's economic problems enter into a more painful phase.

Limited largely to the financial sector and the wealthy elite at first, the crisis is beginning to be felt by the broader population. Inflation, wage arrears and unemployment are on the rise, and in a recent survey, one-fifth of Russians said they or a family member worked for a company that had announced layoffs.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Fri Dec 12th, 2008 at 04:39:25 AM EST
[ Parent ]
this looks like payback time - we feared the Russians, now we pity them, putting them in the rightful place once again. Still a sign of a dysfunctional relationship.

I'm sure there are sob stories about our own citizen, but somehow they're not seen as a similar indictment of the ruling class here.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 04:53:52 AM EST
[ Parent ]

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