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16 August 2008

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Curious

I am trying to figure out the size of Russia sovereign wealth fund.

For one. Russia can dump their Fannie Mae holding. Sold it to chinese for 60c to the dollar? They'll take it. If they decide to dump those housing treasury. One or two big banks are going to collapse within weeks. That will assure Russia and China financial domination within a decade if combined with forex manipulation.

At this point, a trade war against Russia goes both way. Russia actually can withstand far more pain than us if they start playing energy price and forex reserve.

In fact if they survive this one, they very well become the first alternate financial center in eastern europe. (nobody else can backed their banking system using nuclear weapon.)

But I doubt the Russian has the banking skill to pull this one off. They are still pretty unsophisticated in electronic banking, unlike the chinese (they have HongKong)


http://www.bloggingstocks.com/2008/02/21/russia-to-invest-in-fannie-mae-freddie-mac-bonds/

Further, part of that foreign sovereign fund wealth stems from increased oil revenue, with oil-producing Russia being a classic example. A cash-strapped country a decade ago when it had to default on its government bonds in 1998, record-high oil prices and privatization have helped propel an economic boom in Russia, including soaring hard, foreign currency reserves. Russia has amassed more than $700 billion in foreign currency reserves as amid an economic expansion that's featured a growing middle class, a thriving domestic commercial sector, and broadening trade ties with the E.U. and China.


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They already begin divesting some US holding.

http://www.forbes.com/afxnewslimited/feeds/afx/2008/08/12/afx5312257.html

The reduction in Russia's investments in U.S. agency debt was driven by political pressure and the holdings may be reduced further, a Russian senior central bank official was quoted as saying on Tuesday.

'The reduction of holdings is linked to the fact that it's a politically sensitive zone. From an economic analysis we don't think that investments in these papers are risky ... but we are obliged to take into account the mood and the concerns which exist in society,' central bank first deputy chairman Alexei Ulyukayev told Prime-Tass news agency in an interview.

'Our holdings have been reduced by about 40 percent ... It's possible that we will reduce them a bit more, it's not significant' he added.

Russia held about $100 billion in U.S. agencies Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) and Federal Home Loan Banks at the start of 2008. Last month, Ulyukayev said that the investment had been reduced by about 40 percent, with maturing short-term holdings often not being replaced.

Curious

Nevermind, scratch that. Even the chinese won't take more US housing bond. (ain't market economy grand.)

http://www.iht.com/articles/2008/07/20/business/deal21.php

The trouble at Fannie Mae and Freddie Mac, the U.S. mortgage finance companies, may discourage sovereign wealth funds from buying dollar-denominated assets, but the euro is not likely to be the main beneficiary.

...

The Chinese Academy of Social Sciences also said the problems at Fannie and Freddie added urgency to China's goal of diversifying its $1.8 trillion in currency reserves.

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The russian opts to go on hard asset buying binge with their cash. I guess they do get how market economy functions... hah.

http://www.forbes.com/markets/2007/07/26/sovereign-wealth-funds-markets-equity-cx_po_0726markets16.html

Whither Russia? The Kremlin's $100 billion Stabilization Fund, which represents about 10% of the country's GDP, made a profit of $3.4 billion in the year to July 24, 2007, according to RIA Novosti, a Russian wire service. Russian President Vladimir Putin and his officials will channel cash from the fund into state-controlled companies like Gazprom and Lukoil (other-otc: LUKOY - news - people ) to make acquisitions. Gazprom has been rumored for more than a year to have wanted to buyCentrica (other-otc: CPYYY - news - people ), Britain's biggest utility, and the financing would likely come from the Stabilization Fund.

"Their motives are different to the Chinese," said Randolph. "What the Russians are salivating over is good industrial assets. They've already got a degree of industrialization, but what they want to do now is raise the technological level of their industry."

Curious

OMG, this is hilarious...(in scary way. it was last june)

http://www.russiablog.org/2008/06/gazprom_chairman_predicts_250_1.php

In the wake of his interesting announcement at the 2008 St. Petersburg Economic Forum that Gazprom is seeking a stake in a proposed Alaska/Canadian natural gas pipeline to the lower 48 U.S. states, CEO Alexei Miller made headlines again this week in France. In a briefing to European energy executives in the French coastal city of Deauville, Mr. Miller predicted that world oil prices could reach $250 per barrel by 2010.

While many energy analysts were quick to dismiss these comments from a CEO representing an energy company with larger oil reserves than many OPEC countries, Mr. Miller's statement, combined with a comment from the Vice President of OAO Lukoil in April 2008 that Russian oil production might have peaked last year, could send world energy prices higher in the coming months. In the first quarter of 2008, Russia surpassed Saudi Arabia as the world's largest oil producer.

William R. Cumming

Could the other NATO states have been anticipating the move by Russia and so opposed the admission of Georgia and Ukraine into NATO? My guess is the ethnic Russian issue could also be used to stir up problems needing the "Putin" solution in the Ukraine. Again could the US intel orgs have mislead POTUS when he was out advocating membership expansion? I doubt POTUS decided on his own to advocate expansion.

Curious

Definitely.

These little places are unstable politically. If they are connected in some defense treaty, as a result the stability of entire european system will be dictated by some crazy dudes in Georgia or Ukraine This is exactly how both world wars started. defense treaty connected to unstable places.

eg. some future hypothetical. Another little "revolution" in Georgia, and NATO has to butt head with Russia. Germany energy policy shakes, DAX goes down, economy jittery, etc. Ukraine is even worst since it has giant Russian navy center in it. On top of that, these places are target of neocon tricks and no doubt Russia will pull counter move.

The stability of entire european market is dictated by people like Saakasvili? That's just Germany, the biggest economy in Europe.

What about Turkey? Anything happens in Ukraine or Georgia when NATO is concerned,... They are first to get in political trouble. They have to go to war against their biggest neighbor or energy supplier?

Not happening.

I more likely see this as the beginning of an end of NATO. Everybody in europe now feels their stability is at the wimp of some Washington DC hacks and projects. (regime change, missile defense, pipeline projects, large military contract, Israel, etc)

Why should europe send troop to be part of things that don't concern them or harm them even?

So, Condi will be the one who breaks NATO.

What will break her effort is the ground situation in Georgia. The european clearly see what the Russian did (relatively low casualties, strutting around in their tanks, harmless posturing in their own backyard, hardly worth the effort launching WW III)


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Leave it to Condi to make it even bigger problem. The Russian is watching gleee, they just drive a giant wedge between Europe and US.

Pretty soon, NATO identity crisis will start to show. (Is it defense treaty or DC imperial tool?)

http://www.iht.com/articles/ap/2008/08/19/europe/EU-NATO-Georgia.php

U.S. Secretary of State Condoleezza Rice is expected to push NATO allies Tuesday to curtail high level meetings and military cooperation with Russia unless Moscow sticks to its cease-fire pledge to withdraw troops from Georgia.

Dana Jones

"'Our holdings have been reduced by about 40 percent ... It's possible that we will reduce them a bit more, it's not significant' he added."
Talk about understatements.
In discussing this whole Georgian situation with friends, many seem to have come to the conclusion that this whole thing was a premature move by Georgia. They seem to feel that the move was supposed to have been made at a latter time to coincide with US moves against Iran, so thus the Russians would be distracted and not able to come to the aid of Iran.
But just our opinion.

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