CovOps
 Location : Ether-Sphere
Job/hobbies : Irrationality Exterminator
Humor : Über Serious
 |  Subject: Corrupt Russian authorities closed both principal stock markets on Friday  Fri Oct 10, 2008 9:05 am | |
| MOSCOW: Parliament on Friday passed a law unlocking Central Bank lending to private banks in a $36 billion bailout, continuing the anti-crisis strategy here that has essentially relied on making the government's windfall oil profits available to banks, hoping they will in turn lend to companies and maintain economic growth.
Meanwhile, authorities closed both principal stock markets on Friday after Asian shares plunged and European markers followed, in a sign that did not augur well for the market here.
In such cases, Russia has taken to closing the market. Shares in Russian companies traded on foreign stock exchanges plunged, however. The FTSE Russia index fell 9.4 percent in the first half hour of trading. Gazprom, Russia's biggest company, fell 11 percent.
In another bad sign for Russia, crude oil futures dropped to $82 per barrel., Russia's finance minister has said the budget will go into deficit if prices drop below $70. And savings from a long period of high oil prices are now at risk.
Unlike in the United States, where the bailout funds are being gathered by borrowing that will raise the national deficit, in Russia they are being drawn from the national savings account from the period of high oil prices.
The money is going quicker than anybody imagined. Under the latest plan approved by lawmakers Friday, the Central Bank will dip into the national gold and hard currency reserves for loans to private Russian banks. In a particularly Russian answer to the debate going on around the world about accountability for the bailout money, the law allows the Central Bank broad executive privilege in disbursing the money.
Recipients in Russia's sprawling and notoriously shady banking sector would have to meet creditworthiness requirements, the Interfax news agency reported, but the law did not say what those would be. Nor did it specify which credit agency would be relied upon in spending the national reserves.
On Tuesday, President Dmitri A. Medvedev said the Central Bank would lend about $18 billion to commercial banks, and that the government would lend about an additional $18 billion.
In a new proposal, the Parliament, or Duma, is considering a measure to place up to $8 billion of one of Russia's two sovereign wealth funds, the National Welfare Fund, on deposit with a state bank, VEB, which would presumably lend the money to other banks and businesses.
In particular, VEB would be instructed to loan about $1 billion to Rosselkhozbank, the agricultural bank, to ward off a possible collapse in a sector that is capital intensive and was just getting on its feet with the largest wheat harvest this year since the collapse of the Soviet Union.
Also, Russian companies hit hard by declining commodities prices continued to announce layoffs or production cuts. Severstal, a maker of automotive plate steel that had been on a buying spree for mills around the world lately, said Friday it would cut production by 30 percent in the United States, and 25 percent at plants in Russia and Italy.
http://www.iht.com/articles/2008/10/10/europe/11moscow-fw.php
BURN MOTHERFUCKERS BURN!
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