Putin says U.S. is "parasite" on global economy

[Bad_Daddy 2,209]

http://news.yahoo.com/putin-says-u-parasite-global-economy-191447751.html

By Maria Tsvetkova | Reuters – 5 hrs ago

LAKE SELIGER, Russia (Reuters) - Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means "like a parasite" on the global economy and said dollar dominance was a threat to the financial markets.

"They are living beyond their means and shifting a part of the weight of their problems to the world economy," Putin told the pro-Kremlin youth group Nashi while touring its lakeside summer camp some five hours drive north of Moscow.

"They are living like parasites off the global economy and their monopoly of the dollar," Putin said at the open-air meeting with admiring young Russians in what looked like early campaigning before parliamentary and presidential polls.

US President Barack Obama earlier announced a last-ditch deal to cut about $2.4 trillion from the U.S. deficit over a decade, avoid a crushing debt default and stave off the risk that the nation's AAA credit rating would be downgraded.

The deal initially soothed anxieties and led Russian stocks to jump to three-month highs, but jitters remained over the possibility of a credit downgrade.

"Thank god," Putin said, "that they had enough common sense and responsibility to make a balanced decision."

But Putin, who has often criticized the United States' foreign exchange policy, noted that Russia holds a large amount of U.S. bonds and treasuries.

"If over there (in America) there is a systemic malfunction,this will affect everyone," Putin told the young Russians.

"Countries like Russia and China hold a significant part of their reserves in American securities ... There should be other reserve currencies."

U.S.-Russian ties soured during Putin's 2000-2008 presidency but have warmed significantly since his protégé and successor President Dmitry Medvedev responded to Obama's stated desire for a "reset" in bilateral relations.

EARLY CAMPAIGNING?

Casually dressed in khaki trousers and a striped white shirt, Putin flew by helicopter to the tented camp as part of a string of appearances that are being closely watched in the run-up to the elections.

He did not say whether he plans a return to the Kremlin or will stand aside for Medvedev, his partner in Russia's leadership tandem, to run for a second term.

But young people crowding round Putin, caught up in the campaigning spirit created by huge portraits of Putin hung from trees, were not shy about saying who they wanted as president.

"Russia's next president will be small, bald and look like Putin," 17-year-old Ilya Mzokov joked with reporters. Asked why Medvedev was not paying a visit to the summer camp, he said: "Only serious people come here."

Youngsters chanted Putin's name and applauded his remarks as he strolled round the camp, where US-style business seminars, extreme sports and political mudslinging were among the topics on offer.

Putin, whose macho image appeals to many Russians, briefly swung himself up the first half of a climbing wall, filmed by a gaggle of state television cameras.

Nashi, which means "Our People," was created by the Kremlin to counter popular dissent after youth activism helped topple a pro-Moscow government in Ukraine's 2005 Orange revolution.

The group has worked to spread a personality cult around Putin and regularly campaigns against Kremlin critics.

Opinion polls show Putin, still widely viewed as the country's paramount leader, retains near 70 percent approval.

But his United Russia party is trying to reverse a slide in popularity before December parliamentary polls, hoping to use a strong showing there to help Putin in the March 2012 presidential vote.

[Nagishkaw 510]

[peejay 327]

Putin has a point. One day all these countries that hate us will cut us off. They will use us and lose us. Kick us out the back door without breakfast or a good-bye kiss.

[luckytxn 2,264]

The Russian Edition of Too Big to Fail

The rescue of Russia’s fifth-largest bank, Bank of Moscow, furthers political aims

Bank of Moscow's headquarters. It cost $14,360,000,000 to bail out the bank—Russia's biggest rescue Anna Artemeva/Bloomberg

By Denis Maternovsky

THIS WEEK

August 1, 2011Why the Debt Crisis Is Even Worse Than You ThinkPreviousNext

RELATED ITEMS

• HSBC-Libor Probe, Dutch Deposit Guarantee, Basel: Compliance
• Barclays Cuts 3,000 Jobs as Investment Bank Profit Declines
• Banks in BRICs Signal Credit Risks as Bad Loans Curb Growth
• Lehman, Crystal Cathedral, Dodgers, Spiegel: Bankruptcy
• Shadow Banking, Debt Limit, ‘Big Four’ Probe: Compliance

Ex-Moscow mayor Yury Luzhkov once had allies in the KremlinLudovic/REA

STORY TOOLS

• in

  Share

• add to Business Exchange
• E-mail
• Print
• Comment

Bank of Moscow could have been Russia’s Lehman Brothers. The country’s fifth-largest lender teetered on the brink of collapse this spring, after new owners uncovered a pile of bad loans. Worried the revelations might trigger a run on deposits, authorities cobbled together a $14.4 billion bailout. The rescue, announced on July 1, is the biggest in the nation’s history. “The failure of Bank of Moscow would have had a serious effect on Russian banking,” said Andrei Kostin, chairman of VTB Group, which bought a controlling stake in the bank in February. The ensuing panic, he said in a July 20 interview, would have overwhelmed Russia’s deposit guarantee fund: “They didn’t have enough funds to cover this.”

The saga of Bank of Moscow is a murky tale of cronyism and politics. The bank was founded during the tenure of Moscow Mayor Yury Luzhkov and was partly owned by the city. After Luzhkov was ousted by Russian President Dimitri Medvedev amid corruption allegations last September, his successor ordered that the bank be sold. State-owned VTB, Russia’s second-largest lender, paid the Moscow government $3.7 billion for a controlling stake. After the transaction closed, VTB says it discovered that Bank of Moscow’s former chief executive officer, Andrey Borodin, had authorized a $462 million loan to a real estate development company owned by the mayor’s wife, Yelena Baturina. According to officials at Russia’s Interior Ministry, the funds wound up in her personal account. Borodin left Russia in April. A month later, Russian authorities issued a warrant for his arrest. Borodin’s lawyer, in an e-mail, wrote that his client is innocent. Neither Luzhkov nor Baturina has been charged with any wrongdoing. A spokesman for Baturina’s company did not return phone calls or e-mails. Luzhkov could not be reached.

VTB unearthed other questionable transactions after it began running Bank of Moscow in April, according to Kostin. “There were hundreds of small loans given to many small offshore companies without any collateral,” he says.

Insider lending is endemic in Russia, according to international credit-rating services. A Moody’s Investors Service (MCO) report in July said Russian banks “have close to 50 percent of their capital locked in such high-risk loans.” At Bank of Moscow, the proportion could be as high as 60 percent, the report says. “The central bank has clearly not enforced supervision over Bank of Moscow adequately in the past,” Vladimir Savov, equity research head at Otkritie Securities, said in an e-mail. Central bank Deputy Chairman Sergey A. Shvetsov says regulators lack the tools to carry out proper oversight: “We need changes in legislation to protect ourselves.”

If nothing else, the size of the bailout, which equals about 1.5 percent of Russia’s gross domestic product, is confirmation that VTB has “friends in high places,” says Paul McNamara, a money manager at investment firm GAM in London. Then-President Vladimir Putin personally appealed to Russians to buy VTB shares in the runup to the lender’s record $8 billion initial public offering in 2007. Kostin, head of Moscow’s VTB since 2002, also sits on the board of state-run oil giant Rosneft.

A wave of consolidation has given government-owned banks such as VTB a dominant share of the Russian market, much as state-run oil companies now control that industry. Foreign banks have been squeezed out in the process: HSBC (HBC), Barclays (BCS), and Banco Santander (STD) are among those that have shut Russian retail operations in the past year, citing tough competition from domestic giants. Under a condition for the bailout, VTB will raise its stake in Bank of Moscow to 75 percent—furthering Kostin’s previously stated goal of taking full ownership of the troubled lender.

Kostin, 54, says he continues to be enthusiastic about the acquisition. With 9 million customers and a large branch network in Moscow, the bank counts many of Russia’s elite among its clients. “We expect that this year Bank of Moscow will give a very small profit of about $100 million, but next year we expect a 20 percent return on equity,” he says.

[dalegg 143]

"Thank god," Putin said, "that they had enough common sense and responsibility to make a balanced decision."

See, Putin says it's a balanced approach. Obama should be thrilled.

[luckytxn 2,264]

The Ruble would make such an excellent choice as a world currency.

[mawilson 2,133]

The Ruble would make such an excellent choice as a world currency.

China and Russia should create their own currency and call it "renmouble".

Renminbi + rouble.