Investments without insurance are like money down the drain, and investors know it

There appeared information (including ones here in English and here in Russian) that:

"Dmitry Medvedev has instructed Prime Minister Vladimir Putin to submit proposals on the procedure of formation and functioning of a special fund to attract foreign investments in Russia. The President of Russia has decided to implement the idea of a special fund to attract foreign investment. Foreigners who fear for their capital, will invest in the Russian economy, together with the state."

I would insist that when you pretend to create a sustainable flow of non-speculative investments you should remembered that investments go in row with insurance of these investments. Participation of major insurance companies and consortia in this process, their calculation of insurance rates, the definition and categorization of risks, their assessment of payments due on insurance cases - all that contribute into formation of the investment process as systematic, market-based, and smoothed form decreasing the volatility of investments.

Without market participants both in the investment process (such as investor de-facto, unfortunately, too often comprises only of the Russian state) and in the process of pricing risk and loss settlements (not frequent however unavoidable losses), investment in Russia shall remain a solely state issue, without contributing to the development of large and medium-sized businesses in Russia.

I emphasize the need for a systemic approach - both in terms of attracting investment, and for hedging risks. Also information and financial infrastructure investment should be translated from Western capitals to Moscow, St. Petersburg and Russian regions.

Here we have to underline at least the following two corner points.

The first issue is to create or encourage the establishment of (under the state wings or surveillance, for example, by Ministry for Economic Development and Trade), the investments rating agency. I think that this may be an agency that will determine risks of regions of the Russian Federation and industries to invest in Russia, and (on its other side, external) its other function will to determine ratings of the countries where investments go from Russia. Accordingly, Russian banks will take lending decisions on interest rates for lending based on the rankings of the agency. Incidentally, it will be an additional political tool, for example after a new "north-territorial-sickness-syndrome” in Japan the agency might downgrade the rating for investments into this country to, say, the level of rating of investments in Afghanistan or Sudan.

The second issue is the need to form insurance agency to insure investments in Russia and from Russia. Perhaps it will be one agency both for foreign and domestic investment. Alternatively there will be two separate organizations. There is some possibility that major Russian insurance companies might form an insurance investment pool, or there might be a s-called public-private partnership (PPP) involving the Central Bank, VTB, Sberbank and the largest federal commercial insurance companies of Russia.

Georgian Economy Minister posing in a nightclub

The Russian media has seized upon a raunchy photograph – of the Georgian Economy Minister posing in a nightclub – to release a fresh torrent of criticism at President Mikheil Saakashvili for appointing "strippers" to his cabinet.




(Economic Minister of Georgia-Gruzia is in the centre)

Mr Saakashvili appointed 28-year-old Vera Kobalia to the ministerial post this month. Ms Kobalia, an ethnic Georgian, had lived in Canada for 15 years and has no previous experience in politics. She is said to have met Mr Saakashvili during his trip to the Winter Olympics in Vancouver in February.

A photograph, apparently taken from Ms Kobalia's Facebook page, has been published by a newspaper in Georgia. It shows the minister, her sister and three friends posing. The Russian state-controlled media, which gives wide coverage to any story that paints President Saakashvili in a negative light, jumped on the story and insisted that the picture was taken in a Vancouver strip club.
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Ms Kobalia claimed the photo was taken almost 10 years while she was on holiday in Florida. "If the worst thing that the opposition or anyone else can find about me is my old picture from college than I don't see anything wrong with that," she said.

In the photograph, the minister is wearing a dress and there is no indication that she took part in a striptease. There is also no indication from the photograph that it was taken in a strip club, nor any idea in which city or when it was taken.

Ms Kobalia's biography indicates that before leaving Canada for Georgia she worked for a local TV channel and ran a business. This didn't stop the Russian tabloid Komsomolskaya Pravda running a story yesterday headlined "From Strippers to Ministers" and other Russian news outlets followed with similar stories. The minister herself could not be reached for comment yesterday.

At the time of her appointment, many experts expressed amazement that such a key ministry could be entrusted to a political neophyte. "Think how ambitious a person has to be to take the position of the head of the main economic body in the country, without having either the necessary education or any experience whatsoever," said Nodar Dzhavakhishvili, the former head of the Georgian National Bank, at the time. "I think anyone could find someone in their family who was far more experienced and qualified in this field than Ms Kobalia."

But Mr Saakashvili, who was just 36 when he took over as Georgian President after the Rose Revolution in late 2003, has made a habit of appointing ministers in their twenties and thirties. He claims that catapulting the young generation into power is an integral part of his project to build a new type of country and wipe out the Soviet legacy. "The plan is to have nobody in government who served during the Soviet period," said Mr Saakashvili last autumn. "Some of them don't even remember the Soviet period."

In Tbilisi, observers say that Ms Kobalia has started positively in the job and during her first weeks has shown a ruthless streak. On visiting the Tbilisi tourism information centre, she discovered most of the employees had gone to a jazz festival in a Black Sea resort. She immediately fired the entire staff, according to one local news agency.

Spies Go Home

http://abcnews.go.com/GMA/video/spy-swap-us-russia-exchange-spies-vienna-11123936

Swap Done: Spies Go Home
The U.S. and Russia exchange 14 suspected spies on tarmac in Vienna, Austria.

Player booked for diving had suffered heart attack

http://uk.eurosport.yahoo.com/blogs/world-of-sport/article/1224/
Wed May 05 10:44AM

Referee yellow card A Croatian footballer booked for diving had actually dropped dead of a heart attack.
Goran Tunjic, a 32-year-old defender playing for the Mladost FC, collapsed in the 35th minute of the County League match against Hrvatski Sokola, prompting the referee to approach the player with yellow card in his hand.
Tragically, however, the player had suffered a fatal heart attack.
The official quickly realised what had happened and called for medical aid, but Tunjic died despite being rushed to a nearby hospital.
"Doctors tried to help him but there was nothing they could do," a club spokesman said of the player, who had no previous medical problems.
"He just fell dead on the spot."

We Have Met the Enemy and He Is PowerPoint

http://www.nytimes.com/2010/04/27/world/27powerpoint.html
We Have Met the Enemy and He Is PowerPoint
By ELISABETH BUMILLER
Published: April 26, 2010



WASHINGTON — Gen. Stanley A. McChrystal, the leader of American and NATO forces in Afghanistan, was shown a PowerPoint slide in Kabul last summer that was meant to portray the complexity of American military strategy, but looked more like a bowl of spaghetti.
“When we understand that slide, we’ll have won the war,” General McChrystal dryly remarked, one of his advisers recalled, as the room erupted in laughter.
The slide has since bounced around the Internet as an example of a military tool that has spun out of control. Like an insurgency, PowerPoint has crept into the daily lives of military commanders and reached the level of near obsession. The amount of time expended on PowerPoint, the Microsoft presentation program of computer-generated charts, graphs and bullet points, has made it a running joke in the Pentagon and in Iraq and Afghanistan.
“PowerPoint makes us stupid,” Gen. James N. Mattis of the Marine Corps, the Joint Forces commander, said this month at a military conference in North Carolina. (He spoke without PowerPoint.) Brig. Gen. H. R. McMaster, who banned PowerPoint presentations when he led the successful effort to secure the northern Iraqi city of Tal Afar in 2005, followed up at the same conference by likening PowerPoint to an internal threat.
“It’s dangerous because it can create the illusion of understanding and the illusion of control,” General McMaster said in a telephone interview afterward. “Some problems in the world are not bullet-izable.”
In General McMaster’s view, PowerPoint’s worst offense is not a chart like the spaghetti graphic, which was first uncovered by NBC’s Richard Engel, but rigid lists of bullet points (in, say, a presentation on a conflict’s causes) that take no account of interconnected political, economic and ethnic forces. “If you divorce war from all of that, it becomes a targeting exercise,” General McMaster said.
Commanders say that behind all the PowerPoint jokes are serious concerns that the program stifles discussion, critical thinking and thoughtful decision-making. Not least, it ties up junior officers — referred to as PowerPoint Rangers — in the daily preparation of slides, be it for a Joint Staff meeting in Washington or for a platoon leader’s pre-mission combat briefing in a remote pocket of Afghanistan.
Last year when a military Web site, Company Command, asked an Army platoon leader in Iraq, Lt. Sam Nuxoll, how he spent most of his time, he responded, “Making PowerPoint slides.” When pressed, he said he was serious.
“I have to make a storyboard complete with digital pictures, diagrams and text summaries on just about anything that happens,” Lieutenant Nuxoll told the Web site. “Conduct a key leader engagement? Make a storyboard. Award a microgrant? Make a storyboard.”
Despite such tales, “death by PowerPoint,” the phrase used to described the numbing sensation that accompanies a 30-slide briefing, seems here to stay. The program, which first went on sale in 1987 and was acquired by Microsoft soon afterward, is deeply embedded in a military culture that has come to rely on PowerPoint’s hierarchical ordering of a confused world.
“There’s a lot of PowerPoint backlash, but I don’t see it going away anytime soon,” said Capt. Crispin Burke, an Army operations officer at Fort Drum, N.Y., who under the name Starbuck wrote an essay about PowerPoint on the Web site Small Wars Journal that cited Lieutenant Nuxoll’s comment.
In a daytime telephone conversation, he estimated that he spent an hour each day making PowerPoint slides. In an initial e-mail message responding to the request for an interview, he wrote, “I would be free tonight, but unfortunately, I work kind of late (sadly enough, making PPT slides).”
Defense Secretary Robert M. Gates reviews printed-out PowerPoint slides at his morning staff meeting, although he insists on getting them the night before so he can read ahead and cut back the briefing time.
Gen. David H. Petraeus, who oversees the wars in Iraq and Afghanistan and says that sitting through some PowerPoint briefings is “just agony,” nonetheless likes the program for the display of maps and statistics showing trends. He has also conducted more than a few PowerPoint presentations himself.
General McChrystal gets two PowerPoint briefings in Kabul per day, plus three more during the week. General Mattis, despite his dim view of the program, said a third of his briefings are by PowerPoint.
Richard C. Holbrooke, the Obama administration’s special representative for Afghanistan and Pakistan, was given PowerPoint briefings during a trip to Afghanistan last summer at each of three stops — Kandahar, Mazar-i-Sharif and Bagram Air Base. At a fourth stop, Herat, the Italian forces there not only provided Mr. Holbrooke with a PowerPoint briefing, but accompanied it with swelling orchestral music.
President Obama was shown PowerPoint slides, mostly maps and charts, in the White House Situation Room during the Afghan strategy review last fall.
Commanders say that the slides impart less information than a five-page paper can hold, and that they relieve the briefer of the need to polish writing to convey an analytic, persuasive point. Imagine lawyers presenting arguments before the Supreme Court in slides instead of legal briefs.
Captain Burke’s essay in the Small Wars Journal also cited a widely read attack on PowerPoint in Armed Forces Journal last summer by Thomas X. Hammes, a retired Marine colonel, whose title, “Dumb-Dumb Bullets,” underscored criticism of fuzzy bullet points; “accelerate the introduction of new weapons,” for instance, does not actually say who should do so.
No one is suggesting that PowerPoint is to blame for mistakes in the current wars, but the program did become notorious during the prelude to the invasion of Iraq. As recounted in the book “Fiasco” by Thomas E. Ricks (Penguin Press, 2006), Lt. Gen. David D. McKiernan, who led the allied ground forces in the 2003 invasion of Iraq, grew frustrated when he could not get Gen. Tommy R. Franks, the commander at the time of American forces in the Persian Gulf region, to issue orders that stated explicitly how he wanted the invasion conducted, and why. Instead, General Franks just passed on to General McKiernan the vague PowerPoint slides that he had already shown to Donald H. Rumsfeld, the defense secretary at the time.
Senior officers say the program does come in handy when the goal is not imparting information, as in briefings for reporters.
The news media sessions often last 25 minutes, with 5 minutes left at the end for questions from anyone still awake. Those types of PowerPoint presentations, Dr. Hammes said, are known as “hypnotizing chickens.”
Helene Cooper contributed reporting.

The St. Petersburg Times - Top Stories - University Dean Fired, Disputes Official Version

The St. Petersburg Times - Top Stories - University Dean Fired, Disputes Official Version

The St. Petersburg Times

Marina Shishkina, the dean of the journalism faculty of St. Petersburg State University, was fired this month by the university’s rector, Nikolai Kropachev.

During the past year, Shishkina had made statements critical of Kropachev, challenging what she described as “the authoritarian style of managing one of Russia’s oldest and most prestigious universities.”

According to the official version, voiced by Mikhail Kudilinsky, the university’s deputy rector for legal issues, Shishkina lost her job for “failing to perform her duties and violating the university’s charter.” A date for the election of a new dean will be set in the near future and held within the next two months, Kudilinsky added.

Anatoly Puyu, the first deputy dean of the journalism faculty, has been appointed acting dean until the election takes place.

Shishkina’s troubles began in September last year, when the Dzerzhinsky district court began reviewing cases against Shishkina and her husband Sergei Petrov, the former dean of the medical faculty.

Both cases were filed by the university’s president, Lyudmila Verbitskaya, who alleges that Petrov and Shishkina have made libelous statements discrediting one of Russia’s oldest and most respected academic institutions.

The investigators also allege that Shishkina embezzled university funds and abused her position. The investigation claims that at least half a million rubles ($17,000) have been misappropriated. Shishkina says that the prosecutors are trying to frame her, and that the real reasons behind the prosecution are entirely political.

Petrov began the conflict by publishing a revealing and critical interview on a popular web site, in which he accused the school’s management of authoritarian rule, rigid attitudes and the suppression of alternative opinions. Shishkina supported her husband’s crusade with a series of interviews in the media, in which she drew a sobering picture of what she described as the university’s “murky and non-transparent decision-making process” and “the oppressive rule of rector Nikolai Kropachev, who hides behind the facade of fighting corruption and instead uses all the administrative tools available to him to assert his personal power.”

Shishkina alleged that, having replaced Lyudmila Verbitskaya as the university’s rector in May 2008, Kropachev adopted a practice of launching vendettas against anyone who criticized his policies. The journalism dean said an atmosphere of fear and intimidation now reigns at the university, and that she and her husband are paying the price for being among the very few who dared to offer resistance.

The dismissed dean said the embezzlement charges were concocted using a bureaucratic trick. She insisted the journalism faculty has a transparent system of financial management.

“I was getting a salary of 80,000 rubles ($2,700); that figure was never a secret,” she said.”The investigators argue that I did not have the right to sign payslips for extra-budgetary earnings for myself and my staff — which is not true. This practice is legal and fully transparent and it existed for many years with no complaints — until I dared to tell the truth about the autocracy that reigns at the school.”

In December 2009, in the wake of the investigation, which has so far led nowhere, Shishkina was suspended from her job.

Shishkina said she had only found out about her dismissal from the media, and that she was considering taking the case to court.

In addition to her position as the journalism faculty dean, Shishkina was also deputy head of the university’s trade union. “I have met with the union’s representatives and discovered that Kropachev did not get their approval before firing me,” Shishkina said.

In order to illustrate her accusations of Kropachev acting like an authoritarian leader, Shishkina often mentioned in interviews the fact that the university’s rector had secured the right to personally dismiss any member of university staff, including faculty deans, despite the fact that the position of dean is an elected post.

“Now my own dismissal is a compelling enough illustration of the feudal principals of running the university that flourish under Kropachev,” Shishkina said, adding that she had not had a chance to discuss the situation with Kropachev face-to-face, though she would very much have liked to.

The End of an Era in Finance - by Dani Rodrik

The End of an Era in Finance
Dani Rodrik
2010-03-11

CAMBRIDGE – In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance.

On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. Taxes and other restrictions on capital inflows, the IMF’s economists wrote, can be helpful, and they constitute a “legitimate part” of policymakers’ toolkit.

Rediscovering the common sense that had strangely eluded the Fund for two decades, the report noted: “logic suggests that appropriately designed controls on capital inflows could usefully complement” other policies. As late as November of last year, IMF Managing Director Dominique Strauss-Kahn had thrown cold water on Brazil’s efforts to stem inflows of speculative “hot money,” and said that he would not recommend such controls “as a standard prescription.”

So February’s policy note is a stunning reversal – as close as an institution can come to recanting without saying, “Sorry, we messed up.” But it parallels a general shift in economists’ opinion. It is telling, for example, that Simon Johnson, the IMF’s chief economist during 2007-2008, has turned into one of the most ardent supporters of strict controls on domestic and international finance.

The IMF’s policy note makes clear that controls on cross-border financial flows can be not only desirable, but also effective. This is important, because the traditional argument of last resort against capital controls has been that they could not be made to stick. Financial markets would always outsmart the policymakers.

Even if true, evading the controls requires incurring additional costs to move funds in and out of a country – which is precisely what the controls aim to achieve. Otherwise, why would investors and speculators cry bloody murder whenever capital controls are mentioned as a possibility? If they really couldn’t care less, then they shouldn’t care at all.

One justification for capital controls is to prevent inflows of hot money from boosting the value of the home currency excessively, thereby undermining competitiveness. Another is to reduce vulnerability to sudden changes in financial-market sentiment, which can wreak havoc with domestic growth and employment. To its credit, the IMF not only acknowledges this, but it also provides evidence that developing countries with capital controls were hit less badly by the fallout from the sub-prime mortgage meltdown.

The IMF’s change of heart is important, but it needs to be followed by further action. We currently don’t know much about designing capital-control regimes. The taboo that has attached to capital controls has discouraged practical, policy-oriented work that would help governments to manage capital flows directly. There is some empirical research on the consequences of capital controls in countries such as Chile, Colombia, and Malaysia, but very little systematic research on the appropriate menu of options. The IMF can help to fill the gap.

Emerging markets have resorted to a variety of instruments to limit private-sector borrowing abroad: taxes, unremunerated reserve requirements, quantitative restrictions, and verbal persuasion. In view of the sophisticated nature of financial markets, the devil is often in the details – and what works in one setting is unlikely to work well in others.

For example, Taiwan’s use of administrative measures that rely heavily on close monitoring of flows may be inappropriate in settings where bureaucratic capacity is more limited. Similarly, Chilean-style unremunerated reserve requirements may be easier to evade in countries with extensive trading in sophisticated derivatives.

With the stigma on capital controls gone, the IMF should now get to work on developing guidelines on what kind of controls work best and under what circumstances. The IMF provides countries with technical assistance in a wide range of areas: monetary policy, bank regulation, and fiscal consolidation. It is time to add managing the capital account to this list.

With this battle won, the next worthy goal is a global financial transaction tax. Set at a very low level – 0.05% is a commonly mentioned rate – such a tax would raise hundreds of billions of dollars for global public goods while discouraging short-term speculative activities in financial markets.

Support for a global financial-transaction tax is growing. A group of NGOs have rechristened it the “Robin Hood tax,” and have launched a global campaign to promote it, complete with a deliciously biting video clip featuring British actor Bill Nighy (www.robinhoodtax.org). Significantly, the European Union has thrown its weight behind the tax and urged the IMF to pursue it. The only major holdout is the United States, where Treasury Secretary Tim Geithner has made his distaste for the proposal clear.

What made finance so lethal in the past was the combination of economists’ ideas with the political power of banks. The bad news is that big banks retain significant political power. The good news is that the intellectual climate has shifted decisively against them. Shorn of support from economists, the financial industry will have a much harder time preventing the fetish of free finance from being tossed into the dustbin of history.

For a podcast of this commentary in English, please use this link: http://media.blubrry.com/ps/media.libsyn.com/media/ps/rodrik41.mp3