28 February 2007

The Beginning of the End, But Not Yet Beginning

Winter and spring that is.  After a week of stunning winter, clear blue skies and good cold weather, I am reliably informed that winter is about to start ending by moving to that phase in which the sun does not shine, it snows/rains/hails and the nation's collective mood sinks a few degrees.  Each journey beyond the front door is a slog through 15cm's of snow-like mud, or is that mud-like snow, gently defrosting dog-turds and a winter of re-emerging cigarette butts.

All of which is made worse by the forthcoming national domestic violence day, otherwise known as International Women's day.

Fortunately, as I rarely see the outside of my office most of this will pass me by and I have no intention of giving SWMBO cheap, tacky cellophane stuffed with flowers.  The one benefit is that my secretary might actually pretend to do some work before next Wednesday so that I have a reason to give her a present.

And real spring, the green-ish one, is another 6 weeks away.

Good morning.

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21 February 2007

As A Dodo: Bush and Blair 2001-2007

If, like me you are struggling with a balance sheet that won't balance because of a non-cash transaction which wasn't really non-cash, and I promise you I am not making this up, then here is some light entertainment.

As A Dodo: Bush and Blair 2001-2007:

Comedy fans are mourning the death of one of the world's funniest double acts, Bush and Blair, following today's shock announcement by British Prime Minister Tony Blair that he has decided to withdraw from his comic partnership with the USA's President George Bush and will no longer be joining him on the set of the latest in their series of hilarious "Road To" movies, "The Road To A New Vietnam".

It was in 2001 that Tony Blair decided to replace his former sidekick Bill "Slick Willie" Clinton after Clinton's comic persona as a loveable lothario - and catchphrase "I did not have sexual relations with that woman" - began to prove box-office death in America's post-millennial moral climate. Initially Blair had hoped to hook up with Clinton's old straight man, Al Gore, but was to opt instead for the guy behind the tongue-tied goof routine that stole American hearts and votes during the 2000 Presidential Election.

Almost immediately Bush and Blair began preparations for their hilariously titled - and now notorious - "Bringing Democracy" World Tour, Blair spending each day working on the wonderfully ludicrous "I'm a Pretty Straight Kinda Guy" routine that had won him the laughter of audiences across the United Kingdom, while Dubya perfected everything from his "Kenny Boy Lay? - Never Met Him In My Life" skit to the death-defying piece of physical comedy that was "Chewing A Pretzel".

With Bush and Blair's comic characters in place, Dubya playing a knuckle-dragging jock and Blair the smooth-talking poodle that insisted on following him everywhere he went, Bush's long-time manager Dick Cheney spotted the box-office potential in the sequence of scripts that would become the pair's "Road To" movies. Soon they were laughing on "The Road to Democracy", sweeping along the dusty "Road to Afghanistan Liberation" and crying on "The Road to Iraqi Freedom" (known in Britain under the title "The Road to Electoral Suicide").

It was during the filming of the last of these three movies that rumours of a split first began to surface. Crew members reported the sounds of heated arguments emerging from the pair's trailer and more and more often the once inseparable duo were seen to arrive and leave the set apart. The cause, some claim, was the latest script optioned for the pair by Mr Cheney, "The Road To Iran" (also known as "The Road to Armageddon"). Whatever the basis for the dispute, it was increasingly clear that relations between the two men had begun to sour. Indeed it came as little surprise when, on Tuesday night, Mr Blair announced that he would be pulling out of the duo's latest lraq tour, "The Big Troop Surge", to concentrate on other projects.

The comedy duo that was Bush and Blair will be remembered fondly by its fans, both of whom can be found in a secure wing of The Charge of the Light Brigade Hospital for the Militarily Insane.

Bush and Blair are now working on their solo projects: Tony Blair's "Legacy Tour" (fans should be aware that the tour has now been considerably shortened) and George Bush's "Who Gives A Crap? I Ain't Standing For Election Again" stand-up appearances in Washington's premier comedy venue, the White House.

20 February 2007

On Democracy, Cans and Worms

Andy at Siberian Light commented and cross-posted on yesterday's democracy-themed post.  His question "how does Russia get from here (quasi-democracy) to there (democracy)"  (the italics are added by me for elucidation.)  He obliquely raises a another point; too much commentary on what has been and not enough (intelligent) commentary on where the country will be not just tomorrow but the day after that as well.  Or at least beyond the Presidential election (sic).

From my narrow point of view the answer is relatively simple.  It is not for us to impose our views on Russia based on what we would like our home countries to be like.  Expats are amongst the most critical commentators on their home countries.  I fundamentally believe in the fuck-up theory of history as opposed to the conspiracy theory.  There are very few examples in political history of honourable people doing the right thing based purely on altruism.  My own country, Britain (which begs the question what I think of N. Ireland), has developed its version of democracy as a result of changes forced on the Monarchy and House of Lords and Commons over time.  It was not that long ago that Britain has its own rotten boroughs - the implication to the Duma being rotten is not implied, it's explicit.  The changes were forced at periods of weakness of the ruling power of the time - from Magna Carta through to female emancipation.

So what does that mean for Russia?  Whilst commodity prices remain high and local input prices relatively low I see little change to the Russian polity.  I don't put much faith in a growing middle-class forcing changes until the economy is forcing changes without their help.  No colourful revolutions here.  We may see a little more balance-of-power post-Putin, whenever that may be.  If I am being optimistic, a resumption of balance of power may mean an increase use of the courts as means of conflict resolution.  I generally find being optimistic, uninformed wishful thinking.

Where I may be proved (hopefully) wrong is the absolute fear that Power evidences of the people. This may result in changes running ahead of popular desire for change.  A continuation of the Fifth Directorate Thugs belief that they can manage the people.  See comments on optimism above.

Maybe the best prediction I can make is that the country in which we live and comment on will change in ways that we will fail to predict. 


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19 February 2007

Chickens Coming Home to Roost - Or to the Dacha

Shikhovo, which is only a hop and a skip and way to close to need a jump, from the dacha is apparently one of the centres of the avian flu outbreak.  All of which is probably pretty underwhelming except for the bits of the story which don't add up.

Apparently a resident of Shikhovo who also as it happens to own/run/work at the somewhat malodorous chicken farm the aforementioned hop and a skip away was in Moscow buying chickens.  It was my impression that the role of a chicken farm was to; rear, grow and ultimately slaughter chickens.  Maybe the Shikhovo guy was just fattening up chickens he bought in the Moscow bird market.  What the hell do I know anyway.

The good news is that Russian-officaldom says no need to worry.  Because they are always trustworthy and open with the public.

In case you are interested the weather was great out there this weekend and the skiing tip-top.


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Ruminations on Democracy, Russia and LaR

In an attempt to lift the La Russophobe debate out of the mire.

For those of you not fully-conversant in the politics of the english-language Russian blogosphere.  Andy at Siberian Light interviewed La Russophobe.  Who is, as the title of her blog suggests, Russophobic, and also anonymous.  The eXile has taken on the role of tracking her down, but as has already decided on the size of her ass - charming boys that they are.

She has many faults; not least of which is a pre-determined view of what has been posted. The one worth debating though is that of a George W. Bush-like fascination with democracy.  Which, in GWB's case seems Florida-strange, but has little to do with this post.

Her interview on SiberianLight mentions democracy a number of times (the list is not exhaustive, and the last point includes democracy in the question only);

  • "the end of democracy"
  • "democracy in the blogosphere"
  • "I’d been told that Russia was a nation of democrats"
  • "La Russophobe is trying to save the minority from the majority in Russia"
  • "in a sham democracy and thereby poisons the well of Russian attitudes towards democracy"
  • "I think anyone who sees a proud KGB spy as a transitional figure on a journey to democracy is quite mad."
  • "11. Do you think Russia will ever embrace the style of representative democracy now favoured in (most of) the rest of Europe? Answer - Not unless it is led to the well by a revolutionary equal to Lenin and as steeped in the West as Lenin was and ten times more courageous. I’d be happy if Russia would just adopt the physician’s maxim for its government: “Do no harm.”"

But it is the fourth quotation which really describes LaR's view of democracy as being what she believes is best for the people of Russia.  Which includes having MBK and VVP switching places.  It may well be that MBK has had a Damascene conversion on his long and winding road to Chita.  But right up to the moment of his incarceration his view of democracy, as evidenced by his actions as opposed to his words, was that it was OK as long as it could be bought.  And he was buying it.

Democracy is undoubtedly a good thing, or as Churchill would have it, not as bad as everything else.  As the US-led coalition in Iraq is finding out, democracy is not just about voting, it is about the law, and balance of power which forces respect for a minority position.  Whilst it may be tempting to say that a leader with 70-80% approval rating better satisfies concepts of democracy than his U.S, French and British counterparts, it is important to separate populism from the building of democracy, given that there are and were a number of populist but not entirely democratic leaders around the world - Hitler, in the former category and Chavez in the latter.  Russia, in common with Iraq, has a representative democracy which is totally undermined by a lack of the basic protections of democracy, minorities and indeed life itself.

However, to place the blame for failing to democracy on VVP and his Fifth Directorate Thugs is to take a snapshot of history without understanding the historical relevance.  You will be pleased to know that I am not about to undertake a Figes-like review of Russian history.  The last 14 years condensed in to three periods will do;

  • Collapse - financial, moral and of morale
  • The pre-crisis party years
  • The post-crisis revival - financial, moral and of morale

To tell a people that has suffered from the liberal economic and democratic experiment that it needs saving from itself invites the same reactions as post-collapse feminists encountered when spreading the good word.  And in my opinion rightly so - on both counts.  I have quoted Cobbett's "I defy you to agitate a man on a full stomach" to feel a little like a stuck record.  Repetition however, does not demean the point.  Democracy post-collapse has meant; valueless savings, rampant theft of state property or if you prefer, loans-for-shares, and complete collapse of anything that felt like being in control of your life.  Whereas this lack-of-democracy thing has meant; stability, food and consumerism.  Not unsurprisingly the narod have decided for now that they can live with their democratic freedoms being impinged.  But as they never knew what democratic freedoms were (see bullet three for bizarre belief in what you are told) it is more than likely that they aren't missing them now.  And won't, at least until the commodity cycle changes and they have no way of getting rid of this bunch of thieves.

Democracy is not the answer to Russia's problems, actually in today's environment it may add to them.  Would Russia would be better if it were democratic is like asking if you prefer peace to war - the answer is axiomatic.  However, democracy is not about voting and the right to vote.  That is purely the symbol.  Real democracy can only happen when rights and responsibilities are balanced.  Russia is not there yet.  It is poorer for not using this period of wealth to build the institutions, but a simplistic belief that Russia can copy US/UK participatory democracies and be better for it is too simplistic and short-term.  As always, black and white arguments seem reasonable and make a point.  I am sure that the narod would prefer that Schliefer et al and LaR did not make a point with their lives.

You can disagree with my point of view - but please make a reasoned argument or I will just disallow the comment.


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15 February 2007

A Wonder Greater Than Russia

I have a bit of a thing about space and the theories of physics that describe our world's first few seconds.  Which leads me to websites which have pictures like the one below.  I almost feel calm after abusing moronic drivers on my way back from work.

Image from NASA and IAA, Spain

14 February 2007

Oil Contango: Roll Yield Rewards

This all gets a little geeky. Like the changes in temperature post from earlier today the graph showing WTI oil contracts moving from sustained backwardation in to sustained(?) contango all go to highlight that the world in which we are going to live is different from the world in which I got to be old and fat.

The actual post from Seeking Alpha is all about trading oil/product futures.  Which is not overly helpful unless you have physical crude to deliver. 

The infamous Eric Kraus of the Nikitsky Fund and the longest-term oil bull I know (unfortunately RSS-unfriendly) puts it well, and I paraphrase; in a tight market oil prices will tend to be volatile and warm, or otherwise weather, will have a noted impact.  He joins Boone Pickens Jnr as a $100/bbl man.

Oil Contango: Roll Yield Rewards:


25460
Forward shifts in crude oil. Source: thestreet.com.

The above figure shows how oil future forward curves, for any given month, have evolved for oil futures during 2004-05, from the typical oil backwardation to contango curves. As Howard Simons puts it:

Each ribbon in the chart represents a forward curve beginning with the front month and ending with the December 2005 contract. The near months are on the left of the ribbon; the far months are on the right of the ribbon. As time goes forward and as price rises, the switch from a backwardated structure -- front months over the back -- switches to a deeper and deeper carry and a bona fide contango.

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It's Too Warm

Disclosure, to keep LaR happy.  I am personally interested in the weather, it impacts my daily schedule and on days like yesterday results in snow getting over the top of my shoes.  I am also interested because global warming is amongst the greatest threat to our future.  Furthermore I am interested because natural resource prices tend to spike when its very cold and very hot.  That being said you actually have to read the article and understand what it says before you have the right to comment.

I couple of the diagrams failed to import - you'll just have to go to TOD to see them.  Despite quasi-official attempts to say we are just in a period of natural warming its worth looking at the reconstructed temperature graph showing just how much warmer the world is today than the last period of global warming - the medieval period.  But then they did not have a/c, airplanes or cars then - apparently.

Kudos to The Oil Drum (link below).

Last month I provided a weather up-date and it was not my intention to provide updates on a regular basis. But the latest NASA temperature anomaly data for January I feel are worthy of comment. Why is this relevant to The Oil Drum?  Well amongst other things, mild winter weather in the northern hemisphere reduces demand for natural gas and heating oil.  Furthermore, a continuation of current trends may see tracts of molten permafrost render oil exploration and production impossible throughout vast areas of Siberia, Canada and Alaska. Melting of Arctic Sea Ice, on the other hand, may open up new offshore provinces.


Figure 1. Surface temperature analysis map for January 2007 from the Goddard Institute for Space Studies. The datum period for comparison is 1951 to 1980.

There are 8 more maps and charts below the fold.
[break]


Figure 2.  January 2007. Goddard Institute for Space Studies.





Figure 3. December 2006. Goddard Institute for Space Studies.





Figure 4.  January 2006 Goddard Institute for Space Studies.



Comparison December 2006 to January 2007


  • The warm anomaly over Asia and Europe has expanded and intensified between December 06 and January 07 (comparing Figures 2 and 3).  Note that the upper scale band for January is 4 to 11.6 degrees compared with 4 to 8 degrees in December.  The North Pole is 4 to 11.6 degrees warmer compared with the datum period (Figure 1).
  • The Antarctic in December was cooler compared with the datum period but in January it too is now showing positive temperature anomalies.
  • There are a few cool spots in January, notably North Africa, Arabian peninsula, SW USA and Mexico, Australia and East Siberia.  But these are dwarfed by the massive, large positive anomaly over Asia, Europe and the Arctic
Comparison January 2006 to January 2007


  • In January 06, Russia and Europe experienced anomalous cold weather that threatened gas supplies and sent gas prices soaring.  This is in stark contrast to January 07 (comparing Figures 2 and 4). Temperatures over a vast area appear to be somewhere between 8 to 20 degrees warmer this year compared to last year.
  • North America was somewhat cooler this January compared to last year.
21st Century warming



Figure 5. 2000 to 2006, mean January anomalies. Goddard Institute for Space Studies.





Figure 6. 2000 to 2006, zonal mean January anomaly. Goddard Institute for Space Studies.



Figure 7. 2000 to 2006, zonal mean September anomaly. Goddard Institute for Space Studies.

It is worth taking a broader look at 21st century warming.  Figure 5 shows the mean January anomalies from 2000 to 2006 compared with the datum period (1951 to 1980) and Figure 6 charts these mean temperature anomalies by latitude. It is clear that the anomalies dicussed above for December 2006 and January 2007 are part of a broader trend.
Note that January temperature rises are not evenly distributed.  All latitudes north of 60 degrees south have experienced January warming, but the amount of warming increases as you go north.  An average global increase in the period of a fraction of a degree masks the fact that high latitudes have warmed by over 2 degrees C during the northern hemisphere winter (Figure 6).
The late summer (September), northern hemisphere anomaly (Figure 7) shows warming across the whole planet of 1 to 2 degrees C.  Late summer warming of 1 to 2 degrees in the arctic regions of Canada and Russia is unlikely to have a catastrophic effect on melting permafrost - yet.  This will be the subject of a follow on post.


Food for thought

Figure 8 shows a temperature reconstruction for the past 2000 years. Note that the temperature range from the peak of the Medieval warm period to the trough of the Little Ice Age is around 1 degree C.
Figure 9 shows various temperature forecast scenarios for the next 100 years from the newly published IPCC summary report (pdf). Warming forecasts vary from 1.8 to 4.0 degrees C.


Figure 8. Temperature reconstructions for the past 2000 years from Wikipedia.



Figure 9. Temperature forecasts for 6 different scenarios considered by the IPCC (Summary report for Policymakers, Figure SPM-5: pdf).

At this point it was my intention to discuss what are in my opinion certain critical factors for the global warming debate that go beyond the physics of radiative forcing that was discussed by Stuart last year:

  • Orbital / Milankovitch cycles
  • Solar / sunspot cycles
  • Loss of Arctic sea ice / reduced albedo
  • Melting Arctic permafrost
However, I feel there is more than enough food for thought here already so I will postpone this discussion to my next post.

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08 February 2007

The Intelligentsia Emigrates to London

I am apoplectic over this complete heap of shit which pretends to be a piece of journalism from the Economist Boyars of Belgravia.  So ridiculously annoyed that you will have to dig the reasonable out of the useless.

A hint as to the title of this post;

"But the mood in moneyed London is still largely positive towards Russia. In thinking London it is increasingly negative. The battle continues."

Where is thinking London to be found?  Clearly not in the Economist which predicted that the collapse of oil would lead to Russia's destruction, nor that Intelligentsia love-child Edward "a monkey would have out-performed my predictive prowess" Lucas predictive prowess regarding almost anything in Russia (and why am I writing this in the past tense) has left him a laughing stock, but still much quoted.  Unless of course thinking is a synonym for morally superior failure to spot the obvious. 

Oh to be a member of the "Thinking Classes."  Would that make me like the the Soviet Union's Intelligentsia; outwardly indignant - soul sold down the river (or at least as far as Zvenigorod).  Happy to read Turgenev and (small frisson of rebellion) Mir - petrified of exerting their moral authority. 

Maybe, if I re-found my moral sight, I could be a member of London's intelligentsia where I would be worried about; which school my child went to, what car I drove and.. oh that's it.  If you want to dispute my bored-beyond-belief recollection of banker/lawyer-land dinner parties over the last 5 years in London stand by for a real rant. 

I could however, join the moneyed classes who spotted that Russia has a spot of oil, a bit of gas and a population willing to doll themselves up in frippery and finery.  These are the same "morally myopic" (hyphened surely - ed?) moneyed classes who spent at least one night not worrying about west London schools and figured out that Russia is a desperately corrupt place (any bids for a Deputy Ministry at the Oil and Gas Minsitry under $5mn for a 1 year appointment not accepted) but that if democracy is the will of the people as opposed to what you (see Thinking Classes above) will the people to think Russians are at least as happy with their lot as you are with Blair/Brown/Cameron.  There is corruption and there is Corruption - but if Loans-for-Peerages and sexed-up intelligence aren't CORRUPTION then we are in desperate need of a moral compass.  And that's before we all agree to start in to morally-religous otherwise degenerate Bush-dom.

No pretension that making money helps develop a middle-class.  The morally myopic make money, the middle-class makes Genghis Khan look only marginally more right wing than Scotland's own English Home Secretary (work your way through that Lothian question). 

Here's a suggestion; think, don't write, for a calm collected moment about the Scooter Libby trial.  Consider your profession to be on trial and take steps to write with balance and intelligence - or write about your own extinction as the much-derided amateur press do what you should be doing only better - and more cheaply.

Yours from nowhere near Tunbridge Wells.


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07 February 2007

Alfa vs Reiman - A Hint

If you work for Galmond (sic) in his battle to drag his erstwhile financial stable mate through the world's courts and press and you monitor my blog via email leaving your out-of-office reply switched on rates as not very clever.

If you want to know why I write about this subject a. find my name out - not very difficult, b. google and work out what I was doing in 1999-2000 also not difficult c. investigate the transactions that did and almost happened during that time period related to your clients (named and otherwise) d. assume we had meetings and did due diligence. e. ask yourself why you are perpetuating a lie.


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06 February 2007

Reiman vs Alfa - A Continuation

It's been a while but the Royal Gazette yesterday dropped this little nugget in to my feed reader.  The summary is that the Bermudan financial services is taking steps to close down Mr. Galmond's (sic) IPOC fund and, it would appear, a number of associated vehicles. 

Naiive statement for February; how can a telecom minister carry on in his job when an uncontroversial paper like the Royal Gazette makes statements like:


In a written statement yesterday confirming the move, Ms Cox said that it was sometimes necessary to take legal action “to address seeming breaches of our laws and apparent regulatory infractions”.

Some matters relating to the case have been passed on to the Bermuda Police Service for investigation.

The legal action is the latest twist in the IPOC saga, which has sparked litigation in several countries amid claims that the Fund was a money-laundering vehicle.

It was alleged that it was effectively a holding company for around $1 billion in telecommunications assets transferred through a network of shell companies. The WSJ claimed the scandal went all the way up to the Russian IT and Communications Minister Leonid Reiman.

A Swiss tribunal in May last year, found that Mr. Reiman was the “sole beneficial owner” of the Fund. The tribunal stated that the close ally of President Vladimir Putin had amassed great personal wealth in the IPOC Fund by taking advantage of his role in public office.
Puisne Judge Ian Kawaley later upheld the ruling in a related case in the Bermuda Supreme Court.
It was alleged in Zurich that money skimmed during the privatisation of the Russian telecommunications industry during the early 1990s was laundered through the Bermuda-based fund.

IPOC has consistently claimed that Danish lawyer Jeffrey Galmond is the Fund’s owner. Mr. Galmond did not respond to our call yesterday.

KPMG Advisory Services was commissioned by the Ministry of Finance in 2004 to carry out an investigation of IPOC. The findings were passed on to Government in June last year.

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05 February 2007

Sakhalin Fishermen Adrift - With Alchohol

I read them so you don't have to.

It seems that Russian fishermen are trying hard to keep the demographic profile plunging this year.  The latest attempt to prove Darwin would have been just as likely to discover his theories of natural selection in Russia as the Galapgos sees "hundreds" of fishermen rescued, finally, from a lump of ice in the sea of Okhotsk.  Not before many of them had consumed 50 grams or so of the national brew.

Apparently many of those rescued were in a state of "heavy alcoholic intoxication".

Russia anglers saved in ice drama


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01 February 2007

Dyevs Deny Using Sex to Get Ahead

Which is as much of a lie as VVP denying using energy as a political tool.  And they should be as well (dyevs and VVP.)  At the risk of sounding slightly dated; if you've got it, flaunt it.  And the last time I looked the dyevs aren't shy about flaunting it.  I also had not noticed the USA hiding its economic and political might under a bushel.  Russia has energy, energy and maybe an education system - time to pull on the low-cut top, high-cut skirt and killer-stilettos.  Shout it from the roof tops.  We have energy, listen to us idle old-Europe if you want to stay warm, or cool.

I believe a certain ex-Pole by the name of Brezinski would call it Real Politik.

Putin shrugs off criticism that Russia deploys its vast energy resources as political weapon.:

Russian President Vladimir Putin rejected Western criticism that Russia has been using its vast energy resources as a political weapon. " We are always told that Russia is using its...economic resources to achieve its foreign policy aims. This is not the case", said Putin at a news conference Thursday. "Russia has been meeting all of its obligations in full, and will continue to do so in the future", however "…we're not obliged to subsidize the economies of other countries. Nobody does that, so why are they demanding it of us?", said the Russian President who noted that everything Russia does as part of own energy strategy, as well as its accords with transit countries are aimed to better meet the needs of major consumers of the Russian energy.

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Growth, People and Creme Brulee

Given the option of reviewing comments on Mem & Arts or scribbling some thoughts on staff - the blog wins.

By way of a long explanation:

Last night we were fortunate enough to get a freebie meal from one of Moscow's soon-to-be high-end restaurants courtesy of Eric, previously of Carre Blanc.  If it has a name it passed me by. I'll link to it when it opens. The creme brulee would win the Moscow creme brulee competition - not that the competition is stiff.

Anyhow to the point (finally).  The restaurant should have opened a year ago but complicated building works, including keeping the river Neglinka out of the basement, has kept it shuttered. Now they are mostly ready to launch but for the fact that they need to hire 20 kitchen and wait staff.  Currently they are adding them at 1-a-day.  Should be ready for a cash opening in 3 weeks time.  Fortunately the owner won't miss the cash he is currently losing.

It is fairly unusual to use the restaurant business as a proxy for business in general.  In this case it works.  Businesses are looking for qualified and experienced marketing, finance etc etc etc staff.  At a price which reflects their value to the business and on the off chance that they might stay in the business for more than 18 months. I would go as far as to say that they are not available.

As anyone with the barest understanding of supply and demand will know that high demand and low supply will theoretically drive prices up to bring more people in to the industry and suppress demand.  Anecdotal evidence (from my credit card statement) would suggest that restaurants are not passing on cost increases to consumers, or I am drinking less.  But costs are definitely on the rise.  Staff costs are rising everywhere, in every business.

There is a gap between published inflation and real inflation.

On a tangential note; Cantinetta Antinori is Eric's favourite restaurant in Moscow.  That's depressing - nice enough restaurant, good enough food.  But that's about as far as it goes.  Plenty of new restaurants - still no good food.


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Actions and Words

This reported by UFG, sorry that should be Deutsche UFG, via BNE (also my browser but I can't share that).  This on the same day that it was reported via Kommersant that Itera intends to return its gas assets to GAZP, continuing noise on Kovytka.  Not to mention the less-than-white Gutseriev and Russneft.

Maybe more importantly the definition of a strategic gas field was set at 50bcm (~300mn BOE).  Which is close to saying that my sock draw contains a strategic number of the global sock population.

Somewhere, easy enough to fathom - the Kremlin, a bunch of people are fighting battles; the end game of which is not entirely clear.  Please, please, please VVP can you put a lid on this.

UFG Research via BNE

6. Government sees increasing role of independent gas producers
Deutsche UFG, Russia
Wednesday, January 31, 2007

According to Kommersant, the Minister of Industry and Energy, Victor Khristenko, has said that by 2015-2020, independent gas producers will start to dominate the domestic gas market. We expect independents' share to grow from below 20% last year to 35% in 2015 and 45% in 2020. The changing structure of the domestic gas market is due to the fact that Gazprom's exports are increasing faster than its production, resulting in it losing its market share of domestic customers.

We note, however, that if Gazprom continues to acquire independent gas producers (previous examples include Northgas, Sibneftegaz, Sakhalin-2), its monopoly status will only strengthen. We expect further consolidation on the domestic gas market around three key independent gas producers/oil companies: Novatek, LUKoil and Rosneft. According to our estimates, they have a combined potential production capacity of 180 bcma, compared with Gazprom's 550 bcm last year.

Yesterday, Khristenko reiterated the key principles of the domestic gas market liberalisation, which will make this operating segment increasingly attractive.

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28 February 2007

The Beginning of the End, But Not Yet Beginning

Winter and spring that is.  After a week of stunning winter, clear blue skies and good cold weather, I am reliably informed that winter is about to start ending by moving to that phase in which the sun does not shine, it snows/rains/hails and the nation's collective mood sinks a few degrees.  Each journey beyond the front door is a slog through 15cm's of snow-like mud, or is that mud-like snow, gently defrosting dog-turds and a winter of re-emerging cigarette butts.

All of which is made worse by the forthcoming national domestic violence day, otherwise known as International Women's day.

Fortunately, as I rarely see the outside of my office most of this will pass me by and I have no intention of giving SWMBO cheap, tacky cellophane stuffed with flowers.  The one benefit is that my secretary might actually pretend to do some work before next Wednesday so that I have a reason to give her a present.

And real spring, the green-ish one, is another 6 weeks away.

Good morning.

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21 February 2007

As A Dodo: Bush and Blair 2001-2007

If, like me you are struggling with a balance sheet that won't balance because of a non-cash transaction which wasn't really non-cash, and I promise you I am not making this up, then here is some light entertainment.

As A Dodo: Bush and Blair 2001-2007:

Comedy fans are mourning the death of one of the world's funniest double acts, Bush and Blair, following today's shock announcement by British Prime Minister Tony Blair that he has decided to withdraw from his comic partnership with the USA's President George Bush and will no longer be joining him on the set of the latest in their series of hilarious "Road To" movies, "The Road To A New Vietnam".

It was in 2001 that Tony Blair decided to replace his former sidekick Bill "Slick Willie" Clinton after Clinton's comic persona as a loveable lothario - and catchphrase "I did not have sexual relations with that woman" - began to prove box-office death in America's post-millennial moral climate. Initially Blair had hoped to hook up with Clinton's old straight man, Al Gore, but was to opt instead for the guy behind the tongue-tied goof routine that stole American hearts and votes during the 2000 Presidential Election.

Almost immediately Bush and Blair began preparations for their hilariously titled - and now notorious - "Bringing Democracy" World Tour, Blair spending each day working on the wonderfully ludicrous "I'm a Pretty Straight Kinda Guy" routine that had won him the laughter of audiences across the United Kingdom, while Dubya perfected everything from his "Kenny Boy Lay? - Never Met Him In My Life" skit to the death-defying piece of physical comedy that was "Chewing A Pretzel".

With Bush and Blair's comic characters in place, Dubya playing a knuckle-dragging jock and Blair the smooth-talking poodle that insisted on following him everywhere he went, Bush's long-time manager Dick Cheney spotted the box-office potential in the sequence of scripts that would become the pair's "Road To" movies. Soon they were laughing on "The Road to Democracy", sweeping along the dusty "Road to Afghanistan Liberation" and crying on "The Road to Iraqi Freedom" (known in Britain under the title "The Road to Electoral Suicide").

It was during the filming of the last of these three movies that rumours of a split first began to surface. Crew members reported the sounds of heated arguments emerging from the pair's trailer and more and more often the once inseparable duo were seen to arrive and leave the set apart. The cause, some claim, was the latest script optioned for the pair by Mr Cheney, "The Road To Iran" (also known as "The Road to Armageddon"). Whatever the basis for the dispute, it was increasingly clear that relations between the two men had begun to sour. Indeed it came as little surprise when, on Tuesday night, Mr Blair announced that he would be pulling out of the duo's latest lraq tour, "The Big Troop Surge", to concentrate on other projects.

The comedy duo that was Bush and Blair will be remembered fondly by its fans, both of whom can be found in a secure wing of The Charge of the Light Brigade Hospital for the Militarily Insane.

Bush and Blair are now working on their solo projects: Tony Blair's "Legacy Tour" (fans should be aware that the tour has now been considerably shortened) and George Bush's "Who Gives A Crap? I Ain't Standing For Election Again" stand-up appearances in Washington's premier comedy venue, the White House.

20 February 2007

On Democracy, Cans and Worms

Andy at Siberian Light commented and cross-posted on yesterday's democracy-themed post.  His question "how does Russia get from here (quasi-democracy) to there (democracy)"  (the italics are added by me for elucidation.)  He obliquely raises a another point; too much commentary on what has been and not enough (intelligent) commentary on where the country will be not just tomorrow but the day after that as well.  Or at least beyond the Presidential election (sic).

From my narrow point of view the answer is relatively simple.  It is not for us to impose our views on Russia based on what we would like our home countries to be like.  Expats are amongst the most critical commentators on their home countries.  I fundamentally believe in the fuck-up theory of history as opposed to the conspiracy theory.  There are very few examples in political history of honourable people doing the right thing based purely on altruism.  My own country, Britain (which begs the question what I think of N. Ireland), has developed its version of democracy as a result of changes forced on the Monarchy and House of Lords and Commons over time.  It was not that long ago that Britain has its own rotten boroughs - the implication to the Duma being rotten is not implied, it's explicit.  The changes were forced at periods of weakness of the ruling power of the time - from Magna Carta through to female emancipation.

So what does that mean for Russia?  Whilst commodity prices remain high and local input prices relatively low I see little change to the Russian polity.  I don't put much faith in a growing middle-class forcing changes until the economy is forcing changes without their help.  No colourful revolutions here.  We may see a little more balance-of-power post-Putin, whenever that may be.  If I am being optimistic, a resumption of balance of power may mean an increase use of the courts as means of conflict resolution.  I generally find being optimistic, uninformed wishful thinking.

Where I may be proved (hopefully) wrong is the absolute fear that Power evidences of the people. This may result in changes running ahead of popular desire for change.  A continuation of the Fifth Directorate Thugs belief that they can manage the people.  See comments on optimism above.

Maybe the best prediction I can make is that the country in which we live and comment on will change in ways that we will fail to predict. 


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19 February 2007

Chickens Coming Home to Roost - Or to the Dacha

Shikhovo, which is only a hop and a skip and way to close to need a jump, from the dacha is apparently one of the centres of the avian flu outbreak.  All of which is probably pretty underwhelming except for the bits of the story which don't add up.

Apparently a resident of Shikhovo who also as it happens to own/run/work at the somewhat malodorous chicken farm the aforementioned hop and a skip away was in Moscow buying chickens.  It was my impression that the role of a chicken farm was to; rear, grow and ultimately slaughter chickens.  Maybe the Shikhovo guy was just fattening up chickens he bought in the Moscow bird market.  What the hell do I know anyway.

The good news is that Russian-officaldom says no need to worry.  Because they are always trustworthy and open with the public.

In case you are interested the weather was great out there this weekend and the skiing tip-top.


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Ruminations on Democracy, Russia and LaR

In an attempt to lift the La Russophobe debate out of the mire.

For those of you not fully-conversant in the politics of the english-language Russian blogosphere.  Andy at Siberian Light interviewed La Russophobe.  Who is, as the title of her blog suggests, Russophobic, and also anonymous.  The eXile has taken on the role of tracking her down, but as has already decided on the size of her ass - charming boys that they are.

She has many faults; not least of which is a pre-determined view of what has been posted. The one worth debating though is that of a George W. Bush-like fascination with democracy.  Which, in GWB's case seems Florida-strange, but has little to do with this post.

Her interview on SiberianLight mentions democracy a number of times (the list is not exhaustive, and the last point includes democracy in the question only);

  • "the end of democracy"
  • "democracy in the blogosphere"
  • "I’d been told that Russia was a nation of democrats"
  • "La Russophobe is trying to save the minority from the majority in Russia"
  • "in a sham democracy and thereby poisons the well of Russian attitudes towards democracy"
  • "I think anyone who sees a proud KGB spy as a transitional figure on a journey to democracy is quite mad."
  • "11. Do you think Russia will ever embrace the style of representative democracy now favoured in (most of) the rest of Europe? Answer - Not unless it is led to the well by a revolutionary equal to Lenin and as steeped in the West as Lenin was and ten times more courageous. I’d be happy if Russia would just adopt the physician’s maxim for its government: “Do no harm.”"

But it is the fourth quotation which really describes LaR's view of democracy as being what she believes is best for the people of Russia.  Which includes having MBK and VVP switching places.  It may well be that MBK has had a Damascene conversion on his long and winding road to Chita.  But right up to the moment of his incarceration his view of democracy, as evidenced by his actions as opposed to his words, was that it was OK as long as it could be bought.  And he was buying it.

Democracy is undoubtedly a good thing, or as Churchill would have it, not as bad as everything else.  As the US-led coalition in Iraq is finding out, democracy is not just about voting, it is about the law, and balance of power which forces respect for a minority position.  Whilst it may be tempting to say that a leader with 70-80% approval rating better satisfies concepts of democracy than his U.S, French and British counterparts, it is important to separate populism from the building of democracy, given that there are and were a number of populist but not entirely democratic leaders around the world - Hitler, in the former category and Chavez in the latter.  Russia, in common with Iraq, has a representative democracy which is totally undermined by a lack of the basic protections of democracy, minorities and indeed life itself.

However, to place the blame for failing to democracy on VVP and his Fifth Directorate Thugs is to take a snapshot of history without understanding the historical relevance.  You will be pleased to know that I am not about to undertake a Figes-like review of Russian history.  The last 14 years condensed in to three periods will do;

  • Collapse - financial, moral and of morale
  • The pre-crisis party years
  • The post-crisis revival - financial, moral and of morale

To tell a people that has suffered from the liberal economic and democratic experiment that it needs saving from itself invites the same reactions as post-collapse feminists encountered when spreading the good word.  And in my opinion rightly so - on both counts.  I have quoted Cobbett's "I defy you to agitate a man on a full stomach" to feel a little like a stuck record.  Repetition however, does not demean the point.  Democracy post-collapse has meant; valueless savings, rampant theft of state property or if you prefer, loans-for-shares, and complete collapse of anything that felt like being in control of your life.  Whereas this lack-of-democracy thing has meant; stability, food and consumerism.  Not unsurprisingly the narod have decided for now that they can live with their democratic freedoms being impinged.  But as they never knew what democratic freedoms were (see bullet three for bizarre belief in what you are told) it is more than likely that they aren't missing them now.  And won't, at least until the commodity cycle changes and they have no way of getting rid of this bunch of thieves.

Democracy is not the answer to Russia's problems, actually in today's environment it may add to them.  Would Russia would be better if it were democratic is like asking if you prefer peace to war - the answer is axiomatic.  However, democracy is not about voting and the right to vote.  That is purely the symbol.  Real democracy can only happen when rights and responsibilities are balanced.  Russia is not there yet.  It is poorer for not using this period of wealth to build the institutions, but a simplistic belief that Russia can copy US/UK participatory democracies and be better for it is too simplistic and short-term.  As always, black and white arguments seem reasonable and make a point.  I am sure that the narod would prefer that Schliefer et al and LaR did not make a point with their lives.

You can disagree with my point of view - but please make a reasoned argument or I will just disallow the comment.


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15 February 2007

A Wonder Greater Than Russia

I have a bit of a thing about space and the theories of physics that describe our world's first few seconds.  Which leads me to websites which have pictures like the one below.  I almost feel calm after abusing moronic drivers on my way back from work.

Image from NASA and IAA, Spain

14 February 2007

Oil Contango: Roll Yield Rewards

This all gets a little geeky. Like the changes in temperature post from earlier today the graph showing WTI oil contracts moving from sustained backwardation in to sustained(?) contango all go to highlight that the world in which we are going to live is different from the world in which I got to be old and fat.

The actual post from Seeking Alpha is all about trading oil/product futures.  Which is not overly helpful unless you have physical crude to deliver. 

The infamous Eric Kraus of the Nikitsky Fund and the longest-term oil bull I know (unfortunately RSS-unfriendly) puts it well, and I paraphrase; in a tight market oil prices will tend to be volatile and warm, or otherwise weather, will have a noted impact.  He joins Boone Pickens Jnr as a $100/bbl man.

Oil Contango: Roll Yield Rewards:


25460
Forward shifts in crude oil. Source: thestreet.com.

The above figure shows how oil future forward curves, for any given month, have evolved for oil futures during 2004-05, from the typical oil backwardation to contango curves. As Howard Simons puts it:

Each ribbon in the chart represents a forward curve beginning with the front month and ending with the December 2005 contract. The near months are on the left of the ribbon; the far months are on the right of the ribbon. As time goes forward and as price rises, the switch from a backwardated structure -- front months over the back -- switches to a deeper and deeper carry and a bona fide contango.

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It's Too Warm

Disclosure, to keep LaR happy.  I am personally interested in the weather, it impacts my daily schedule and on days like yesterday results in snow getting over the top of my shoes.  I am also interested because global warming is amongst the greatest threat to our future.  Furthermore I am interested because natural resource prices tend to spike when its very cold and very hot.  That being said you actually have to read the article and understand what it says before you have the right to comment.

I couple of the diagrams failed to import - you'll just have to go to TOD to see them.  Despite quasi-official attempts to say we are just in a period of natural warming its worth looking at the reconstructed temperature graph showing just how much warmer the world is today than the last period of global warming - the medieval period.  But then they did not have a/c, airplanes or cars then - apparently.

Kudos to The Oil Drum (link below).

Last month I provided a weather up-date and it was not my intention to provide updates on a regular basis. But the latest NASA temperature anomaly data for January I feel are worthy of comment. Why is this relevant to The Oil Drum?  Well amongst other things, mild winter weather in the northern hemisphere reduces demand for natural gas and heating oil.  Furthermore, a continuation of current trends may see tracts of molten permafrost render oil exploration and production impossible throughout vast areas of Siberia, Canada and Alaska. Melting of Arctic Sea Ice, on the other hand, may open up new offshore provinces.


Figure 1. Surface temperature analysis map for January 2007 from the Goddard Institute for Space Studies. The datum period for comparison is 1951 to 1980.

There are 8 more maps and charts below the fold.
[break]


Figure 2.  January 2007. Goddard Institute for Space Studies.





Figure 3. December 2006. Goddard Institute for Space Studies.





Figure 4.  January 2006 Goddard Institute for Space Studies.



Comparison December 2006 to January 2007


  • The warm anomaly over Asia and Europe has expanded and intensified between December 06 and January 07 (comparing Figures 2 and 3).  Note that the upper scale band for January is 4 to 11.6 degrees compared with 4 to 8 degrees in December.  The North Pole is 4 to 11.6 degrees warmer compared with the datum period (Figure 1).
  • The Antarctic in December was cooler compared with the datum period but in January it too is now showing positive temperature anomalies.
  • There are a few cool spots in January, notably North Africa, Arabian peninsula, SW USA and Mexico, Australia and East Siberia.  But these are dwarfed by the massive, large positive anomaly over Asia, Europe and the Arctic
Comparison January 2006 to January 2007


  • In January 06, Russia and Europe experienced anomalous cold weather that threatened gas supplies and sent gas prices soaring.  This is in stark contrast to January 07 (comparing Figures 2 and 4). Temperatures over a vast area appear to be somewhere between 8 to 20 degrees warmer this year compared to last year.
  • North America was somewhat cooler this January compared to last year.
21st Century warming



Figure 5. 2000 to 2006, mean January anomalies. Goddard Institute for Space Studies.





Figure 6. 2000 to 2006, zonal mean January anomaly. Goddard Institute for Space Studies.



Figure 7. 2000 to 2006, zonal mean September anomaly. Goddard Institute for Space Studies.

It is worth taking a broader look at 21st century warming.  Figure 5 shows the mean January anomalies from 2000 to 2006 compared with the datum period (1951 to 1980) and Figure 6 charts these mean temperature anomalies by latitude. It is clear that the anomalies dicussed above for December 2006 and January 2007 are part of a broader trend.
Note that January temperature rises are not evenly distributed.  All latitudes north of 60 degrees south have experienced January warming, but the amount of warming increases as you go north.  An average global increase in the period of a fraction of a degree masks the fact that high latitudes have warmed by over 2 degrees C during the northern hemisphere winter (Figure 6).
The late summer (September), northern hemisphere anomaly (Figure 7) shows warming across the whole planet of 1 to 2 degrees C.  Late summer warming of 1 to 2 degrees in the arctic regions of Canada and Russia is unlikely to have a catastrophic effect on melting permafrost - yet.  This will be the subject of a follow on post.


Food for thought

Figure 8 shows a temperature reconstruction for the past 2000 years. Note that the temperature range from the peak of the Medieval warm period to the trough of the Little Ice Age is around 1 degree C.
Figure 9 shows various temperature forecast scenarios for the next 100 years from the newly published IPCC summary report (pdf). Warming forecasts vary from 1.8 to 4.0 degrees C.


Figure 8. Temperature reconstructions for the past 2000 years from Wikipedia.



Figure 9. Temperature forecasts for 6 different scenarios considered by the IPCC (Summary report for Policymakers, Figure SPM-5: pdf).

At this point it was my intention to discuss what are in my opinion certain critical factors for the global warming debate that go beyond the physics of radiative forcing that was discussed by Stuart last year:

  • Orbital / Milankovitch cycles
  • Solar / sunspot cycles
  • Loss of Arctic sea ice / reduced albedo
  • Melting Arctic permafrost
However, I feel there is more than enough food for thought here already so I will postpone this discussion to my next post.

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08 February 2007

The Intelligentsia Emigrates to London

I am apoplectic over this complete heap of shit which pretends to be a piece of journalism from the Economist Boyars of Belgravia.  So ridiculously annoyed that you will have to dig the reasonable out of the useless.

A hint as to the title of this post;

"But the mood in moneyed London is still largely positive towards Russia. In thinking London it is increasingly negative. The battle continues."

Where is thinking London to be found?  Clearly not in the Economist which predicted that the collapse of oil would lead to Russia's destruction, nor that Intelligentsia love-child Edward "a monkey would have out-performed my predictive prowess" Lucas predictive prowess regarding almost anything in Russia (and why am I writing this in the past tense) has left him a laughing stock, but still much quoted.  Unless of course thinking is a synonym for morally superior failure to spot the obvious. 

Oh to be a member of the "Thinking Classes."  Would that make me like the the Soviet Union's Intelligentsia; outwardly indignant - soul sold down the river (or at least as far as Zvenigorod).  Happy to read Turgenev and (small frisson of rebellion) Mir - petrified of exerting their moral authority. 

Maybe, if I re-found my moral sight, I could be a member of London's intelligentsia where I would be worried about; which school my child went to, what car I drove and.. oh that's it.  If you want to dispute my bored-beyond-belief recollection of banker/lawyer-land dinner parties over the last 5 years in London stand by for a real rant. 

I could however, join the moneyed classes who spotted that Russia has a spot of oil, a bit of gas and a population willing to doll themselves up in frippery and finery.  These are the same "morally myopic" (hyphened surely - ed?) moneyed classes who spent at least one night not worrying about west London schools and figured out that Russia is a desperately corrupt place (any bids for a Deputy Ministry at the Oil and Gas Minsitry under $5mn for a 1 year appointment not accepted) but that if democracy is the will of the people as opposed to what you (see Thinking Classes above) will the people to think Russians are at least as happy with their lot as you are with Blair/Brown/Cameron.  There is corruption and there is Corruption - but if Loans-for-Peerages and sexed-up intelligence aren't CORRUPTION then we are in desperate need of a moral compass.  And that's before we all agree to start in to morally-religous otherwise degenerate Bush-dom.

No pretension that making money helps develop a middle-class.  The morally myopic make money, the middle-class makes Genghis Khan look only marginally more right wing than Scotland's own English Home Secretary (work your way through that Lothian question). 

Here's a suggestion; think, don't write, for a calm collected moment about the Scooter Libby trial.  Consider your profession to be on trial and take steps to write with balance and intelligence - or write about your own extinction as the much-derided amateur press do what you should be doing only better - and more cheaply.

Yours from nowhere near Tunbridge Wells.


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07 February 2007

Alfa vs Reiman - A Hint

If you work for Galmond (sic) in his battle to drag his erstwhile financial stable mate through the world's courts and press and you monitor my blog via email leaving your out-of-office reply switched on rates as not very clever.

If you want to know why I write about this subject a. find my name out - not very difficult, b. google and work out what I was doing in 1999-2000 also not difficult c. investigate the transactions that did and almost happened during that time period related to your clients (named and otherwise) d. assume we had meetings and did due diligence. e. ask yourself why you are perpetuating a lie.


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06 February 2007

Reiman vs Alfa - A Continuation

It's been a while but the Royal Gazette yesterday dropped this little nugget in to my feed reader.  The summary is that the Bermudan financial services is taking steps to close down Mr. Galmond's (sic) IPOC fund and, it would appear, a number of associated vehicles. 

Naiive statement for February; how can a telecom minister carry on in his job when an uncontroversial paper like the Royal Gazette makes statements like:


In a written statement yesterday confirming the move, Ms Cox said that it was sometimes necessary to take legal action “to address seeming breaches of our laws and apparent regulatory infractions”.

Some matters relating to the case have been passed on to the Bermuda Police Service for investigation.

The legal action is the latest twist in the IPOC saga, which has sparked litigation in several countries amid claims that the Fund was a money-laundering vehicle.

It was alleged that it was effectively a holding company for around $1 billion in telecommunications assets transferred through a network of shell companies. The WSJ claimed the scandal went all the way up to the Russian IT and Communications Minister Leonid Reiman.

A Swiss tribunal in May last year, found that Mr. Reiman was the “sole beneficial owner” of the Fund. The tribunal stated that the close ally of President Vladimir Putin had amassed great personal wealth in the IPOC Fund by taking advantage of his role in public office.
Puisne Judge Ian Kawaley later upheld the ruling in a related case in the Bermuda Supreme Court.
It was alleged in Zurich that money skimmed during the privatisation of the Russian telecommunications industry during the early 1990s was laundered through the Bermuda-based fund.

IPOC has consistently claimed that Danish lawyer Jeffrey Galmond is the Fund’s owner. Mr. Galmond did not respond to our call yesterday.

KPMG Advisory Services was commissioned by the Ministry of Finance in 2004 to carry out an investigation of IPOC. The findings were passed on to Government in June last year.

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05 February 2007

Sakhalin Fishermen Adrift - With Alchohol

I read them so you don't have to.

It seems that Russian fishermen are trying hard to keep the demographic profile plunging this year.  The latest attempt to prove Darwin would have been just as likely to discover his theories of natural selection in Russia as the Galapgos sees "hundreds" of fishermen rescued, finally, from a lump of ice in the sea of Okhotsk.  Not before many of them had consumed 50 grams or so of the national brew.

Apparently many of those rescued were in a state of "heavy alcoholic intoxication".

Russia anglers saved in ice drama


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01 February 2007

Dyevs Deny Using Sex to Get Ahead

Which is as much of a lie as VVP denying using energy as a political tool.  And they should be as well (dyevs and VVP.)  At the risk of sounding slightly dated; if you've got it, flaunt it.  And the last time I looked the dyevs aren't shy about flaunting it.  I also had not noticed the USA hiding its economic and political might under a bushel.  Russia has energy, energy and maybe an education system - time to pull on the low-cut top, high-cut skirt and killer-stilettos.  Shout it from the roof tops.  We have energy, listen to us idle old-Europe if you want to stay warm, or cool.

I believe a certain ex-Pole by the name of Brezinski would call it Real Politik.

Putin shrugs off criticism that Russia deploys its vast energy resources as political weapon.:

Russian President Vladimir Putin rejected Western criticism that Russia has been using its vast energy resources as a political weapon. " We are always told that Russia is using its...economic resources to achieve its foreign policy aims. This is not the case", said Putin at a news conference Thursday. "Russia has been meeting all of its obligations in full, and will continue to do so in the future", however "…we're not obliged to subsidize the economies of other countries. Nobody does that, so why are they demanding it of us?", said the Russian President who noted that everything Russia does as part of own energy strategy, as well as its accords with transit countries are aimed to better meet the needs of major consumers of the Russian energy.

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Growth, People and Creme Brulee

Given the option of reviewing comments on Mem & Arts or scribbling some thoughts on staff - the blog wins.

By way of a long explanation:

Last night we were fortunate enough to get a freebie meal from one of Moscow's soon-to-be high-end restaurants courtesy of Eric, previously of Carre Blanc.  If it has a name it passed me by. I'll link to it when it opens. The creme brulee would win the Moscow creme brulee competition - not that the competition is stiff.

Anyhow to the point (finally).  The restaurant should have opened a year ago but complicated building works, including keeping the river Neglinka out of the basement, has kept it shuttered. Now they are mostly ready to launch but for the fact that they need to hire 20 kitchen and wait staff.  Currently they are adding them at 1-a-day.  Should be ready for a cash opening in 3 weeks time.  Fortunately the owner won't miss the cash he is currently losing.

It is fairly unusual to use the restaurant business as a proxy for business in general.  In this case it works.  Businesses are looking for qualified and experienced marketing, finance etc etc etc staff.  At a price which reflects their value to the business and on the off chance that they might stay in the business for more than 18 months. I would go as far as to say that they are not available.

As anyone with the barest understanding of supply and demand will know that high demand and low supply will theoretically drive prices up to bring more people in to the industry and suppress demand.  Anecdotal evidence (from my credit card statement) would suggest that restaurants are not passing on cost increases to consumers, or I am drinking less.  But costs are definitely on the rise.  Staff costs are rising everywhere, in every business.

There is a gap between published inflation and real inflation.

On a tangential note; Cantinetta Antinori is Eric's favourite restaurant in Moscow.  That's depressing - nice enough restaurant, good enough food.  But that's about as far as it goes.  Plenty of new restaurants - still no good food.


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Actions and Words

This reported by UFG, sorry that should be Deutsche UFG, via BNE (also my browser but I can't share that).  This on the same day that it was reported via Kommersant that Itera intends to return its gas assets to GAZP, continuing noise on Kovytka.  Not to mention the less-than-white Gutseriev and Russneft.

Maybe more importantly the definition of a strategic gas field was set at 50bcm (~300mn BOE).  Which is close to saying that my sock draw contains a strategic number of the global sock population.

Somewhere, easy enough to fathom - the Kremlin, a bunch of people are fighting battles; the end game of which is not entirely clear.  Please, please, please VVP can you put a lid on this.

UFG Research via BNE

6. Government sees increasing role of independent gas producers
Deutsche UFG, Russia
Wednesday, January 31, 2007

According to Kommersant, the Minister of Industry and Energy, Victor Khristenko, has said that by 2015-2020, independent gas producers will start to dominate the domestic gas market. We expect independents' share to grow from below 20% last year to 35% in 2015 and 45% in 2020. The changing structure of the domestic gas market is due to the fact that Gazprom's exports are increasing faster than its production, resulting in it losing its market share of domestic customers.

We note, however, that if Gazprom continues to acquire independent gas producers (previous examples include Northgas, Sibneftegaz, Sakhalin-2), its monopoly status will only strengthen. We expect further consolidation on the domestic gas market around three key independent gas producers/oil companies: Novatek, LUKoil and Rosneft. According to our estimates, they have a combined potential production capacity of 180 bcma, compared with Gazprom's 550 bcm last year.

Yesterday, Khristenko reiterated the key principles of the domestic gas market liberalisation, which will make this operating segment increasingly attractive.

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