Ruminations on Russia

Konstantin from Russia Blog points out tangentially that different countries have different definitions of liberalism. I would like to think that the liberals that we all hope get to be the future of Russia are those described in the last paragraph. Put in very simple terms they suffer from a branding problem not entirely dissimilar to that faced by the British Labour Party pre-Blair and the current Conservative Party.

It would be better to say that they are believers in liberal economics - that is a smaller role for the state. Which is not entirely unsurprising when you consider the additional burden that the state in its role as truly organized crime applies to their business.

Anyway worth a read.

My Political Credo:
What's my political credo? I'm a liberal intelligent who supports the state although it sounds as an oxymoron. Sergei Roy, the editor of intelligent.ru (you find the English version of this site at the sidebar) defines it better than I do. Here's his thoughts about the poor state of Russian liberalism published by Peter Lavalle's Untimely Thoughts.

Putin is indeed a statist, and thus the opposite of liberal, in that he has stopped the country rolling along an inclined plane into the abyss of disintegration. By the end of Boris Yeltsin, the Liberal Pretender’s, rule, Russia was fast becoming an assemblage of fiefdoms that were “territories of free hunting” (Khodorkovsky’s phrase) for oligarchs/barons of two types, regional and financial-industrial, without a clear demarcation line between them. It came to pass that the biggest and the most impudent of these, Mikhail Khodorkovsky, made a grab for ultimate political power, buying the services of 250 deputies of the Duma and preparing to sell to a U.S.-based transnational 50 percent of the biggest oil company in the land, which would have put him beyond the reach of Russian law.

Putin put a stop to that, in the nick of time, and did some other things to restore the notorious “vertical of power,” which on closer inspection proves nothing more nor less than a functioning system of governance securing a more or less unified legal, political, and economic space.

What about Putin, the Statist Pretender’s, liberal credentials? Alas, they are no better than his predecessor’s. Although some of the oligarchs have been slapped into line, the oligarchy as a system of post-communist order is still with us and, which is more, it is thriving. Some of the members of Putin’s government – Mikhail Zurabov, German Gref, Viktor Khristenko – enjoy the tags of liberals, or neo-liberals, or radical liberals. In my view, these appellations can only be applied to these people if the word “liberal” has irreversibly passed into the swearword section of the Russian vocabulary. Monetization of social benefits was one example of their liberalism, housing and utilities reforms will be another. As a result of these liberal reforms, oligarchic profits (say, Zurabov’s pharmaceutical interests) will swell, while the populace at large will find itself in a still harsher grip of those oligarchic interests and at the mercy of the state’s handouts. Liberalism, forsooth.

I have stressed in the above the primary tenets of liberalism: freedom from state intervention and control over the sovereign individual’s affairs. In Russia, this principle has undergone a fantastic perversion: an owner or top manager of a company is free from state control and intervention precisely because he himself is the State – a government minister or a member of the President’s Administration. That’s what oligarchy is in a nutshell. And that’s what we have.

A few words on the subject of Russia’s political parties and liberalism – simply because they do not deserve more than a few words. I will leave Vladimir Zhirinovsky’s Liberal-Democratic Party entirely out of account; it is the proper provenance for the Public Prosecutor.

The Union of Right Forces, or SPS: Headed to this day by the founding fathers of oligarchic capitalism, it is a graphic illustration of the perversion of liberal principles, as described above. Chubais’s call for a “liberal empire” is a classic, in this respect: it will be an empire for a few “liberals” up top, just as it is now, and the masses vainly awaiting liberation from the slavery of poverty, at bottom.

Yabloko, the left-leaning branch of the liberal intelligentsia: For one thing, it is tarred with the oligarchic brush, much as it would like to expunge that memory. For years it fed out of Khodorkovsky’s hand. For another, it has shown a readiness to take Russian liberalism to a point at which Russia would simply disappear. During the 2000 presidential campaign, Anatoly Chubais had every right to call Yabloko head Grigory Yavlinsky a “traitor,” very publicly, on NTV, because of Yavlinsky’s stance on policy vis-?-vis Chechnya. I would hate to agree with Chubais on the time of day, but here he hit the nail right on the head: any concessions in the matter of Chechnya’s independence mean one thing, and one thing only – wave after wave of Islamic fundamentalism hitting Russia from the Caucasus, threatening to split it right down the middle, along the Turkic-populated regions of the Volga. As president, Yavlinsky would one day be crowned with the same laurels of Russia’s destroyer as Mikhail Gorbachev and Alexander Kerensky before him, not counting the scum that started the Times of Troubles.

So, aren’t there any true liberals left in Russia? There are. We are simply looking for them in the wrong places.

One locus is the same as decades and hundreds of years ago: the liberal intelligentsia. True, its role is pitiful right now, reduced to criticizing the current state of affairs and preaching to the younger generation that things can be different from the existing heap of manure as long as they keep the faith. A sad role, but a necessary one, and there are enough memories to sustain the intelligentsia in this role; it has seen much worse times. Words can barely say just how much worse they were.

The other agent is a much more robust one: the non-oligarchic capitalist. His fate is perhaps even worse than the pensive intellectual’s, for it is he who has to grapple with the forces of the bandit bureaucracy, the pressure of bandits in the more traditional sense, and of oligarchic monopolies. These people would be very much surprised if you informed them that they were the brightest hope of liberalism in Russia. Yet that is a fact. Of course, they are mostly extremely rough diamonds, their esthetic taste is abominable – you only have to look at the “castles” they are building all around Moscow or any other city. But, as Anna Akhmatova said, “If only you knew out of what garbage poems grow, unaware of shame.” Liberalism seems to be akin to good poetry, growing out of garbage. Among other things.

Opponents of President Vladimir Putin are calling for an investigation into his links with a German banker who was exposed last week as a former East German spy.

Documents uncovered in a Berlin archive revealed that Matthias Warnig, 49, who played a leading role in the controversial forced sell-off of part of the Yukos oil giant, was once an agent of the East German secret police, the Stasi.

Seems as although the logic of the Mostelecom deal is pretty strong that there is no great strategic or tactical plan for it. Another wasted asset.

Technorati Tags: Broadband, Cable, Company, Russia

Seems as although the logic of the Mostelecom deal is pretty strong that there is no great strategic or tactical plan for it. Another wasted asset.

Technorati Tags: Broadband, Company, Cable, Russia

The painful death march to a fully-tradeable Gazprom share gets a step closer Duma passes foreign ownership changes for Gazprom. The ultimate in the no news story. I wonder what the government will use to keep the financial community happy after they finally pass this in to law when they do something truly stupid (again.)

Some of the most powerful bloggers on the future, or lack of it, for the telecom industry have had a real go at Skype recently.



Here from Om Malik on legitimate comments on Skype 2.0 (albeit as a Mac user I had to kick an analyst off his PC for a while to play with it - no worries we don't pay him to have a life so he did not mind staying late anyway.)



Here from James Enck on the Yahoo offering and Verso's Skype-blocking.


And then one from Andy Abramson suggesting a little unease inside the company. As James has it the comments emanate from the West Coast and make significant reference to problems in the Estonian development center.


I have no reason to like or dislike Skype as a company (I have a different take as a technology and a further view as a service) but have an opportunity to sell a voice-engine that could replace the stranglehold that GIP's has on Skype so am always interested in a bit of salacious gossip.


Being somewhat closer to Estonia than the esteemed bloggers of the West Coast it was a little easier to have a same time of the day conversations with friends of friends. For those of you who are interested Estonians are a strange mixture of Swedes without the welfare state and Russians without a bottle of vodka. It makes them somewhat reserved and very self-sufficient. If your only interaction with an Estonian of any kind was Steve Jurvetson then you would be very surprised to meet a real Estonian. Steve would also throw many aliens off track if they captured him as a representative of the human race.


Anyway the local Estonian take on the unhappiness in Skype's ranks does not seem to ring true with the Estonian R&D center. Yes its strange having a bunch of strangers constantly wondering through the office - but changes seem to be minimal at the programmer level. There was also a little head scratching at the management change in London allegations.


Now I am not a Skype insider and I was fishing for information on the role of GIPS as a core part of the Skype offering so lets not pretend that I was getting all the story, but it does not fit with what is being blogged as gospel truth.

Technorati Tags: Broadband, Skype, Technology

Mostelecom (Mtk), the inappropriately named carrier of free-to-air television to the older apartments in Moscow has been acquired by Nafta Moskva. Nafta has now acquired Mostelecom and National Cable Networks (can't find a link to the story) in the past 6 months.

Mostelecom pipes between 8 and 14 free-to-air channels to about 3 million Moscow households, the cable network overcomes the frequency and power issues that free-to-air broadcasters cannot overcome from the Ostankino tower. It's a slightly strange network in that Mtk broadcasts to a series of mini-headends around Moscow which then pipes the signal in to the housing blocks via some very old and crappy copper coax. There is no upgradeable capacity in the network. Mostelecom's value is its rights of way access to (admittedly not the best) homes in Moscow and about $6mn in monthly revenues. Which assumes that Moscovites pay their utility bills.

The salacious gossip is that the real purchaser was not Nafta Moskva but the previous TV Minister and VI shareholder, Mikhail Lesin.

Technorati Tags: Broadband, Russia

One of my favourite ongoing stories has a brief pre-New Year flourish. Which was of course denied by the MinSvyaz. Also reported in the Moscow Times, but as their archive policy was created by a half-wit in the middle of a zapoi there's f**k all point linking to it. This time it's the WSJ, whose online policy was also designed whilst in the middle of a zapoi (uncertain of my grammar here), who have picked up the investigative torch from the FT.

In trying to find a news source that had heard of Web2.0 I found this piece from Tass on Aton's website from July 2005. The pertinent quotation is:

"So far, it seems that Galmond, apart from the Commerzbank managers who have already fallen on their swords, is the one big name in the investigation truly in the firing line."

"In 2004, the same Zurich Arbitration Court now demanding further investigation into the actions of Commerzbank, Galmond and Telecominvest, made a partial ruling that IPOC Growth Fund Ltd. had not completed the option for the purchase of CT-Mobile, and that Galmond had been guilty of falsifying documents."

Technorati Tags: Corruption, Reiman vs Alfa, Russia, Telecom

"Was She Pushed Asks Humpty Dumpty"

Not sure whether this is internal politics, monumental arse licking or active suggestion I don't know. As I posted earlier there is no freedom of news broadcasting. Anyway another one bites the dust. Head of Russia’s Last Independent TV News Service Resigns.

Technorati Tags: Russia

I know I really should have been a Sun headline writer.



James Enck on NTL making a formal approach for Virgin Mobile.


Either that makes Renova's acquisition of Korbina (see previous post);

1. Prescient


2. Ahead of its time


3. Not a bad deal but massively over-priced


4. Stupid

"no respite from the deflationary spiral which is our beloved UK telecom market"

Technorati Tags: Broadband, Russia, Telecom

I posted a while ago about the phenomenon that is the outsourcing at the FSB. It took a while for the NY Times to run it past its lawyers but here's the fuller story.

Technorati Tags: Corruption, Russia

Without getting overly cynical about a member of the Federation Council worrying about DVD prices this is a follow-up piece to My Friendly Local Video Kiosk Is Under Remont and tangentially about Korbina. Daniel Nezerov commented in effect that Hollywood's business model is broken. And to be fair to the VC blogosphere so has everyone else. This piece in the Moscow Times quotes a member of the Federation Council saying that there is little point trying to stamp out piracy if the narod cannot afford to buy licensed DVD's.

Being sure that Hollywood's business model is broken is very different from knowing how to make money from remaking it. It is now a pressing issue. As I pointed out in the Korbina link hi-speed internet ARPU's are on their way from $22 (ex-VAT) to $15 per month over the next three years. Additional services are essential to milking leveraging the investment in the network - however cheaply and well made they are.

• 1. 14 channels of free-to-air
• 2. No meaningful cable only content
• 3. Must-carry provisions
• 4. The historical development of cable in Russia where crappy 250mhz networks carrying no more than 14 channels

So if film and Hollywood content is the way to lure customers to buying premium packages, sports being the way, and the most recent blockbuster is being sold in every kiosk at Rbl90-120 ($3-4) what should the answer be and how should it be delivered? The simple answer is to make it easier to buy licensed than pirated; and that does not mean making the pirates go underground it means making licensed content really easy to pay for and watch. Whenever, however and over whatever medium. Acknowledge that however strong the DRM (an anti-consumer 4 letter word) protection someone will find a way to rip it off. So be it; as long as content is being sold at a fair price in a way that allows the user to view it as and when he/she wants then the needle will swing (violently) toward licensed versions. If iTunes isn't a lesson in fair-(ish) use there was no lesson.

I asked the head of Micorsoft's business in Moscow how she felt about competition from Linux about a year ago. Not bothered she said. I awaited the M$FT bullshit. She followed up with the view that her competitor was not Linux, OpenOffice (whatever) but pirated versions of Office et al at $10 for Office. Good point well made. The analogy is not easy to make but the point is the same. The competition is the most efficient business machine. It's input cost is close to zero and will charge whatever it can get away with. It will invest nothing in marketing or customer relations.

OK so that was the easy part; Hollywood busted, Russian piracy, poor cable TV uptake, booming consumer market. Any half-baked hack can write that part. The answer that makes money is so much harder than the question. In an environment where the only thing that costs a $ is a $ there are precious few opportunities to play the Hampton Court Maze game. The only way is forward.

Is it better to be the market leader setting the trend or the guy who has the subscribers and an open mind? Answers on a postcard please...

The technical answers are relatively simple; I just can't see the business plan without Hollywood's backing. And that's not an option to bet your hard won cash on.

Technorati Tags: Broadband, Content, Corruption, Innovation, Russia

I really like - but I live in and for email so it joins one other account in Apple's Mail as a POP download. Though when I have a bunch of Gmail mail to deal with I'll switch to the browser and work in it. And I love the GMail in Basic HTML view. It feels really clean and to me (de gestibus non est disputandum) way more intuitive.

Group of Private Equity Firms Launches $36.12 Billion Bid for TDC. A collection of very smart people spending a lot of OPM to buy an old fashioned telecom company.

Are old fashioned telecom companies really a stable source of cash flow? Who do you sell it to?

Technorati Tags: Company, LBO, puppy, Telecom

The very clever Mr. Nash of Renaissance Capital opines that in fact the glass is half full. As he is very clever it has to be admitted that he has more than half a well argued point. It is unlikely that the Chinovniki will be any more successful at running car companies than GM for instance, albeit with lower health care costs. So let them keep their heavy machines and extractive industries and let us get on with retail banking and providing services to consumers.

My problem with his argument is that I spend most of my life (the part when I am not I am either asleep or trying to be) interacting with the the owners of the new businesses that drive VVP's economic dream. As the big bosses get their hands around such giants as Kamaz and Avtovaz (and they are welcome to both - as a Brit they equal the quality that was once Leyland, remember it? Exactly) the junior bosses are getting hungrier; the price for delivery of a container through Kotka, Finland before the end of the year increased Monday 1.8x (that's 180% for those of you who prefer stats that way). Of that 180% increase about 30% can be paid white i.e. it can be officially paid and can therefore be deducted from Net Income, in addition a special delivery by New Year price was introduced on the same day of $450 per container. So let's be clear - you could pay the 180% price increase and the risk is that the container would not make it in time for the big buying season unless you pay another $450 per container, or in reality $596 as it cannot be deducted from Net Income.

These rapidly growing businesses are always looking for more cash. In the absence of reasonable bank lending (in particular inventory financing) the private equity guys would appear to be a good port of call. But they demand that the businesses run on the white side of grey-white. Meanwhile their competitors turn to government-sponsored money and run grey-black under the quasi-government roof. Good management will win out at the end of the day, whichever way the business is run - it's just remarkable that they tend to be at the whiter end of the spectrum. But in the meantime unequal competition means that sticking to the clean road is not always easy.

The State also impacts entrepreneurial business through its access to cheap money. An infrastructure company I am a shareholder in, and board member of, was offered a 5 year 9% loan with 2 year capital repayment holiday by such a Government sponsored company. That's LIBOR plus 3 for a business that will generate $6mn in revenue in 2006 and will invest every $ it can gets its grubby hands on. In a WACC calculation that means the debt is cheaper than the equity. Not that WACC calculations are worth the time calculating, but that's another story. That's one hell of a market distortion.

So my glass remains sceptical.

Technorati Tags: Company, Economy, Russia

Today Gref announced the formation of 6 special economic zones. I was asked to get involved with a putative bid in Academ Gorodok in Novosibirsk which failed and with the Dubna effort which subsequently succeeded and two others that never got off the ground in Moscow. I turned down all the invitations as it was clear that the real reasons behind the bids were either fantastically idealistic (i.e. had not a cats chance in hell of succeeding) or were designed to assist companies that had political clout to make money on a. real estate and b. by lowering taxes on already profitable businesses or c. assist high profile unprofitable businesses compete unfairly against lower profile profitable ones (hint: if the CEO drives a new Merc and you lose $2mn+ a year the formula should return an ERROR.

It would be fair to say that Zelenograd SEZ will not assist micro-electronics in Russia nor will Dubna assist nuclear and physics technologies (sic). Dubna will find a way to build an offshore programming center which will fail to challenge Bangalore and Zelenograd will become the center for the manufacture assembly of PC's, notebooks and servers.

But the best job to get is the real estate developer. Funnily that was never on offer.

BTW my mood and the weather are in lock step and I will retain my heightened level of cynicism for one more month until I run for the sun.

Technorati Tags: Company, Innovation, Russia

According to Kommersant the reason is an order from on high to cut down on piracy. My friendly video kiosk is in the underpass that sits directly in front of MID (Ministry of Foreign Affairs) and could be relied upon to provide a never ending host of truly crap movies. You have to imagine that a number of WTO negotiators passed through the hallowed doors of MID and might have had a reason to go through the underpass.

Kommersant come up with two principal reasons both of which are probably true; firstly WTO negotiations are reaching the tipping point so Russia needed to show that it was serious about clamping down on piracy. Secondly because the Prosecutors office has pushed the Militsia to show that it can actually do something about economic crime that is just mildly obvious.

It seems that most of the kiosks closed themselves down following a friendly hint from the local police. Time to keep your head down as the Militsia will need to replace their income sources.

The interesting fact that most of the retail points was locked up by owners themselves –that was their response to the action. “Those, who stayed open, took off all counterfeited merchandises and currently sell only licensed Russian games. Those, who sells DVD has only licensed copies of “9th Regiment,” the owner of the kiosk, which is located near Komsomolskaya Square, told Kommersant. “I don’t know when all this would be over. Some people say on Wednesday and some after the elections in Moscow City Duma.”

I love the Russian cynicism about their imminent return - maybe Wednesday....

I am not sure that I understand the point that they are making about the conflict between the Prosecutors Office and the Militsia (copied below for your enlightenment). Needs to be read in the original. The Prosecutor's office was the main instrument in the attack on Yukos (no link required) but if it is going to push the Militsia in to doing their job I might even be marginally less cynical about them.

"According to another point of view, the large-scale police operation is a consequence of the conflict between the General Prosecution of the Russian Federation and the Interior Ministry of RF. In September of this year, General Prosecutor of RF Vladimir Ustinov harshly criticized police for their inability to fight with pirates. “The antagonism between Interior Ministry and Prosecution over the investigation of the crimes for Article 146 of Criminal Code, is widely known. The quality of investigation documents provided by the police to prosecution in the pirate cases is awful,” Yuri Zlobin, head of the association Russian Shield. “I think, that in this case Interior Ministry wants to prove prosecution that it can fight effectively with pirates. The ministry hopes that after this action the law would get an amendments, which would allow police investigate these cases by itself (currently it is a competence of prosecution –Kommersant). Then, police would have a better ratio of cracking media pirate cases because it would collect the evidence, interrogate suspect and make arrests without constantly asking Prosecution for orders.”

Technorati Tags: Corruption, Russia

MosNews reports that TNT has taken Olga Romanova off the air allegedly because she reported that Sergei Ivanov's son would not be charged for killing a elderly women whilst driving. You would have to look pretty hard to find that piece of news in the Russian language.

It does not mark the end of free speech on broadcast television; it was already dead. It is however, another example of the 5th directorate thugs believing that they can control the flow of news when it proves to be embarrassing. The good news is that the Russian narod are at least 2 steps ahead of the thugs and no longer get their news from the television.

The king of broadband comment correctly points out that there is the beginning of a VoIP shakeout. To give him his due he is rarely wrong and admits it when he is.

I think that the more nuanced message that should make itself heard above the din of badly researched acquistions is that very few pure VoIP service-providers pretending to be pure communication devices will survive the death rattle.

I do like the technology that underlies the game. Global IP Sound is a little overvalued (work out the link) but there are others that have been built with smart engineers with an eye on the web and telephony that will make their owners a small fortune.

Technorati Tags: VoIP, Technology

This plain stupid. Victoria found some gas in Eastern Siberia (ergo no infrastructure) in a country where gas is uneconomic sold domestically and export gas is sold by Gazprom, which also controls the pipelines. Meanwhile, value trebles. Go figure.

Technorati Tags: Russia, Gas, Oil

I have been a little quiet in the blogging front due to the pressure of work (and the fact that it is dark in the morning which makes getting out bed difficult).

However the purchase of Korbina Telecom by Victor Vekelsburg of Renova fame forces me back to the keyboard.

As the Kommersant article points out a part of the Renova empire is the de facto majority shareholder of Comcor TV or Moscow Cable Com a NASDAQ listed entity (MOCC). For the financially-minded amongst you ignore the per household stats which are a result of thin liquidity not meaningful numbers of around $178 per household passed. MOCC's own stats page highlight the difficulty in selling premium pay TV services to a Russian public that already has access to 14 (or so) free-to-air TV channels. The problem is exacerbated by the lack of meaningful premium content. Discovery TV can be entertaining but it does not create a ROI on network investment.

Korbina, like its privately held competitor, Korvette Telecom (Russian only) (you will find both under the moniker of Corbina and Corvette Telecom K in cyrillic is C in English) (disclosure - where I am a shareholder), is deploying 10/100 gigabit ethernet networks in the sleeping regions of Moscow providing high-speed internet connection to retail subscribers. ARPU's (including VAT/NDS) tend to be in the $22/month region. In the longer established regions penetration rates are around 18% of households passed.

MOCC on the other hand employs a traditional hybrid-fiber coax ("HFC") network. Comparable capex per household passed seem to be $60-ish for MOCC's HFC network and $17-ish for the ethernet network. A recent network audit of the ethernet network by the previous director of network at UPC Broadband was exceedingly enthusiastic. Very simple (stupid) networks with high-throughput potential, well-engineered and very cheap to maintain. Today these ethernet networks only offer retail internet and provide no other services. It is clear that ARPU's will drop over the next 3 or so years to around $14/month so other services will have to replace the lost revenues. There is work ongoing and I would not be surprised if one or other of these companies becomes a trial user of meaningful IPTV-type services.

Possibly a good example of a technology leap-frog? The question to me is whether this will create a meaningful competition to the weight of money behind MOCC and StreamTV, part of the Sistema Group (Russian only.)

I bumped into MOCC's COO in the gym yesterday; whilst he was aware of the Korbina purchase there is as yet no explicit desire to merge Korbina's internet business with MOCC (Korbina is also a MVNO). I hope it stays that way for a while as a MOCC-Korbina merger employing ethernet networks would be a major competitor, in a market where there are already enough well-funded but customer unfriendly players.

Meanwhile the ante-deluvian Mostelekom (Russian only) is being fought over. Mostelekom connects 2.5 million of Moscow's approximately 4 million households with very old copper. If some real oil money gets behind it a large part of the market will be cornered.

Technorati Tags: Russia, Emerging Markets, Broadband

From the omnipresent Om Malik on the The Bill & Ozzie Show. A bunch of people more qualified to comment than I have done so - so I won't on the story. But I will on the process. As Om states;
So Bill Gates and Ray Ozzie dropped two memos to the Microserfs, and then somehow they got leaked to the media and more importantly to Dave Winer.

Which is pretty much how I read it on the FT with my muesli this morning - that it was leaked to the mainstream press as a strategy and therefore was not a leak. If it had been a real leak the first people to have reported on it would have been the blogosphere. It was supposed to be a clever piece of marketing that not only failed to hit its mark with me but achieved the opposite aim.

Could the marketing department consult with Scoble before launching a bollocks strategy like this.

Technorati Tags: Phyrric, Technology

It has been 13 years since the Soviet Union added the moniker former. However, I am still asked by acquaintances outside Russia about our ability to get hold of things. As if we spend half our lives in food queues. For the longest time we were unable to get hold of "english" sausages. This problem has been solved by our friend Rostov John. Proper, as opposed to American-type, bacon is still a problem, as is Marmite. As you can see what I miss here is cultural, not shortage-created - god forbid in this city which worships consumerism.

Bread however, good bread has always been a scarce resource. Local bread has a certain similarity to the northern German variety, hard and not great for a bacon sarnie - something to do with flour varieties. There is also a hangover from Soviet days when the rumour was put out that fresh bread was bad for you. My (english) father-in-law was told the same thing during post-war (WWII) rationing. The idea being that you finished the last bread before starting in on the fresh stuff. Hard and semi-stale bread is not a great mix.

Life has just got marginally better. This post is accompanied by a cup of espresso, freshly-brewed at home, and a chocolate croissant from the new French Bakery. Not quite as good as the real butter variety I consumed in New York last week but pretty damn good all the same.

Time for another.....

Technorati Tags: Russia

That old chestnut - how do you measure innovation? From the FT (don't think that it's subscription only).

"The warning should be heeded by those western observers who, dazzled by China’s rise in basic manufacturing, breathlessly proclaim it is destined to become a global leader in science and technological innovation."

Technorati Tags: Economy, Russia, Technology, Venture Capital

With thanks to Siberian Light for this one British Petroleum - Kremlin secrecy talks:

A lot of stuff from MosNews the long and short of which is.......The best outsourcing company in the world ever, otherwise known as the FSB scams itself more revenues.

A source close to TNK-BP said that the company was forced to replace foreign directors and to outsource all the work with maps and secret information to Russian companies.

To be frank the scams just get more pathetic. Look for the line in TNK-BP's accounts in 2006. Fees paid to useless idiots to do nothing in order to keep some malignant form of government of our backs.

A company who uses my services is raising money at the moment. The company imports stuff, quite a lot of it really. A potential investor wants to know how "white" they are.

a - "Except for customs; completely...."

q - How much does it save you

a - nothing

q - why do you do it

a - because we like our goods to arrive in the same millenium

The rules have changed recently - now the real rules are applied. It just costs more to get a certificate that badminton rackets are not dangerous ($1,000 per consignment through DME) and storage costs for non-storage in customs now equal 60% of COGS. All in costs to play according to the rules - "other" in COGS = 90% of COGS.

Long live the Chinovniki.....

Technorati Tags: Company, Corruption, Russia

Start with a large one. Screw your best friend. Have him made persona non grata. Invest in a President to ensure that your stay-out-of-jail card remains valid. Invest in a football club. (Employ a bunch of useless bankers, sorry the first letter was a w) and at the end of the day, or at the end of the end.

A SMALL FORTUNE.............owned by someone else.

However, Sauer believes the motivation is simpler. He lives in a posh suburb of Moscow, where his son plays football with Abramovich's, and after 16 years in Russia he is an anthropologist of the oligarch tribe. Sauer explains: "These people have money, but they don't have status, so what do you do? You try to acquire status. In 1920s America there were tycoons who did exactly the same. They bought newspapers, went into art, that sort of thing

Oil Money Pumps Into Football - and who said I could not make it as a Sun headline writer.

p.s. congratulations to Derk who got out without selling his soul. Unlike his successors.

If you care I live here. Who says there is no free press.

Interesting piece from Wired on blocking Blogs from Investment Banks. No Longer Safe For Work: Blogs. Not necessarily because it says anything that we don't know about Investment Banks ability to bury their head in the sand, but because of what James Enck has to say about the value of research to his buy-side clients.

The sort of research that I mostly require comes from Blogs. From time-to-time I need hard numbers, but mostly I need smart people to think about how the future, both immediate and medium-term (tomorrow to 5 years). People such as James do a great job of doing that.

From today's FT. It requires subscription so I have pulled out a line. There remains a mental block amongst the political elite that the Narod have a sort of mind of their own. It can be influenced but is increasingly resistant to manipulation. The greatest risk to economic stability is a failed transition of power.

Manipulation alone is not enough. Real appeal is required.

Khodorkovsky Sent To Remote Siberian Camp:

"Our country is headed by small-minded, vindictive people. Mere revenge -- that's the only motive."

Pretty difficult to be any clearer about the Fifth Directorate Thugs.

What's the Difference Between a Developing Market and an Emerging Market



None; they both make money. A grab from the front page of this evening's FT.com

Technorati Tags: Emerging Markets, Russia