Re: Kvetching, was Sarkozy, France etc
On May 8, 2007, at 6:22 PM, Chris Doss wrote:
Alberta did not spend the 1990s collapsing like a popped soap-bubble, was not ruled by the Mob, and did not have a civil war going on.
Financial Times - April 24, 2007
Financial boom in Russia will ‘end in pain’ By Stefan Wagstyl, East Europe Editor
Russia’s financial boom will come to a painful end “in the near
future”, a London banker with long experience of the country warned
yesterday.
After seven years of growth, Russia was reaching its capacity limits
in an expansion fuelled by credit, much of it from foreign markets,
said Hans-Joerg Rudloff, chairman of Barclays Capital, the investment
banking arm of Barclays.
“It is a boom which is not sustainable and I have to warn
people . . . there will be downturns. There will be more
difficulties,” Mr Rudloff told the Russian Economic Forum in London.
While many bankers disagreed with his prediction, others recalled
that Russian markets had not suffered a serious downturn since 1998
and might be ready for acorrection.
Bank credit in Russia leapt by more than 30 per cent last year with a
90 per cent rise in retail lending, the fastest-growing sector.
Mr Rudloff said: “Financial markets will always react
excessively . . . There’s no soft landing after such excessive
rewards and . . . I would say the last seven years [have been]
rewarded somewhat excessively and . . . the present boom will be
penalised somewhat excessively in the near future.”
Mr Rudloff’s words are significant because he has generally been a
supporter of the economic changes under President Vladimir Putin. He
seems to enjoy the Kremlin’s confidence and sits on the board of
Rosneft, the state-run oil group.
Mr Rudloff said the predicted downturn would not divert Russia from
its long-term economic development as long as it remained on the
track of international economic integration.
He also took a swipe at western critics who complained about the
Russian state’s strong economic role, saying economic development was
only possible where there was stability.
State intervention had played a key role in the economic development
of Germany and France after the second world war. In Russia, the
whole population was now benefiting from the country’s “extraordinary
economic development”.
Natalya Orlova, chief economist of Alfa Bank, a Russian bank, said Mr
Rudloff’s fears were exaggerated. While retail credit was growing
rapidly it was expanding from a small base, with retail loans
equalling just 8 per cent of gross domestic product. “While certain
banks may have problems, they are unlikely to damage the entire
banking system,” she said.
Several leading Russian government and business figures pulled out of
the conference at the last minute after a Kremlin intervention.
Jean Lemierre, president of the European Bank for Reconstruction and
Development, said: “It’s not by isolation that we make progress.”