Tatiana Dementieva
What can discourage you from reading “Putin's Russia and the Big Lie”, an article published in The American Thinker. First of all, it is the author’s name - Kim Zigfeld. She is an anonymous personality who constantly writes anti-Russian articles in her blog called “La Russophobe”. She writes a lot, with most of her “masterpieces” being full of nonsense.
Some experts say that she is a Russian emigrant who hates Putin and Russia. They say Kim Zigfeld is a diagnosis, not a name. The American Thinker has published a lot of anti-Russian articles. Why did Market Leader focus on this very article? You will find this out in a minute.
The major though of the article is the statement made by George Soros during the World Economic Forum in Davos, "Investing in Russia, I think, is a big mistake. The Putin regime doesn't respect the rule of law." Obviously, Soros is a very influential personality among investors. Therefore, Kim Zigfeld could abstain from righting a whole article, it was sufficient to quote Soros.
Quote Soros If You Have Nothing To Say
Kim Zigfeld’s article is full of negativity towards Russia and Putin. The author writes that the Russian economy is about to get a knockdown because of bad management, capital flight, brain drain and poverty (“And even by that miserly standard, there are 400,000 more Russians living in "poverty" today than there were in 2007…”)
As for Putin himself, the author believes that“If half of Putin's strategy is to lie about the Russian economy, the other half is to silence those who would tell a different story.”
Pros and Cons
Some experts are convinced that Soros’s statement is a bad sign for Russia. It may scare some investors away from the Russian economy. They say Soros’s words should be taken into account not only because of his authority in investment circles but also because he is an independent (and therefore unbiased0 person. Unlike, Putin, Soros doesn’t need to lie in order to stay in power.
They say that the previous market drivers - state support and consumer demand - do not work anymore. The industrial production is stagnating while the GDP growth keeps slowing down. There is a lack of highly skilled workers, the infrastructure needs improvement.
Moreover, the Russian economy is a resource-based economy. Most of the country’s GDP comes from the export of energy carriers. Moreover, Russia is highly corrupted. There is a lot of administrative barriers, the institutional environment is poor. Nepotism leads to poor selection of professionals.
The weakness of the Russian Ruble is believed to be another major issue.
However, when it comes to currency exchange rates, the DFWA Department of offers to use its own methods to evaluate the prospects of the Russian currency.
The new technical analysis developed by Masterforex-V suggests that USDRUR is developing a bearish wave pattern. At this point, the price is forming wave 3. A major level of support is nearby. The price is expected to suspend the downtrend around 29,40-29,50 and to recovery by 1-1.5 rubles.
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To make the long story short, they say Russia should start structural reforms immediately in order to preserve its economic viability and to attract foreign investments.
Others say that Soros is wrong. They say smart investors can decide on their won whether to invest in Russia. All the counterarguments can be reduced to the following statements:
Soros’s arguments are subjective. In 1997, Soros bought 25% of Svjazinvest’s stock by paying $1,875bn for it. After the 1998 crisis in Russia, the stock devalued by 50%. Soros called it the worst investment decision of his life. They say he has been negative towards Russia since then.
If the West criticizes the Russian authorities, this means that the Russia is actually getting stronger.
Over the last few years, there have been many doomsday predictions concerning Russia and its economy. However, all of them have failed so far.
The economy is actually developing. Mark Adomanis says that the Russian economy is far from collapsing. The country’s currency reserves are substantial (25% of GDP). There is a budget surplus, By the way Russia is number 14 on Bloomberg’s new list of the world’s most innovative countries, which is the highest position among all the BRICS economies. Even Poland, which is an EU state, is only number 30.
That means that Russia will keep attracting new foreign investments. It is an emerging market which means that even despite bribes and kickbacks, investors still can make decent profits by investing in Russia.
At the same time, Soros doesn’t care about investors. He simply dislikes Putin and Russia.
Still, it is up to you whether to believe Soros or not…
Tatiana Dementieva
