Isolated, Impoverished, Backwards Russia

You already knew that Russia has an utterly pathetic, puny level of Foreign Direct Investment in its economy, roughly half that of tiny nations like Netherlands and Belgium, and that its level of FDI has been falling consistently under Vladimir Putin.

Maybe you even knew that things were so bad that the Russian Kremlin is actually bribing foreign investors to sink their cash into Russia.

But you still didn’t know how bad things really are. Because Ben Aris of the Financial Times reveals:  “Russia has a woeful record when it comes to investment. According to a paper about to be released by Aton, a leading Russian investment bank, some 70 per cent of all foreign direct investment into Russia comes from offshore havens – meaning it is Russian flight capital returning home.”

You read that right:  70% — seventy percent! — of all money Russia counts as FDI is in fact just money that is brought back to Russia by Russians in connection with capital flight, that is, money that’s now needed for spending purposes and is recovered from its hiding place. In other words, it’s an illusion!  So the true level of new money sent to Russia by foreigners who believe they can make more money in Russia than other places is so tiny that it’s barely measurable, comparable to a backwater like Chile or South Africa.

This is what Russians have given themselves by choosing proud KGB spy to govern them:  isolation, impoverishment and backwardness, for the foreseeable future.

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Rob Minto of the Financial Times is a Braying Jackass

Rob Minto, the braying jackass

It’s shocking to see such childish and idiotic financial “analysis” being produced by as lofty a source of financial information as the Financial Times of London.

Writing on the FT’s “Beyond BRICS” blog, Rob Minto claims “Russia is not as unequal as you think” based on a report he read (but does not even take the time to link to, really shabby stuff) from Russian stock brokerage house Renaissance Capital.

RC used Gini coefficient analysis to produce a chart that, apparently, Minto did not even take the time to read.  The chart plots the positions of 22 different countries based on per capita income and Gini rating for economic inequality.

Apparently they haven’t learned to count yet over at the FT, because only five countries out of the total group show more economic inequality than Russia (South Africa, Brazil, Chile, Mexico and Argentina).  That’s right, sixteen of the 22 countries showed less economic in equality. Russia stood in the bottom quartile of the group, yet Minto, a braying jackass if ever there was one, thinks this proves Russia isn’t that unequal after all.

And that’s only the first gaping flaw in Minto’s analysis.

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