Putin Needs Neither War Nor Peace in Ukraine

[Purveyor]

Apr 29, 2015 10:05 AM EDT
By Leonid Bershidsky

Russia's toxicity for investors is suddenly so 2014. Western money is returning to Moscow's equity and bond markets, and private Russian companies are again able to borrow, albeit at a premium to Western peers.

The main cause for this reversal of fortunes is the cease-fire in Ukraine, even though it isn't really holding militarily or moving forward politically. That's a paradox that may shed light on how events in eastern Ukraine will develop.

The Wall Street Journal reported Wednesday that "investors have taken Russia out of the penalty box." According to the global fund tracker EPFR, the influx of cash into mutual and exchange-traded funds targeting Russian securities so far this year has almost wiped out last year's outflow. Indeed, the rebound in the Russian stock and bond markets since December's panic over a free-falling ruble has been spectacular:


russia_leonid

This can be explained in economic terms. The ruble is the best-performing major currency so far this year, having gained 14 percent against the U.S. dollar. That's mainly because the oil price, all-important for Russia's fiscal health, has stabilized at a higher level than doomsday prophets predicted -- above $60 a barrel of Brent crude. And Russian economic data, while hardly encouraging, don't indicate an impending collapse. So why not give Russia a chance, especially since it promises higher yields than most other big markets?

International lenders led by Societe Generale, ING and Natixis have just provided $530 million to Uralkali, Russia's world leader in potash production, at 3.3 percentage points above the Libor benchmark rate. European companies with similar credit ratings pay less than half that premium now.

more...

http://www.bloombergview.com/articles/2015-04-29/putin-needs-neither-war-nor-peace-in-ukraine

[Igel]

1. Of course.

It's a near-universal among most educated Westerners. Talk morality, ethics, etc., etc., but what really matters is money and convenience.

The only time that morality and ethics matter is when compelling others to do what you should do--it's unfair to be moral in isolation--and it's esp. useful when there's a way to make money off of compelling others to do your right thing.

Putin's seen this several times. "We must not allow this horrible thing." Then, in less than a year, the attitude becomes, "Ah, it's not so bad. Just 25k dead, we can live with that, it's an acceptable sacrifice."

And, yes, that was my opinion of the sanctions regime put in place last year. We support defending our morality, but only when it gets other people we really don't care about die.

(Not all Westerners have the same simplistic value system. There are two large-ish ones "out there." But most educated Westerners look down at rubes with a more complex, less money-centered, values system.)

[Blue_Tires]

2. So does that mean all those striking/laid off workers get paid now?