Jul

7

About a year after the Berlin wall fell, I found myself in Bucharest screwing around with the flying hydraulic knife of a continuous casting steel mill my dad had designed a dozen years before. I ran across an old buddy that had switched jobs and was tasked with finding investment opportunities for a FBC fund run by Mike Holland.

We meet in the lobby of the hotel he was staying at and he asks me if I want to go to Warsaw the next day. So we catch a morning Aeroflot flight to Warsaw. I ask the stewardess for OJ and my buddy asks for tomato juice. She pours out half a glass of orange juice and half a glass of tomato juice and then grabs a bottle of vodka that and poured a shot into both.

My buddy says, ''if the default on the breakfast flight is vodka, maybe eastern Europe isn't the next Singapore or Taiwan, maybe eastern Europe is the next Brazil or Uruguay.''

Nigel Davies adds: 

With the death of Maxim Sorkin (after being discharged from hospital) it's difficult not to notice the number of Russian Grandmasters who've died either during or after medical treatment, the two most notable ones being Leonid Stein and Paul Keres.

It's also difficult not to have noticed the number of domestic Russian plane crashes or the fact that my brief visit to a Russian dentist (whilst residing in Israel) came to a sudden end when I realized he'd been partaking in a few glasses of vodka that lunchtime (I ran like the wind). And this guy had been recommended.

Now does anyone want to speculate why India and China are emerging as powerhouse economies whilst the Russian bear seems to be somewhat confused, and at every level? Well here's a big clue, even according to the Kremlin's figures, 12% of deaths in Russia last year were directly attributable to alcohol. 


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2 Comments so far

  1. rod. on July 8, 2007 5:52 am

    Congratulations Tony!

    You have been able to forecast Eastern Europe’s economic future based on the fact that a stewardess back in the 1990s once gave you vodka with your juice. This could be interpreted as a joking, amusing post which should not be taken very seriously… or then it should be regarded as an example of why this blog’s quality has been declining dramatically in the recent months, as authors who have little to say seem eager to prove a point they simply don’t have.

    For the sake of this blog’s quality, maybe Dr. Niederhoffer should consider the possibility of going back to the pre-2007 format, which was of much better quality, at least in terms of content.

  2. Vitaliy Katsenelson on July 8, 2007 10:14 am

    I wrote this awhile back on ContrarianEdge.com:

    As you look at the high-flying Russian stock market, you may feel like you want some of it. But before you dive into Russia consider this: as it is, Russia is a dysfunctional play on high oil prices as well as commodities. It is no less bureaucratic than it was some fifteen years ago.

    When you buy a Russian company, with the exception of Gazprom (OGZPY), you run the risk that the Russian government will decide it “wants it,” the same way it “wanted” the Yukos and Sakhalin project from Shell (RDA). Gazprom is a unique case since it seems the whole country’s foreign policy is written in the Gazprom HQ for the benefit of Gazprom and Gazprom alone. When one of the former republics has a dispute with the company about its pipelines or prices, the Russian foreign ministry gets involved. I guess the fact that Gazprom is owned in part by Russian government and remains one of the largest sources of tax revenue in the country certainly makes it Mother-Russia’s business. Gazprom’s play is limited to several factors: it’s a cheap stock (if you trust the reserve numbers); it has been raising natural gas prices in former Soviet republics to market rates; in some cases it is receiving shares of local gas distribution companies in lieu of payment. But in the long-run, I wouldn’t bet on higher production from Gazprom because its capital expenditures are allocated from the Kremlin, whose objectives are more short-term oriented.

    Current Russian prosperity is completely driven by high commodity prices. Take the $60 oil away and what you get is a very backwards economy, poor infrastructure (especially outside Moscow and St. Petersburg - two cities that are swimming in oil money), very high pension liabilities that the country accrued to its seniors during the Soviet days, corrupt local governments and a fairly unstable political system.

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