Post by cjm on Dec 30, 2015 18:14:15 GMT
Warning to PIC: Russian “Developmental State” bank requires R275bn bailout
Here’s a warning for those promoting a “Developmental State” model for South Africa. Politicians are terrible investors. Well intentioned as they might be, decisions taken without the discipline of the marketplace invariably end up in the scrapheap. Russia, one of the biggest beneficiaries of the artificial affluence wave created by Quantitative Easing, has come to earth with a bump. The slush fund used to pay for President Vladimir Putin’s pet projects, VEB, now needs a bailout of a staggering R275bn ($18bn). VEB was Russia’s equivalent of South Africa’s PIC, the massive pool of money which houses monthly pension fund contributions by public servants. The PIC is supposed to look after the retirement benefits of continuously expanding public sector employees. Achieving this requires a highly disciplined investment process. Not allocations driven by a political agenda – the R900m “invested” in Government-friendly newspaper group Independent Media among the more obvious examples. Maybe the Russian example will cause a penny to drop in the right place. – Alec Hogg
Here’s a warning for those promoting a “Developmental State” model for South Africa. Politicians are terrible investors. Well intentioned as they might be, decisions taken without the discipline of the marketplace invariably end up in the scrapheap. Russia, one of the biggest beneficiaries of the artificial affluence wave created by Quantitative Easing, has come to earth with a bump. The slush fund used to pay for President Vladimir Putin’s pet projects, VEB, now needs a bailout of a staggering R275bn ($18bn). VEB was Russia’s equivalent of South Africa’s PIC, the massive pool of money which houses monthly pension fund contributions by public servants. The PIC is supposed to look after the retirement benefits of continuously expanding public sector employees. Achieving this requires a highly disciplined investment process. Not allocations driven by a political agenda – the R900m “invested” in Government-friendly newspaper group Independent Media among the more obvious examples. Maybe the Russian example will cause a penny to drop in the right place. – Alec Hogg
By Evgenia Pismennaya
(Bloomberg) — For years, Vladimir Putin used Vnesheconombank (VEB) to pay for “special projects,” from the Sochi Olympics to covert acquisitions in Ukraine to oligarch bailouts. Now, the state bank needs a rescue of its own and it could be the Kremlin’s costliest yet.
VEB was supposed to be the financial supercharger of the Russian president’s state-directed capitalism, using its government backing to raise billions at low rates on western markets and pumping them into ventures the Kremlin wanted funded, some concealed from public view with code names like “Lily of the Valley.”
...
(Bloomberg) — For years, Vladimir Putin used Vnesheconombank (VEB) to pay for “special projects,” from the Sochi Olympics to covert acquisitions in Ukraine to oligarch bailouts. Now, the state bank needs a rescue of its own and it could be the Kremlin’s costliest yet.
VEB was supposed to be the financial supercharger of the Russian president’s state-directed capitalism, using its government backing to raise billions at low rates on western markets and pumping them into ventures the Kremlin wanted funded, some concealed from public view with code names like “Lily of the Valley.”
...