Kremlin moves to stem Russian financial crisis – Stock Market Closed for 3rd Day

by Dario Thuburn Thu Sep 18, 4:15 PM ET

MOSCOW (AFP) – President Dmitry Medvedev on Thursday moved to prop up Russia‘s battered financial markets following the biggest one-day plunge in share prices since the 1998 financial crisis.

The stock market was suspended for a third day to allow government measures to boost liquidity and calm investor fears that led to Tuesday’s fall. Both main markets were to reopen Friday.

“There is no more important task for Russian authorities than supporting the financial system,” Medvedev told ministers at an emergency meeting on economic policy in the Kremlin that was broadcast on national television.

“We have enough reserves, we have a strong economy and this is a guarantee that there will not be any shocks… The market will get all the necessary support,” he said, adding that the government was “ready to act quickly.”

Finance Minister Alexei Kudrin told the meeting that share trading would resume on Friday and outlined rescue measures including the injection of 10 billion euros (14.3 billion dollars) into the market on Thursday.

Kudrin announced a cut in oil export duties to 372 dollars a tonne from 495.9 dollars as of October 1, a multi-billion dollar injection to ease the pain of recent falls in the oil prices — the mainstay of Russia’s recent economic boom.

Medvedev also said the government would supply around 13.7 billion euros (19.7 billion dollars) to support the financial markets, half of which would come from the budget, and promised possible “additional measures.”

The Interfax news agency later cited Kudrin as saying the government would spend this money buying shares in the market.

“The situation is such that share prices, including those of large, reputable companies, and those with state involvement, have fallen to levels which do not correspond, in our view, with their real value,” Kudrin said.

“If this under-valuation of the companies exists for a long time, the government may buy some of these shares — both in state-linked and private firms” listed on the market, he added.

The government is ready to spend “billion rubles (6.9 billion euros) to begin with,” and if that is not enough, it will spend “another 250 billion rubles,” he said.

All fundamental indexes of the Russian economy are “normal”, Interfax news agency meanwhile quoted Prime Minister Vladimir Putin as telling foreign business leaders.

The current oil price was offering Russia a cushion, he said, adding that revenues from Russian gas and oil exports could be used in the future to prop up a failing market.

“I don’t think that time has come to spend the income from gas and oil. But if necessary, we can use it to back up the financial market,” he said.

Putin also said that Russia would not close its market to foreign investors, Interfax reported.

Officials earlier pledged to inject 44 billion dollars (31 billion euros) into the market to fight collapsing investor confidence and the central bank said it was slashing reserve requirements for banks by four percent.

The measures “will be sufficient to recover the pre-crisis functioning of the money market and will strongly contribute to restoring the overall degree of confidence,” the Renaissance Capital investment bank said in a statement.

The RTS plunged 11.47 percent and the MICEX 17.45 percent on Tuesday in the worst day of trading since the financial crisis of 1998, which led to exploding inflation, the collapse of several major banks and political turmoil.

The RTS has now lost 57 percent since hitting an all-time high in May, a slump analysts put down to a mix of falling energy prices, global market turmoil and political issues including worries over the war with Georgia.

“Who are we waiting for? Don’t you understand that you’ve all lost your jobs?” read a comment left on Thursday on a specialist Russian Internet forum used by traders, quote.ru.

Analysts said that while the Russian economy was in far better shape now than in 1998, the current crisis could lead to the collapse of some banks and could lead ordinary Russians to rush to withdraw their deposits.

Meanwhile the Central Bank on Thursday said that Russia’s international reserves had lost 13.3 billion dollars, going down from 573.6 billion dollars on September 5 to 560.3 billion dollars on September 12.

http://news.yahoo.com/s/afp/russiastocksfinance

Russia stakes claim on oil-rich Arctic –

 

TIMES ONLINE       September 18, 2008

Russia triggered a fresh scramble for the oil wealth of the Arctic today after President Dmitri Medvedev called on security chiefs to establish a formal border in the region. Mr Medvedev laid claim to a vast tranche of the Arctic, telling his National Security Council that it had “strategic importance” for Russia. Estimates suggest that the polar region contains billions of tons of oil and gas reserves, which are increasingly accessible as global warming melts the ice cap. “We must wrap up all the formalities for drawing the external border in the continental shelf. This is our direct responsibility to future generations,” Mr Medvedev told the Kremlin meeting. The Federal Security Service under Mr Patrushev created a special Arctic Directorate in 2004 to further Russian interests in the region. He even flew to the North Pole to plant a Russian flag.

The order to assert the Kremlin’s rights came just over a year after a team of Russian explorers became the first to reach the Arctic seabed. They dived 4,261 metres (13,980ft) in two mini-submarines and planted a titanium flag on the ocean floor to stake Russia’s claim to an area of territory the size of Western Europe.

The expedition brought back soil samples as part of Russia’s campaign to demonstrate that the Lomonosov Ridge, an underwater shelf that runs through the Arctic, is an extension of its territory. Russia lodged a claim in 2001 to 463,000 square miles (1.2 million sq km) of the Arctic ocean with the UN Convention on the Law of the Sea. The UN asked for more scientific data and Russia is planning to submit a fresh application next year.

Canada, Norway, the US and Denmark – which has sovereignty over Greenland – all reject Russia’s arguments. Denmark and Canada claim that the Lomonosov Ridge is linked to their territories, while Norway is conducting a survey to strengthen its case. Under international law each country is entitled to control an economic zone within 200 miles of its continental shelf, but the limits of the shelf are disputed.

Canada’s then Foreign Minister, Peter MacKay, dismissed the Russian expedition as a throwback to 15th-century imperialism, saying: “You can’t go around the world and plant flags and say ‘We’re claiming this territory’.”

Russia’s descent to the seabed unnerved its rivals, however, by demonstrating its ability to enforce a physical presence in the hostile Arctic environment.

 

Nikolai Patrushev, the director of the council, said that Russia would defend its interests in the Arctic against rival claims from the United States, Canada, Norway and Denmark. “We must define the borders in the north of our country, where the Arctic lies. Our estimate is that it makes up 18 per cent of our territory. And we are saying that 20,000km of the state border runs in this region.”

On Russia, Oil, Energy,The Artic Circle and Foriegn Policy – Part 2

Telegraph.co.uk

By Sean Rayment, Defence Correspondent
Last Updated: 12:23AM BST 18 May 2008

Canada Claims : Russia is annexing Artic area for Oil Reserves. 

The battle for “ownership” of the polar oil reserves has accelerated with the disclosure that Russia has sent a fleet of nuclear-powered ice breakers into the Arctic.

It has reinforced fears that Moscow intends to annex “unlawfully” a vast portion of the ice-covered Arctic, beneath which scientists believe up to 10 billion tons of gas and oil could be buried. Russian ambition for control of the Arctic has provoked Canada to double to $40 million (£20.5 million) funding for work to map the Arctic seabed in support its claim over the territory.

The Russian ice breakers patrol huge areas of the frozen ocean for months on end, cutting through ice up to 8ft thick. There are thought to be eight in the region, dwarfing the British and American fleets, neither of which includes nuclear-powered ships.

Canada also plans to open an army training centre for cold-weather fighting at Resolute Bay and a deep-water port on the northern tip of Baffin Island, both of which are close to the disputed region. The country’s defence ministry intends to build a special fleet of patrol boats to guard the North West Passage.

The crisis has raised the spectre of Russia and the West joining in a new cold war over the Arctic unless the United Nations can resolve the dispute.

Liam Fox, the shadow defence secretary, told Telegraph: “Four of the five Arctic powers are Nato members, yet Nato seems ill-configured to be able to respond to the sort of activities we have seen from the Russians. We need to ensure Nato has the will and the capability to deter Russian activity that contravenes international laws or treaties.”

Jonathan Eyal, of the Royal United Services Institute, said the dispute could simmer for years. “The message from Vladimir Putin is that Russia will no longer be shackled to treaties signed by Yeltsin when he was half drunk or when Russia was on its knees,” he said. “This dispute is not only about oil reserves which might or might not exist, it is about the control of sea lanes. Russia’s movements could pitch it into a serious territorial dispute with the US for the first time.”

Tension in the Arctic is also being heightened by the revival of Russian Cold War-era manoeuvres. Hardly a week passes without Russian aircraft over-flying the North Pole, simulating strikes on “enemy” bases and shipping.

The crisis erupted last year when a Russian submarine crew planted a flag on the Lomonosov Ridge, a 1,240-mile stretch of seabed that Moscow says is Russian. Derided at the time as a stunt, the move focused attention on the race for the Arctic’s hidden treasures.

No country owns the Arctic Ocean or the North Pole, but under the 1982 UN Law of the Sea Convention, each country with a coast has exploitation rights in a limited “exclusive economic zone”. On ratification of the convention – and America has yet to ratify it – each country has 10 years to make claims extending its zone.

Russia rivals Saudi Arabia as the world’s largest oil producer and is estimated to have the largest natural gas supplies. Energy earnings are funding a $189 billion (£97 billion) overhaul of its armed forces.

http://www.telegraph.co.uk/news/worldnews/europe/russia/1976314/Russia-accused-of-annexing-the-Arctic-for-oil-reserves-by-Canada.html

On Russia, Oil, Energy and Foreign Policy & The Artic Circle – Part 1

Posted: July 29, 2008
9:52 pm Eastern

© 2008 WorldNetDaily 

Even if Congress follows President Bush’s lead in opening off-shore oil exploration, there exist over 125,000 square miles of sea bottom that won’t be explored, because the State Department – amid controversy and against the will of Alaskans – has surrendered the land to Russia.

Eight islands and their surrounding sea floors were ceded to the former Soviet Union as part of the U.S.-U.S.S.R. Maritime Boundary Treaty in 1991, a treaty signed by the U.S. Senate and President George Bush but never ratified by the Soviets. Nonetheless, an executive agreement enforcing the terms of the treaty until ratification has been in place through three presidencies, meaning the State Department officially recognizes the islands as Russian territory.

Alaskan legislators, who were given no input or authority on the island giveaway, have long protested the treaty, declaring it null and void without Russian ratification.

And since last week’s U.S. Geological Survey estimating that 90 billion barrels of oil lie undiscovered and technically recoverable above the Arctic Circle, those 125,000 square miles of seabed have taken on newly appreciated value. Five of the islands lie north of the Artic Circle, and the other three sit at the western end of Alaska’s Aleutian island chain.

Carl Olson, a retired U.S. Navy Lieutenant Commander and chairman of State Department Watch, a nonpartisan foreign policy watchdog group, explained to WND the significance of the State Department’s stance: “The area off the coast of an island that a nation may use is called the exclusive economic zone. The group in charge of defining that is the State Department. So (the president and Congress) can say the off-shore areas are opened up, but still not recognize these quarter of a million square miles available for American oil exploration.”

Alaska state Rep. John B. Coghill told WND earlier, “The issues involve not only state sovereignty over vital territories but also significant national defense concerns and substantial economic losses over fisheries and petroleum.”

The Alaskan legislature and a sympathetic California legislature have both passed resolutions asking Congress to allow Alaska at the bargaining table with Russia to resolve the islands’ ownership. After almost 20 years of official protests, the U.S. State Department has yet to acknowledge Alaska’s arguments.

“It’s totally anti-public, anti-Congress, anti-state actions – but unfortunately the State Department thinks it has the power to adopt this boundary line with the Russians without anybody’s consent outside themselves, ” Olson told WND. “The State Department is basically chopping off a piece of Alaska and giving it to a foreign government without Alaska having any say in it.”

The lands in dispute include the islands of Herald, Bennett, Henrietta, Jeanette, Copper Island, Sea Lion Rock, Sea Otter Rock, and Wrangel, which is the largest of the eight, roughly the size of Rhode Island and Delaware combined.

The U.S. purchased Alaska from Russia in 1867, including the Aleutian Islands, which presumably would include Copper Island, Sea Otter Rock and Sea Lion Rock. In 1881, U.S. Captain Calvin L. Hooper landed on Wrangel Island and claimed it for the U.S. Also in 1881, the U.S. Navy claimed the islands of Bennett, Jeannette, and Henrietta. The British held Herald Island, but they gave up that claim, permitting the U.S. to take it.

American citizens had occupied Wrangel Island from approximately 1881 to 1924, when Russian soldiers landed and forcibly removed the American occupants from its shores. The Russians then reportedly used the island as a concentration camp.

Many Alaskan legislators believe the islands were part of their state, even after the Wrangel invasion, though the U.S. State Department officially disagrees. Without a ratified treaty designating them as Russian, those same legislators and Carl Olson believe the islands still are American territory and can be reverted to the U.S. easily.

The only thing binding the islands to Russia is “in the form of an executive agreement,” Olson told WND, “which means it can be changed with the stroke of a pen by the president, because it has no force of law.”

“We have been steadily maintaining the pressure,” said Olson. “It’s just a matter of finding sympathetic people in Washington and the other states to go for it. There’s plenty of organizations who have endorsed our efforts, so we keep up the drumbeat.”

Coghill has also sought the support of other states, claiming that the federal State Department has overstepped its authority in giving away a state’s land. “If they can do this to Alaska,” he warns, “they can do this to any state.”

U.S. State Department officials did not return WND telephone calls to discuss the matter, but a State Department webpage devoted to the island controversy denies that islands were ever claimed by the United States and explains that though the treaty between the U.S. and Russian Federation was never fully ratified, “In a separate exchange of diplomatic notes, the two countries agreed to apply the agreement provisionally.”

The webpage concludes, “The U.S. has no intention of reopening discussion of the 1990 Maritime Boundary Treaty.”

http://www.worldnetdaily.com/?pageId=70902

New York Attorney General launches Criminal Probe of “short-selling” in Stock Market

NEW YORK – New York’s attorney general says he’s launching an investigation into whether some traders used illegal tactics to drive down the stock price of several Wall Street firms.

Attorney General Andrew Cuomo told reporters Thursday his office has received a “significant number” of complaints about short sellers, or investors who hope to profit by placing bets that a company’s stock will fall.

Short-selling is not illegal. But Cuomo says he will focus on whether short sellers engaged in conspiracy or spread bad information to influence the stock prices of Lehman Brothers Holdings Inc., American International Group Inc. and other firms that have been hammered in the ongoing financial crisis.

http://news.yahoo.com/s/ap/20080918/ap_on_bi_ge/cuomo_short_selling

UPDATE:

  • SEPTEMBER 18, 2008, 3:39 P.M. ET
  • Cuomo Plans Short-Selling Probe

    New York Attorney General Andrew Cuomo has started a “wide-ranging investigation into short selling in the financial market” related to companies under pressure over the past week, such as Lehman Brothers Holdings Inc., American International Group, Morgan Stanley and Goldman Sachs Group Inc.

    In a conference call with reporters, Mr. Cuomo said that in the past few days his office has received complaints about false rumors spread by short sellers. “Short selling is not illegal, but when combined with the spread of wrong information, that is illegal,” he said.

    Mr. Cuomo said a recent decision by the Securities and Exchange Commission to require more disclosure of investors’ short positions didn’t go far enough. “I believe the SEC should freeze short selling of financial stocks on a temporary basis,” Mr. Cuomo said. 

    The SEC is also investigating rumor mongering and has sent subpoenas to more than 50 hedge funds. An SEC spokesman couldn’t be reached for comment.

    Morgan Stanley Chief Executive John Mack has been aggressively trying to limit the downward moves in his company’s stock. Company executives have said they believe short sellers are spreading false rumors about the company’s prospects. The company’s stock slid sharply this week because of fears about customer defections, even though the company released better than expected earnings for the quarter ended Aug. 31 and underscored that its balance sheet is more sound than other investment banks that ran into trouble recently.

    Mr. Mack also spoke with numerous federal government officials as well as Goldman Sachs Chief Executive Lloyd Blankfein five or six times in the past few days, to discuss how to reduce the influence of short-sellers, a person familiar with the matter said.

    Also former Morgan Stanley Chairman and CEO Philip Purcell, in a rare public comment about his old company, urged the SEC to pass tougher rules to rein in short sellers. “At a minimum, the SEC must follow the FSA and ban short selling of financial stocks,” he said Thursday afternoon. referring to the U.K.’s Financial Services Authority. In an unusual move, the FSA, U.K.’s market regulator, on Thursday banned short selling in financial stocks until January.

    Mr. Purcell added that the SEC “should also reinstitute the uptick rule and evaluate calling in the outstanding shorts on financial stocks to get true cash-price discovery at this critical time.”

    Write to Aaron Lucchetti at aaron.lucchetti@wsj.com, Amir Efrati at amir.efrati@wsj.com and Kara Scannell at kara.scannell@wsj.com

    http://online.wsj.com/article/SB122176389889653245.html

    Another Example of Democrats Blocking Reform – McCain’s attempt at reform “Scuttled”

    McCain Accounting Proposal Scuttled

    Senate Rejects Listing Of Stock Options as A Corporate Expense

    By Helen Dewar and David S. Hilzenrath

    Washington Post Staff Writers

    Friday, July 12, 2002; Page A01

     

    Senate Democrats yesterday blocked a proposal that would have changed the way companies account for stock options, an initiative vehemently opposed by high-tech companies that have used such grants to award billions of dollars in compensation to their executives and employees.

    Sen. John McCain (R-Ariz.) tried unsuccessfully to attach to a broader corporate accountability bill a requirement that companies subtract the cost of stock option grants from their reported profits. But the Democratic leadership prevented McCain’s amendment from reaching a vote.

     “The fix is in,” said McCain, vowing to try to force a vote on the measure in the future. McCain’s proposal faced bipartisan resistance in the Senate.

    Unlike salaries and cash bonuses, option grants to executives and employees are not counted as an expense on corporate statements. If they were, many companies would report weaker profits, and some companies that now appear profitable would post losses.

    The ability of companies to dispense options as if they had no cost has led to huge executive grants, giving corporate leaders added incentive to cook the books and artificially inflate stock prices, some politicians and business analysts say.

    After Republicans used parliamentary maneuvers to block Democrats’ amendments, Assistant Majority Leader Harry M. Reid (D-Nev.) outflanked McCain. As a result, Reid spared senators the potential discomfort of going on record with a vote against the stock option amendment.

    http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A58272-2002Jul11&notFound=true

    When Obama says, “age appropriate sex education” what does he mean? It isn’t what you think!

    On Tuesday, while speaking with Planned Parenthood Barack Obama confirmed his support for “age appropriate” sex education for children as young 5-years-old. Obama described it as “the right thing to do”. http://www.americanthinker.com/blog/2007/07/obamas_radical_ideas_on_sex_ed.html

     The question is, “What does Obama consider to be age appropriate for 5 year-olds”.

    Obama supports the use of, “The Sexuality Information and Education Council of the United States (SIECUS) guidelines for drafting legislation. The Guidelines were adopted in Illinois SB 0099, 2003. When MSNBC asked the Obama Campaign for information on the Campaign’s position on this issue, a copy of the Guidlines was sent to MSNBC.  http://www.cbn.com/CBNnews/391467.aspx . You can read those guidelines at http://siecus.org/_data/global/images/guidleine.pdf  – This link takes you to the SIECUS web site.

    The Guidelines indicate that “age appropriate” sex education for 5 to 8-year-olds is listed as Level 1 Education in the Guidelines.

    On Page 14 of the guidelines the Council states its intent, “to provide comprehensive education about sexuality that includes such topic as, abstinence, sexually transmitted disease (STDs), HIV/AIDS, Contraception (Pregnancy Prevention) and Disease Prevention.

    Appropriate Topics (for 5- year-olds) are listed on page 24 of the guidelines: The Topics include, “appreciate ones own body”, “affirming ones own sexual orientation and the orientation of others” and “affirming ones own gender identities (plural) and the gender identities of others”.   

    The Guidelines then go on to decribe, in detail, the individual Topics appropriate for 5yr-old instruction: 

    Topic 1- The body has the capability to reproduce as well as to give and receive sexual pleasure. Page 26 Outlines Body Parts, the names of the Parts and their function, in quite some detail.

    On Page 29 of the Guidlines – Level 1 Instruction includes – “Humans beings can love people of another gender”, “Some people are heterosexual”, “Somepeople are homosexual”, “Homosexual men and woman are know as gay men and lesbians.”, “People deserve respect”, “The terms ‘gay’, ‘fag’,’qeer” are hurtful.”

    A discussion of ‘Sexual Behavior” begins on page 50:  Level 1 Instruction includes the topics, “Sexuality is natural”, “Bodies feel good when touched“.   

    Page 51 & 52 of the Guidelines address Level 1, “Topic 2, Masterbation:” – “Touching and rubbing ones own genitals to feel good is called masterbation”, “some boys and girls masterbate”, “masterbation should be done in a private place” – yes this is what is outlined for Level 1, 5 -year-olds. You have the link and page number to check if you would like.  http://siecus.org/_data/global/images/guidleine.pdf

    On page 54, Human Sexual Response notes, “Both boys and girls discover that their bodies feel good when touched”.

    Contraception Education for 5-yr-olds is addressed on pages 58 & 59, “Some people have children, others do not”, “Each family can decide how many children to have, if any.”

    Page 61, addresses instruction on Abortion for 5-yr-olds, “Sometimes woman become pregnant when they do not want to be, or are unable to care for a child.”

    Page 63 – Outlines Level 1 instruction on Sexually transmitted diseases.

    Page 65 – Outlines Level 1 – HIV/AIDS instruction –  

    Page 67 – Level 1 Sexual Abuse Instruction is outlined.

    Page 82 of the Guidelines Instructs Educators to fill in the Gaps, “For example the guidelines suggest that students in early elementary school learn ‘that each body part has a correct name and function ……”, “They do not explain the function of these parts …..” “It is the rsponsibility of the educator to fill in this information ……..”.

    The Catholic Citizens of Illinois Website stated that the Obama supported bill, “was aimed, in fact, at changing the entire philosophy of sex education in the Public Schools of Illinois”. It had nothing to do with protecting kids from predators. http://catholiccitizens.org/views/contentview.asp?c=47980  

    Obama and his supporters keep screaming that John McCain is lying on this subject – You can read it for yourself – right from the source.

    The Manual clearly identifies this as the cirriculum for 5-yr-olds, I’d call it comprehensive, however, less than 5% of the material has anything to do with “predators”. 

    Update: See the new Booklet from SIECUS…. the descrition of age appropriate activities begin in section 2: http://www.foxnews.com/projects/pdf/082509_unesco.pdf

     

    The SIECUS has been attempting to deliver the same message for decades …

    see: Edition 2: 1991        

    http://www.hawaii.edu/hivandaids/SIECUS%20Guidelines%20for%20Comprehensive%20Sexuality%20Education.pdf

       

      

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