Sometimes you can tell the health of the Russian economy not by the RTS swings or major acquisition moves, but rather something as simple as movements in the executive hiring sector. The Russia branch of Goldman Sachs has lost two key guys in one month … but it’s not because the banking sector is contracting. As reported on Deal Journal, Goldman lost Michael Capone, former executive director of equity sales, to VTB Bank, and today lost William Donovan, who handled oil & gas M&As, to Deutsche Bank. What’s going on in Russia with this hiring glut in the banking sector? Just some early rustling, or something more? With oil holding firm at somewhere above $60 a barrel, at least some people seem to think Russia sees a light at the end of the tunnel (those other might say it is an oncoming train).
From Deal Journal on the increase in bank hires:
A spokesman for Deutsche Bank in Russia confirmed Donovan had joined recently to take up a similar position covering the energy sector. Deutsche Bank said it was “hiring selectively” and had never put a freeze in place unlike many other banks in Moscow.
Investment-bank hiring is back across the board in Moscow, with Russia’s VTB Capital leading the way. Morgan Stanley, Nomura Holdings, Barcap, Sberbank Capital and Troika Dialog are actively hiring or trying to fill selected positions, according to local headhunters who have tapped for executive searches.
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Aslund is hilarious! Not only has he predicted five of the last zero Russian economic collapses, but the following is just ridiculous:”The crisis has revealed how little Putin has done for the well-being of the Russian population during his time in office.”Compare the well-being of Russians in 1999, when Russian clerks and teachers made a princely $20/month, and that often years in arrears, and now, and we can see how utterly disconected from Russian realities Aslund is. Even funnier is his expectation that Putin should have set Russia up better for a *global financial collapse* less than ten years after the Russian economic collapse in 1998.Of course, he never says how.
Well, rkka, a good idea would be to diversify the economy. The increase in wealth for Russians that you mention comes almost entirely from gas/oil and from selling weapons. Unlike China, which now manages to have products for sale pretty much everywhere, Russia still — like the early monoculturist economies in Latin America, dependent on sugar, coffee, rubber, whatever — is fragile. The ups and downs of prices determine the success and the failure of the Russian economy; just like the ups and downs of oil determine the success/failure of oil emirates and Saudi Arabia.The high price of oil is the source of Putin’s “economical success”. If oil had gone down, down, down after Yeltsin, Putin would have to concentrate on external wars (his first idea for making Russians like him).Now, this is not to say he is stupid. He is not. Despite all the corruption and all the siloviki putting money in their pockets, still Russia had a respectable amount of reserves in foreign currency. That shows foresight and planning.Still… look at how China went through the same crisis. Look at how it’s now going to grow 8%, despite said crisis. Why didn’t Russia do the same? Certainly it can’t be because of lack of natural resources or lack of native talent: Russians as individuals are very intelligent and competent (I should know, my wife is Russian). So what happened? Are the Chinese leaders smarter than Putin?
“Well, rkka, a good idea would be to diversify the economy. “I agree. However, this is a task that will require decades to accomplish. The expectation that Putin should have accomplished it in the decade following Russia’s economic collapse, when the country was visibly on the verge of disintegration, and people were writing articles with the title “Russia is Finished”, is more an indication of people actually desiring Putin (and Russia) to fail than constructive criticism. That’s what amuses me about sites like this one, the fact that people sponsoring it expect the Russian government to take their destructive criticism to heart.The Russian government are many things, but stupid is not one of them”The high price of oil is the source of Putin’s “economical success”.”The IMF disagree. The proportion of the Russian economy comprised by oil declined just about every year after Putin became president.”Still… look at how China went through the same crisis. Look at how it’s now going to grow 8%, despite said crisis. Why didn’t Russia do the same?”Because China has been at its economic transformation for over thirty years, and wisely regulates the flow of “hot money” into, and more importantly, out of, China’s economy. And you must admit that Russia has done a much better job of diversifying her foreign currency reserves than China.Now, a question for you. After half a decade of the Baltic States being held up by the likes of Ed Lucas in The Economist as an example for Russia to follow, why are their economies plummeting far faster than Russia’s? Was his advice intended to aid Russia, or harm Russia?
RKKA:I’d like to nominate your “comment” as being perhaps the stupidest AND most dishonest ever published on a Russia blog.Not only do you give ZERO evidence that the economies in the Baltics are performing worse than Russia’s (per capita GDP and standard of living there are FAR higher than Russia’s, and they are EU members), but you ignore the fact that unlike Russia THEY DO NOT HAVE VAST STORES OF CRUDE OIL. They are operating real economies, not Potemkin illusions.Ranking by PPP per capita GDP:#33 Estonia#36 Lithuania#37 Latvia#42 Russiahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitaIt’s shameless liars like you who give the blogosphere a bad name. Your hopeless attempts to rationalize failure and delay reform in Russia are the acts of a venal enemy of Russia, not a friend.One must wonder how bad things would have to get in Russia before you would admit the regime had failed. Presumably you also find it “hilarious” that Russians are reduced to eating rotten food?http://www.chicagotribune.com/news/nationworld/la-fg-russia-spoiled25-2009may25,0,1663879.story