The nature of risk ...

Doug Henwood dhenwood at panix.com
Fri Jun 12 18:30:40 PDT 1998


Rosser Jr, John Barkley wrote:


> Probably Boris wouldn't stiff Soros. But plenty of
>big cheese foreign investors in Russia have been taken for
>a major ride, including most of the big US oil companies.
>And I am not just talking about the recent sharp declines
>in the stock market over there after last year's
>world-leading runup.
> Part of the problem is that Boris is not really in
>control. In fact, nobody is. Thus when the oil majors
>have tried to cut deals (or have bought companies) they
>have encountered local governments at several levels
>attempting to tax them. In some cases the sum of all the
>taxes exceeds 100% of profits. Boris has been unable to
>rein in this kind of local power/revenue grabbing.
> So, yes, Soros was most certainly taking a big risk
>when he lent the Russians all that money.

I'm talking about a sovereign loan to the government of Russia. Yeltsin would never stiff Soros on one of those. Sure thing that many investors are taking big baths in Russia.

Curiously, former perma-bear James Grant, publisher of Grant's Interest Rate Observer, resolved in 1996 or early 1997 to try to be bullish about something in every issue. Grant's recommendations? Korean and Russian stocks.

Doug



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