Financial Meltdown Good for Putin, Bad for Oligarchs

So you say you’re fed up. Your tired of hearing about the car companies needing more money, you’re tired of hearing about AIG and how they pissed through $123B of your money, and you’re tired of hearing about the $700B in loans to the financial sector to keep our economy from flat lining. Well, join the club my brothers and sisters!

But what if….

But what if I told you it could be worse. What if hypothetically, Warren Buffett got into his 1976 Ford F150 (or whatever the Hell it is he drives around Omaha) and drove straight for the White House. And once he got there, he got Secretary Paulson and Fed Chair Bernanke, and President Bush in a room and said the following:

Guys, I need your help, I am a little short on cash, I owe a couple of the banks $50B and I ain’t got it. Can you spot me ‘til Tuesday for a loan today?

Once again, I said this was hypothetical but we as a country would finally revolt. We would hit the friggin’ roof if we watched Paulson hand a check over to any one individual right? But this is exactly what is happening in Russia as their richest man, metals magnate Oleg Deripaska went hat in hand to the Russian government and asked for $4.5B to help pay a few loans he had with a couple unnamed Western banks. Now, everyone involved is denying the loan took place, but apparently three newspapers have confirmed the deal in order to prevent the banks from taking over the metals concern Mr. Deripaska pledged as collateral.

Now it gets interesting

Bit of a catch 22 here for Putin; if he doesn’t bail out Deripaska, then foreign owned banks will take over a highly prized asset of Mother Russia. If he does give Deripaska the lifeline he so desperately needs, he risks losing face with the Russian people which for a guy trying to stay in power forever, isn’t good.

When you get lemons you make lemonade

But Putin is smart cunning enough to capitalize on someone else’s misfortune. You see, the Russian government has pledged $50B to help stabilize their economy which is in tatters too. But most if not all of the money will go to companies that are majority owned by uber wealthy businessmen or oligarchs, as they have come to be known. Most of the oligarchs control entire industries, therefore any loan bailouts from Putin and the boys inside the Kremlin are going to carry stiff covenants. As in, if you screw up and don’t pay us, we are going to nationalize your shit in a New York Moscow minute.

Putin has been waiting for something like this for years so he could put Russia back together again from the inside out. And the worse it gets, the more powerful the Russian state will become because this could very well provide Putin the ammunition he needs to convince the people of Russia that democracy and it’s red-headed step-son capitalism, aren’t all they are cracked up to be. And finally, if you don’t think its Putin calling the shots these days, you’re just kidding yourself!