Putin Sets the Stage to Nationalize ALL Foreign Assets
as he re-creates the Soviet Empire!
Russia is heading for an economic collapse and dictatorship.
Investors, be careful!
Russian President Vladimir Putin’s annexation of Crimea and land grab in Eastern Ukraine led me to recommend that my subscribers exit Gazprom (OGZPY) back in April … and any stocks or bonds tied to Russian assets, for that matter.
It’s impossible for anyone to deny the pattern of pure plunder and thievery Putin has undertaken since becoming president in 2000. Estimates put his wealth at over $71 billion, all stolen from private Russian businesses and individuals.
Putin has a pattern of arresting those who own businesses or assets he wants for himself. He simply accuses them of money laundering, not paying taxes or breaking Russian import or export laws. Once arrested, his victims wait for trial for years in a Russian gulag.
A significant pattern and method are similar to what the Soviet empire did during its entire existence to businesses, minorities and political rebels.
It’s not a free market in any way, shape or form. You can own only what the Russian government will allow you to own.
Just two weeks ago, Putin continued this pattern of theft by having his henchmen place one of Russia’s richest business leaders, Vladimir Yevtushenkov, under house arrest on allegations of money laundering …
The Financial Times on Sept. 16, 2014, stated:
“Russian federal investigators determined that one of the country’s largest private businesses, Yevtushenkov’s AFK System, employed "criminal means" to acquire subsidiary oil company Bashneft (BANE.Russia), with Yevtushenkov’s knowledge.
“AFK Sistema’s other businesses include Mobile TeleSystems (MBT), one of Russia’s biggest mobile operators. The Financial Times reported that Yevtushenkov acquired companies during the "chaotic" privatizations under former Russian President Boris Yeltsin "when many state-owned properties were sold off for a song to politically connected businessmen."
The Financial Times also reported …
Vedomosti, the Russian business newspaper part-owned by The Financial Times, reported in June that Rosneft (ROSN.Russia), Russia’s biggest state-owned oil company was interested in buying Bashneft, but Rosneft declined to comment on the report.
Rosneft is headed by Igor Sechin, a close ally of Russian President Vladimir Putin, and also acquired many of the assets of Yukos after [Mikhail] Khodorkovsky’s imprisonment.
Troubles for Sistema began this summer when authorities of Russia’s Bashkortostan Republic, a central Russian region which is also Bashneft’s former owner, alleged that Sistema had underpaid for the company from the local government in 2009, suing Sistema for $5.8 billion in damages.
Bloomberg reported in July that:
"One by one, Mikhail Khodorkovsky’s partners in Yukos Oil fled Russia to escape prosecution as Pres. Vladimir Putin’s agents hunted for their billions. Now, more than a decade after Khodorkovsky’s arrest kicked off the country’s largest nationalization campaign since the 1917 Bolshevik Revolution, those allies say they’re on the verge of winning international court rulings that would empower them to pursue Russian state assets abroad as payback."
Notice in the Bloomberg report above, the use of the words "the country’s largest nationalization campaign since the 1917 Bolshevik Revolution" is exactly how Putin has been looting private Russian assets.
At the same time, Putin has been tightening his control over the country. As a result, he is systematically re-establishing state control over the press, media and Internet through a Stalinist method of brute force and a never-ending series of lies.
Here is a short list of his known criminal behavior:
- He has and continues to have a great number of his business and political enemies jailed and murdered. We can probably assume that there are more instances than we’ve seen reported.
- He has forcefully turned government TV and radio stations into pro-Putin propaganda machines. Some of these "news outlets" have been running the most outlandish programming. One recurring theme is to describe the new government in Kiev, Ukraine, as being made up of Nazis — playing on the deep fear and imagery of the German Third Reich.
- Putin’s systematic strangling of Russia’s freedoms will only bring about a much harder crackdown when the Russian economy collapses.
Putin’s international and domestic strategy looks increasingly reckless, especially now with the price of oil falling.
It is well-known by Russian economic observers that the country needs $117 per barrel of oil in order to fund the country’s government.
The slide in the price of crude to the mid-$90s per barrel, and the tightening price spread between WTI and Brent crude, is hammering the Russian economy.
Especially while Putin insists on …
- Continuing to supply billions of dollars in arms to Iran and Syria on credit
- Funding Ukraine separatists and supplies with heavy weaponry
- Continuing to escalate his threats against NATO and the Baltic States and is ramping up a mock nuclear strike on the United States.
All of this is now crushing Russia’s currency.
In recent days, the Russian ruble fell to an all-time low against the dollar. The press is blaming investor concerns about western economic sanctions being imposed on Russia by the United States and the European Union.
To address this problem, last week the U.S. and the European Union imposed a new round of sanctions against Russia for its actions in Ukraine.
This included blocking off Western financial markets to key Russian companies and limiting the imports of some of those technologies.
Yet, others believe the problem supports the ruble.
They are all contributing factors but the biggest issue is Putin’s flagrant disregard for the rule of law, private property and increasing military threats.
On Sept. 23, Alexei Kudrin, an economist who served as finance minister under Putin for 11 years until 2011, stated that sanctions could send Russia’s economy into recession for one or two years.
He also warned that Russia would not reach high growth again unless it implemented much-needed reforms.
I think Kudrin’s analysis is the best-case scenario. The rapid decline in the exchange value of the Ruble represents more than just investors and businesses jitters over sanctions.
Investors have pulled a whopping $61 billion in capital out Russia last year, largely due to concerns over the investment climate …
That is before the Black Ops invasion of Crimea and long before Russia started flying practice missions for a nuclear attack on the United States.
Kudrin has also stated that money has been flowing out of Russia even faster this year, with market-watchers predicting an approximate $110 billion could be withdrawn by year-end.
The flow of money could very well accelerate to twice that figure if the ruble continues to make new historic lows over the next several weeks.
I may very well be the only market analyst on or off Wall Street who is more focused on Putin’s megalomania and willing to predict openly that he will eventually nationalize all foreign assets.
In addition to that, I will go a step further to say that when he does, you’ll see him shut Russia down tight as Putin imposes a Stalin-like purge of anyone who challenges him.
News last week that Putin designed a plan to shut down access of the Internet to Russian citizens outside of the country is a tip-off Russian investors and businesses should not ignore.
Right now, Putin enjoys a great deal of popularity as the Russian population is buying his propaganda. However, as his terror of a new Soviet-style regime is being reinforced, his forced popularity won’t last long.
I rate all Russian securities and firms that depend on Russian revenues and investments for a large part of their revenues: A STRONG SELL!
Watching Your Chickens,