The System Matters

[mendeleyev]

You seem to be ignoring the fact that our system of government has 3 branches, and nothing that the man who was (allegedly and I say allegedly because there is evidence of widespread voter fraud) elected can or should be done without involvement of the Congress.  Congress is the "peoples house" and he has been giving my elected officials the finger

AC, the article was not about the three branches of government, and nor will I attempt to make it about that.

I do not ignore the presence of three branches, and to put your mind at ease, I admire the separation of powers in the Constitutional and Republican form of government adopted by the founders.

I do not see where we disagree.

Sorry, but more and more, I sense that the average American seems to like the direction the guy is taking the country. Again, just so you can read it more than once: that makes me sad.

If you read the archives here, my views on Obama are very clear.

[Muzh]

AC, the article was not about the three branches of government, and nor will I attempt to make it about that.

I do not ignore the presence of three branches, and to put your mind at ease, I admire the separation of powers in the Constitutional and Republican form of government adopted by the founders.

I do not see where we disagree.

Sorry, but more and more I feel that the average American seems to like the direction the guy is taking the country. Again, just so you can read it more than once: that makes me sad.

Mendy, try not to waste too much time on this person. He is teaching is useless.

[Gator]

AC, even with Obama skirting the Constitution, our system is still far superior to the Russian system. 

The American system allowed Sergei Brin (a native Russian) to create an excellent product enhancing our use of the Internet, a product which he leveraged into great wealth for himself and his fellow shareholders.  In the Russian system, Pavel Durov also developed an excellent Internet product allowing people to connect and communicate, only to have it seized from him and given to friends of Putin without recourse or redress. 

The reasons for seizure in Russia would not apply in America in part because of the First Amendment to the Constitution.  ["Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."]

The Constitution is just one building block of the system that enabled Sergei to excel.  The system is embodied in many Federal laws to include antitrust laws, interstate commerce laws, securities laws, etc.  Even more important is our government's commitment to enforcing the rule of law established by the legislation.

I do not know the Russian Constitution nor its laws; however, I suspect that on paper it gives the Russian citizen far more power than what is practiced.   A Russian faces obstacles such as corruption, ruthless executive privilege,  no rule of law..... that is the system. 

[AC]

Mendy, try not to waste too much time on this person. He is teaching is useless.

Sure professor.  Go back to your nap.

[AC]

AC, the article was not about the three branches of government, and nor will I attempt to make it about that.

I do not ignore the presence of three branches, and to put your mind at ease, I admire the separation of powers in the Constitutional and Republican form of government adopted by the founders.

I do not see where we disagree.

Where we seem to disagree is that because of the lack of fiscal discipline in both parties and also the willingness of not just the current administration, but the last one as well (Bush, Jr.) to violate a citizens right to privacy our government is quickly heading in the direction of Putin's government.

It won't really take too much for there to be another recession worse then 2008.  As long as both the established Republicans (Boehner) and the Democrats continue growing our government at the rate it's been growing there is no doubt our government will eventually collapse under the weight of the debt very similar to what happened to Rome as post Brasscasing alluded to in one of his posts.

Had Putin not made the decision to invade and annex Crimea and then to invade E. Ukraine, he could have invested all of that money in infrastructure and kept Western investment in Russia growing.  Or I should say that if Medvedev or another reformer were in office, they could do that.

If Medvedev were still in office Russia would likely be in a better position then the USA will be in about 10 years time.  Both countries are moving in the wrong direction and I chuckle when fools on this board tell you not to waste time on me because I'm honest enough to point out the obvious.

[fathertime]

It won't really take too much for there to be another recession worse then 2008.  As long as both the established Republicans (Boehner) and the Democrats continue growing our government at the rate it's been growing there is no doubt our government will eventually collapse under the weight of the debt very similar to what happened to Rome as post Brasscasing alluded to in one of his posts.

 

If Medvedev were still in office Russia would likely be in a better position then the USA will be in about 10 years time.  Both countries are moving in the wrong direction and I chuckle when fools on this board tell you not to waste time on me because I'm honest enough to point out the obvious.

I find truth in these words.  Our country (the USA) doesn't appear to be out of the woods financially.  Whoever the next president is, I'm hoping he can find a way to cut both military and domestic spending, while not torpedoing the economy, and somehow striking the right cord with the public. A HUGE task.     There are a lot of factors of course, but we will somehow need to expand our contracting workforce and/or raise the income cutoff for SS contibutions maybe to 180k...maybe even more...Shortly too many people will be drawing vs contributing....an 18 trillion plus debt has serious interest payments! 


Fathertime!   

[Gator]

.... our government will eventually collapse under the weight of the debt very similar to what happened to Rome .... Russia would likely be in a better position then the USA will be in about 10 years time. 

This is crazy talk.  Look back over 250 years and consider how America has not only adjusted to change but seized the opportunity to thrive. 

I will admit that Obama was a step backwards and GWB did little.  Nevertheless, look at where we are today.  For example, consider how Obama downplayed dirty oil, supported alternative sources, and took steps to restrain new production, yet the oil industry forged ahead.  American business will lead the way.  Be brave. 

[jone]

If we're talking failures in the economy, I would point out the US' investment in mortgage backed securities to right the financial system.  The TRILLIONS of debt held, as a result, has created an intermediate term dearth of liquidity.  While the US will weather the storm, this action has created precedent for future such actions which our country might not be able to obtain a soft landing.

[AC]

This is crazy talk.  Look back over 250 years and consider how America has not only adjusted to change but seized the opportunity to thrive. 

I will admit that Obama was a step backwards and GWB did little.  Nevertheless, look at where we are today.  For example, consider how Obama downplayed dirty oil, supported alternative sources, and took steps to restrain new production, yet the oil industry forged ahead.  American business will lead the way.  Be brave.

Yes look where we are today.  18 Trillion in debt, not counting future Social Security debt, Medicare and Medicaid and future costs to the VA for wounded and sick veterans.  Some economists put the total of unfunded liabilities at 200 Trillion.  And you say that I'm the one engaging in crazy talk.

I would like to ask you, what do you think is going to happen to the US economy when the Chinese refuse to loan us any more money?

[fathertime]

Yes look where we are today.  18 Trillion in debt, not counting future Social Security debt, medicare and Medicaid and future costs to the VA for wounded and sick veterans.  Some economists put the total of unfunded liabilities at 200 Trillion.  And you say that I'm the one engaging in crazy talk.

I would like to ask you, what do you think is going to happen to the US economy when the Chinese refuse to loan us any more money?

It can be financially ruinous to a lot of people.  The 10 year yield is very very close to a historic low.  1.72%.  Despite this, the stock market has fallen nearly 1000 points in recent weeks....all the while we are exploiting our own natural resources (oil) at a rate never seen and this is still happening.    Tax increases need to be on the horizon as do real budget cuts...or we can just keep running up the debt...if we can.


Fathertime!   

[AC]

The Constitution is just one building block of the system that enabled Sergei to excel.  The system is embodied in many Federal laws to include antitrust laws, interstate commerce laws, securities laws, etc.  Even more important is our government's commitment to enforcing the rule of law established by the legislation.

 
Yes our current system is superior to Russia's system no doubt about that.  The part I bolded above is not completely true.  If it were Obama would have been enforcing existing immigration law going back 5 years.  There are other examples.  Two Presidents in a row have pushed Presidential powers beyond what they should be per the Constitution.

Freedom of association for example is now completely ignored.  If it were enforced then Arizona and other states could discriminate against gays for example.  I'm not saying that would be a good thing, but perhaps the pendulum swung too far.  A private wedding photographer for example apparently will be put out of business for refusing to take photos of a wedding which is against his religion.  I think that is going way too far, and it's already more or less happening.  Are Christians going to be driven underground while Muslims can extort a school district to drop Christmas?  It certainly looks that way.

[ML]

If we're talking failures in the economy, I would point out the US' investment in mortgage backed securities to right the financial system.  The TRILLIONS of debt held, as a result, has created an intermediate term dearth of liquidity.  While the US will weather the storm, this action has created precedent for future such actions which our country might not be able to obtain a soft landing.

Yes, this is the Moral Hazard idea.

In economics, moral hazard occurs when one person takes more risks because someone else bears the burden of those risks.

When we who honored our debts  bailed out those homeowners and others who did not honor their debts . . . we created a terrible omen for the future.

[AC]

It can be financially ruinous to a lot of people.  The 10 year yield is very very close to a historic low.  1.72%.  Despite this, the stock market has fallen nearly 1000 points in recent weeks....all the while we are exploiting our own natural resources (oil) at a rate never seen and this is still happening.    Tax increases need to be on the horizon as do real budget cuts...or we can just keep running up the debt...if we can.


Fathertime!

That's my point fathertime.  Certain cheerleaders here think that what I write is crazy or that Mende should not waste time posting responses to mine.  Examples are there throughout history of Empires gone to ruin from too many military campaigns and too much debt.

The only group of people who want to really do anything about our debt are the Tea Party, and they have been labeled "extreme".  I never knew it would be considered extreme to want to live within ones means, but there you have it.

Certain posters here if they got their way Obama would have borrowed even more money from China.  It's monopoly money, right?   

[AC]

Mendeleyev,
Yes the system matters.  You are correct that the US system is overall superior to that of most nations and it encourages free enterprise.  Very good article.  I just think however it is very important to point out that our economy really is a house of cards, and the damage the next time around is likely to be more severe then 2008 was.  This coupled with expanding governmental powers makes a lot of us nervous about our direction.

Were it only true that more Russians were worried about the direction their country took then maybe a reformer like Medvedev could get in power sooner.  As it is it looks like a gloomy future for Russia right now and many years to come.

[Shadow]

Shadow, Jone has excellent points but I understand that your allegiances make it difficult for you to concede.

The very example of the founders of Google and VKontakte are illustrative of how the system matters. Google founders remain at their company, and in fact, their IPO agreement binds them to the company until at least the year 2024.

VKontake is a different matter. Founder Pavel Durov was ousted and replaced by Kremlin-linked Alisher Usmanov and Igor Sechi, pals of Vladimir Putin.

Durov fled the country. Why? The system matters.

Those in control of the system determined that he was uncooperative. The system allowed him to be ousted because he did not wish to help that system control opposition to the system.

Durov did not flee Russia because he hated his grandmother's blini. He did not flee Russia because he was poor. He did not flee Russia because Ukrainian borsch is better than Russian, nor because they make better tractors in Belarus, or because he was addicted to Uzbek plov.

Durov fled because of the system.

The system matters.

Mendy it has nothing to do with my allegiances. It is clear to me that a company based in the US has more opportunity to become a worldwide payer as one based in Russia, simply due to language and market restrictions.
What the article tries to do is to paint the regime of Putin as a failure because a single company has grown beyond the size of the Russian stock market. And there it makes an invalid comparison.

If you wish to make a comparison then compare Google of 380 billion with Yandex, founded in 1997 and worth 34 billion.
However considering its limitation to Russian language the position of Yandex as 4th search engine in the world still is pretty impressive. And FYI Yandex is traded on the NASDAQ, as it would not be able to raise as much on the Russian stock market.

[mendeleyev]

No, it is valid. Why? Because it is true.

Were Russia to clean up her act and provide an atmosphere for safe investments, then companies based in Russia would fare quite well.

[Gator]

Were Russia to clean up her act and provide an atmosphere for safe investments, then companies based in Russia would fare quite well.

Money will find its way to good investments in foreign countries, particularly companies with a track record of growth.   

The key issue is whether the financial and management reporting is accurate and reliable.  Other issues are political stability, liquidity, currency, rule of law, etc.  I wonder how Shadow would rate   Russia with regard to such issues?

[Shadow]

No, it is valid. Why? Because it is true.

Were Russia to clean up her act and provide an atmosphere for safe investments, then companies based in Russia would fare quite well.

Do you truly believe that any country in this world could in 20 years build a stock exchange where a single company could raise 380 blillion?

[mendeleyev]

Shadow, Russia could have already accomplished far more were it not for the system. The corruption, siphoning off, the bribes, stripping companies of ownership and assets have stymied Russian economic progress.

Of course they could. In the Western world an IPO must fight through much competition. In Russia, there was noting but upside potential--the only way was up. It is shameful that the system has not allowed that growth.

[Faux Pas]

Do you truly believe that any country in this world could in 20 years build a stock exchange where a single company could raise 380 blillion?

Yes, many

[Shadow]

Shadow, Russia could have already accomplished far more were it not for the system. The corruption, siphoning off, the bribes, stripping companies of ownership and assets have stymied Russian economic progress.

Of course they could. In the Western world an IPO must fight through much competition. In Russia, there was noting but upside potential--the only way was up. It is shameful that the system has not allowed that growth.

I believe you are far too optimistic here. Why adid such companies not emerge in countries like Poland and Hungary, who got liberty at the same time and joined the EU? Why is the Polish stock exchange much smaller as the Russian one?
A sudden change in the political and economic system does not change the people or their habits.
Just look at duthc privatized state companies like the railways or telecom. They still operate as if there are civil servants running the place, and in fact most of the managers did not change.

Similar in Russia it is foolish to expect that corruption suddenly stops to exist just because of a changed political system.
Many people still exchange goods instead of money, as capitalism has no influence outside the main cities.

A system matters, but simply copying a system does not guarantee success. Applying the Ditch political and economic system to the US would bring chaos and vice versa. The plan of Medvedev to give everyone an electronic ID that would work as bank card seems to have been canceled, probably due to it being impossible for a large part of the population to use electronic payments.
When a large part of the country is not using the bank system, how do you expect money to be available? Remember that those few olicharchs are not driving an economy, as rich people have never been the driving part of an economy.

My point remains that there is no comparison between building a company and a country. Sure a company built in the right place has more chances to grow, but you can not blame a country that has to rebuild its economic and political system for that.

This may bring an interesting point that explains the impatience of the West with Putin.
As you may have learned in school, a revolution can start when the gap between expectations and reality becomes too large.
Now there may have been the possibility that the West had epxected much more from Russia in development both in political as in economical fields, and there for is longing for that revolution. On the other hand most Russians have never had these high expectations, reason why they are far from ready to revolt.

[Boethius]

I think you have it backwards, Shadow.
 
 

[Gator]

Do you truly believe that any country in this world could in 20 years build a stock exchange where a single company could raise 380 blillion?

I focus on something different and I believe it is what Mendy sees. 

In 1998 Sergei Brin and his fellow Stanford student Larry Page selected a subject for a dissertation research project.   They brainstormed the idea and received a mere $100,000 of venture money.  Sergei filed for a patent a year later and had quickly developed it into what was recognized in the tech world as the best search engine available. 

In a few more months they received $25 million more of VC funding.    Big companies such as Microsoft attempted to buy them.  They declined and instead raised $1.6 billion in a 2004 IPO, giving the company a market cap of $23 billion. Today, only ten years later, their company has a market cap $380 billion (a little less after reporting one hour ago it missed earnings estimates). 

What would have happened had Sergei never emigrated?   One must first assume that he would have received the same education in Russia as he did at Stanford with the same creative environment.  Would he have received a patent or would someone pirate his idea?   Would he be able to decline overtures from Russian bigwigs?  This is where the Russian system starts to break down whereby Sergei is robbed of his idea, and the idea now withers on the vine because it has been taken over by people who don't fully understand it. 

Let us assume that Sergei as a Russian somehow developed Google into what it is today.  If so, a majority of Google's 50,000 employees would have been Russians, earning high salaries that boost the Russian economy. 

You counter that Russian stock market could not have raised $380 billion.  I agree with that because the Russian stock market is not considered safe enough.  However, Google can still realize its market potential by becoming an ADR and traded on NASDAQ.  See BABA (Alibaba), a Chinese internet retail company traded on NASDAQ with a market cap of about $300 Billion (before a recent decline).

The difference is the system as Mendy says unless I am missing something.  So what am I missing?

[jone]

I believe you are far too optimistic here. Why adid such companies not emerge in countries like Poland and Hungary, who got liberty at the same time and joined the EU? Why is the Polish stock exchange much smaller as the Russian one?
A sudden change in the political and economic system does not change the people or their habits.
Just look at duthc privatized state companies like the railways or telecom. They still operate as if there are civil servants running the place, and in fact most of the managers did not change.

Similar in Russia it is foolish to expect that corruption suddenly stops to exist just because of a changed political system.
Many people still exchange goods instead of money, as capitalism has no influence outside the main cities.

A system matters, but simply copying a system does not guarantee success. Applying the Ditch political and economic system to the US would bring chaos and vice versa. The plan of Medvedev to give everyone an electronic ID that would work as bank card seems to have been canceled, probably due to it being impossible for a large part of the population to use electronic payments.
When a large part of the country is not using the bank system, how do you expect money to be available? Remember that those few olicharchs are not driving an economy, as rich people have never been the driving part of an economy.

My point remains that there is no comparison between building a company and a country. Sure a company built in the right place has more chances to grow, but you can not blame a country that has to rebuild its economic and political system for that.

This may bring an interesting point that explains the impatience of the West with Putin.
As you may have learned in school, a revolution can start when the gap between expectations and reality becomes too large.
Now there may have been the possibility that the West had epxected much more from Russia in development both in political as in economical fields, and there for is longing for that revolution. On the other hand most Russians have never had these high expectations, reason why they are far from ready to revolt.

I can see how Shadow's point of view evolved.  That is why it was very important for the author to label what he was trying to get across.  Without said direction, an individual could get lost in the article.  Shadow has focused on the overt comparison, while all of us seem focused on how the system in the country was spun by the current ruler of Russia and the resulting deficiencies.  It is subtle, but living in Russia, one must be subtle these days.

[Muzh]

This is crazy talk.  Look back over 250 years and consider how America has not only adjusted to change but seized the opportunity to thrive. 

I will admit that Obama was a step backwards and GWB did little.  Nevertheless, look at where we are today.  For example, consider how Obama downplayed dirty oil, supported alternative sources, and took steps to restrain new production, yet the oil industry forged ahead.  American business will lead the way.  Be brave.

I just asked him to say in his own words how this "debacle" would affect him personally.


You saw his answer: duh, duh,duh