Economist Apr 19th 2014



  • Infiltration to Eastern Ukraine; not quite invasion;
  • Reasons why Russia might want to destabilize Ukraine: stop presidential elections? justify overt Russian intervention? civil conflict that destroys the authority of Kiev;

There is nothing wrong with federalism in principle, but this would be a formula for Russian domination.

《Boys from the Blackstuff

  • The occupations have shown how little authority Ukraine’s government has in the east;
  • Moving military against Ukraine is costly for Putin: salaries, pensions, subsidizing coal mines, would cost twice as much for Donetsk as in Crimea;
  • (Alexander Dugin, Russia’s most vocal imperial nationalist and anti-American ideologue) Maidan revolution in Kiev was an American plot to drag Ukraine into the EU and NATO; having failed to make this happen, America is now trying to provoke violent clashes to justify NATO military bases in Ukraine;

《Turning off the Taps

  • Start with finance, because of the pre-eminence of the dollar;
  • Such sanctions have been used increasingly since the 1990s: helping nudge Pyongyang back to the negotiating table; helped soften Tehran’s stance over its nuclear program;
  • The Treasury has been deliberately vague about how strong such links have to be:

If one bank or company stops doing business with an entity, so does everyone else. No one wants to be an outlier.

  • Sanctions also invite countermeasures: hit Rosneft and you hurt BP, ExxonMobil as well; Russia could 1) choose to investigate foreign investors for tax “irregularities”; 2) enlist hackers to destabilize American banks and exchanges, as it proposed to China back in 2008;

《From Bad to Worse

  • Sanctions are pretty limited on paper, but they have created a “scare factor” that is magnifying their effect;
  • … could also create openings for competitors (Chinese firms);
  • Russian firms are casting around Asia and elsewhere for new customers: Rosneft is seeking to treble its exports of oil to China;
  • Losing access to foreign loans – what it will mean for investment, productivity, and growth;
  • Weak currency will be an advantage for local brands? Not actually, many Russian manufacturers depend on imports for inputs and equipment;


《China’s Losers

  • (Analysys International) More than 90% of programmers and journalists and about 80% of food and service industry and marketing workers said they saw themselves as diaosi; civil servants least identified with being losers in the survey;

《Coming to a Beach near You

  • Next step: get visa easier; tailor language, products and services to the Chinese market – “They are very afraid of being treated as second-class”;
  • “Authentic”, “limited edition” or “VIP” have always appealed to the Chinese;
  • Getting noticed is the toughest step;


《The 50-Year Snooze

  • “The moment you land in Brazil you start wasting time.”

Few cultures offer a better recipe for enjoying life.

  • TFP is lower now than it was in 1960; Brazil invests just 2.2% of its GDP in infrastructure; low quality education; badly managed companies; protectionism;
  • Preferential tax treatment (for firms with turnovers of no more than $1.6m) discourages companies from growing;
  • Two salutary examples: deregulated agriculture in 1990 and institutional reforms in financial services a few years later;

《Status Shift

Social networks promised marketers a revolution, but what they have delivered is just boring traditional ads.

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