President Medvedev has reportedly said that the damage caused by the financial crisis was far worse than expected and the economy may contract by 7.5% this year.  In an interview with state television, Medvedev designated priorities for economic modernization: 'energy efficiency [...] information products, both ground- and space-based; nuclear energy [...] and pharmaceuticals as we must produce our own medicinal drugs'.  The President also said that Russia will need as long as 15 years to reduce its reliance on raw materials.  Avtovaz plans to start the production of Renault and Nissan vehicles in 2012, suggesting that the French automaker is attempting to comply with the Kremlin's demands for financial commitment.  Prime Minister Vladimir Putin has called for domestically produced medicines to represent at least 50% of total sales in Russia within three years, from the current 20%.  Media ...

TODAY: EU Russia-Georgia report out! Tilted towards blame on Georgia; Russia claims vindication on who started it issue; denies report's accusations of Moscow violating international laws; PR machines crank up on both sides.  PACE to vote today on rights; Yushchenko says he will meet Medvedev despite recent freeze in relations; Medvedev to ditch Putin's wordsmith? 'Open hostilities began with a large-scale Georgian military operation against the town of Tskhinvali and the surrounding areas, launched in the night of 7 to 8 August 2008' - the Telegraph quotes the EU report which suggests the blame for starting the war lies with Georgia, whose actions in South Ossetia were unjustifiable under international law.  Reuters argues the report is 'likely ...

Gazprom will cut output in 2009 by 13.8%, the lowest in history, due to dwindling consumer demand domestically and in the former USSR.  The company has apparently said it is considering adding a third partner to the South Stream pipeline.  Bloomberg has an interview with the CEO of Statoil Hydro regarding hopes to join the Yamal project in northern Siberia.  Naftogaz Ukrainy apparently expects to see a recovery this year for the losses of 2008, maintaining that profit-making was prevented by currency exchange rates.  Vladimir Putin has said that although ultimately Russia plans to liberalize the gas market, a cautious approach is favorable.  According to Reuters, Russia will maintain Gazprom's export monopoly in the medium term.  A project to transport Russian gas from North Korea to South Korea has been halted due to inter-Korean tensions.  ...

The Streetwise Professor has a sharp post on Vladimir Putin's recent welcoming party to foreign investors in the Arctic energy sector (which was done with a flair of deadpan comedy).  Really it's the same old story starting over again - no fair courts or rule of law, no security for investments.  Yet the trap keeps luring them in.

Put differently, Putin is the spider, and any investor would be the fly.  Putin may be desperate now, but once there is pipe in the ground and the gas is flowing, his (or his successors) desperation will disappear, and the temptation to expropriate will be irresistable.   Once caught in the Russian web, any foreign energy investor is likely to be the spider's meal, sooner or later.

Like the Telegraph says, absent credible, enforceable legal safeguards, western investors should avoid Putin's blandishments like the plague.  The existence of a resource

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Vladimir Putin told a meeting of international oil company heads that he is seeking 'stable and long-term' cooperation for gas extraction in the Yamal peninsula, which the country hopes could lead to a 25% share of the world's LNG market.  'Mr Putin indicated that favourable fiscal treatment might be on offer' at his warm reception for the companies, the Times says.  Putin's unusually solicitous welcome is the mark of 'desperation', the Telegraph suggests and argues that if Western companies consider their previous altercations with Russia in the oil industry, the luster of Putin's offers may fade.  Oil and Gas Eurasia details which former Yukos assets belonged to SeverEnergia, the Italian firm in which Gazprom has just bought a controlling interest.  Russia plans to ship 4.5% more Urals and Siberian Light crude oil from four Baltic and Black ...

You wanna know what is going on? David Rosenberg explains…

“US consumers are cutting back, and where they are not cutting back, they are scaling down. This new cycle is all about ‘getting small’ and it is deflationary. For yet another in the litany of signs pointing in the direction of social change towards thrift, have a look at what is transpiring at the upper echelons of the income strata – Now Even Millionaires See the Benefits of Budgeting on page B5 of the Saturday NYT is a must read.

“Not only are the rich trading down, but the article quotes a high net worth financial advisor who said ‘many of our clients are very happy to be sitting on bond portfolios and cash reserves.’ And see the article on page 2 of the Sunday NYT – Beauty Products Lose Some Appeal During Recession. According to the NPD Research Group, total sales

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The new CEO of TNK-BP will apparently be chosen by the end of the year, energy mogul Viktor Vekselberg has announced.  The Telegraph examines Total chief Christophe de Margerie's belief that oil prices may rocket back up to the $100 mark if further investment into oil exploration is not followed through.  According to Bloomberg, state-run monopoly Saudi Aramco says that it imagines little chance of pumping crude from idle fields in 2010 because demand for oil remains low.  Ukraine will offer 'absolute and unconditional guarantees' to restructure the debt of Naftogaz Ukrainy.  Greece is cooperating with Russia in the construction of the Burgas-Alexandroupolis oil pipeline and South Stream gas line, but with a predominant concern for its own interests, says Greek Prime Minister Costas Karamanlis, according to ITAR-TASS.   37 tenders for the Shtokman gas field ...

TODAY: Obama firm on reasons for missile defense decision; Medvedev and Putin seem to take it as a positive sign; Putin wishes to see trade the next barrier broken; Russia will abandon Kaliningrad missile plans.  Pressure mounting regarding Iran situation; Israel apparently promises Medvedev no attack on Ahmadinejad regime.  Top cleric murdered in Ingushetia; disappearances abound.Barack Obama is still arguing the independence of his decision on missile defense saying, 'the Russians don't make determinations about what our defense posture is,' but if they are 'less paranoid' as a result, than can be considered a 'bonus'.  Defense Secretary Robert Gates has reiterated this position in an article in the New York Times.  Medvedev sees otherwise: '...

TODAY: US missile defense in Eastern Europe plans officially scrapped in favor of 'more efficient' new program.  A matter of concession or conviction on Obama's part; mixed reaction from former would-be host countries fearful of Russian dominance; is the US expecting Russian cooperation in Iran in return wonders media - and will it get it?  NATO to have increased involvement in new plans. Georgia and Russia to negotiate.  Gapzrom may get its tower. The US plans to build missile defense bases in Poland and the Czech Republic have been binned; the Moscow Times reprints President Obama's speech on the decision here.  'This is not about Russia',  White House spokesman Robert Gibbs has said.  According to the ...

This week marks the one-year anniversary of the Lehman bankruptcy. The media struggles to say something meaningful about it. Here at the Daily Reckoning we will not even attempt meaningfulness. We’ll be satisfied with a few snide remarks.

What is most remarkable about the world a year after Lehman fell is that so little seems to have changed. Even the papers have noticed.

“A year after Lehman, little change on Wall Street,” says the headline on today’s International Herald Tribune. “Backed by huge U.S. government guarantees, the biggest banks have re-structured only around the edges. Employment [on Wall Street] has fallen just 8% since last September.”

“Obama to push banking overhaul,” says another headline at the Telegraph. Yes, the pols will try to convince the world that they have regulated risk out of the market. Perhaps they will limit salaries… or insist on more disclosure… or require that the

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