Putin: Prime Minister

After 8 years in presidency, Vladimir Putin has been choosen Prime Minister in Russia by the newly elected Dmitri Medvedev. His protege, Dmitri Medvedev handed his role the 8th May. The new prime minister gave a speach in the State Duma in an overwhelming 392-56 vote, where he promised to lower tax and increase the social welfare in Russia. The most important problem that he has in Russia is inflation which was reduced to 11.9% last year and which is one the biggest issue in Russia. Putin move to the number 2 place was forced by the constitution as he is not allowed to run for a third consecutive term as president. Putin will have the same strong influence on Russian policy. The question still remain that who will run the Kremlin but the newly elected president made it clear that they will take the decision and will run the country together. As the most fascinating figure in Russia we have no doubt that he will run the country, during his years he brought back a strong Russia on the world stage with increasing price in Oil, he has the power to invest and increase social welfare, education, health and life expectancy. Human right are still an issue in the country but who can stand to the ex KGB agent and newly elected prime minister.

First foreign bank

Turkey is in the process of opening the first foreign bank in Iran. There is a business of around $ 8 billion between Iran and Turkey. In 2002, the turnover between the countries were of $ 2 billion, nowadays $ 8 billion and the forecast show that it will be around $ 20 billion in 2011. Turkey is increasing his export in Iran in the sector of Gaz and petrol but ask the Iranian foreign minister Manochehi Motaki to finally reduce the tarrifs and barriers between the 2 countries. Iran has promised them for years that this problem of barriers will be resolve but Turkey is furious that the foreign minister hasn't done much in this area because this kind of problem doesnt help anyone in business. Since the mildly muslim party in power we have seen that the relation with Arab countries and business between them are increasing. It is a sign of a Turkey which is fed up of waiting for the European Union and turning their face to the Arab world.

Evolution of the real estate market in Spain

In the last few years in Spain, especially, Madrid and the Costa del Sol they build more building than United Kingdom, France and Germany all together.
Commercial centres and luxury apartments are produced in enormous quantity and very fast, therefore the real estate sector became the heart of the Spanish economy.
The real estate sector grew very fast from 2000-2008, they build 5.3 million building which were sold at high prices. We also need to have in mind that the Spanish population is less than half of the German population. In Madrid and in the Costa del sol the price for a square meter in a district is over a 2000 euros.
Many foreigners with high incomes were investing heavily in the country. Marbella is only an example where exclusive property can be found.
Marbella has been hit the hardest by the crisis and the prices has gone down. Many people has made a loss on their investment because of the houses which are going under the price they paid to buy them.
The construction companies has benn affected negatively and building has been reduced by 40 % in 2008. In Marbella and other localities, construction has fallen by 50%.
An other problem which was seen just before the crisis is that local government in Marbella has given illegal construction permit to people and has reduce the confidence of foreign investors and local ones.

Unemployment in France

In May the unemployment has increased in France which will affect negatively the popularity of Nicolas Sarkozy. Compare to February the number has raised by 8200 unemployed and reach 1,9 million people. French blame on the government but the finance minister said that the reason behind the increase is the current situation in the world, the strong euro, US recession. The french socialist party blame the new government for the increase as they don´t like the reforms and the attitude of new elected French president. There are reforms the government has brought like CPE or CNE which were suppose to reduce the unemployment but we see that the problem is that in France the market place is to rigid and dimissal is too hard. With more flexible contract, companies will tend to hire more young people which gain experience for the job and with time reduce unemployment in the country.

Nationalisation in Bolivia

Thursday 1st of May, Evo Morales the bolivian president annouced that the government was to control the majority of the share in 3 oil company with foreign capital. The companies are owned originaly by BP(Chaco), Shell (Transredes) and CLHB owned partly by a german and peruvian company. The president also annouced that they tried to buy 51% of the share but they couldn´t reach some kind of agreement. This process started in May 2006, the government also bought the majority share in an Spanish oil company called Repsol. The president said during a speach in the capital La Paz that he wanted to have associate not masters. Since he is in power of the country, Evo Morales has decided to take back all the oil company from the privat sector that the previous liberal president Gonzalo Sanchez de Lozada(1993-97) has privatised. In the same speach, he said that the telecommunication company ENTEL, which was under Italian control will be public and in control of the Bolivian hand. All this announcement in the country has created tension and 4 regions including Santa Cruz, Pando, Beni and Tarija wants autonomy which also is 65% of the GDP of the country. The foreign minister of Bolivia said that this was some act of conspiration from rich regions which are against the government of Evo Morales. The future of this country which have a strong state run government is particulary uncertain. It is harder for foreign business to invest in this countries. Therefore, even if the return in investment is high the country is too risky for foreign company to invest, the Bolivian people will miss the know-how of Foreign firms in those area and the support of Western countries.

UBS Write-Downs

In the list of the 45 list of the world biggest bank and security firms. Ubs, the largest Swiss bank, is on the top of write-downs. They had 19 billion dollard write-downs on asset related to assets related to mortgage assets. Since the beggining of 2007, we can see that 232 billion dollards has been write down by banks all over the world and also with a significant market exposure due to the size of the bank UBS is on the top. Obviously,after seing the exposure that the bank has and the significant lost that they have the chairman Marcel Hospel has step down of his post. He was shown as the modernizer of the Swiss bank industry, now he is forced to step down. When your salary is in millions and that the bank was not ready at all to the credit crunch, someone is to blame and in that case the chairman had to step down which makes sense as he is responsible of the company. The lack of risk management, the rushed set up of its hedge fund business and an over aggresive growth plan is also to blame for the position of the bank.

Northern Rock fiasco

Another victim of the credit crunch in the US was the newcastle based firm which is the highest profile UK victim of the credit crunch. Not like most banks which make their money from customer making deposits into savings accounts, Northern rock is build around its mortgage business. Basically, they raise money which it provides for mortgages via the wholesale credit market and they sell the debt on in the form of bonds. With this model of business they werent prepare for the credit crunch therefore it was forced to ask for the Bank of England for emergency funding. The loan that they took was also a shown by a loss in confidence from the public. Some consortium of buyers such as Virgin group tried to buy the bank but it was seen that they undervalued the bank and Ministers where forced to nationalize the bank, the first such move since 1970s. Behind this move, the government wants to stabilize the situation of the bank as the bank now is operating normaly and then sell it and repay the tax payer because if the bank was to be sold now it will be much undervalued. This year the firm share have already fallen by about 50%.