US banks will lend less to Russia, but the Russians don’t mind.

With a balanced budget, a current account surplus, and little sovereign debt, the Russian state is relatively indifferent to banking sanctions.  According to the central bank, Russia’s total external debt (public and private) is about $700 bn, most of it long; reserves are $500 bn.  The trade surplus is running at $170 bn. Banking sanctions are the favored kind of showy gesture that the US can make without the risk of affecting anything.  As such, they serve a useful public relations function.

Land of hope and baloney

The Indian stock market is rallying on expectations of a Modi victory.  Shares have risen 17% in three months.  Rodham Desai of Morgan Stanley is quoted in the FT as saying, "the market has turned hugely exuberant; there is a big hope that this incoming government will fix all of the country's macroeconomic problems.” 

The European defense industry is still downsizing even as global threats increase.

 Airbus is restructuring and cutting 5,800 defense jobs in response to a steep reduction in European defense spending.  It would appear that Europe is not particularly worried about security despite events in Ukraine.  Will this change?

Chinese housing: Built to last but likely to diminish

Residential construction is currently 23% of Chinese GDP.  (In the US it is 3.1%) The Chinese build houses and apartments of cement, and China produced more cement in 2011 and 2012 than the US did in the entire 20th century, according to China’s statistical agency.  But the economy is slowing. Electricity consumption was up only 4.4% in April. Curious though it is, the government has taken no stimulus measures.  One suspects the authorities want a slowdown.

Do Americans love their mothers?

­The National Retail Federation says Americans spent $29 bn on Mother's Day gifts this year. That’s only $300/mother.

Thank you, Federal Reserve, for the easy money

Ethiopia got its first credit rating: Fitch B, S&P B, Moody's B1. The economy is said to be growing at a 10% rate and the country is planning to issue a Eurobond.

Confucius says: “Even the seizure of the largest hydrocarbon resource must begin with a single offshore oil rig.”

China has moved an offshore rig into waters off Vietnam. Vessels of the two countries have been harassing each other. In December China state TV aired an eight part documentary proving it owns the seas within the famous “nine-dash line,” which goes up to the shores of Vietnam, the Philippines, Malaysia, and other countries.