1990s Russian Revival: Intangible Bubbles… Approach With Caution or Zeal

John Lett (About) (Readings)

"Amsterdam" by ChrisJunker, 2002, retrieved from http://www.flickr.com/photos/chris-yunker/138241368/.

As I have written in the past, the value of traveling in hostels cannot be overstated. For the last eight weeks I have been holidaying, consulting, and on tour in Europe (Portugal, Spain, Germany, Denmark, the Netherlands, and soon others), and staying in a variety of living arrangements, but the most dynamic has been through youth hostels. In some countries there is some vitality on the ground, but the employment data remains bad because work is often undocumented (Spain), and in others, there is a tremendous amount of construction and infrastructure development happening, but the work contract and full-time, formerly “stable” jobs are disappearing in droves (Denmark, Germany, the Netherlands). In hostels, this is a topic of interest for most people nearing the end of their studies and older, and a lot of information is passed along.

In Amsterdam, Netherlands a few days ago, I was informed that a massive post-Soviet Ponzi investment scheme that ended disastrously in 1994 (MMM) has been revived after its creator has been released from prison. He has adapted his approach to fit the internet/information/knowledge economy age and has been evading lawmakers and banks through entangling them in involvement or masterfully using statutes of limitation. This is a rough take of what was disseminated to me, in the form of a video through my YouTube channel, but which is only available to readers here:

This development in Russia (with other legal battles related to it going on in places such as Belarus) has the potential to effect world markets given that 15 to 20 million investors are now involved and people the world over are looking for alternative investments outside of major currencies and commodities such as gold and silver. What is interesting about MMM is that has a lot of egalitarian, “everyday man” qualities to its branding that would appeal to Russians or those abroad who are tired of oligarchs taking all the big contracts… however, these were the people that lost tremendously in the 1990s.

Though I sometimes use tarot as a means to help investors or those in the financial world decide a direction, all I can say from questions I have asked the cards is that 2012 is “The Year of Opiates” for the Anglocentric world, particularly in the US, where the focus will be on giving a good impression for the elections. You will notice that the jobs data will suddenly appear better and people will be taking riskier investments. Some of them are good to take advantage of, but do not overextend yourself during this build-up period.

Soon the divide will come along the lines of people who want to go further into the sphere of neoliberalism and globalization and those who want to completely remove themselves from it. It is not entirely clear to me which side will dominate or win, but I can see on the ground that most people working alone are doing much better if they concentrate on a small local marketplace or community. Property owners and proprietors without too much overhead and without looking for quick profits are generally the figures succeeding.

A very prosperous spring to you all and I will let you know as the tour extends to other parts of Europe, the US, and possibly Asia this year. It is possible to create seminars if you have in excess of 15 participants who wish to create a spirituality + living-within-our-means event.

John Lett (About) (Readings) (YouTube Channel)

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5 Responses to 1990s Russian Revival: Intangible Bubbles… Approach With Caution or Zeal

  1. I remember MMM clearly. In fact, in Paris on my first visit in 1993, I met with writer Albert Russo who had contacts in various countries, and he spoke in horror of what was going on in the former Soviet Union.

    Some of these Ponzi schemes pay off well for years. Madoff is one example.

    Generally, I’ve seen this sort of thing fail going back to the 1960s in the USA. A huge eye-opener for me in the ’80s as a young investor was having legal securities arrangements go bad. When you’re under 30, this can be overcome, often, but older, and it can set you back forever. I chalked a lot of it up as learning experiences, got an MBA and became a licensed securities dealer, myself. It was the education of a lifetime!

    Living debt-free, staying as nimble as reasonably possible (I am not at all at this point in my life, but I am getting older and have health issues), being diversified, being prepared to weather out a storm with some basic planning done … all these are still very good things. Some American friends who actually have some money have been frustrated about earning negative returns, so false upticks are likely to continue throughout this year. An election year for the Presidential post.

    I continue to be dismayed by Americans who want “meaningful” work and who are unwilling to accept jobs at 8 dollars per hour or so. I’ve seldom found any of my work on two continents “meaningful,” even when fully self-employed, and here in France, people who do not work and who are picky are looked down upon. All honest work is valued here, and undeclared work is anathema in France. It does exist, but at great risk for the workers and the employers. This is a very work-oriented culture. Americans tend to not realize, when you sign a work contract here, you are highly unlikely to ever receive an increase in pay or a bonus. Any promotion will just mean more stress and no additional compensation. Prices always increase for the most part, and yet, people just sort of band together and make do with less. Even during good times, Europeans are more likely to be pessimists, expecting another bloody war to befall them at any moment!

    This being said, I’ve done okay with short term stock market trading in the past year and a half! Even with taxes taken into consideration. It does not reassure me. I’ve never known markets like this before. I seem to just have to read press releases. Having written those press releases in the past, I know just how bogus they generally are. Most people are not willing to accept that the correct increase in real estate values worldwide, on average, is one per cent. per century. Anything more is a bubble. The cultures which think ahead for generations, long after we are dead, are the ones who will continue to do best. The Chinese come to mind. In France, renting property to tenants at a slight loss over 20 years is probably the best way to go. For people who are accustomed to “instant gratification,” this type of thinking is unthinkable.

    • I don’t know of Albert Russo, I just have heard of Aaron Russo, the famed manager of Bette Midler and purported social connector to the Rothschilds.

      The $8 an hour job you describe is a bit hard to take but sometimes it is a good starting point, so long as it does not prevent the person from being able to mobilize for something better. Most jobs have legs.

      It seems like Europe is the place of the unstable 90-day contract now. I met yet another woman who came over with her kids from Canada to the Netherlands and had initially been offered a one year deal, but now it is reduced to 90 days… that may very well not cover all of her moving costs, I suspect.

      In the Netherlands, a lot is going on right now in terms of protecting people. Apparently, the biggest supermarket chain, Albert Heijn (32-34% marketshare) has been forbidden from offering special member rewards cards for creating a monopoly in the market, for instance. People do not buy property with the intent of flipping it, and it is so hard to acquire anyway that one would never take that risk unless they are a big, big player.

      People are getting sick of the shyster stuff. However, this MMM revival in Russia does have some populist, egalitarian, warm aspects to it so long as people realize they could lose it all.

      • She probably did not understand the “trial period” clause in her work contract. I got burned this way my first job in France. I had made it past the 30-day trial period and then it was their responsibility to send me a registered letter before the expiration date and say they were renewing their option to have me on trial for another month, in which case they could let me go for no reason (and I could leave on a day’s notice, too). I was railroaded into signing a paper in French in the fifth week, stupidly did so, and was soonafter fired, no recourse. An expatriation consultant such as myself could have examined her contract (most have to give it in the mother tongue, but a polite letter in the local language must be sent immediately asking for this, registered mail, and they have 30 days to comply) and advised her to negotiate to have her place sublet and her things stored for 4-6 months, at the new employer’s expense. She should have asked for a “logement de fonction” (a work-related abode), shipping expenses both ways, travel costs both ways, and so on. Many management level jobs in Europe have 90-day trial contracts. They can be renewed only once usually, and then it becomes “a job for life” unless you mess up (and even then, unless you attack someone at work or steal or whatever, there are procedures to be followed). That means, however, it is touch and go for a good six months. Quality companies have relocation services to get you hooked up with local utilities, school and daycare taken care of for the children, studies or provisions made for “the trailing spouse,” and so on. You must get a bank account, be connected with the benefits system, etc. People who work abroad also need to understand that they will still have to file tax returns and likely pay social charges in their home countries, even if they have no plans to return.

        Many people who are accustomed to Anglo-Saxon law (or other laws) are not at all familiar with European law(s). It is a whole ‘nother ball o’ wax. People thought I was nuts because I legally sublet my apartment in NYC for 14 months when I relocated to France, but I had to plan for a retreat if things did not work out. Generally, North Americans do not realize the European employer will have to pay about 1.5 times the salary in social charges alone for each employee. Still, job candidates must ask for high pay, as once they sign the contract and the job is eventually, we hope, secure, only those at minimum wage (here in France, at least) are guaranteed any increase, and usually that is only 1% per annum. Under certain “conventions collectives,” a raise of one eurocent per hour in the seventh year might get the employer off the hook for “raise and promotion.” Men tend to do way better than women over here in Europe. They tend to be promoted more quickly, for example, and women face the glass ceiling, especially if they have children.

        This is one of the reasons I charge so much for expat services. I use local counsel, and they must all be paid. If I am not qualified to do the necessary, I am right there with them, face to face, monitoring the meetings and having on-site interpretors and stenographers. Europe is quite a closed shop unless one is very, very savvy. Even locals are used for ridiculous “internships” which basically are slave labor. Only those who say NO, NO, NO all the way tend to be taken seriously and given a fair shake. Again, males are favored.

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