Price controls in Russia and China
This entry was posted on 10/26/2007 3:48 PM and is filed under uncategorized.
Both China and Russia seem to have taken the admonition "Never forget where you come from" to heart. Both have mandated price controls on certain food items. Despite the fact that both countries have enormous reserves that could easily be used to subsidize food for the poorest of their population, both governments have shifted the cost to companies doing business in their countries.
Before US investors and executives start believing the myths of 1.3 billion capitalists, they should look at what is really happening. When these governments feel pressure to buy off any threat to their power, they will fall back on old socialist habits at the expense of investors.
For now, the leaders of both Russia and many analysts who should know better feel that their economies are so strong that they can set the rules. One thing that is for sure in all markets is that they go up and down. A crash, which becomes more likely by that day, will definitely change the rules. When it does, investors will to their regret learn the true inclinations of these rulers for whom socialism is not a distant memory.
William Gamble
