Thursday, September 11, 2008

Russia May Use Wealth Fund to Support Markets

Russia is considering using money from its national wealth fund and pension fund to support financial markets where necessary in the future, Alexei Kudrin, finance minister said on Thursday as the country’s stock market inched higher following moves to bolster confidence.

On Thursday the RTS index opened 0.5 per cent higher at 1341.32, having lost almost 12 per cent during the previous two sessions. The market fell 4.4 per cent on Wednesday as investors ignored bullish remarks by President Dmitry Medvedev and an injection of $10 billion by the central bank to alleviate a chronic credit shortage.

The Russians still need to learn a few things about capitalism, like A. You don't use pension fund money to prop up the stock market. In the old days stock brokers in the U.S. used to use their cash to prop up individual stocks, they would always fail, and
B. central bank monetary injections will only cause inflation.

What? You say the U.S. uses its pension fund money, aka Social Security, to prop up the Treasury securities market and the U.S.'s central bank, the Federal Reserve, prints money to bailout financial institutons. Oh well, never mind.

-Robert Wenzel

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