Mark Adomanis writes:  You know that Russia is in real trouble when liberal economic policies start getting batted around. This is particularly true of “privatization,” a typically boring and technical term studiously avoided during periods of stability and then suddenly thrust back into the public consciousness during periods of crisis.

In 2009, the last time that oil prices tanked and the government’s coffers became a bit sparse, the Kremlin talked openly about privatizing a number of state-owned companies. Impressive sounding plans were released, and officials mouthed the pieties about “attracting investment” and “improving efficiency.” Nothing came of this campaign (oil prices rebounded quickly enough that the pressure on the state’s finances quickly abated and the state’s economic role actually grew), but it established a precedent that is being repeated.

As the economy experiences a nasty recession and pressure on the government’s budget mounts, the Kremlin is once again mulling the initiation of a large-scale program of privatization.

Both in 2009 and in 2016, the official justification for privatization is familiar: privatization will both raise money to plug holes in the budget and, perhaps even more importantly, will make the economy as a whole more competitive. It’s no secret that government-owned companies almost always lack the incentives needed for long-term profitability.

Compared with private sector peers, state-owned firms tend to have some combination of bloated payrolls, unrelated assets (think golf courses), or suspiciously large capital expenditures.

Gazprom’s capex as a percentage of sales was somewhere between three and four times the level of comparable publicly-traded companies. It’s easy to imagine that more profit-oriented managers would do a better job.

If the government’s main goal is to increase the economy’s efficiency, privatization is an excellent tactic. But, rare indeed is the instance in which a government single-mindedly pursues greater efficiency.

According to the Kremlin’s public statements, privatization is going to achieve the following goals simultaneously: 1) increase the economy’s competitiveness, 2) raise funds to plug the hole in the budget, 3) maintain state control of “strategically important companies,” 4) avoid a “fire sale” in which the government “gives away” valuable assets, 5) limit the involvement of state banks and 6) attract foreign investors.

It is simply impossible to design a privatization scheme that achieves all of these goals simultaneously.

Alternately, the government could drastically limit the involvement of state banks. This would likely improve the quality of management but would significantly depress valuations.

Unless the government significantly changes its stated goals, foreign investors will remain uninterested.

The Russian government needs to decide what it values most highly. Does it want to involve foreigners or keep everything registered in Russia? A properly-structured program of privatization would marginally boost the country’s growth rate and bring in fresh management, but would require such economic de-regulation that, by all accounts, the Kremlin deems unacceptable.

I would expect a reprisal of 2009’s performance — self-satisfied talk of privatization with very little action. The real question is whether oil prices will rebound like they did last time.

A draft deal to reform Britain’s relationship with the European Union has fiercely divided the Square Mile, prompting cheers from big business groups and drawing sharp criticisms from sceptical economists and industry leaders.

European Council President Donald Tusk tabled a tentative agreement yesterday for a “new settlement” for the UK in the EU, and in a letter to the leaders of all 28 EU member states, Tusk said his proposals go “really far in addressing all the concerns raised” by Prime Minister David Cameron.

But Tusk added: “This has been a difficult process and there are still challenging negotiations ahead. Nothing is agreed until everything is agreed.”

The circulation of the draft kicks off another two weeks of high-stakes negotiations ahead of a meeting of EU leaders later this month. Cameron has said that he wants to secure a final deal at the meeting, paving the way to hold an in/out vote as soon as June.

TheCityUK and Confederation of British Industry (CBI) welcomed yesterday’s draft, calling it a “milestone” in the reform process, while the Institute of Directors said the proposals were “better than expected”.

Economists and industry leaders, however, slammed the deal, saying it fell short of earlier promises made by the Prime Minister and chancellor George Osborne.

“Britain’s business leaders and finance professionals will remain to be convinced that today’s draft deal is the right formula for a better future in Europe,” said ICAS chief executive Anton Colella.

Quidnet Capital Partners chief executive Richard Tice agreed, telling City A.M.: “There is no genuine reform in any of this. The Prime Minister talks about substantial changes, but this is a restatement of the existing system.”

Osborne wrote in City A.M. last September: “One of the greatest threats to the City’s competitiveness comes from misguided European legislation. A central demand in our renegotiation will be that Europe reins in costly and damaging regulation.”

But Jon Moynihan, former executive chairman of PA Consulting Group, said he saw little in the draft that would curb harmful regulations.  “Even the small set of concessions achieved will either be just ignored by the EU as such agreements have in the past,” Moynihan said. “They are sort of meaningless as far as business is concerned.”

Among the proposals included in the draft is a so-called safeguard mechanism protecting non-euro countries from being discriminated against by the Eurozone.

The draft calls on Eurozone countries to “respect the competences, rights and obligations of member states whose currency is not the euro” and allows the UK to call a summit of EU leaders if it is concerned about punishing Eurozone rules, including those related to financial services. But the draft stops short of allowing the UK and others to veto Eurozone legislation.

“It’s not a mechanism that has any actual impact,” Europe Economics executive director Andrew Lilico told City A.M., calling the measure “completely worthless”.

Michael Haltman writes: The December increase was implemented despite inflation remaining well below the Fed’s target rate of 2% and in the face of a recovery that could be, at best, termed tepid.

At the time some speculated that the Fed needed to raise rates so that they would have the ability to lower them again should the economy weaken. Still others thought that to retain any credibility they needed to make a move.

Neither one of those could be called solid reasoning when making decisions impacting the U.S. economy.

And since the rate hike suggests the counterintuitive track of 2-year treasury note yields courtesy of treasury.gov…

The Federal Reserve has acknowledged that the U.S. economy has slowed down but provided little guidance about when it would raise interest rates again.

The central bank began pulling back its support for the recovery in December and signaled it anticipated increasing its benchmark rate four times this year. But weeks of turmoil on Wall Street have spurred doubts about whether the Fed will forge ahead.

For now, the central bank is standing pat. In a unanimous vote Wednesday, the Fed left the range for its benchmark interest rate unchanged between 0.25 and 0.5 percent. Its official statement emphasized the resilience of the job market despite the weakened recovery and pointed out strength in consumer spending and the housing sector.

So do we feel that the Fed as an institution with HUGE responsibilities, has a firm grasp on accomplishing its mandate?

Is the Federal Reserve, in effect the arbiter of the global financial system is run by academicians with little to no actual experience with business.

The Federal Reserve has no need to innovate or to push the envelope.

Government in effect has no responsibility to a bottom-line or a need to grow in any way other than raising taxes to bring in more revenue or to increase infrastructure to create more jobs.

Either way, whether through taxes or through government growth, the cost is borne by you and I, the taxpayer.

To further compound the problem of government bureaucrats setting policy for businesses and individuals is that I would venture to guess that many if not the majority have little to no actual business experience.

A perfect example might be the government mandated minimum wage of $15 an hour that might sound great to the voter, but will undoubtedly have unintended consequences politicians can’t be bothered with worrying about.

The above mentioned description certainly seems to be the case with Fed Chair Janet Yellen, an appointed government official who has much of the worlds financial future (at least in the near to medium-term) in her hands.

Emily EIsner of the NY Fed writes: The main liabilities of central banks are typically currency (banknotes) and reserves, a form of money that can only be held by banks at the central bank  Banks use reserves to make payments among themselves and to the central bank. In addition, some central banks issue deposits to the government. These accounts function as the government’s “checking account” at the central bank.

The Federal Reserve was a central bank that, before the crisis, held mostly currency as its main balance sheet liability. Currency represented 93 percent of the Fed’s liabilities in December 2006, with reserves only 1.5 percent and the Treasury’s general account half a percent. Currency is a sizable liability on most central bank balance sheets in normal times.

Other central banks had a much larger share of their liabilities as reserves before the crisis. One reason to issue a lot of reserves in normal times is to help interbank payments run smoothly; if the supply of reserves is small, banks concerned about running out of reserves at the end of the day may choose to delay payments to other banks, which can create “gridlock.”

As an example, the Norges Bank issued a relatively large amount of reserves before the crisis – 7 percent of its liabilities. Almost 50 percent of the liability side of the Norges Bank balance sheet at the end of 2006 was made up of treasury deposits, and currency represented only 16 percent of liabilities, so its balance sheet looked more like the figure below.

Currency and reserves are “immediate” maturity liabilities, since they can be instantly transferred to other parties for payment. Some central banks also issue term maturity liabilities, either term deposits, which are only available to counterparties that hold a central bank account, or term repos, which are collateralized and available to counterparties beyond depositing institutions. Some central banks have the authority to issue bills. Like Treasury bills, central bank bills are available to nonaccount holders in the secondary market, although some central banks restrict primary issue to account holders. Term liabilities can be issued both to reduce the amount of reserves in the system and to control the central bank’s target interest rate. (This composition is depicted in the figure below.)

For instance, the Bank of England (BoE), the European Central Bank (ECB), the Fed, and the Reserve Bank of Australia (RBA) have been fine-tuning term deposit facilities and repo instruments that have longer maturities than overnight. The BoE, the ECB, the Swiss National Bank, and the RBA are among the central banks that have the ability to issue bills, the Fed does not currently have this authority. Central Bank Assets

If you are a drug company, and you acquire a drug that has no competitors, and you immediately massively increase the price of the drug, we assume that you’re doing it to make money. There is a fairly well accepted playbook for distracting attention from that obvious explanation. You’re raising the price to fund research and development, for instance. Or, sure the list price of the drug is high, but you have assistance programs to make sure that anyone who needs it can get it.

Valeant Pharmaceuticals International Inc. and Turing Pharmaceuticals AG, both under congressional investigation over skyrocketing drug prices, were focused on making money before helping patients, members of Congress said internal documents obtained from the companies show.

“$1 bn here we come,” former Turing Chief Executive Officer Martin Shkreli said in an e-mail to the chairman of the board on May 27, after the company had made progress toward acquiring the antiparasitic drug Daraprim, according to a memo from House Oversight and Government Reform Committee’s ranking Democrat Elijah Cummingsof Maryland. After buying the drug later that year, Turing raised the price by more than 50-fold, to $750 a pill.

They are really just in no way good for those companies. Valeant had a presentation describing “PR Mitigation” as a “Critical Risk” to its plans, and suggesting that it should “Minimize media coverage of the pricing increase,” oops. More worrying, perhaps, is an e-mail from Howard Schiller (then chief financial officer, now interim chief executive officer) to Mike Pearson (then CEO) saying that “about 80%” of Valeant’s growth came from price, not volume, which John Hempton points out seems to contradict what Pearson said on an earnings call.

Turing was run by Martin Shkreli, how do you think its internal e-mails read? Turing Pharmaceuticals, had paid $55 million to acquire the drug Daraprim, and had raised its price more than fiftyfold to $750 a pill, or $75,000 for a bottle of 100.” Turing even price-gouged a dog, though at least it had the heart to recommend a generic alternative. The Director of Specialty Pharmacy Development at Walgreens forwarded a request for financial assistance for a dog that had been prescribed Daraprim to treat its toxoplasmosis. The request stated: “I have an unusual request. There is a dog that is a patient and he needs Daraprim. He is obviously not covered by insurance … the cost of what was prescribed is $5,000 for this little guy.” Jon Haas, the Director of Patient Access at Turing, responded: “You can buy Pyramethamine/Sulfa [sic] combo pills from a vet meds website for about $80.”

Benjamin Brafman, the same lawyer who helped get rapper Sean ‘Diddy’ Combs acquitted of gun and bribery charges in 2001 represents Shkreli. Shkreli asserts that he is “innocent, and not guilty,” a potent combination, while Brafman is more circumspect, saying that “Mr. Shkreli never intended to violate the law, nor did he intend to defraud anyone.” Shkreli does not, however, have a new public relations person.

“The world is changing its mind about me,” he said. “I think the tide is swinging from, you know, this is a bad guy to people listening to me and really understanding who I am.”

To be fair, an actual public relations professional says of Shkreli’s approach: “It’s certainly unconventional, but is it bad? I don’t think we know yet.” I feel like I know?

Are missing refugee children being exploited?

More than 10,000 refugee children have disappeared in the past two years after registering for asylum in Europe, European Union law enforcement agency Europol warned, as EU leaders looked to stem the flow of migration ahead of warmer weather. Cold winter temperatures and increasingly dangerous sea conditions have not stopped tens of thousands of people from trying to make the risky journey to Europe in January, and young children face added dangers of exploitation both along the trip and upon arrival in the EU.

“Not all of them will be criminally exploited; some might have been passed on to family members,” Europol Chief of Staff Brian Donald said, Agence France-Presse reported Sunday. “We just don’t know where they are, what they’re doing or whom they are with,” said Donald, noting that the 10,000 figure was likely a conservative estimate.

Escalating violent conflicts in the Middle East and North Africa sent more than 1 million people to seek asylum in Europe in 2015, with more than half of them coming from war-torn Syria. While around 27 percent of all refugees that have arrived since 2015 are children, recent research from the United Nations reported that in January, around 55 percent of new asylum-seekers in Europe were women or children.Europol’s report on missing refugee children looked at those who registered as asylum-seekers at some point in Europe and then disappeared. Around 5,000 of the 10,000 missing children disappeared in Italy, a country that has been a popular point of entry for tens of thousands of refugees looking to cross into Europe via the Mediterranean Sea — often coming from North Africa.

Greece has been another frequent point of entry because of its close proximity to Turkey, and EU leaders such as German Chancellor Angela Merkel have looked to stem the flow of refugees traveling from Greece to northern European countries like Sweden and Germany. European authorities have attempted to slow migration by creating a bottle-neck in Balkan countries like Macedonia by adding additional border guards and police vehicles as leaders look for a permanent solution to the crisis, the Wall Street Journal reported.

“So no matter what, we need to prevent the influx from massively increasing again in the spring,” German Interior Minister Thomas de Maziere said, as reported by German magazine Der Spiegel, adding, “time is running out.”

Stephen Foley  writes: The world’s largest asset managers have held secret summit meetings to hammer out proposals for improving public company governance to encourage longer-term investment and reduce friction with shareholders.

Jamie Dimon, chief executive of JPMorgan Chase, and Warren Buffettconvened the sessions with the heads of BlackRock, Fidelity, Vanguard and Capital Group to work on a new statement of best practice that would cover the relationship between U.S. companies and their investors.

The unusual collaboration comes at a time of rising shareholder activism and a raging debate about whether public markets demand short-term profits at the expense of long-term investment.

In recent years, some private companies have shunned early public listings, and technology bosses such as Michael Dell have argued that equity markets are too focused on short-term gains. Some large technology groups have also opted to go public with dual-class share structures that limit shareholder rights in an effort to minimise the influence of activist hedge funds.

Do Sheryl Sandberg  and Christine Lagarde represent women?

Dawn Foster: Will young women be convinced that the freedom they’ve inherited is part of the natural state of affairs and not the temporary outcome of a long battle that is still being waged, and in which everything could suddenly be lost”.

Anyone familiar with abortion rights campaigns, for example, knows this to be true. Reproductive freedoms have been hard won in many countries, but millions of women worldwide are still denied the right to abortion, and religious groups are committed to chipping away at reproductive rights across the globe.

Women’s rights are precarious. It’s not simply a question of marching towards a more equal future: we have to keep an eye on the past too. For every battle won, there remain people who will happily reverse those decisions and cast women back decades in terms of social progress. This is the problem with using individual women’s successes as bellwethers of feminist progress. Sheryl Sandberg (COO of Facebook), Marissa Mayer (CEO of Yahoo!) and Christine Lagarde (managing director of the International Monetary Fund) may talk about women’s equality, and proffer their own positions as proof of progress – but post-crash, many women feel their lives are measurably worse.y.

It’s all well and good to encourage women in business to speak up more in meetings, but most women don’t – and will never – work in managerial roles. And for them, being told women must be the architects of their own fortune won’t wash. A broader understanding of how inequality is perpetuated, and how the economy disadvantages women, can yield policy that is fairer to women.  Representative Women