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  • Goings-on in Kremlin and Around It

    The Kremlin, Moscow

    MOSCOW – The past week’s developments gave lots of food for conjecture and speculations among Kremlinologists both within Russia and beyond. The regime – President Dmitry Medvedev and Prime Minister Vladimir Putin – sent out an array of signals that could be interpreted as both the attempts at somewhat liberalizing Russia’s domestic policy and proof of growing differences between the President and the Prime Minister.

    Medvedev has recalled from the State Duma the government-submitted amendments to the Criminal Code designed to dramatically expand the definition of such concepts as state secret, high treason and espionage. They could well be used by secret services to battle with political opposition, NGOs, dissent and just criticisms of government officials. Now, President Medvedev has ordered his Administration to rework the bill.

    In addition, the President met with ex-Soviet leader Mikhail Gorbachev and Novaya Gazeta daily chief editor Dmitry Muratov, deemed among the most consistent critics of the government’s actions. Medvedev expressed his condolences over the killings of lawyer Stanislav Margelov and Novaya Gazeta journalist Anastasia Baburina. The expert community took it as recognition of the political nature of the crime possibly committed by extremists.

    Furthermore, speaking to Bulgarian media representatives, Medvedev clearly indicated that he had every right to criticize Putin and his government, despite the President-Premier close relationship. This statement was interpreted as Medvedev’s attempt at self-assertion as the nation’s sole leader. Note was also taken of the law enforcers’ gentleness in dealing with the participants of anti-government demonstrations staged in Moscow last weekend under the slogans of criticizing the government’s anti-crisis efforts. The order for the police to show restraint could have come from the Kremlin.

    Tellingly, according to an unidentified General Staff official, Moscow has suspended the implementation of plans to deploy Iskander missiles in the Kaliningrad exclave because newly elected President Obama was not pushing hard to station missile defenses in Eastern Europe. Although these Iskanders have yet to be manufactured, Kremlin has masterminded the act as a gesture of goodwill to the new Washington Administration.

    Prime Minister Putin surprised participants at the World Economic Forum in Davos with his unexpectedly liberal pronouncements. In contrast to his standard behavior, the Russian Prime Minister tempered his criticism of the United States, but warned against excessive state interference in the economy and a blind faith in the government omnipotence. Some experts even joked that Andrei Illarionov, a classic liberal economist, Putin’s former economic adviser and presently a Cato Institute research fellow had had a hand in writing his speech.

    However such surprise in conjunction with Putin’s address is hardly justified. Experience shows that listeners usually get from Putin what they want to hear. The topic of a limited government is clearly attractive to many in Davos and the West at large. Given a profound economic downturn in Russia, the Kremlin can no longer afford to keep challenging the West and has to resort to mimicry. Putin’s liberal statements in Davos implicitly indicate that the Russian authorities have recognized that the demand for liberal ideas persists in Russia.

    Admittedly, the significance of Putin’s statements in Davos should not be inflated. In fact, speaking on the sidelines of the Davos Forum the Russian Prime Minister virtually disavowed his own words intimating that such economic spheres as aircraft-building, nuclear power industry, as well as oil and gas cannot develop without the government influencing them directly and effectively. According to Putin, the significance of limited government lies in the fact that it cannot be made responsible for business’ errors. The government has a right to chose whom to back up and whom not. These reservations are radically changing the meaning of Putin’s formal address.

    As for the Medvedev-Putin relationship, they clearly have differences. Neither one, nor the other is willing to sacrifice their popularity and assume the responsibility for the tough crisis aftereffects. Both have specific business preferences. But one should not exaggerate these disparities. In the final analysis, both belong to the same team and cannot but realize that the deepening meltdown is threatening their power. Both find it important to avert the popular discontent turning into a color revolution in Russia. The island of stability, which the Kremlin leaders used to call Russia only a few months ago, exists no longer. The crisis is deepening. The limits of the euro/dollar basket corridor which the Central Bank established for the ruble two weeks ago in the hope that it would hold for several months were almost reached last week, and the national currency devaluation is proceeding at rapid pace.

    The President and the Prime Minister realize that Russia cannot do without Western support. Thus, the objective of improving Russia’s image abroad is once again coming to the fore. This explains the Kremlin’s signals of domestic liberalization and liberal rhetoric abroad. The Obama Administration should critically address these verbal signals and urge the Kremlin to show deeds rather than words.

    Yevgeny Volk is the Coordinator of The Heritage Foundation’s Moscow Office

    Posted in International [slideshow_deploy]

    2 Responses to Goings-on in Kremlin and Around It

    1. John Dillon, Florida says:

      Dr. Sonia Dillon sent a proposal (Here is a true aggressive and comprehensive solution to the housing market and trapped homeowners. These measurements should be mandatory to the Financial Institutions and HUD and How to implement my plan? Etc.) to fix the housing crisis and economy before the Presidential Election and the first TARP (http://en.wikipedia.org/wiki/Troubled_Assets_Relief_Program) to Senator John Mccain and other members of the Senate, both democratic and republican.

      Please see attachment about the housing market from Dr. Sonia Lizardo-Dillon who went to a Harvard Business School and who’s PH.D dissertation from the University of Pitt. (selected one of the 5 best in the nation award in 1995) was used by the Clinton Administration and former secretary Ron Brown.

      http://www.mixx.com/stories/3514852/obama_team_se

      Here is a true aggressive and comprehensive solution to the housing market and trapped homeowners. These measurements should be mandatory to the Financial Institutions and HUD.

      1) Adjust all houses’ loans to the true value market. The difference between the true value and the original loan would be held as a debt to be paid off to the Financial Institution when the house is sold. That difference would be guaranteed by HUD. Under this program, the houses should not be put on sale within the next 5 years and if it is sold before that time the homeowners should pay to the Financial Institutions the amount guaranteed by HUD.

      2) Allow those in adjustable rates mortgages to refinance 100% of their houses’ value to the new low 4.5%

      The conditions to refinance should be:

      a) Prove of stable income

      b) Good or excellent Credit scores (over 700)

      c) No being behind payments

      d) The house is primary residency

      3) Start a governmental housing exchange program for those at risk of foreclosures or who cannot afford their houses any longer. In this program, HUD will buy their houses and will offer them a new housing alternative (rental or ownership) at a lower price. The conditions for a new homeownership should be the following:

      a) Prove of stable income

      b) Acceptable credit score (between 600 to 700)

      c) The house is primary residency

      If these conditions are not met, then, the government will rent them those houses. If they get behind their rental’s payments (# of payments to be determined), then, they will need to move to subside housing or to resolve for themselves.

      I guarantee that this program will work and will stabilize the housing market. This program by itself will bring enough stimulus to the economy to get us out of deep recession sooner. The solution should be a coordinated effort among the financial institutions, HUD and homeowners.

      Dr. Sonia Dillon

      Posted in the Wall Street Journal under “Obama Works to Overhaul TARP”

      Date: Wed, 17 Dec 2008 11:13:47 -0500

      From: “Sonia Dillon”

      How to implement my plan? See my comments before in this blog:

      1. The New Congress needs to approve a law under which all houses’ loans, which are primary residencies, will be adjusted to the true value market (according to the 2008 property taxes). Homeowners will pay new and low mortgages according to this adjustment (Financial Institutions should not complain. They already have been bailout with billions from taxpayers’ money). The difference between the original loan and the adjustment will be held in the homeowner account to be redeemed when the house is sold. The homeowners will not pay interest over this amount. This amount will be guaranteed by HUD. Homeowners will be saving hundreds of dollars a months that they can use to pay bills and buy products. This stimulus will benefit homeowners and the economy, and it is not costly for the government.

      After this adjustment, homeowners who are in adjustable rates mortgages will be given the opportunity to refinance 100% of the value of their home to a fixed 4.5% for 30 or 40 years. This measure combined with the first one will reduce significantly future foreclosures and will help to stabilize the housing market.

      If after the adjustment still some homeowners are at risk of foreclosures, then, HUD will buy those houses and will offer to them the option to buy a house at a lower price that they could afford. If they don’t have guaranteed income to secure homeownership, then, they will be given the option to rent from HUD. This measure will help financial institutions to recup their money, HUD would be making income out of rentals and people would have a place to live.

      EXTREME CIRCUNSTANCES LIKE IN THE ONES THE HOMEOWNERS AND THE ECONOMY ARE REQUIRE EXTREME AND AGRESSIVE SOLUTIONS. ALL (THE GOVERNMENT, THE FINANCIAL INSTITUTIONS AND HOMEOWNERS) NEED TO COME TOGETHER TO RESOLVE THE HOUSING CRISIS. THE INVISIBLE HAND OF THE MARKET CANNOT DO IT ALONE AT THE SPEED THAT IT IS NEEDED

      Please see article below which is in the same alignment of what Dr. Dillon has been proposing since early October 2008:

      Senate Republican leader Mitch McConnell on Monday February 02, 2009 demanded an amendment to the mammoth economic stimulus package to give government-backed, low-interest loans to homeowners — a revision that he says will both increase the demand for houses and boost the average household income.

      "We believe that a stimulus bill must fix the main problem first and that's housing," McConnell told reporters Monday in introducing a plan to offer fixed mortgages of 4 percent to "any credit-worthy borrower."

      Under the "Fix Housing First Act" — an amendment spearheaded by both McConnell and Republican Sen. Lamar Alexander of Tennessee — new and refinanced mortgages would be available to homeowners for 4 to 4.5 percent.

      The amendment will require banks to issue these lower fixed-rate mortgages on primary residences, "both for new homes purchases and for refinances mortgages for responsible homeowners."

      And to encourage banks to issue these mortgages, the government will direct Fannie Mae and Freddie Mac to purchase these newly originated loans. Homeowners already holding loans from Fannie and Freddie would also qualify, according to the proposal.

      In a radio address Saturday, McConnell said his plan would allow the average family to see its monthly mortgage payment drop by $466 a month, or $5,600 a year. He said that over the life of a 30-year loan, that's a savings of $167,760.

      Article Reference:
      http://www.foxnews.com/politics/2009/02/02/republ

    2. John, Bradenton, Flo says:

      Treasury Looks to Aid 'Underwater' Mortgages

      Posted in the wallstreetjournal by Dr. Sonia Dillon: 2-17-2009

      Let me put it into this way: irresponsible lenders helped create the negative equity that many homeowners have in their homes today. Although they are current in their payments, these homeowners are not able to refinance and take advantage of low interest. These people deserve help from the Obama's plan. They didn't do anything wrong but wrong was done to them. I don’t want to take the excuse of the banks that the bulks of these loans have been securitized and therefore they cannot do anything. Let those investors to share the burden, too. They were part of the game!

      Treasury Looks to Aid 'Underwater' Mortgages

      By

      WASHINGTON — The Obama administration is looking for ways to let "underwater" homeowners refinance their mortgages, one of a series of ideas being hashed out ahead of an expected announcement next week, according to a person familiar with the planning.

      The Treasury Department is mulling as many as 10 ideas to help deal with the housing crisis, and has yet to settle on any one approach.

      The White House said President Barack Obama intends to unveil the plan Wednesday during a speech in Phoenix . The administration has already said it would spend $50 billion to help struggling homeowners, a vital element of its broader plan to fix the ailing financial and banking systems.

      Economists and government officials say the country's economic woes can't be fixed until the downward spiral of foreclosures and falling home prices come to an end. Devising a plan that helps without rewarding banks for making bad loans or costing too much has proven hard for both the Bush and Obama Treasury Department.

      One contender would reduce Americans' home-mortgage payments, people familiar with the discussions said, possibly through a cut in the interest rate, the costs of which would be shared by the government and mortgage servicers. As part of a new national standard for modifying loans, government officials would make such a plan available to people who are still current with their payments but in danger of defaulting.

      At present, government-backed mortgage companies are focused on modifying loans for people who are already 90 days or more behind.

      The Fannie and Freddie loan-modification program currently calls for holding monthly housing-related payments to 38% of pretax income. The new formula is likely to be as low as about 31%, according to some people taking part in the policy making.

      Other ideas to ease the housing crunch include the potential move to help underwater homeowners — who owe more than their houses are now worth — to refinance. Currently, that's too risky for lenders to do, which means homeowners across the country often can't take advantage of lower mortgage rates.

      In addition, the administration is expected to endorse a plan to allow judges to modify mortgages during bankruptcy proceedings in some circumstances, a move long opposed by the mortgage industry. And it could also push legislation that would remove some contractual obstacles that hinder mortgage servicers from modifying troubled loans.

      Pending any announcement, the country's three largest mortgage lenders are putting a temporary halt on foreclosures. The move comes days after their top executives were grilled in Washington about what they are doing to help homeowners.

      Inc. said they have stopped the clock on foreclosures for the next few weeks. The moratoriums are aimed at owner-occupied residences.

      It's unclear how many people will be helped by the move. The banks declined to comment on how many customers are in the foreclosure process. And the bulk of mortgages serviced by the banks have been securitized to investors; those loans won't automatically be included in the moratorium.

      Citigroup, which already has a foreclosure moratorium in place, said its new program goes further by eliminating some restrictions.

      J.P. Morgan said the new moratorium essentially replicated its 90-day foreclosure halt that expired at the end of January. The bank said the latest moratorium would last through March 6 and only included the loans owned by the bank. That reflects about 25% of the $1.5 trillion mortgages that J.P. Morgan services.

      Bank of America's moratorium also lasts through March 6 and includes mortgages owned by the bank and its Countrywide mortgage unit.

      —James R. Hagerty contributed to this article.

      Write to Deborah Solomon

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