Things aren’t so good these days in Sergiyev Posad, the small town in northeastern Russia that is generally considered to be the birthplace of the matryoshka, the iconic nesting dolls that represent Russian folk culture and a simpler time, generally.

The wooden, black lacquered dolls that come in sets with each one fitting just so inside the next have become an endangered species, squeezed as they have been off vendors’ shelves by cheap plastic knock-offs from Asia and now threatened by the global economic slowdown.

The dolls are produced by hand in small factories or in  workshops by artisans that have spent years learning to use a lathe.

“The matryoshka is our face” to the world, Galina Subbota, the town’s deputy mayor told the Washington Post. “Even if it is not economically profitable, we can’t allow it to disappear from our lives.”

But in the setting of the Great Economic Crisis, souvenir shops have slashed orders and the tourists have all but vanished. Recently, nesting doll producers approached Moscow for financial aid which is necessary, they say, to save the industry from extinction.

In response, the Kremlin pledged to buy nearly $30 million worth of the dolls and began requiring  officials to distribute them as gifts.

But the artisans view the largesse with skepticism and have indicated they would prefer that Moscow cut export taxes and make it easier for them to obtain existing subsidies.

“For 12 years, I’ve heard the government talking about support for folk crafts,” Oleg Korotkov told the Post. The director of Semyonovskaya Painting, a nesting doll manufacturer that has seen sales drop more than 90% added, “unfortunately, there’s never any real help.”

Russian President Dmitry Medvedev has taken a page out of FDR’s playbook with weekly televised talks to his countrymen. Problem is, few of them are watching.

It seems they’ve tired of his message, which amounts to a remix of Albert King’s woeful lament, “if it wasn’t for bad news, I’d have no news at all.”

A recent poll revealed for example, that a third of Russians expected to lose their jobs in the immediate future.

February’s industrial output, including oil and minerals, was down 13.2% versus the same month last year, and manufacturing output shriveled a whopping 20%, according to the Economist.

Meanwhile wage arrears, the most visible symptom of Russia’s economic chaos in the 1990s, are creeping up again. State-approved reports suggest that more than 500,000 people had pay withheld temporarily last month, which is higher than at any point in 4 years.

Given these are state-approved reports, one can only imagine how bad the matter has actually become.

Medvedev has even taken the unusual step of appealing for help from the oligarchs. They have “a moral role” to preserve jobs, he stated while reminding them how easily they amassed wealth during different economic times.

“It’s time to repay debts, moral debts,” he said in his last chat.

“If a person really has become a businessman, he knows how to value his employees.”

Then he waded directly into the fray, calling it “unacceptable” that billionaire Mikhail Fridman’s Alfa Bank was threatening to close down billionaire Oleg Deripaska’s Basic Element, laying off tens of thousands in the process, if the latter didn’t repay an overdue $650m loan.

The oligarchs buried the hatchet the next day.

Thirty years after Chevy Chase kept telling the world what it already knew about the fate of Spain’s fascist dictator, the nation’s Socialist government wants to remove from public display hundreds of statues, monuments and emblems throughout the country that commemorate his rule.

In fact Prime Minister José Luis Rodríguez Zapatero’s government has passed a law mandating that they be expunged.

That doesn’t sit well with Sinforiano Bezanilla, a city employee who was 11 when Franco died, but who boned up on the man and liked what he read.

Franco saved Spain from communism and elevated the Catholic Church to an exalted status in daily life, he emphasizes. In today’s Spain abortion, divorce and gay marriage are all legal.

“A lot of people are afraid to express themselves,” Bezanilla wailed to the Wall Street Journal. “The left is attempting to rewrite our country’s history. They base it on a series of half-lies, half-truths and outright lies.” 

Never mind that Franco’s Nationalist thugs slaughtered tens of thousands of foes after prevailing in a civil war that itself cost 500,000 lives. Or that they sent tens of thousands more to forced labor camps while giving their children away to families who supported the regime.

When Franco died, Spain’s fledgling democracy didn’t put his generals on trial as Latin American nations did, nor did it organize Truth and Reconciliation Commissions like South Africa.

The passivity all but assured the bitter ideological divisions would fester for generations.

In fact Spain’s ambivalence can be heard every time Real Madrid takes the pitch.

Years ago, Spanish politicians decreed that a certain phrase in its national anthem that reminded many of the repressive dictator’s rule would be deleted: “Raise your arms, sons of the Spanish people.”

But the pols couldn’t decide on a suitable replacement, so nowadays Spaniards either roll their own lyrics or just hum along.

Last month the Big O sent a secret letter to Russian president Dmitry Medvedev in which he offered to back off a new missile defense system in Eastern Europe if Russia stopped Iran from developing ballistic missiles and nuclear warheads.

That’s the biggest trade since Wilt Chamberlain to the Lakers for Darrell Imhoff, Archie Clark and Jerry Chambers.

The Bear maintains commercial, diplomatic and military ties to Tehran so it can exert influence there.

And although Russia never seemes to care that Iran’s mullahs have nuclear ambitions, it vehemently objected when George W. Bush proposed deploying a US-built interceptor system to knock out Iranian missiles before they hit Western Europe.

Not a man of tact, Bush additionally proposed positioning the “defensive” missiles in Eastern European countries that were, along with Russia, part of the good old USS of R.

Setting aside the fact that these interceptor missile systems don’t work yet, Bush’s idea might have gone forward except that he rejected Moscow’s proposal to install part of the system on Russian territory and give the Russians access to the on-off switch.

 “It’s almost saying to them, put up or shut up,” a senior administration official said of the Big O’s overture. “It’s not that the Russians get to say, ‘We’ll try and therefore you have to suspend.’ It says the threat has to go away.”

Kommersant, a Moscow-based, state-run newspaper called the Big O’s a “sensational proposal,” and a day later Medvedev himself said he believed the Big O was serious about cooperation on missile defense.

“We have already received such signals from our American colleagues,” he said on the Kremlin Web site. “I expect that these signals will turn into concrete proposals…

I hope to discuss this issue of great importance for Europe during my first meeting with President Barack Obama.”

That’s scheduled for April 2, in London. A properly-labeled reset button will be available.

One day after UBS agreed to hand over the names of 250 wealthy US account holders as part of a $780 million settlement with US prosecutors on a tax-evasion probe, the Justice Department sued the Swiss banking giant to hand over 52,000 more.

The Feds have been on UBS’ tail since 2007 when a former executive told them the bank was representing to US customers that it didn’t have to disclose their identities to the IRS, according to the Wall Street Journal.

US prosecutors believe UBS has stashed a minimum of $20 billion and perhaps several times that, on behalf of US clients. The accounts generated a minimum of $200 million in annual revenues for the bank.

It was the first time in centuries that Swiss regulators permitted a bank to reveal account holders’ identities. Some Swiss lawmakers opposed the move on grounds it would destroy the Swiss banking industry.

“Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts” such as violating the US tax code, UBS Chairman Peter Kurer told the Journal.

UBS acknowledged as part of the settlement that some of its managers knowingly cooked-up a scheme to assist US taxpayers looking to evade paying taxes.

The original 250 names had been identified in conjunction with a criminal investigation, but the larger roster is being sought by Justice as part of a separate civil probe.

The marked expansion in the number of names sought by US officials could be disastrous for the Swiss financial sector if large numbers of those 52,000 accounts turn out to involve tax evasion. Swiss banks generate 10% of the nation’s GNP and employ 5% of the work force.

Arnaud and Aurélie are in love. They’ve lived together for years and they just decided they want to be together forever.

So they trotted down to Marseille’s Palais de Justice and got PACSed by a clerk.

PACS is the French appellation for a perfunctory procedure authorized by the nation’s 10 year-old Civil Solidarity Pact that validates their togetherness legally and socially without the implication of permanence conveyed by marriage.
 
“It’s a first step toward marriage,” Arnaud told the Washington Post after the 15 minute procedure ended and he headed back to work.

France’s government had introduced PACS to legalize unions among gay couples since French law does not permit them to marry. But the law was not made specific for gay couples, and heterosexual couples have been leveraging PACS’ advantages ever since.

PACSed couples can file joint income tax returns and have an easier time navigating inheritance laws and establishing a legal residence, among other things.

PACS is also perceived to be a declaration of independence from calcified social traditions and best of all, it can be terminated by either party with a short written note.

And that’s it: no divorce proceedings, no claims to the other’s property and no alimony.

The number of PACS has exploded from 6,000 to 140,000 in the decade since the law passed. That’s half as many as the number of marriages taking place in France. Nearly 92% of PACSed couples are heterosexual.

Oh and in France nowadays, more than half of all babies are born out of wedlock. Last month, the unmarried Justice Minister had a baby, and Ségolène Royal, the Socialist Party candidate that lost to Nicolas Sarkozy is an unmarried mother of 4.

The tiny village of Roquefort-sur-Soulzon, nestled at the base of a limestone promontory overlooking a valley not far from Montpellier, has become ground zero in a nasty spat precipitated by George W. Bush days before he packed up and headed for a spider hole in Crawford.

The pristine valley is honeycombed with cravasses and caves that provide a completely unique environment in which ewe’s milk can be fermented just so to become Roquefort cheese, a blue-veined delicacy that some say is lovely with a spot of rye toast and a full-bodied red.

On January 13, US Trade Representative Susan Schwab announced the Bush administration had leveled a 300% duty on Roquefort cheese, essentially nixing the entire US market.

She said it was in retaliation for the EU ban on imports of hormone-containing US beef.

She added that the administration targeted other scrumdiddly items like French truffles, Italian sparkling water and “fatty livers of ducks and geese,” which last time we checked was foie gras.

But only poor Roquefort got nailed with a duty so steep it might as well be a ban, according to the Washington Post.

“This measure is completely out of proportion,” Robert Glandières told the Post. He’s a sheep farmer and heads of the Regional Federation of Ewe Raisers’ Unions.

“It’s a…provocation.”

Maybe so, but the Roquefort Economy is probably going to be just fine. The US had imported only 450 tons of the stuff per year, or 3% of the amount produced.

Besides, the Big O’s in town now. He knows that Roquefort tastes great on an arugula salad.

Normally, getting Europeans to agree on anything is dicey but right now just about everybody over there is delighted the Big O made it all the way.

His strip-whitened smile blankets TV screens, celebrity magazines and newspapers all over Europe, and large majorities of people in the 5 largest EU countries, ranging from 77% in the UK to an otherworldly 92% in France believe he will have a favorable global impact.

Funny though, the Big O didn’t even mention the word “Europe” in his inaugural address.

And sacre-bleu! It took 3 days before he so much as pinged a European leader, placing every one of them behind those of Israel, the Palestinian Authority, Egypt and Jordan, to name a few.

And then of all things he called Gordon Brown first.

Uh-oh! Did Obama catch Anglophilia from Bush when they shook hands at the swearing-in?

Come to think of it, the Big O dodged a chance to meet the top 5 EU leaders when they rolled in last November for the G20.

And we can only guess how many times he’s turned down requests to visit Germany’s beleaguered Angela Merckel, who is up for re-election and would love to catch some stardust from the man who drew 200K in Berlin last summer.

 “Everybody wants the first visit of the Messiah,” a French official wryly remarked to the Economist.

Alas the Big O probably already knows the Europeans will get jiggy when he starts asking for help.

They’re not exactly lining up to take Guantanamo Bay detainees off his hands, are they?  They’re not exactly rushing to outfit troops for a summer tour in Afghanistan, are they?

And as for cooperation on the economic crisis, Josef Braml, an officer in Germany’s Council on Foreign Relations managed to splutter that the matter will trigger a “heavy burden-sharing debate” between America and its European allies.

Not exactly a ringing endorsement there, either.

The First Annual Bernie Madoff Award for Global Business Chutzpah goes to Siemens, Europe’s largest engineering firm which just copped a plea to bribery and corruption charges involving public officials and politicians on 4 continents.

The multinational agreed to pay $800 million worth of fines in America and another $540 million in Germany. That was in addition to the $280 million it coughed up to settle an earlier, similar charge.

But the size of the fines wouldn’t have, by itself, put Siemens over the top for the Madoff Award. It was the perverse sense of openness with which the process unfolded, as if people throughout the organization knew and accepted this was the way to do business.

According to the Economist, Siemens set up in full view 3 “cash desks” in its offices. Everyone knew employees could tote empty suitcases there and have them filled with cash to be used in paying off public officials for awarding contracts to Siemens.

Managers could pull out as much as $1.3 million at a time in support of efforts to secure contracts for the company’s telecoms-equipment division, according to the US Department of Justice.

Between 2001 and 2004, nearly $67 million was withdrawn in those suitcases, and all tolled according to Justice, Siemens paid foreign officials $805 million over a 6-year period.

No questions were asked, little documentation was required and managers needing money could approve their own requests.

Until 1999 Siemens actually claimed tax deductions for the bribes, booking them as “useful expenditure.”

“There was no complex financial structuring such as you would find among drug smugglers or money launderers,” Mark Pieth, chairman of OECD’s working group on bribery told the Economist. “People felt confident they were doing nothing wrong.”

Now that’s chutzpah!

Every winter it seems, Russia and Ukraine get into a spat about Russian gas supplies, but this year the squabble ballooned into an energy emergency for the entire European Union. 

The EU receives 25% of its gas from Russian gas conglomerate Gazprom via a pipeline coursing through Ukraine.

Ukraine is itself a Gazprom customer and for years it paid less than half the market price for gas. In the fall, the 2 countries agreed that Ukraine would transition slowly to market prices but Ukraine wanted to increase is transit fees on gas headed for the EU in return.

Gazprom made an insulting offer in this regard. Ukraine responded with an outlandish counter. The parties then stopped talks just as Vlad the Impaler sniffed for the umpteenth time that his feelings got hurt when the Ukrainians supplied arms to the Georgians during last summer’s dance party in Tbilisi.

Who knows what happened over the holidays but just after new year a shady court ruling in Kiev voided the pricing agreement and hours later the Impaler ordered Gazprom to cut supplies to Europe through Ukraine by an amount it accused Ukraine of siphoning off for internal use.

“Ukraine had neither the need nor the intention to steal Russian gas,” Hryhory Nemyria, Ukraine’s deputy prime minister told the Economist. And he added that Russia’s crass act in the dead of winter exposes it as an energy bully.

To which Gazprom’s Alexander Medvedev retorted that Ukraine “is responsible for everything that has happened.”

The squabble has hit Bulgaria, Hungary, Romania, Poland and Slovakia the hardest. It has impacted France, Germany and Italy as well.

Then over the weekend, Russia noticed its gas reservoirs were topped off meaning if it didn’t resume pumping soon, it would have to start burning gas.

Seeing the folly in that, the sides just agreed to get the gas flowing again and have neutral observers monitor the pipeline. There are also plans to have both boys stand in a corner for 5 minutes.

While US lawmakers are busy bailing out banks, insurance giants and we’ll see about car companies, the Italians have rushed to bail out Parmesan cheese makers.

What’s next, buffalo mozzarella?

And how could it come to this for the iconic pasta-topper when demand remains strong in Italy and abroad?

It’s simple. Producers can’t cover their costs.

Marco Iemmi and his 7 employees for example produce 15 thousand 77-pound Parmesan wheels a year. Last year he sold them at 7.4 Euros per kilogram, but he spent 8 Euros per kilo to produce them.

“It’s a tragic situation,” Iemmi told the Wall Street Journal. “I’ll have to close up shop unless things improve.”

So thank heavens for the Italian government which announced it will subsidize Parmesan makers by purchasing 100,000 wheels and donating them to charity.

Most Italians on ‘Strada Principale’ support the bailout.

“Parmigiano is almost indispensable,” Antonio Piermani told the Journal. The Rome wine-bar owner buys 3 kilos per month and swears that any substitute “would compromise the taste of the dish.”

Italy’s cheese crisis is the product of a fragmented producer sector. The world’s supply of Parmesan comes from about 400 tiny, family-owned businesses located near Parma in northern Italy. They understand economies of scale, but refuse to consolidate.

“We have an ancient mind-set,” Iemmi explained. “Each one of us wants to take care of his own little business.”

Meaning producers have no leverage with wholesalers, and not even the Pope would dare to mess with the meticulous Parmesan production process that has remained unchanged for several hundred years.

There’s even price competition, at least in Italy where 80% of the world’s Parmesan is consumed. Grana Padano, another grated cheese has a similar taste and costs less to produce.

Was that Big Pharma sighing relief or did the wind pick up a bit?

Back in January the European Commission began investigating potentially anticompetitive behavior by raiding the European corporate offices of every player in the space from Astra to Zeneca.

There followed months of extensive investigations and more raids all of which culminated in the release of a report last Friday.

The 400 page document detailed unseemly practices and suggested they might have cost European health care systems $4 billion between 2000 and 2007.

It was accompanied by threats to take down the first company that crosses any lines, but no criminal charges were filed.

In fact no company was accused of anything.

The report decried the way Big Pharma creates legal minefields for generic competitors by filing hundreds of ridiculous patents for its drugs, lobbing frivolous lawsuits in their path, and even paying-off the generics makers to shelve their products.

“These practices delay generic entry and lead to health care systems and consumers paying more than they would otherwise have done for medicines,” noted the Commission.

But the best line of the day belonged to Bayer’s CEO Arthur Higgins, who scoffed “there is nothing in this report that is unlawful.”

Well maybe not. But the Commission’s report is only preliminary. It’s got few more months to dig before the final report is released, and it you know it wants to fry some fish.

The northern bluefin tuna is native to the Atlantic Ocean and the Mediterranean Sea. The source of nearly all the tuna used in sushi, it is particularly revered in Japan where a large specimen can command $100,000 in Tokyo fish markets.

The fish live in deep ocean waters where no country has jurisdiction, and as a result they have been subject to decades of overfishing.

The problem is approaching crisis stage. Brian MacKenzie and colleagues at the Technical University of Denmark reported in particular that even if all bluefin fishing were halted immediately, bluefin populations in both the Atlantic and the Mediterranean will likely collapse within a decade.

Not that the current plan comes anywhere close to an outright ban. In theory, the organization that sets bluefin fishing policies is the Madrid-based International Commission for the Conservation of Atlantic Tunas (ICCAT). Its performance has prompted the Economist to propose that ICCAT actually stands for International Conspiracy to Catch All Tunas.

ICCAT had set a quota of 30,000 metric tons per year even though scientists suggest this is 2-4 times the sustainable amount. In response to the outcry from the scientific community (which must have been tough to hear amid the din arising from sushi restaurants on 6 continents), ICCAT reduced its quota to 25,000 metric tons. Whoop-de-damn-do!

Let’s not even start on the fact that at least 50,000 metric tons are actually landed each year due to illegal fishing and non-existent monitoring.

Oh, and even if ICCAT set a properly aggressive limit and became empowered to enforce it, there’s the problem of how the 46 participating countries would divvy up the catch.

Lots of people woke up with headaches the day after Barack Obama’s historic victory, including the Big O himself. Had Malia upped her negotiation stance to a Great Dane?

It wasn’t that bad, but it was an Excedrin moment nonetheless when those intemperate Russians announced just hours after the polls closed that they’ll deploy Iskander tactical missiles close to the Polish border if the Obama administration proceeds with plans to build a missile defense system in Western Europe.

Talk about raining on the parade!

To an extent, we can cut Russian President Dmitry Medvedev a break here. The poor guy feels put-out because his nation’s 75% stock market tumble in the last 6 weeks has completely extinguished the adrenaline rush he got from his moment in the Georgian sun last summer.

But did he have to go on national TV and say that right then?

Whatever, it presents an early test for the Big O, who during the campaign provided lukewarm support for a US-built European missile defense system designed to protect Western Europe from rogue states like Iran.

Moscow believes the missile defense system threatens its national security, to which the lame duck US president responded that the system would be no match for an all-out Russian nuclear attack so why worry?

Oy vey! January 20th cannot come fast enough.

Meanwhile, Medvedev was quoted by the Washington Post as saying, “I want to stress that these are forced measures. We want positive cooperation…we want to act together against common threats. But they unfortunately, don’t want to listen to us.”

Obama had no comment on the matter. He’s got to deal with Puppygate first.

A wealthy Norwegian dot-com boss turned fish farming entrepreneur thinks he can transform the country’s famous fjords into cod hatcheries just as human consumption of farmed fish is set to exceed that of wild fish for the first time.

Harald Dahl has already convinced Morgan Stanley and J. P. Morgan Chase to back his new company, Codfarmers. His backers apparently believe Dahl can overcome outbreaks of disease and finicky eating habits that have thwarted previous efforts to farm the iconic fish.

Today’s Atlantic cod market is worth about $1 billion, a fraction of its value before frightfully irresponsible overfishing slashed the global annual take from 1.8 million tons to 137,000 tons in just 40 years.

Codfarmers believes Norway’s deep fjords will facilitate waste disposal and lower exposure to fecal pathogens, the main reason why farmed cod hadn’t thrived in the past. Codfarmers has also developed techniques that increase reproductive efficiency and reduce harvesting costs.

At the moment, hearty, omnivorous salmon is by far the most widely farmed fish. But farmed salmon is not as tasty and contains fewer beneficial omega-3 fats than wild salmon, so it sells at a discount.

The economics are reversed for cod. Wild cod spends days in the hull of a boat before reaching shore, so it is not as fresh as the farmed variety. It sells for 20% less than farmed cod.

“Salmon used to be the party fish. Now it’s become an everyday fish. We want to make cod the party fish,” Dahl told the Wall Street Journal.

Seems like just yesterday when British Prime Minister Gordon Brown had sunk below the Mendoza Line. Criticism had morphed to ridicule. The man had been skewered as the anti-Midas of politics-everything he touched had turned to stone.

But things turned on a dime for Mr. Brown. Now we see him as a global savior. The European media sings his praises daily and even newly canonized Nobel economist Paul Krugman lauds the dour Scotsman as the guy who got it right with his plan to inject cash directly into UK banks, a plan soon copied around the world. All hail the laser-like antidote that saved us from the abyss!

How are we to explain the transformation? Did the lights just go on, was it dumb luck, or did circumstances simply play to his strengths?

The Economist suggests it’s mostly the latter. Brown was smart enough to recognize a good idea when he saw one. Thus, his plan borrowed from Sweden’s 1992 bank-rescue strategy for example, and it incorporated good ideas put forward by David Cameron’s Conservatives.

Beyond this, his austere personality and the experience he gained as economic grand master for the Blair administration positioned him to think clearly at the moment others were counting life preservers (including a certain Treasury Secretary who cut his teeth during flamboyant times on Wall Street).

But the phoenix act may be short-lived for Mr. Brown. A lot rides on whether his plan actually works and whether folks in the UK blame him for the deep recession they (and we) still must face.

One thing we know on this side of the pond is that the Brits will not give Mr. Brown a long leash. We’re still trying to figure out why they soured so completely on Tony Blair.