Ghosn shifts "currency footprint" for Nissan to US dollar

Renault-Nissan supremo Carlos Ghosn told the Financial Times today that “What we [want] to do is shift more of our cost from a yen base to a dollar base.”  The saviour of Nissan wants to hedge against exchange rate volatility so he is betting that Asian economies continue to dance with the US dollar.  But what if the dollar is destroyed?

Of course, irrational optimism is nothing new to Mr. Ghosn.  For example, consider Renault's likely increased stake in AvtoVAZ.  As Prof. Craig Pirrong ("Foreign Investors: Listen to Putin's Renault Threat") put it:

Russia’s unilateral decision to pump funds into Avtovaz doesn’t obligate Renault to do the same. If Putin wanted to negotiate an arrangement with the French automaker, he could have done it. To take an action, presumably based on calculations of his/Russia’s self-interest in no way justifies a demand that Renault take similar actions–again based on Putin’s/Russia’s self-interest.

All those listening to or reading Putin’s siren call in his speech about Russia’s “becoming more attentive to investors” should ignore his words, and heed his deeds. The precipitous drop in foreign investment is the main reason for Russia’s appalling economic performance over the past year–one of the worst in the world among major economies, and far worse than its ostensible BRIC peers.

Until Russia credibly protects property rights, investing there is a very good way to lose.

By now everyone should know who the real Vladimir Putin is. He’s the one that threatens to steal property–and does–not the one who dresses up as Adam Smith.