The rent is too damned high because money-laundering oligarchs bought all the real-estate to clean their oil money

Originally published at:



What better way to launder Russian mafia money than to just buy up another country? Or better yet install a puppet government to make the laundering all the easier.

One needs to think about the scale of the problem. Russia is the largest mafia state on the planet and it needs massive mechanisms to clean it’s rubles. Since the 1990’s “some $1.3 Trillion in illicit capital has poured out of Russia”

“The money, illicit and otherwise, began to rain in earnest after the Soviet Union fell in 1991. President Boris Yeltsin’s shift to a market economy was so abrupt that cash-rich gangsters and corrupt government officials were able to privatize and loot state-held assets in oil, coal, minerals, and banking. Yeltsin himself, in fact, would later describe Russia as “the biggest mafia state in the world.” After Vladimir Putin succeeded Yeltsin as president, Russian intelligence effectively joined forces with the country’s mobsters and oligarchs, allowing them to operate freely as long as they strengthen Putin’s power and serve his personal financial interests. According to James Henry, a former chief economist at McKinsey & Company who consulted on the Panama Papers, some $1.3 trillion in illicit capital has poured out of Russia since the 1990s.” -The New Republic

And guess which real estate agent has been working with the Oligarchs since the fall of the Soviet Union?



I don’t specifically disagree with what is being said, but it’s not that simple going from dirty money to REIT purchase. The cash has already been effectively laundered through the briefly-mentioned foreign cut-outs and shell companies by the time it gets to the REIT. The sole reason for the REIT to be the last link in the chain is to convert that clean cash into a long-term revenue stream in a stable currency.


This is one of the best summaries I’ve seen of what’s been going on. Charlie Stross’s discussion from last year about what might happen when the fossil-fuel greedheads cash out is worth re-reading as a follow-up:


Evergreen message…


Whaddya know. I always thought they were saying “Iss a rish man swirl”. :wink: (I don’t think they had perfected their American accent yet.)


Yes, but eat the rich!


It continues unabated…

“Despite Vladimir Putin’s warnings on at least two occasions that Russian entrepreneurs should avoid investing their money in the U.S., because of potential sanctions, several very wealthy Russians have bankrolled American startups. Vekselberg, for instance, invested an estimated $1 billion.” -Meduza

The sweet, sweet, sweet taste of money laundering.

A good example: “(Dmitry) Rybolovlev bought an estate from Trump in Palm Beach for $95 million. Just four years earlier, Trump had acquired the property for a mere $41 million.”

Sanctions schmanchins say trump.

ETA: Seems oil money laundering is not just limited to Real Estate


Well, that was uplifting. /Xs


how do I invest in guillotine manufacturing companies because I think the decade of 2020-2030 is going to produce record profits


You should start the day with a good exercise routine:



these guillotine gifs are really getting a workout these days.


What sort of policy structuring (besides the obvious but intensive investigation of laundering), would effectively address this stuff? Not sure that AOC’s and Warren’s recent wealth tax proposals would be quite the right thing for this since they are more aimed at HNW individuals. Perhaps direct controls on REIT types of arrangements that act as a pass through vehicle? Is there some local metric that could be tapped to determine what rents should be pegged to to make this a less enticing avenue, regional mortgages, assessed values? Would simply controlling the rent rates discourage this or just make it less lucrative? OTOH since it is all so complicated,

there are many ways to stay in tiptop shape! … HeartfeltSaneAiredaleterrier-size_restricted


The reason rent is so damned high is a lot simpler than that. Cities don’t have enough housing units for the number of jobs in the city and they can’t build their way out of it because of restrictive zoning, NIMBYs, and corruption.


Yeah looks like he is on the blue collar side.

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If they pay more for real estate it does not enable them to rent it out for more. That makes no sense. The renter has no idea what the landlord paid and doesn’t care. If the landlord asks for rents that exceed rental demand, they will have vacancies.

If anything, their willingness to pay more will increase the supply of housing as builders have more incentive to build. An increase in housing supply puts a downward pressure on rents.

One huge pressure that pushes up rents is that millennials aren’t owning. They saw the real estate crash and they wisely don’t view real estate ownership as a sure thing like people used to.


NIMBYs are at the heart of the problem, influencing the zoning decisions. The corruption is more about city officials willing to abase themselves and sell out the interests of the citizens to large corporations (the Amazon HQ2 search being a particularly embarrassing example). Also, developers in desirable cities prefer to build luxury condo towers instead of affordable high-density rentals, and politicians will always dance to their tune.

The oligarchs and money launderers who purchase condos do have a “trickle-down” effect on the rest of the market, though, to the detriment of renters and to those younger people who are priced out of buying a home.


In the spherical cow universe …

Meanwhile, in the objective universe …