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Bond Markets Hit Another 'Ukrainian Chicken Moment' By Mark Gilbert
Two European companies -- French drugmaker Sanofi and German household
products maker Henkel -- last week became the first firms to persuade
investors to pay them to borrow euros. By selling bonds yielding minus
0.05 of a percentage point, they may well have signaled the bond
market's peak, delivering this decade's equivalent of the "Ukrainian
Chicken Farm Moment."
That phrase refers to the 2006 sale of $250 million of bonds by
Myronivsky Hliboproduct which, according to its description on the
Bloomberg terminal, is "a vertically integrated producer of poultry
products in Ukraine." Few investors had ever heard of the Ukrainian
chicken breeder, but with an interest rate north of 10 percent, buyers
were clamoring for the MHP bonds. Bill Blain, currently at Mint
Partners in London, was one of the bankers who brought the deal to
market. He recalls the bidding frenzy:
It was massively oversubscribed. A few weeks later, bird flu broke out
in Hong Kong. The chicken farm was uninsured. The market immediately
discounted the notes and the price crashed 30 percent or more. That
moment of supreme belief when anything is possible in the new issues
market will always be remembered as "The Ukrainian Chicken Farm
An investor who buys some of Sanofi's 1 billion euros ($1.12 billion)
of bonds and holds them until they're repaid in three years is
guaranteed to lose money. The same goes for owners of Henkel's 500
million euros of two-year notes. It's the equivalent of lending a
dollar and five cents to your neighbor, knowing that you'll only be
repaid a dollar
I call this picture: "Ricardo, the world is yours". Germano Miele
We were in Ilha de Luanda. He was completely captivated by the lights
of Luanda that shone in front of him. He looked like he was thinking
about his future. So why do I think Ricardo will shape the continent
over the next ten years? Because the children of Africa are our
biggest hope. This new generation has a lot of work to do, but I
believe in them and I believe in Ricardo.
The central thematic concern in Al-Inkishafi is mortal life
This world is a raving sea
It harbors, in plenty, reefs and evils Whoever rides it is a rebel
Every loss comes his way
The great men of Pate lived in splendid houses characterized by
graceful lighting, beautiful utensils and rail upon rail of fanciful
clothes. In these houses, merriment and joy were the order of the day.
We are told:
Their lit mansions glittered
With lanterns of crystal and brass
Nights went-by like days
Surrounded they were by fame and honour
Graced they were by select China-ware And every gobbet was engraved
In their midst they placed crystal pitchers Among enchanting ornaments
Rails of fanciful clothes
I swear by God, Lord, the Bountiful Were of teak wood and ebony
Full rail upon full rail
The men’s halls resonated
And the hind-quarters vibrated With voices of slaves and servants
Happiness and merriment rang out
(Stanzas 37 – 40)
In attractive sleeping quarters
In beds laid with mattresses Green pillows at the head and feet
Embroidered to exquisite finesse
Lovely fabrics they had
Canopied over the couches
Sprinkled with perfumed water
And scented with sandwood and attars
The above portrait of riches, power and grandeur is forcefully
contrasted with that of a town in ruins and desolation. The elegant
houses and the luxurious life are no more. In their place, we find
ruins where young bats leisurely suspend themselves on rafters,
spiders have spanned webs, and owls cry out.
Now sleep they in fingers’ span Without carpets or mattresses
Their bodies are blemished
Agonized by the grave’s confinement
Their cheek-bones are damaged
Pus and blood doze out
From the nostrils creep out worms Changed is their nobility and countenance
They have become food for worms Chewed are their bodies
White and black ants feed on them And upon them serpents are entwined
The radiant faces have darkened
To an ape’s or mountain-bear’s countenance Lacerated are their skins
And shriveled are their bones and flesh.
Mohammad Javad Zarif: Let Us Rid the World of Wahhabism @JZarif @nytimes
Law & Politics
Tehran — Public relations firms with no qualms about taking tainted
petrodollars are experiencing a bonanza. Their latest project has been
to persuade us that the Nusra Front, Al Qaeda’s affiliate in Syria, is
no more. As a Nusra spokesman told CNN, the rebranded rebel group,
supposedly separated from its parent terrorist organization, has
Thus is fanaticism from the Dark Ages sold as a bright vision for the
21st century. The problem for the P.R. firms’ wealthy, often Saudi,
clients, who have lavishly funded Nusra, is that the evidence of their
ruinous policies can’t be photoshopped out of existence. If anyone had
any doubt, the recent video images of other “moderates” beheading a
12-year-old boy were a horrifying reality check.
Since the terrorist attacks of Sept. 11, 2001, militant Wahhabism has
undergone a series of face-lifts, but underneath, the ideology remains
the same — whether it’s the Taliban, the various incarnations of Al
Qaeda or the so-called Islamic State, which is neither Islamic nor a
state. But the millions of people faced with the Nusra Front’s tyranny
are not buying the fiction of this disaffiliation. Past experience of
such attempts at whitewashing points to the real aim: to enable the
covert flow of petrodollars to extremist groups in Syria to become
overt, and even to lure Western governments into supporting these
“moderates.” The fact that Nusra still dominates the rebel alliance in
Aleppo flouts the public relations message.
Saudi Arabia’s effort to persuade its Western patrons to back its
shortsighted tactics is based on the false premise that plunging the
Arab world into further chaos will somehow damage Iran. The fanciful
notions that regional instability will help to “contain” Iran, and
that supposed rivalries between Sunni and Shiite Muslims are fueling
conflicts, are contradicted by the reality that the worst bloodshed in
the region is caused by Wahhabists fighting fellow Arabs and murdering
While these extremists, with the backing of their wealthy sponsors,
have targeted Christians, Jews, Yazidis, Shiites and other “heretics,”
it is their fellow Sunni Arabs who have been most beleaguered by this
exported doctrine of hate. Indeed, it is not the supposed ancient
sectarian conflict between Sunnis and Shiites but the contest between
Wahhabism and mainstream Islam that will have the most profound
consequences for the region and beyond.
While the 2003 American-led invasion of Iraq set in motion the
fighting we see today, the key driver of violence has been this
extremist ideology promoted by Saudi Arabia — even if it was invisible
to Western eyes until the tragedy of 9/11.
The princes in Riyadh, the Saudi capital, have been desperate to
revive the regional status quo of the days of Saddam Hussein’s rule in
Iraq, when a surrogate repressive despot, eliciting wealth and
material support from fellow Arabs and a gullible West, countered the
so-called Iranian threat. There is only one problem: Mr. Hussein is
long dead, and the clock cannot be turned back.
The sooner Saudi Arabia’s rulers come to terms with this, the better
for all. The new realities in our region can accommodate even Riyadh,
should the Saudis choose to change their ways.
What would change mean? Over the past three decades, Riyadh has spent
tens of billions of dollars exporting Wahhabism through thousands of
mosques and madrasas across the world. From Asia to Africa, from
Europe to the Americas, this theological perversion has wrought havoc.
As one former extremist in Kosovo told The Times, “The Saudis
completely changed Islam here with their money.”
Though it has attracted only a minute proportion of Muslims, Wahhabism
has been devastating in its impact. Virtually every terrorist group
abusing the name of Islam — from Al Qaeda and its offshoots in Syria
to Boko Haram in Nigeria — has been inspired by this death cult.
So far, the Saudis have succeeded in inducing their allies to go along
with their folly, whether in Syria or Yemen, by playing the “Iran
card.” That will surely change, as the realization grows that Riyadh’s
persistent sponsorship of extremism repudiates its claim to be a force
The world cannot afford to sit by and witness Wahhabists targeting not
only Christians, Jews and Shiites but also Sunnis. With a large
section of the Middle East in turmoil, there is a grave danger that
the few remaining pockets of stability will be undermined by this
clash of Wahhabism and mainstream Sunni Islam.
There needs to be coordinated action at the United Nations to cut off
the funding for ideologies of hate and extremism, and a willingness
from the international community to investigate the channels that
supply the cash and the arms. In 2013, Iran’s president, Hassan
Rouhani, proposed an initiative called World Against Violent
Extremism, or WAVE. The United Nations should build on that framework
to foster greater dialogue between religions and sects to counter this
dangerous medieval fanaticism.
The attacks in Nice, Paris and Brussels should convince the West that
the toxic threat of Wahhabism cannot be ignored. After a year of
almost weekly tragic news, the international community needs to do
more than express outrage, sorrow and condolences; concrete action
against extremism is needed.
Though much of the violence committed in the name of Islam can be
traced to Wahhabism, I by no means suggest that Saudi Arabia cannot be
part of the solution. Quite the reverse: We invite Saudi rulers to put
aside the rhetoric of blame and fear, and join hands with the rest of
the community of nations to eliminate the scourge of terrorism and
violence that threatens us all.
I will hardly be the first to observe that all of us, and especially famous people, now live in a digital panopticon
Law & Politics
I will hardly be the first to observe that all of us, and especially
famous people, now live in a digital panopticon, where at any moment
our actions may be observed, videotaped, and uploaded to the internet.
Nor that the web has democratized publishing, creating what law
professor Glenn Reynolds has dubbed “an Army of Davids” willing and
able to attack the powerful. Nor that the amazing proliferation of
data and records on the web has given those Davids an array of weapons
far more powerful than a slingshot. Why has the news not yet reached
If you collapse in public, and you are famous, the odds that this
event has not been captured on someone’s cell phone are starting to
approach zero. And the odds that this video will be seen by virtually
every American are starting to approach 100 percent because there are
no longer any gatekeepers to bully. Trying to control stories like the
old Clinton spin machine did is like trying to fight World War II with
tactical maneuvers that worked for Caesar’s legions.
Nor is this the first time that Clinton has had this problem. She
tried to keep her e-mails secret by building a private server that was
eventually going to come to light. When it was discovered, her early
stories about it were nonsensical to anyone who knew anything about
They were bolstered by easily checkable statements that were at best
half-truths and which were almost immediately exposed. When she
finally gave a press conference, she played dumb and evasive as the
public’s trust in her plummeted. She then swung to a series of new
statements which were progressively shown to be untrue.
High Frequency Traders Elbow Their Way Into the Currency Markets @Business
High-speed electronic market making, already widespread in stocks, is
getting a grudging welcome from currency markets. They don’t have much
Algorithmic traders have more than tripled foreign-exchange volumes
over the last three years, seizing opportunities as Wall Street banks
withdraw from currency dealing, according to Aite Group, a consultant
in Boston. The new group of market makers is trading almost $200
billion a day. While that may seem small in the context of the
sprawling global currency market, consider this for perspective: Stock
trading on all U.S. exchanges totals about $270 billion a day.
Following the U.K.’s vote to leave the European Union, computerized
traders got a chance to prove their mettle as activity surged across
venues run by Thomson Reuters Corp., Bats Global Markets Inc. and
FastMatch. Nonbanks made markets continuously after the shock
decision, Galinov said.
“It was definitely the defining moment,” said Ari Rubenstein, CEO of
automated trading firm GTS in New York. “It was very, very important
to us that we did not stop providing liquidity throughout that event.”
U.K. Failed to Prevent Libya Chaos After Qaddafi, Lawmakers Say @business
U.K. intervention in Libya that led to the 2011 overthrow of Moammar
Al Qaddafi was based on bad intelligence and inaccurate assumptions
about the rebellion in the north African country, according to a panel
David Cameron, the prime minister at the time, was decisive in pushing
the move to carry out airstrikes in support of Libyan rebels through
the National Security Council without properly assessing the threat to
civilians and the role of Islamist extremists in the uprising, the
House of Commons Foreign Affairs Committee said in a report Wednesday.
“U.K. policy in Libya before and since the intervention of March 2011
was founded on erroneous assumptions and an incomplete understanding
of the country and the situation,” the committee chairman, Crispin
Blunt, a member of Cameron’s Conservative Party, said in a statement.
“Political engagement might have delivered civilian protection, regime
change and reform at a lesser cost to the U.K. and Libya. The U.K.
would have lost nothing by trying these instead of focusing
exclusively on regime change by military means.”
Britain “drifted into a policy of regime change” and repeated its
mistakes in Iraq by failing to plan properly for Libya’s government
after Qaddafi was overthrown, the committee said. Cameron and French
President Nicolas Sarkozy traveled to Tripoli and Benghazi in
September 2011 to celebrate the rebel victory and promised to help
rebuild the country.
“Having led the intervention with France, we had a responsibility to
support Libyan economic and political reconstruction,” Blunt said.
“But our lack of understanding of the institutional capacity of the
country stymied Libya’s progress in establishing security on the
ground and absorbing financial and other resources from the
“It may be that the U.K. government was unable to analyze the nature
of the rebellion in Libya due to incomplete intelligence and
insufficient institutional insight and that it was caught up in events
as they developed,” the panel said. “It could not verify the actual
threat to civilians posed by the Qaddafi regime; it selectively took
elements of Moammar Qaddafi’s rhetoric at face value; and it failed to
identify the militant Islamist extremist element in the rebellion.”
The Wave Riders of Dakar NYT
I don’t really surf that much, but I’ve always had this romantic
notion of the culture. The movie “Endless Summer” stopped in Senegal,
so I thought it would be cool to visit the same breaks they were
surfing in the film. Even in the smaller villages like Ngor, the kids
take broken boards and try to emulate the surfers. One of the most
famous breaks is right off Ngor Island, and you have to take a boat —
either a fishing boat or one of the restaurant boats — to get to the
Ngor is a little tricky to surf. It’s a really big break. Some of the
more experienced surfers try it. Local people go there to swim, and
there’s a surf camp. There’s a beachfront called Almadies and one
place called Secret Spot that many Senegalese go to — not much of a
secret. Some of the younger surfers have generated an income because
they can provide lessons for expats and tourists.
Kenyan Central Bank Sets CBR as the Base Rate for Loan Charges
Kenya’s central bank said lenders should peg their loans to its
Central Bank Rate, or CBR, in line with a new law capping costs and as
the International Monetary Fund warned that legislation limiting how
much lenders charge for credit risks impeding access to loans.
East Africa’s biggest economy has introduced restrictions on borrowing
costs that set commercial rates at 400 basis points above a central
bank base rate. Most banks, which have to comply by Sept. 14, had said
they’d peg loans on the CBR that’s currently at 10.45 percent. The
Commercial Bank of Africa had said it would price debt on the Kenya
Banks’ Reference Rate, which is at 8.9 percent.
The Kenya Bankers Association, an industry lobby group, had sought
clarification from the central bank on whether the base rate should be
the KBRR or the CBR. The wording of the law has also been questioned
by lawyers because it stipulates that banks should set their lending
rates at “no more than 4 percent, the base rate set and published.”
“The cap will be set at four percentage points above the CBR,”
according to a circular sent to lenders on Sept. 13 seen by Bloomberg.
“The interest rates indicated in the Banking (Amendment) Act 2016,
will apply on an annual basis.”
Central bank Governor Patrick Njoroge had opposed the proposal by
parliament to cap interest rates, warning in February that regulating
loan costs would be “damaging to the economy and regressive to
growth.” He has yet to comment publicly on the new law that also
compels financial institutions to pay interest on deposits of at least
70 percent of the central bank rate.
President Uhuru Kenyatta, who is seeking a second term in elections
scheduled for August 2017, signed the law on Aug. 24, saying he sided
with Kenyans exasperated by the cost of credit and low rates on
While persistently high spreads between deposit and loan rates cause
“understandable frustration among borrowers about the cost of credit,
and has produced political pressure for interest rate controls,” IMF
Deputy Managing Director Mitsuhiro Furusawa warned that the
“politicization of monetary policy” bears risks for a sound financial
system and for credit access, especially to risky borrowers.
“Linking deposit and lending rates to the central bank’s policy rate
may compromise the independence of the central bank, and hamper its
ability to enact monetary policy towards achieving its main
objectives, that is to maintain price and financial stability and to
support the economy,” Furusawa said in Nairobi, during a ceremony to
mark the Central Bank of Kenya’s 50th anniversary.
Visa Introduces Mobile-Money Product to Rival Safaricom's M-Pesa
The mVisa app will initially facilitate transactions for people with
accounts in four banks, including KCB Group Ltd. and Co-operative Bank
of Kenya Ltd., according to Visa Emerging Markets Senior Vice
President Uttam Nayak. The company estimates 84 million of Africa’s
mobile-phone users still pay by cash.
“Those can be converted overnight,” Nayak said in the Kenyan capital, Nairobi.
Users of mVisa will make payments by scanning a unique merchant Quick
Response, or QR, code using their smart phones. About 1,500 merchants
have up signed up and more banks will be on board later this year.