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Macro Thoughts

U.S. job gains roared back in November as unemployment matched a
half-century low and wages topped estimates, giving the Federal
Reserve more reason to hold interest rates steady after three straight
cuts.
Payrolls jumped 266,000, the most since January, after an upwardly
revised 156,000 advance the prior month, according to a Labor
Department report Friday that topped all estimates in a Bloomberg
survey calling for 180,000 jobs.
It was the first full month that General Motors Co. workers returned
to work after a 40-day strike, adding 41,300 to automaker payrolls
following a similar drop the prior month.
The jobless rate dipped to 3.5%, matching the lowest since 1969.
Average hourly earnings climbed 3.1% from a year earlier, exceeding
projections, and the prior month was revised higher. Private
employment jumped by 254,000.
The data back the Fed’s view that the labor market remains strong,
supporting consumers and continued economic growth.
That may give the central bank more room to keep interest rates on
hold at their meeting next week amid the uncertainty of President
Donald Trump’s prolonged trade talks with China.
Wage gains should also support holiday shopping and ease concerns
about a slowdown.
“It’s a significant surprise because economists were ready to go with
the idea that payroll growth was slowing down because the job market
had gotten tight,” said Stephen Stanley, chief economist at Amherst
Pierpont.
 “The whole tenor has changed in terms of job growth. We’re back at
steady-as-she-goes at a robust pace.”
Revisions added 41,000 jobs for the prior two months, bringing the
three-month average to a 10-month high of 205,000.
The report adds to recent data pointing to an economy holding up amid
headwinds.
Jobless claims remain near a half-century low, service-sector activity
is expanding and consumer sentiment is within reach of the best levels
of the expansion.
Manufacturers rebounded, adding 54,000 jobs after a 43,000 drop the
prior month, mostly reflecting GM workers returning to work.

Specifically, with respect to the United States, stoking up the Fire
with rate cuts is a very dangerous situation because according to my
calculations, the FED will need to be raising rates into the Election,
something that will turn Trump apoplectic I am sure.

Home Thoughts

On Friday, we reported on the latest bizarre milestone in the "art"
world, when a banana duct-taped to a wall sold for $120,000 at that
excess-liquidity conclave of ultra rich and other wannabe poseurs
known Art Basel Miami Beach. Worse, a second banana duct-taped to a
wall also sold for $120,000. Yet even worse than that, a third banana
duct-taped to a wall is expected to sell for $150,000 and so on.
Then on Saturday, at around 1:45pm, the art world was shocked when a
random man, allegedly a performance artist, ate said duct-taped banana
that sold earlier this week for $120,000.
New York-based performance artist David Datuna ate the banana early on
Saturday afternoon in front of a stunned convention full of "art"
lovers most of whom had no idea whether they were witnessing even more
"art", of just some clueless rando eating the world's most discussed
"art" exhibit, the gallery told the Miami Herald.
Perrotin Gallery spokesman Lucien Terras told the Herald that Datuna
did not "destroy" the artwork because "the banana is the idea", or as
Magritte would say "Ceci n'est pas une banane."
The controversial piece, called "The Comedian," was created by
Maurizio Cattelan, an Italian artist who had also entertained art
lovers from around the globe in 2017 with his "America" 18-carat-gold
toilet. The $6-million throne was stolen from England's Blenheim
Palace over the summer according to CBS.
Emmanuel Perrotin, the gallery founder, told CBS News that Maurizio's
work is not just about objects, but about how objects move through the
world.
"Whether affixed to the wall of an art fair booth or displayed on the
cover of the New York Post, his work forces us to question how value
is placed on material goods," he said, although he could have also
added "or eaten."
He added that "the spectacle is as much a part of the work as the banana."
Perrotin was about to head to the airport when he heard about the
banana being eaten and rushed back, according to the Herald. An
attendee tried to cheer him up by handing him a banana. A borrowed
replacement banana was eventually re-adhered to the wall, because
"art."

Political Reflections

“There is something going on with him that we don’t know about,” Mr.
Trump said of the president, drawing applause from the crowd in
Washington.
The dark power of words has become the defining feature of Mr. Trump’s
bid for the White House to a degree rarely seen in modern politics, as
he forgoes the usual campaign trappings — policy, endorsements,
commercials, donations — and instead relies on potent language to
connect with, and often stoke, the fears and grievances of Americans.
The transcriptions yielded 95,000 words and several powerful patterns,
demonstrating how Mr. Trump has built one of the most surprising
political movements in decades and, historians say, echoing the
appeals of some demagogues of the past century.
Mr. Trump’s breezy stage presence makes him all the more effective
because he is not as off-putting as those raging men of the past,
these experts say.
The most striking hallmark was Mr. Trump’s constant repetition of
divisive phrases, harsh words and violent imagery that American
presidents rarely use, based on a quantitative comparison of his
remarks and the news conferences of recent presidents, Democratic and
Republican.
He has a particular habit of saying “you” and “we” as he inveighs
against a dangerous “them” or unnamed other — usually outsiders like
illegal immigrants (“they’re pouring in”), Syrian migrants (“young,
strong men”) and Mexicans, but also leaders of both political parties.
“ ‘We vs. them’ creates a threatening dynamic, where ‘they’ are evil
or crazy or ignorant and ‘we’ need a candidate who sees the threat and
can alleviate it,” said Matt Motyl, a political psychologist at the
University of Illinois at Chicago who is studying how the 2016
presidential candidates speak.
“He appeals to the masses and makes them feel powerful again: ‘We’
need to build a wall on the Mexican border — not ‘I,’ but ‘we.’ ”
In another pattern, Mr. Trump tends to attack a person rather than an
idea or a situation, like calling political opponents “stupid” (at
least 30 times), “horrible” (14 times), “weak” (13 times) and other
names, and criticizing foreign leaders, journalists and so-called
anchor babies.
He bragged on Thursday about psyching out Jeb Bush by repeatedly
calling him “low-energy,” but he spends far less time contrasting Mr.
Bush’s policies with his own proposals, which are scant.
The specter of violence looms over much of his speech, which is
infused with words like kill, destroy and fight. For a man who speaks
off the cuff, he always remembers to bring up the Islamic State’s
“chopping off heads.”
And he has expressed enthusiasm for torturing enemies beyond
waterboarding. Last month, after several men hit a Black Lives Matter
protester at one of his rallies, Mr. Trump said, “Maybe he should have
been roughed up.”
“Such statements and accusations make him seem like a guy who can and
will cut through all the b.s. and do what in your heart you know is
right — and necessary,” said Michael Kazin, a historian at Georgetown
University, echoing the slogan that Barry Goldwater used in his 1964
presidential campaign.
And Mr. Trump uses rhetoric to erode people’s trust in facts, numbers,
nuance, government and the news media, according to specialists in
political rhetoric.
“Nobody knows,” he likes to declare, where illegal immigrants are
coming from or the rate of increase of health care premiums under the
Affordable Care Act, even though government agencies collect and
publish this information.
He insists that Mr. Obama wants to accept 250,000 Syrian migrants,
even though no such plan exists, and repeats discredited rumors that
thousands of Muslims were cheering in New Jersey during the Sept. 11,
2001, attacks.
He promises to “bomb the hell” out of enemies — invoking Hiroshima and
Nagasaki — and he says he would attack his political opponents “10
times as hard” as they criticize him.
And as much as he likes the word “attack,” the Times analysis shows,
he often uses it to portray himself as the victim of cable news
channels and newspapers that, he says, do not show the size of his
crowds.
Mr. Trump declined a request to be interviewed for this article.
This pattern of elevating emotional appeals over rational ones is a
rhetorical style that historians, psychologists and political
scientists placed in the tradition of political figures like
Goldwater, George Wallace, Joseph McCarthy, Huey Long and Pat
Buchanan, who used fiery language to try to win favor with struggling
or scared Americans.
Several historians watched Mr. Trump’s speeches last week, at the
request of The Times, and observed techniques — like vilifying groups
of people and stoking the insecurities of his audiences — that they
associate with Wallace and McCarthy.
“His entire campaign is run like a demagogue’s — his language of
division, his cult of personality, his manner of categorizing and
maligning people with a broad brush,” said Jennifer Mercieca, an
expert in American political discourse at Texas A&M University.
“If you’re an illegal immigrant, you’re a loser. If you’re captured in
war, like John McCain, you’re a loser. If you have a disability,
you’re a loser. It’s rhetoric like Wallace’s — it’s not a kind or
generous rhetoric.”
“And then there are the winners, most especially himself, with his
repeated references to his wealth and success and intelligence,” said
Ms. Mercieca, noting a particular remark of Mr. Trump’s on Monday in
Macon, Ga. (“When you’re really smart, when you’re really, really
smart like I am — it’s true, it’s true, it’s always been true, it’s
always been true.”)
“Part of his argument is that if you believe in American
exceptionalism, you should vote for me,” Ms. Mercieca said.
Historically, demagogues have flourished when they tapped into the
grievances of citizens and then identified and maligned outside foes,
as McCarthy did with attacking Communists, Wallace with
pro-integration northerners and Mr. Buchanan with cultural liberals.
These politicians used emotional language — be it “segregation
forever” or accusatory questions over the Communist Party — to
persuade Americans to pin their anxieties about national security,
jobs, racial diversity and social trends on enemy forces.
A significant difference between Mr. Trump and 20th-century American
demagogues is that many of them, especially McCarthy and Wallace, were
charmless public speakers.
Mr. Trump, by contrast, is an energetic and charismatic speaker who
can be entertaining and ingratiating with his audiences. There is a
looseness to his language that sounds almost like water-cooler talk or
neighborly banter, regardless of what it is about.
For some historians, this only makes him more effective, because
demagogy is more palatable when it is leavened with a smile and joke.
Highlighting that informality, one of his most frequently used words
is “guy” — which he said 91 times last week and has used to describe
President Vladimir V. Putin of Russia, a stranger cheering him on at a
rally and a celebrity friend.
“His relaxed, jokey tone makes statements about his resolve to solve
every problem because he knows what’s right and has the energy to do
it more persuasive,” said Mr. Kazin of Georgetown, who described Mr.
Trump’s idea for a database of Muslims in the United States as
insidious but also said he found Mr. Trump amusing at points.
Over many decades, Mr. Trump’s career as both a real estate developer
and a celebrity has been infused with language described as divisive,
even racially charged.
In the 1980s, it was with advertisements condemning the young men,
four of them black and one Latino, accused of marauding through
Central Park and raping a jogger.
Just over a decade ago, it was the controversy during the first season
of his reality show “The Apprentice,” in which he played a boardroom
billionaire who fired people.
He and other cast members clashed with Omarosa Manigault, a black
woman who claimed someone had called her a racial slur and suggested
that Mr. Trump had been insensitive.
Mr. Trump has said he will tear into anyone who tries to take him on,
and he presents himself as someone who is always right in his opinions
— even prophetic, a visionary.
He repeatedly insists that he alone predicted the rise of Osama bin
Laden in 2001 (despite the fact that the Bin Laden network had
attacked two United States embassies and the U.S.S. Cole in the three
years before). “I said, ‘We better be careful, that’s gonna happen,
it’s gonna be a big thing,’ and it certainly is a big thing,” Mr.
Trump has said of what he wrote about the Al Qaeda leader in 2000.
It is the sort of trust-me-and-only-me rhetoric that, according to
historians, demagogues have used to insist that they have unique
qualities that can lead the country through turmoil. Mr. Trump often
makes that point when he criticizes his Republican rivals, though he
also pretends that he is not criticizing them.
“All of ’em are weak, they’re just weak,” Mr. Trump said in New
Hampshire on Tuesday of his fellow candidates. “I think they’re weak,
generally, you want to know the truth. But I won’t say that, because I
don’t want to get myself, I don’t want to have any controversies. So I
refuse to say that they’re weak generally, O.K.? Some of them are fine
people. But they are weak.”

Trump has already established his credentials as a linguistic warfare
specialist. Look at the names he gave his opponents: crooked Hillary,
Lyin’ Ted, little Marco, ‘low-energy’ Jeb — which were devastating and
terminal.
His linguistics actually derive from the world of wrestling and
between 1988 and 2013, he ran wrestling events, appeared ringside
(notably in the Battle of the Billionaires), and was even inducted
into the world wrestling entertainment Hall of Fame.
Despite being presented as a competitive sport, professional wrestling
is scripted. The competitors, results, pre-match and post-match
interviews — all of it is make-believe.
The broadcasters give their audience all the things you’d expect in a
work of fiction: backstory, suspense, symbolism and so forth.
[Financial Times’Stephen Grosz].
In wrestling, as in literature, names are never neutral. Naming a
character is an essential part of creating them.
There’s always a “face” (short for baby-face, or hero) and a “heel”
(villain). Hulk Hogan and Dwayne “The Rock” Johnson are faces. Jake
“The Snake” Roberts and Rick Rude are heels.
Wrestling pits good against bad, a genuine he-man against a phoney
rascal. To emasculate his opponents, Trump uses this trope: “low
Energy Jeb”, “Mr Magoo” (Jeff Sessions) “Lyin’ James” (Comey), “Rat”
(Michael Cohen), “Highly conflicted Bob Mueller”.
As part of his two-fisted swagger, Trump tweets in wrest- ling-speak:
“lightweight Marco Rubio was working hard last night. The problem is,
he is a choker, and once a choker, always a choker! meltdown.
The President expanded his lin- guistic warfare repertoire last week
to embrace a [prima facie] racist trope, he said;
In America, if you hate our coun- try, you are free to leave. The
simple fact of the matter is, the four Con- gresswomen think that
America is wicked in its origins, they think that that we are all
racist and evil.
He picked on four ladies of colour AOC, Tlaib, Omar & Pressley. His
use of the word ‘’wicked’’ was a ‘’Blinder’’ because who can forget
the Wizard of Oz and the Wicked Witch of the West. Paul Virilio said.
‘’Images contaminate us like a virus.’’

Trump is a linguistic warfare specialist. Look at the names he gave
his opponents: Crooked Hillary, Lyin’ Ted, Little Marco, ‘Low-energy’
Jeb — were devastating and terminal.

Now set these events alongside these comments from the US army war
college quarterly 1997. The US officer assigned to the deputy chief of
staff (Intelligence), charged with defining the future of warfare,
wrote “One of the defining bifurcations of the future will be the
conflict between information masters and information victims.”
This information warfare will not be couched in the rationale of
geopolitics, the author suggests, but will be “spawned” - like any
Hollywood drama - out of raw emotions. “Hatred, jealousy, and greed -
emotions, rather than strategy - will set the terms of [information
warfare] struggles”.

Economies on the verge of collapse, a yearning for greater democracy,
revulsion against corruption and inequality–the grievances that drove
people into the streets in 2019 were consistent across continents.
Some marched peacefully, others clashed violently with security
forces, and in at least five places the unrest helped topple
government leaders.
Below is a breakdown of protests around the world, by region, and the
main reasons behind them.

Global
A defining movement of 2019 was the worldwide push for more urgent
government action against what scientists and activists call a climate
emergency. Demonstrations took place around the globe, many inspired
by the 2018 school strikes started by Swedish teenager Greta Thunberg.

Americas Protest causes and effects Source: Bloomberg reporting
① Puerto Rico
After a hurricane, bankruptcy, and probes into corruption, Puerto
Ricans ousted Governor Ricardo Rosselló in July.
② Venezuela
Hyperinflation and hunger have driven opposition to the repressive
regime of Nicolás Maduro. So far, he’s dug in.
③ Colombia
President Ivan Duque promised to lower taxes for the poorest quintile
of the country after unrest led to the deaths of at least four,
including a teenager.
④ Ecuador
When fuel subsidies ended, chaos ensued. The government rescinded the
price hikes days later.
⑤ Bolivia
President Evo Morales presided over economic growth but ignored term
limits. He was forced out on Nov. 10.
⑥ Chile
Anger at increases in public transport costs grew into a broad-based
movement protesting inequality.

Europe Protest causes and effects Source: Bloomberg reporting
① Scotland
More than 200,000 marched through Edinburgh in support of independence
from the United Kingdom.
② U.K.
Britain has seen mass demonstrations both for and against Brexit,
which is destined to define the country’s future.
③ France
A year into the yellow vest protests, the demonstrations have waned in
size, but the grievances remain.
④ Catalonia
The impasse between Catalonia and Spain’s government in Madrid flared
anew, with no resolution in sight.
⑤ Czech Republic
Prime Minister Andrej Babis, one of the country’s richest men, was a
target of the biggest protests since 1989.
⑥ Slovakia
Slovaks took to the streets in October to demand investigations into
crimes and the rooting out of government corruption.
⑦ Russia
Moscow has been the center of the largest antigovernment rallies in seven years.

Africa and the Middle East Protest causes and effects Source:
Bloomberg reporting
① Algeria
Algeria’s president, Abdelaziz Bouteflika, sought a fifth term,
prompting unrest. He resigned in April.
② Lebanon
A levy on WhatsApp calls sparked pent-up anger, forcing Prime Minister
Saad Hariri to resign in October.
③ Iraq
Prime Minister Adel Abdul-Mahdi quit after hundreds died in protests
against government corruption and influence from Iran.
④ Iran
Fuel-price hikes resulting from U.S. sanctions sparked protests that
led to more than 200 deaths, Amnesty International said.
⑤ Sudan
Omar al-Bashir crushed dissent during his 30-year presidency, but
discontent over prices led to unrest that forced him out in April.
⑥ Malawi
Allegations of election rigging prompted tens of thousands to take to
the streets of Malawi’s cities in August.
⑦ South Africa
Poor government services and a lack of housing were the primary
reasons for violent demonstrations that broke out in April.

East Asia and Oceania Protest causes and effects Source: Bloomberg reporting
① South Korea
Tens of thousands protested the appointment of Cho Kuk as minister of
justice. He left after five weeks on the job.
② Hong Kong
A June rally against a proposed law allowing extradition to China
morphed into a broad anti-China movement.
③ Indonesia
October protests raged against the government’s program, including
controversial changes to the criminal code.
④ Papua
In Indonesia’s easternmost region, clashes between separatists and
government forces in August and September resulted in many deaths.

Paul Virilio pronounced in his book Speed and Politics, “The
revolutionary contingent attains its ideal form not in the place of
production, but in the street, where for a moment it stops being a cog
in the technical machine and itself becomes a motor (machine of
attack), in other words, a producer of speed.’’
This Phenomenon about which I am speaking is not limited to Latin
America. We have recently witnessed the ‘’WhatsApp’’ Revolution in
Lebanon, where a proposed Tax on WhatsApp calls sent up to 17 per cent
of the Lebanese Population into the street. Iraq is on a Knife Edge.
Millions of Algerians sent the wheelchair-bound Bouteflika home not
too long ago.
Hong Kong remains in open rebellion and trying to shake off the
‘’Crusher of Bones’’ Xi Jinping and his Algorithmic Control.
The Phenomenon is spreading like wildfire in large part because of the
tinder dry conditions underfoot. Prolonged stand-offs eviscerate
economies, reducing opportunities and accelerate the negative feed-
back loop.
Antonio Gramsci wrote, “The crisis consists precisely in the fact that
the old is dying and the new cannot be born; in this interregnum, a
great variety of morbid symptoms appear. now is the time of monsters.”
This level of unhappiness is unprecedented in a time of ‘’peace’’ and
in a time when our august financial institutions keep touting about
how it has never been so good for the Human Race.
Ryszard Kapuściński wrote:- “Revolution must be distinguished from
revolt, coup d’état, palace takeover. A coup or a palace takeo- ver
may be planned, but a revolu- tion—never. Its outbreak, the hour of
that outbreak, takes everyone, even those who have been striving for
it, unawares. They stand amazed at the spontaneity that appears
suddenly and destroys everything in its path. It demolishes so
ruthlessly that in the end, it may annihilate the ideals that called
it into being.”
This is a Revolution and it is a Global Phenomenon.
Ryszard Kapucinski also said: “If the crowd disperses, goes home, does
not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.

今日のデモには、80万人が参加しました。5大要求、1つも欠けてはなりません。 香港政府は今すぐ民意に応えるべきです。 #香港デモ
#HongKongProtests @chowtingagnes
https://twitter.com/chowtingagnes/status/1203686932632334336?s=20

News ricocheting through Chinese social media today: Library in Gansu
announces burning “illegal, religious and deviant” materials in order
to “fully exert libraries’ central role in broadcasting ideology
through mainstream society.”

There is certainly a Fin de siècle even apocalyptic mood afoot.
WB Yeats’ The Second Coming Turning and turning in the widening gyre
The falcon cannot hear the falconer;Things fall apart; the centre cannot hold;

He is right, traditional media has been disrupted and the insurgents
can broadcast live and over the top.

As the joke went, "there is no news in the truth and no truth in the
news." Eventually the disparity between truth and lies became too
great; life wasn't improving and more and more information was making
it through the Iron Curtain.
Denying reality became too grave an insult to our dignity, an
underestimated ingredient in the spirit of revolution.
My ongoing attempts to fight that tragedy led to my exile in the
United States. Now my new home finds itself locked in its own perilous
battle -- a battle to avoid becoming the latest member of the
post-truth world.
President Donald Trump and his Republican defenders in Congress have
followed his lead in declaring war on observed reality.
Critical reports are "fake news," journalists reporting the facts are
"enemies of the people," a phrase from Vladimir Lenin's, debunked
conspiracy theories is repeated, and public servants testifying under
oath about documented events are dismissed as Never Trumpers.
The internet was supposed to shine the light of truth into every
corner of the world, breaking the authoritarians' monopoly on
information.
But it has also become a light-speed delivery system of lies and
propaganda. The web has been chopped into pieces. Like a shattered
mirror, each fragment reflects a different distorted image instead of
a single reality.
Software is soft power, and US companies betray the values of the
nation that enabled their success by doing the bidding of dictators.
Tech firms defending themselves by saying it's just business, not
politics, sound a lot like the Hollywood studios that edited their
movies and fired Jewish staff under Nazi pressure in the 1930s.
What's the truth? In the era of regionalized facts, it depends on
where you stand, what channel you're watching, and what party you
belong to.
Trump is finally facing the music, and that must begin with everyone
facing the facts.

Only accept information if it has an actual living name on it. The
Fake News Media makes up many “sources say” stories. Do not believe
them!

The report, from industry researcher IHS Market, to be released
Thursday, said the number of cameras used for surveillance would climb
above 1 billion by the end of 2021. That would represent an almost 30%
increase from the 770 million cameras today. China would continue to
account for a little over half the total. Fast-growing, populous
nations such as India, Brazil and Indonesia would also help drive
growth in the sector, the report said. IHS analyst Oliver Philippou
said government programs to implement widespread video surveillance to
monitor the public would be the biggest catalyst for the growth in
China. City surveillance also was driving demand elsewhere.

What do Uganda’s police force, a Mongolian prison and Zimbabwean
airports have in common? All three are in the process of testing
facial recognition systems and all three have used Chinese technology
to do it. At least 52 governments are doing the same thing according
to research by the Carnegie Endowment for International Peace. Chinese
facial recognition companies have taken the lead in serving this
growing international market not least because of the advantage they
have over peers in other countries: a massive domestic market and an
authoritarian system where privacy often takes a back seat. According
to IHS Markit, China accounted for nearly half of the global facial
recognition business in 2018.
“There are protests around the world from Lebanon to Chile and Iraq,
and a lot of these governments, whether it’s liberal democracies or
more autocratic, are in tenuous positions,” says Steven Feldstein, a
fellow at Carnegie, a US think-tank. “Now, there is technology
available that allows them to fight back against political
mobilisation.”
Critics, and human rights campaigners, have accused Beijing and the
surveillance companies of “exporting authoritarianism” via the
technology that has been used at home as part of a security crackdown
that has led to the detention of more than 1.8m people, predominantly
Uighur Muslims, in the Xinjiang region. Chinese companies may be the
most successful, but they are not the only ones supplying surveillance
technologies to governments. Rivals from Israel, Japan and America are
competing to do the same, while often sourcing components from the US.
Research by Mr Feldstein into the global expansion of artificial
intelligence surveillance found that Chinese tech companies —
particularly Hikvision, the world’s biggest surveillance camera
vendor, Huawei, Dahua, and ZTE — have supplied countries ranging from
Australia to Myanmar and Kazakhstan.
“These companies are particularly well-suited to provide [advanced
surveillance capabilities],” says Mr Feldstein, “but also they are
willing to go to markets that perhaps western competitors are less
willing to go to.”
On the roads leading into Nairobi, the Kenyan capital, surveillance
cameras flash at every car passing in and out of the perimeter of the
urban centre, capturing and analysing the identities of their
occupants. Chinese telecoms company Huawei boasts that its cameras led
to a 46 per cent drop in the regional crime rate in 2015. Local
government figures suggest the impact was smaller, and only
shortlived. The company, which was blacklisted for allegedly posing a
threat to US national security this year, has supplied surveillance
equipment — including facial recognition — to roughly 230 cities
worldwide stretching from western Europe to large swaths of Asia and
Sub-Saharan Africa. It supplies more countries with AI video
surveillance than anyone else according to Carnegie.
“Huawei has been investing heavily in the developing world in a way
their telecoms provider competitors haven’t. It is perfectly pitched
for surveillance projects,” says Henry Tugendhat, a researcher at
Johns Hopkins School of Advanced International Studies. “The
governments have an interest in security and companies have an
interest in selling.”
But the question of who is driving the surveillance rollout is not
straightforward. “I would beware of the idea that Africa is a blank
slate, where the Chinese arrive bringing their oppressive ways,” says
Iginio Gagliardone, author of China, Africa, and the Future of the
Internet. “Companies are spinning their products to fit the political
demands of African elites.”
Hikvision, which grew out of a government research institute, but is
now only partially state-owned, has a growing international presence,
supplying video surveillance infrastructure from Brazil to South
Africa and Italy. It is one of a clutch of Chinese tech companies —
along with Dahua, SenseTime and Megvii, among the world’s leading
artificial-intelligence software vendors — to have been blacklisted by
Washington over alleged involvement in supplying technology used in
Xinjiang. Yet Chinese domination of the market shows no sign of
waning. According to figures from IHS Markit China’s market expanded
by 13.5 per cent last year whereas the global market — excluding China
— grew by just 5 per cent. In 2017 Chinese state media boasted that
the country had built the world’s biggest video surveillance system,
employing over 20m AI-enabled cameras. Chinese companies have
previously operated under loose regulation at home and abroad, but are
now facing challenges from the public unhappy at the expansion of
facial recognition. Some 80 per cent of respondents in the country’s
first mass survey on the issue, released on Thursday, feared data
leaks from facial recognition operators.
“When you’re arguing with public bodies like the Beijing subway about
their use of facial recognition, there’s no point talking to them
about data protection,” Hong Yanqing, a scholar at Peking University,
told a recent forum in Beijing. “Instead we need to have a debate
about the appropriateness and proportionality of using [facial
recognition].”
Mr Hong helped draft the government working group’s report on personal
data protection standards.
The widespread use of facial recognition in China is in part a
reflection of how many activities already require real-name
identification. Face scans have replaced or augmented human identity
checks in hotels, boarding flights and trains, and at banks and
hospitals. Regulations, which came into effect this week, require
telecom carriers to scan the faces of users registering for mobile
phone services. But facial recognition is also being used to extend
surveillance in new ways, such as tracking the classroom behaviour of
students. The country’s rapidly expanding network of
facial-recognition cameras means many people are now subject to mass
identification. China’s police force already holds the world’s biggest
national database of over 1bn faces, captured for the national ID card
system. Depending on the quality of these photos, they can be matched
to people posing for a face scan. The industry is beginning to pay
attention to the complaints. SenseTime announced last week that it
will lead a consortium of 27 companies to help set national standards
for facial recognition, under the guidance of a government standards
body. “The public is increasingly paying attention to the security
problems faced by this technology,” the company wrote in a social
media post.
While debate over the use of facial recognition in the EU and the US
is focused on the privacy threat of governments or companies
identifying and tracking people, the debate in China is often framed
around the threat of leaks to third parties, rather than abuses by the
operators themselves. China’s courts received their first challenge to
the commercial use of face scans in October. When a zoo in Hangzhou
forced season pass holders to submit to face scans for entrance, Guo
Bin, a professor at Zhejiang Sci-Tech University, sued the zoo in
order to keep his personal information private. Face traits are
“sensitive personal data”, he said in a court submission, arguing that
the data could be leaked or stolen. Most Chinese people approve of the
use of facial recognition for convenience and improving security, but
remain concerned about privacy abuses, according to Beijing’s Nandu
Personal Information Protection Research Centre, which conducted the
mass survey.
The installation of an in-class facial monitoring system at the China
Pharmaceutical University in Nanjing in September sparked widespread
online criticism. As part of a new “smart campus” system, the school
installed face scanners in two classrooms to track attendance and to
catch students dozing, playing on their phones and talking in class.
It “effectively solves the difficult problems of managing attendance
and low efficiency”, the school says.
In response, China’s education ministry said the department would add
restrictions and regulations on the use of facial recognition in
schools, and hoped they would be “highly cautious” in using the
technology. While Chinese companies are dominant in the global facial
recognition market, their position is coming under pressure from
rivals such as Japan’s NEC which supplies similar technology in 14
countries, and US groups like IBM, the software company Palantir and
Cisco.
“Companies from other countries including Israel and Russia are very
advanced in this space, and are making a play in markets such as the
United States, and regions in the Caucasus and Central Asia, which is
significantly under-reported,” Mr Feldstein says.
Israeli companies like AnyVision and Elbit Systems have supplied
technology to the US, while Ukrainian start-up Riddletag uses Amazon’s
facial recognition technology to allow access to passengers in the
Tbilisi subway in Georgia.
“US companies, for all the lip service they pay to technology and
ethics, are also building surveillance tech, and indeed supplying
Chinese companies that produce it,” says Stephanie Hare, an
independent researcher of facial recognition technology and ethics,
and a former employee of Palantir. “This leaves everyone else with a
decision: be spied on by the US or by China? This point was made in
the German parliament last week, and the US was very upset about it,
saying there can be no moral equivalence between China’s
authoritarianism and US values.”
Meanwhile, China’s surveillance industry is already moving on to the
next frontier of computer image recognition: identifying people by the
way they walk and trying to read their emotions.

The US Economy is, in fact, more of an island economy than China’s.

The eyeballs make sense, because Epstein was a watcher. ..Is it a
coincidence that we all live in a watch-and-collect digital economy?
maybe. But we feast upon each other in the 21st century.

Believing that Epstein planned to marry his daughter, Maxwell
introduced him and Ghislaine Maxwell to Ben-Menashe’s Mossad circle.
“Maxwell sort of started liking him, and my theory is that Maxwell
felt that this guy is going for his daughter,” Ben-Menashe said.
“He felt that he could bless him with some work and help him out in
like a paternal [way].”
Israeli intelligence bosses gave the green light and Epstein then
became a Mossad asset.
“They were agents of the Israeli Intelligence Services,” said Ben-Menashe.
When it became clear that Epstein wasn’t very competent at doing much
else, his primary role became “blackmailing American and other
political figures.”
“Mr. Epstein was the simple idiot who was going around providing girls
to all kinds of politicians in the United States,” said Ben-Menashe.
“See, fucking around is not a crime. It could be embarrassing, but
it’s not a crime. But fucking a fourteen-year-old girl is a crime.
And he was taking photos of politicians fxxxing fourteen-year-old
girls — if you want to get it straight. They would just blackmail
people, they would just blackmail people like that.”
There’s also a Mossad connection to a different kind of sex offender;
Harvey Weinstein.
Weinstein reportedly hired ex-Mossad agents to suppress allegations
against him.
Working for an Israeli firm called Black Cube, these agents pressured
witnesses and tried to intimidate journalist Ronan Farrow in order to
“bury the truth” about Weinstein’s activity.

In November of 1991, Robert Maxwell’s body was found floating in the
sea near the Canary Islands and his luxury yacht the Lady
Ghislaine.[16] Immediately following his death, Ghislaine flew to
Tenerife, where the yacht was stationed, to attend to his business
paperwork.[9]
Though a verdict of death by accidental drowning was recorded, Maxwell
has since stated that she believes her father was murdered,[17]
commenting in 1997 that "He did not commit suicide. That was just not
consistent with his character. I think he was murdered."

I am of the view that BITCOIN and crypto is a Jeffrey Edward Epstein
[and his cast of characters] level Con and I am having nothing to do
with it other than occasionally looking in and admiring the
sophistication and level of the Con. Its breathtaking.

Twilight had settled over the tranquil country lane when officers
arrived to find the slumped frame of a middle-aged man, his dog lying
dead nearby. The fatally wounded figure was Dmitry Obretetsky, a
billionaire who had made his fortune in the smash-and-grab chaos of
post-communist Russia before moving to Britain with his wife and
children. He had been walking his dog near his home in the exclusive
Surrey village of Oxshott when he was mown down in a crash involving
three vehicles. Although police are not treating it as suspicious,
when Obretetsky’s death became public in Russia last week, rumours
began swirling. “People drive very carefully in Britain,” a friend of
his said, in an interview with Life, a Russian news outlet. “I don’t
exclude that he was specially knocked down.” Britain “used to be
off-limits for contract killings, but apparently not any more”, a
Russian business associate of Obretetsky told me. Those fears were not
far-fetched. Obretetsky is the latest in a string of powerful Russians
to have met an untimely end after moving to Britain.

Vladimir Putin has been using deadly force to wipe out his enemies at
home and abroad from the first days of his presidency. He has poured
state resources into the development of an arsenal of chemical and
biological weapons, and passed laws explicitly giving his security
forces powers to exterminate enemies of the state on foreign soil with
impunity. Dissenting politicians, journalists, campaigners, defectors,
investigators and critics have been gunned down, poisoned, hit by
cars, thrown out of windows, beaten to death and blown up in droves
under his rule. Last week, the German government expelled two Russian
diplomats over fears that the Russian state had ordered the murder of
a Chechen rebel commander who was shot in the head in a Berlin park in
August. But nowhere has Putin pursued his foreign killing campaign
with more vigour than within the borders of the United Kingdom. The
nerve agent poisoning of the former double-agent Sergei Skripal and
his daughter Yulia in Salisbury last year marked a tipping point —
exposing members of the British public to a deadly toxin in the first
chemical weapons attack on European territory since the Second World
War. The British government had no option but to act, expelling 23
Russian diplomats and marshalling an international response in which
more than 150 Russian officials were thrown out of western countries.
The polonium poisoning of the KGB defector Alexander Litvinenko in
2006 was another case too brazen to ignore — the assassins having
bungled the hit so badly that they left a radioactive trail all over
London. The government reacted by sending Russian diplomats packing
back to Moscow. My team at BuzzFeed News has connected Russia to no
fewer than 14 other suspected assassinations on British soil since
Putin came to power. Keen to preserve the flow of Russian money into
London, protect British energy investments in Russia and enlist Putin
as a geopolitical ally, successive governments have ignored glaring
evidence of this campaign of targeted killing. At the heart of the web
of death we uncovered was the exiled Russian oligarch Boris
Berezovsky. The billionaire mathematician fled to Britain in 2001 and
made himself the Kremlin’s public enemy No 1 by using his base in the
Surrey countryside to finance a campaign of opposition to Putin’s
rule. Berezovsky had relied on a network of British lawyers and
financiers to help spirit his money out of Moscow and stash beyond the
reach of the Russian authorities, and he had used this fighting fund
to bankroll dissidents, including Litvinenko, who were investigating
Putin’s links to organised crime and terrorist atrocities in Russia.
The oligarch and his turbulent associates thought they had found haven
in Britain — but they were wrong. Two of Berezovsky’s British lawyers
were the first to die after helping to funnel his fortune out of
Moscow: Stephen Moss succumbed to a sudden heart attack in 2003, aged
46, and Stephen Curtis died in a helicopter crash in 2004, aged 45,
after receiving a stream of death threats from Russia. The oligarch’s
business partner, the Georgian billionaire Badri Patarkatsishvili,
dropped dead aged 52 of an apparent heart attack in Surrey in 2008
after warning Scotland Yard of a plot to kill him, as did their
acquaintance Yuri Golubev, the co-founder of the troubled oil giant
Yukos, who died in London in 2007 aged 64 after telling friends he
believed he was being targeted by the Russian state. Berezovsky’s
British fixer, Scot Young, fell from the fourth-floor window of his
London house in 2014 and was impaled on iron railings below after
telling friends, family and the police that he was being targeted by a
team of Russian hitmen. Three of Young’s close friends and business
partners — Paul Castle, Robbie Curtis (no relation to Stephen) and
Johnny Elichaoff — had all lost their lives in apparent suicides in
the four years before the fixer died. After surviving a string of
brazen assassination attempts, Berezovsky was found hanged in 2013
with a broken rib and a blunt injury to the back of his head.

My colleagues and I spoke to more than 40 current and former
intelligence and law enforcement sources on both sides of the
Atlantic, and obtained read-outs of classified files, to establish
that US spy agencies have passed to Britain intelligence connecting
these deaths either to Russia’s security services, including the FSB,
or to its powerful mafia groups — two forces that often work in
tandem. British intelligence and law enforcement sources confirmed
that they had gathered detailed information about Putin’s
assassination programme — including state laboratories in which
government scientists have developed an arsenal of nerve agents,
deadly germs, and radioactive poisons designed to kill without leaving
a trace. These weapons can be administered orally, in sprays, or in
vapours to trigger cancers, heart attacks or multiple organ failure,
allowing the FSB’s specialist hit squads to eliminate a target while
making it look like the victim had succumbed to a sudden illness or
died a natural death. It was against the backdrop of this mountain of
intelligence that the British authorities shut down investigations
into the deaths of the men in Berezovsky’s circle — treating them all
as accidents, suicides or natural deaths. Among the most extraordinary
cases in the web of 14 suspected Russian assassinations we uncovered
is that of Alexander Perepilichnyy. The financier, who fled to Britain
in 2010 after blowing the whistle on a massive Kremlin-linked fraud,
dropped dead aged 44 while out jogging in Surrey two years later. The
police immediately declared that the whistleblower had died of natural
causes. But then toxicology tests ordered by Perepilichnyy’s life
insurance company detected what appeared to be traces of a deadly
poison in his stomach. It was not possible to identify definitively
the substance because the sample sent to the lab was too small, and
further tests were impossible, because the rest of Perepilichnyy’s
stomach contents had been discarded by the police toxicologist. That
was just the first of a series of police failures that ensured the
truth about the financier’s death would never be known. Files from the
dead man’s computer revealed a stream of threatening Skype messages as
well as details of a mysterious $500m payment he had received shortly
before he died — but both the primary police evidence disc containing
those clues and the backup were somehow wiped, and then it emerged
that the files had also mysteriously disappeared from the server of
the region’s anti-terrorism unit, meaning they could never be
recovered. The government fought tooth and nail to keep the full truth
about the dead man from his inquest, initially using a public-interest
immunity certificate to prevent the disclosure of a cache of documents
relating to Perepilichnyy on national security grounds, and then
obtaining a second secrecy order banning the disclosure of any contact
between the financier and British intelligence. In 2016 America’s top
intelligence official prepared a classified report for Congress
detailing “the use of political assassinations as a form of statecraft
by the Russian Federation”, listing a series of deaths in Britain.
That report asserted with “high confidence” that Perepilichnyy had
been assassinated on direct orders from Putin or people close to him,
and the intelligence it outlined was passed to MI6. But, again, the
British government ignored evidence connecting the Kremlin to a brazen
hit on British soil. As the body count of the Kremlin’s enemies
continues to grow, officials are finally realising that this policy of
appeasement has been a catastrophic misjudgment.

The attack on the Skripals last March was a watershed moment. When, a
week later, another Kremlin enemy was found dead at home in the London
suburb of New Malden, the official response was markedly different.
Nikolai Glushkov, 68, was a key lieutenant of Berezovsky who had been
a vocal opponent of Putin’s regime. When he was found strangled with
his dog lead the police immediately opened a murder inquiry. Bowing to
pressure, the home secretary announced that the government would
reinvestigate all 14 cases with help from the police and MI5. The case
files locked away inside Scotland Yard and rural police stations were
dusty — some having lain unread for more than a decade. For the
officers drafted in to conduct the review, reviving cases that had
been left to go so cold was a nearly impossible task. What good could
come of raking over secrets so long buried when any suspects would be
thousands of miles out of reach? Six months after announcing the
review, the government quietly closed it again, deciding there was “no
basis” on which to investigate further. No reasons were given.
Meanwhile, the home secretary had obtained a secrecy order to ban the
results of the review from being disclosed to the inquest on
Perepilichnyy, which was still snarled up in red tape nearly six years
after the event. In the absence of any “direct evidence of murder”,
the coroner ruled that the financier had died of natural causes.
Obretetsky’s death is a reminder of the spate of suspicious Russian
deaths that can no longer be ignored. Only a public inquiry, with full
powers to review the voluminous classified information that has been
suppressed by the authorities, has any hope of unearthing the whole
truth.

Former #Maldives President M.Nasheed has been objecting to #China's
influence over the Maldivian economy & it's alleged island grabbing
through leasing & debt, satellite images also show how islands leased
for commercial projects are being dredged & expanded south of #India

In addition, for those of Africa’s least developed countries, heavily
indebted and poor countries, landlocked developing countries and small
island developing countries that have diplomatic relations with China

International Markets

Euro 1.1061
Dollar Index 97.652
Japan Yen 108.57
Swiss Franc 0.9904
Pound 1.3170
Aussie 0.6834
India Rupee 71.145
South Korea Won 1190.135
Brazil Real 4.1435
Egypt Pound 16.1357
South Africa Rand 14.1616

Commodities

Emerging Markets

Frontier Markets

Sub Saharan Africa

I could have written about the Banana that was duct taped to a Wall at
Art Basel Miami Baech, sold for $120,000.00 and then eaten by a Fellow
called David Datuna. Perrotin Gallery spokesman Lucien Terras told the
Herald that Datuna did not "destroy" the artwork because "the banana
is the idea" I could have written about How ''The presidents free
lawyer took Wizz Air to Ukraine for all the Criming'' [@MollyJongFast]
However,  What with the Victoria Falls now a trickle, a Famine
ravaging the Land in Southern Africa, Floods and Desert Locust swarms
in Eastern Africa, Buildings collapsing in Nairobi, You might finding
yourself turning to the Bible and reading verses about the signs of
the End Times.

Luke 21:11  There will be great earthquakes, and in various places
famines and pestilences. And there will be terrors and great signs
from heaven.
Revelation 6:12-13  When he opened the sixth seal, I looked, and
behold, there was a great earthquake, and the sun became black as
sackcloth, the full moon became like blood, and the stars of the sky
fell to the earth as the fig tree sheds its winter fruit when shaken
by a gale.

And then You might cast your Mind back a few years and recall the
IMF's Africa Rising conference in 2014 when I quaffed the most
flavoursome Tiger Prawns and in between mouthfuls the conversation was
all about how Africa was finally rising and Fund Managers from far and
wide were salivating at double digit local currency yields and life
was hunky dory and so peachy. What we know now and that's after the
Tuna Bond Scandal is we were all popping Quaaludes [Quaaludes
''promote relaxation, sleepiness and sometimes a feeling of euphoria.
It causes a drop in blood pressure and slows the pulse rate. These
properties are the reason why it was initially thought to be a useful
sedative and anxiolytic It became a recreational drug due to its
euphoric effect’’]

Today wherever You care to look [There are a few exceptions, Egypt is
one, Cote D'Ivoire another], we are looking at ''the decay Of that
colossal Wreck''

This week Moodys Investor Services downgraded Nigeria to negative and
we learnt that Foreign Investors are propping up the Naira to the tune
of NGN5.8 trillion ($16 billion) via short term certificates. Everyone
knows how this story ends. When the music stops, Everyone will dash
for the Exit and the currency will collapse just like its collapsing
in Lusaka as we speak. Nigeria matters and it has not posted positive
GDP growth above its population growth for a number of years.
Essentially Baba Go Slow's Nigeria is in reverse gear as is
Ramaphosa's South Africa which reported -0.6% Q3 2019 GDP. President
Ramaphosa, however, was awarded with the Grand Croix de l'Orde
National du Merit, on behalf of the Grand Master, His Excellency
President Alpha Conde of the Republic of Guinea. The Two biggest
Beasts in Sub Saharan Africa are essentially providing fewer
Opportunities and their Citizens have been becoming worse off year
after year for more than 5 years now.

What is also clear is that currencies represent the best Proxy.
Bloomberg reported last week that the Ghana Cedi is headed for its
25th straight year of depreciation against the dollar.  The cedi is
down 13% so far in 2019, according to data compiled by Bloomberg
Decades of high inflation led to a redenomination in 2007, when the
new cedi was phased out and replaced by the current currency at a
ratio of one to 10,000. It has since lost about 80% of its value. And
Ghana is often touted as a success story. Bloomberg was also reporting
on Friday that Zambia’s kwacha fell the most against the dollar in
four years and may continue to slide to record lows as “panic buying”
of the U.S. currency sets in, according to FNB Zambia.The currency
depreciated by as much as 5.3% to 15.5750 per dollar, bringing its
drop so far this year to 21% and making it the world’s third-worst
performer in 2019. Thursday was the first time it reached 15 per
dollar. Zambia’s economy has been ravaged by a regional drought and
repeated budget deficits that have sent government debt soaring.
Economic growth won’t reach 2% this year, according to the
International Monetary Fund, while sovereign debt will end 2019 at
91.6% of gross domestic product.Currency weakness makes servicing
foreign loans more costly and could also drive up an inflation rate
that’s already at 10.8%, the highest since 2016.

The kwacha’s depreciation is “regretable” and the central bank is
looking at ways to arrest the slide, Vice President Inonge Wina told
lawmakers Friday in Lusaka, the capital. They are still popping
Quaaludes in Lusaka.

Stratfor has headlined their latest article about Zimbabwe as follows
''As Its Economy Worsens, Zimbabwe Teeters on the Edge of Chaos'' and
the first sentence reads With an increasingly cash-strapped and hungry
citizenry, the survival of Zimbabwe's current government will hinge
heavily on keeping its security forces paid and happy.

Here in Kenya David Ndii headlines his latest Opinion Piece in the
Elephant ''An IMF Straightjacket Is a Fitting End to Jubilee’s Reign
of Hubris, Blunder, Plunder, Squander and Abracadabra''

Meanwhile, Jack Ma beats the Drum of the African Entrepreneur and I
will just quote Howard French

Be candid what's really at stake here: interest of players like these
is really harvesting eyeballs, coins aand talent from Africa the
purses of the biggest demographic pool of the 21st century @hofrench

Herve Gogo can have the final word

It’s a big tragedy indeed, for Zimbabweans and for the continent. But
conspiracy-theorists, living mainly overseas, will always find a
reason to accuse the other of being responsible of this self-inflicted
catastrophe. Naipaul would have called them some Kunta Kinte manqués.

Time to Big Up the Dosage of Quaaludes

Be candid (lest one think I'm picking on poor Jack Ma, ditto to
Twitter, Facebook, et al) about what's really at stake here: interest
of players like these is really harvesting eyeballs, coins aand talent
from Africa the purses of the biggest demographic pool of the 21st
century.

With an increasingly cash-strapped and hungry citizenry, the survival
of Zimbabwe's current government will hinge heavily on keeping its
security forces paid and happy.

Zambia’s kwacha fell the most against the dollar in four years and may
continue to slide to record lows as “panic buying” of the U.S.
currency sets in, according to FNB Zambia, the local unit of FirstRand
Bank Ltd.
The currency depreciated by as much as 5.3% to 15.5750 per dollar,
bringing its drop so far this year to 21% and making it the world’s
third-worst performer in 2019. Thursday was the first time it reached
15 per dollar.
“The breach opens up possibilities of further weakness as
psychological effects are likely to influence decision-making,” FNB
said in a note Friday, adding that farming imports may be the reason
for the fall this week.
“The fear of the rate running away may cause panic buying while
sellers are likely to step aside as they see their kwacha values
increase, exacerbating the situation.”
Zambia’s economy has been ravaged by a regional drought and repeated
budget deficits that have sent government debt soaring.
Economic growth won’t reach 2% this year, according to the
International Monetary Fund, while sovereign debt will end 2019 at
91.6% of gross domestic product.
Currency weakness makes servicing foreign loans more costly and could
also drive up an inflation rate that’s already at 10.8%, the highest
since 2016.
The kwacha’s depreciation is “regretable” and the central bank is
looking at ways to arrest the slide, Vice President Inonge Wina told
lawmakers Friday in Lusaka, the capital.
With foreign exchange reserves near the lowest in a decade, the
central bank has little power to sell dollars into the market to
support the kwacha.

“Investors have lost faith in government promises to get spending
under control and the government has fallen out with the IMF as well,”
he said. In Zambia, Eurobonds are trading at 60c in the $.

We dream of a new politics
That will renew the world
Under their weary suspicious gaze. There’s always a new way,
A better way that’s not been tried before.

Kenya

The economic management space has become rather lively of late. A few
weeks ago, the National Treasury published an updated national debt
register that spooked quite a few people. A couple of days later, it
circulated a draft debt policy for comments in whose wake followed a
stern memo from State House to all state agencies. The subject of the
memo was austerity measures and the following three directives were
addressed to state corporations: “(a) to immediately remit the
entirety of identified surplus funds to the National Treasury; (b) to
assign (transfer ownership) of all the Treasury Bills/Bonds currently
held in the name/or for the benefit of the State Corporations/SAGAs to
The National Treasury, including any accruing interest by Friday, 15
November 2018; (c) to remit the entirety of Appropriations-in-Aid
(AiA) revenues to The National Treasury” SAGAs stands for
Semi-Autonomous Government Agencies. Appropriations-in-Aid is the
money that government agencies raise from the public, usually in fees;
court fines, licences and payments for services. This money is usually
factored into their budgets—for instance, if an agency’s approved
budget is Sh1 billion and it expects to collect Sh200 million, the
Exchequer will budget to fund the balance of Sh800 million. It turns
out that this memo was the agenda of the event at which Uhuru Kenyatta
made his “why are Kenyans broke?” faux pas. Evidently, he had summoned
the state corporation bosses to read them the riot act on the
directive. Hot on the heels of the State House meeting, it was
reported that Parliament had passed an amendment to the Public
Financial Management Act requiring that all public agencies centralise
their banking with the Central Bank of Kenya. Why the sudden zeal? The
answer may be found in a press release issued by the IMF on 22
November disclosing that the Fund had concluded a visit to the country
to review recent economic developments. It also disclosed that another
visit was planned for early next year “to hold discussions on a new
precautionary stand-by facility.” A precautionary standby facility is
a credit line that IMF member countries can draw on in the event of a
shock that affects a country’s ability to meet its external payment
obligations, for example, a petroleum price shock, or a global
financial crisis of such severity that a country’s foreign exchange
resources would not be sufficient to cover both imports and debt
servicing. The previous standby facility, which was due to expire in
March 2018, was suspended in the run-up to the 2017 general election
because of non-compliance. In early 2018, the administration sought
and secured a six-month grace period during which it would negotiate a
new one (with no money available during the grace period as the
government was not compliant). The grace period was to expire in
September, but in August the talks collapsed. Some of the conditions
that the IMF sought were the removal of both the interest rate cap and
the controversial VAT on fuel. The exchange rate policy may have been
another sticking point, as the IMF claimed that the government was
artificially propping up the shilling, a contention that the Central
Bank has vigorously contested. It turns out then that the sudden
flurry of activity may be all about impressing the IMF. Indeed, the
centralisation of government banking—known as the Treasury Single
Account (TSA)—is one of the IMF’s latest fads, And just as with IFMIS
before it, TSA is supposed to be the silver bullet that will put an
end to financial control woes. There are at least two other
developments that are consistent with the sort of demands that we can
expect from the IMF. First, the government has started to make wage
bill noises again. The acting Treasury Cabinet Secretary was heard to
lament at a conference convened to discuss the wage bill that it is
consuming 48 per cent of revenue, way above the maximum of 35 per cent
stipulated in the Public Finance Management Act. This appears to be a
case of giving a dog a bad name. The total wage bill for the entire
public sector including commercial enterprises was Sh600 billion,
about 40 per cent of national revenue. But even this is misleading
because commercial parastatals (Kenya Pipeline, Kenya Airports
Authority, Central Bank, etc.) do not depend on government revenue.
The consolidated public sector wage bill as a percentage of
consolidated revenues is in the order of 34 per cent. This is not the
first time that the government is cooking the wage bill figures. It
has also been reported that Kenya Power has applied for a 20 per cent
tariff increase, in part to cover for the national government subsidy
for low-income consumers. The IMF takes a dim view of subsidies of
this kind and although this has not come into the public domain, I
would expect the IMF to similarly take a dim view of the operational
subsidy made to the SGR, which is even less defensible than the tariff
subsidy. Given that the same Jubilee administration that found IMF
conditions unpalatable last year now appears to be bending over
backwards to secure a deal, we are compelled to ask: what has changed?
Money is short. This year the government plans to borrow Sh700
billion. It plans to borrow Sh450 billion domestically, and Sh250
billion from foreign sources. Soft loans from development lenders are
budgeted at Sh50 billion, leaving the balance of Sh200 billion to be
sourced from commercial lenders, either by way of issuing sovereign
bonds (Eurobonds) or by arranging syndicated bank loans. The Sh200
billion foreign borrowing is “net”, that is, over and above what the
government will borrow to pay the principal installments on foreign
bank loans (e.g. the Exim Bank of China SGR loans), and to refinance
or roll-over maturing syndicated loans (thankfully, there are no
Eurobonds maturing this year) amounting to Sh131 billion, bringing the
total borrowing to Sh331 billion. As a rule, interest payments are
paid out of revenue while the government aims to pay the principal by
rolling-over or refinancing. The government has access to three
potential sources of this kind of money: budget support (also known as
programme loans, issued by multilateral institutions, including the
IMF itself), Eurobonds and syndicated loans. Of the three, the
multilateral lenders are the cheapest, but they take long, come with
conditions and usually require that an IMF programme be in place
(although last year the World Bank did extend a programme loan without
one). Eurobonds are the next best option. The Government does not need
an IMF deal to go to the sovereign bond market. Indeed, it did not
have an IMF programme in place during its previous two bond issues:
the debut issue in 2014 and the second one in February 2018. But
circumstances do change. With as many as 20 African countries either
already in or at high risk of debt distress, it may be that the market
has signaled to the government that an IMF stand-by would be “an added
advantage.” Indeed, the IMF itself has downgraded Kenya’s debt
distress risk from low to medium. Multilateral lenders are the
cheapest, but they take long, come with conditions and usually require
that an IMF programme be in place For what it’s worth, the Jubilee
administration is finally owning up to the fact that its finances are
in a worse state than it has previously cared to admit. The new
narrative heaps the blame on the now-suspended Treasury officials,
Cabinet Secretary Rotich and Permanent Secretary Kamau Thugge. I was
taken aback recently when a cabinet secretary who has a strong
background in finance remarked that they were not aware how bad things
were until Rotich and Thugge were booted out, while the central bank
governor has been quoted blaming Rotich’s rosy revenue forecasts—which
he has characterised as “abracadabra”—for encouraging the government
to pile up debt. This is disingenuous because that is not how it is
done. The borrowing is decided politically first, and then they cook
the revenue numbers to show that we can afford it. The Governor has
been part of the racket. It is also mean to mock one’s colleagues when
they are in trouble, not to mention that the Central Bank has been
deeply implicated in the Eurobond fraud cover-up under his watch. The
Governor’s turn to be thrown under the bus may yet come, but I
digress. What is now inescapable is that six years of the most
egregious fiscal profligacy has caught up with us. As this column
argued a fortnight ago, the government is now hostage to fate—it can
kick the can down the road and hope and pray that the crunch does not
come this side of the election, in which case an IMF facility seems
like a good cushion to have. But it comes with a health warning: the
cure may be worse than the disease. A couple of weeks ago, Lebanese
people took to the streets and brought down the government in what has
been dubbed the Whatsapp revolution. Those of us who are a bit long in
the tooth remember Beirut as the byword for urban warfare. Lebanon’s
sectarian warfare ended when its fractious and venal political elite
worked out an inclusive eating arrangement of the kind that our
equally venal eating chiefs are now crafting with handshakes, bridge
building and whatnot. With no agencies of restraint, the chiefs
finished the tax money and progressed to eating debt, chomping their
way into a 150+ per cent of GDP debt (third highest in world after
Japan and Greece) that is consuming half the government revenue in
interest payments alone, and causing economic stagnation. What is now
inescapable is that six years of the most egregious fiscal profligacy
has caught up with us On its knees, the government passed an austerity
budget in July. The austerity budget coincided with an IMF mission
which recommended “a credible medium term fiscal plan aiming for a
substantial and sustained primary fiscal surplus.” Primary fiscal
balance is the difference between government revenue and recurrent
expenditure excluding interest. It is achieved by raising more taxes
and cutting wages and O&M (operations & maintenance) spending. These
cuts usually fall most heavily on social spending. As the government
set about imposing more austerity and raising taxes, it unveiled a tax
on voice-over-IP (VOIP) calls in October, the idea being to protect
tax revenue from regular voice calls. It was the last straw.
Evidently, the eating chiefs had not realised that this was the social
lifeline for the youth. The people took to the streets. Two weeks
later, the government fell. Lebanon is now in full financial meltdown.
The IMF is nowhere to be seen. Mozambique had an IMF programme in
place when it ran into debt payment difficulties that forced the
government to disclose more than a billion dollars of secret “Tuna
bonds” debt. Now, the purpose of an IMF programme is to help a country
in payment difficulties, but because the secret debt violated the
terms of the IMF deal, instead of bailing Mozambique out, the IMF led
the other donors in suspending aid to the country. Instead of helping
put out the fire, the fire brigade decided that teaching the culprits
a lesson was more important than saving the victims. Mozambique’s
economy went into free fall, where it remains. This is the very same
IMF that cooked our books to cover up the Eurobond theft. The
borrowing is decided politically first, and then they cook the revenue
numbers to show that we can afford it What alternative does Uhuru
Kenyatta have? In economics, we talk of the orthodox and heterodox
approaches to dealing with a sovereign financial crisis. The orthodox
approach is a formulaic one-size-fits-all approach which adheres to
one economic school of thought known as neoclassical economics. Its
prescriptions are fiscal austerity and doctrinaire free market
ideology. It is, as is readily apparent, the IMF prescription.
Heterodox is another name for unorthodox, and refers to a pragmatic
strategy that draws from the entire spectrum of economic ideas from
Austrian to Marxist political economy and everything in between. The
dilemma governments have to face is that the orthodox cure is
sometimes worse than the disease, but it’s the one with the money
behind it. Heterodox approaches work better, but they require a
resolve and an imagination that many governments are unable to muster,
especially when they have their backs against the wall. Can the
Jubilee administration muster the resolve for a heterodox response?
Doubtful. Four years ago I contemplated the Jubilee administration
ending precisely where it is headed, to wit: “I cannot think of a more
fitting epitaph for the Jubilee administration’s reign of hubris and
blunder, plunder and squander, than the rest of the term spent
savouring copious helpings of humble pie in an IMF straightjacket.
Choices do have consequences. Sobering.

Current account deficit as a % of GDP:

2015: -6.7%
2016: -4.9%
2017: -6.2%
2018: -5.0%

The missile frigate Weifang from the 33rd escort fleet of the Chinese
People's Liberation Army (PLA) Navy arrived at the port of Mombasa,
Kenya for technical docking Sunday morning after successfully
completing the China-Russia-South Africa maritime joint mission in
South Africa from November 24 to 29.