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Satchu's Rich Wrap-Up
Thursday 24th of September 2020

This Bout of Stock Market Angst Looks Much Darker @markets @johnauthers
World Of Finance

The stock market sold off again Wednesday. It has done so more often than not this month. But it would be a mistake to draw a line between the latest bout of negativity and those that preceded it. Earlier sell-offs involved an attempt to correct obviously excessive prices in some of the dominant tech names. The latest sell-off was about rethinking the basic assumption that the U.S. and world economies can continue to recover, buoyed by continuing Fed largesse. This wasn’t so much “we took things too far” as “we might have taken things in completely the wrong direction.”

I think two main issues are involved. First, there is the death of Supreme Court Justice Ruth Bader Ginsburg. The passing of the liberal icon has no direct effect on markets, but the political conflict it has engendered does create much greater uncertainty over whether any kind of fiscal stimulus can be thrashed out any time soon. Now, members of Congress have to worry about re-election and a historically divisive court appointment. They may have neither the time nor the attention span to agree on a deal to tide people and businesses through the pandemic.

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To this day, the natural reservoir of Marburg is unknown. Marburg lives somewhere in the shadow of Mt. Elgon. Crisis in the Hot Zone Lessons from an outbreak of Ebola. Richard Preston

In 1980, a French engineer who was employed by the Nzoia Sugar Company at a factory in Kenya within sight of Mt. Elgon developed Marburg and died. He was an amateur naturalist who spent time camping and hiking around Mt. Elgon, and he had recently visited a cavern on the Kenyan side of the mountain which was known as Kitum Cave. It wasn’t clear where the Frenchman had picked up the virus, whether at the sugar factory or outdoors. Then, in the late summer of 1987, a Danish boy whose name will be given here as Peter Cardinal visited the Kenyan side of Mt. Elgon with his parents—the Cardinals were tourists—and the boy broke with Marburg and died. Epidemiologists at usamriid became interested in the cases, and they traced the movements of the French engineer and the Danish boy in the days before their illnesses and deaths. The result was weird. The paths of the French engineer and the Danish boy had crossed only once—in Kitum Cave. Peter Cardinal had gone inside Kitum Cave. As for the Ugandan trappers who had collected the original Marburg monkeys, they might have poached them from the Kenyan side of Mt. Elgon. Those monkeys might have lived near Kitum Cave, and might even have occasionally visited the cave. Mt. Elgon is a huge, eroded volcanic massif, fifty miles across—one of the largest volcanoes in East Africa. Kitum Cave is one of a number of caverns that penetrate Mt. Elgon at an altitude of around eight thousand feet and open their mouths in a deep forest of podo trees, African junipers, African olives, and camphors. Kitum Cave descends into tight passages and underground pools that extend an unknown distance back into Mt. Elgon. The volcanic rock within Kitum Cave is permeated with mineral salts. Elephants go inside the cave to root out chunks of salty rock with their tusks and chew on them. Water buffalo also visit the cave to lick the rocks, and they may be followed into the cave by leopards. Fruit bats and insect-eating bats roost in the cave, filling the air with a sour smell. The animals drop their dung in the cave—an enclosed airspace—and they attract biting flies and carry ticks and mites. The volcanic rock contains petrified logs, the remains of trees that were enveloped in lava, and the logs are filled with sharp crystals. Peter Cardinal may have handled crystals inside the cave and scratched his hands. Possibly the crystals were tainted with animal urine or the remains of an insect. The Army keeps some of Peter Cardinal’s tissues frozen in cryovials, and the Cardinal strain is viciously hot. It kills guinea pigs like flies. In February, 1988, a few months after Peter Cardinal died, the Army sent a team of epidemiologists to Kitum Cave. The team wore Racal suits inside the cave. A Racal is a lightweight pressurized suit with a filtered air supply, used for hot operations in the field. There is no vaccine for Marburg, and the Army people had come to believe that the virus could be spread through the air. Near and inside the cave they set out, in cages, guinea pigs and primates—baboons, green monkeys, and Sykes’ monkeys—and they surrounded the cages with electrified wire to discourage predators. The guinea pigs and monkeys were sentinel animals, like canaries in a coal mine: they were placed there in the theory or the hope that some of them would develop Marburg. With the help of Kenyan naturalists, the Army team trapped as many different kinds of wild mammals as they could find, including rodents, rock hyraxes, and bats, and drew blood from them. They collected insects. Some local people, the il-Kony, had lived in some of the caves. A Kenyan doctor from the Kenya Medical Research Institute, in Nairobi, drew blood from these people and took their medical histories. At the far end of Kitum Cave, where it disappears in pools of water, the Army team found a population of sand flies. They mashed some flies and tested them for Marburg. The expedition was a dry hole. The sentinel animals remained healthy, and the blood and tissue samples from the mammals, insects, arthropods, and local people showed no obvious signs of Marburg. To this day, the natural reservoir of Marburg is unknown. Marburg lives somewhere in the shadow of Mt. Elgon.

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.@ReutersGraphics Global Tracker INFECTIONS WORLDWIDE 326,722 last day reported

Countries reporting the most new infections each day *

INDIA 89,379


BRAZIL 29,906

SPAIN 11,300

FRANCE 10,788

42 countries are still near the peak of their infection curve

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Taiwan unveils cruise missiles designed to strike Chinese air bases @TaiwanNews886
Law & Politics

Taiwan's Air Force on Tuesday (Sept. 22) displayed its new Wan Chien (萬劍, Ten Thousand Swords) air-to-ground cruise missiles at an offshore military base, along with its Indigenous Defense Fighters (IDF) and other weaponry.

During President Tsai Ing-wen's (蔡英文) visit on Tuesday to the Magong Air Force base in Taiwan's island county of Penghu, the military offered a rare glimpse of the locally developed Wan Chien missiles, which only entered service in 2018. 

Developed by the National Chungshan Institute of Science and Technology (NCSIST), the weapons are carried exclusively by the IDF jets and can be fired at targets about 200 kilometers away.

The GPS-guided missiles are said to have the ability to strike Chinese air bases, military barracks, and fortifications in Fujian and Guangdong provinces once they are fired from near the median line of the Taiwan Strait. 

They can also be used to immobilize amphibious ships approaching Taiwan, reported CNA.

This is the first time Wan Chien cruise missiles have been displayed to the public. Their debut appearance comes at a time when the Chinese military has increased activity around Taiwan.

Since last Thursday (Sept. 17), Chinese warplanes have entered Taiwan's air defense identification zone (ADIZ) five times. 

On Sept. 18, 12 Chinese jets crossed the median line of the Taiwan Strait and came extremely close to entering Taiwan's sovereign airspace.

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Threat of war over Taiwan leaves superpowers on edge @thetimes
Law & Politics

The world has long fretted about the outbreak of a catastrophic war on the Korean peninsula but the real danger may lie some 1,000 miles away in the Taiwan Strait — where the largest army on the planet is flexing its increasing might against a democratic island of 24 million people.

In recent days, jets of China’s People’s Liberation Army (PLA) have repeatedly crossed the midpoint of the strait that separates the mainland and Taiwan — their de facto border — triggering intercepts by the island’s frontline fighters.

Chinese flotillas are practising mine clearing to open up sea lanes for warships and landing forces, and Chinese soldiers have vowed to give up their lives should there be a war against Taiwan.

“If one day, the war breaks out, we would rush to the battlefield without any hesitation,” announced the PLA’s eastern theatre command, which would be the force to invade the island.

“We will protect every inch of the land of the motherland, every flower and every blade of grass. We’d never let down the motherland and our people!”

In Taiwan, the defence ministry has redefined procedures, allowing its soldiers to fire back when attacked, while its president struck a defiant tone against the mainland.

“We will never allow others to display their military might in our territorial airspace,” declared Tsai Ing-wen, as she toured a military base in Penghu, a string of small western islands that are on the furthest front of Taiwan’s air defences.

China has pledged to take Taiwan — which it considers unfinished business from the civil war in 1949 — back by force if necessary. 

For decades that seemed an unlikely threat, especially as Taiwan had a defence pact with the United States, but as relations plummet between Beijing and Washington, Taiwan could spark a clash that draws in the superpowers.

Washington has stepped up its military support. Over the past four years, the Trump administration approved seven arms sales packages to Taiwan totalling $13.2 billion, and plans to sell a further $7 billion worth of advanced weaponry, including long-range missiles and drones.

Yet Beijing’s ambitions to reunify Taiwan run deep into the psyche and have grown as the country’s leadership becomes more confident and senses weakness or isolationist tendencies in Washington.

In July, a former US admiral and a former CIA official warned that Beijing could invade Taiwan in January 2021, when the US would be distracted by its presidential inauguration.

This month Seth Cropsey, a senior fellow at the Hudson Institute, a Washington-based think tank, told The Hill that Beijing might even strike as the US goes to the polls on November 3.

Sun Yun, a senior fellow and director of the China programme at the Stimson Centre, dismissed any imminent war, even if risks of misfire or accidents are rising with the increased sabre rattling.

“It’s a political decision to launch a war. Should there be an accident, I don’t think military officials would be escalating the situation but they would be making phone calls (for high-level decisions),” Ms Sun told The Times.

She argued that Beijing would not take that step unless it is absolutely certain it would emerge victorious, because “the Taiwan issue is about the party’s legitimacy, and it cannot afford to lose the war”.

Kerry Brown, professor of Chinese studies and director of Lau China Institute at King’s College London, told The Times that war is still not probable but has “become horribly more possible”.

That’s “because of the deterioration of US-China relations, the discord within the US’s domestic situation meaning that China increasingly looks at America no longer as some role model but as a dysfunctional place that no longer has any right to lecture it, and the generally nationalistic tone of domestic Chinese politics under Xi,” he said.

“All of these contribute to a drift towards lack of flexibility on Taiwan, and rising impatience,” Mr Brown said. “No one should be complacent about this issue.”

The prospect of reunifying Taiwan is particularly alluring to President Xi, who harbours an ambition to gain the same stature as Mao, the country’s founding revolutionary. 

To do so he might have to achieve something that none of his communist predecessors, including even Mao, managed and that was conquer Taiwan.

“For many years, the median line of the Taiwan Strait has served as a symbol of the status quo to avoid cross-strait military conflict and maintain peace and stability,” he said.

“The recent claim of the Chinese foreign ministry in effect destroys the status quo of the Taiwan Strait,” he added, and compared it to Beijing’s dismissal of the “one country, two systems” deal under which it promised Hong Kong would be governed after its handover from Britain in 1997.

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07-OCT-2019 :: China turns 70
Law & Politics

I am sure Xi sees Hong Kong and Taiwan like a virus and he is looking to impose a quarantine just like he has imposed on Xinjiang. 

The Chinese Dream has become a nightmare at the boundaries of the Han Empire.

The World in the 21st century ex- hibits viral, wildfire and exponential characteristics and feedback loops which only become obvious in hindsight.

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Arden,''is polling so high in the run-up to next month’s election that some...predict the Labour party could form [New Zealand’s] first single party govt since 1996.” @FT H/T @SimonWolfe
Law & Politics

New Zealanders are renowned for their humility and tend to view the mass euphoria that characterises US political campaigning with suspicion. 

But when Jacinda Ardern visited a university last week, the prime minister was mobbed by students demanding selfies, as if she was a celebrity.

The 40-year-old politician, who assumed power in 2017 by riding a wave of popular support dubbed “Jacinda-mania”, is polling so high in the run-up to next month’s election that some analysts predict the Labour party could form the Pacific nation’s first single party government since 1996.

Ms Ardern has won plaudits for her decisive handling of Covid-19, which included sealing New Zealand’s borders and imposing a strict lockdown that has limited the number of deaths to 25 people.

Her empathetic response to the murder of 51 Muslims in Christchurch last year by a white supremacist and a deadly volcanic eruption on Whakaari Island has elevated her status beyond that of a traditional politician.

“We have not seen a leader manage to rise above the political fray like this in a very long time,” said Bronwyn Hayward, professor of politics at University of Canterbury

Ms Ardern has displayed remarkable communication skills during multiple national crises and retains high trust and confidence among the public, she said. 

A 1 NEWS Colmar Brunton Poll published on Tuesday showed Labour on 48 per cent and the centre right National party on 31 per cent. 

Labour is being aided by the disarray within the National party, which has changed leader three times since February 2018. 

Todd Muller stepped down in July, citing health concerns and was replaced by Judith Collins. 

The 61-year-old former lawyer is a combative politician, who earned the nickname “Crusher Collins” for proposing to destroy the cars of “boy racers” while serving as police minister. 

“I was staggered to see the prime minister clearly not socially distancing with no mask just the other day,” Ms Collins said this week when photos emerged of Ms Ardern posing with dozens of students at the Massey University campus during a Covid-19 lockdown. She accused Ms Ardern of hypocrisy given her imposition of one of the world’s strictest Covid-19 lockdowns, which includes social distancing restrictions in Auckland owing to a recent outbreak that broke a 102 days run with no new locally transmitted cases. 

Ms Ardern, who worked for a period in the British Cabinet Office under former prime minister Tony Blair, apologised for the incident. 

Wellington’s hardline strategy to eliminate Covid-19, rather than suppress the spread of the virus, has been criticised for damaging the economy. 

Last month President Donald Trump singled out New Zealand, warning of a “big surge” in cases. 

However, strong public approval for the government’s handling of the pandemic has blunted opposition attacks and failed to galvanise the National party’s traditional supporters in the business community.

“Most New Zealanders look at the rest of the world and recognise that this is a good place to be,” said Justin Murray, chairman of Murray & Co, an investment bank

“The average voter understands the government has done a reasonable job on Covid and I think Labour will get the benefit of that at the ballot box.”

He said Ms Collins was an effective politician but was struggling to detach herself from the turbulence and mis-steps of some of her party colleagues. 

ACT New Zealand, a rightwing, libertarian party that proposed to cut taxes and cut public spending could pick up some National supporters, said Mr Murray.

In the first televised leaders’ debate on Tuesday, Ms Collins focused on plans to temporarily cut income tax to put an extra NZ$3,000 ($2,000) in the pockets of middle-income earners over the next 16 months to boost the economy.

The policy has been attacked by Labour, which argues the Nationals are stuck in an impossible “Bermuda Triangle” where they want to increase spending, reduce revenue and cut debt all at the same time.

In contrast, Labour is proposing to increase the top rate of income tax on people earning more than NZ$180,000 a year to 39 per cent, up from 33 per cent.

“We think that’s an important policy so that everyone is pitching into our recovery,” Grant Robertson, New Zealand’s minister of finance told the Financial Times.

Despite its poll lead, Labour could become vulnerable to accusations that it has failed to deliver on ambitious promises to tackle child poverty, build 100,000 affordable homes and introduce capital gains taxes.

“On the left there is a lot of discontent with this government for not being as transformational as people would like,” said Grant Duncan of Massey University.

“But what were they expecting given they [Labour] had New Zealand First [a populist party] acting like a ‘dog in a manger’ as coalition partners.”

Analysts expect Labour’s lead to narrow before the October 17 election, as Ms Collins benefits from more airtime.

And Labour’s coalition partners, NZ First and the Greens, could struggle to win 5 per cent of the popular vote, the threshold that guarantees them seats in parliament.

“If there is no new Covid-19 outbreak before the election that can be blamed on the government then Jacinda Ardern is probably pretty safe to return to office. But what other political parties will be around for a coalition remains to be seen,” said Mr Duncan.

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25-MAR-2019 :: :: If You want to measure a Soft Power Leapfrog, Keep an Eye on the Kiwis and this remarkably sophisticated epitome of c21st Girl Power @jacindaardern
Law & Politics

From a geopolitical perspective, the big popping over the Radar happened in ChristChurch New Zealand. Jacinda Aardern [an agnostic who took her oath of office without a Bible or mention of God. A living example that to be a humanitarian you need no dogma; just compassion, love, an open heart and an open mind @HarounRashid2] shattered the glass ceiling into tiny little pieces. She is the first Western leader to seek to assert narrative control over ‘’Terror’’ the symbolism of ‘’A biker gang providing an escort to a hearse transporting the coffin of Haji Mohammed Daoud Nabi, killed in New Zealand’s twin mosque attacks, to the Memorial Park Cemetery in Christchurch’’ sums things up metaphorically and even cryptically. She vowed never to utter the name of the twin-mosque gunman to deprive him of the publicity he craved. She warned social media companies saying “they are the publisher, not just the postman”.The Prime Minister of New Zealand asserted Narrative Control and pushed back at what Don Delillo noted;

“I used to think it was possible for an artist to alter the inner life of the culture. Now bomb-makers and gunmen have taken that territory,” Don DeLillo, Mao II.

If you want to measure a soft power leapfrog, keep an eye on the Kiwis and this remarkably sophisticated epitome of 21st century Girl Power Jacinda Aardern

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The coronavirus could be the great global leveler for this generation. @ForeignPolicy
Law & Politics

Developing countries may also find the post-pandemic world more hospitable to their continued rise, as the global economy becomes more digitized, more multipolar, and more fluid.

On paper, meanwhile, Bangladesh, the most crowded large country in the world, should have been among the worst affected by COVID-19. But at time of writing, the country’s official death toll is less than a third that of Texas.

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COVID-19 Is Bioterrorism – New Book By Indian Biological Weapons Expert Claims @GreatGameIndia
Law & Politics

A new book by Senior Indian Police officer and Biological Weapons expert claims COVID-19 is Bioterrorism. Dr Sharad S. Chauhan is a decorated Indian Police Service (IPS) officer awarded the Prime Minister’s baton and the Home Minister’s Revolver. He is also a Gold Medallist MBBS Doctor from Delhi University with a PhD in Bioterrorism. He also authored the book Biological Weapons.

The book titled COVID-19 – Opportunistic Bioterrorism? A Virus from China set to Change World History, traverses the early stages of the COVID-19 epidemic in China with a special emphasis on the origins of the coronavirus, the timeline of events and administrative reactions of the Chinese to the virus. The book examines this in the backdrop of the experiments conducted by Chinese researchers on SARS like coronaviruses for more than a decade and the state of the Chinese economy preceding the outbreak.

What started as an outbreak in China near the end of 2019 is now a global calamity. The rampaging COVID-19 pandemic has changed the world as never before, the great wars and pandemics of past included. The strategic, geopolitical and geo-economics consequences of COVID-19 are slowly unfolding. The virus from China is set to change the world.

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Has SARS2 some features which point to its development as vaccine? @Rossana38510044
Law & Politics

I am aware of the accumulation of synonymous mutations in SARS2 Spike which might indicate a codon deoptimization strategy, as noticed by  @CZilcho

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I am convinced that the only ‘’zoonotic’’ origin was one that was accelerated in the Laboratory #COVID19
Law & Politics

There is also a non negligible possibility that #COVID19 was deliberately released – Wuhan is to the CCP as Idlib is to the Syrian Regime – and propagated world wide.

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Deducing the N- and O-glycosylation profile of the spike protein of novel coronavirus SARS-CoV-2 H/T @flavinkins

The coronavirus spike (S) protein, which facilitates viral attachment, entry and membrane fusion is heavily glycosylated and plays a critical role in the elicitation of the host immune response. The spike protein is comprised of two protein subunits (S1 and S2), which together possess 22 potential N-glycosylation sites. 

The pathogenic SARS-CoV-2 enters human target cells via its viral transmembrane spike (S) glycoprotein. The spike protein is a trimeric class I fusion protein and consists of two subunits, namely S1 and S2. The S1 subunit facilitates the attachment of the virus, and subsequently the S2 subunit allows for the fusion of the viral and human cellular membranes (Hoffmann et al. 2020; Walls et al. 2020; Zhou et al. 2020). The entry receptor for SARS-CoV-2 has been identified as the human angiotensin-converting enzyme 2 (hACE2), and recent studies determined a high binding affinity to hACE2 (Hoffmann et al. 2020; Shang et al. 2020; Walls et al. 2020). Given its literal key role, the S protein is one of the major targets for the development of specific medical treatments or vaccines: neutralizing antibodies targeting the spike proteins of SARS-CoV-2 could prevent the virus from binding to the hACE2 entry receptor and therefore from entering the host cell

The S protein RBD located in the S1 subunit of SARS-CoV-2 undergoes a hinge-like dynamic movement to enhance the capture of the receptor RBD with hACE2, displaying 10–20-fold higher affinity for the human ACE2 receptor than SARS-CoV-1, which partially explains the higher transmissibility of the new virus 

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Anomalies in BatCoV/RaTG13 sequencing and provenance H/T @flavinkins

To this date, the most critical piece of evidence on the purposed “natural origin” theory of SARS-CoV-2, was the sequence known as RaTG13, allegedly collected from a single fecal sample from Rhinolophus Affinis. Understanding the provenance of RaTG13 is critical on the ongoing debate of the Origins of SARS-CoV-2. However, this sample is allegedly “used up” and therefore can no longer be accessed nor sequenced independently [1], and the only available data was the 3 related Genbank accessions: MN996532.1, SRX7724752 and SRX8357956.

We report these datasets possessed multiple significant anomalies, and the provenence of the promised claims of RaTG13 or it’s role in proving a “probable bat origin”[2] of SARS-CoV-2 can not be satisfied nor possibly be confirmed.

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However, after sequencing the full genome for RaTG13 the lab’s sample of the virus disintegrated, he said. “I think they tried to culture it but they were unable to, so that sample, I think, has gone.”

According to Daszak, the mine sample had been stored in Wuhan for six years. Its scientists “went back to that sample in 2020, in early January or maybe even at the end of last year, I don’t know. They tried to get full genome sequencing, which is important to find out the whole diversity of the viral genome.”

However, after sequencing the full genome for RaTG13 the lab’s sample of the virus disintegrated, he said. “I think they tried to culture it but they were unable to, so that sample, I think, has gone.”

International Markets

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1651

Dollar Index 94.389

Japan Yen 105.32

Swiss Franc 0.9235

Pound 1.2692

Aussie 0.7042

India Rupee 73.83

South Korea Won 1171.14

Brazil Real 5.59

Egypt Pound 15.75

South Africa Rand 17.132

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Gold May Hit Record Before Year-End on U.S. Election Risk, @Citi Warns @business

Gold could hit a record before the year-end, aided in part by the risks surrounding the U.S. presidential election, according to Citigroup Inc.

Uncertainty over the contest and delays about the outcome may “be under-appreciated by precious metals markets,” analysts including Aakash Doshi said in a quarterly commodities outlook. 

The bank’s forecast implies a surge of more than $200 for bullion futures from current levels.

Gold rallied to an all-time high last month as investors sought havens amid the coronavirus pandemic, but prices have slipped back since then. 

Citi’s outlook reflects rising investor concern about the battle for the White House that pits incumbent Donald Trump against challenger Joe Biden. 

The already complex race has acquired added tension with Trump’s plan to speedily replace the late Justice Ruth Bader Ginsburg on the U.S. Supreme Court.

The election “could be an extraordinary catalyst for gold flat price and volatility skew late in the fourth quarter, even though historically there is no clear pattern for gold trading or price volatility into and after U.S. elections,” Citi said,.

 “That is one reason why we expect gold prices to hit fresh records before year-end.”

Futures traded at $1,894.20 an ounce on the Comex at 12:36 p.m. in Singapore, with prices losing ground this week on a rising dollar. 

Most-active prices set a record $2,089.20 on Aug. 7. In addition to the election, Citi is very positive on gold amid low interest rates, saying it’s in the middle of a bull cycle.

Election day is Nov. 3.

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There have been at least 1,415,000 reported infections and 33,900 reported deaths caused by the novel coronavirus in Africa so far #COVID19 @ReutersGraphics

Countries reporting the most new infections each day *






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Regulators in Africa’s big economies are scrambling to get on top of a spike in cryptocurrency trade @qzafrica @TheYomiKazeem

For context, the total value of retail bitcoin transfers (worth less than $10,000 per transaction) in Africa reached $316 million as of June, according to research by Chainalysis, a blockchain market intelligence firm.

The growing volumes of transactions at local exchanges also suggest pace is unlikely to slow down. 

Luno, one of the continent’s oldest exchanges says monthly trading volume in Nigeria and South Africa alone topped $549 million in August—a 49% increase since the start of the year. (Luno also operates in Uganda and Zambia.) 

Meanwhile, BuyCoins, a three-year old Lagos-based exchange, says it has already processed $110 million in transactions so far this year, compared with $28 million for all of 2019.

“The demand we see now is a result of the challenges that people experience across Africa,” says Marius Reitz, Luno’s general manager for Africa. 

“When people find value in using a cryptocurrency and are able to fulfill their needs with that better than they’re able to do with fiat currency, then they will naturally choose cryptocurrency—that’s what we’re seeing.”

There is also evidence of increasing adoption specifically due to the global Covid-19 pandemic as Luno reports a 122% increase in new customers across Africa between the fourth quarter of 2019 and the second quarter this year.

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Assumptions Behind Demonitisation, Rushed Execution Make Dangerous Marriage @addis_fortune

The matter of demonetisation was raised along with limiting cash withdrawals earlier this year when the banking industry was hit by a serious liquidity crunch. Restrictions on cash withdrawals from banks and the amount of money that can be held outside the banking system was set a few months ago.

The Birr notes have been demonetised this week, and a higher denomination note - 200 Br - has been introduced. The cost of printing has been north of 100 million dollars. It has been claimed that this measure will tackle illicit financial flows, underground trading and cash hoarding. Moreover, it is indicated that the measure would bring the excessive cash circulating outside the banking system into the banking network, and may even help fight inflation, which has been a serious economic malady for a decade.

Primarily, it has been repeatedly heard that a considerable sum of money is in circulation outside the banking system. The way the message has been conveyed is creating the wrong impression. The National Bank of Ethiopia's (NBE) third-quarter report for the fiscal year shows that 139 billion Br was in circulation as of late March 2020. Out of this amount, 109 was outside of the banks.

In fact, determining whether this amount is excessive for a predominantly cash-based and informal economy requires analysing the long-term trend of monetary phenomena. Over the past decade, currency in circulation soared to its level of 139 billion Br from 37.5 billion Br, as of late March 2010, driven by economic growth, increased business activities, the proliferation of the informal sector and inflation.

Keeping aside the seasonal variations, the annual growth rate has been significantly fluctuating. In 2010, it increased by as high as 37pc in a year, whereas the growth rate in 2015 was as low as eight percent. In the past couple of years, the growth remained 11 percent, following the massive increase of 22pc in 2018.

Despite the significant increase in the value of currency outside banks, currency in circulation as a proportion of broad money - currency outside banks, saving and time deposits - has gone down considerably to 11pc from 22.8pc over the same period due to the increased accessibility of banking services. The data reveals that there is no unusual amount of money in circulation in the economy as believed by many.

Apart from wild guess work, there is also no credible evidence to show the size of cash hoarding from illegal activities. There is just as well no guarantee that the money obtained from illegal activities would not be laundered through the demonetisation process.

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Gangs still drive Mombasa’s narco-city image @issafrica

In 2018, 43 gangs were identified as operating in Mombasa by the National Crime Research Centre (NCRC) in the Ministry of Interior. According to Francis Auma, rapid response officer at the human rights non-profit MUHURI, the number of criminal groups had increased to about 60.

The gangs have been linked to a spate of attacks and other criminal activities, and have become the foot soldiers in Mombasa’s drug trade, keeping the city’s narco image alive. They provide grassroots reach for drug lords in the top tier, as well as businessmen and politicians in the second tier.

France 24 TV’s investigative report in October 2019 showed how the city has become a major drug trafficking hub and route for heroin and cocaine coming from Asia and Latin America to Europe and Dubai. The report attributes this to Kenya’s porous 500 km coastline, which allows traffickers to smuggle narcotics into the country using small boats and yachts. The French news channel estimated the trade to be worth about €100 million.

Kitiyo described three types of actors behind these groups: gang patrons and their paymasters; unscrupulous businessmen who buy valuables stolen from residents; and politicians who hire group members for personal protection. These people ensure that gang members are quickly released from police custody when they’re arrested.

Nassir says the gangs protect the drug trade, and children as young as 13 are used as conduits. ‘The unga [heroin] comes from Afghanistan. If the teachers speak about the use of children in transporting drugs, they are threatened and beaten by the gangs.’ This protection of operations, mainly by the Wakali Kwanza gang in Kisauni, is crucial to drug trafficking in Mombasa.

Members as young as seven gather intelligence while older gangsters, mostly teenagers, armed with knives and machetes, carry out attacks in different locations. They take drugs themselves in order to gain ‘courage and confidence’ to engage in petty theft, bag snatching, and pick-pocketing, as well as sexual assault.

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None of the commercial banks was willing to sell the dollar Tuesday at less than Sh111 on average. @nationafrica
Kenyan Economy

But since you cannot post a high price on the platform, you can’t sell expensively to other banks because you will be summoned for distorting prices. Hence you stop selling publicly to other banks, creating an artificial shortage that drives prices even higher.

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by Aly Khan Satchu (www.rich.co.ke)
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September 2020

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