"We have a deviate, Tomahawk." "We copy. There's a voice." "We have gross oscillation here"
Don DeLillo, who is a prophetic 21st writer, writes as follows in one of his short stories:
The specialist is monitoring data on his mission console when a voice breaks in, “a voice that carried with it a strange and unspecifiable poignancy”.
He checks in with his flight-dynamics and conceptual- paradigm officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m not sure it’s helping.”
“We are clearing an outframe to locate source.”
“Thank you, Colorado.”
“It is probably just selective noise. You are negative red on the step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We will correct, Tomahawk. In the meantime, advise you to stay redundant.”
The voice, in contrast to Colorado’s metallic pidgin, is a melange of repartee, laughter, and song, with a “quality of purest, sweetest sadness”.
“Somehow we are picking up signals from radio programmes of 40, 50, 60 years ago.”
"The Dark Forest," which continues the story of the invasion of Earth by the ruthless and technologically superior Trisolarans, introduces Liu’s three axioms of “cosmic sociology.” @nfergus
First, “Survival is the primary need of civilization.”
Second, “Civilization continuously grows and expands, but the total matter in the universe remains constant.”
Third, “chains of suspicion” and the risk of a “technological explosion” in another civilization mean that in space there can only be the law of the jungle.
In the words of the book’s hero, Luo Ji:
The universe is a dark forest. Every civilization is an armed hunter stalking through the trees like a ghost ... trying to tread without sound ...
The hunter has to be careful, because everywhere in the forest are stealthy hunters like him.
If he finds other life — another hunter, an angel or a demon, a delicate infant or a tottering old man, a fairy or a demigod —
there’s only one thing he can do: open fire and eliminate them. In this forest, hell is other people ... any life that exposes its own existence will be swiftly wiped out.
This is intergalactic Darwinism.
09-MAY-2021 The Markets The Lotos-eaters
World Of Finance
In 1929, President Herbert Hoover assured the country that things were already “back to normal,” Liaquat Ahamed writes in Lords of Finance.
The US NFP printed 266,000 versus 1,000,000 expected which was the biggest miss relative to expectations in Non Farm Payrolls since at least 1998. @bespokeinvest
On 8th March when the Bears had gotten hold of the US 10 Year, I wrote that I expected the 10 Year to target 1.45% well we got real close on Friday before the market reversed
Ten- year yields initially plunged to a more than two-month low of 1.46%, then reversed to end the day at 1.58%. However, I am resetting my target Yield to 1.25% now.
Given the volume of money Printing and the extraordinary stimulusI have to say that the US Recovery is actually really weak and I believe it will be very short lived and the Penny will drop soon with the Bond Market and the Shorts will be forced to cover.
The Consensus View appears to be that the Global economy is going to accelerate big time and that its going to BOOM!
I beg to differ
Partying responsibly. @BobNeiwen
Furthermore The Central Banks are in a corner.
They have fired a lot of bullets and even if there was a meaningful bounce they cannot raise rates.
Here is why central banks are trapped and cannot raise rates even if inflation rises: @dlacalle_IA Feb 2
Pfizer: '...of all time...'. @_HassanF
‘A united nations of crime’: how Marbella became a magnet for gangsters @guardian @gdnlongread
The cafe’s regulars drank coffee and ate toast, unaware that only 24 hours earlier, in another part of the city, Greco agents had rescued a man from a garage, alive, but with holes drilled through his toes. It was the latest local case of amarre, or kidnapping, to settle a score between criminal gangs.
“You, the criminals, come here to relax, don’t commit any crimes, and bring your money.” And so, as the authorities turned a blind eye, Marbella became a premier destination for the global criminal elite.
The Costa del Sol is organised crime’s southern frontier – a stretch of urban sprawl extending from Málaga to Estepona, with Marbella, a city of 147,633 people, as its capital.
According to the Spanish Intelligence Centre for Counter-Terrorism and Organised Crime, there are at least 113 criminal groups representing 59 different nationalities operating out of the area.
There is nowhere quite like the Costa del Sol – a long tongue of land stretching 55 miles between the mountains and the sea.
To the south, less than 10 miles of open water separates the region from Morocco – the world’s largest producer of hashish – and from the autonomous Spanish outposts of Ceuta and Melilla.
Less than an hour’s drive away is one of Europe’s main entry points for cocaine, the port of Algeciras.
Across the bay from Algeciras is the British overseas territory of Gibraltar, a tax haven separated from Spain by a fence.
To the north rise the Málaga and Granada mountains, Europe’s main region for marijuana cultivation.
“The Costa del Sol is a kind of hub, or ‘coworking’ space, where almost every major criminal group in the world has some sort of presence,” a senior National police agent investigating organised crime told us.
“It’s a UN of criminals for a globalised world. Marbella is a tourist brand, but it’s also a criminal brand.” Marcos Frías, chief of the Central Organised Crime Brigade, said:
“If a crime boss from Liverpool wants to traffic drugs on a large scale, he knows he has to make an appearance in Marbella. He doesn’t have a choice.”
The other side sees it the same way. “There are groups from all over the world here,” said a member of the Camorra, the Naples mafia organisation, who has lived in Marbella for years.
“People of all different nationalities, doing all kinds of different jobs. We don’t intermix, but we’re constantly collaborating.”
The mobsters blend in with their millionaire neighbours. Marbella is not so much a rich place as a place full of rich people.
“Organised crime, in large part, is invisible,” said Ricardo Álvarez-Ossorio, a lawyer who has represented several members of Costa del Sol’s criminal community.
“They’re rich, they live well, they spend money … Organised crime has nourished and sustained Marbella. That and the sheikhs. And everyone has been fine with it.”
In recent years, the situation has deteriorated. Bosses have started bringing their “soldiers” with them, who strut along the streets of Puerto Banús or New Andalucía.
“Young gangsters, armed and really dangerous,” said one member of Greco Costa del Sol. And it’s not just the police who are complaining.
The Naples mafioso who has lived in Marbella for years feels the same way: “The young guys who are coming here now don’t live by any codes, they don’t have any respect.”
The mafioso, who did not want to give his name (we have called him Francesco), had agreed to meet at a restaurant in Puerto Banús, where he always has a table waiting for him.
Drinking cup after cup of coffee, he said this new culture of delinquency is ruining the Costa del Sol: “What’s changed about Marbella is that now the lower criminal class is here. All these guys running around with their little bum bags, while their bosses are in Dubai.”
There is no question that the landscape in Marbella has changed, and that the arrival of this new community of criminals is at the root of the transformation.
“Here, you’ll be eating at a nice restaurant, then turn to the table next to you and there’s an Albanian with a star tattoo, then at the other table, there’s a thug from the Irish mafia,” said an agent from Greco.
“The other day I was standing in line at the grocery store, and the kid in front of me turned around and he had a Kalashnikov tattooed on his forehead. It didn’t used to be like that here.”
“The border closures have caused exports [from South America] to drop. Here’s an example: cocaine that leaves Brazil or Uruguay comes hidden in leather from Paraguay. And if there’s no demand for leather, there’s no way to get the cocaine out.”
“You can’t report everything to the press, or it would create panic,” admitted an agent with Greco Costa del Sol. “The majority of residents are unaware of the situation here, they don’t have the slightest idea about what’s going on around them, let alone the rest of the Spanish population. And maybe that’s how it should be.”
Pablo – who did not want to give his real name – opened his black Calvin Klein bum bag, spilling mobile phones of various colours and sizes across the restaurant table: two big ones that looked like smartphones and two little ones, basic, antique-looking.
He arranged them in a row, and started to talk. For years, Pablo, originally from Colombia, has been moving 50kg of cocaine a week to markets in Spain, and now he is climbing the ranks, thanks to his contacts on the other side of the Atlantic, who are helping him bring in merchandise directly from the source.
Within the Marbella ecosystem, he’s a mid-level trafficker with certain typical characteristics: an ostentatious sports car for driving around Puerto Banús, shirts featuring brand names such as Valentino, Dsquared2, Kenzo and Dolce & Gabbana, fancy sunglasses, hair in a side-parting with the sides shaved, a well-trimmed beard, a tracksuit, white sneakers and, of course, a batch of mobile phones.
The phones are by far his most important possessions: they allow him to communicate with suppliers, buyers and people working for him, under the noses of the police, thanks to encrypted messaging technology.
In the eyes of the Costa del Sol’s criminal underworld, if you don’t have multiple mobile phones, you’re nobody.
And when you sit down at a restaurant or bar, convention dictates that you lay them all out on the table – a warning sign for all to see.
Tina, a young Colombian attracted by the Costa’s atmosphere of wealth, first came to Puerto Banús a few years ago, and used to manage public relations for some of the best clubs in Marbella, where narco extravagance is the name of the game.
You have to see it to believe it, she said one morning sitting at a cafe, sipping fruit juice and dressed for the gym.
“In the clubs frequented by los malos (the bad guys), a table reservation costs €5,000, drinks included,” she said.
“What they do is they’ll order €1,500 euro bottles of champagne or bottles of vodka or tequila, until they reach their table limit. But they always go over and end up spending more.
“Last summer, since there were hardly any tourists, the clubs were just full of those mafia guys who already live here and who go out partying every night. Their presence was a lot more noticeable. They’re not classy people. The scariest and most violent are the English. And no one stops them because everyone’s afraid. They wear trashy clothes and don’t look like who they actually are – people who have everything: money, muscle, power,” Tina says.
In the VIP areas, guests spend thousands of euros in a single night, and no one seems to care who they are or where they’re from.
“There aren’t any door searches. People bring in guns, for sure,” she said. It’s a similar situation with drugs.
“There’s zero tolerance for selling, but consumption isn’t really that restricted.” And prostitution? “In the upscale nightclubs, it’s absolutely essential. The clubs are full of rich men looking to get laid, and if there aren’t any pretty girls, they leave,” Tina says.
But she also said that without all this, “Marbella wouldn’t exist. It would be like Torremolinos or Benalmádena: normal middle-class tourism, tourism for wage workers.”
The pandemic changed all this, said Pablo, the Colombian drug trafficker. With the restrictions and closures, he said that private parties in villas and chalets have taken the place of nightclubs.
“When a group does a job and it goes well, they want to celebrate and they want alcohol, drugs and women. And if there aren’t any nightclubs, they do it at the villas.”
Hosts hire top DJs for rates that can exceed €100,000, and commission Michelin-Star chefs. Last March, a DJ died at a private party in Marbella after he was shot by a stray bullet during an argument.
When police arrived, the mansion was totally empty except for the body of the victim.
‘A united nations of crime’: how Marbella became a magnet for gangsters @guardian @gdnlongread [continued]
“But all of this is just a phase,” said Pablo. “The ultimate goal is to not be such a showoff, to make a nice life with a family, to live like the big bosses, where no one has any idea what you do. All that stuff about ‘plata o plomo’ [‘silver or lead’ – take a bribe or take a bullet], that’s just from the movies. That’s really whose fault it is: all the TV shows and movies that lure young people to this world, thinking they’re going to get rich.”
A prosecutor in the region put it like this: “Anyone who thinks that the criminal organisations are the same as they were before – structured like a pyramid, managing every aspect of the business – well, they’re wrong. It’s not like that any more. It’s a lot more like in the TV series ZeroZeroZero, where everyone has to form alliances and each group takes on certain things. They’re not cartels, they’re service providers: it’s the Uberisation of organised crime.” Because of this, there’s also no division of territory. “It’s not possible to make a map, like they’ve done, for example, with Mexico,” he says. “Instead, you’d have to make a diagram that reflects the division of labour, the different roles and activities of each organisation.”
The groups make alliances based on country of origin. Lower down the hierarchy are the smaller criminal gangs who often act as subcontractors.
Marcos Frías, chief of the Central Organised Crime Brigade, explained: “There are lots of groups who offer subsidiary services: procuring a gun or a car, having someone who knows how to drive 150mph, or who you can hire to beat someone up … ”
Many of these gangs concentrate on activities like stealing watches and cars, or robbing homes. And some of them, like the youth gangs from Naples or Marseille, or the gangs from Romania or Bulgaria, travel to Marbella for a few months of the year to work the season, then return home.
The groups in Costa del Sol, said one Marbella-based drug trafficker, “are talking with each other all day long, asking each other questions”.
Everyone knows everything, he said, “and almost everyone knows each other”. Meetings take place in discreet locations: shopping centres, fast-food restaurants or parks, or during a stroll through a public garden in a luxury development.
While there might not be any clearly marked territories on the Costa del Sol, each group has its own stomping grounds – the businesses and other locations they frequent and control. And it’s important, the trafficker said, sipping his drink, that everyone knows the rules. “If a Brit walks into an Albanian gym, for example, he’s gonna have a problem.” The Irish have their own pubs in Puerto Banús; the Moroccans have their own bars, where there’s no (public) alcohol consumption but they smoke shisha; the Colombians hang out at the shopping centres; the Camorra have their pizzerias, and there are specific hotels for English gangsters. The police know a lot of these places by name.
Beyond its own frontiers, Marbella is inextricably linked to Dubai by crime. Most of the area’s criminal groups live between these two cities.
“Dubai is like Marbella but with no rules and no law,” said one high-level Costa del Sol criminal.
“It’s extremely rare for them to arrest anyone there. It’s only happened a few times, and always for some underlying political reason. Most of the top bosses live there, and then they spend the summer in Marbella. The soldados go to Dubai when they feel like they’re under surveillance. We’re protected there. There’s no extradition.”
They call it a “cold wallet”. At first glance, it looks like a normal USB flash drive, but in reality it’s a device that can hold millions of euros in cryptocurrency.
A cold wallet is an essential tool for anyone who wants to store large quantities of illicit money in a discreet place. It’s “cold” because it isn’t connected to any networks, so it can’t be hacked or traced.
Cold wallets are the latest trend in money laundering, an essential tool for criminal organisations who wish to convert illegal earnings into legal wealth.
“If you have a room full of cash it’s not worth anything – you’re poor. You have to transform the cash to be able to use it,” said an investigator with the Guardia Civil.
In addition to cryptocurrency, there’s the longstanding tradition of laundering money through real estate. A lot of the mansions on the Costa del Sol have companies with ties to organised crime behind them, a regional expert on money laundering with the Guardia Civil told me matter-of-factly.
The tactic that gives security forces the biggest headache is false invoicing and fraudulent accounting. A criminal organisation signs an investment contract with a development or real estate company that it controls in some opaque way.
The contract includes a clause stipulating that if payments cease, the contract is terminated. Over time, the organisation stops issuing invoices and the contract is rescinded. This is where police often lose the trail, because everything paid up to that point gets registered as profit and the money becomes clean.
A police officer in Marbella told us that “your typical narco launders money by selling cars”. But this approach comes with its own obstacles: in Spain, you can’t make cash purchases over €2,500. In Germany you can, up to €50,000, and with fewer constraints if the purchase is made by a business.
So a criminal living in Marbella sets up a company in Germany. That company buys cars from an official dealer in Germany and pays in cash.
The company then ships the cars to Spain, where a partner based in Costa del Sol buys them. Mission accomplished: the seller keeps their commission, and the rest of the money, now clean and legal, gets sent back to Germany.
“We have agencies tasked with detecting money-laundering operations,” the Guardia Civil agent said. “But it’s impossible to stop all of it”.
Drug trafficking is the Costa del Sol’s core criminal enterprise – the nucleus around which all other activities revolve, and the area’s main source of income.
“Drug trafficking is a global phenomenon, but Marbella is the capital,” said an agent from Greco Cádiz.
The global trafficking networks connecting Colombia, the Netherlands, Italy and Dubai sooner or later all converge in Marbella.
The Netherlands even has a special prosecutor based in Spain, which gives a sense of the region’s strategic importance.
Hashish is typically smuggled from Morocco in gomas (high-speed motorised rafts) and delivered up and down the coast by Andalucían or Galician traffickers. The organisations behind these operations are based in Marbella.
Cocaine is almost always smuggled in shipping containers through the port of Algeciras, while the bosses go about their lives only a few miles away. “The people who fund the operations are on the Costa del Sol. And not just Marbella, but other resorts along the coast. [There are private developments] where a lot of the world’s big bankers and high-level drug traffickers spend the summer,” said an agent with Greco Cádiz.
In Morocco, large organisations oversee the preparation of massive shipments of hashish, often in the thousands of kilos. (In Spain, 1kg currently sells for about €2,500.)
“At a certain point,” said Juan, a trafficker from Málaga who did not want to give his real name, “they hand the product over to us, and it’s up to us to get it into Spain. At that point, the merchandise is my responsibility and I’ll die before I let someone take it. When the drugs reach land and are in a secure location, I contact the organisation and, using whatever codes we’ve agreed on, I deliver the drugs to their people and they pay me my cut in cash.”
Groups do this to avoid theft and vuelcos, or ambushes – a drug trafficker’s greatest fear. “A vuelco by another organisation is much more common than a police raid,” Juan said. “As soon as you agree to the job, the most important thing is discretion. The fewer people who know about it, the better. If word starts to spread, you’re fuXXed, they’re gonna come for you.”
To protect against vuelcos, groups will sometimes hire security, which, on the Costa del Sol, is usually contracted out to the Naples Camorra.
“We guarantee the success of the operation, and are paid in advance,” said Francesco, the Camorrista. “Everyone knows that if something happens with the shipment, there will be consequences. If you try something, we’ll kill you. Usually, the shipment has a GPS tracker. If at any point the signal disappears, we kill you,” he said nonchalantly.
Once on land, the drugs are loaded into sports cars stolen by other gangs and transported to the guarderías or warehouses where they’ll sit until ready for delivery.
“A lot of [the warehouses] are in Seville,” said Pablo. Other times, the drugs are stored in secret caches in the mountains that surround Málaga, where shepherds are hired to keep watch and to send word if anything goes wrong.
“Deliveries involve a system of prearranged codes,” Pablo said. “For example, the organisation will give you a card with a sequence of numbers that corresponds to another card, which they keep. Before you tell them the location of the product, they have to send you a photo of the code, so you know it’s actually them. Then, when they pick up the product, they have to show it to you again. I carry mine tucked in my cellphone case.”
“Normally we deliver the drugs back to the original owner and then they sell them,” said Juan. “They’ll arrange a meeting with English, French, Italian or Russian buyers, then sell them portions of the shipment. A 1,000kg shipment will go to dozens of buyers. Once it hits land, it should only sit for a week, at most. If it sits any longer, it can be dangerous. Sometimes, the buyers will come and pick it up themselves, but the owners don’t tend to like that because then you might become friends with the buyer and start dealing with them directly. I don’t do that kind of thing, but the French guys do it a lot,” Pablo said. “I don’t want any headaches. Once it’s delivered, we disappear. Then the Moors load it in their Audis and drive like bats out of hell, 150mph non-stop all the way to Paris. You try to stop them.”
Cocaine usually enters in shipping containers exported from Latin America. The containers are almost always owned by food distribution companies. One container, or a portion of a container, will arrive preñado, or pregnant, with drugs. “Once it’s offloaded at the port, and with the help of a worker we have on payroll, they send us the code and we open the container and take the drugs,” Pablo said.
“To smuggle in large quantities, you have to have someone in your pocket,” Pablo added. “The organisations have people in the Guardia Civil, the National police, customs agents and dock workers. There’s a lot more corruption than you’d think.” Another method of importing drugs is to use small boats or other watercraft: speed boats, camouflaged fishing boats, or even submarines.
Faced with such opposition, agents are constantly complaining about the lack of resources in what they say is an unequal fight. “It’s easier to organise a drug-running operation than it is to investigate one,” said one Greco agent. “There should be one agency solely dedicated to tackling drug trafficking, like the DEA [the US Drug Enforcement Agency]. If we’re the main entry point for all of Europe, how is it we don’t have something like that?”
“Whatever they do,” said Francesco, “none of this will ever stop. Drug money is what makes the world go around.”
Bitcoin's Messianic Zeal Shares the @GameStop Rage @bopinion @johnauthers $BTC
Bitcoin Is Not a Currency, and Other Revelations
One of my favorite moments in Monty Python’s Life of Brian, itself one of my favorite movies, comes when Brian is trying to convince a gaggle of followers that he isn’t the Messiah. One woman pipes up to say: “Only the true messiah denies his divinity!”
“What chance does that give me?” cries Brian, who then gives in and tells them he is indeed the Messiah. Their response is to bow before him and say “Hail the Messiah!”
I’m reminded of this when trying to discuss bitcoin with ardent supporters. Nothing works. If there is some telling problem with the digital currency, it somehow turns into an advantage.
My argument — not at all unusual — is that extreme changes in bitcoin’s value make it very hard to use as a currency.
Who would want to denominate a large transaction in a currency that might dip or rise by more than a third in a matter of hours?
Here are a few of the responses I received:
Bitcoin is not made for transactions, you don’t do transactions with gold either.
Bitcoin is NOT A CURRENCY.
If bitcoin isn’t for transactions, what is it for? And precisely the complaint against fiat currencies is that they replaced those based on gold, in which it was very much possible to carry out transactions.
There is no long term stability without short term volatility.
For assets to be valuable they need volatility, otherwise they’re pointless & provide little to no use. Asset and currency are not the same thing, nor do they have to be.
These statements may be true as far as they go. In general, you earn a greater return for taking more risk, and it has become standard in the literature to define risk as volatility.
Fast-growing assets will inevitably have a degree of volatility on the way up. But it’s not as though volatility is an outright advantage or something desirable — particularly on the scale of bitcoin in the last 48 hours.
Over that period, I count a fall of 30%, followed by a rise of 33.2%, a fall of 13.3%, a rise of 21.2%, and a fall of 9.4%. Over the whole two days, it dropped 7.5%, which is unremarkable. But the idea that such volatility might actively be healthy is crazy.
Another line of attack is to hammer away at fiat currencies, which many bitcoiners regard as illegitimate. This one was particularly impressive:
Enjoy your petrodollar, warmonger!
When I asked what this was supposed to mean, I received this response:
Fiat: funds wars. Violent, by decree. Bitcoin: defunds wars. Voluntary, opt-in. Using fiat is a vote for more wars. Using Bitcoin, by sending value peer-to-peer over the Lightning network bankrupts the war machine. The choice is available to you today. What do you choose?
This is startling on a number of levels, even if we ignore the fact that the great majority of history’s wars were funded by currencies backed by precious metals, rather than governments, and that fiat currencies have funded the eradication of many diseases worldwide in the last few decades. Here is another example:
People suffering from the abuse of central banks and governments have no champion except #bitcoin. Humans are greatly in abject slavery and there is a clear way out.
There are huge issues with the global financial system in the 50 years since the last partial peg to gold was removed by President Richard Nixon with the end of the Bretton Woods system in 1971.
That period saw the slump of the 1970s, and the global financial crisis, and steadily deepening inequality in the West. It also saw huge inroads against poverty and disease across the world, and the end of the cold war.
There has been no hyperinflation in the West. While the paradigm of the last few decades appears to have reached a point where it has to change, it isn’t clear to me that 50 years of fiat have been so obviously terrible compared to the history that preceded them.
Anger Is an Energy
Implicit, and sometimes explicit, in much of the anger is that fiat currencies are illegitimate, because they are decreed by governments.
What is alarming about this is that the governments in charge of all the world’s major fiat currencies, with the significant exception of the Chinese yuan, are democracies.
Cryptocurrencies are a revolution against democratic governments as currently constituted. The guiding spirit is less libertarian, and more anarchist, or anarcho-capitalist. And the guiding emotion isn’t greed, so much as anger.
In this respect, the GameStop Corp. saga is very similar. Both are motivated by anger, and a genuine, righteous desire to right the wrongs of society — whether by toppling unscrupulous speculators, or a corrupt government imposition.
Also, as with GameStop, there is a painful generational angle. “Why are old people so tied up in this?” asked one respondent, while another called me an “ultra rich boomer media guy.” Would that were accurate.
Again, the worrying part is the sense of generational injustice. This grievance is genuine: millennials and Generation Z have a dreadful deal compared to the baby boomers.
But it’s disturbing that has made ageism acceptable when just about every other form of identity-based abuse is now unacceptable.
Bitcoin as a Fang
To return to the opening question, if bitcoin isn’t a currency, what is it? The answer is that it is increasingly regarded as a growth asset, which behaves increasingly in line with growth stocks.
For a startling demonstration, look at how bitcoin has performed compared to the NYSE Fang+ index, which includes the big internet platform companies and Tesla Inc., over the last few years.
Anyone who bought bitcoin at its last peak in December 2017 would have been better off with the Fang index.
Obviously this is an extreme point at which to start, but the tendency of bitcoin and the Fangs to travel in the same direction is becoming marked:
This ties with a phrase from my former colleague Rob Armstrong: “Bitcoin is best thought of as equity in a company whose only asset is a promising but unproven technology — this is not strictly true, but it is the right metaphor.”
Obviously, that is how its price behaves. It has much the same total worth as a Fang stock at present, having topped $1 trillion earlier this year.
The likes of Apple Inc. and Google introduced paradigm-changing technology in the past, and the intricate mathematics and blockchain infrastructure of bitcoin is comparably revolutionary.
The problems are as follows:
The technology doesn’t work well enough yet. (This week’s volatility puts that beyond argument.)
The way to invest in the technology isn’t by buying the currency, but by buying stock in the companies that produce that technology.
Stock in Apple or Amazon.com Inc. has the advantage that it is backed by the companies’ assets and cash flows; bitcoin has no comparable backing.
So, bitcoin is behaving like a promising but unproven technology that people are prepared to buy even though it as yet has no assets to back it.
The more the brilliantly inventive people involved in the crypto world work on improving the technology, and the more people actually use it, the more of a viable currency bitcoin could become. But for the time being it is reliant on the ebb and flow of crowd emotion.
The Anti-Bank, Not the Anti-Fiat
One more point: There are plenty of causes for complaint against governments. There always are. But without governments or states to protect the little guys, life could easily get even more cruel and unfair.
Bitcoin shouldn’t be seen as the protector of the little guy. There’s much more of a risk that it will become a vehicle to deprive little guys of their money the next time the price dives.
However, I do think there is a revolutionary role for crypto. Rather than replacing fiat currencies, it could release us from blackmail by big banks.
If the vast banking infrastructure can be separated from the payment system, then banks can be allowed to fail.
As it stands, they control this invaluable public good, and so cannot be allowed to go under; the disaster that befell the Greek economy in the summer of 2015 when its banks and ATMs were shuttered for two weeks during a standoff with the European Union makes that clear.
Cryptocurrency and blockchain also offers the possibility to make banks’ back offices far more efficient. That in turn would make it far easier to rid the financial world of moral hazard, and allow a big bank to fail at the next threat of a repeat of the Lehman crisis.
That is a consummation devoutly to be wished, and is much more realistic than displacing the fiat system altogether.
This is what I wrote for my old employers a frighteningly long time ago, in December 2013, at a point when bitcoin was almost at the apex of its first big wave of excitement.
It's the first time I tried to get to grips with bitcoin and it’s tied me in knots ever since:
This could be an investment opportunity. Rather than an alternative to fiat currencies, Bitcoin has a role in a critical trend; the disintermediation of banks.
African tribesmen can now pay each other using their mobile phones, without involving a bank. Crowdsourcing systems raise loans over the internet without involving a bank. Internet currencies are part of the same trend.
Buying Bitcoins while their price is so bubbly is nothing more than a gamble. Investing in other online currencies, or in companies that can help the Bitcoin economy develop, looks like a sensible use of a venture capitalist’s money.
I’m happy to stand by that more than seven years later. That still seems to be the future for cryptocurrency to me. Full disclosure: When I said that buying a bitcoin was nothing more than a gamble, I was arguably proved right when bitcoin subsequently dropped 79%, and failed to show a profit until early 2017.
But over the full period since I wrote that, bitcoin has risen by 4,500%, compounding at 67% per year. So it’s fair to say that I should have been more positive. Even an aging financial media guy like me can learn something over time.
Technobabble, Libertarian Derp and Bitcoin $BTC @nytimes @paulkrugman
Twelve years is an eon in information technology time. Venmo, which I can use to share restaurant bills, buy fresh fruit at sidewalk kiosks, and much more, was also introduced in 2009. Apple unveiled its first-generation iPad in 2010. Zoom came into use in 2012.
By the time a technology gets as old as cryptocurrency, we expect it either to have become part of the fabric of everyday life or to have been given up as a nonstarter.
If normal, law-abiding people don’t use cryptocurrency, it’s not for lack of effort on the part of crypto boosters.
Many highly paid person-hours have been spent trying to find the killer app, the thing that will finally get the masses using Bitcoin, Ethereum or some other brand daily.
But I’ve been in numerous meetings with enthusiasts for cryptocurrency and/or blockchain, the concept that underlies it.
In such meetings I and others always ask, as politely as we can:
“What problem does this technology solve? What does it do that other, much cheaper and easier-to-use technologies can’t do just as well or better?”
I still haven’t heard a clear answer.
Yet investors continue to pay huge sums for digital tokens. The values of major cryptocurrencies fluctuate wildly — Bitcoin fell 30 percent Wednesday morning, then made up most of the losses that afternoon.
Their collective value has, however, at times exceeded $2 trillion, more than half the value of all the intellectual property owned by U.S. business.
Why are people willing to pay large sums for assets that don’t seem to do anything?
The answer, obviously, is that the prices of these assets keep going up, so that early investors made a lot of money, and their success keeps drawing in new investors.
This may sound to you like a speculative bubble, or maybe a Ponzi scheme — and speculative bubbles are, in effect, natural Ponzi schemes.
But could a Ponzi scheme really go on for this long? Actually, yes: Bernie Madoff ran his scam for almost two decades, and might have gone even longer if the financial crisis hadn’t intervened.
Now, a long-running Ponzi scheme requires a narrative — and the narrative is where crypto really excels.
First, crypto boosters are very good at technobabble — using arcane terminology to convince themselves and others that they’re offering a revolutionary new technology, even though blockchain is actually pretty elderly by infotech standards and has yet to find any compelling uses.
Second, there’s a strong element of libertarian derp — assertions that fiat currencies, government-issued money without any tangible backing, will collapse any day now.
True, Britain, whose currency was still standing last time I looked, went off the gold standard 90 years ago. But who’s counting?
Given all this, are cryptocurrencies headed for a crash sometime soon? Not necessarily. One fact that gives even crypto skeptics like me pause is the durability of gold as a highly valued asset.
Gold, after all, suffers from pretty much the same problems as Bitcoin.
People may think of it as money, but it lacks any attributes of a useful currency: You can’t actually use it to make transactions — try buying a new car with gold ingots — and its purchasing power has been extremely unstable.
So when John Maynard Keynes called the gold standard a “barbarous relic” way back in 1924, he wasn’t wrong.
But the metal’s mystique, and its valuation, live on. It’s conceivable that one or two cryptocurrencies will somehow achieve similar longevity.
Or maybe not. For one thing, governments are well aware that cryptocurrencies are being used by bad actors, and may well crack down in a way they never did on gold trading.
Also, the proliferation of cryptocurrencies may prevent any one of them from achieving the semi-sacred status gold holds in some people’s minds.
The good news is that none of this matters very much. Because Bitcoin and its relatives haven’t managed to achieve any meaningful economic role, what happens to their value is basically irrelevant to those of us not playing the crypto game.
27 NOV 17 :: "Wow! What a Ride!"
The parabola was described thus by Thomas Pynchon,
“But it is a curve each of them feels, unmistakably.It's The Parabola. They must have guessed, once or twice -guessed and refused to believe- that everything, always, collectively, had been moving toward that purified shape latent in the sky, that shape of no surprise, no second chance, no return.’’
Or as T.S Eliot said in The Hollow Men
Between the idea
And the reality
Between the motion
And the act
Falls the Shadow
For Thine is the Kingdom.
My investment thesis at the start of the year was that Bitcoin was going to get main-streamed in 2017. It has main-streamed beyond my wildest dreams, therefore, I am now sidelined.
Let me leave you with Hunter S. Thompson, “Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming “Wow! What a Ride!”
''Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."
World Of Finance
GameKyuubi posted "I AM HODLING," a drunk, semi-coherent, typo-laden rant about his poor trading skills and determination to simply hold his bitcoin from that point on.
"I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," he wrote in reference to the now-famous misspelling of "holding."
"WHY AM I HOLDING? I'LL TELL YOU WHY," he continued.
"It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."
He concluded that the best course was to hold, since "You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell."
He then confessed he'd had some whiskey and briefly mused about the spelling of whisk(e)y. [HODL Definition | Investopedia]
$ASS Coin Billionaire: Tales From the Fringe of the Crypto Craze
Meet the thrill-seeking traders who are prowling for profits in the wildest corners of the market — all in search of the next big coin.
The Bud Light Mango Mai Tais were beginning to take hold when Eric Hackney — 38, unemployed and ticked off by watching other people get rich — figured, What the hell? and laid $500 on some crazy-sounding thing called ASS Coin.
“Screw it. Let’s go. Let’s see what happens,’’ Hackney thought.
ASS Coin: officially, that’s Australian Safe Shepherd, one of those obscure virtual currencies that have YOLO’d and FOMO’d their way from crypto in-jokes to soaring — and now sinking — monuments to these strange financial times.
And here’s the thing: In the midnight hour, in his Florida kitchen, thumbing through his high school yearbook and brooding over might’ve-beens, Hackney is more than another dreamer longing to get rich quick.
He is also a stand-in for one of the three key players in today’s laugh-or-you’ll-cry tragicomedy involving money of all kinds.
The stage on which these actors strut: Decentralized Finance, or DeFi, Crazy Town of the Everything Rally.
Here even Luddites can mint digital tokens — Shit Coins, in parlance of the trade — with a little off-the-shelf code. It takes maybe 10 minutes, no whiz-bang computers or complex math required.
And so it is that Eric Hackney, husband of Brittany, father of two, former bartender, became the owner of 20,000,000,000 ASS Coins with his $500 investment.
The rich keep getting richer — on FAANG stocks, private-equity carried interest, SPACs, Basquiats, Canadian lumber, Palm Beach oceanfront, Greenwich hedge funds, you name it.
All the Eric Hackneys out there want is to wet their beaks a little, too, before everyone catches on to the joke.
And so Hackney has assumed the winking role of The Buyer. He’s today’s thrill-seeking amateur, goaded on by social media, who’s prowling for profits on a Robinhood trading app,
Mango Mai Tai or Woodford Reserve in hand. There are millions of them out there, surfing the wild currents of an historic swell in retail trading.
Over the past several days, greed met reality and giddy markets collapsed again. Crypto, SPACs, tech stocks, the ARK ETFs: prices of all kinds of assets are falling, some spectacularly so.
From Wall Street squawk boxes to Reddit chat rooms, the question burns: Is this just a hiccup, or the beginning of something worse?
Hackney was there for that whole GameStop craziness back in February, when the Redditors briefly humbled the hedge-fund pros.
He says he was up and then, in a blink, he wasn’t. He says he later made a bundle on Dogecoin, created in 2013 as a joke, until — pffft! Gone too.
And yet he plows onward, along with countless others who’ve been brought to this moment by confluence of forces including but not limited to SARS-CoV-2, iPhones, the pandemic economy, boredom, the Fed, YOLO, “stimmies,” FOMO, TikTok, zero-commission trading, Elon Musk, greed, “stonks,” “Saturday Night Live,” Twitter and more.
Joining The Buyer up there beyond the footlights has been The Creator — someone like this guy sitting in Thailand who just minted another digital will-‘o-the-wisp, SuperDoge.
Call him Fab. Like many in this game, from the creator of Bitcoin on down, Fab prefers to remain anonymous.
A Canadian from Vancouver, Fab lives in Jomtien Beach, Thailand, south of Bangkok.
There he’s been dreaming of building SuperDoge — with a cartoon Shiba-Inu-as-Superman mascot — into a global brand akin to Marvel Comics.
Finally, a third player: The Promoter. Someone like the former investment bank trader who goes by the TikTok nom de guerre Pablo Heman.
In his selfie-style, animated videos, Heman explains how to turn $1,000 into $1 million in a year trading cryptocurrencies.
The people who mint coins — The Creator — pay guys like Heman anywhere from $5,000 to $10,000 to plug their crypto.
Shameless promotion is a hallmark of the Shit Coin hype cycle: Mint and promote, get in and get out — preferably ahead of all the people who just ran for the hills.
At times this might seems like a good old-fashioned pump-and-dump in penny stocks. In the crypto trade, the maneuver is known as a “rug pull.’’
Together, these actors, The Buyer, The Creator, The Promoter, have strut and fret their hours. Some are out there even now, waiting for that next meme — another Doge Shiba Inu, another cryptic tweet from Musk — to revive the animal spirits and maybe, just maybe, hand them that big win.
Go ahead, laugh.
Even accounting for Wednesday’s wild swings in crypto prices, one DeFi token, Meme, has soared over 3,000% since August.
Another, PooCoin, has doubled in a month. SafeMoon — which was recently endorsed by Barstool Sports’ Dave Portnoy — is up more than 56,000% since launching in early March.
“It’s more aggressive capitalism than we’ve ever seen,” Nic Carter, co-founder of researcher Coin Metrics and general partner at Castle Island Ventures, says of the flood of new coins.
At last count, almost 10,000 new ones were minted this year alone, data from Dune Analytics show.
“It’s global. It’s 24/7. And it’s completely unregulated,” Carter said.
Here’s how Eric Hackney remembers his epiphany — the ah-ha moment in his long, tortured journey from the bar to GameStop to ASS Coin.
It was late January, somewhere around the time Molly Ringwald, The Princess, had just handed that diamond stud to Judd Nelson, The Criminal, and — cue Simple Minds — the credits to “The Breakfast Club” were set to roll.
At home in Tampa, Hackney was slipping into a finger or three of bourbon as the movie was winding down.
He and his wife lost their jobs last year when the bars and restaurants closed. He’s seen help-wanted ads but, really, $9 an hour? Lately, he’s been trying his luck on Robinhood instead.
That night, Hackney was hunting for hot new things on the app. That’s when he noticed Dogecoin. It was up, big time — and climbing. He texted his friend, John.
Why is this happening? John replied. I don’t know what this is!
Hackney didn’t really know either.
Hackney says he bought some Dogecoin anyway, at 4 cents. In a blink, the price shot to 8. He’d doubled his money.
Oh my God, he thought.
He texted John.
Get on this!
More than three months later, Hackney glanced at Robinhood again. He had long sold his Dogecoin because he hated the wild swings in its price.
But seeing its surge to 70 cents in early May stung. He felt he’d missed the boat again. He turned on Coldplay and stewed in the dark. He vowed: never again.
His wife tried to talk him down.
Don't you get it? she asked.
Get what? Hackney replied.
People nowadays like stupid shit. They don’t’ care. They follow the crowd.
“And I had an epiphany,” Hackney recalls. “I realized the money was, in fact, in the garbage late-night coins you would never consider hooking up with unless you were half in the bag.’’
He was talking about crypto like Papa Shiba, OMG, SafeMoon, Baby Shiba, SpaceCorgi, TacoCat — Shit Coins that makes Bitcoin and even Dogecoin look like good old-fashion dollars.
“It’s insane,” Hackney kept thinking, “but it’s reality.”
‘It’s DeFi … It’s BSC …. It’s SUPERDOGE.’
Beneath the homepage stands SuperDoge — self-styled crypto-superhero.
In Superman blue, red cape furling behind him, he has the chiseled body of your favorite Kryptonian and the head of a leering, wolfish canine. On his chest, framed in yellow, is a big red “D.”
This is the cartoon-inflected world of Fab the Creator, who made the SuperDoge token. He used to be a part owner of 29 bars and restaurants in Phuket, Thailand.
That number has gone down to 23 since the pandemic lockdowns, he says. Trading crypto, he insists, brought him back — and then some.
“I got a few 10x going and — Boom! I was back in the game,” Fab says.
After trading other people’s coins, Fab figured he’d create his own. It’s easy enough — someone this week made a new crypto coin inspired by Bloomberg’s Joe Weisenthal within an hour.
SuperDoge launched with a limited amount of coins available in a pre-sale, pitched as a chance for early buyers to get in before anyone else. Whoever clicked on the buy button faster would get it.
Fab and his team make money by earning 5% of the total token supply over a six-month period. The other way to make money is to invest in your own coin early. So far, Fab has invested more than $150,000 in his own coin.
A lot of these new coins have been whizzing back and forth on unregulated, automated interfaces like UniSwap or PancakeSwap, which match buyers and sellers without a centralized custodian.
On those platforms, users can create a market and generate a coin with few hurdles and little effort.
“People are doing it because there’s an opportunity to make a lot of money very, very quickly,” says Carter of Castle Island Ventures, a blockchain venture capital firm. “It’s the promise of fantastic, multi-thousand percent returns.’’
“Of course, are any of these coins going to stick around and exist in three years’ time? Definitely not.”
If Fab gets his way, SuperDoge will be an exception, this week’s meltdown aside. He’s says he’s thinking big — like, global brand big. Comic books, an animated Web series, action figures, maybe a movie: this man has dreams. “We want to become the Marvel of the cryptocurrency world,” Fab says.
Birthing all these new coins doesn’t take a lot of money, especially by Wall Street standards. But there’s a key ingredient the savvy Creator tends to splash out on: hype.
Fab says he spent $150,000 over 20 days on influencers, marketing and advertisements to promote SuperDoge in the weeks after he created it. It also cost about $25,000 to list the coin on an exchange.
The goal is to create that wonderful, aching fear-of-missing-out and generate as much hype as possible. It’s been a recipe for quick profits and now quick losses, as well as what everyone agrees can be some unscrupulous behavior.
Fab says SuperDoge is legit and donates 2% of every transaction to partner charities. It has its own website, and several accounts on social media.
Even before launch, the coin was promoted through advertisements on Facebook and 4chan, and efforts were made to reach investor groups on Telegram.
Fab hired TikTok and YouTube influencers, paid for tweet promotions, and partnered with news outlets.
After shooting higher following its launch in late April, SuperDoge has now fallen back to Earth.
Enter The Promoter: Heman, 38, who has amassed over 370,000 followers on TikTok.
“So, what is happening with Doge, Akita Inu and Shiba Inuuuuuuuuuuu,” Heman tells his followers while howling in a video, a trend among owners of the doggy coin across social media.
He cuts to a shot of him jokingly wiping tears away, as he explains what Ethereum founder Vitalik Buterin’s donation of more than 50 trillion in the joke coin Shiba Inu means for the crypto world.
Heman charges anywhere from $5,000 to $10,000 dollars to promote content on his account.
Just how much they are willing to pay promoters like Heman provides one indication as to which coins are more real than others, if “real” is an operative word for Shit Coins.
In the unregulated world of DeFi, money buys influencers, who drive news cycles, which help pique interest, which drives up prices and trading volume.
“If someone is paying good money for 10 influencers to go on YouTube, Instagram and Twitter to be pumping this thing, then that means there’s a real big backup behind this coin,” Heman says. “It’s like the tip of the iceberg. What you don’t see is the 90% underneath.”
Until recently, Heman held a portfolio of traditional investments in stocks and real estate. He started his TikTok in January, and the hunger out there for cryptocurrency analysis prompted him to get into the game.
He started gambling — his word — a couple of hundred dollars a go, mostly in obscure coins. He says his portfolio is up 1,063% since February, and about 70% in the past 30 days alone, at least until the rout arrived.
“Basically, I thought, why not put 100 or 50 bucks on one of those, they might just take off,” Heman said.
“You can only say so many times to your audience that this is pure gambling. They come back and say ‘I’m up 500x or I turned $3,000 into $100,000, it’s a very common story.”
In DeFi, all the old barriers to entry have collapsed into nothing.
Ten years ago, creating a viable token meant persuading a centralized exchange like Coinbase or Binance to list your coin. But DeFi is, as the term suggests, decentralized. And you thought no one was in charge of Bitcoin.
All of which raises the possibility that outright scamsters can and have moved in from time to time.
The classic maneuver is the rug pull: launch a coin, pay people to promote it, and once the crowd piles in and the price jumps, get out as fast as you can.
Fab and others say one red flag is coins for which liquidity isn’t “locked,” a setup that makes it impossible for The Creator to cut and run. SuperDoge is locked.
Not so long ago, pros would’ve laughed you off Wall Street if you told them that ordinary people would soon be staking real money on WallStreetBets-inspired meme stocks, SPACs plugged by YouTubers, TikTok-enthused Shit Coins and the rest. This week, the skeptics look smart. The punters? Not so much.
Then again, the events of the past year have turned small-time investors — often dismissed by the pros as the “dumb money” — into a powerful force.
For better and worse, Robinhood, DeFi and all the rest just might have changed things for good.
“We are sick of the traditional financial system,” says Ramy Bekhiet, 27, and an engineer by training. He used to watch TV and play video games after work. Now, he works from 7 a.m. to about 3 p.m., and then starts his second shift: trading from 4 p.m. to 11 p.m.
Since 2017, he’s built a portfolio of Bitcoin, Ethereum and XRP that did well enough to help him buy a house in Ewing, New Jersey — with five bedrooms, two-and-a-half baths, two living rooms, a sunroom and a basement.
He’s also poured money into Dogecoin, Shiba Inu and Elongate. Market swings like the one on Wednesday are an opportunity to buy more crypto at a discount, Bekhiet said.
In his home, two open laptops and 32-inch monitor glow atop his dining room table, as well as a ring light to shoot videos for his TikTok account.
Off to the side, across from the kitchen, by the thick, drawn curtains, an ironing board is tucked into the corner. Welcome to the 21st Century trading floor.
Bloody brothers Eritrea, Africa’s gulag state, is on the march @TheEconomist
It is an unlikely pairing. Abiy Ahmed, Ethiopia’s prime minister, is young, charismatic and says he is committed to democracy in Africa’s second-most-populous country.
Until war erupted in November in Tigray, a northern region, he was a darling of the world.
In 2019 he won the Nobel peace prize for ending a war with Eritrea.
Yet he is now knee-deep in blood alongside Eritrea’s president, Issaias Afwerki, an ageing dictator who locks up dissidents in shipping crates in the desert.
When the two leaders met to sign a peace deal in 2018, many hoped their reconciliation would reshape the region.
Abiy was liberalising Ethiopia, releasing political prisoners and freeing the press.
Some thought Issaias might learn from his new friend. Outsiders rushed to encourage the thaw.
The un lifted an arms embargo (imposed because of Eritrea’s support for jihadists in Somalia).
Western donors poured in cash.
Eritrea’s decades of isolation seemed about to end. “Love is greater than modern weapons like tanks,” declared Abiy on his first visit to Asmara, Eritrea’s capital
The bromance has indeed changed the region, but not in the way many had hoped. It seems that Issaias influenced Abiy, rather than vice versa.
Encouraged by Issaias, and emboldened by promises of Eritrean military support, Abiy sent troops into Tigray for what he hoped would be a quick “law enforcement” operation against its rebellious ruling party which had attacked federal bases.
The fighting has since turned into a bloody stalemate. Ethiopian and Eritrean troops control the cities and, intermittently, the main roads. Tigrayan rebels control much of the rest. Stuck in the middle are millions of starving civilians.
Eritrean troops, sometimes accompanied by those of the Ethiopian government and its militias, are pulling unarmed Tigrayan men from their homes, churches or buses and shooting them.
Soldiers are methodically raping Tigrayan women. To cut supplies to the rebels, they are blocking food convoys and preventing farmers from planting crops. Around 4.5m of Tigray’s 6m people need food aid, says the un.
The only winner is Issaias. His troops, who died in their tens of thousands in their unsuccessful border war with Ethiopia, are now deep inside their neighbour’s territory.
They have massed troops along parts of Ethiopia’s border with Sudan, threatening to inflame a separate dispute between those two countries. More worrying is that Issaias seems to be trying to export his model of despotic rule.
He is said to have egged on a power grab by Mohamed Abdullahi Mohamed, Somalia’s president, who has stayed in office despite his term having ended in February.
To back his man in Mogadishu, Issaias has trained a Praetorian guard loyal to Mr Mohamed. “Issaias is the Svengali of this affair,” says a foreign diplomat. “He’s been unyielding in pushing a centralised state and bugger having elections.”
Western governments are belatedly waking up to the horrors in Tigray.
In April the European Union cancelled €100m ($122m) of aid that would have gone to Eritrea.
In March it imposed financial sanctions on Eritrea’s intelligence agency. Diplomats say that wider American and eu sanctions may be imposed soon.
Few hold out much hope that sanctions will sway Issaias, whose state is already largely cut off from the world.
But sanctions, or even a credible threat of them, would provide greater leverage over Abiy, who needs access to export markets and international finance if Ethiopia is to grow quickly enough to quell protests by its young and restless population.
Abiy can probably be convinced to ditch Issaias if the costs of their alliance become too high. Donors should therefore press Abiy harder.
Without his new ally, Issaias would have less clout in the region. There is not much, alas, that outsiders can do to make him less cruel to his own oppressed people, though neighbours and rich countries can and should grant them asylum if they flee his gulag state.
Even if Issaias cannot be persuaded to change his ways, he can be prevented from remaking the Horn of Africa in his own tyrannical image. ■
Its clear Prime Minister has no Agency in Tigray Province now.
@PMEthiopia has launched an unwinnable War on Tigray Province.
Ethiopia which was once the Poster child of the African Renaissance now has a Nobel Prize Winner whom I am reliably informed
PM Abiy His inner war cabinet includes Evangelicals who are counseling him he is "doing Christ's work"; that his faith is being "tested". @RAbdiAnalyst
@PMEthiopia has launched an unwinnable War on Tigray Province.
Eritrea’s President Issaias Afwerki bids for regional greatness @TheEconomist
Shy and awkward, the teenage Issaias Afwerki did not stand out. As a student in Asmara, Eritrea’s capital, the future president was known less for his bookish brilliance than for sudden flashes of temper.
One day in the early 1960s his physics teacher, an American, handed him a particularly shoddy mark. Issaias walked calmly to the front of the class and slapped him in the face.
An act of vindictiveness as well as self-confidence, it was characteristic of the man for the rest of his life.
It is 30 years this month since Issaias, as leader of the secessionist Eritrean People’s Liberation Front, at last succeeded in overthrowing Ethiopia’s military dictatorship.
In alliance with the Tigrayan People’s Liberation Front (tplf), a rebel movement to Eritrea’s south, Issaias, now 75, assumed power in Asmara, while his tplf friends took up the reins in Addis Ababa, Ethiopia’s capital.
Two years later Eritreans voted in a referendum to break away from Ethiopia. Issaias became the nation’s first and only president. There has never been an election.
Few African leaders have ruled their countrymen so harshly or handled their neighbours so aggressively.
In 1998 Eritrea went to war with Ethiopia over a barren stretch of land worth almost nothing (pictured).
In two bloody years perhaps 70,000 lives were lost. The remains of Eritrea’s fledgling democracy was crushed. A decade later Issaias invaded Djibouti, which abuts Eritrea at the mouth of the Red Sea.
Now Eritrean forces, made up of conscripts, are fighting again. This time they are in Tigray as allies of Ethiopia’s government in a catastrophic war against Issaias’s former allies, the tplf.
The Eritreans have been accused of war crimes, including massacres of civilians and mass rape.
The secretiveness of Issaias’s regime spawns endless speculation about his intentions. Some say the president’s main aim is to outmanoeuvre Ethiopia and remake the Horn of Africa in his own anti-democratic image.
Though this is sometimes overstated, he is thought to wield great influence over Abiy Ahmed, Ethiopia’s prime minister, with whom he signed an opaque peace agreement in 2018 that put an end to nearly two decades of cold war between the two countries.
He has also drawn close to Somalia’s authoritarian president, Mohamed Abdullahi Mohamed, better known as Farmaajo, and has hosted and trained thousands of Somali troops.
Issaias’s foreign policy has three main planks. The first is his belief that the Horn of Africa is a bear pit where there are no permanent friends.
Second, the use of force is always legitimate.
Third, even a tiny and impoverished country like Eritrea can, with ruthlessness and guile, punch well above its weight. Ask North Korea.
The breakdown of Issaias’s relations with his old comrades in the tplf testifies to his belief that no ally can be trusted.
Eritrea’s defeat in the border war with Ethiopia (then ruled by the tplf) in 1998-2000 sorely embittered him.
Awet Tewelde Weldemichael, an Eritrean at Queen’s University in Canada, likens Issaias to “a camel which can never sleep without settling a score”.
When Abiy, an ethnic Oromo from Ethiopia’s south, took office in 2018 and sidelined the Tigrayan old guard, Issaias saw his chance.
Six months ago his troops joined the fray as allies of Abiy, almost as soon as fighting broke out between Ethiopia’s federal government and the tplf.
The destruction wrought by the Eritreans in Tigray reflects more than a desire for vengeance. It also stems from Issaias’s long-standing conviction that the tplf threatens his country’s very existence.
Butchering young Tigrayan men, as well as looting infrastructure, food and medical supplies, should—reckons Issaias—scotch any chance of this happening.
By the same token, the destruction of two camps in Tigray hosting Eritrean refugees and dissidents was intended to prevent the tplf from training and arming a potential opposition to Issaias’s regime.
Issaias’s ambitions, however, reach well beyond Tigray.
“Eliminating the tplf is about eliminating an obstacle on his path to Addis Ababa and the region,” says Seeye Abraha, a former defence minister of Ethiopia who was once high in the tplf.
Recently in Foreign Policy, an American journal, he argued that what Issaias really covets is access to Ethiopia’s wealth.
In his bid to master the Horn of Africa, he has sought to influence Abiy, who runs a much larger and more important country.
Last year, with the backing of the Ethiopian and Somali pair of leaders, he set up a new regional bloc, which he hopes will replace the Intergovernmental Authority on Development, hitherto the region’s premier club, which also includes Djibouti (seat of its secretariat), Kenya, the two Sudans and Uganda.
The trio of leaders is wooing South Sudan to join the new club. This particularly annoys Djibouti.
Even more controversial are rumours of plans to bind Ethiopia and Eritrea into some kind of union.
Their armies are co-operating along Ethiopia’s shaky border with Sudan, as well as in Tigray.
In March a spokesman for Ethiopia’s foreign ministry suggested that Eritrean independence had been a mistake that political integration could one day rectify.
He apologised in the face of a backlash. But Issaias spoke enthusiastically about a confederation with Ethiopia after the independence referendum of 1993.
Might he again contemplate such an arrangement, provided Eritrea won more clout alongside its beefier partner?
“Issaias will never allow any federation with Ethiopia which does not allow him to dominate it,” says a former colleague, now in exile.
Right now, Issaias has more pressing concerns. His troops are bogged down in Tigray, though both he and Abiy agreed in March to remove them.
“We see nothing that would lead us to believe there are preparations on the ground for such a withdrawal,” says a senior state department official.
The American administration is threatening sanctions against Ethiopia and Eritrea. The eu has already withdrawn more than $100m in aid for Eritrea.
Issaias’s survival depends on winning his latest war. “He’s bet the house on [it],” says Dan Connell, the author of a book on Eritrea’s liberation war. “He’s thrown everything at it…He has to fight on.” ■
.@Maersk Calls Bolster Kenya’s Ambitions of Becoming Maritime Hub @Politics
Two A.P. Moller-Maersk A/S vessels made maiden calls at Kenya’s new Indian Ocean port which began operating on Thursday, edging the nation closer to fulfilling its ambition of becoming the main shipping hub on East African’s coast.
The port in Lamu is expected to eventually have 32 berths and offer an alternative gateway to access landlocked Ethiopia and South Sudan. It will supplement the clogged Mombasa port, which lies 340 kilometers (313 miles) to the south.
The $5 billion project is part of a bigger infrastructure plan known as Lapsset that’s being rolled out by Kenya’s government and includes an oil pipeline, roads, rail lines and airports that connect the nation to its northern neighbors.
The port’s first berth is expected to process 400,000 twenty-foot equivalent units in its first year of operation, according to the Lapsset Corridor Development Authority.
Establishing the first three berths has cost $480 million, with two of those set to be fully operational by year-end.
Transshipment fees will be waived and permissible periods for the removal of transit cargo will be extended in a bid to woo shipping lines and cargo owners to Lamu, according to the Kenya Revenue Authority.
Luring new business to Lamu could prove challenging. Ethiopia has regained use of the Red Sea ports of Assab and Massawa following a rapprochement with Eritrea, while about 90% of its inbound trade already arrives through the Port of Djibouti.
South Sudan may however consider using Lamu as an alternative to Port Sudan, the main maritime gateway in neighboring Sudan.
A key concern for potential users will be Lamu’s location. The idyllic resort town lies about 100 kilometers from the Somalia border and has come under multiple attacks from al-Shabaab -- an al-Qaeda-backed group of insurgents.
Last month, Kenya began constructing a 257 kilometer highway linking Lamu to the town of Garissa, part of a road network that will extend to the border with Ethiopia and South Sudan.
The road will traverse sparsely populated Kenyan territory that’s particularly vulnerable to attacks from the Somalia-based militant group.