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Satchu's Rich Wrap-Up
Thursday 24th of February 2022

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29-NOV-2021 :: Regime Change
World Of Finance


There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. 
There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones

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Octavio Paz The Street

A long and silent street.
I walk in blackness and I stumble and fall
and rise, and I walk blind,
my feet stepping on silent stones and dry leaves.
Someone behind me also stepping on stones, leaves:
If I slow down, he slows;
If I run, he runs.
I turn:

Everything dark and doorless.
Turning and turning among these corners
which lead forever to the street
where nobody waits for, nobody follows me,
where I pursue a man who stumbles
and rises and says when he sees me:

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September 1, 1939 by W. H. Auden comes to mind
Law & Politics

Waves of anger and fear
Circulate over the bright
And darkened lands of the earth,
Obsessing our private lives;
The unmentionable odour of death

Into this neutral air
Where blind skyscrapers use
Their full height to proclaim
The strength of Collective Man,
Each language pours its vain
Competitive excuse:
But who can live for long
In an euphoric dream;
Out of the mirror they stare,

Faces along the bar
Cling to their average day:
The lights must never go out,
The music must always play,

The Music has been playing for Eternity and its about to stop

Love Fellini. So brave, with that whiff of insanity. @DiAmatoStyle Federico Fellini's 8 1/2 @tcm

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Putin is seeking to stop NATO dead in its tracks, create a sphere of influence and is seizing this moment in the context of a now extinct ''Unipolar'' World and a freshly minted Tripolar World.
Law & Politics

It is clear the Russian abrasiveness is in part informed by a fundamentally better understanding of realpolitik and its chagrin that The US might still be reliving its glory days of the 1990s and essentially inviting its own triangulation.

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29-NOV-2021 :: Regime Change
Law & Politics

Regime Change came to Saddam’s Iraq and for a while regime change was de rigeur

Muammar Gaddafi was decapitated and the domino effect only stopped when Vladimir Putin decided he was going to put a stop to it and intervened on behalf of Bashar Al-Assad in Syria.
Today, the US has exited Afghanistan and the days of a Unipolar World are self evidently behind us. We exist in a Tripolar World [US China and Russia] with rapidly emerging Middle Powers. 

I am not discounting Fortress Europe but one senses the Fortress is keener on a more defensive posture unlike the US [notwithstanding its withdrawal from Afghanistan], China and Russia. Taiwan and Ukraine are the immediate geopolitical flashpoints.

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Everything can change overnight, emphasised the Russian president. @France24_en
Law & Politics

He also said that the best solution for #Ukraine would be to withdraw any request to join NATO and called for a demilitarisation of the country

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Oil, Gas and Commodities Aren’t Being Weaponized — for Now @bopinion @JavierBlas
Law & Politics

In the 24 hours after Vladimir Putin signed a decree recognizing two breakaway Ukrainian territories, the European Union, the U.K., and the U.S. bought a combined 3.5 million barrels of Russian oil and refined products, worth more than $350 million at current prices. 

On top of that, the West probably bought another $250 million worth of Russian natural gas, plus tens of millions dollars of aluminum, coal, nickel, titanium, gold and other commodities. In total, the bill likely topped $700 million.
And that's the way it’s going to be — at least for now. The U.S. and its European allies will continue buying Russian natural resources and Moscow will continue shipping them, despite the biggest political crisis between the former Cold War warriors since the collapse of the Soviet Union in 1991.
Both sides are aware of the contradictions. The West knows that commodities are a cash cow for Putin, fueling his imperial ambitions thanks, in great part, to ultra-high oil and gas prices, but the allies are also aware of the economic self-harm of cutting imports to zero. 

For its part, the Kremlin may be tempted to weaponize its natural resources — which could trigger blackouts in Europe. But it also knows commodity exports are its own economic lifeline.
It’s the commodities market version of the Cold War doctrine of mutual assurance destruction, or MAD.
With other adversaries — say Iran or Venezuela — the White House has been quicker to use oil as a geopolitical tool. 

As a result, both Tehran and Caracas cannot sell oil legally in world markets, not just into the U.S. However, Russia remains free to ship its oil into America; and the U.K. continues to buy Russian diesel, too.
At this point, neither Moscow nor the U.S. and its allies have an economic, political or military interest in weaponizing oil, gas and other natural resources. 

However, I must emphasize “for now.” The initial round of Western sanctions —  and the reaction from the Kremlin — was a reflection of that current posture.
The European Union and the U.K. targeted five medium-sized Russian banks, accusing them of helping the Kremlin’s campaign. 

But they left untouched the three state-owned giant lenders that are key for the commodities trade: VTB Bank PJSC, Sberbank of Russia PJSC and Gazprombank JSC. 

Putin did the same, telling an industry conference — the day after recognizing the breakaway republics — that Russia was planning “uninterrupted supplies” of natural gas to world markets.
The fears of the Kremlin cutting the gas supply remain simply that: fears. 

Any military trouble remains confined to the two breakaway territories, which are far away from the mighty Russian oil and gas pipelines that crisscross Ukraine from East to West: Druzbha, Soyuz, Progress and Brotherhood. 

The company that operates the gas pipeline network of Ukraine tweeted: “Keep Calm & Transit Gas.”
The biggest casualty has been NordStream 2, the Kremlin-backed gas pipeline connecting Russia directly with Germany under the Baltic Sea. Berlin halted the administrative approval process for the pipeline, in effect putting the project on ice. 

Tellingly, however, it did not impose sanctions on the pipeline itself. In any event, NS2 — which hasn’t started operations — was unlikely to be approved before the summer. 

Berlin did not take any action on NS2’s sister pipeline, NordStream 1, which follows exactly the same route, and has been pumping gas for several years. Why not? NS2 is empty; NS1 is full.
While NS2 is a cause célèbre for many politicians, its importance lies in diplomacy rather than the energy market. 

For Berlin, halting the project sends a signal to the Kremlin without affecting current German natural gas supply. 

For its part, Moscow doesn’t need NS2 if its sister is at full capacity. Indeed, Gazprom, the Russian state-owned gas giant, hasn’t sent a single molecule of gas through its other pipeline — the Yamal-Europe, which traverses Belarus and Poland — since late December.
We may soon see Gazprom boosting its gas supplies to Germany and the rest of Europe. 

Current spot gas prices are higher than the average of February-to-date, a situation that may prompt European utilities to maximize their Gazprom supply contracts from March 1st. 

If that’s the case, Europe may see an ironic situation: simultaneously higher political tension and higher flows of Russian gas.

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The naivete of the US response, the grandstanding smacks of panic and an inability to navigate a new and dynamic landscape This is the first nonlinear war.
Law & Politics

Sure we can keep muttering under our breath that Russia's GDP is the size of Italy but that completely misses the overarching point. 

Russia is not Iraq, Russia is not Yemen and Russia probably has the highest ROI of any country in the World. 

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Russia's government is in fiscal surplus, apart from the rollover of debt, Russia is overfunding borrowing when strictly speaking it does not need to. @elinaribakov
Law & Politics

1/ Russia's sovereign debt (presumably new) is sanctioned. No more access to the US/EU markets. What does it mean?
Russia's government is in fiscal surplus, apart from the rollover of debt, Russia is "overfunding" borrowing when strictly speaking it does not need to.

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While we wait for Biden, here's a snapshot of Russia's deep ties to global economy @SalehaMohsin
Law & Politics

- 17% of global natural gas production (largest exporter)
- 12% of global crude exports (Same as Saudi)
- 21% of palladium, 11% of nickel, 9%  aluminum, 7% refined copper (all critical metals)

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Russia Was Prepared to Withstand Sanctions. Why Wasn't Europe Prepared to Impose Them?
Law & Politics

Russian exports of oil and natural gas are an essential source of hard currency that helps cover the cost of importing manufactured goods. 

Russia’s oil, gas, and coal exports are also an essential source of energy for European consumers and businesses, without which they couldn’t generate electricity, fuel their vehicles, or heat their homes and offices.
This entanglement limits the West’s ability to penalize Russian aggression financially. 

Yes, cutting Russia off from the global financial system would devastate the Russian economy and impose severe hardship on the Russian civilian population, but it would also force Europeans to slash their energy consumption.
Milder sanctions could protect Europe’s access to oil, coal, and gas, but their impact on the Russian government’s behavior would be commensurately smaller. 

The Putin regime has spent years acclimating Russians to material deprivation and it has also built up substantial financial buffers. 

Not for the first time, conservative macroeconomic and regulatory policies have shielded a revisionist regime from international pressure.

There was nothing that Europeans could have done about the Russian government’s decision to impose severe costs on its civilian population for the sake of maintaining its own flexibility. 

But Europeans can and should be blamed for becoming even more reliant on Russian fossil fuel exports since the 2014 invasion of Ukraine. 

They wasted nearly a decade when they could have been greening their economies and also increasing the security of their own neighborhood. Ukrainians—and others—will now have to live with the consequences.

Russia’s Fortress Balance Sheet

The Russian government’s ability to withstand financial pressure was hard-earned. 

Most obviously, total spending on imported goods and services (in U.S. dollar terms) has consistently been about 25-30% lower than it was before the first invasion of Ukraine. 

While some of this can be attributed to declines in the world prices of Russia’s oil and gas exports, Western sanctions and Russian domestic policies have also played a role.

The sustained drop in imports has left a mark on Russian consumers’ spending. In inflation-adjusted terms, Russian households spent 12% less in 2016 than they did at the peak in 2014. 

Even in 2019—before the coronavirus pandemic upended the world economy—Russian consumers were about 2% worse off in material terms than they were before the first invasion of Ukraine.

Meanwhile, Russian businesses and other borrowers responded to external financial pressures—and domestic political ones—by slashing their foreign-currency denominated debt by $200 billion since the beginning of 2014. 

The Russian government also spent $200 billion adding to its stockpile of reserves (gold, bank deposits, and bonds) since mid-2015.

The net effect is that Russia’s central bank now has enough foreign exchange reserves ($630 billion as of last month) to cover 2021 spending on imports ($368 billion) plus 75% of the country’s entire stock of foreign-currency denominated debt ($353 billion as of 2021Q3).

Much of that debt isn’t even due for at least two years.

None of this, however, is sufficient to protect Russia from the impact of sustained Western sanctions. 

As the Taliban has discovered, foreign reserves are useless if your counterparties freeze your accounts. 

Even Russia’s $132 billion in gold reserves couldn’t be used to settle payments if Western banks were banned from touching anything involving Russia.

The Russian government nevertheless feels that it has room to act because it knows that the Europeans need them.

Europe’s Self-Inflicted Error

Shortly after Russia invaded Ukraine in early 2014, I wrote that Russia faced a long-term strategic vulnerability: Europeans had the option to squeeze Russia permanently by reducing their reliance on Russian energy exports. 

At the time, about 60% of Russia’s total export revenues came from sales of crude oil, refined products, and natural gas—and much of that went to Europe.
The Europeans could have built out their capacity to import liquefied natural gas (LNG) from the U.S. and other allies. 

Even better, the Europeans could have reduced their reliance on fossil fuels altogether by building out more alternative energy generation.
Either way, Gazprom’s network of pipelines would have been transformed from a source of leverage into an albatross. 

Russia could have found other customers for its gas—most obviously China—but building the necessary transportation infrastructure to compensate for the loss of the European market would take years. 

Russian oil could be sold elsewhere more easily, but the prices would have to be lower if European demand disappeared.
At first glance, it almost looks as if that’s what happened. Russia’s total export revenues from oil and gas fell from $350 billion/year before the first invasion of Ukraine to $231 billion in 2019. 

While Russians made up the difference by increasing other exports, including food, the squeeze on energy revenues is real.

But the Russian energy export squeeze had nothing to do with European restraint.

In 2013, the countries of the European Union imported about 135 billion cubic meters of natural gas from Russia. That was equivalent to about 70% of Russia’s total gas exports and equal to 37% of the EU’s worldwide gas imports

Yet in 2019, EU countries imported 166 billion cubic meters of Russian gas—23% more than before the invasion of Ukraine. 

That was equivalent to 75% of Russia’s total gas exports and 38% of the EU’s worldwide gas imports in 2019.1
European demand for Russian crude oil and refined petroleum products was slightly lower in 2019 than in 2013, but this was offset by surging European demand for Russian coal, which now accounts for almost half of the EU’s coal imports. 

Put another way, the countries of the EU went from consuming about 62 exajoules of energy in 2013 to 61 exajoules in 2019, while Russia went from supplying 10 exajoules of that energy in 2013 to 11 exajoules in 2019. 

Despite a slight decline in fossil fuel demand, Russia’s share of the European energy mix rose from 16.5% to 18.5% after the invasion of Ukraine. 

Europe’s dependence will only increase if the Nord Stream 2 gas pipeline comes onstream as planned.

The perverse result is that Europe is at greater risk of Russian pressure than the other way around. 

Natural gas prices in Europe are now about 5-6 times as high as in the U.S. because Gazprom has been withholding supply and because the lack of LNG terminals has prevented ships from moving gas across the Atlantic.

And while Europeans have made some modest investments in solar and wind energy over the past decade, it hasn’t been nearly enough to make a dent in the overall energy mix, especially after factoring in the impact of the decisions to decommission existing nuclear power plants.
The Europeans seem to have—belatedly—realized the implications of all this. As EU Commission President Ursula von der Leyen put it on Tuesday:
This crisis shows that Europe is still too dependent on Russian gas. We have to diversify our supplies…We will have to massively invest in renewable energy…because this is a strategic investment in our energy independence.
I hope her words are heeded.

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Top 50 countries for test positivity by World Bank region @fibke

Sweden: 75% of COVID tests positive last week That's the highest in the world.

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They fancied themselves free, wrote Camus, ―and no one will ever be free so long as there are pestilences
Law & Politics

―In this respect, our townsfolk were like everybody else, wrapped up in themselves; in other words, they were humanists: they disbelieved in pestilences.
A pestilence isn't a thing made to man's measure; therefore we tell ourselves that pestilence is a mere bogy of the mind, a bad dream that will pass away.
But it doesn't always pass away and, from one bad dream to another, it is men who pass away, and the humanists first of all, because they have taken no precautions.

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People are selling 'Endemicity' with a lesser IFR @fitterhappierAJ

'Endemicity' will make waves in the world more synchronous. As is the natural tendency in such oscillating systems, via phenomenae including greater transmissibility and more open borders

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.122500
Dollar Index 96.688
Japan Yen 114.5730
Swiss Franc 0.918445
Pound 1.349620
Aussie 0.718835
India Rupee 75.2961
South Korea Won 1202.065
Brazil Real 5.0102000
Egypt Pound 15.722700
South Africa Rand 15.305885

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#Ghana #cedi slipping is not surprising but still concerning. BoG likely regretting not hiking again in January. Heard talk about an emergency MPC meeting. @Markbohlund

#Ghana #cedi slipping is not surprising but still concerning. BoG likely regretting not hiking again in January. Heard talk about an emergency MPC meeting. Probably more likely BoG will step up forward purchases of cedi and other interventions.

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The #EU announces that sanctions on #Zimbabwe have been renewed because there has been no improvement in the country’s human rights environment. @OEAfrica

It follows President Emmerson Mnangagwa’s seemingly unsuccessful charm offensive at the EU-AU Summit last week.

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Tunisians are suffering delays to salary payments and shortages of grains, medicines and sugar, a foretaste, some economists say, of a rapidly looming public finances crisis @Reuters

Outside the Ettahrir district of Tunis, taxi driver Ahmed ben Salem stood in a long queue at a bakery that has cut its working times because supplies are more limited than in the past.
“This isn’t my only failed shopping trip. For the past month, I go around the district every day looking for semolina. I go through all the shops but without hope,” he said.
Any big hit to the standard of living in Tunisia, where the government imports and subsidises many basic goods, would greatly aggravate an existing political crisis as President Kais Saied tries to cement one-man rule and rewrite the constitution.
Saied and government officials have blamed the delays and shortages on administrative glitches, labour union strikes, market speculators or even a conspiracy by his opponents.
“They are trying to starve the people through medicine and food supplies,” Saied said last month.
Economists say there is a simpler cause: Tunisia is running out of money and so is struggling to pay state workers and foreign suppliers.
Talks on an International Monetary Fund (IMF) rescue package have been repeatedly stopped and started because of Tunisia’s political tumult, but they recommenced last month.
An IMF deal is seen as necessary to unlock further bilateral help from Western allies and Gulf states as Tunisia tries to finance its deficit and make debt repayments.
Central bank governor, Marouane Abbasi, has said Tunisia risks a crisis on the scale of those in Lebanon or Venezuela.
“There are teachers who have reached a state where they wake up in the morning thinking about how to survive the day without money. How they are going to feed their children,” said Lotfi Mansouri, 55, a teacher in Tunis.
In January, teachers’ salaries were delayed by more than a week. Diplomats have warned that such delays may grow more common if the government is unable to strike an IMF deal in the spring, something they say seems unlikely.
“If the authorities do not reach an IMF agreement, they will not be able to mobilise the necessary loans and won’t be able to cover public spending except by the very worst solutions like printing money,” said economist Ezzedine Saidane.
That could prompt a sharp fall of the currency, very high inflation and the faster depletion of Tunisia’s remaining financial resources, he said.
Since December, labour union officials at the port of Sfax have said numerous grain shipments have not docked or unloaded because the state cannot pay for them. 

Trade Minister Fadila Rabhi has denied this, saying the delays were caused by labour union strikes and that there is enough grain to last until May.
Other subsidised staples, including sugar and semolina are also in short supply through government agencies, said wholesaler Tarak Tahri, 40. 

“None of them are available. In the past I always found them. But there’s a big problem now,” he said.
Though the state has not raised flour prices, some bakeries have raised the bread price by a quarter because they cannot get enough subsidised flour and have to use grain bought privately.
A national bakers association says there has been a continuous shortage of flour for three months, disrupting activity and pushing hundreds of bakeries towards collapse.
At pharmacies, some centrally bought medicines including for diabetes and heart conditions, are no longer available.
“There are dozens of medicines that we’ve been unable to buy for two months,” said Fathi, a pharmacist in the Omrane Superieur district who did not want to give his family name.
A retired customer, Noureddine Layouni, said he has asked a friend in France to post him his medicine instead.
“My situation is unbearable. Where are we going? Is this the prosperity that Saied promised us?” he said.

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January 15, 2011 Tunisia's Jasmine Revolution @csmonitor

Mr. Ben Ali in a speech on Monday called the riots “terrorist acts” that were the work of “masked gangs” operating for foreign parties.
"We are not afraid, we are not afraid, we are afraid only of God," the crowds chanted on Tuesday in Tunis.
On Thursday, the American secretary of State said the following in Qatar.
“In too many places, in too many ways, the region’s foundations are sinking into the sand,” said Secretary Hillary Clinton. 

“Those who cling to the status quo may be able to hold back the full impact of their countries’ problems for a little while, but not forever, If leaders don’t offer a positive vision and give young people meaningful ways to contribute, others will fill the vacuum.”
“No presidency for life,” Ben Ali, 74, said in Tunis, pledging not to run after 2014.
By Friday evening he was gone in a puff of smoke. French President Sarkozy would not allow him to land on French soil and it was the Saudi Arabians who accepted the Ben Ali entourage.
The day’s seismic events in Tunisia were described by the broadcaster Abeer Madi al-Halabi as serving “a lesson for countries where presidents and kings have rusted on their thrones.”
Change is never incremental, it tips and surges. Looking at Tunisia and Africa, I see so many similarities. 

There is the widest spread between the average age of the rulers and the average age of the ruled. Tunisia is but the first example of the elastic band snapping. 

The demographic skew is such that an average of more than 60 percent Africans are under the age of 26. 

And keep an eye on food prices. Those are sky high and not coming down and not unlike dry kindling, awaiting a spark.

The Jasmine Revolution feels like the story of Gulliver and the Lilliputians. Gulliver was the state. All powerful. You owned the levers to the state, you owned it all. L'état, c'est moi. 

Then the Lilliputians got connected and that connection was the net with which to catch their Gulliver.
John Donne wrote:
"...Therefore, send not to know
For whom the bell tolls,
It tolls for thee..."

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21 OCT 19 :: The New Economy of Anger

Paul Virilio pronounced in his book Speed and Politics, 

“The revolutionary contingent attains its ideal form not in the place of production, but in the street, where for a moment it stops being a cog in the technical machine and itself becomes a motor (machine of attack), in other words, a producer of speed.’’

The Phenomenon is spreading like wildfire in large part because of the tinder dry conditions underfoot. Prolonged stand-offs eviscerate economies, reducing opportunities and accelerate the negative feed- back loop.

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Turning To Africa

Democracy has been shredded.
We are getting closer and closer to the Virilian Tipping Point
“The revolutionary contingent attains its ideal form not in the place of production, but in the street''
Political leadership in most cases completely gerontocratic will use violence to cling onto Power but any Early Warning System would be warning a Tsunami is coming

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2nd thought: I’m not sure lecturing people about how much the economy grew is a good plan when public anger at the rising cost of living is so high @Fromagehomme

This risks coming across as tone deaf + I wonder if it actually plays into the hands of Ruto and the hustler narrative 

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by Aly Khan Satchu (www.rich.co.ke)
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February 2022

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