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Satchu's Rich Wrap-Up
Tuesday 05th of April 2022

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You can print money, but not oil to heat or wheat to eat. @CreditSuisse Zoltan Pozsar
World Of Finance

The current environment is perhaps more complex than the crises of 1997, 2008, or 2020, for the problem is not only nominal (FX pegs, par, or the great overdraft, respectively), but also real: commodities are real resources (food, energy, metals), and resource inequality cannot be addressed by QE...
...you can print money, but not oil to heat or wheat to eat.

If we are right, our framework will be the right framework to think about how to trade interest rates in coming years: inflation will be higher; the level of rates will be higher too; demand for commodity reserves will be higher, which will naturally replace demand for FX reserves (Treasuries and other G7 claims); demand for dollars will be lower too as more trade will be done in other currencies; and structurally then, the negative cross-currency basis (the dollar premium) will naturally fade away and potentially become a positive cross-currency basis.
by extension, every major crisis is also a crisis of money.

Central banks have it easy when it comes to policing the prices of money in the nominal domain, but not when it comes to policing prices in the real domain of commodities, especially when pressures come not from demand, but supply, or rather, a supply shock caused by a collapse in demand for specific commodities, like Russian commodities (the market self-policing for fear of future sanctions).

Central banks are good at curbing demand, not at conjuring supply. 

Energy and commodities are needed for virtually everything, Russia exports everything, and unlike 1973, it’s not just the price of oil, but the price of everything that is surging. 

After laying dormant for decades, the fourth price of money is back with a vengeance – the par, basis, and FX-related prices of money are dormant at the moment, but the price level is about to become very volatile and the market is trying to price the price of future money (OIS), that is, the number of interest rate hikes and the FOMC adjusting the level of terminal rates (r*) in response to the new price level regime brought about by war and sanctions.
Once you cross over from the nominal domain of prices to the real domain, things gets more complicated. We will now expand the four prices framework:

(1) Par
(2) Interest (OIS and bases)
(3) Foreign exchange
(4) Price level = commodities
(5) Foreign cargo (priced in U.S. dollars) 

(6) Shipping
(7) Protection

In the current context, we focus on real assets – commodities. 

In the world of commodities, the demand side dominates the form of payment – U.S. dollars, petrodollars, eurodollars – and if you have dollar balances, there is no foreign exchange involved, but there is “foreign exchange” because you are swapping dollars for foreign cargo, that is, foreign-sourced commodities.

Commodity traders can deliver foreign cargo from port A to port B most of the time, but when not, the state intervenes again: not the monetary arm, but the military arm of the state. 

What central banks are to the protection of par promises, the military branch is to the protection of shipments: foreign cargo needs to sail on sea routes and through choke points like the Strait of Hormuz, and “par” in this context means being able to sail from here to there freely, safely, and without undue delays...
Protection applies more broadly. Not just to shipping, but to mining and oilfield interests, pipelines, et cetera, and protection for assets is not only military, but also legal and diplomatic. 

For colorful anecdotes, please refer to Chapter 21 (“Can’t the CIA and the Navy Solve This Problem”) in Steve Coll’s book, Private Empire: ExxonMobil and American Power, or the first page of the book, The World for Sale, by Javier Blas and Jack Farchy, recounting the descent of Vitol’s private jet with the legendary oil trader and CEO Ian Taylor aboard under the protection of a NATO drone chaperoning its plane into war-torn Libya in order for him to negotiate with rebels to trade crude oil from fields controlled by the rebels for gasoline needed by the rebels to fight the forces of Gaddafi...
...all that trouble and protection to harvest crack spreads. You get the idea...
Par (nominal) and protection (real). Interest (nominal) and shipping (real). Balance sheets (nominal) and vessels (real). Foreign exchange (nominal) and foreign cargo (real). Price level (nominal) and commodity prices (real).
We need to understand the details of commodity trading because the rules of the game are changing, and these changing rules will affect the price level, the level of interest rates (OIS), FX rates, and, in due course, OIS-OIS bases.
This is how:
Foreign cargo used to be priced in U.S. dollars (or in the case of gas, euros), but now the ultimate sources of foreign cargo (foreign nations) are changing the form of payment they demand and prefer: Russia is now invoicing its commodity exports to “non-friendly” nations in ruble, not U.S. dollars or euros,

and Saudi Arabia is open to China paying for oil in renminbi. It used to be as simple as “our currency, your problem”. Now it’s “our commodity, your problem”.
Shipping used to be about minimizing the time it takes to get commodities from producers to consumers. 

Time at sea is a function of sea routes, and different sea routes correspond to different types of vessels. 

In the case of oil, for example, the three main types of vessels are VLCC, Suezmax, and Aframax vessels. 

VLCCs (very large crude carriers) carry 2 million barrels and are used for long-haul voyages. There are about 800 VLCCs in the world. 

Suezmax refers to tankers that are capable of passing through the Suez Canal in a laden condition. Suezmax tankers carry 1 million barrels on long-haul voyages. There are 700 of them

Aframax vessels are “go-fast boats” in comparison, shuttling 600,000 barrels on short-haul trips. There are about 600 Aframax carriers in the world. 

Oil from Russia (Urals) gets loaded on Aframax carriers at the Port of Primorsk or the Port of Ust Luga to then be shipped on short shuttle runs to Hamburg and Rotterdam. But if Europe boycotts Russian oil, Russia will have to ship its oil to Asia through much less-efficient routes. 

If Europe no longer wants Russian oil and Russian oil needs an outlet, and that outlet is a buyer in China (see here), China will need more VLCC carriers to get oil from Primorsk and Ust Luga.

Now the details.

...that as commodity traders need more financing, banks’ own liquidity needs will start to move higher over time too. If not immediately, surely inevitably.
There are implications for funding markets and parallels with funding markets: as the above example shows, oil transports will take four months to finance instead of two weeks, and because oil prices are up, it will take more money to fill up VLCCs – which means more notional borrowings for much longer terms.
Our instinct says that as commodity price inflation and volatility drives the commodity world’s credit demand higher, banks’ LCLoRs will move higher too and banks’ willingness and ability to fulfill the commodity world’s credit needs will diminish. 

In 2019, o/n repo rates popped because banks got to LCLoR and they stopped lending reserves. 

In 2022, term credit to commodity traders may dry up because QT will soon begin in an environment where banks’ LCLoR needs are going up, not down. History never repeats itself, but it rhymes...
Banks currently have lots of excess reserves, so they will be able to lend more to commodity traders to move more expensive and more price-volatile cargo, while spillovers into measures of funding stress (Libor and cross-currency bases) will likely remain mute for now, but not forever. 

Banks’ LCLoRs are moving up as we speak because commodity and trade financing needs are growing too, and that cannot be good for banks’ demand for Treasuries on the eve of QT.
Furthermore, an encumbrance of VLCCs should ring alarm bells to STIR traders, since a lack of VLCCs to move oil around (and other ships for other stuff) is the real-world equivalent of year-end G-SIB constraints in the financial system.
One aim of this dispatch is to hammer home the parallels between the (nominal) world of money and its four prices and the (real) world of commodities, and just as G-SIB constraints around year-end gum up the free flow of money, VLCC constraints during times of war can gum up the free flow of commodities – can commodity prices spike like FX forward points when we run out of ships?
We can’t QE oil (= reserves) or VLCCs (= balance sheet).

But that is what we need...
...and 80 extra VLCCs are just for one product

Russia exports every major commodity imaginable, and the same problems will show up in other products and also with ships that move dry, as opposed to wet cargo. It will be a big mess.
Protection we tend to take for granted, much like we take it for granted that currency, deposits, and money fund shares are interchangeable always at par. 

Tankers pass through sea routes, and sea routes pass through straits, and straits must be open at all times and sea routes must be free of bottlenecks...
...bottlenecks engineered by states or pirates.
Wheat and oil are connected. Egypt used to be a big importer of Ukranian wheat. If much more oil is about to pass through the Suez Canal, Egypt might consider to introduce its own G-SIB surcharge: raising the fee required to pass through the Suez Canal in order to raise more money for the state’s coffers, such that the Egyptian state can buy more wheat in the wheat market to feed its people.
Hungary lost to Russia in 1956 because the U.S. protected the Suez Canal...
Pirates need to eat too, and they will have an extra incentive to engage in acts of piracy when there is a bread shortage (a wheat shortage is a bread shortage).
Protection again.
More expensive ships. More expensive cargo. More expensive transit fees. Much longer transit routes. More risks of piracy. More to pay for insurance. More price-volatile cargo. More margin calls. More need for term bank credit... ...a perfect time to do QT!
Don’t get me wrong – we need to tighten financial conditions, but it is now time to think about how to do QT such that we minimize the destruction of reserves while maximizing the amount of duration delivered into the bond market...
...to undo the mistake of believing that we can craft sanctions that maximize pain for Russia while minimizing financial and price stability risks for the West. 

Did OFAC coordinate with the FOMC and FSOC when crafting sanctions on Russia?

of U.S. dollars for other currencies, and between the bottom two nodes we have the monetary arrangement of the new world order: Bretton Woods III, where banks create eurorenminbi and where eurorenminbi balances are accumulated to buy Chinese Treasuries (inevitably, but not imminently), outside money like gold instead of G7 inside money, and commodity reserves instead of FX reserves.
Commodity reserves will be an essential part of Bretton Woods III, and historically wars are won by those who have more food and energy supplies – food to fuel horses and soldiers back in the day, and food to fuel soldiers and fuel to fuel tanks and planes today. 

According to estimates by the U.S. DoA (the Department of Agriculture), China holds half of the world’s wheat reserves and 70% of its corn. In contrast, the U.S. controls only 6% and 12% of the global wheat and corn reserves. 

This has implications for the price level of food and the conversation about VLCCs and the oil trade for the price level of energy.
The co-existence of the two triangles then has huge implications for the course of inflation in the East versus the course of inflation in the West. This is serious:
Bretton Woods II served up a deflationary impulse (globalization, open trade, just-in-time supply chains, and only one supply chain [Foxconn], not many), and Bretton Woods III will serve up an inflationary impulse (de-globalization, autarky, just-in-case hoarding of commodities and duplication of supply chains, and more military spending to be able to protect whatever seaborne trade is left).
Empires fall and rise. Currencies fall and rise. Wars have winners and losers.
When Wellington beat Napoleon, the trade was to buy gilts. I am no expert on geopolitics, but I am an interest rate strategist and I think the level of inflation and interest rates and the size of the Fed’s balance sheet will depend on the steady state that emerges after this conflict is over. Three is a magic number:
The four prices of money are managed via Basel III and central banks as DoLR. 

The four pillars of commodity trading are shaped by war, hopefully not WWIII. The new world order will bring a new monetary system – Bretton Woods III. Paul Volcker had it easy...
...he “only” had to break the back of inflation but had a unipolar world order and the rise of Eurodollars to support him. The triangle on the left supported him, and the triangle markets fussed about was the impossible trinity (you know, the stuff about monetary policy independence, FX rates, and open capital accounts), but that was about “our currency, your problem”. 

Jay Powell finding his inner Volcker won’t be enough to break inflation today. He’ll need a strong helping hand.....a strongman to take on the (inflationary) mess caused by other strongmen?
The new trinity of Bretton Woods III will be about “our commodity, your problem” – the EU’s inflation problem for sure, if not the inflation problem of the entire G7.

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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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A dead city's new life

The Gede ruins offer insights into East Africa's past and opportunities for its future
The Gede ruins, buried deep in a lush forest along Kenya's coast, present one of Kenya's greatest mysteries. 

The relics are the remains of an ancient Swahili town believed to have been founded in the early 12th century.
Walking through the ruins, about 100 kilometers north of Mombasa, one gets the feeling that they hold secrets to a completely different and lesser-known history of Africa. 

The well-built houses, mosques and palaces that stand today debunk the belief that Africa was a place of "wild "tribes practicing "primitive" lifestyles prior to European colonization.
"The ruins prove that this was home to an advanced civilization before it was abandoned in the 17th century," explains local tour guide Yusuf Yaa.
It is one of the oldest cities established on the Indian Ocean's coast. It once occupied 18 hectares, only roughly 5 of which have been excavated, Yaa says.
The Gede ruins remained unnoticed for centuries until British settlers arrived, and explorer John Kirk rediscovered the city in 1884. 

Excavations didn't begin until 1948, under the supervision of James Kirkman, a pioneer of Swahili archaeology.
The excavations brought to light a sophisticated city built in coral stone, with streets laid out inside two concentric walls. 

The town's internal wall protected the elite, and the external bulwark safeguarded the entire precinct.

The buildings that survive today are numerous coral-brick houses, a palace and a mosque.

"However, it is not only the quality of the ruins that amazes visitors but the advanced nature of the settlement," Yaa says.
"Gede was, in many ways, a very advanced city with streets, running water and flushing toilets."
It's believed the rich residents lived within the safer confines of the inner wall, while the middle class dwelled within the outer wall, and peasants and other less-affluent people lived outside the walls.
The discovery of artifacts like Chinese vases and coins as well as Venetian glass proves the citizens of Gede had strong contact and trade with other parts of the world.
The town also hosts a fortress, palaces and tombs built in Swahili-style architecture. 

The buildings were primarily constructed of plaster, earth and coral.
Residents also dug numerous wells. The 50-meter-deep Well of the Great Mosque near the namesake place of worship is celebrated for its impressive design and was used for ceremonial baths.
The Gede ruins contain many mysteries, but the greatest question puzzling experts is why it was abandoned. 

According to Yaa, some historians have suggested a lack of water, a conflict or a devastating disease may have prompted the exodus in the 17th century.
"One theory on how Gede was deserted states that unknown invaders destroyed the town. However, historians and archaeologists contend that there is no evidence of battle or disruption," Yaa said.
"Others have suggested that Gede's population, which is estimated to have been around 2,500 people, may have been forced out of the town by the receding waters of the Indian Ocean, which reportedly depleted the available wells, making the town uninhabitable."
Today, the monument is under the care of the National Museums of Kenya.
The forest surrounding the ruins remains a sacred site for traditional rituals and sacrifices for the surrounding community.

Visitors can walk along the nature trail network that hosts diverse wildlife, including 40 species of plants, and leads to lesser ruins throughout the forest. 

It also features a gallery, displaying items excavated from the site, including old Chinese coins.
Forest birds like Turacos, Malachite Kingfishers, Paradise flycatchers and African Harrier Hawks can be seen from a treetop platform.
The deciduous forest is also home to wildlife like monkeys, duiker antelopes, golden-rumped elephant shrews and galagos.
Gede's ruins remain significant because they bear testimony to the lives and cultures of 12th-century Africa. 

The site offers insights into the economy, architecture, lifestyles, social structure and other aspects of ancient African civilizations. 

Its history and architecture also represent the culture of the Swahili communities in East Africa.
The Gede ruins have been nominated for consideration as a UNESCO World Heritage Site.
The settlement's history is intricately linked to what was happening in other Swahili communities along Africa's eastern coast. 

Its architecture is similar to the historic cities of Kilwa Kisiwani and Songo Mnara in Tanzania, given their common legacies.
And Gede continues to provide prosperity, especially to the locals who earn incomes through tourism, as this dead city takes on new life.
OTIATO OPALI in Nairobi, Kenya

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Sic transit gloria mundi

Sic transit gloria mundi is a Latin phrase that means "Thus passes the glory of the world."

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Printing gas: Soviet Union/Russia has delivered nat gas to Germany since the 1980s, being paid for in DEM/EUR. Now the EUR is a major currency, This would put euro area in a position to *print gas*. @VictorTheClean3
Law & Politics

Printing gas: Soviet Union/Russia has delivered nat gas to Germany since the 1980s, being paid for in DEM/EUR. Now the EUR is a major currency, and until recently, Russia accumulated EUR reserves. This would put euro area in a position to *print gas*.

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Did you notice that since about 2012, when EUR partly became a gas currency, euro area policitians were tempted to go on spending sprees, ECB began to monetize government debt @VictorTheClean3
Law & Politics

Did you notice that since about 2012, when EUR partly became a gas currency, euro area policitians were tempted to go on spending sprees, ECB began to monetize government debt, later some demanded common euro debt to be issued, at least the EFSF now exists.

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Why remain prudent if the opposite is not immediately punished? Now that RU is withdrawing gas support from the EUR, the policy choices of the ECB are seriously narrowed. @VictorTheClean3
Law & Politics

Why remain prudent if the opposite is not immediately punished? Now that RU is withdrawing gas support from the EUR, the policy choices of the ECB are seriously narrowed. They must absolutely hate the sanctions lady in Brussels.

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Law & Politics


He is an Information warfare Specialist 

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US army war college quarterly 1997. The US officer charged with defining the future of warfare, wrote One of the defining bifurcations of the future will be the conflict between information masters and information victims.
Law & Politics

This information warfare will not be couched in the rationale of geopolitics, the author suggests, but will be “spawned” - like any Hollywood drama - out of raw emotions.
“Hatred, jealousy, and greed - emotions, rather than strategy - will set the terms of [information warfare] struggles”.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.097080
Dollar Index 98.976
Japan Yen 122.4495
Swiss Franc 0.92622 
Pound 1.31301 
Aussie 0.760250 
India Rupee 75.4697 
South Korea Won 1210.710 
Brazil Real 4.5950000 
Egypt Pound 18.280200 
South Africa Rand 14.57370 

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Sri Lanka crisis sends inflation warning worldwide @Reuters @Breakingviews
Emerging Markets

Protesters fed up with crippling shortages of essential food and fuel items are on the streets, prompting multiple members of Prime Minister Mahinda Rajapaksa’s cabinet to offer to resign late on Sunday. 

Social unrest will probably accelerate a restructuring of some $44 billion of international sovereign debt. 

Though Sri Lanka’s problems follow years of mismanagement, its speedy unravelling is a warning to sturdier economies from Europe to Asia suddenly grappling with a spike in the cost of living.
A current account crisis has intensified after the West fired its sanctions bazooka at Russia as punishment for its invasion of Ukraine. 

Rolling blackouts and a state of emergency are frightening away remaining tourists, a crucial source of foreign exchange. 

Food inflation hit an eye-watering 30.2% in March. 

The currency’s 40% depreciation against the U.S. dollar in one month, including a central bank managed devaluation, is blowing out leverage ratios: 

Public debt estimated by the International Monetary Fund at 120% of GDP is perhaps some 40 percentage points more than might be deemed sustainable, guesses Citi.
A worsening crisis mutes the impact of disjointed financial lifelines, including a $1.5 billion currency swap from China in December and rice and diesel shipments from India. 

The IMF notes that policies required to reduce debt to sustainable levels are neither economically nor politically feasible. 

Hence, Sri Lanka’s $1 billion bond maturing in July trades at 67 cents on the U.S. dollar, compared to about 74 cents at the start of February. 

Haircuts will stretch from China to Wall Street, where market borrowings accounted for 47% of Sri Lanka’s foreign government debt as of April last year.
It's a reminder of the political implications of high prices. Prior to Russia’s invasion of Ukraine, few Asian countries had consumer inflation in double digits. 

The standouts were Sri Lanka and Pakistan, whose Prime Minister Imran Khan on Sunday dodged a no-confidence vote and called fresh elections. 

Poorer countries are more vulnerable to surging global food prices because their populations spend more on food than discretionary items. 

But pandemic dislocations to supply chains and trade meant advanced economies overall were facing a jump in prices three times bigger than emerging markets between 2019 to 2022, per IMF estimates in January.
Whether countries rush to deal with surging prices with tax cuts, or ramping up subsidies, Sri Lanka’s speedy unravelling offers a warning of the political risks of complacency.

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Just in case anyone forgot: Sri Lanka is now governed by Gotabaya Rajapaksa, a man so sinister he used to keep a tank of sharks in his garden. Death of the Tiger @newyorker H/T @jamescrabtree
Emerging Markets

The Tamil army—known as the L.T.T.E., or simply the Tigers—was led by Velupillai Prabhakaran, a charismatic, elusive man who had become one of the most successful guerrilla leaders of modern times.

The Tigers’ collapse began in January, 2009, when they lost the town of Kilinochchi, their de-facto capital

Hemmed in by the sea, a lagoon, and a hundred thousand government soldiers, they were all but helpless, as the Army kept up a barrage of fire from gunboats, aircraft, and field artillery.

There were later reports, which the government denied, that as many as forty thousand civilians were killed during the Army’s final offensive, and that their bodies were burned or buried in secret mass graves. 
“Most of them were Black Tigers,” he said, referring to the Tamil suicide squad. “Prabhakaran was among us, too, but none of us saw him.” 

One soldier said, in Sinhala—I understand a little—‘We have orders to shoot everyone.’ We were shouting for them not to shoot.” 

“It is in my mind. When I sleep, automatically it comes out—things I only saw in films in my youth. Bodies without heads. Bodies with the stomach open and the liver coming out.” He added, 

“At the end, we were walking out through fire and past dead people, and the soldiers were laughing at us and saying, ‘We have killed all your leaders. Now you are our slaves.’ You can imagine how I feel about my country.”
On the same day, May 18th, the Army announced that the Tiger leader, Velupillai Prabhakaran, had been killed, along with two hundred and fifty others, during an overnight escape attempt across the Nandikadal Lagoon, which separated the beach from the mainland. 

Images were released of his body lying at the feet of Army troops, a handkerchief over his forehead to conceal a yawning wound. 

The Army claimed that it had cremated his remains. Prabhakaran’s eldest child, Charles Anthony, was killed the day before, along with other fighters who launched a final assault on Army lines. 

Soon after, the Army said it had also recovered the bodies of Prabhakaran’s wife, their daughter, and their youngest child, a boy, all of them dead of gunshot wounds. 

Rajapaksa declared a national holiday. “We have liberated the whole country from L.T.T.E. terrorism,” he said.
“Our intention was to save the Tamil people from the cruel grip of the L.T.T.E. We all must now live as equals in this free country.”

One of his brothers, Gotabaya, is his defense minister; another, Basil, is his chief of staff and minister for economic development; and a third, Chamal, is Speaker of Parliament. 

His twenty-four-year-old son Namal was recently elected to Parliament, and forty-odd additional brothers, sisters, cousins, nephews, nieces, and in-laws hold various other government posts.

The important thing, he said, was that Sri Lanka had ended terrorism, making it the first country in the modern age to have done so. 

In military circles around the world, the “Sri Lanka option” for counter-insurgency was discussed with admiration. 

Its basic tenets were: deny access to the media, the United Nations, and human-rights groups; isolate your opponents, and kill them as quickly as possible; and segregate and terrify the survivors—or, ideally, leave no witnesses at all.

A master of battlefield innovation, Prabhakaran devised a form of execution for collaborators with the enemy: the victim was tied to a lamppost and blown to pieces with Cordex explosive fuse wire.

The Tigers killed one Sri Lankan President by suicide bomb, in 1993, and came close to killing two more; they also assassinated scores of government ministers, parliamentarians, military officers, and other officials. 

In 1991, in the world’s first female suicide bombing, a Black Tiger named Dhanu set off explosives concealed under her clothing as she knelt at the feet of Rajiv Gandhi, the former Indian Prime Minister, during a public ceremony, blowing him and fourteen other people to bits. 
But by the time Mahinda Rajapaksa stood for election in November, 2005, the ceasefire was already unravelling. 

Just two months earlier, the country’s foreign minister, a moderate Tamil, had been assassinated by a suspected Tiger sniper.

Rajapaksa government turned instead to Eastern nations. China, in the last year of the war, supplied a billion dollars’ worth of military aid, including fighter jets, air-surveillance radar, and anti-aircraft batteries; Russia and Pakistan provided artillery shells and small arms; Iran supplied fuel.

Prabhakaran was finally trapped. Because all the people around him have been killed, it is difficult to know how he spent his last moments—whether, as the Army says, he was killed in combat, or whether he was caught and executed.
The Tiger leaders clearly hoped for a deal that would spare their lives. Weeks before the massacre, Prabhakaran’s aides began calling their intermediary Marie Colvin, and on the evening of May 17th one of them relayed surrender terms: 

the Tigers would lay down their arms in return for a guarantee of safety for fifty of their leaders and a thousand of their fighters. 

Colvin said that this surprisingly low number most likely represented all the Tiger fighters left alive on the beach. She heard machine-gun fire behind the aide’s voice, suggesting that the fighting was close by.

Prabhakaran also crucially underestimated Mahinda Rajapaksa. 

“Pre-Rajapaksa governments never went one hundred per cent all out to wipe out the L.T.T.E.,” Wickramaratne explained. 

“They used military force, but always had a political solution in mind. But then came Rajapaksa, and he was prepared, rightly or wrongly, to go whole hog. If you look at the L.T.T.E., it’s a case of them arrogantly refusing opportunities. They thought they could just keep telling the world that they were willing to talk, but not follow through. They thought they were the exception, until Rajapaksa came along and said,
‘I’m not going to let you do it.’ ”

With the Tigers’ defeat at Mullaittivu, all of Sri Lanka’s territory came under government control for the first time in nearly thirty years. 

But many Tamils believed that this was simply the first step toward complete Sinhalese domination. Without the Tigers to defend the land, the government would flood the north and east with Sinhalese soldiers and their families; much as China did in Tibet,
they would weaken the Tamil claim on the region with unrelenting force and by diluting the population. 

Gunaratne showed me some private snapshots of the dead Prabhakaran, including one in which the handkerchief that covered his forehead had been removed, revealing a gaping hole in his forehead. 

It suggested an exit wound, as if he had been shot from behind at close range. Gunaratne had taken Prabhakaran’s dog tags, which he had given to Sarath Fonseka, the Army commander, and his Tiger I.D. card, which he had kept for himself. 

Sri Lanka may be seen as an early skirmish in a new “Great Game” of influence between China and the United States and their proxies. 

“Sri Lanka has read the situation and seen that the West’s influence is diminishing,” Harim Peiris, a Sri Lankan political analyst, said. 

“So this government has made some strange friends: Iran, Pakistan, Myanmar, Russia, and Japan. China is probably our biggest single investor. These are ‘softies’—soft loans without pressure. So who’s putting the pressure? Oh—Sweden and the E.U.!”
Peiris laughed derisively, and said, “There is no serious international pressure.”

The keynote speaker was Gotabaya Rajapaksa, an owlish, watchful man with a mustache, wearing spectacles and a gray suit. 

“Sri Lanka’s victory over terrorism is an unprecedented event that the world can learn from,” he said. 

He spoke of how the Tigers’ international support network had enabled it to raise funds from the Tamil diaspora and to ship weapons into Sri Lanka. 

“At one point, the L.T.T.E. controlled one-third of the Sri Lankan coastline,” he said. “In this way, heavy weaponry and enormous quantities of ammunition were brought to Sri Lanka. And this happened in a post-9/11 world.” 

Rajapaksa was congratulating the American observers; it had been the U.S. that helped locate the Tigers’ ships.

He didn’t drink, he said, and didn’t know what he had in the house. He knew only that he had a bottle of “Fonseka.” Would we like a drink of that? He grinned. On the trolley was a bottle of Fonseca Bin No. 27, a brand of port.

When I asked about the suspicions that the government was attempting to change the demographics of the Tamil lands by swamping them with Sinhalese soldiers, he said, with a laugh, “We should do that, but it’s difficult.”

” After dinner, Gotabaya led us outside. Across his lawn, by the garden’s high security wall, was a huge, illuminated outdoor aquarium.
Inside, several large, unmistakable shapes moved relentlessly back and forth.
“Are those sharks?” I asked him.
“Yes,” he said. “Do you want to see them?”
We crossed the lawn and stood in front of the tank, which was eight feet tall and twenty feet wide. There were four sharks, each about four feet long, swimming among smaller fish.

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Turkey's inflation monster continues to grow with Mar CPI coming at 61% (+5.5% MoM) and PPI 115% (+9.2% MoM). @akcakmak
Emerging Markets

With this, Turkey now well ahead of Argentina, closer to Suriname (62%) and just behind Zimbabwe (73%) among those with world's highest inflation - ranked as number 7.

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Dubai’s main power and water utility is defying a global IPO gloom, with its listing poised to be the largest in Europe, the Middle East and Africa since Saudi Aramco’s in 2019.
Emerging Markets

DEWA has almost tripled the size of the IPO after attracting plenty of demand from institutional and retail investors. The company will raise $6.1 billion at the top end of the price range. 

The stock should start trading on Dubai’s bourse around April 12.

The emirate’s government is aiming to list 10 state-owned firms.
“Dubai is sharing its jewels with the market for the first time,” said Wassim Jomaa, chief investment officer at Capital Investments in Jordan. 

 The private sector added more than 250,000 jobs for non-Saudis in the fourth quarter and 83,000 for Saudis. In the public sector, the government allotted 24,000 additional jobs.  

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Zimbabwe Keeps World’s Highest Interest Rate; Raises It to 80% @markets

Central bank lifts rate to halt currency slide, curb inflation
Local unit has declined 62% against the dollar since October

Zimbabwe’s central bank lifted its key interest rate to a record high, to halt a decline in its currency and rein in surging inflation amid food and fuel price pressures that have been exacerbated by the war in Ukraine.
The monetary policy committee hiked the rate to 80% from 60%, Governor John Mangudya said in a statement. 

That’s the highest level since the southern Africa nation’s MPC set the rate at 70% in September 2019 and adds to a 2,000 basis point increase in October. 

Since the previous hike, the Zimbabwean dollar has lost nearly two-thirds of its value against the greenback and annual inflation quickened to 72.7%, compared with 54% in October. 

The local unit officially trades at Z$142.42 per dollar, and changes hands on the parallel market at Z$260 per dollar, according to Zimpricecheck.com, a website that monitors both exchange rates.
The depreciation is in part due to monetary tightening in developed markets such as the U.S. and the growing use of the greenback to pay for most transactions amid a lack of confidence in the local currency.
The cost of goods from bread, cornmeal, fertilizer and fuel have increased in recent weeks, with importers citing the impact of global price spikes due to the war. 

President Emmerson Mnangagwa last month ordered a review of fuel levies to stave-off the hikes on inflationary pressures.
Mangudya cited the negative impact of the price spikes on domestic costs and the currency as reasons for raising the rate. 

“The committee reiterated the need for the bank to remain focused on inflation reduction and putting in place additional policy measures in response to the resurging inflationary pressures and foreign exchange parallel market activities,” he said
While the Reserve Bank of Zimbabwe’s latest move may help to anchor inflation expectations and stem the decline of the local currency, it’s likely to draw criticism from some politicians and labor unions as the cost of living is already high. 
Inflation averaged 143% in 2021, prompting state and bank workers this year to ask to be paid in U.S. dollars as they attempt to curb the erosion of their earnings.

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How long can Zimbabwe continue down this path? @drmwarsame

Reserve Bank of Zimbabwe raises  int. rate to 80% & Zim$ has lost 62% of its value in last 6 months. Inflation is >70% & Z$ officially trades at Z$142/$ & unofficially at Z$260/$ - a parallel premium of 83%. 

21-JAN-2019 :: @harari_yuval & money

“Money is accordingly a system of mutual trust, and not just any system of mutual trust: money is the most universal and most efficient system of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination. Their worth is not inherent in the chemical structure of the shells and paper, or their colour, or their shape. In other words, money isn’t a material reality – it is a psychological construct. It works by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between high Inflation and revolutionary conditions, Zimbabwe is a classic example
The Mind Game that ZANU-PF played on its citizens has evaporated in a puff of smoke.

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.@FitchRatings has affirmed Kenya's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' with a Negative Outlook
Kenyan Economy

elevated public debt, high net external indebtedness, and GDP per capita and governance indicators that are below the 'B' range median. 

The Negative Outlook reflects uncertainty about planned fiscal consolidation and risks to economic growth around the August 2022 general election. 

Furthermore, the surge in global commodity prices puts upward pressure on inflation and the current account deficit (CAD).

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

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