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Satchu's Rich Wrap-Up
Wednesday 18th of May 2022

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Bear Market Rallies Can Be a Treacherous Lure @opinion @johnauthers
World Of Finance

So, if tempted to try buying the dip, take a look at how the great selloffs of 2000-03 and 2007-09 unraveled. 

They saw peak-to-trough falls in the S&P 500 of 49% and 56% respectively. But there were plenty of excursions on the way. 

After the dot-com bubble, Larry McDonald of The Bear Traps Report LLC points out that the Nasdaq Composite, center of the speculation, saw countertrend rallies of 22%, 24%, 37%, 18%, 22%, 30%, 47%, and 56% in 2000 and 2001. 

Each time it looked like the downtrend was over, and each time it wasn’t.
Anyone timing those rallies correctly could have made a lot of money. 

Meanwhile, the S&P 500 had by my count 12 rallies of at least 6% as it went from top to bottom. 

The market was in one of these retracements for roughly half the time during that period, so there were plenty of buying opportunities. 

The problem was that these rallies also created a sequence of openings to buy into the market at a series of mini-tops. 

Cumulatively buying at the top of each bear market rally and selling at the bottom would have yielded a loss of 85.95% over the full period:

The descent during the global financial crisis was slightly quicker, but it still produced plenty of opportunities to trick you into buying. 

I counted eight significant countertrend rallies, including some very violent ones after panic set in with the fall of Lehman Brothers. 

These were all opportunities to make money for traders, but they also offered a great chance to get suckered in and lose even more money. 

During this drawdown, collectively selling at the bottom and buying at the top of each rally would have lost 80.25%:

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This exercise by Longview Economics Ltd. of London is interesting. It estimated the total U.S. market caps in a range of asset classes as of the end of 2009 and the close of last year (along with the global market caps for gold and cryptocurrency)
World Of Finance

This exercise by Longview Economics Ltd. of London is interesting. It estimated the total U.S. market caps in a range of asset classes as of the end of 2009 and the close of last year (along with the global market caps for gold and cryptocurrency). This gives an idea of where the money is:

There is still more tied up in real estate than anything else. And while cryptocurrencies and special purpose acquisition companies, or SPACs, have plainly hosted the most extreme speculation over the last decade, they aren’t yet big enough for a collapse to have systemic effects.  

Looking at where growth has been over that period, however (excluding crypto and SPACs) we can see that public and private equities have both enjoyed annualized returns of almost 14%. 

That’s a remarkable performance over such a long period and cannot be expected to continue. 

Government bonds’ annualized return of almost 10% also stretches credulity. 

If you’re worried about markets being taken too far, there are plenty of places to look:

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― Thomas Pynchon, Gravity's Rainbow

“I dream that I have found us both again,
With spring so many strangers' lives away,
And we, so free,
Out walking by the sea,
With someone else's paper words to say....

They took us at the gates of green return,
Too lost by then to stop, and ask them why-
Do children meet again?
Does any trace remain,
Along the superhighways of July?”

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But it is a curve each of them feels, unmistakably. It is the parabola Gravity’s Rainbow is a 1973 novel by Thomas Pynchon

“But it is a curve each of them feels, unmistakably. It is 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.’’

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[i just finished reading] The Land of Green Plums (German: Herztier) is a novel by Herta Müller, published in 1994

Perhaps Müller's best-known work, the story portrays four young people living in a totalitarian police state in Communist Romania, ending with their emigration to Germany. 

The narrator is an unidentified young woman belonging to the ethnic German minority. 

Müller said the novel was written "in memory of my Romanian friends who were killed under the Ceauşescu regime"

The novel approaches allegory in many of its details, such as the green plums of the title. 

Mothers warn their children not to eat green, unripe plums, claiming that they are poisonous. 

Yet the novel regularly depicts police officers gorging themselves on the fruit: "The officers' lack of constraint in engulfing the fruit parallels the remorseless persecution of the human race" under Nicolae Ceauşescu.

The green plums also suggest childhood, or regression into childhood: "The narrator watches the Romanian police guards in the streets of the city as they greedily pocket green plums ... 

'They reverted to childhood, stealing plums from village trees.' 

Ms. Muller's vision of a police state manned by plum thieves reads like a kind of fairy tale on the mingled evils of gluttony, stupidity and brutality."

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Sunday, April 10, 2022 Apocalypse Now
Law & Politics

The moment we find ourselves is in is one of extreme stress and complexity. The Geopolitical fault line is most visible in Ukraine and therefore at the European periphery, however, fault lines are emerging all over the global landscape and exhibiting multiple feedback loops, which feedback loops all have viral and exponential characteristics.

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France, Germany & Italy Favor Negotiations To End Ukraine War @zerohedge
Law & Politics

In recent weeks, the leaders of the three largest EU countries by population — France, Germany, and Italy — have all come out in favor of negotiations between Kyiv and Moscow as a way to end the fighting in Ukraine.
Unlike President Biden, French President Emmanuel Macron, German Chancellor Olaf Scholz, and Italian Prime Minister Mario Draghi have all spoken with Russian President Vladimir Putin since Russia invaded Ukraine on February 24.
The three European leaders have all signed off on sending weapons to the Ukrainians but have also been calling for a ceasefire. 

After speaking with Putin by phone on Friday, Scholz wrote on Twitter: "There must be a ceasefire in Ukraine as quickly as possible."
In an address to European Parliament last week, Macron said, "We are not at war with Russia." He said that Europe’s “duty is to stand with Ukraine to achieve a ceasefire, then build peace.”
Draghi met with President Biden last week, and after the meeting, the Italian leader, who previously discouraged talks with Russia, said it was time to start thinking about a peace deal. 

"We agreed that we must continue to support Ukraine and put pressure on Moscow, but also begin to ask how to build peace," Draghi said.

"People … want to think about the possibility of bringing a ceasefire and starting again some credible negotiations. That’s the situation right now. I think that we have to think deeply on how to address this," Draghi added.
After the Biden-Draghi meeting, the White House still appeared to be uninterested in negotiations. 

"We feel the most constructive role is to continue to support the Ukrainians’ hands at the negotiating table and support them militarily," White House Press Secretary Jen Psaki said.
Secretary of Defense Lloyd Austin recently spoke with his Russian counterpart for the first time since Russia invaded, but Secretary of State Antony Blinken, the US’s top diplomat, has yet to speak with Russian Foreign Minister Sergey Lavrov. The two diplomats last spoke on February 15.
Meanwhile, direct Ukraine-Russia talks which had been frequent through the first month-and-a-half of the invasion faltered and then were terminated...

British Prime Minister Boris Johnson shares Washington’s view on negotiations. Johnson recently told Macron in a call that he “urged” Ukraine not to hold talks with Russia and reportedly told Ukrainian President Volodymyr Zelensky on April 9 that even if Kyiv was ready to sign a deal with Moscow, the West was not.
Other hawkish NATO countries have come out against talks with Moscow. 

In early April, Polish Prime Minister Mateusz Morawiecki slammed Macron for speaking with Putin, likening it to “negotiating with Hitler.”

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I spoke with Russian Minister of Defense Sergey Shoygu today for the first time since February 18th. I urged an immediate ceasefire in Ukraine @SecDef
Law & Politics

I spoke with Russian Minister of Defense Sergey Shoygu today for the first time since February 18th. I urged an immediate ceasefire in Ukraine and I emphasized the importance of maintaining lines of communication.

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Death by a thousand cuts: where is the west's Ukraine strategy? @TheCradleMedia
Law & Politics

While we are all familiar with Sun Tzu, the Chinese general, military strategist and philosopher who penned the incomparable Art of War, less known is the Strategikon, the Byzantium equivalent on warfare.
Sixth century Byzantium really needed a manual, threatened as it was from the east, successively by Sassanid Persia, Arabs and Turks, and from the north, by waves of steppe invaders, Huns, Avars, Bulgars, semi-nomadic Turkic Pechenegs and Magyars.
Byzantium could not prevail just by following the classic pattern of Roman Empire raw power – they simply didn’t have the means for it.
So military force needed to be subordinate to diplomacy, a less costly means of avoiding or resolving conflict. 

And here we can make a fascinating connection with today’s Russia, led by President Vladimir Putin and his diplomacy chief Sergei Lavrov.
But when military means became necessary for Byzantium – as in Russia’s Operation Z – it was preferable to use weaponry to contain or punish adversaries, instead of attacking with full force.
Strategic primacy, for Byzantium, more than diplomatic or military, was a psychological affair. 

The word Strategia itself is derived from the Greek strategos – which does not mean “General” in military terms, as the west believes, but historically corresponds to a managerial politico-military function.
It all starts with si vis pacem para bellum: “If you want peace prepare for war.” Confrontation must develop simultaneously on multiple levels: grand strategy, military strategy, operative, tactical.
But brilliant tactics, excellent operative intel and even massive victories in a larger war theater cannot compensate for a lethal mistake in terms of grand strategy. Just look at the Nazis in WWII.
Those who built up an empire such as the Romans, or maintained one for centuries like the Byzantines, never succeeded without following this logic.
Those clueless Pentagon and CIA ‘experts’
On Operation Z, the Russians revel in total strategic ambiguity, which has the collective west completely discombobulated. 

The Pentagon does not have the necessary intellectual firepower to out-smart the Russian General Staff. 

Only a few outliers understand that this is not a war – since the Ukraine Armed Forces have been irretrievably routed – but actually what Russian military and naval expert Andrei Martyanov calls a “combined arms police operation,” a work-in-progress on demilitarization and denazification.
The US Central Intelligence Agency (CIA) is even more abysmal in terms of getting everything wrong, as recently demonstrated by its chief Avril Haines during her questioning on Capitol Hill. 

History shows that the CIA strategically blew it all the way from Vietnam to Afghanistan and Iraq. Ukraine is no different.
Ukraine was never about a military win. What is being accomplished is the slow, painful destruction of the European Union (EU) economy, coupled with extraordinary weapons profits for the western military-industrial complex and creeping security rule by those nations’ political elites.
The latter, in turn, have been totally baffled by Russia’s C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) capabilities, coupled with the stunning inefficiency of their own constellation of Javelins, NLAWs, Stingers and Turkish Bayraktar drones.
This ignorance reaches way beyond tactics and the operational and strategic realm. 

As Martyanov delightfully points out, they “wouldn’t know what hit them on the modern battlefield with near-peer, forget about peer.”
The caliber of ‘strategic’ advice from the NATO realm was self-evident in the Serpent Island fiasco – a direct order issued by British ‘consultants’ to Ukraine’s President Volodymyr Zelensky. 

The Commander-in-Chief of the Armed Forces of Ukraine, Valery Zaluzhny, thought the whole thing was suicidal. He was proven right.
All the Russians had to do was launch a few choice anti-ship and surface Onyx missiles from bastions stationed in Crimea on airports south of Odessa. 

In no time, Serpent Island was back under Russian control – even as high-ranking British and American marine officers ‘disappeared’ during the Ukrainian landing on the island. 

They were the ‘strategic’ NATO actors on the spot, doling out the lousy advice.
Extra evidence that the Ukraine debacle is predominantly about money laundering – not competent military strategy – is Capitol Hill approving a hefty extra $40 billion in ‘aid’ to Kiev. 

It’s just another western military-industrial complex bonanza, duly noted by Deputy Chairman of the Security Council of Russia Dmitry Medvedev.
Russian forces, meanwhile, have brought diplomacy to the battlefield, handing over 10 tons of humanitarian assistance to the people of liberated Kherson – with the deputy head of the military-civil administration of the region, Kirill Stremousov, announcing that Kherson wants to become part of the Russian Federation.
In parallel, Georgy Muradov, deputy prime minister of the government of Crimea, has “no doubts that the liberated territories of the south of the former Ukraine will become another region of Russia. This, as we assess from our communication with the inhabitants of the region, is the will of the people themselves, most of whom lived for eight years under conditions of repression and bullying by the Ukronazis.”
Denis Pushilin, the head of the Donetsk People’s Republic, is adamant that the DPR is on the verge of liberating “its territories within constitutional borders,” and then a referendum on joining Russia will take place. When it comes to the Luhansk People’s Republic, the integration process may even come earlier: the only area left to be liberated is the urban region of Lysychansk-Severodonetsk.
The ‘Stalingrad of Donbass’
As much as there’s an energetic debate among the best Russian analysts about the pace of Operation Z, Russian military planning proceeds methodically, as if taking all the time it needs to solidify facts on the ground.
Arguably the best example is the fate of Azov neo-Nazis at Azovstal in Mariupol – the best-equipped unit of the Ukrainians, hands down. 

In the end, they were totally outmatched by a numerically inferior Russian/Chechen Spetsnaz contingent, and in record time for such a big city.
Another example is the advance on Izyum, in the Kharkov region – a key bridgehead in the frontline. 

The Russian Ministry of Defense follows the pattern of grinding the enemy while slowly advancing; if they face serious resistance, they stop and smash the Ukrainian defensive lines with non-stop missile and artillery strikes.
Popasnaya in Luhansk, dubbed by many Russian analysts as “Mariupol on steroids”, or “the Stalingrad of Donbass,” is now under total control of the Luhansk People’s Republic, after they managed to breach a de facto fortress with linked underground trenches between most civilian houses. 

Popasnaya is extremely important strategically, as its capture breaks the first, most powerful line of defense of the Ukrainians in Donbass.
That will probably lead to the next stage, with an offensive on Bakhmut along the H-32 highway. 

The frontline will be aligned, north to south. Bakhmut will be the key to taking control of the M-03 highway, the main route to Slavyansk from the south.
This is just an illustration of the Russian General Staff applying its trademark, methodical, painstaking strategy, where the main imperative could be defined as a personnel-preserving forward drive. 

With the added benefit of committing just a fraction of overall Russian firepower.
Russian strategy on the battlefield stands in stark contrast with the EU’s obstinacy in being reduced to the status of an American dog’s lunch, with Brussels leading entire national economies to varying degrees of certified collapse and chaos.
Once again it was up to Russian Foreign Minister Sergei Lavrov – a diplomatic master – to encapsulate it.
Question: “What do you think of Josep Borrell’s (Lavrov’s EU counterpart) initiative to give Ukraine frozen Russian assets as ‘reparations?’ Can we say that the masks have come off and the west is moving on to open robbery?”
Lavrov: “You could say it is theft, which they are not trying to hide … This is becoming a habit for the west … We may soon see the post of the EU chief diplomat abolished because the EU has virtually no foreign policy of its own and acts entirely in solidarity with the approaches imposed by the United States.”
The EU cannot even come up with a strategy to defend its own economic battlefield – just watching as its energy supply is de facto, incrementally turned off by the US. 

Here we are at the realm where the US tactically excels: economic/financial blackmail. We can’t call these ‘strategic’ moves because they almost always backfire against US hegemonic interests.
Compare it with Russia reaching its biggest surplus in history, with the rise and rise of commodity prices and the upcoming role of the stronger and stronger ruble as a resource-based currency also backed by gold.
Moscow is spending way less than the NATO contingent in the Ukrainian theater. NATO has already wasted $50 billion – and counting – while the Russians spent $4 billion, give or take, and already conquered Mariupol, Berdyansk, Kherson and Melitopol, created a land corridor to Crimea (and secured its water supply), controls the Sea of Azov and its major port city, and liberated strategically vital Volnovakha and Popasnaya in Donbass, as well as Izyum near Kharkov.
That doesn’t even include Russia hurling the entire, collective west into a level of recession not seen since the 1970s.
The Russian strategic victory, as it stands, is military, economic, and may even coalesce geopolitically. 

Centuries after the Byzantine Strategikon was penned, the Global South would be very much interested in getting acquainted with the 21st century Russian version of the Art of War.

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Sunday, April 10 ‘You can print money, but not oil to heat or wheat to eat’ wrote @CreditSuisse’s Zoltan Pozsar.
Law & Politics

The Sanction warfare program is a reiteration of the @BarackObama 2014 version but then Oil was dropped to $20.00 and today its trading at $97.56 a barrel. This is the first flaw in the sanction warfare effort.
Russia essentially gave the $ and the Euro the very same exorbitant privilege that King Abdul Aziz Ibn Saud of Saudi Arabia gave President Franklin D Roosevelt aboard the USS Quincy in Great Bitter Lake in February 14, 1945 when the petro dollar economy was symbolically born.
By insisting payments are made in Russian Rubles for Russian commodities Vladimir Putin has withdrawn that exorbitant privilege.
The Russian Ruble rally is real and has much further to go.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.052965
Dollar Index 103.41
Japan Yen 129.0805
Swiss Franc 0.99438
Pound 1.247500
Aussie 0.700955
India Rupee 77.50550
South Korea Won 1270.275 
Brazil Real 4.9393000
Egypt Pound 18.278900 
South Africa Rand 15.956940

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In one year, SoftBank went from reporting the highest profits in the company's history to its biggest losses ever. @Birdyword
World Of Finance

It is now the sixth-most indebted non-financial public company in the world, facing what looks like an extended dry spell.

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After a bruising year, @SoftBank_Group braces for more pain @TheEconomist
World Of Finance

A year ago, at the height of the pandemic boom in all things digital, Son Masayoshi embodied in the flesh the futuristic promise of global tech. 

The flamboyant founder of SoftBank Group, a telecoms-and-software firm turned tech-investment powerhouse, reported the highest ever annual profit for a Japanese company, driven by soaring valuations of the public and private technology darlings in its vast portfolio.
Twelve months later Mr Son and his company are once again the face of tech, which like Masa, as he is universally known, is dealing with rising interest rates, deteriorating balance-sheets, investor disillusionment and, for good measure, China’s crackdown on its digital champions and reinvigorated trustbusters in the West. 

What happens next to the Masa-verse is therefore of interest not just to SoftBank’s ailing shareholders, who have collectively lost tens of billions of dollars in stockmarket value since its share price peaked in February 2021, but also to anyone interested in the fate of the technology industry more broadly.

On May 12th SoftBank reported a net loss of ¥1.7trn ($15bn) for the latest financial year ending in March, caused primarily by a ¥3.7trn write-down in the net value of its flagship tech investments (see chart 1). 

Its public holdings, most notably in Alibaba, a Chinese e-commerce giant pummelled by the Communist Party’s crackdown on the technology industry, are losing their shine. 

Northstar, an ill-fated trading unit which funnelled surplus funds from the parent company mainly into American tech stocks, has been all but wound down after losing ¥670bn last year.

Meanwhile, SoftBank’s copious private investments, in loss-making startups with unproven business models, are being rapidly repriced as higher interest rates make companies whose profits lie mostly far in the future look less attractive to investors. 

Competition authorities have halted the $66bn sale of Arm, a British chipmaker, to Nvidia, a bigger American one. 

All this is making SoftBank’s net debt of $140bn, the sixth-largest pile for any listed non-financial firm in the world, harder to manage. 

And there may be more pain to come, for the tech sell-off has accelerated since March, when SoftBank closed the books on its financial year.
SoftBank’s first big challenge has to do with its assets—and in particular its ability to monetise them. 

The pipeline of initial public offerings (ipos) from its $100bn Vision Fund and its smaller sister, Vision Fund 2, is drying up. 

That makes it harder for Mr Son to realise gains on its early investments in a string of sexy startups. 

Oyo, an Indian hotel startup backed by SoftBank, unveiled plans in October to raise $1.1bn from a listing, but more recent reports suggest that the company could cut the fundraising target or shelve the plan altogether. 

Other holdings, including ByteDance (TikTok’s Chinese parent company), Rappi (a Colombian delivery giant) and Klarna (a Swedish buy-now-pay-later firm) were all rumoured to be plausible ipo candidates for 2022. 

None has announced that it intends to list and that may not change while market conditions remain rough—which could be some time.
Arm, which is now expected to launch an ipo, could offer a reprieve. Mr Son has said he would like to list the chipmaker around the middle of next year. 

But even relative optimists doubt a flotation can fetch anywhere close to the sum Nvidia was offering before the regulators stepped in. 

At the bullish end, Pierre Ferragu of New Street Research, an investment firm, suggests Arm may be valued at or above $45bn in the public market—$13bn more than SoftBank paid for it in 2016 but well shy of Nvidia’s bid. 

More bearishly, Mio Kato of Lightstream Research, a firm of analysts in Tokyo, says he struggles to imagine that the chip firm is worth more than $8bn.
Mr Son’s problems do not end with the asset side of his company’s balance-sheet. Its debt, too, looks problematic. 

In the near term, it appears manageable enough. SoftBank’s bond redemptions in the coming 12 months are modest: $3.3bn-worth will mature in the current financial year, and another $6.8bn between April 2023 and March 2024. 

SoftBank’s $21.3bn in cash would be more than adequate to cover those repayments. 

Mr Son has pointed out that despite the heavy investment losses his company’s net debt as a share of the equity value of its holdings has remained largely unchanged, at around 20%.

The price of credit default swaps against SoftBank’s debt, which pay out if the company defaults, tell a different story. 

Across most maturities from one year to ten years, the swaps have only been more expensive once in the past decade—during the market turmoil of March 2020, as countries went into the first pandemic lockdowns (see chart 2). 

The group possesses other large liabilities: its Vision Fund, a $100bn vehicle for speculative tech investments, has no short- or medium-term debt of its own but the holders of $18.5bn in preferred equity tied to it are entitled to a 7% coupon, regardless of the performance of the underlying holdings.

Moreover, SoftBank does not include margin loans against holdings such as Alibaba in its preferred loan-to-value measure. The details of such loans are not public. 

On top of that, as of mid-March a third of Mr Son’s stake in SoftBank, worth about $18bn, was pledged to a range of banks as collateral for his own borrowing. 

The agreements that govern such deals are not public, so it is unclear when or whether margin calls that force sales of those shares could be triggered. 

Such a sale would put further downward pressure on SoftBank’s share price. All this helps explain why SoftBank shares have consistently traded at a large discount to the net value of its assets (see chart 3).
Mr Son’s admirers, a vocal if dwindling bunch, point out that SoftBank still has plenty going in its favour. 

Its Japanese telecoms business, SoftBank Corp, remains profitable (and helped offset the investment losses). 

And it has survived previous bear markets, including the dot-com bust at the turn of the century, intact—not least thanks to Mr Son’s early bet on Alibaba. 

It is not inconceivable that one of SoftBank’s current wagers proves equally successful.
As for future gambles, Mr Son struck an uncharacteristically sober note on the latest earnings call. 

Private companies adjust their valuations one to two years behind the public market, he told investors and analyst, so they are still commanding high multiples.

 “The only cure is time,” he mused philosophically. Perhaps. Except that in other ways, time is not working in SoftBank’s favour. ■

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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. #Bitcoin
World Currencies

"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]

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27 NOV 17 :: Bitcoin "Wow! What a Ride!". #Bitcoin
World Currencies

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.

There are many cryptocurrency schemes which are sold on the same grounds as the greatest South Sea Bubble prospectus: 

“For carrying on an undertaking of great advantage, but nobody to know what it is.”
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!”

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Heard it all before 22 years ago with B2B and fiber optics stocks: #Bitcoin @UrbanKaoboy
World Currencies

-Artificially constrained floats
-"S-Curve Adoption" 
-"New Paradigm"
-"Metcalfe's Law

Maybe this time's different, but I doubt it.

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The way I see it, one of the following is likely to happen in this new era of the END OF THE LIQUIDITY LOTTERY: #Bitcoin @UrbanKaoboy
World Currencies

1. Demand shifts DOWN (D2 -> D1) against inelastic supply (S1)
2. Supply becomes more elastic (S1->S2)
3. A combo of 1 & 2

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Not only is the Liquidity Lottery ENDING it is about to REVERSE #Bitcoin @UrbanKaoboy
World Currencies

the cadence of Fed balance sheet expansion. Note that the biggest surge came between 3/20-6/20 where it surged from ~$4.5T to ~$7.2T. The next 2 years saw an additional $2T expansion up until NOW.

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Sunday, April 10, 2022 Apocalypse Now The consequences for global stability are now unfathomable.

Food prices are soaring at a record pace, rising another 13% in March. @lisaabramowicz1
“But it is a curve each of them feels, unmistakably. It is 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.’’

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At the moment, we only have petrol stocks for a single day. The next couple of months will be the most difficult ones of our lives,” Ranil Wickremesinghe said @AJEnglish
Emerging Markets
Foreign reserves had neared zero, from $7.5bn in November 2019, with the country requiring $75m in the next few days to keep the economy running, he added. Essential medicines had run out.

Wickremesinghe said he planned to ask for foreign assistance, privatise SriLankan Airlines and seek parliamentary approval to increase Treasury bill issuance to 4 trillion rupees ($11.27bn) from 3 trillion.



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The Phenomenon is spreading like wildfire in large part because of the tinder dry conditions underfoot.
Emerging Markets

Prolonged stand-offs eviscerate economies, reducing opportunities and accelerate the negative feed- back loop.

Antonio Gramsci wrote, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum, a great variety of morbid symptoms appear. now is the time of monsters.”

Ryszard Kapucinski also said: “If the crowd disperses, goes home, does not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.

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Paul Virilio Speed and Politics
Emerging Markets

“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.’’

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Considerations for a Prospective New Chinese Naval Base in Africa @AfricaACSS @PNantulya

Speculation is rife that the Chinese People’s Liberation Army (PLA) will open its second naval base in Africa on the Atlantic coast. 

The base would be part of China’s drive to become a global military force capable of projecting power far from its shores.  Commonly rumored locations include Equatorial Guinea, Angola, and Namibia.
Executives of overseas Chinese state-owned enterprises (SOEs) have pushed for a more expeditionary PLA in Africa. 

Africa alone hosts over 10,000 Chinese firms, one million Chinese immigrants, and approximately 260,000 Chinese workers, mostly working on the One Belt One Road (known internationally as the Belt and Road Initiative)—China’s strategy to link global economic corridors to China.

China’s future military basing scenarios raise numerous questions. 

Africa has strong reservations against foreign basing, as evidenced by a 2016 African Union (AU) Peace and Security Council decision warning countries to be “circumspect” about permitting more bases. 

An increased PLA presence could prompt others to follow suit and accelerate transforming Africa into a turf for external competition. 

India’s efforts to construct security facilities on Agaléga Island in Mauritius, for example, are believed to be in response to China’s growing presence in the Indian Ocean.
Africa’s experience with foreign bases has had its share of controversy. 

In March 2021, Kenya witnessed a public uproar over the accidental burning of 12,000 acres of land—including a wildlife conservancy—during a military drill conducted by the British Army Training Unit-Kenya (BATUK). 

The Kenyan press, civil society, and courts have closely scrutinized BATUK’s activities—for a complex that spans hundreds of thousands of hectares—the only overseas location where British battle groups can train on such a scale.
Yet such oversight is the exception. For the most part, African citizens are unaware of the presence of foreign troops in their countries or of bilateral defense agreements. 

The PLA base in Djibouti is one example. China had denied it was in talks for a military base until construction started in 2016—the same year the AU warned about foreign bases. 

Initially presented to the public as part of a series of civilian complexes, the Chinese-built Doraleh Multipurpose Port was subsequently expanded to include a naval base. 

China now has 2,000 troops permanently stationed at the Djibouti base and has completed a pier that can accommodate an aircraft carrier, allowing China to project power beyond the Western Pacific.
Hence, many Africans feel China was not forthright about its true intentions. 

Beyond the base’s stated purpose of supporting Chinese antipiracy and peacekeeping deployments, very little is known about it and the PLA’s in-country activities. 

And unlike in the case of BATUK, citizens are unaware of the security agreement between China and Djibouti as Djiboutian courts and media are not as independent.
Should China establish a base on the Atlantic, it would underscore China’s continued push for greater power projection. It would also redefine China’s global posture and Africa’s role in it.
China’s Investments in Expeditionary Capabilities
Chinese military analysts have debated its foreign basing scenarios since the early 1990s, and all Chinese defense white papers since then have called for improving overseas logistical facilities to accomplish “diversified military tasks,” including in 2019 with regard to “far seas” forces.
The goals the PLA have emphasized in these discussions on modernizing China’s naval capacity include:
Imposing unacceptable costs on the ability of China’s adversaries (principally the United States and its allies) to access and maneuver in the western Pacific.
Establishing China as a leader in contributing to global security commensurate with its perceived status as a Great Power, particularly with regard to antipiracy, peace missions, and disaster relief.
Advancing China’s escalating global interests, particularly those associated with the One Belt One Road Initiative, including infrastructure, assets, personnel, and control over sea lanes.
Closing gaps in matching Chinese capabilities with those of more advanced militaries.
In pursuit of these goals, the PLA shifted from “near coast active defense” to “far seas maneuvering operations” (yuanhai jidong zuozhan nengli, 远海机动作战能力). 

Several terms of art were coined to benchmark China’s constraints in achieving a more expeditionary force. 

The “two inabilities” (liǎnggè nénglì bùgòu, 两个能力不够) says the PLA’s ability to win modern wars is insufficient and its commanders are not up to the task. 

The “two big gaps” (liǎnggè chājù hěn dà, 两个差距很大) speaks of huge gaps in power projection between the PLA and the U.S. military in particular.
Such self-assessments are heavily socialized across the chain of command. 

In 2013, Colonel Yue Gang, then working in the Central Military Commission’s Joint Staff Department, wrote that the PLA’s transport capacity could not sustain large scale overseas operations and China’s forward military presence was weak compared to the U.S. Navy, which is “deployed worldwide and … capable of engaging in peacekeeping missions or wars in coastal regions.”
In 2015, Zhou Bo, from the Academy of Military Science, China’s most respected military research institute, said the PLA “hasn’t all of the capabilities required to safeguard” overseas interests. 

Chinese President Xi Jinping has instructed the force to resolve such perceived deficiencies by 2035, when China’s current phase of military modernization is slated to be completed.

In line with its modernization directives, the PLA has invested in more sophisticated capabilities with greater strategic reach and lethality, including newer classes of nuclear-powered submarines armed with cruise and ballistic missiles. 

China has also built new destroyers, frigates, fighter aircraft, amphibious ships, navy helicopters, and unmanned aerial vehicles (UAVs) for longer-range strike and reconnaissance.
Many new weapons and platforms were tested and employed in African waters during antipiracy missions in the Gulf of Aden that started in 2008—China’s first deployments outside the western Pacific. 

These include the Jiangkai II guided missile frigate, Yuan-class nuclear submarine, Luyang–class destroyers, Z-9C anti-submarine warfare helicopters, Yuchao–class amphibious dock, and improved Fuchi-class replenishment ships.
China’s aircraft carrier program—which began in the mid-1990s— is a further signal of its intention to build power projection capabilities. 

Its first carrier, the Liaoning, entered service in 2012. It is a retrofitted Ukrainian (Soviet) carrier that China used to familiarize its sailors with carrier operations. 

In 2019, the first Chinese-built aircraft carrier, Shandong, entered service. A second one will be commissioned in 2022. 

A Chinese carrier strike group has not yet sailed to Africa, however, commercial satellite imagery suggests that the recent upgrade of piers in Djibouti are large enough to hold aircraft carriers in the future.

Africa also provided the venue for the PLA to gain experience in its first “out of area” operations. 

Since 2008, China deployed 40 naval task forces to Africa and escorted 7,000 Chinese and foreign ships. 

In 2011 and 2015, it evacuated stranded Chinese in Libya (35,000) and Yemen (571), respectively.
These operations featured some of China’s newest guided missile frigates: the Xuzhou in Libya, and the Linyi and Weifang in Yemen.
Simply put, Africa is a testing ground for China’s “far seas” operations

Alongside them, the PLA conducts port calls, joint military drills, and offshore military education—improving its interoperability, knowledge of foreign forces, surveillance, and intelligence at a relatively low cost. 

The PLA’s accumulated experience in African waters arguably positions it for more complex future tasks.
Where Could China Go Next?
Key to China’s Africa basing considerations is its system of partnership prioritization. 

This categorization is based on a series of factors such as geostrategic significance, historical ties, One Belt One Road investments, as well as maritime importance. 

Many of these countries are also leading peacekeeping troop contributors—a plus for China given its tendency to tie its military activities to multilateral missions. 

This enables it to deflect concerns that its engagements are slowly but steadily becoming more militarized.

China’s top strategic partners also host major One Belt One Road infrastructure projects—including Chinese-built or financed ports—and regularly host PLA Navy port calls and participate in joint drills. 

Mozambique, Namibia, the Seychelles, and Tanzania receive more than 90 percent of their arms transfers from China. And Kenya and Ghana receive more than half. 

Some are also among the Chinese Communist Party’s closest partners in the Global South. 

A 2014 article by the Chinese Naval Research Institute discussed seven ports of interest globally: Djibouti, Seychelles, and Tanzania in Africa—along with Myanmar, Pakistan, Cambodia, and Sri Lanka. Kenya—along with Indonesia, Myanmar, Pakistan, Sri Lanka, Singapore, and the United Arab Emirates (UAE)— appears in a 2018 report of the PLA Army Transportation University.

Namibia, Kenya, Seychelles, and Tanzania have featured in intense local media speculation as potential basing sites, all of which China has denied. 

Concerning the Seychelles, China said its presence would “not rise to the level of a ‘naval base’” and would mostly be used for antipiracy missions—the same argument it made to deflect rumors it was planning to open a base in Djibouti.
If China moves forward with any of these locations, it will likely expand the existing civilian port infrastructure and build dual-use facilities as evidenced by the precedent it established in Djibouti. 

The dual-use basing model entails mixing access to commercial ports and a selective number of military facilities to downplay the military significance of China’s strategic port investments

Needless to say, the PLA has a wide range of options to choose from—46 African ports have either been built, financed, or are currently operated by Chinese state-owned shippers.

As far as regional preferences go, the latest version of China’s capstone doctrinal text, Science of Military Strategy (2020 edition), talks about a “two oceans” approach centered on the Pacific and Indian oceans. 

According to it, the PLA needs to “create conditions to establish ourselves” in both seas by constructing “maritime strategic support points” (meaning bases) and a “powerful two oceans layout” that can face any crisis. 

This publication is a useful guide as it is prepared by the Academy of Military Science which reports directly to the Central Military Commission, chaired by Xi Jinping.
China’s basing strategy in the Indian Ocean partly seeks to solve the “Malacca Dilemma:” 

China’s Middle Eastern and African imports (including 80 percent of its oil) traverse Indian Ocean sea lanes patrolled by potential adversaries—principally the U.S. Navy. 

According to the Science of Military Strategy, 

“They [Malacca Straits] are not owned or controlled by us. Once crisis starts, our sea transport has the possibility to be cut off.”
Several mitigation strategies focused on this dilemma have been published in Chinese military journals over the years. 

A prominent one by analysts from the PLA Military Transport Academy advocates for “enhanced port construction in the Indian Ocean under the Belt and Road Initiative,” particularly Pakistan, Sri Lanka, and Tanzania. 

These port clusters—along with Djibouti and Kenya—would provide new “route options into China to reduce transport pressure on Malacca” and avoid waterways that could be closed by adversaries.
What Do African Stakeholders Say?
Africans are sharply divided over foreign bases on their soil. Some African governments tend to view them as opportunities to prop themselves up and gain additional income. 

Citizens tend to be more circumspect judging from how they have reacted when they learned of moves to establish new bases. 

For example, in June 2018, the Seychelles Parliament rejected a bilateral agreement allowing India to build naval facilities after heavy public disapproval led to protests. 

Similar misgivings were raised in Kenya in 2020 when media agencies reported that China was planning to build a new base. 

While the claims remain contested, the tone of reporting suggests Kenyans will not be enthusiastic about new military facilities. 

This closely tracks with sentiments in other African countries given the mixed views associated with foreign military interventions and the aversion held by many about Africa becoming a pawn in geostrategic rivalries.
“Africans are sharply divided over foreign bases on their soil. Some African governments tend to view them as opportunities … citizens tend to be more circumspect.”
Most Africans view China’s influence as positive, in part due to major investments in infrastructure, agriculture, education, and professional training. 

This could change if China starts to be viewed as a military power focused on flexing military muscle as opposed to a development partner.
China’s future basing options are likely to encounter another challenge. While Djibouti offers a template that can be replicated in the Indian, Pacific, and Atlantic oceans, its unique status as a host to several other militaries is not readily applicable to other countries. 

This means China’s next base will not have similar diplomatic cover and will therefore stand out and stoke more controversy than is currently the case.
The level of press freedom will also shape how much scrutiny a future Chinese base will face from its African hosts.

 China’s future basing scenarios are unfolding when the demand for democracy in Africa is as strong as ever (79 percent reject one party rule according to Afrobarometer) and pressure to hold governments and their foreign partners to higher and stricter standards is growing. 

A business-as-usual approach where bases are stationed without public input and foreign troops are above accountability is becoming increasingly untenable.

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August 19 2013 I have no doubt that the Indian Ocean is set to regain its glory days

I have no doubt that the Indian Ocean is set to regain its glory days. China’s dependence on imported crude oil is increasing and the US’ interestingly is decreasing. 

I am also certain the Eastern Seaboard of Africa from Mozambique through Somalia is the last Great Energy Prize in the c21st. 

Therefore, the control of the Indian Ocean becomes kind of decisive and with control China can be shut down quite quickly. 

A Sine qua non of President Barack Obama’s pivot to Asia is US/NATO Power Projection over the Indian Ocean.

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6 AUG 18 :: ::The Indian Ocean Economy and a Port Race.

Professor Felipe Fernández-Armesto explains ‘’The precocity of the Indian Ocean as a zone of long-range navigation and cultural exchange is one of the glaring facts of history’’, made possible by the ‘’reversible escalator’’ of the monsoons. 

The Indian Ocean Economy preceded the Atlantic Ocean Economy, where the Europeans only learnt how to ‘’crack the code’’ of the Atlantic winds [and a new ‘Western’ culture arose on both sides of the ocean] long after the Indian Ocean 

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Baffling Inflation Tests Ghana’s Policy Making, Governor Says @markets

Surging prices are posing a challenge to Ghanaian policy makers who prefer to have a key lending rate above headline inflation.
The Bank of Ghana already increased the benchmark rate to a three-year high of 17% at its last meeting, pushing the gauge above headline inflation at the time. 

The most recent data put inflation at 23.6%, leaving policy makers in a tight spot as they prepare to announce their latest stance on May 23.

“It’s an issue, which in a sense is baffling for all of us,” Governor Ernest Addison said in a virtual interview Monday before the Bloomberg Invest: Focus on Africa conference. 

“I do not want to preempt what the committee will decide, but I think it’s a very complicated situation.” 

Annual inflation in April accelerated to the fastest pace since January 2004, up from 19.4% in March, according to the Ghana Statistical Service, and has been above the central bank’s preferred range of 6% to 10% for eight consecutive months. 

Surging food and fuel prices are adding to inflation pressures across the continent. In Ghana, the headline figure hit an 18-year-high despite measures aimed at taming prices.
The government has cut expenditure, while the central bank raised rates by 250 basis points in March -- the biggest hike since at least 2002 -- and increased banks’ primary reserve ratio to draw liquidity from the economy, Addison said. 
“A lot of the shocks that we are seeing now tend to be supply-side in nature,” he said. “We expect that inflation will be tapering off for the rest of the year.”
Ghana’s economy grew 5.4% last year, a strong comeback from a 37-year low of 0.5% in 2020, when the Covid-19 pandemic struck. 

But this year growth could be hobbled by Finance Minister Ken Ofori-Atta’s proposed 30% cut to government spending. 
“I believe that if we were to choose between growth and inflation, the policy priority should be on managing the pace at which prices are rising,” said Addison. Early 2022 data doesn’t suggest growth is slowing down, he said.

The government has sought to stem a sell-off in Ghana’s dollar bonds to assure wary investors it will meet fiscal targets, rein in debt and regain market access it lost this year. 

Portfolio investors also exited cedi bonds, contributing to the currency’s 19% loss against the dollar this year and fueling inflation.

“We are trying to manage liquidity very tightly to ensure that we don’t have excess liquidity fueling further inflation and an exchange-rate depreciation,” Addison said. 

“If markets get tighter and we see capital beginning to exit, the interest-rate instrument will have to do part of the work.”

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

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