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Friday 17th of June 2022

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Sunday, April 10 Apocalypse Now
Law & Politics

Sunday, April 10 Apocalypse Now

Secretary Blinken has refused to meet Lavrov, Biden calls for ‘’Regime Change’’ on a daily basis and ‘’defensive’’ weapons are being shoveled into Ukraine at an unprecedented speed. 

There is clearly zero intention to resolve this matter anywhere other than on the battlefield and through an insurgency which will bleed Russia to death and the Ukrainians as well.

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For a while regime change was de rigeur
Law & Politics

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.

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The only Russian comment on Macron/Scholz/Draghi in Ukraine so far @maxseddon
Law & Politics

The only Russian comment on Macron/Scholz/Draghi in Ukraine so far @maxseddon


May 29 Vanity of Vanities! All is vanity

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European fans of frogs, liverwurst and spaghetti love visiting Kiev. With zero use. Promised EU membership and old howitzers to Ukraine, lushed up on gorilka and went home by train, like 100 years ago. @MedvedevRussiaE
Law & Politics

European fans of frogs, liverwurst and spaghetti love visiting Kiev. With zero use. Promised EU membership and old howitzers to Ukraine, lushed up on gorilka and went home by train, like 100 years ago. All is well. Yet, it won’t bring Ukraine closer to peace. The clock’s ticking

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.052225
Dollar Index 104.219
Japan Yen 134.1115
Swiss Franc 0.96526
Pound 1.229995
Aussie 0.698775
India Rupee 78.06285
South Korea Won 1293.605 
Brazil Real 5.0540
Egypt Pound 18.732332 
South Africa Rand 15.968990

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Sociopathic economists and the coming high fertility crisis @AfricanBizMag @RencapMan

Inflation hits the poorest most, economists often say as they welcome interest rate hikes which hit the poorest too. 

This seemingly sociopathic bunch tend to be in favour of short-term pain to improve the long-term. 

Which is why the Bank of England governor could say workers should not seek pay rises even as prices soared. 

Most economists are likely to endorse the biggest US interest rate in nearly 30 years and the interest rate rises in the UK.

But globally, it is those interest rate rises which hit the poorest countries most. 

There should have been a collective groan from Ghana to Pakistan on 15 June as the Federal Reserve in the US released its forecasts that US interest rates in 2023 will be over 3% instead of closer to 2% – its forecast from just a month ago.

Already global markets have taken fright and dumped the bonds they bought from low-income countries in recent years. 

It was just last year, when US long-term borrowing costs were around 1-2%, that Rwanda (hitting the headlines for different reasons in the UK this month) could borrow at 5-6%. 

Today, when the US will pay you nearly 3.5%, investors will demand a far higher interest rate from riskier countries.

Long-term bonds for many now have a price that is around 50-60 cents on the dollar – compared to over 100 cents just a year ago. 

This is like your bank assuming they will only get repaid on the 50-60% of the mortgage they lent you.

Investors do not expect to get repaid in full by Pakistan, Ghana or Tunisia, nor Sri Lanka and Zambia that have already defaulted. 

More countries will follow. Debt default often leads to currency collapse, more inflation (again worse for the poor) and a dramatic rise in poverty, as Lebanon, Venezuela and most recently Sri Lanka have all demonstrated in recent years.

Who’s to blame is a very natural question. Was it foolish fund managers who lent too much, or China who, often behind the scenes, lent a great deal too? 

Should corrupt local leaders be blamed for borrowing too much? Or do we simply blame Russia for global inflation and say this is just an unfortunate, unpredictable set of circumstances.

Debt default is normal among high-fertility countries
The problem is that the coming debt crisis has been predictable, but not for the reasons that many assume. As I argue in the forthcoming book, The Time Travelling Economist, debt default is normal among high-fertility countries and most of the countries threatened by default in the coming years have a fertility rate above three children per woman.

What we show in the book is that high-fertility countries have very few savings. If you have five to six children per woman on average in a country, the children are your savings. After feeding and clothing them, you have nothing left to put in a bank on a Friday when you get paid.
Local banks have few deposits to lend out, and what little they have, they lend out at very high rates, even as high as 20-25%. 

So governments welcomed the chance to borrow at 5-6% in US dollars as Rwanda did last year, and global investors jumped at the opportunity to lend to countries which wanted to accelerate infrastructure investment which can lift countries out of poverty.
Rwanda boomed after issuing its first ever international bond in 2013, allowing it to dramatically increase annual spending on health, by far more than the interest costs of that bond. 
The problem comes – as high-fertility Latin America found out in the 1980s – when US interest rates drive up global borrowing costs. 

Low-income governments can no longer borrow cheaply to repay maturing bonds (Rwanda was smart to refinance in 2021). They have to hike taxes locally or cut spending.

The debt crisis will be a high-feritility crisis
But not everyone suffers the same. Countries like Bangladesh with a fertility rate of 2 children per woman, doesn’t have the foreign debt pile that Pakistan with 3.4 children per woman has. 

They have never issued a Eurobond, because local banks had local savings accrued by parents who had to invest in their children. Bangladesh should thrive in the 2020s. Pakistan will struggle.
The coming debt crisis is a high-fertility crisis, and one that politicians from Islamabad to Abuja will need years to address. 

In the short term, only concerted action by the G20, the IMF and the World Bank, can help ameliorate the economic pain that is coming. 

During the Global Financial Crisis and Covid, such support took over a year to arrive. 

For the West, 2022 and 2023 will be tough. For indebted high fertility countries, it will be worse.

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28 OCT 19 :: From Russia with Love

28 OCT 19 ::  From Russia with Love

“This is not accidental, as Africa increasingly becomes a continent of opportunities''
‘’These opportunities include natural resources, infrastructure development and increasing consumer demand from a growing population'' Putin specified.
But, he said, Russia was going to be a different kind of superpower, one that does not engage in “pressure, intimidation and blackmail” to “exploit” sovereign African governments.
“Our African agenda is positive and future-oriented. We do not ally with someone against someone else, and we strongly oppose any geopolitical games involving Africa.”

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Kenya is experiencing a sixth wave of Covid-19 infections after the number of positive cases in the country increased on average by 92% in the past month, compared with the previous four weeks.

The East African nation becomes the second country in the region to see a sixth wave after Mauritius, Ahmed Ogwell Ouma, acting director of the Africa Centres for Disease Control and Prevention, said during a virtual briefing on Thursday. 

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

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