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Tuesday 02nd of August 2022

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The Dark Forest | Author: Liu Cixin

The Dark Forest | Author: Liu Cixin

“It’s all fascinating, but what would the axioms of cosmic sociology be?”

“First: Survival is the primary need of civilization. Second: Civilization continuously grows and expands, but the total matter in the universe remains constant.”
“I’ve been thinking about this for most of my life, but I’ve never spoken about it with anyone before. I don’t know why, really.… One more thing: To derive a basic picture of cosmic sociology from these two axioms, you need two other important concepts: chains of suspicion, and the technological explosion.”

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Sunday, April 10 Apocalypse Now The moment we find ourselves is in is one of extreme stress and complexity.
Law & Politics

Sunday, April 10 Apocalypse Now 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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23-AUG-2021 :: Xi Jinping is on a winning streak ever since he started salami slicing his then adversary President Obama.
Law & Politics

23-AUG-2021 :: Xi Jinping is on a winning streak ever since he started salami slicing his then adversary President Obama.

It is inevitable he will roll the dice on Taiwan 

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Taiwan is preparing its citizens for war. @dwnews
Law & Politics

Taiwan is preparing its citizens for war.  @dwnews

Nationwide drills are being conducted that inform people where to seek shelter in case China attacks.

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From Russia with Love
Law & Politics

From Russia with Love

“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.”

“Russia regards Africa as an important and active participant in the emerging polycentric architecture of the world order and an ally in protecting international law against attempts to undermine it,” said Russian deputy foreign minister Mikhail Bogdanov back in November 2018.

Between 2006 and 2018 Russia’s trade with Africa increased by 335 per cent, more than both China’s and India’s according to the Espresso Economist.

In Moscow’s offer for Africa are mercenaries, military equipment, mining investments, nuclear power plants, and railway connections.

Andrew Korybko writes Moscow invaluably fills the much-needed niche of providing its partners there with “Democratic Security”, or in other words, the cost-effective and low-commitment capabilities needed to thwart colour revolutions and resolve unconventional Wars (collectively referred to as Hybrid War).
To simplify, Russia’s “political technologists” have reportedly devised bespoke solutions for confronting incipient and ongoing color revolutions, just like its private military contractors (PMCs) have supposedly done the same when it comes to ending insurgencies.

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West eases efforts to restrict Russian oil trading as inflation and energy risks mount @FT
Law & Politics

West eases efforts to restrict Russian oil trading as inflation and energy risks mount @FT 

European governments have eased back on efforts to curb trade in Russian oil, delaying a plan to shut Moscow out of the vital Lloyd’s of London maritime insurance market and allowing some international shipments amid fears of rising crude prices and tighter global energy supplies.

The EU announced a worldwide ban on the provision of maritime insurance to vessels carrying Russian oil two months ago, expecting co-ordinated action with the British government. 

However, the UK is yet to introduce similar restrictions. UK participation is pivotal to the effectiveness of any such ban because London is at the centre of the marine insurance industry.
Meanwhile, Brussels in late July amended some curbs on dealing with state-owned Russian companies, citing concerns over global energy security.
A joint UK-EU prohibition on maritime insurance would constitute the most comprehensive restriction to date on Russian oil, ending access to much of the global tanker fleet for Moscow’s exports.
But US officials have expressed concern that an immediate global ban on maritime insurance would push up prices by pulling millions of barrels of Russian crude and petroleum products off the market.
European and British officials told the Financial Times in May that the UK had agreed with the EU to co-ordinate a ban on insuring Russian oil cargoes.
However, Britain’s latest sanctions against Russia, approved by parliament in July, only prohibit providing insurance to vessels carrying Russian oil to the UK, and only after December 31. 

The legislation was introduced after the government promised to outlaw the import of Russian oil from the end of the year but does not ban the provision of services to shipments from Russia to other countries, UK officials said.
“There is no current UK ban affecting global shipments of Russian oil,” said Patrick Davison, underwriting director of the Lloyd’s Market Association, an industry group for insurers at Lloyd’s. 

“Given the global nature of the [re] insurance industry, the existence of the EU restrictions may well impact appetite for Russian oil shipments in London.”
He said Lloyd’s was in close contact with [the UK government] “and will work with them on any future sanctions they seek to introduce.”
The UK Treasury said it was still exploring the best course of action. 

“We stand ready to impose further sanctions on Russia and are working in conjunction with our allies at pace to ensure these can be implemented with maximum effect on the Russian economy,” it said.
The EU’s insurance ban was introduced on June 4 and remains in place. 

It prevents companies in the bloc from writing new insurance for any vessel carrying Russian oil anywhere. 

Existing contracts remain valid until December 5, when all such business will be banned.
However, the EU has amended part of its own sanctions to permit European companies to deal with some Russian state-owned entities, such as Rosneft, for the purpose of transporting oil to countries outside the bloc.
European companies will no longer be blocked from paying the likes of Rosneft, “if those transactions are strictly necessary”, for the purchase or transport of crude or petroleum products to third countries, a European Commission spokesperson told the FT.
The EU said in a statement that the measures were taken to “avoid any potential negative consequences for food and energy security around the world”.
The White House has been working since June to push G7 countries to support a price-cap mechanism that would allow some Russian oil to reach third countries as long as they agreed to pay a below-market price for the cargo.
Officials in Washington said the US and UK still plan to ban maritime services, including insurance, by the time the EU’s ban takes full effect in December. 

But they want an oil price cap in place first. US President Joe Biden is keen to reduce gasoline prices before midterm elections in November.
Sanctions lawyers said the EU appeared to be soft-pedalling its efforts to stem the global flow of Russian oil, and that there was new uncertainty among traders over the UK’s commitment to a global insurance ban.
Sarah Hunt, a partner at HFW, a law firm, said trading houses were inquiring whether it was now legal to buy Rosneft oil to ship to countries outside the EU.
“The new EU sanctions effectively permit the lifting of Russian crude by European companies. We were surprised by this,” she said.
Leigh Hansson, partner at Reed Smith, another law firm, said the EU’s sanctions amendment was a “big retreat”, adding that lawyers had also been expecting “more robust” measures by now from the UK.

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May 29 Vanity of Vanities! All is vanity
Law & Politics

May 29 Vanity of Vanities! All is vanity

In the same article Cummings continues
Blofeld: Kronsteen, you are sure this plan is foolproof?
Kronsteen: Yes it is, because I have anticipated every possible variation of counter-move.
Politics therefore suffers from a surfeit of narcissists.
The occupants of No10, like Tolstoy’s characters in War and Peace, are blown around by forces they do not comprehend as they gossip, intrigue, and babble to the media.
The MPs and spin doctors steer their priorities according to the rapidly shifting sands of the pundits who they are all spinning, while the pundits shift (to some extent unconsciously) according to the polls.
The outcome? Everybody rushes around in tailspins assembling circular firing squads while the real dynamics of opinion play out largely untouched by their conscious actions.
In terms of a method to ‘manage’ government, it is not far from tribal elders howling incantations around the camp fire after inspecting the entrails of slaughtered animals. 
Layer on top of this a highly managed media construct which is essentially a Claque where alternative voices are deplatformed and we have an environment which was accurately described thus by @FukuyamaFrancis
The democratization of authority spurred by the digital revolution has flattened cognitive hierarchies along with other hierarchies, and political decision-making is now driven by often weaponized babble.
At a time when what is required is agile multi disciplinary thinking we have ''weaponized babble''

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Europe has lost the energy war The livelihoods of millions have already been sacrificed @unherd @battleforeurope
Law & Politics

Europe has lost the energy war The livelihoods of millions have already been sacrificed @unherd @battleforeurope 

After a decade of financial austerity, is Europe now on the brink of a new age of energy austerity? 

The city of Hanover has recently introduced strict energy-saving rules that include cutting off the hot water in public buildings, swimming pools, sports halls and gyms, banning mobile air conditioners, fan heaters or radiators, switching off public fountains, and stopping illuminating major buildings such as the town hall at night.
Meanwhile, several countries across Europe are considering dimming or switching off public lights, and even adopting “energy curfews”, with early closures for businesses and public offices. 

And more drastic measures are under consideration — including gas rationing for energy-intensive industries such as steel and agriculture.
These measures are part of an EU-wide Gas Demand Reduction Plan, ominously titled Save Gas for a Safe Winter, to reduce gas use in Europe by 15% until next spring

Among the proposals is a provision that officials in Brussels impose fines for non-compliance if they decide the crisis is escalating dangerously.
All of this comes amid growing fears that dwindling Russian gas supplies may plunge Europe into an energy crisis this winter

Overall, Russian gas exports to the EU are at about a third of last year’s levels, falling steadily since the invasion of Ukraine. 

While several European countries have been reducing their Russian gas imports, Russia itself has been reducing gas flows to Europe through Nord Stream 1, the continent’s biggest pipeline, citing mainly technical issues

Just the other day, citing equipment repair, Russia announced yet another reduction in the amount of natural gas flowing through Nord Stream 1, which is now operating at only 20% capacity.
This has caused natural gas spot prices to surge to levels not seen since early March; they are now almost 10 times higher than they were two years ago

In most countries, electricity prices have risen accordingly. Soaring energy prices are already fuelling record inflation — currently close to 9% and rising in the EU — squeezing people’s spending power, plunging thousands into poverty, and placing a huge burden on industry.
This is especially true for Germany, which is almost entirely dependent on Russian gas imports. 

Indeed, the country’s industrial production has been contracting for over three months. 

Astonishingly, 16% of industrial German companies have reduced production or partially stopped their activities due to rising energy prices. 

This helps explain why last month Germany became the first country to escalate its warning over gas supplies to the “alert level”.
The combined effect of rising prices, lagging demand (both internally and abroad, as China goes back into lockdown) and falling production and investment is already causing economic growth on the continent to grind to a halt. 

While institutions such as the European Commission and the IMF, despite significant downward revisions, still predict real GDP in the EU to be around 2.5% this year, several analysts consider even these far-from-rosy predictions to be overly optimistic. 

Carsten Brzeski, Chief Eurozone Economist at ING bank, for example, foresees a recession at the end of the year as high prices sap purchasing power.
To make matters worse, the ECB’s recent decision to raise interest rates will do little or nothing to curb inflation caused by supply-side factors, but will almost certainly further depress economic activity, making it harder for states to mobilise resources needed to cushion the effects of the energy crisis. 

And as for the ECB’s recently launched Transmission Protection Instrument (TPI), aimed at helping countries in financial distress, it may only be activated for those countries judged to be “fiscally sustainable” (a questionable concept in itself), even though the current polycrisis is inevitably bound to put a strain on the public finances of European countries.
Furthermore, even though the EU has sensibly — for once! — proposed to keep the EU’s fiscal rules suspended for another year, several countries, led by Germany, have announced their intention to embrace austerity once again. 

“For Germany, it’s clear: we will not make use of the general escape clause,” said the German Finance Minister Christian Lindner, arguing that the priority now had to be fighting inflation. 

“We will return to the debt brake. We have to stop the addiction to ever more indebtedness.” 

For this, he added, “we have to get out of our expansionary fiscal policies, and out of the debts, so that the central bank has the space to fight inflation with its means”.
In other words, Germany seems intent on once again plunging the continent even deeper into recession through utterly self-defeating austerity, just as it did in the wake of the financial crisis. 

Europe is already heading for a stagflationary scenario — a situation where high inflation is associated with low or negative growth. Austerity would simply make a bad situation even worse.
If things are bad now, however, it goes without saying that a further decrease in Russian gas flows, which still account for 40% of the EU’s gas imports — not to mention a full stop — would have utterly catastrophic consequences, especially if that were to happen during the winter, when demand for gas it at its highest

Energy, after all, is literally the lifeblood of the economy. It’s what keeps our houses lit and warm (or cool), and our cars, industries, supermarkets and electronic gadgets running. Without it, civilisation literally comes to a halt.
This is why if Europe’s energy supplies are unable to meet demand, the consequences would be almost unimaginable: factories would be forced to close, workers would be laid off, and households forced to restrict electricity and heating use to certain hours

It would be nothing short of societal meltdown. 

Germany’s Foreign Minister Annalena Baerbock recently admitted that shortages of natural gas this winter “could spark popular uprisings”. Think riots, looting, martial law, possibly even toppled governments.
In an attempt to stave off this doomsday scenario, the EU has adopted a regulation providing that underground gas storage on member states’ territory must be filled to at least 80% of their capacity by the end of October (it’s currently at 67%). 

That, however, depends on stable flows in the following months. Moreover, even if the 80% target is reached, that still wouldn’t be enough to get countries through the whole winter without continuous supplies of more gas. 

While at current capacity, the EU would have just enough gas to get to the end of November (assuming an October 1 start to winter).
Moreover, storage levels and storage capacity vary greatly in the EU. Some countries, such as Spain, Portugal, Bulgaria and Croatia, would run out by December even at full capacity (while others are lagging seriously behind in filling the tanks up). 

Germany remains the most exposed. Despite having by far the largest storage tanks in Europe, its demand for gas is equally large and its tanks only hold 108 days of consumption — full tanks would run dry on February 16 and they are currently only 67% full, which would be emptied in December if Russia turned off the gas tomorrow.
Overall, it’s highly unlikely that Europe would survive a full cut-off of Russian gas. 

While some countries have successfully managed to partially replace Russian gas imports with alternative, albeit more expensive, sources of gas — such as liquefied natural gas, or LNG — others, first and foremost Germany, remain heavily dependent on Russian imports.
So ultimately we have little choice but to hope in Putin’s good will if we want to make it through the winter. 

Yet Russia’s leader is not the only one to blame for our current predicament. If today we find ourselves on the brink of disaster, and already facing massive economic hardship, the responsibility falls squarely on the shoulders of European leaders

Put to one side the fact that waging “total economic and financial war” on a nuclear-armed regional power that shares more than 2,000 kilometres of borders with Europe could hardly be considered a sensible move, it was glaringly obvious that cutting off Europe-Russia economic relations was going to hurt the former much more than the latter, given Europe’s dependency on Russian gas

Indeed, European leaders indirectly admitted this when they excluded Russian oil and gas exports from the sanctions regime.

 There’s something pathologically infantile about the behaviour of European leaders: they enjoy strutting around on the world stage and making grandiose speeches about “democracy standing up to autocracy”, and yet they don’t seem to be cognisant of the real-world consequences of their words.
The question of Russian supplies is a perfect case in point. 

At the start of the conflict, the EU, which before the war got some 40% of its gas from Russia, announced its intention to reduce those gas imports by two-thirds by the end of the year and phase out Russian gas entirely by 2027. 

Indeed, for the past six months European leaders have been boasting about weaning themselves off it in order to “hit Putin where it hurts the most”. 

And yet today they moan about inflation and rising prices — what did they think would happen? — and were gripped by panic and moral outrage when Gazprom announced that it would be slashing its gas flows to Europe.
Is Russia weaponising the flow of gas in its tug of war with Europe? Of course it is. But Europeans started this game. 

Or perhaps they thought they could engage in a unilateral energy war with Russia, at their own pace and conditions (which is why they excluded Russian oil and gas exports from the sanctions regime), without the other side firing some shots back at them

To make matters even more grotesque, not only has the “gas war” not weakened Russia — it appears to have actually strengthened it, by helping Russia massively increase its inflow of foreign reserves on the back of rising energy prices.
For all the barbarity of Putin’s war, the livelihoods of millions of Europeans have already been sacrificed on the altar of the gross incompetence of European leaders. 

And the livelihoods of millions more are at risk. They’re right about one thing, though: the future of Europe depends on the struggle between democracy and autocracy — between us, the people, and them, the autocrats.

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Regime Change in Western Capitals long before Moscow.
Law & Politics

Regime Change in Western Capitals long before Moscow.
A ''Fairy Tale'' reality and a geoeconomic boomerang effect which is shredding the standard of living in the West and whose consequence will be Regime Change in Western Capitals long before Moscow.

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Jul 24 When I was a lot younger we used to play a Game called ''Red Eye''
World Of Finance

Jul 24 When I was a lot younger we used to play a Game called ''Red Eye'' 

Everyone gets a card and everyone else's card is visible to you except your own. And you bet on that basis. 

The Question is whether if this were a Game of Red Eye and the market has now seen that Powell and Lagarde are holding the 2 of spades and that this hiking cycle is near done. 

If that is the case, the Yen is a screaming Buy and the Dollar a Big Sell.

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German retail sales plunged to -8.8% on an annual basis Last time the German retail sales plunged by such a margin? January 1952 (-10.8%). @Lvieweconomics
World Of Finance

German retail sales plunged to -8.8% on an annual basis Last time the German retail sales plunged by such a margin?  January 1952 (-10.8%). @Lvieweconomics

German retail sales plunged to -8.8% on an annual basis as consumers continued to battle rising inflation and trimmed purchases. Last time the German retail sales plunged by such a margin?  January 1952 (-10.8%).

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Currency Markets at a Glance WSJ
World Currencies

Currency Markets at a Glance WSJ
Euro 1.0267
Dollar Index 105.00
Japan Yen 130.63
Swiss Franc 0.9503
Pound 1.2243
Aussie 0.6954
India Rupee 0.7895
South Korea Won 1306.55
Brazil Real 5.2326
Egypt Pound 
South Africa Rand 16.567

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Emerging markets hit by record streak of withdrawals by foreign investors @FT
Emerging Markets

Emerging markets hit by record streak of withdrawals by foreign investors @FT
Foreign investors have pulled funds out of emerging markets for five straight months in the longest streak of withdrawals on record, highlighting how recession fears and rising interest rates are shaking developing economies.

Cross-border outflows by international investors in EM stocks and domestic bonds reached $10.5bn this month according to provisional data compiled by the Institute of International Finance. 

That took outflows over the past five months to more than $38bn — the longest period of net outflows since records began in 2005.
The outflows risk exacerbating a mounting financial crisis across developing economies. 

In the past three months Sri Lanka has defaulted on its sovereign debt and Bangladesh and Pakistan have both approached the IMF for help. 

A growing number of other issuers across emerging markets are also at risk, investors fear.
Many low and middle-income developing countries are suffering from depreciating currencies and rising borrowing costs, driven by rate rises by the US Federal Reserve and fears of recession in major advanced economies. 

The US this week recorded its second consecutive quarterly output contraction.
“EM has had a really, really crazy rollercoaster year,” said Karthik Sankaran, senior strategist at Corpay.
Investors have also pulled $30bn so far this year from EM foreign currency bond funds, which invest in bonds issued on capital markets in advanced economies, according to data from JPMorgan.
The foreign currency bonds of at least 20 frontier and emerging markets are trading at yields of more than 10 percentage points above those of comparable US Treasury bonds, according to JPMorgan data collated by the Financial Times. 

Spreads at such high levels are often seen as an indicator of severe financial stress and default risk.
It marks a sharp reversal of sentiment from late 2021 and early 2022 when many investors expected emerging economies to recover strongly from the pandemic. 

As late as April this year, currencies and other assets in commodity exporting EMs such as Brazil and Colombia performed well on the back of rising prices for oil and other raw materials following Russia’s invasion of Ukraine.
But fears of global recession and inflation, aggressive rises in US interest rates and a slowdown in Chinese economic growth have left many investors retrenching from EM assets.
Jonathan Fortun Vargas, economist at the IIF, said that cross-border withdrawals had been unusually widespread across emerging markets; in previous episodes, outflows from one region have been partially balanced by inflows to another.
“This time, sentiment is generalised on the downside,” he said.
Analysts also warned that, unlike previous episodes, there was little immediate prospect of global conditions turning in EM’s favour.
“The Fed’s position seems to be very different from that in previous cycles,” said Adam Wolfe, EM economist at Absolute Strategy Research. 

“It is more willing to risk a US recession and to risk destabilising financial markets in order to bring inflation down.”
There is also little sign of an economic recovery in China, the world’s biggest emerging market, he warned. 

That limits its ability to drive a recovery in other developing countries that rely on it as an export market and a source of finance.
“China’s financial system is under strain from the economic slump of the past year and that has really limited its banks’ ability to keep refinancing all their loans to other emerging markets,” Wolfe said.
A report on Sunday highlighted concerns about the strength of China’s economic recovery. 

An official purchasing managers’ index for the manufacturing sector, which polls executives on topics including output and new orders, fell to 49 in July from 50.2 in June.
The reading suggests that activity in the country’s sprawling factory sector, a major growth engine for emerging markets more broadly, has fallen into contraction territory. 

The decline was because of “weak market demand and production cuts in energy-intensive industries”, according to Goldman Sachs economists.
Meanwhile, Sri Lanka’s default on its foreign debt has left many investors wondering which will be the next sovereign borrower to go into restructuring.
Spreads over US Treasury bonds on foreign bonds issued by Ghana, for example, have more than doubled this year as investors price in a rising risk of default or restructuring. 

Very high debt service costs are eroding Ghana’s foreign currency reserves, which fell from $9.7bn at the end of 2021 to $7.7bn at the end of June, a rate of $1bn per quarter.
If that continues, “over four quarters, suddenly reserves will be at levels where markets start to really worry,” said Kevin Daly, investment director at Abrdn. 

The government is almost certain to miss its fiscal targets for this year so the drain on reserves is set to continue, he added.
Borrowing costs for large EMs such as Brazil, Mexico, India and South Africa have also risen this year, but by less. 

Many large economies acted early to fight inflation and put policies in place that protect them from external shocks.
The only large EM of concern is Turkey, where government measures to support the lira while refusing to raise interest rates — in effect, promising to pay local depositors the currency depreciation cost of sticking with the currency — have a high fiscal cost.
Such measures can only work while Turkey runs a current account surplus, which is rare, said Wolfe. “If it needs external finance, eventually those systems are going to break down.”
However, other large emerging economies face similar pressures, he added: a reliance on debt funding means that eventually governments have to suppress domestic demand to bring debts under control, risking a recession.
Fortun Vargas said there was little escape from the sell-off. 

“What’s surprising is how strongly sentiment has flipped,” he said. “Commodity exporters were the darlings of investors just a few weeks ago. There are no darlings now.”

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Figure 1: Sub-Saharan Africa’s external debt stock by holder of debt. Source: @WorldBank

Figure 1: Sub-Saharan Africa’s external debt stock by holder of debt. Source: @WorldBank  International Debt Statistics. @LSEnews 

The great untold story of 21st century economics is the momentous climb in global debt, not just in Africa but elsewhere too, especially since the 2007-8 financial crisis.

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@GoldmanSachs $15 Billion View of Egypt @IMFNews Needs Too High for Maait @business

@GoldmanSachs $15 Billion View of Egypt @IMFNews Needs Too High for Maait @business

Goldman Sachs Group Inc. has estimated that Egypt may need to secure a $15 billion package from the International Monetary Fund, but a top official said it’s seeking a smaller amount.

Finance Minister Mohamed Maait told Al Kahera Wal Nas channel late on Sunday that Egypt can help close its funding gap by increasing foreign direct investment and with capital from international development institutions and bond markets.
Asked if Egypt is asking for $15 billion, Maait said “this figure is not true at all,” adding that it’s “definitely” less and declining to be more specific. 

The estimate wasn’t attributed to Goldman during the television program.
To shore up its finances, the North African nation is seeking a new IMF loan after seeing about $20 billion in foreign outflows this year by investors in local debt who exited what had been a favorite market. 
A major food importer, Egypt has struggled to cope with record grain prices fueled by Russia’s invasion of Ukraine. 

The two countries at war previously supplied most of Egypt’s wheat and were a major source of visitors for its economically important tourism industry. 
Egyptian officials in the past have spoken about much lower amounts. 

When asked in May about the possible size of an IMF loan, central bank Governor Tarek Amer said “Egypt now has taken a big quota so it won’t be a big amount.”
Repayments to the IMF are set to reach a cumulative $13 billion over the next three years, according to Goldman.
The country has been one of the IMF’s biggest borrowers in recent years, agreeing to a three-year, $12 billion loan program in 2016. 

More recently, Egypt secured a $5.2 billion stand-by arrangement as well as $2.8 billion under the IMF’s Rapid Financing Instrument, helping authorities tackle the impact of the coronavirus.
In a July report, Goldman estimated that Egypt may need to secure $15 billion from the IMF to meet its funding requirements over the next three years.

 Authorities have already won pledges of more than $22 billion in deposits and investment from Saudi Arabia, the United Arab Emirates and Qatar.
Egypt turned to the IMF for new assistance in March, and speculation since then has focused on what conditions the lender might attach to a new package. 

In response to a question about any demand from the lender to devalue the domestic currency, Maait said the Finance Ministry only comments on fiscal policy.
The central bank already allowed the pound to depreciate sharply in March and it’s traded weaker since then.
During a visit to Germany last month, President Abdel-Fattah El-Sisi, said he’d asked “our friends in Europe” to help convey a message to international financial institutions like the IMF and the World Bank that “the reality in our country can’t support” the kinds of steps that might be called for while the current crisis persists, according to the state-run Middle East News Agency. 

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How to prepare for the coming crisis @mtmalinen [continued]
Kenyan Economy

How to prepare for the coming crisis @mtmalinen

Sovereign debt crisis

Sovereign debt or fiscal crises consist of periods of severe deficits in public financing and/or periods during which the government fails to meet domestic or foreign obligations.
Gerling et al. (2017) identify a fiscal crisis by four criteria: credit event (foreign default), implicit domestic default (monetization, domestic arrears), loss of market access and exceptional official financing (IMF). 

In a credit event, the government of a country announces that it will not pay interest and/or the principal of some or all of its debt (bonds) that it owes to foreign creditors. 

This means that the government defaults on its foreign-held debt. 

This usually leads to loss of access to international money markets, which may also happen if the interest rates on sovereign debt rise so high that they become impossible for the government to service.

The concept of monetization was explained above. The government can also default on debt held by its citizens and domestic institutions. 

In this case, the government defaults on domestically-held debt. 

This may have serious repercussions for the banking sector of a country, which usually holds domestic sovereign bonds as collateral possibly leading to a banking crisis (see more, e.g., Malinen and Ropponen 2022; free older version).

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Eaagads Ltd. FY 2022 earnings FY EPS +420%
N.S.E Equities - Agricultural

Eaagads Ltd. FY 2022 earnings FY EPS +420%

Par Value:                  1/25
Closing Price:           13.70
Total Shares Issued:          32157000.00
Market Capitalization:        440,550,900
EPS:             0.26
PE:               52.692

Eaagads  reports FY Results ended 31st March 2022

FY Revenue 142.234m versus 139.662m

FY Fair Value gain on biological assets 9.685m versus 4.121m

FY Cost of production [101.913m] versus [85.479m]

FY Gross Profit 50.006m versus 58.304m

FY Net Operating Costs [41.962m] versus [53.644m]

FY Profit before Tax 8.044m versus 4.660m

FY Profit for the Year 8.377m versus 1.750m

FY EPS 0.26 versus  0.05 +420%


In the year under review, the company produced 188 tons of coffee compared to 233 tons last year.  

The decrease in the yield was mainly attributed to unfavorable weather conditions resulting in a lower late crop harvest. 

Despite the fall in the crop yield, sales incomes grew by Kshs 2.6 million, up from Kshs. 139 million last year to Kshs. 142 million. 

Crop prices averaged USD 6.90 per kilogram compared to USD 5.52 per kilogram last year and this was as a result of increased focus on direct sales, improved coffee bean quality and higher international coffee prices.

To ensure sustainability of the coffee bushes, various intense coffee upkeep activities were undertaken to boost future productivity pushing the cost upwards by Kshs. 16 million. F

arm management fees remained constant at USD 90 per hectare.
The company revalued its freehold land (44 hectares) resulting in a revaluation gain of Kshs. 155 million. 

The remaining land which measures 341 hectares is held on a leasehold basis and is not subjected to valuation in line with the International Accounting Standards
The future of the farm looks promising as evidenced by the good flowering exhibited on the trees for 2022/23 production season. 

The company is on course towards achieving its early crop harvest of 200 tons and a late crop harvest of 150 Tons. 

Although the weather forecasts indicate depressed rainfall patterns, Eaagads farm management continues to put in place measures to ensure attainment of the crop projections.
International coffee market prices have also greatly improved due to increased demand. 

According to ICO, Production for 2022-23 coffee season is expected to be lower than the demand mainly due to an anticipated low production in the South America coffee buffer zones. 

Looking ahead, the prices are likely to remain attractive as the world looks at depressed production. 

Eaagads coffee continues to attract a premium in the market due to its superior coffee quality. 

The farm continues to be managed by Coffee Management Services Ltd.

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

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