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'At the moment of vision, the eyes see nothing'

I have found as I have gotten older that Time and even the World
simply does not move in a linear fashion.   I too like all of you I am
sure, am waiting for that magic Pill which will reverse time and give
me back my 21 Year Old Body which of course was an Enzo Ferrari and
which I surely in a folly of youth did not appreciate at the time and
instead coveted the Car which was nothing.  Yuval Noah Harari leads us
to believe the arrival of such a Pill that will reverse time cannot be
that far away. I would like to keep my more mature mind and not get
back that Testosterone fuelled mind machine of old, however.  A lot of
Folks will have read Lord of the Flies which is a 1954 novel by Nobel
Prize–winning British author William Golding. The book focuses on a
group of British boys stranded on an uninhabited island and their
disastrous attempt to govern themselves not unlike the Post Brexit
vote United Kingdom.  However, Fewer Folks will have read William
Golding's book ''The Spire'' and in that book Golding writes

''At the moment of vision, the eyes see nothing''

''The moment of Vision'' is in essence a non-linear thing, its a
moment of deep insight. The President of the United States of America
currently undergoing an impeachment process at the hands of
''Nervous'' Nancy Pelosi [his moniker which probably is a linguistic
transference of a sort and whom [Speaker Pelosi and not the Trumpster]
I find sexy but that's a discussion I have to have with my Wife] was
boo'ed for the second consecutive weekend, This weekend he was boo'ed
at a UFC 244 event at Madison Square Garden. Pollice verso or verso
pollice is a Latin phrase, meaning "with a turned thumb", that is used
in the context of gladiatorial combat. It refers to the hand gesture
or thumb signal used by Ancient Roman crowds to pass judgment on a
defeated gladiator. The Madison Square UFC 244 verso pollice moment is
a Shakespeare level moment for President Trump and of more import than
the Impeachment process because Impeachment is political and therefore
the outcome should split on Political Party lines. The Republican
Party will be making a hard nosed political calculation this weekend
that if the President is getting booed at a UFC event, the Base is
lost. Vice President Pence who is an evangelical Christian [and is in
the habit of praying with another evangelical Christian and Nobel
Prize Winner far away in Addis Ababa, allegedly] is the coming Man and
this could happen real quick.

''At the moment of vision, the eyes see nothing''

Staying with the US, we learnt last week that the US National Debt
crossed $23 Trillion, having $1.3 Trillion in 12 Months. The US Stock
Indices posted Fresh record highs. This is now unhinged. I recall
sitting in the Offices of a Gentleman called Julian Robertson in the
1990s. Robertson founded Tiger Management, one of the earliest hedge
funds. Robertson is credited with turning $8 million in start-up
capital in 1980 into over $22 billion in the late 1990s and I met him
at the Apogee and subsequently Mr. Robertson bet just about everything
on shorting the NASDAQ. And the Story goes like this. The NASDAQ
stayed irrational and even got more irrational longer than he could
stay solvent. Of course, he was right and the NASDAQ subsequently
crashed in what was characterised as the ''DOT-COM'' bubble. The Point
is this, we can see the dislocation, we can smell the ''stink'' of it
[Think WeWork's Neumann - admittedly never made it to the Public
markets] but timing it is an both an Art and a science. And always
remember, the entire Paraphernalia of the Financial markets and its
entire raison d'être is there to prevent the Bubble bursting.  The
Elastic Band will snap because we are in ''Voodoo'' territory but when
and will it inflate further before snapping and what will happen in
the moment of snapping.

And make no mistake, everyone is riding the wave. Its all ''hocus
pocus''. Xi's China is in a similar Fix and fully loaded with debt. I
came across this in an Article in War on the Rocks

''Once Xi becomes weak, sick, old, or dies, various interests within
China will likely have a weakened institutional ability to deal with
the distribution of interests and managing factional rivalry''

The Ministry of Sound ["My concept for Ministry was purely this: 100%
sound system first, lights second, design third (in that order); the
reverse of everyone else’s idea."] 4 am[ers] otherwise known as the
BITCOIN Evangelists will of course all be screaming

''Aly-Khan, Aly-Khan Just Buy Bitcoin its going to $50,000, $100,000,
$1,000,000.''

Last week they all got carried away when Xi apparently gave Bitcoin
his imprimatur.

It took China about 3 days of being officially interested in
blockchain to make their intentions clear: transparent, panoptichain
immutable social credit dystopia. @nic__carter
All you people that are ready to forsake all of your values for the
sake of riding some authoritarian driven pump, I want nothing to do
with you @nic__carter
I don’t believe in the god damn “underlying technology”, I believe in
the FREEDOM  that the technology gives us. From autocrats and
dictators. @nic__carter
It matters because ppl are interpreting it as validation of
permissionless blockchains when it represents a perversion and
corruption of those ideals @@nic__carter
Not to mention the ability to shut-off access to anyone on the system
with a “flip of a switch”. A 21st century authoritative government’s
dream @Rhythmtrader
The terrifying reality of a cashless society @mc_madvillian

I am of the view that BITCOIN and crypto is a Jeffrey Edward Epstein
[and his cast of characters] level Con and I am having nothing to do
with it other than occasionally looking in and admiring the
sophistication and level of the Con. Its breathtaking.

The most referenced Poem today is WB Yeats The Second Coming

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;

Its easy to see why.

Therefore, when Pangall, the lame and impotent caretaker, reports that
the workmen employed to build the spire ‘torment’ him and warns that
‘one day, they will kill me’ (14), Jocelin fails to do anything of
note to help him.  Pangall begs him to send them away but Jocelin only
requests that the master builder speaks to his men and ask them to
stop bullying Pangall.  It appears later that Pangall’s prediction is
correct although Jocelin’s description of the event is far from
conclusive as he watches the workmen chase Pangall near the pit.

He saw men who tormented Pangall, having him at the broom’s end.  In
an apocalyptic glimpse of seeing, he caught how a man danced forward
to Pangall, the model of the spire projecting obscenely from between
his legs – then the swirl and the noise and the animal bodies hurled
Jocelin against stone, so that he could not see, but only hear how
Pangall broke…

Pollice verso or verso pollice is a Latin phrase, meaning "with a
turned thumb", that is used in the context of gladiatorial combat. It
refers to the hand gesture or thumb signal used by Ancient Roman
crowds to pass judgment on a defeated gladiator.
The precise type of gesture described by the phrase pollice verso and
its meaning are the subject of much scholarly debate.

Macro Thoughts

Home Thoughts

People tend to have a fairly specific idea of what they can expect
from a musician’s autobiography. Excess. Smashed-up hotel rooms,
mountains of drugs, the requisite number of naked men and women. And,
yes, many do offer those familiar tales but, as the rock memoir has
become big business in recent years — particularly as the gods of the
1960s and 1970s golden age of rock begin to die off, feeding the
appetite for their stories before it’s too late — many of the best and
biggest books have taken different paths.

Bruce Springsteen’s Born to Run offered no war stories, instead
stripping away the artifice around that monolith of American rock. Rod
Stewart’s fantastic book had the drugs and the women (how could it
not?), but was actually most involving when he was mocking himself,
and most moving when he was talking about his love of model railways.
Jeff Tweedy of Wilco treated his life story as an opportunity to
engage in extended self-examination. Still, the formula for the
perfect rock memoir remains simple: combine a big star, enough honesty
and a decent writer (usually a ghost, though Springsteen wrote his
own) and you’ve got a banker.

Hence the fees being paid for the biggest books. Springsteen
reportedly got $10m for his book; music industry rumour has it that
Elton John’s memoir Me sold for even more, with some proportion of
that spent on bringing in Alexis Petridis — the most stylish of
current British music writers — to be his amanuensis (I was Petridis’s
editor for 11 years, though that only made me enjoy his writing more).
And hence this autumn bringing a rash of big music memoirs alongside
it: books by Debbie Harry, Madness, Brett Anderson from Suede, Flea
from Red Hot Chili Peppers, Andrew Ridgeley of Wham!, Patti Smith and,
incredibly, Prince — incredible because not only is the author dead,
but he had only managed to hand-write part of one chapter before
dying.

The introduction by Prince’s putative ghostwriter — Dan Piepenbring of
The Paris Review — gives a succinct explan­ation of how the book ended
up being published: “One of [the] first priorities, given the sizeable
tax bill the estate was facing, was to monetise Prince’s assets
however they could . . . Representatives from Bremer [the
administrator] got in touch with Random House: Was there any way the
book was still possible?” Of course there was.

The new seriousness of the rock memoir contrasts with rock’s actual
golden age. Back then, the major musicians were too consumed with
their careers to write books, and rock books were either shoddy
exploitation texts (“The Official Story!”) aimed at teenage fans or
ones written from the outside by the first generation of music
writers.

In the 1990s, with the growth of the heritage rock industry driven by
the CD boom and magazines such as Mojo, rock memoirs began to flourish
(I commend to you David Lee Roth’s 1998 book Crazy From the Heat,
which is entirely untrustworthy and completely fabulous). This
century, as the biggest stars realise that their best musical days are
behind them and they have legacies to protect, they have boomed, along
with books by cult heroes — such as Viv Albertine of The Slits — whose
lustre has grown with the passing of the years and the spreading of
their musical influence.

Rock stars are rarely most interested in talking about their own
success. Anyone who has interviewed them knows they come alive talking
about their own teenage musical infatuations. That means that while
their memoirs theoretically have more in common with sports stars’
books than anything else — the same firework trajectory through
extreme fame at a young age — they end up being unlike those books.
While the most fascinating events in a sports star’s life tend to be
the biggest ones — the Olympic gold medal, the Tour de France victory
— precisely because they are the most dramatic, the period of greatest
success is rarely the most dramatic part of a musician’s life. It’s
the time when they are most isolated from the world, from their
friends, when what ties a band together frays under the strain of
drugs, drink and jealousy. Every day becomes the same — hotel, travel,
venue, sound check, show, hotel — which means there’s little to say
about any of those days.

The real excitement is always to be found before the burdensome
super­stardom, when everything is new. Elton John is particularly good
on his vertiginous rise: on page 81 alone he manages to shame Liberace
by not being present when the pianist calls him on stage, because he’s
coming out to his parents, then infuriates his neighbours when Neil
Young comes over at 2am to deliver a live voice-and-piano rendition of
the as-yet-unreleased Harvest album.

Nevertheless, the superstar years are presumed to be the selling point
of rock memoirs. And so book after book follows the same trajectory: a
brilliant start derailed by the grim necessity of detailing the big
tours and how they made the hit albums, usually in a manner distinctly
lacking the passion of their descriptions of their rise.

In Face It, Debbie Harry is frank about the misery of what Neil
Tennant of Pet Shop Boys described as a band’s “imp­erial phase”: “I
keep thinking there must have been some good times. Feels like I’m
always remembering the hard times. I can’t for the life of me think of
any funny experiences.” Anderson follows Suede’s biggest hits by
upgrading his recreational habits to full-blown heroin addiction: “My
understanding of the world was ever narrowing to the epicentre of the
glass-topped table around which my friends and I permanently perched
as we conducted our obsessive new duties like devout acolytes
attending to a shrine.”

John is more fun about his imperial phase, no matter that it involved
a descent into cocaine usage so deep, as he puts it, that: “My
appetite for the stuff was unbelievable — enough to attract comment in
the circles I was moving in. Given that I was a rock star spending a
lot of time in ’70s LA, this was a not inconsiderable feat.” John’s
willingness to overshare (and to let his ghostwriter play events for
comedy, not tragedy) makes the most peculiar events into delights; he
concludes an anecdote about trying to pick up men at Studio 54 when
zonked on cocaine with the observation: “It’s hard to conjure up a
seductive mood when your eyeballs are pointing in different directions
and it takes you three attempts to successfully navigate your way
through the exit.”

Prince’s book doesn’t reach his imperial phase, sadly. In fact he
doesn’t get any further than his teens. Most of The Beautiful Ones is
filled out with photos and notes from his archive, and the little text
there is suggests that Piepenbring, for all his professed excitement
in the introduction, would have had a task somewhere north of
thankless turning Prince’s thoughts into a book that the wider world,
rather than just Prince obsessives, would have wanted to read.

And that’s a shame. Not least because Prince is one of the most
extraordinary musicians pop culture ever produced, but also because it
means we’ll never get to read his love story, and the love story is
the heart of every rock memoir. It’s not the romantic love for a life
partner (often, they are barely mentioned), but the love between
people who discover that when they come together they create something
extraordinary.

In Me, it’s the love between John and the writer of his lyrics, Bernie
Taupin; in Afternoons With the Blinds Down, it’s that between Anderson
and Suede’s original guitarist, Bernard Butler; in Face It, it’s
shared by Harry and Chris Stein (who were also lovers); in Before We
Was We, it’s a multi-faceted affair between the seven members who made
up Madness.

The Madness book — brilliantly assembled by journalist Tom Doyle as an
oral history featuring the voices of all the members — is so focused
on the relationships within the band that it more or less dispenses
with the story of their career. The book ends in 1979, the year
Madness released their first single. In doing so, it tells you more
about how a band becomes a band than any number of anecdotes about
life in the studio.

Before We Was We is the only music book I have read that comes with a
map: of Kentish Town in north London, and the surrounding area. It
shows how closely tied to the district Madness are. As much as
anything, the book is a social history of growing up on the edges of
criminality in what was then a poor part of the capital. There are
stories of stealing scooters, of looting gas meters and the money tins
in launderettes, of fights and police cells and court appearances.
Nothing is paid for: the principals “bunk in” to gigs and to films.
Records are nicked from shops foolish enough to keep them in their
sleeves. When they wanted to see somewhere other than Kentish Town,
they would climb on to a railway bridge and jump on a freight train.
And sometimes they would board freight trains for other reasons.

“Once, we opened this train and we got an outboard motor,” recalls
guitarist Chris Foreman. “What a load of teenage kids were going to do
with an outboard motor . . . ‘Yeah, but it’s probably worth a few
hundred quid.’ But, I mean, how are you going to sell an outboard
motor in this big box?”

One of pop music’s great truisms is that the best bands are like
gangs. Madness were a gang before they were a band. Rather than just
being young men brought together by a small ad in a music magazine,
their very existence represented their peers, which was why they
became something that few bands manage: the cornerstones of a
subculture, the skinhead revival that sprang up in the late 1970s.
They spearheaded a renewal of interest in Jamaican ska music that
would go global.

Something similar happened with Suede, albeit on a lesser scale, when
they became one of the first bands in the movement that was named
Britpop. Anderson writes well of how his own ambition, the desire of
the weekly music press and the desire of the indie music audience for
something colourful, glamorous and “their own” combined to make them
seem otherworldly. “We started to play small iconic London venues,
always ensuring that they were dangerously oversold, heaving with
steaming, sweaty bodies and almost impossible to get into,” he writes.
That “manufactured hysteria” was in tune with the core ethos of Suede,
a desire to “transcend the everyday, to reach for the heightened
state”.

The rock autobiography might be at its zenith right now, with enough
of music’s golden generation still alive to churn them out (the
biggest prize of all, the Moby-Dick of rock memoirs, is Mick Jagger,
but no publisher has yet been able to harpoon him). But how long will
this golden age last? With the cultural centrality of music
diminishing with each passing year, whose autobiograph­ies now would
capture the wider imagination in the way Elton John’s has? When
artists control their own narratives via social media, is there a need
for a book to set the record straight? The biggest of today’s stars —
Beyoncé, Rihanna et al — treat the notion of complete self-revelation
to an interviewer, a staple of rock stars of the past, as utterly
alien, so why would they sign up for 300 pages of it?

Whatever happens, here’s one guarantee: when Ed Sheeran publishes his
autobiography, he’ll talk a lot more fondly about playing the pubs
than he will about playing Wembley Stadium. They all do.

Round the decay Of that colossal Wreck, boundless and bare. The lone
and level sands stretch far away.

Political Reflections

To the extent that any nation has a grand strategy, China surely does.
The vision is no secret: Xi Jinping vows to make China great again.
This resonates deeply: Since imperial decline in the First Opium War
(1839 to 1842), every Chinese leader has sought the same, with broad
popular support. Xi’s strategy for a modern China of unprecedented
power and influence requires recapturing lost glories at home and
abroad. It clearly entails reincorporating Taiwan, together with other
unresolved island and maritime claims. China’s history and geography
suggest that it now faces short-range opportunities and long-range
challenges. China’s strategy thus has a broadly-defined arc that the
United States should address with a strategy of “competitive
coexistence” to safeguard American interests sustainably amid
increasing Chinese assertiveness.

Xi’s Vision and Priorities

At the 19th Chinese Communist Party National Congress on Oct. 18,
2017, Xi Jinping delivered a major speech in which he declared, “The
Chinese nation […] has stood up, grown rich, and is becoming strong.”
He articulated a new era with the historic mission to “realize the
Chinese Dream of national rejuvenation.” For its implementation, Xi
laid out a timeline with three major target dates: By the Party
Centenary in 2021, China should “finish building a moderately
prosperous society in all respects.” By 2035, China should be much
stronger economically and technologically, have become a “global
leader in innovation,” and have completed its military modernization.
By the People’s Republic of China Centenary in 2049, China should have
“[r]esolv[ed] the Taiwan question” and be a “strong country” with
“world-class forces.” Party leadership is crucial to the realization
of this “Chinese Dream,” Xi insists, and his own leadership is crucial
for now.

To understand how Xi’s grand strategy might play out, and to assess
its prospects, one should consider Xi’s hierarchy of
geographically-rooted national security priorities. Save for the
party’s self-justified dictatorship since 1949, this hierarchy
arguably echoes across centuries of Chinese imperial history. From
their very origins, the party (established 1921) and its People’s
Liberation Army (established 1927) have pursued political, security,
and geostrategic goals in layers. Overall, these objectives have
radiated outward over time, prompting leadership to look beyond
China’s borders. When facing setbacks, however, leaders have retreated
inward in focus and forces. Should China or its leadership face
substantial challenges in the future, they might slow or even reverse
their current outward advance. The speed and direction cannot be
projected with certainty, but the broad continuum along which China’s
geostrategic status may progress or retrogress is readily visible. In
descending order of importance: party leadership, centralized
administration of the core Han heartland, stability of ethno-religious
borderlands, integrity of land borders and security of coastlines,
resolution of near-seas sovereignty claims, and safeguarding of
overseas interests. The party has staked its claim to power on its
ability to safeguard the most important of these interests and
rejuvenate China in a way that no other government could.

An Enduring Hierarchy of Interests

The foremost party-army priority has been the consolidation and
retention of authority over mainland China, its population, its
resources, and its purported historical mission. In this, there are
arguably parallels to previous dynasties that gained control of China
and subjected it to centralized authoritarian rule only to have that
actual administration vary over geography and time. In Origins of the
Modern Chinese State, for instance, Philip Kuhn argues that this
centralizing mission has been a consistent effort since 1800, albeit
with varying levels of success across regimes. This is very different
from the geo-identity and geopolitics of such immigrant societies as
the United States, Canada, Australia, and New Zealand; such outwardly
demarcated island nations as the United Kingdom and Japan; and such
committed European Union members as Germany; as well as those of many
other countries.

The party-army struggled for over two decades before finally becoming
the party-state-army that founded a people’s republic charged with
reinvigorating China — this time with Marxist-Leninist ideology. Mao
Zedong articulated and implemented a strategy of asymmetric
“protracted war” in which time and territory could be traded for
attrition of enemy forces and accrual of popular support. The
strategy’s ultimate implementation was the year-long Long March in
which Mao and other party and army leaders led multiple groups over
thousands of kilometers to escape Chiang Kai-Shek’s Kuomintang forces,
which were pursuing a rival vision for reviving China. Shortly after
his arrival at the party base in Yan’an in 1935, Mao became chairman
of the Military Commission and undisputed leader of the fraction of
forces surviving the mythologized march. By early 1949, the party
controlled most of the core Han heartland, ensuring its victory in the
civil war. On October 1, 1949, Mao assumed power in the historic
capital of Beijing, formally institutionalizing the party-state-army.
Ever since, in marked contrast to most nations’ professional
militaries, the People’s Liberation Army has maintained extensive
responsibility for domestic stability and opposing internal threats to
party hegemony. This central mission would manifest dramatically in
the 1989 Tiananmen Massacre, which initiated three years of military
purges, political instruction, and few major exercises.

Party-army capture of the Chinese state set the stage for achieving
the next layer of security: party-state administration of the core Han
heartland. Beyond that, however, lay a gaping hole in the control of
ethno-religious minority borderlands. Tibet remained unincorporated
through the People’s Republic of China’s first year of existence. On
October 7, 1950, Mao sent the army into the region. This led to the
surrender of 5,000 Tibetan troops by October 19. In 1951, Beijing
pushed through a Seventeen Point Agreement establishing sovereignty
over, and the power to rule, Tibet. While there is no chance today of
Tibet, the Xinjiang Uyghur Autonomous Region, or any other minority
borderland seceding from China, ethnic tensions and opposition to
governance approaches are prompting Beijing to devote tremendous
surveillance and security resources to these areas.

Beyond Tibet, the People’s Republic spent much of the Cold War
defending the integrity of its self-defined land borders. Most
importantly, the army defeated Indian forces in a 1962 border
conflict. It also shored up defenses after the flight of 60,000 ethnic
Kazakhs and Uyghurs from Xinjiang to the Soviet Union that year. In
1969, Chinese forces preemptively attacked Soviet counterparts on the
Ussuri River’s contested Zhenbao Island in order to deter broader
incursions by thousands of Soviet troops then deployed along China’s
disputed northern border. But in keeping with even higher priorities,
as M. Taylor Fravel explains, Beijing compromised in international
disputes when threatened with minority rebellions in adjacent border
areas. In 1979, China waged a bloody border war to punish Vietnam for
invading Cambodia and deposing the Khmer Rouge, followed by years of
episodic skirmishes, but in 1991 the two sides settled their land
border. Sino-Russian boundary agreements culminated in a 2008 treaty
whereby Beijing acquiesced to Moscow’s historical acquisition of
thousands of square kilometers of Chinese-claimed territory to settle
dispute over the world’s longest land border. It has now settled land
border disputes with all neighbors save India and Bhutan.

Meanwhile, China’s seaboard contained important flashpoints unresolved
by the civil war period of the 20th century. Here, Chinese achievement
was, and remains, mixed. Between March 5 and May 1, 1950, the army
recaptured Hainan Island. It subsequently secured the mainland
coastline and airspace by halting a spate of Kuomintang coastal raids,
harassment, and — years later — American-sponsored U-2 overflights.
However, it failed to wrest the heavily fortified offshore islands of
Jinmen and Matsu from Kuomintang control, shelling them intermittently
instead. Moreover, rather than prioritizing naval development to
safeguard China’s coastal concentration of people and industry, Mao
redirected much of both to China’s remote southwest hinterlands, where
“third line” defense and industrial development consumed slightly over
half of the Third Five Year Plan’s total capital investment. In
personally promulgating China’s 1964 military strategy, Mao even
imposed a retrograde approach of “luring the enemy in deep,” although
this and related initiatives furthered his own political purposes
without strategic soundness. China’s 1988 military strategy instead
emphasized China’s southern coastline and the South China Sea. In that
same year, China’s navy clashed with its Vietnamese counterpart in the
Spratly Islands. Long after Deng Xiaoping’s reforms reversed Maoist
autarky, beginning in 2014 China engineered an extraordinary
externalization of its coastal defense posture by engaging in extreme
augmentation and fortification of features it occupied in the South
China Sea.

Most importantly, Mao indefinitely postponed an invasion of Taiwan
slated for 1951 following the Korean War’s outbreak that year. But
even if Mao gave up on Taiwan for the near term, Chiang Kai-Shek had
not given up on the mainland and remained determined to retake it. For
years afterward, including in 1962, China’s leaders worried that
Chiang would invade from Taiwan, perhaps with American support. Taiwan
Strait crises erupted in 1954-55, 1958, and 1995-96. Today, a Taiwan
contingency is the army’s lead planning scenario. The military
strategies of 1993, 2004, and 2014 focus geographically on Taiwan and
its surroundings and emphasize achieving the jointness and
technological sophistication necessary to prevail in a contingency
there potentially involving the U.S. military. Years of Chinese
progress have left Taiwan’s forces in a position of gross quantitative
inferiority; respective qualitative advantage now varies by area, with
army-favored areas growing.

As for entrepôts Mao considered unfairly separated by imperialism, he
and the party played a long game of prioritized sublimation. Whereas
distance, oceanic buffering, Kuomintang resolve, and lack of a
substantial party-affiliated fifth column would likely have precluded
success in any conceivable invasion of Taiwan, the lack of these same
factors would have enabled Mao to take Hong Kong. Yet by February
1949, he had already determined not to do so, in favor of using
British Hong Kong as a permanent doorway to foreign necessities.
Circumventing a post-1949 U.S. blockade and the Sino-Soviet split,
Cold War Hong Kong literally underwrote party survival “as the
single-largest contributor of foreign exchange to China (estimated at
over 173 million pounds in 1966, about a third of the total); the only
entrepôt for ‘smuggling’ sanctioned Western technology, equipment, and
medicines to China and exporting Chinese food products; a business
operation base for Chinese enterprises; and an intelligence center for
Chinese agents.” Portugal offered to return Macau in 1985, but Beijing
deferred to avoid preempting Hong Kong’s return. Mao, who could have
taken the two territories on command, could not have lived to witness
Hong Kong’s return in 1997 or Macau’s in 1999. Beijing now controls
Macau tightly, but is having more difficulty consolidating its control
over Hong Kong given rising local opposition, conditions that fuel
concern in Taiwan.

Unresolved near-seas sovereignty claims are now a major Chinese focus.
Beijing has some form of dispute with all eight of its maritime
neighbors, counting Taipei. With a wealthy 23.5 million-strong society
rooted in Chinese languages and cultures, Taiwan is by far Beijing’s
most coveted prize. Additional objectives include the Senkaku/Diaoyu
Islands and East China Sea delimitation claims, and multifarious South
China Sea features and maritime claims encompassed by the “Nine-Dash
Line.” Beijing’s basis for claims remains nebulous in some areas, but
the nature of its claims is relatively clear. While Mao and the party
in their early prioritization did not emphasize sovereignty over
Taiwan or these other features and zones, Chinese citizens alive today
have been subjected to numerous official statements declaring near
seas claims to represent  “core,” or at least important, Chinese
territorial interests. Xi’s China is currently on a trajectory to
pursue these claims with increasing vigor and impatience, even if it
triggers significant tensions. It is hard to imagine a future China —
even if no longer party-led —explicitly renouncing these claims,
although different politics and priorities could prompt a shift to
peaceful, symbolic means as seen in Taiwan today.

Beyond the near seas, Beijing’s priorities become more diffuse and
unclear in nature, and less unilateral in potential execution. For
years, China’s overseas interests have been growing rapidly as more
citizens, officials, and enterprises operate overseas; and China’s
economy depends increasingly on resource inputs and trade.
Accordingly, the New Historic Missions that Hu Jintao ordered in 2004
added a new layer of outward emphasis for the People’s Liberation
Army. Some aspects of China’s foreign footprint, such as commerce in
the Indian Ocean, have historical analogs even predating Zheng He’s
Ming Dynasty voyages six centuries ago. Others are unprecedented,
including Xi’s Belt and Road Initiative to orient enhanced Eurasian
economic development around China through infrastructure and
investment. As Liza Tobin explains, this is part of Xi’s larger
pursuit of an international “community of common destiny” friendly to
his party and its increasingly global influence. Here Xi is invoking
older imperial “Silk Road” traditions, but building far beyond them in
scope and scale. China’s military is finally receiving the level of
resources, development, and tasking to safeguard these interests in
substantive ways. It is tasked with securing the Belt and Road
Initiative. But what this all means in practice remains to be seen. It
risks modern-day versions of imperial management challenges and
overreach.

Short-Term Opportunities, Long-Term Challenges

Short-term upsides and long-term downsides characterize China’s
trajectory. With its disciplined hierarchy of national security
priorities, China’s leadership has picked its battles literally and
figuratively. Unlike imperial Germany and Japan, it has not truncated
its rise with ruinous wars. Unlike European imperial powers, it has
not invested heavily in overseas colonies only to have them rebel or
demand their release peacefully. Unlike the Soviet Union, it has not
overextended itself militarily or otherwise. Unlike the United States,
it has not expended heavily on long-term overseas conflicts with few
tangible benefits. Washington disperses its focus and forces globally;
Beijing is making the near seas its current layer of military
emphasis, to formidable effect.

But China has no guarantee of prevailing in its near seas quest, let
alone adding a similarly intensive layer of military capabilities
beyond. China’s attenuation in military power and coordination with
distance remains striking. And time may not be on the side of
continued rapid progress in the future. Rather than another four
decades of economic burgeoning, China appears poised for decreased
rates of growth across the board. This “S-Curved” slowdown typically
bedevils mature great powers, and is well-documented in Western Europe
and even the uniquely-advantaged United States. In China’s case, party
policies have hastened and exacerbated the slowdown with artificially
decreased birthrates and facilitated pollution. Yet slowing may remain
underappreciated, particularly in a society where nobody under forty
has experienced national economic setbacks. In area after area, China
has made rapid achievements by picking low-hanging fruit during
“catch-up” growth fueled by societal striving following Maoist
malpractice. Now citizens’ expectations are far greater and
incremental progress far harder and more expensive. Taking military
technology and personnel to the next level entails great effort yet
diminishing returns. Warships built rapidly now will require massive
overhauls a decade hence. The cost of sea power far outpaces
inflation: there is a reason that very few nations maintain a blue
water navy. Time will tell whether China can continue rapid progress
into the far seas, but history and economics suggest that a slowdown
looms.

The ultimate downside facing Xi’s China has not materialized, but he
and his party have long feared it sufficiently to invest tremendously
against it. Unlike Western nations, whose decentralization frustrates
deliberate pursuit of a consistent grand strategy yet facilitates
tremendous resilience, the Leninist China so comprehensively guided by
Xi is brittle and highly vulnerable to domestic instability. Xi has
reintroduced additional vulnerability to the system removing limits to
his reign and launching severe “anti-corruption campaigns” against
rivals. He has scrapped Deng’s relatively stable, reliable, and
consensus-based system of elite interest management. Replacing Mao’s
excesses and a system in which losers of political struggles often
died, it was designed to enhance stability by sharing decision-making
and benefits more broadly among top elites while reducing the stakes
for factional infighting. Instead, Xi has reverted to a
winner-takes-all system in which the paramount leader monopolizes
decision-making and responsibility. Should economic growth continue
slowing, and other problems emerge, Xi may come under tremendous
pressure.

If party rule, administration, or control of borderlands were
threatened, Xi would undoubtedly redirect priorities inward. The
development of the Belt and Road Initiative and aircraft carrier
groups to protect it could not compete with the imperative to shore up
policing, paramilitary forces, and border security. Moreover, as
Fravel documents, party disunity frustrates the formulation of new
military strategy; economic slowdown could produce elite policy
differences yielding precisely such disunity. Once Xi becomes weak,
sick, old, or dies, various interests within China will likely have a
weakened institutional ability to deal with the distribution of
interests and managing factional rivalry. That may mean greater
instability and uncertainty within China, which may cause it to
release political pressure through regional aggression. The United
States and others should prepare for a less stable China as well as
one that lashes out externally even more.

For now, however, Xi is able to pursue a grand strategy predicated on
a progressive radiating of Chinese power and prestige. Beijing’s
current area of focus, China’s maritime periphery, is a zone of
overlapping Sino-American interests and activities. Since the United
States and China have tremendous interests in avoiding war yet feel
increasingly threatened by each other regarding self-defined vital
interests, the author maintains that both nations must pursue some
form of “competitive coexistence.”

Competitive Coexistence?

The actions and relations of the United States and China will largely
shape the world of the next several decades. This will doubtless be a
challenging time. With the grandest and most strategic vision of any
great power, Xi and his party have staked their persistence in power
on the proposition that they alone can make China great again, in part
by achieving hierarchically prioritized national security interests.
Realizing this “China Dream,” as Xi defines it, by 2049 or even
earlier requires subordinating Hong Kong to Beijing’s unchallenged
control, incorporating Taiwan formally into the People’s Republic of
China, and realizing a variety of disputed near seas sovereignty
claims. These objectives pit China directly against important
interests, policies, treaty obligations, and military preparations of
the United States and its allies and partners. Even if parties can
avoid a collision course, it will not be smooth sailing. Yet, with the
right navigation, the American ship of state can stay strong and
successful: Washington must hold off Beijing’s irredentism until
slowing in Chinese national power growth combined with domestic
demands reprioritizes policies toward peacefulness.

China under Xi clearly has a strategy. The United States clearly needs
one of its own. With four decades of deep engagement foundering on
Chinese ambitions and American concerns, Washington needs a new
approach. I propose a strategy of “Competitive Coexistence,” which
boils down to four points:

Do not suppress China wholesale; do oppose its harmful behaviors.
Accept risk and friction to recalibrate Chinese actions threatening
American interests.
Hold ground in contested areas to thwart Chinese dominance.
Reduce tensions and pursue shared interests as much as Beijing is willing to do.
By nearly any measure, China’s power has grown formidable indeed, but
there is no need for Washington to yield to Beijing’s demands in the
window of vulnerability before national slowdown recalibrates Chinese
priorities. In addition to its own unparalleled strengths, America has
a unique array of allies and partners for burden sharing and force
multiplication. It must leverage this advantage to safeguard its
interests against Chinese pressure. Only then can all the necessary
numbers truly add up.

As for the United States and China, while they contend continuously
and interact in contested spaces, may nevertheless avoid kinetic
conflict — and may pursue shared interests as strategic stakeholders
where mutually motivated. This is not a panacea. Beijing will continue
to promote its own concepts. But given the reality of U.S. public
opinion and economic and security concerns, it is likely the most
realistic place to start.

“Longing on a large scale makes history''

“Unity is iron and steel; unity is a source of strength,” “Complete
reunification of the motherland is an inevitable trend..no one and no
force can ever stop it!” he added.

🇻🇪Venezuela -35%
🇱🇾Lybia -19.1%
🇮🇷Iran -9.5%
🇿🇼Zimbabwe -7.1%
🇳🇮Nicaragua -5%
🇬🇶Ecuatorial Guinea -4.6%
🇦🇷Argentina -3.1%
🇸🇩Sudan -2.6%
🇪🇨Ecuador -0.5%
🇦🇴Angola -0.3%

IMF October report: via  @jesuscasique1

I expect Corbyn to get much closer.

International Markets

Euro 1.1167
Dollar Index 97.199
Japan Yen 108.27
Swiss Franc 0.9863
Pound 1.2936
Aussie 0.6920
India Rupee 70.66
South Korea Won 1159.375
Brazil Real 3.9904
Egypt Pound 16.1268
South Africa Rand 14.80

There's narrow attribution at times and then there's this.  Recall
last year they dropped 31% in Q4.  The return from Oct high last year
to now is 14%

Commodities

The price at which all subscribers in the Offering will purchase
Shares (the “Final Offer Price”), the number of Shares to be sold, and
the percentage of the Shares to be sold will be determined at the end
of the book-building period.
The Company’s crude oil production accounted for approximately one in
every eight barrels of crude oil produced globally from 2016G to
2018G.

For the year ended 31 December 2018G
Operating Cash Flow $121.0 billion
Free Cash Flow $85.8 billion
Net Income $111.1 billion
ROACE (%) 41.1%
As at 30 June 2019G
Gearing (%)
2.4%

the Board intends to declare aggregate ordinary cash dividends of at
least $75.0 billion with respect to calendar year 2020G, in addition
to any potential special dividends.

Emerging Markets

Hundreds of millions of dollars in cash has been shipped from Russia
to Venezuela, providing a lifeline to the South American country as
U.S. sanctions limit its access to the global financial system. A
total of $315 million of U.S. dollar and euro notes were sent in six
separate shipments from Moscow to Caracas from May 2018 to April 2019,
according to data reviewed by Bloomberg from ImportGenius, which
compiled Russian customs records it obtains through private sources.
The cash came from lenders run by the countries’ governments and went
to Venezuela’s development bank, the records show. While the money
could be for any number of things -- like Venezuela repatriating cash
held overseas or dividends from a stake in a Moscow-based bank or
revenue from sales of crude or gold -- the complex logistical feat
shows one of the ways President Nicolas Maduro’s administration has
sought to skirt aggressive U.S. financial sanctions. As a consequence
of the scrutiny, the central bank is conducting more transactions in
cash, sometimes offering local clients access to euro bills.
ImportGenius’s data goes through April this year. That month, about
$97 million in notes were sent in two loads from Moscow-based bank
Evrofinance Mosnarbank to Venezuela’s Banco de Desarrollo Economico y
Social de Venezuela, or Bandes. Evrofinance is a joint venture between
Bandes and Russia’s state property management agency. In January, $113
million worth of 100-euro bills were sent from state-controlled lender
Gazprombank, which at the time had a stake in Evrofinance. The same
entity shipped $50 million in U.S. dollar bills just two days earlier,
and two separate shipments of unspecified currency totaling $55
million were made in May and July of last year. Press officials for
Evrofinance didn’t respond to requests for comment. Requests made to
Bandes through Venezuela’s Finance Ministry were redirected to the
Information Ministry, which didn’t respond. A Venezuelan government
official, who asked not to be identified discussing sensitive matters,
confirmed the country had received cash shipments tied to Evrofinance
but declined further comment. Gazprombank spokesman Anton Trifonov
declined to comment on any cash shipments but noted that “the
correspondent account of Bandes with Gazprombank, as well as any
cooperation between the banks, was totally terminated in March 2019.”

The Venezuelan regime has gone to great lengths to maintain access to
hard currency as the U.S. crackdown leaves it isolated from
conventional financial systems, with major banks mostly refusing to do
business with Maduro. Among other ventures, the regime has used secret
gold sales to raise funds, while also studying the possibility of
using cryptocurrencies or a Russia-run global payment system to send
money.

Bandes was sanctioned in March by the U.S., which alleged Maduro uses
the bank’s accounts to keep a substantial amount of money abroad,
mostly in Europe. The officials said the Venezuelan government had
started moving funds away from the central bank, shifting them to
Bandes.

Last year, Evrofinance was selected by the Maduro government to handle
some payments to its suppliers, which were urged to channel
international transactions through the Moscow bank. Later that year,
Venezuela appointed a former Evrofinance board member as a top
official in the nation’s banking system.

They’re delving deep into legal rules governing the securities,
searching for language covering collective action clauses that come
into play when borrowers want to change contract terms, as in a
restructuring. Notes that require a higher percentage of investors to
sign off on any deal often trade at a premium of about 25% over those
with a lower threshold. Bondholders have good reason to think the
issue will soon be in play. President-elect Alberto Fernandez says
Argentina needs debt relief to make its finances sustainable, while
signaling he’s hoping for a fairly friendly restructuring to push back
payments on the bonds. Ahead of any talks, investors are taking
positions in notes issued in 2005 and 2010 that require sign-off from
at least 85% of holders of all bonds affected to make changes, versus
the 66.67% or 75% threshold on securities issued more recently.

While most of Argentina’s debt is now trading at about 40 cents on the
dollar -- essentially reflecting investors’ bets on recovery value --
some of the dollar- and euro-denominated bonds with more stringent
CACs fetch a premium of about 10 cents.
For example, dollar-denominated notes due in 2033 are quoted at 51
cents on the dollar, while securities with the lower CAC level due in
2028 and 2036 trade for 39 cents. A higher-CAC euro-denominated note
maturing in 2033 is at 48 cents, while a lower-CAC note that comes due
five years earlier is at just 38 cents.


Frontier Markets

Sub Saharan Africa

Leaders of three African countries said that Saudi Arabia could play a
pivotal role in the process of transformation and development in the
Dark Continent, pointing to the great historical links with the Arab
world and the Kingdom in particular.
Speaking on the sidelines of the Future Investment Initiative (FII)
currently held in Riyadh, Kenyan President Uhuru Kenyatta said he had
a positive discussion with Saudi Crown Prince Mohammed bin Salman
about investing in Africa.
“So far we are not real partners. We have to restore old business
ties. There are many opportunities that offer mutual prosperity and
enable us to move forward as our parents and grandparents did,” he
said during a session entitled, the Future of Business in Africa,
within the FII forum.
Kenyatta urged the Arab world not to believe what is published in
social media and television about Africa being the continent of
diseases and wars.
“Can’t you see what the Chinese and the Russians saw? Africa is a land
that is transforming, evolving and changing… It is a continent that
seeks to overcome conflicts, offer investment opportunities, and end
corruption altogether,” he emphasized.
“Let us be able to collaborate with each other as developers and
partners. We have cultural similarities with Saudi Arabia and the
world,” he added.
According to the Kenyan president, African countries are working hard
to fight corruption and boost the investment climate.
“We are focusing on strengthening the anti-corruption tools and the
investigation and research departments,” he noted, underlining efforts
to speed up the digitization process and to launch an intensive
campaign for the population to talk about the negative aspects of
corruption and how to combat it.
Nigerian President Mohammed Buhari said that Africa was moving towards
peace, stability, and security, which are the mainstay of investment.
He stressed that his country was working hard to fight corruption
through accountability and the follow-up on administrative efforts,
saying: “We have recovered millions of dollars and assets from outside
the country.”
Mohamed Issoufou, President of the Republic of Niger, touched on the
African Free Trade Area launched last July.
“This free zone within Africa is the largest in the world for free
trade. It is located in a region with one billion consumers, including
300 million from the middle class,” he said.
Issoufou added that Saudi Arabia had an excellent role in Africa in
development, health, and education.
“We have strong relations with Saudi Arabia and our cooperation is
excellent. We have priority sectors such as infrastructure, while the
Saudi Investment Fund is contributing to the construction of the
Kainji Dam, which provides energy and electricity,” he remarked.

Moody’s, the last big credit rating agency to classify South Africa as
investment-grade, retained the country’s Baa3 rating on Friday.
But it warned that failure by President Cyril Ramaphosa’s government
to fix slowing economic growth and rising debts may soon lead to a
downgrade to junk.
“The current rating rests on the government’s ability to quickly
develop a credible strategy to halt and ultimately reverse the rise in
debt. Such a strategy has not been forthcoming to date,” Moody’s said.
The negative outlook signalled Moody’s concern that Mr Ramaphosa’s
ruling African National Congress “will not find the political capital
to implement the range of measures it intends” to restart the economy,
it added.
Mr Ramaphosa promised a “new dawn” when he replaced Jacob Zuma as
South Africa’s president last year after a lengthy period of rising
corruption in the state.
But he has been hard pressed by vicious infighting in the ANC over
reforms such as tackling a crisis at Eskom, the state power monopoly
that has been called the biggest threat to the economy.
Eskom sells nearly all of South Africa’s electricity but, because of
waste and corruption, it can no longer keep up payments on R450bn
($30bn) of its mostly state-guaranteed debts without government help,
straining public finances to the limit.
Tito Mboweni, finance minister, warned this week that, without
reforms, bailouts for Eskom and a bloated public-sector wage bill
would raise state debts from less than 60 per cent of GDP to a danger
level of 70 per cent over the next three years.
Moody’s added that structural blocks in the post-apartheid economy,
such as the world’s worst inequality rate and high joblessness, were
sapping reform efforts “to an even greater extent than previously
expected”.
Mr Mboweni’s Treasury believes that the economy will grow only 0.5 per
cent this year. Factories, mines, shops and smelters have all been
battered by Eskom-imposed rolling power blackouts in 2019.
A complete fall into junk status would bar South Africa’s debt from
global bond indices tracked by investors, making it even more
expensive to raise money on the markets.
Mr Mboweni’s next budget in February is increasingly being seen as a
critical moment to turn the fiscal tide for South Africa.
“The development of a credible fiscal strategy to contain the rise in
debt, including in the 2020 budget process and statement, will be
crucial to sustain the rating at its current level,” Moody’s said.

Charlie Robertson [Chief Economist Renaissance Capital] has
pronouncedthat South Africa [is] Heading for [a] Junk Downgrade. A
meme flying round on social media is that There is a New sex position
called the “Ramaphosa” Get on top and do nothing [@danielmarven].

The Purest Proxy for the China, Asia, EM and Frontier markets feedback
loop phenomenon is the South African Rand aka the ZAR.
The rand is also the most volatile currency in the world, with the
one-week implied volatility climbing a fourth day.

Kenya

The “nowhere” refers to Duka Moja (literally meaning “one shop”), a
sleepy trading centre on the Maai Mahiu-Narok road where the railway
line comes to an abrupt end. Duka Moja lies about 20 kilometres beyond
the last train station at Suswa, a slightly busier cattle market about
five kilometres down the highway turn-off at Maai Mahiu. There is
little to take commuters there, unless one is a cattle trader.
Naivasha town, which would be the destination for commuters, is a good
30 kilometres by road from the train station at Suswa but only an hour
and a half’s drive from Nairobi. There being no station at Duka Moja
means that the stretch will lie unused until “Phase 2B” is built—if it
ever is. The entire Phase 2A extension is an economic puzzle. The bulk
of the cargo that comes through the port of Mombasa is either destined
for Nairobi, or is in transit to Uganda and beyond. In 2018, the port
handled 21.8 million metric tonnes of dry cargo of which 9.6 million
tonnes—44 per cent—was transit cargo. This suggests only two logical
destinations for rail freight: Nairobi and Malaba. After offloading in
Nairobi, the only other logical line for rail freight is one that
serves transit cargo, terminating at Kisumu or Malaba as the case may
be.
The entire Phase 2A extension is an economic puzzle. The bulk of the
cargo that comes through the port of Mombasa is either destined for
Nairobi, or is in transit to Uganda and beyond. In 2018, the port
handled 21.8 million metric tonnes of dry cargo of which 9.6 million
tonnes—44 per cent—was transit cargo. This suggests only two logical
destinations for rail freight: Nairobi and Malaba. After offloading in
Nairobi, the only other logical line for rail freight is one that
serves transit cargo, terminating at Kisumu or Malaba as the case may
be. In October 2018, we were informed that the financing agreement for
Phase 2B, the 250-kilometre stretch from Naivasha to Kisumu, would be
signed at the margins of the China-Africa Summit (FOCAC). Upon his
return, Cabinet Secretary for Transport James Macharia informed the
country that the Chinese authorities had asked for a feasibility study
“of the whole project”. He was quick to add that he was confident that
they would be able to produce one in no time, since they now had data
from the Mombasa-Nairobi line which had by then been in operation for
close to a year. There are two observations to be made here. Firstly,
it is the Chinese who have been running the railway, and it is they,
and not the government, who have the data on its operations. Secondly,
CS Macharia implies that no feasibility study had been undertaken.
This is not quite true. There exists a feasibility study for the
Mombasa-Nairobi line carried out by the contractor, China Road and
Bridge Company. The economic evaluation—which takes up 17 pages of the
143-page document—is the shoddiest thing of its kind that I have seen.
In April this year, the Kenyan delegation left for Beijing amid much
fanfare, again anticipating that they would sign the financing of
Phase 2B at the margins of the Belt and Road Initiative (BRI) Summit.
This time China dropped the bombshell; the project would not be
financed. The government had not been paying attention. A couple of
weeks prior, China’s Ministry of Finance had released a document
titled Debt Sustainability Framework for Participating Countries of
the Belt and Road Initiative. It was posted on their website, and was
the theme of China’s Finance Minister’s speech at that BRI summit. The
long and short of it was that the era of chequebook diplomacy was
over. China was bringing sovereign risk assessment on board. More
interestingly, China had not formulated its own framework, stating in
the document that it was adopting the IMF/World Bank Debt
Sustainability Framework for Low Income Countries. Evidently, the
administration had missed that memo. Once the financing fell through,
a hastily conceived “Plan B” proposing to revamp the old meter gauge
line and integrate it with the new railway was unveiled. The initial
announcement indicated that the revamped line would terminate in
Kisumu at a cost of Sh40 billion ($400 million). Within days, this
plan was abandoned in favour of another routing terminating at Malaba
on the Kenya-Uganda border. It was to be a public-private partnership
(PPP) project costing Sh20 billion ($200 million). The latest on these
“Plan Bs” is that the Chinese contractor’s quotation far exceeds the
government’s preliminary estimates.

I only recently discovered Ecclesiastes and clearly Xi was ahead of me
in this regard.
Ecclesiastes 1:2-11 2 Vanity[a] of vanities, says the Preacher 2 Vani-
ty[a] of vanities, says the Preacher, vanity of vanities! All is
vanity. 11 There is no remembrance of former things,[c] nor will there
be any re- membrance of later things[d] yet to be among those who come
after.
It seems to me that we are at a pivot moment and we can keep
regurgitating the same old Mantras like a stuck record and if we do
that this turns Ozymandias

Two years after a nullified presidential election threatened to
unleash turmoil across Kenya, growth and stability have returned to
east Africa’s second-largest economy.
Underpinned by a simple handshake in March 2018 between president
Uhuru Kenyatta and Raila Odinga, his then opponent and longtime foe,
Kenya’s new political language of elite co-operation has eased
competition between the country’s most powerful groups and revived
business and investment activity.
Following the reconciliation, economic output jumped by 6.3 per cent
in 2018, growing at its fastest pace in eight years.
At the same time, foreign direct investment rebounded by more than a
quarter from 2017 to $1.6bn and inflation dropped to 4.7 per cent,
well within the central bank’s target range.
The rapprochement between the political leaders was followed by a
change in economic strategy. Since 2018, Mr Kenyatta’s government has
sought to shift public spending away from the large infrastructure
projects that have characterised much of the past decade.
Now the focus is on the president’s Big Four agenda of delivering food
security, affordable housing, more manufacturing, and affordable
healthcare to Kenyans. At the same time an anti-corruption campaign,
which had previously been rhetorical, has matured into a series of
high-profile indictments.
Despite the signs of progress, public opinion on the merit of the
“handshake” is split. While it pulled the country back from the brink
of implosion — Mr Odinga had refused to participate in a rerun of the
2017 presidential poll and sworn himself in as president in a mock
inauguration — it has neutered the opposition, rendering government
less accountable, according to critics.
“The opposition is dead here,” says MP Omboko Milemba.
“When Odinga was the doyen of the opposition, he would check the
government of the day on corruption and all issues. Now that he’s in
government there are no checks.”
Though he has no official position and the exact terms of the
handshake deal are unknown, Mr Odinga is working with Mr Kenyatta’s
administration. He is leading a national review expected to make a
series of recommendations for a more inclusive system of government.
Known as the Building Bridges Initiative, Mr Kenyatta has pitched it
as an opportunity to overcome the tribal divisions that split the
country in 2017. Sceptics see it as a strategy to bring opposition
leaders into an already bloated executive while restricting political
control to a narrow elite.
“The country was burning so I think [the handshake] was a good thing
but it could also be driving Kenya into a one-party state,” says
Herman Manyora, a political analyst and professor at Nairobi
University.
“Frankly speaking, in 2022 the election could be a boardroom decision,
with very little left to the voters to decide.”
If that is Mr Kenyatta’s plan, the spoiler could be William Ruto, his
former running mate and current deputy president. Mr Ruto delivered
his Rift Valley voters to help elect Mr Kenyatta in 2013 and backed
him again in 2017, on the understanding that he would succeed the
president in 2022. After the rapprochement with Mr Odinga, that deal
appears to be off.
Some of Mr Kenyatta’s closest supporters have distanced themselves
from Mr Ruto and several of his allies have been targeted in
anti-corruption probes, in effect splitting the ruling coalition.
Mr Ruto’s backers say the self-made, teetotal former teacher is
exactly the right leader to take Kenya forward from 2022.
“William Ruto inspires a whole generation of Kenyans . . . Kenyans who
are hustling through life, Kenyans who would otherwise have no hope,”
says Kimani Ichung’wah, an MP for the Kikuyu constituency in central
Kenya.
Mr Ruto’s critics accuse him of corruption and ruthlessness in his
pursuit of power, warning that a Ruto government would dismantle
Kenya’s tradition of moderate politics and centralise control at State
House.
Mr Kenyatta has so far made no comment on Mr Ruto and the 2022
elections but tension in the ruling coalition appeared to break into
the open in July, when Henry Rotich, the finance minister, and his
deputy Kamau Thugge were charged with corruption and removed from
office.
The indictment of the country’s sitting finance minister was an
unprecedented move that was quickly seen through a political lens.
Though Mr Rotich was appointed by Mr Kenyatta, he is from Mr Ruto’s
Kalenjin ethnic group and is viewed as an ally of the deputy
president.
Mr Kenyatta’s record on fighting corruption has been mixed. He has
been a vocal critic of bribery since entering office but graft is
widely perceived to have increased during his presidency.
“Never have we had a president more articulate against corruption in
Kenya’s history, but on the ground it has just been scandal after
scandal,” says John Githongo, an anti-corruption campaigner who headed
an anti-graft unit under a previous president.
One of the problems, he says, is that Mr Kenyatta inherited and then
accelerated a public works programme that was rife with opportunities
for corruption.
As the state’s focus shifts from public works to the Big Four agenda,
those opportunities should be reduced, he says.
The shift in policy also has implications for economic growth,
explains Razia Khan, chief Africa economist for Standard Chartered
Bank.
“The Big Four initiative is about unlocking the growth opportunities,
sector by sector, in a more measured way. Yes, it will have an impact
on growth but it will only be seen over time.”
Kenya has borrowed heavily over the past decade to fund its public
works projects, returning to the eurobond market three times in five
years while also issuing debt at home.
The borrowing caused economic output to leap but saw the ratio for
debt-to-gross domestic product jump to 58 per cent in 2017 from 51 per
cent in 2015, leading the IMF to increase Kenya’s risk of debt
distress to moderate.
With government constrained by the need to service those debts, it is
even more important that the private sector is empowered to grow, says
Ms Khan.
The problem is that while headline figures for economic growth have
improved, business confidence in the private sector does not reflect
this, she says.
“Something has been missing from the growth story. It’s growth that
seems lacking in the animal spirit that was evident in Kenya in the
past.”

Kenya’s stock market is going digital and diversifying as it seeks to
attract new investors to offset declining share values, global anxiety
over emerging and frontier market risk and a dearth of initial public
offerings.
That is the message of Geoffrey Odundo, chief executive of Nairobi
Securities Exchange. Founded in 1954, the NSE is one of the oldest
stock exchanges in sub-Saharan Africa after Johannesburg in South
Africa and Harare in Zimbabwe.
In 2014, it followed Johannesburg’s example by listing on the exchange
itself. Five years later a new strategy, which has seen the NSE make
substantial investments in technology, is ready to bear fruit, says Mr
Odundo.
“After we listed we changed our focus from just being an
infrastructure provider to becoming a commercial business,” he
explains from his office in the exchange’s mirrored headquarters in
the Kenyan capital.
That strategy has seen the NSE overhaul its trading platform, extend
its services and engage hundreds of thousands of new Kenyan investors.
Despite this, the value of equities traded in the first eight months
of 2019 was down 23 per cent as foreign investors — on whom the NSE
relies for more than half of its trading activity — followed global
trends and pulled funds from emerging and frontier markets.
In response, the NSE has tried to deepen local participation in the
market as a counterbalance to the international situation.
“We are carrying out a number of programmes to ensure that we make
domestic investors equally active in the market,” Mr Odundo says.
In 2017, the NSE helped launch M-Akiba, the world’s first mobile-only
government bond, which allows any Kenyan to acquire government paper
for as little as $30 (the average monthly wage is $76).
Since then M-Akiba has raised more than Ks1bn ($9.6m) and, though it
has fallen short of the government’s Ks4bn target, the NSE has
registered interest from more than 500,000 citizens.
“That’s 500,000 people who previously had no idea of what a bond is,” he says.
The next step in the NSE’s democratisation will be the launch “very
soon” of a trading function to allow users to buy and sell equities on
their phones.
The new capability will be accompanied by an upgrade to the NSE
trading platform to allow intraday trading for the first time.
Currently equity trades take three days to clear.
“Retail wants excitement, they want to see, can I buy this share, have
I made a shilling more and can I sell it within the same period,” Mr
Odundo says. “That’s the level of activity we want and we believe
that’s going to stimulate the demand.”
The new platform will also allow the lending and borrowing of
securities for the first time, enabling investors to “short” stock
they believe is likely to underperform.
Currently about 80 per cent of the shares issued on the exchange are
held by long-term domestic pension funds.
“We want them to lend that stock to investors who want to trade” he
says. “All these [initiatives] are part of broadening the offering to
get different pools of investors.”
Other new asset classes include a derivatives market launched in July.
Eight years in the making, it is only the second derivatives market in
sub-Saharan Africa after Johannesburg, which has offered equity
derivatives since 1988.
This month a property developer, Acorn Project (Two), raised Ks4.26bn
($41m) in Kenya’s first green bond offering, designed to raise capital
for projects that reduce carbon emissions.
Though Acorn fell short of its Ks5bn target, analysts said the
reception to the debut offering was favourable and Mr Odundo expects
many other green bonds to follow.
“Kenya is awash with green financing opportunities.”
Still, the problem remains that new entrants to the stock market are
scarce and too many listed companies have suffered major losses.
The NSE has had no IPOs since 2015, compared with eight between 2006 and 2011.
Equally, three of the 66 groups listed on the exchange have been
forced into liquidation in the past two years, including ARM Cement,
whose investors included the UK government’s private sector investment
arm, CDC Group.
Mr Odundo says new listings will come next year, adding that the NSE
is also incubating 17 companies as potential entrants to the market.
Under the programme, called Ibuka, the NSE helps businesses to
fast-track development with access to financial consultants,
structuring advice and enhancing visibility with local and foreign
investors.
“We are pretty optimistic about next year to see a couple of IPOs,
possibly even one conversion from one of our incubator companies” says
Mr Odundo. “Very positive outcomes are expected.”

On a windswept mound on the edge of the Rift Valley, two Kenyan
bird-spotters lift binoculars to their eyes. A tawny eagle circles on
the thermal currents above their heads. They check the time, estimate
the bird’s altitude and note the approximate flight pattern.
The men, Sylvester and David, are avid ornithologists but this is not
a hobby. They work for Kipeto Energy, an ambitious wind power project
50km south-west of Nairobi, that is seeking to advance Kenya’s move to
renewable power while protecting the fauna for which the east African
country is so well known.
Funded by Actis, the UK-based private equity manager, and the US
government’s Overseas Private Investment Corporation, the 100MW Kipeto
project is ideally located to harness the winds that blow across the
undulating plateau.
The site is, however, only 15km east of the cliff-face nesting place
of the critically endangered Rüppell’s vulture.
In addition, the farmland where the investors are building 60
130m-high wind turbines is home to groups of the white-backed vulture
— also critically endangered — and dozens of other raptors for which a
collision with one of the 50m-long blades would mean injury or death.
Initially opposed by Kenyan conservationists, the partners have found
a solution seen by Actis, which invested in the project in 2014, as a
template for managing the environmental effect of infrastructure
projects across the continent.
In consultation with four conservation groups, Kipeto has committed to
ensuring a net gain in the population of Rüppell’s and white-backed
vultures, in addition to no net decline in the number of other
resident raptors.
“This is pioneering stuff,” says Michael Turner, Actis managing
director in east Africa, on a tour of the site.
“If we can make it work I think we’ll find it will become the norm for
wind farm development in sensitive areas across Africa.”
The vultures are not directly the target of poisoning but they become
the victims
The strategy is twofold. Kipeto intends to limit, if not eliminate,
the number of bird collisions with the turbines, while investing in
work in southern Kenya to boost vulture numbers.
Across the site, up to 30 spotters will monitor birds’ flight paths
and will order a turbine to be shut down if one is at risk of a
collision, says Mr Turner.
The rapid discovery and removal of animal carcasses from the site
should also reduce the number of vultures that visit, he says.
To achieve the promised gain in the population for the endangered
vultures — an obligation that Mr Turner says is part of the $233m loan
agreement with Opic — the project will spend about $1m a year on
conservation programmes across 9,000 sq km — an area about six times
the size of Greater London.
“This, you could argue, is a lifeline for vulture conservation in
Kenya because there is no organisation that is contributing this
amount of money and the threat, the danger for vultures is here and
now,” says Mr Turner.
To protect their herds, farmers across Kenya often lace dead livestock
with commonly available but poisonous agricultural chemicals in the
hope of killing predators such as lions, hyenas and leopards.
When vultures feed on those same carcasses or on the bodies of
poisoned predators, the birds die too, sometimes in huge numbers.
Vulture numbers in Kenya’s famous Masai Mara national reserve, for
example, have dropped by half in the past 30 years and across Africa
poisoning accounts for 60 per cent of recorded vulture deaths,
according to Bird-Life International.
“The vultures are not directly the target but they become the
victims,” explains Dominic Kimani, Kipeto’s chief ornithologist.
Anti-poisoning programmes already exist in and around the Masai Mara
and national parks such as Amboseli. Through its conservation efforts,
Kipeto believes it can link those initiatives.
“What we’re able to do . . . is connect the ecosystems in the Mara
with the ecosystems in Amboseli and actually have the whole of the
southern belt of Kenya hopefully a poison-free zone,” says Mr Turner.
The innovative solution should see the previously doomed power
project, now under construction, connect to the grid in December 2020.
This should further boost Kenya’s already impressive renewable energy
credentials.
Kenya has installed generating capacity of about 2,370MW, of which
2,016MW or 85 per cent came from renewable sources last year,
according to the African Development Bank. Of that, about 40 per cent
came from hydropower and 33 per cent from geothermal sources.
But the contribution from wind power is slowly increasing. Africa’s
largest wind power project — 365 turbines with a total capacity of
310MW — was commissioned in July near Lake Turkana in northern Kenya,
moving the country closer to its ambitious target of 100 per cent
green energy by 2020.
At Kipeto the farmers have an added incentive to help the project meet
its conservation targets. The company had to acquire the site through
58 lease agreements and each 30-year contract provides for revenue
sharing with the individual land owner, explains general manager
Stefan van Niekerk.
“A farmer is at the mercy of the environment, so the revenue stream
from these lease agreements gives them a completely new lease of
life,” he says.

The 2 other countries with higher negative fiscal balances as a % of
GDP (2019) are: Burundi -9.1% Eswatini -8.8%

The increase recorded in NASI was driven by gains in large-cap bank
stocks such as NCBA Group, Equity Group, and KCB Group, which gained
by 30.7%, 24.2%, and 23.2%, respectively, owing to expectations of the
repeal of the interest rate cap.

Par Value:                  1/-
Closing Price:           15.80
Total Shares Issued:          432155985.00
Market Capitalization:        6,828,064,563
EPS:             1.37
PE:                 11.533

Additionally, WPP will also sell its shareholding in Research and
Marketing Group Investment Limited. The Kantar transaction is part of
WPP PLC’s new strategy, selling Global Kantar Group to Bain Capital
Group.
Kantar TNS operates in Nigeria and Kenya; the primary markets for WPP
Scangroup. It also conducts activities in other countries including
Senegal, Cameroon, Cote d’Ivoire, and Ghana.
Shares for Scangroup in RMGIL amount to 80% of the total ownership.
The sale of Millward Brown Companies and RMGIL will generate
approximately KSh 5 billion, after costs and taxes.
 A notice from the company secretary reveals that Scangroup will pump
proceeds from the sale into expansion and capital needs. Furthermore,
40% of the proceeds will be paid out as a special dividend to
shareholders.
 “The sale will realize approximately KSh 5 billion after estimated
tax and costs. The consideration has been arrived at under a global
competitive auction process carried out by WPP Plc.” announced Reuben
Mwangi.
“The board has considered the use of the proceeds from the disposal
taking to considerations potential expansion and capital need and
subjects to completion expects that at least 40% of the net proceeds
shall return to shareholders in the form of a special dividend.”
 Still, the transaction is not complete as it awaits the finalization
and execution of the sale agreement. The deal also awaits shareholder
and regulatory approval as well as the finalizing of the Global
transaction.
 Meanwhile, the company has urged shareholders to exercise caution
when trading its shares due to the ongoing transaction.