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Satchu's Rich Wrap-Up
Monday 26th of April 2021

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“Derivatives,” Alvin said. “I don’t speculate about the future, I trade it.” @NewYorker
World Of Finance

And they were cross‑linked and interwoven and resold in large bundles, “future on future,” Alvin said, handing me a paper towel. 

“Forget about the forces of the free market, my friend. Commodity prices no longer refer to any value, past or present—they’re just ghosts from the future.”


The Consensus View appears to be that the Global economy is going to accelerate big time and that its going to BOOM! I beg to differ 

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Van Gogh experienced a period of new hope and happiness in the spring of 1888. @vangoghmuseum

Having just moved to Arles from Paris, he anticipated all of the bright new colours he would see in the South and how he would capture them in flowering orchards.

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MIRRORS Jorge Luis Borges

I, who have felt the horror of mirrors

Not only in front of the impenetrable crystal

Where there ends and begins, uninhabitable,

An impossible space of reflections,

But of gazing even on water that mimics

The other blue in its depth of sky,

That at times gleams back the illusory flight

Of the inverted bird, or that ripples,

And in front of the silent surface

Of subtle ebony whose polish shows

Like a repeating dream the white

Of something marble or something rose,

Today at the tip of so many and perplexing

Wandering ears under the varying moon,

I ask myself what whim of fate

Made me so fearful of a glancing mirror.

Mirrors in metal, and the masked

Mirror of mahogany that in its mist

Of a red twilight hazes

The face that is gazed on as it gazes,

I see them as infinite, elemental

Executors of an ancient pact,

To multiply the world like the act

Of begetting. Sleepless. Bringing doom.

They prolong this hollow, unstable world

In their dizzying spider’s-web;

Sometimes in the afternoon they are blurred

By the breath of a man who is not dead.

The crystal spies on us. If within the four

Walls of a bedroom a mirror stares,

I am no longer alone. There is someone there.

In the dawn reflections mutely stage a show.

Everything happens and nothing is recorded

In these rooms of the looking glass,

Where, magicked into rabbis, we

Now read the books from right to left.

Claudius, king of an afternoon, a dreaming king,

Did not feel it a dream until that day

When an actor shewed the world his crime

In a tableau, silently in mime.

It is strange to dream, and to have mirrors

Where the commonplace, worn-out repertory

Of every day may include the illusory

Profound globe that reflections scheme.

God (I keep thinking) has taken pains

To design that ungraspable architecture

Reared by every dawn from the gleam

Of a mirror, by darkness from a dream.

God has created nighttime, which he arms

With dreams, and mirrors, to make clear

To man he is a reflection and a mere

Vanity. Therefore these alarms.

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Johnson banged a gong for the cameras but the assembled crowd shouted “Dom, Dom, Dom,” not “Boris, Boris, Boris”. “I could see Boris watching, off to the side,” the mutual friend said. “He didn’t like it.” ⁦ @thesundaytimes
Law & Politics

Cummings’s response was predictable. He is a man who takes nuclear weapons to a pillow fight. He has had months to copy emails and messages. There are rumours he has audio recordings. 

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Guerrilla warfare: @BorisJohnson steels himself for final assault from Cummings @thesundaytimes
Law & Politics

Even Boris Johnson’s closest allies have compared the prime minister to one of Shakespeare’s most tragic heroes: King Lear. 

After arguably one of his toughest weeks in Downing Street, Johnson suffered his greatest betrayal when his once loyal lieutenant, Dominic Cummings, eviscerated him in a 1,000-word blog post.

Those close to Johnson fear the treachery of his former chief adviser, accused of “systematic leaking”, has pushed the prime minister over the edge. Just like Lear, the PM has been driven half mad.

Aides are only too conscious that Cummings has nothing to lose and believe he has enough “kompromat” to “destroy” Johnson when he gives evidence on Covid-19 to MPs on May 26.

They are especially concerned about emails in which the prime minister is allegedly dismissive about the potential death toll from Covid — or quoted as being so. 

Others believe Cummings has embarrassing details of his links to Mohammed bin Salman, the Saudi crown prince, and Sheikh Mohammed, the ruler of Dubai.

One Downing Street insider said: “After the departure of his closest aides last year, the prime minister has become increasingly isolated and paranoid. He has become known in some circles as the King Lear prime minister and we all know how that ended up.”

Last week after days of leaks, including the publication of private text messages between the prime minister and Dyson more than a year ago, Johnson finally “snapped”.

“It was like death by a thousand cuts,” said one Downing Street aide. “But the Dyson leak was the last straw.”

In particular, Johnson has been concerned by the disclosure of details about the refurbishment of his Downing Street flat amid claims it was circuitously funded by a Tory donor.

The Electoral Commission is investigating. By Friday, the Cabinet Office had confirmed in a statement to parliament that Johnson would foot a residual bill of £58,000 himself. 

On Thursday, the PM decided to finger Cummings for the leaks. It is suggested he may have briefed newspaper editors himself. It was a co-ordinated hit with the story appearing in three newspapers. The Daily Mail, which has been the outlet for most of the leaks, was left out.

Few aides in No 10 now believe Johnson made the right decision in launching the attack on Cummings, prompting Friday’s incendiary riposte. It is understood that he overruled advisers who warned him that the move was “suicidal”.

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‘You’re a mutant virus, I’m the immune system and it’s my job to expel you from the organism.’ OCTOBER 30, 2014 BY DOMINIC CUMMINGS The Hollow Men II

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.

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China and Russia Turn Deeper Ties into a Military Challenge for Biden @ForeignAffairs @JackDetsch
Law & Politics

Deepening military and diplomatic cooperation between Russia and China is worrying U.S. defense planners, who fear the two frenemies that share military technology and many foreign-policy goals will complicate the Biden administration’s plan to reassert U.S. leadership. 

China is carefully monitoring Russia’s military buildup near the border with Ukraine, which the U.S. Defense Department said this week is larger than the 2014 deployment, with an eye to its own pressure campaign on Taiwan and the South China Sea. 

Last week, China dispatched a record number of bombers and fighters into Taiwan’s air defense zone in a display of dominance; top U.S. military officials warn Beijing could try to seize the island by force in the next six years.

“Our sense is that [China] is paying very close attention to what’s going on as they did initially with things in the Ukraine,” the senior defense official said, speaking on condition of anonymity. 

“I think it’s fair to say that they are looking closely to determine how they might leverage lessons learned into their own national interests.”

There’s no evidence so far to suggest Beijing and Moscow are actually coordinating their parallel pressure campaigns, according to 11 current and former officials and experts who spoke to Foreign Policy. 

But the buildups are stretching the U.S. President Joe Biden’s attention at a particularly bad time. 

As the Pentagon has broken with the 1990s-era concept of planning for two major wars at the same time, the split screen of Chinese fighter jets over Taiwan and Russian troops massing near Ukraine is giving the Pentagon’s strategic planners a particularly uncomfortable preview of what the future could hold.

“You face a two-front war where we don’t have a two-front military,” said Elbridge Colby, a former deputy assistant secretary of defense during the Trump administration

“If NATO is expecting U.S. forces to bail it out simultaneously with a fight over Taiwan, we can’t do them both. We don’t have the assets. That can create huge problems for us.”

The Biden administration is busy trying to make good on the long-delayed pivot to Asia by putting more military assets in the Western Pacific, but it is still trying to figure out how to manage Beijing’s growing axis with Moscow, which a 2019 U.S. intelligence assessment described as more aligned than at any point in the past 60 years.

 Chinese President Xi Jinping once described Russian President Vladimir Putin as his “best friend and colleague.” 

Russia’s recent military buildup near Ukraine’s border has also served as a reminder that although China may be the strategic priority for years to come, Moscow still has the capacity to wreak havoc in Europe.

“I want the pivot to Asia, but I don’t want it to come at the expense of focusing on the threat of Putin today,” said Michael McFaul, who served as U.S. ambassador to Russia under former U.S. President Barack Obama.

For years, China and Russia have engaged in a tactical alliance in the United Nations Security Council, banding together to counter the influence of the United States and its European allies—Britain and France—who have liberally pursued economic sanctions and military intervention. That cooperation has only increased in recent years, including on votes regarding Syria. Outside of U.N. headquarters, Russia and China have intensified their once-chilly relationship in recent years by redoubling bilateral trade in key areas like energy and arms. Both are interested in circumventing the U.S.-dictated financial order that helps undermine Washington’s global dominance. They have also united over their deep skepticism about U.S. efforts to promote democracy and human rights.

“We have to start thinking about how they also generate synergy in ways that amplify the challenge that both countries pose,” said Andrea Kendall-Taylor, director of the Transatlantic Security Program at the Center for a New American Security. 

For decades after the Sino-Soviet split in 1961, the relationship between the two major powers was characterized by deep mistrust. 

But things began to thaw after the end of the Cold War and really went into overdrive after Russia invaded and annexed Crimea in 2014, provoking an avalanche of Western sanctions.

That prompted Russia to find new economic and political partners in the East, starting almost immediately with a 30-year, $400 billion deal for a natural gas pipeline connecting Russian gas with Chinese demand for energy; since then, Chinese dependence on Russian oil has also increased. 

In exchange, Beijing provides financing and high-tech components that Moscow can no longer access in the West. 

Although China’s defense industry is rapidly developing, almost 80 percent of its arms imports still come from Russia, including its S-400 missile defense system and Sukhoi Su-35 fighter jets. China’s J-11 and J-15 fighters are based off of Russian designs as well as some of its surface-to-air missiles. 

It’s a two-way street: Russia has also leaned on China for electronic components and naval diesel engines in the face of Western sanctions, according to a recent report from the Center for a New American Security. 

The think tank concluded Russian missile and fighter technology gives China “better strategic air defense capability and improved ability to contest U.S. superiority,” particularly in Taiwan or the South China Sea.

“In the words of that old movie Jerry Maguire, they complete each other,” said retired Adm. James Stavridis, who served as NATO’s Supreme Allied Commander Europe from 2009 to 2013.

Even military ties are getting closer. Thousands of Chinese People’s Liberation Army troops took part in Russia’s 2018 “Vostok” exercise, the first time forces from outside the former Soviet Union had taken part. 

The following year, Putin revealed Russia was helping China develop a missile attack early warning system. 

Russia and China, along with Iran, conducted major naval drills in the Indian Ocean in 2019, and both nations have jointly exercised in the East China Sea, where China has territorial disputes with Japan.

Although the two countries have not entered into any formal defense agreements, the relationship is effectively a “quasi-alliance or entente,” said Artyom Lukin, an associate professor and specialist on China in the Asia-Pacific at the Far Eastern Federal University in Vladivostok, Russia. 

“We are looking at the situation of how to deter both simultaneously; yet, individually, what works with one may not work with the other,” said another U.S. defense official, speaking on condition of anonymity.

Even without any sort of formal alliance, the tacit cooperation between China and Russia and rising tension over both Ukraine and Taiwan is putting the Biden administration in a bind.

“Now you’re looking at two theaters with two adversaries,” said Jim Townsend, who served as deputy assistant secretary of defense for European and NATO policy. “This is something that makes planners wake up and sweat in the middle of the night.”

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1-4-2-1 The 2 means the U.S. armed forces must have the strength to win swiftly in two near-simultaneous conflicts in those regions.
Law & Politics

1-4-2-1. The first 1 refers to defending what has since come to be called the homeland. 

The 4 refers to deterring hostilities in four key regions of the world. 

The 2 means the U.S. armed forces must have the strength to win swiftly in two near-simultaneous conflicts in those regions. 

The final 1 means that we must win one of those conflicts “decisively,” toppling the enemy’s regime.

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05-DEC-2016:: "We have a deviate, Tomahawk." "We copy. There's a voice." "We have gross oscillation here"
Law & Politics

So much has happened in 2016, from the Brexit vote to President-elect Trump, and it certainly feels like we have entered a new normal. 

One common theme is a parabolic Putin rebound. 

At this moment, President Putin has Fortress Europe surrounded. 

The intellectual father of the new Zeitgeist that propelled Brexit, Le Pen, the Five Star movement in Italy, Gert Wilders in the Netherlands, is Vladimir Putin.

Putin has proven himself an information master, and his adversaries are his information victims.

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28-MAR-2021 :: We are once again entering an exponential escape velocity Phase #COVID19
Minerals, Oil & Energy

The Virus remains an exogenous uncertainty that is still not resolved though all the virologists who have metastasized into vaccinologists will have you believe its all sunlit uplands from here. 

Glorious sunrise at the Borana conservancy @nickdimbleby @JamboMagazine

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Covid-19 bodies officials set up pyres on a parking lot next to the road in East Delhi. They lost count after 100 on Friday evening. The crematorium handled around 20 bodies a day before the pandemic. @LamaPrawesh

As Covid-19 bodies were brought to the crematorium without a break, officials set up pyres on a parking lot next to the road in East Delhi. They lost count after 100 on Friday evening. The crematorium handled around 20 bodies a day before the pandemic.

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States with such rulers can get “seized by senility and the chronic disease from which [they] can hardly ever rid [themselves], for which [they] can find no cure”
Law & Politics

Ibn Khaldun explained the intrinsic relationship between political leadership and the management of pandemics in the pre-colonial period in his book Muqaddimah 

Historically, such pandemics had the capacity to overtake “the dynasties at the time of their senility, when they had reached the limit of their duration” and, in the process, challenged their “power and curtailed their [rulers’] influence...” 

Rulers who are only concerned with the well-being of their “inner circle and their parties” are an incurable “disease”. 

States with such rulers can get “seized by senility and the chronic disease from which [they] can hardly ever rid [themselves], for which [they] can find no cure”

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India asks @Twitter to take down some tweets critical of its COVID-19 handling @Reuters
Law & Politics

Twitter has withheld some of the tweets after the legal request by the Indian government, a company spokeswoman told Reuters on Saturday.

The government made an emergency order to censor the tweets, Twitter disclosed on Lumen database, a Harvard University project.

In the government's legal request, dated April 23 and disclosed on Lumen, 21 tweets were mentioned. 

Among them were tweets from a lawmaker named Revnath Reddy, a minister in the state of West Bengal named Moloy Ghatak and a filmmaker named Avinash Das.

The law cited in the government's request was the Information Technology Act, 2000.

"When we receive a valid legal request, we review it under both the Twitter Rules and local law," the Twitter spokeswoman said in an emailed statement.

"If the content violates Twitter's rules, the content will be removed from the service. If it is determined to be illegal in a particular jurisdiction, but not in violation of the Twitter Rules, we may withhold access to the content in India only," she said.

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A bit concerned by scientists claiming with absolute certainty that VOCs will not evade vaccine responses & that this has never happened in 'real people'. @dgurdasani1

A bit concerned by scientists claiming with absolute certainty that VOCs will not evade vaccine responses & that this has never happened in 'real people'. 

This has happened in clinical trials & dismissing very real risks provides false reassurance & prevents pre-emptive action.

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Now for the kicker on Evidence Based Science: New variant is here, all of the existing evidence is worthless, obsolete. @yaneerbaryam

What you gonna do? Start all over again? Or make incorrect assumption of independence from the change (not evidence based!).

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That might also correlate with Manaus. And P1 @muradbanaji and @trvrb

And because ''the only Covid-19 vaccines likely to be available for most of 2021 have been formulated against the original virus''

Then might prior infection to wild-type or vaccination against wild type actually prove to be an accelerant of mutant virus infection?

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.2107

Dollar Index 90.716

Japan Yen 107.71

Swiss Franc 0.9123

Pound 1.3902

Aussie 0.7775

India Rupee 74.85

South Korea Won 1112.70

Brazil Real 5.4787

Egypt Pound 15.6825

South Africa Rand 14.2687

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26-NOV-2018 :: "It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."
World Of Finance

GameKyuubi posted "I AM HODLING," a drunk, semi-coherent, typo-laden rant about his poor trading skills and determination to simply hold his bitcoin from that point on. 

"I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," he wrote in reference to the now-famous misspelling of "holding." 

"WHY AM I HOLDING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad trader and I KNOW I'M A BAD TRADER.  Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."

He concluded that the best course was to hold, since "You only sell in a bear market if you are a good day trader or an illusioned noob.  The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell." 

He then confessed he'd had some whiskey and briefly mused about the spelling of whisk(e)y.  

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08-FEB-2021 :: The Markets Are Wilding @elonmusk I am become meme, Destroyer of shorts
World Of Finance

And on February 4 He tested that hypothesis

No highs, no lows, only Doge @elonmusk Feb 4 

Dogecoin is the people’s crypto @elonmusk Feb 4

You have it all wrong The Pink Tulips aren't Trading Tulips, they're investing Tulips @StockCats

The hardest thing at the peak is to be the naysayer the short seller.

Anybody can be decisive during a panic It takes a strong Man to act during a Boom. VS NAIPAUL

“The businessman bought at ten and was happy to get out at twelve; the mathematician saw his ten rise to eighteen, but didn’t sell because he wanted to double his ten to twenty.”

...and so then I says to the guy, "listen - you don't understand Radio..." @coloradotravis

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The story of the last few weeks in finance has been the secretive rise and rapid downfall of Archegos Capital Management. @SahilBloom
World Currencies

A thread on the underlying mechanics of the Archegos saga and how a $20 billion fortune vanished into thin air...

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Fortunately, there were features of the strategy that allowed the firm to remain anonymous. @SahilBloom
World Of Finance

(1) As a family office, it was not required to disclose its holdings on a 13F filing (as with all hedge funds).

(2) It used swap contracts to quietly amass large, leveraged positions.

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At its peak, Archegos had built a ~$100 billion portfolio and Bill Hwang was worth ~$30 billion. @SahilBloom
World Of Finance

Importantly, as the positions were held at banks and not disclosed on 13F filings, the extent of the positions and leverage was largely unknown.

But then it all came crashing down.

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On March 22, ViacomCBS, which had seen its stock 3x in the prior months (perhaps from Archegos’ aggressive buying) announced a $3 billion stock sale. @SahilBloom
World Of Finance

Its share price tumbled 30% in the two days that followed the announcement.

Suddenly, Archegos’ levered bets were underwater.

This meant that the value of the stock being held on the bank balance sheets was lower than the amount that was loaned to buy the positions.

The banks would be able to seize a portion of Archegos’ collateral in order to make themselves whole.

The banks allegedly asked Archegos to sell its positions and close the contracts.

This would mean Hwang would take a small loss but the banks would be whole.

The problem was that if the stocks dropped much more, Archegos would be wiped out and even the banks might take a loss.

The bankers from the different banks convened a meeting to discuss what to do.

Some believed the best path was to wait - the stocks would recover and everything would be fine.

Others weren’t so sure and began offloading large blocks of Archegos’ stock to mitigate their risk.

A classic deleveraging spiral was set in motion.

As the banks seized Archegos’ collateral and sold large blocks of the stock, the stock prices began to drop.

Seeing the further stock price drops, Archegos’ other bankers, who had been inclined to wait, began doing the same.

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With the dust settled, it was time to assess the damage @SahilBloom
World Of Finance

Archegos’ banks had offloaded ~$100 billion of stock.

Several (the late movers who had tried to wait) had lost billions in the process.

And Archegos had seen its estimated $20 billion capital base vanish into thin air...

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$1800 remains a key resistance area for $gold. @Mayhem4Markets 1780.25

I suspect many would consider jumping back in, and shorts would be more likely to cover en masse, if we break that level on a weekly close with sizable volume.

Worth watching the yellow metal closely for signs of directionality.

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The diamond industry’s collapse last year left the biggest producers with billions of dollars of uncut gems stashed away in safes. Now, in a matter of months, they’ve suddenly found buyers. @markets

The huge stockpile was built up when the diamond world came to a standstill during the height of the pandemic, stoking fears that gems amassed by the biggest miners could hurt the sector for years. 

But rampant demand from the middlemen who cut, polish and trade stones has all but wiped out the stash -- and remarkably as top producers De Beers and Alrosa PJSC raised prices.

It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis. 

At the same time, demand jumped amid surprisingly good festive sales, with consumers unable to book vacations spending more on luxuries such as gems.

De Beers this week said it sold 13.5 million carats of diamonds in the first quarter, almost double the amount it mined in the period, signaling stock drawdowns

While the No. 1 miner doesn’t report inventories, it indicated to customers in recent weeks that stockpiles have returned to normal levels, according to people familiar with the matter who asked not to be identified. The company declined to comment.

Russian miner Alrosa’s inventories tumbled about 60% in six months to 12.8 million carats by the end of March, the lowest in almost three years.

Managing supply has been a headache for the sector ever since De Beers ended its monopoly around the turn of the century. 

Inventories ballooned during the 2008-09 financial crisis and again in 2013, and each time subsequent stockpile sales saw polished gems build up, putting huge pressure on the industry’s midstream.

Yet the top miners have been able to raise prices this time round, after significantly cutting production last year and buoyed by renewed demand from manufacturers and traders. 

De Beers has been hiking prices since the end of last year, back to pre-coronavirus levels. It sold more than $1.6 billion in rough gems in its first three sales of 2021, the most since 2018.

“Alrosa and De Beers have managed to clear the excess inventories built over the course of 2020 and without hurting polished-diamond pricing that continues to advance,” Liberum Capital analyst Ben Davis said. 

“This bodes very well for the remainder of the year to clear that much stock in such a short space of time.”

There are still plenty of risks. The start of the year is typically busiest because of restocking, and any slowing in sales will pressure prices again.

In India, the industry’s factory engine room remains vulnerable to a ferocious new coronavirus wave. 

Concerns are mounting that local production won’t be able to meet demand from key Chinese and U.S. retailers, and some manufacturing has already been curtailed, according to people familiar with the matter. 

That could create shortages, but may also cut rough-diamond demand.

While the speed of the stockpile drawdown caught many by surprise, the big question is whether the industry will be disciplined enough not to sell too much too soon.

“The industry has to use supply and pricing in tandem,” said Anish Aggarwal, a partner at adviser Gemdax. “That’s been the big takeaway from this crisis.”

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Just two weeks ago, @IMFNews upgraded India’s economic growth forecast to 12.5% -- quickest rate among major economies. Now, as Covid-19 cases surge the most globally, that bullish view is looking increasingly in doubt. @markets
Emerging Markets

Just two weeks ago, the International Monetary Fund upgraded India’s economic growth forecast to 12.5% -- the quickest rate among major economies. 

Now, as Covid-19 cases surge the most globally, that bullish view is looking increasingly in doubt.

In Delhi, India’s political capital, the streets are mostly empty and the markets nearly deserted with almost all shops closed in response to curbs put in place by the local administration to fight the pandemic. 

The scene is not so different in Mumbai, the financial hub that accounts for 6% of the national output.

Yet for now, Prime Minister Narendra Modi is shunning a nationwide lockdown and encouraging states to keep their economies open. 

And for that reason, economists are signaling risks to their forecasts, but not tearing them up all together just yet.

“This second wave of virus cases may delay the recovery, but it is unlikely in Fitch’s view to derail it,” the ratings company said in an April 22 statement

It stuck to its 12.8% GDP growth forecast for the 12 months through March 2022.

The Reserve Bank of India this month also retained its growth estimate of 10.5% for the current fiscal year. 

But Governor Shaktikanta Das said the surge in infections impart greater uncertainty and could delay economic activity from returning to normalcy.

High-frequency data are already pointing to a deepening contraction in retail activity in the week through April 18 relative to its pre-pandemic January 2020 level, said Bloomberg Economics’ Abhishek Gupta. 

That’s a key risk for an economy where consumption makes up some 60% of gross domestic product.

“Localized containment measures will act as a drag on growth,” said Teresa John, an analyst at Nirmal Bang Equities Pvt. in Mumbai, given that 10 Indian states that account for about 80% of the country’s Covid-19 cases contribute nearly 65% of the national output. 

Still, John left her “conservative” growth estimate unchanged at 7% for the current fiscal year.

The reluctance by economists to revisit growth forecasts just yet possibly stems from expectations for the crisis to blow over soon. 

Fueling that confidence is a vaccination drive that’s covered more than 100 million people of the nation’s over 1.3 billion total, besides the promise of continued support from fiscal and monetary policy makers.

“While the rapidity with which cases are rising is high, it is also expected that this wave will be relatively short lived,” said Kotak Mahindra Bank Ltd.’s Upasna Bhardwaj, who is among the few to have downgraded the economy’s growth forecast -- by 50 basis points to 10% for the current year. 

“Nonetheless, uncertainty remains,” she said.

That uncertainty doesn’t look to be going away in a hurry, with India reporting record 349,691 new coronavirus cases and 2,767 deaths on Sunday. 

With nearly 17 million cases in total, it is the second-worst affected nation globally, lagging only the U.S.

While the outbreak has overwhelmed the nation’s hospitals and crematoriums, it’s also hit consumer confidence in an economy that was only beginning to recover from an unprecedented recession last year.

“The surge in infections has led to the re-imposition of partial lockdowns in the more affected cities and states, and could trigger full lockdowns if the situation worsens,” said Kristy Fong, senior investment director for Asian equities at Aberdeen Standard. 

“This will have a knock-on impact on the re-opening of the economy and recovery prospects.”

Those concerns have contributed to the nation’s benchmark stocks index becoming Asia’s worst performer this month, while the rupee put up by far the region’s poorest show over the past month as traders factored in the impact of the curbs on economic growth.

Although policy makers have signaled they are ready to take steps to support growth, a failure to flatten the virus curve could exert pressure on monetary and fiscal policies that have already used up most of the conventional space available to them.

The government has limited fiscal headroom, having penciled in a near-record borrowing of 12.1 trillion rupees ($162 billion) this year to spur spending in the economy. 

For its part, the RBI has stood pat since cutting interest rates to a record low last year. It has instead relied on unorthodox tools, including announcing a Government Securities Acquisition Programme, or GSAP, to keep borrowing costs in check.

Sovereign bonds are also facing the possibility of more supply if the government needs to spend more to deal with the second wave. 

Demand is tepid at auctions and the market is banking on central bank support to help ease the supply pressure.

“Given the heavy borrowing program and the evolving macro situation wherein growth concerns are again coming back due the second wave of the pandemic and on the other side inflation could remain sticky, we think bond yields will struggle to soften despite RBI’s very laudable efforts,” said B. Prasanna, head of global markets, trading, sales and research at ICICI Bank Ltd.

With or without lockdowns, some economists see the pandemic weighing on the confidence of consumers -- the backbone of the economy.

“The rising burden of case counts could prove to be a negative distraction to the growth momentum and economic recovery,” said Shubhada Rao, founder at QuantEco Research in Mumbai, who sees a hit to the services sector, especially the contact-intense kind. 

“Potentially this could dent growth by a percentage point. This remains a developing story.”

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His presidency started with a rebellion. It also ended with one. @TheEconomist

Although the exact circumstances surrounding Mr Déby’s death are not yet clear, the transfer of authority that followed it is highly irregular.

The government and parliament have been dissolved and a military council led by Mr Déby’s 37-year-old son, Mahamat Idriss Déby, has taken charge. 

By ignoring the constitution, the army has in effect staged a coup. It says it will rule for 18 months until “free and democratic” elections can be held. That may be too long for many people in Chad. 

“We don’t want a militarised Chad any more” says Bienfait Djiedor, a 31-year-old student in N’Djamena, the capital. “We want a democratic Chad…where reason rules, not force.”

During his three decades in power Mr Déby brought neither democracy nor development. Instead he cracked down on opponents, protesters and the press. The recent election was no exception. 

Witnesses told Human Rights Watch (hrw), a monitoring group, that in February police beat peaceful protesters with whips and sticks. 

In March police officers reportedly drove into a car taking injured demonstrators to hospital, and then pulled the passengers out and hit them. 

Another protester told hrw he was tortured with electric shocks at the police headquarters.

An attempt to arrest an opposition candidate, Yaya Dillo, ended in a shoot-out that he says killed his mother and 11-year-old son.

Although the country has earned billions of dollars from oil, a fifth of its children die before they turn five

Yet Mr Déby proved adept at winning friends in the West, forming alliances with France and America, which saw him as an ally in the fight against jihadists. 

France has a large military base in Chad. Operation Barkhane, its 5,100-strong military force roving the Sahel, has its headquarters in N’Djamena. 

“France loses a courageous friend,” lamented the French government in a statement after Mr Déby’s death.

The dictator’s demise is likely to rock an already tottering government beset by opposition on many fronts. 

Since 2015 the jihadists of Boko Haram have been attacking across the border from neighbouring Nigeria and Niger. 

Their atrocities have pushed thousands of Chadians from their homes. The government has also faced repeated incursions by rebels based in Libya and Sudan. 

In 2019 fighters advancing from Libya towards N’Djamena were halted only after French aircraft bombed them.

This month’s rebel attack seems to have pushed deep into Chad, with fighting reported some 300km north of the capital. Despite this, France has so far refrained from direct involvement, apparently offering reconnaissance and intelligence support instead. 

French reluctance to intervene more forcefully may have been crucial. 

Besides Chad’s president, the rebels claim also to have killed 14 other senior officers in recent fighting.

The third front where the government has been battling is in the capital itself, recently roiled by repeated protests. Police and demonstrators clashed in February over Mr Déby’s decision to run for a sixth term, and again this month in the run-up to the election. 

Opposition leaders have denounced the seizure of power by Mahamat Idriss Déby as a coup. In a statement America also emphasised the need for a transition “in accordance with the Chadian constitution”, which calls for the head of the National Assembly to take over and to hold elections within 90 days.

That contrasts with France, which has simply muttered warily about the need to “establish an inclusive, civilian government” after a “limited period”. 

The younger Mr Déby will probably maintain a close relationship with France and keep supporting Western efforts to fight jihadists in the Sahel, says Nathaniel Powell, a military historian at Lancaster University in Britain. 

At the request of Emmanuel Macron, France’s president, Chad recently sent 1,200 soldiers to help fight jihadists in Burkina Faso, Mali and Niger.

But the crisis at home may require those forces to come back. The opposition is ready to take to the streets again. Rebels from the north, who claim to be fighting for democracy, are promising to march on the capital. 

Divisions are appearing in the army, with one general denouncing the transition as a “coup”. Hence there is “a real fear of civil war”, says Cameron Hudson of the Atlantic Council, an American think-tank. 

“We are afraid,” says Ramadan Mahamat, a 37-year-old teacher in N’Djamena. Every Chadian is asking one question: “What is going to happen to us?” 

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France Backs Chad Military Rulers, AU Urges Swift Transition @bpolitics

France backed a military council that intends to rule Chad for a transition period following the president’s death, while the African Union said it was deeply concerned by the military takeover.

The situation threatens “peace, security and stability” not only in Chad, but also the region, as well as the continent, the African Union said in a statement on its website.

On Saturday, the Front for Change and Concord in Tchad, the rebel group that claimed responsibility for the squirmish that killed Deby, said they were ready to accept a cease-fire and find a political solution to the crisis.

“Chad needs new leaders,” FACT leader Mahamat Mahdi Ali told Radio France Internationale. “But to overthrow the regime to take power was never our goal.”

President Idriss Deby died on April 20 of wounds sustained on a battlefront in northern Chad as rebels advanced on the capital, N’Djamena, according to the army. 

A transitional military council headed by his son, 37 year-old General Mahamat Idriss Deby, said it will run the country for 18 months before restoring civilian rule. 

The nation’s constitution states that a successor should be elected within 90 days.

“France will never let anyone, neither today nor tomorrow, threaten the stability and integrity of Chad,” French President Emmanuel Macron said while attending Deby’s funeral in N’Djamena, on Friday. 

The military council has a role to play to promote “stability, inclusion, dialog and a democratic transition.”

France is a key player in the battle against Islamist insurgencies in West Africa.

French Foreign Minister Jean-Yves Le Drian also defended the military takeover in an interview Thursday with Paris-based broadcaster France 2, saying it was necessary to maintain stability in Chad and the region, while calling for a quick transition.

The former colonial power has contributed about 5,100 troops to a counter-terrorism force that’s battling Islamic State and Al Qaeda-linked militants in West Africa’s Sahel region. 

France’s Barkhane mission, which backs up a regional force known as the G5 Sahel - made up of troops from Chad, Mali, Niger, Mauritania and Burkina Faso - are headquartered in N’Djamena.

Deby positioned himself and his battle-hardened army as key players in the maintenance of peace and security in the area. 

That role helped shield him from international criticism even as his regime became increasingly authoritarian. It even earned him protection from France.

The European ally, which, as of two years ago, spent at least an estimated €1 million ($1.1 million) a day on Barkhane, would eventually like to turn over more responsibility to the G5 Sahel force. 

That seems impossible without military cooperation from Chad, which the junta has said it will maintain.

“Today, we’re very upset with France,” Delphine Djiraibe, a prominent human rights lawyer, said by phone from N’Djamena. 

“Whether the president died on the battlefield or not, you need to respect the constitution. France is a democracy, they should know,” she said.

The Economic Community of Central African States, which counts Chad among its members, also expressed its “solidarity” with the new leadership, Cameroonian President Paul Biya, who currently heads the six-nation bloc, said in a statement. 

The G5 Sahel also gave its “full support to the transition in progress,” its Nouakchott-based secretariat said in a statement issued within hours of the military takeover.

The junta should “expeditiously embark on a process of restoration of constitutional order and handing over of political power to the civilian authorities,” the African Union said.

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Is France facing a Russian north-south pincer assault in Chad? @michaeltanchum

Russia is entrenching in Central African Republic in the South and possibly assisting directly/indirectly Libya-based FACT rebels in the north

#Deby is dead. #Chad’s future is in the balance. Rebels seem very well equipped. Note the blue vehicles bearing the flag of a neighbouring country. Inconclusive but worth examining. @DinoMahtani


These Folks are well provisioned. The Question is by whom? This is a Question @Emmanuelmacron must be surely asking himself. looks like Putin to me.

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28 OCT 19 :: From Russia with Love

“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

Recently we have seen Russian interventions in the Central African Republic CAR.

In July this year, a three-minute animated video appeared on YouTube. Called Lionbear, the cartoon was aimed at children and told the story of a brave but beleaguered Central African lion, who was fighting a losing battle against a pack of hungry hyenas. 

Luckily the lion had a friend who came to the rescue — the strong Russian bear. The bear fights off the hyenas brings peace to the land and everyone lives happily ever after.

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 resol- ve 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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However, while international pressure on Abiy Ahmed's government continues to ramp up, concrete measures are elusive. @Africa_Conf

Four meetings of the UN Security Council failed to arrive at a consensus after China vetoed a United States and European resolution aimed at sanctioning and condemning Ethiopia over the Tigray crisis.

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President @SuluhuSamia treads carefully in post-Bulldozer era @Africa_Conf

President Samia Suluhu Hassan made an unequivocal pitch for herself as the political heir to the late President John Magufuli in her first speech to parliamentarians this week since taking office last month.

'Dr Magufuli departed physically, but his visions, philosophy and strategies on national development are still alive,' said President Samia, prompting loud applause.

That was entirely in tune with the political balancing act which the new President has sought to take. 

With little personal following prior to taking up the presidency, she needs to shore up the support of Magufuli's allies and continuing the war on graft is a sure bet to find favour in the court of public opinion (AC Vol 62 No 7, Life after the bulldozer).

This campaign has also been high on Suluhu Hassan's agenda after a report by the auditor general, Charles Kichere, earlier this month suggested that rampant financial mismanagement in state agencies and parastatals is part of the Magufuli legacy. 

The President has already suspended the Director-General of the Tanzania Ports Authority (TPA), Deusdedit Kakoko, pending an investigation into accusations of embezzlement, and told lawmakers that the office of Director of Public Prosecutions and Prevention and Combating of Corruption Bureau would both be strengthened.

She has also ordered investigations into the alleged misuse of funds that were released from the Bank of Tanzania for development projects earlier this year.

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Angola’s Isabel Dos Santos Says Will Cooperate With Authorities @markets

Isabel dos Santos, who is accused of causing billions of dollars in losses to the Angolan government during her father’s 38-year rule, said she is available to cooperate with authorities to clear her name and find out the truth.

“What I want to resolve as quickly as possible are the attacks on my reputation and my good name,” Dos Santos said in an emailed statement on Monday. 

“I’m available, as I always have been, to cooperate with justice and to provide all the necessary clarifications so that the truth prevails.”

Dos Santos currently faces several civil and criminal cases in which the Angolan government claims more than $5 billion, Angola’s prosecutor general’s office said on May 12. 

The 47-year-old’s assets in Angola were frozen last year after authorities accused her of engaging in deals that caused losses to the Angolan state during the rule of her father, Jose Eduardo dos Santos, that ended in 2017.

Last week, the Portuguese government took control of Dos Santos’s 72% stake in Efacec Power Solutions SGPS SA, a producer of electrical equipment, and is currently looking for a buyer for that. 

The move came after Portuguese prosecutors froze Dos Santos’s accounts in the country that’s home to a sizable portion of her estimated $2.4 billion fortune, according to data compiled by Bloomberg.

Dos Santos, who is Africa’s richest woman, has been living outside Angola since 2018. 

She said it’s false that Angolan authorities are unaware of her whereabouts or unable to contact her, according to her statement on Monday. Dos Santos has denied any wrongdoing and says the allegations against her are politically motivated.

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Zambia: Since October, food price inflation has soared by more than 13 percentage points. “One of the main drivers behind the rise in food price inflation was kwacha weakness,” Shani Smit @NKCAfrica

The population of Zambia is paying the price for Zambia’s sovereign default – when the government missed a payment on its debt – in November 2020. 

The most direct impact is in the form of higher food prices.

Overall annual inflation climbed to 22.8% in March from 22.2% in February, driven by food inflation, which jumped to 27.8%.

The higher prices result from a loss of confidence in the kwacha, says Shani Smit, an economist at NKC African Economics in South Africa. 

Since October, food-price inflation has soared by more than 13%, she notes. “One of the main drivers behind the rise in food price inflation was kwacha weakness.”

Headline inflation is likely to peak in April and then gradually slow, Smit says. 

Reasons for optimism are the harvest season starting in April and the government’s decision not to charge value-added tax on fuel imports, she says.

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.@Absa’s parting of ways with Chief Executive Officer Daniel Mminele following a boardroom bust up leaves the future of South Africa’s third-largest bank up in the air @markets

Chairman Wendy Lucas-Bull has said the board must move quickly to bring about stability, but the to-do list for interim head Jason Quinn and whoever fills the role permanently is lengthy. 

The company is about three years into a new era as a freshly independent group following a split from former U.K. parent Barclays Plc, and signs of a new direction are just starting to form.

The lender’s first Black CEO resigned on Tuesday following a dispute with some subordinate directors over strategy, less than two months after his deputy Peter Matlare died from complications from Covid-19. 

The dilemma now facing the Johannesburg-based company is whether to appoint an internal successor to Mminele or once again target an outsider.

Among employees, “morale and confidence is running low,” said Joe Kokela, general secretary of South Africa’s finance union.

Absa said the bank understands the “concerns and disappointment.”

“Jason has been tasked with ensuring that the business remains resilient,” the company said in emailed comments. 

“His focus will be to align leadership and colleagues behind a clear way forward.”

The lender this month closed a $6 billion money-market mutual fund, South Africa’s largest, reviving speculation the bank may look to sell its wider asset-management unit. 

Absa is also the only one of the country’s top three lenders to resist resuming dividend payments after a coronavirus-related pause, suggesting a different take on navigating the crisis than rivals.

Investment banking head Charles Russon and retail boss Arrie Rautenbach are both pushing for more focus on their respective divisions, while the rest of Africa portfolio -- previously part of Matlare’s remit -- remains without an official leader. 

Quinn also has a number of other executive positions to fill, including a head of digital solutions, innovation and technology.

‘Unmanageable Complexities’

“Appointing an external CEO to implement a strategy that had already been developed and agreed by a management team and board created unmanageable complexities,” said Stefan Swanepoel, an equity analyst at Prudential Investment Managers, which holds 2.4% of the bank’s stock. 

“We would rather this was resolved than continued as a rift embedding unnecessary friction.”

It took Absa almost a year to appoint Mminele, who became the bank’s third CEO in two years when he replaced the previous permanent head, Maria Ramos, in early 2020. 

The former deputy governor of the country’s central bank also became the third Black leader of a major South African lender, but his departure this week cut that number to one.

South Africa has directed efforts toward raising the number of Black leaders in companies to reflect its demographics and help reverse the effects of Apartheid policies.

“Whenever a senior Black executive leader exits, it is a setback,” Polo Leteka Radebe, president of the Association of Black Securities and Investment Professionals, said in response to written questions.

While Absa grapples with identifying a new CEO, Quinn, who has been its financial director since 2016, must keep on implementing the strategy announced in 2018 to reclaim market share lost to competitors during the Barclays era.

“The implementation of the strategy has to date shown signs of success,” Prudential’s Swanepoel said.

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‘Lake Kivu, a Link between the Countryside and the City’ by Esther N’sapu, the Democratic Republic of Congo

Motorboats and wooden canoes circulate Lake Kivu, between the city of Bukavu and the villages of Kalehe, Idjwi and Minova. 

Bukavu is located in the east of the Democratic Republic of Congo, and the three villages are located at the extreme south of the lake. 

Several boats and motorboats traffic between Bukavu and these villages creating a busy agricultural economy.

These villages are among those that supply the city of Bukavu with fresh food from the fields. 

The inland farms are endowed with bananas, pineapples, cassava, cassava leaves, beans, sugar cane, potatoes and sweet potatoes. Farmers keep and trade livestock such as goats, chickens and poultry like turkey.

Water transport is the easiest means due to the poor state of the roads and their lack of security. 

By road, in the dry season, it takes several hours to get to these villages, but crossing the lake takes only 2.5 hours for large boats and three hours for motorboats. 

Without the existence of these boats, the economy between Bukavu and these villages would greatly slow down and the inhabitants much more isolated. 

Moreover, thanks to this traffic, traders can make a round trip to the city during the same day.

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Between the Devil and the Deep Blue Sea: The Choices Facing Kenya and the Kenyattas @theelephantinfo @johngithongo
Law & Politics

Kenyans on Twitter (#KOT) – a fraternity not to be messed with on global social media – recently took on the IMF following the announcement that the Fund had approved another US$2.34 billion facility for the Kenyan government. 

The loan is intended to mitigate the fiscal crunch that has been exacerbated by the COVID-19 pandemic. 

#KOT’s concern was that the current ruling elite is so corrupt that not only have they stolen and misspent what they had previously borrowed, leading to a public debt portfolio of US$70 billion and rising, they will steal and misspend this new amount as well. 

The IMF was forced to respond virtually – which was interesting – explaining the governance conditionalities attached to this latest facility. 

The Fund’s explanation did little to calm Kenyans and the debate still rages; for many, simply put, the IMF is being asked why it is serving whiskey to an alcoholic on condition that the alcoholic only takes a tot a day and imbibes “carefully”. 

Kenyans on Twitter believe they know their government better; they are likely right. 

Unfortunately, no matter how well intentioned, the IMF toolkit is  limited – the austerity spanner, loan wrench, conditionality screwdrivers and advisory nuts and bolts, these have been used before, in the 1990s, but this time the consumer is far more sceptical, and with good reason. 

We are in the middle of major political realignments as we head into the 2022 general election, with President Uhuru Kenyatta currently serving his last term but clearly keen on a transition that will leave his family’s influence intact. 

The overall behaviour of the regime, and the elite at its core, is imbued with an assumption of impunity; they have since independence eluded accountability. 

This impunity gene in our politics can be traced back to the creation of Kenya by the Imperial British East Africa Company (IBEA), a group of businessmen with a royal charter to grab, tax, kill and essentially enslave the population at will. 

A combination of corruption, profligacy, incompetence, rapacious personalised accumulation, spiralling debt and now the devastating COVID-19 epidemic has – ironically – created the circumstances for the elite to think its way out of a crisis of its own making; as they say, never let a good crisis go to waste. 

Indeed, others have been here before. Some senior civil servants – and even the president himself, so I am told – are known to be fans of Lee Kuan Yew’s book From Third World to First: The Singapore Story – 1965-2000 and share it liberally among colleagues. 

If they have read it, it is not always clear that they have understood it. 

A number of Asian countries – notably Singapore, South Korea, Taiwan and to a lesser extent Thailand and Malaysia – used the crisis conditions following the Second World War to change the behaviour of their elite and transform their economies and societies. 

As Ken Ohashi – one-time Senior Economic Advisor to the Kenyan Presidency – explained in a feature carried in The Standard, the East Asian success stories emerged significantly out of a shift away from an “elite-favouring, rent-seeking centred economy” to economies structured to advance when individuals and companies come up with new ideas and are spurred by fair competition. 

Taiwan, South Korea and Singapore in particular took a dramatic shift away from our elite’s rent-seeking model of business. 

In South Korea, President Park Chung-hee, who came to power in a military coup in 1961, ended the Kenyan style of corruption-oriented business by the political and commercial elite. 

He called in leaders of the traditional, largely family-owned businesses (the chaebols) and essentially forced them to become internationally competitive manufacturers. 

Ultimately, the majority couldn’t survive in an environment where they could not manipulate government policy and fiddle the books. 

But the Samsungs, Hyundais etc., flourished and are global giants today. 

As Ohashi argues, “Corruption never disappeared, but it ceased to be the mainstay of business strategy . . .  Taiwan and Singapore managed to revamp the fundamental business culture in a similar way and created an environment in which most companies focused singularly on producing competitive and increasingly higher-value products.”  

In Kenya’s history, the Jubilee regime has been the most sophisticated at managing the perceptions of its performance. 

Jubilee’s launches of bridges, roads, government programmes and other initiatives are slick and the speeches well written. This is true even when they are launching the same project multiple times. 

They have also spent more money than any other previous regime doing this. 

However, in the digital age, they have ultimately struggled and the narrative their media managers try to sell is so far removed from reality that the entire enterprise – even augmented by the likes of Cambridge Analytica – has collapsed in on itself. 

This demonstrates the impact social media has had on the political terrain not only in Kenya but all over the world

As governments have become increasingly authoritarian and as the globalisation model has faltered, social media has become a space that is freer than the streets, particularly for the youth. 

As a result, more and more governments across the developing world have resorted to private intelligence, PR and other reputational management companies to manage this space while others, especially during elections, simply switch off the internet, a tactic that Ethiopia, Zimbabwe, Morocco, Benin, Rwanda, Morocco, Democratic Republic of Congo and Uganda have resorted to in the recent past. 

However, this is not so easy in economies with a reasonably developed service sector and a relatively high use of financial technology. 

In Kenya we have several governance balls in the air at the same time: elections (traditionally our season of grand theft); President Uhuru Kenyatta’s transition as he serves out his final term amid talk of changing the constitution and even holding a referendum to effect the change; spiralling corruption and debt; and the return of IMF conditionalities of the kind last witnessed in the 1990s. 

This time, however, and as I mentioned above, the IMF is confronted with a totally new demographic across Africa. 

It is overwhelmingly young – below 35; increasingly interconnected by technology; mistrustful of the World Banks and IMFs of this world, and also more aware of the inequities that the elites have wrought in the pre-pandemic era of globalisation. 

Kenya’s political elite: hardened and resilient mystifiers 

Still, Kenya has one of the continent’s most experienced and resilient political elites. They have over 50 years of experience in political wheeler-dealing, skulduggery, deal-making and sharing the loot from public coffers – uninterrupted by coups, major social meltdowns or grand economic experiments. 

The odd thing about the corruption perpetrated by an even minimally coherent elite is that it produces a stagnating political stability so long as there is enough loot to share around. 

It is not an ideal situation and it is fraught with deepening inequality and declining public trust in governance institutions and in the politicians themselves. 

Still, the guys at the top can hold on and even sustain a hegemon on the basis of backroom deals, understandings and accommodations. And with the right foreign friends this job is made even easier. 

Currently, there is considerable bewilderment about the Kenyatta succession as our politicians position themselves for the 2022 elections. Part of this is deliberate mystification. 

Newspaper headlines sometimes seem to derive from a single photo of politicians at a meeting posted on Twitter where it’s not at all clear what the discussions were about. 

The mystification is also in part caused by the fact that there are no ideological or significant policy differences between the different competitors for the presidency. 

Even COVID-19 – the disruptor of the century – hasn’t changed their modus operandi. 

The odd thing about the corruption perpetrated by an even minimally coherent elite is that it produces a stagnating political stability so long as there is enough loot to share around. 

The pandemic has stripped naked the governance models of all nations and it has been surprising to see what is hidden underneath all the constitutions, institutions, platitudes and political theatre. 

It has led to a resurgence of authoritarianism where democracy was already in recession globally and there is disquiet that some states will fail. 

Add to this the fact that China is now a risen power and for the first time, under President Xi, is directly marketing its technocratic/meritocratic authoritarian model as an alternative to liberal democracy which is noisy and free but which can, as a result, be slower in delivering public goods and has, in recent years, produced dangerously comical leaders in some of the most developed countries in the world. 

China will clearly play a significant role in defining the post-pandemic geopolitical reality. 

For our ruling elite, however, the confusion is compounded by the 2010 Constitution which has placed severe limitations on their capacity to disrupt both each other and the governance institutions for their personal political ends. 

Indeed, the 2010 Constitution was written specifically because of the elite’s penchant to manipulate the previous constitution to their political advantage, as witnessed from 1964 to the late 1990s. 

Some have described it as a “rule book for naughty boys”, full of self-executing provisions and with a level of detail in terms of institutional design that betrays a lack of trust on the part of its drafters that the elite have any real fidelity to the spirit of the document. 

What our current elite does now will determine what Kenya will look like in the coming decades. 

It is thus that Uhuru Kenyatta, who should be a lame duck by now, continues to play an energetic role in his own succession – not necessarily because of his grip on political matters but because of the Kenyattas’ unique private commercial achievements. 

In fact, there is some concern that all the realignments and political shenanigans could make the 2022 polls more destabilising than previous transition elections. 

Traditionally, incumbency elections in Kenya – where a head of state is going into elections to compete for another term – are the most violent, as was the case in 1992, 1997 and 2007. 

Transition elections, on the other hand, when a head of state is serving his last term, as in 2002 and 2013, are far more peaceful. 

The Kenyatta family enterprise, whose foundation is built on land acquired during President Jomo Kenyatta’s tenure between 1964 and 1978, is now a highly diversified fledging multinational, with Brookside Dairies as its flagship and significant international shareholding. 

These commercial interests have been expanded, diversified and consolidated during Uhuru Kenyatta’s tenure as president. 

Chapter VI of the constitution on Leadership and Integrity – especially those of its provisions that touch on conflict of interest – does not exist in our political reality. 

Meanwhile, public debt has accumulated so rapidly under the Kenyatta regime – Kenyans believe that much of it has been misappropriated – that the mess in public finances no longer has a technical fix, only a political one. 

Indeed, the outrage expressed by Kenyans on social media at the IMF’s US$2.3 billion facility was caused by the belief among many that this money will also be stolen. 

Some of the conditionalities the IMF has insisted on in apparent good faith – such as the reform of key state-owned enterprises – were particularly controversial because of the conviction among some that this was a green light for them to be taken over by the very people who precipitated the debt crisis in the first place. 

Local real estate company Knight Frank estimated that by last year Kenya had over 3,000 dollar millionaires. 

The question that looms over the succession and transition currently underway – and which may explain why it is so confusing – is this: a small group of families have emerged from the last eight years spectacularly wealthy; how do they protect this wealth going forward? 

Similar questions faced elites in South Korea, Japan, Taiwan, Singapore, etc., especially after the Second World War, but the elites in those countries ultimately chose a generally inclusive form of meritocratic governance. 

There are many elites who, having accumulated wealth which they wish to protect in perpetuity, choose to securitise and militarise their politics – essentially throw liberal constitutions out of the window and hold on to the power to steal through a mixture of manipulation, bribery and force. 

There are those who would argue that the Building Bridges Initiative (BBI) is a vehicle to politically engineer the elite out of the structures imposed on them by the current constitution and essentially emerge with a political deal that serves all their political and commercial interests. 

Others argue that the elite inclusivity that informs the Building Bridges Initiative – expensive as it will be – is just what Kenya needs. 

This is a considerably more uncertain model than, say, the Taiwanese or South Korean ones, where the elites fashioned a political and constitutional arrangement that served not just their own interests but those of the entire population as well. 

Securing the peace and prosperity of the masses is the surest protection for the wealth of the elite. 

The combination of factors – the impact of COVID-19; upcoming elections with all the realignments they imply; a volatile region; increasingly unmanageable debt; and, most importantly, the demographic challenge of a now thoroughly disillusioned youth who no longer believe politicians or trust their own governance institutions – will force some of the most consequential choices our hardened elite have ever made. 

Multinationals like the Kenyattas’ need political predictability and policy consistency unless they are in the extractive sector, selling alcohol, drugs or cigarettes rather than perishables like milk and yoghurt.

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@KeEquityBank share price data
N.S.E Equities - Finance & Investment

Price: 37.95

Market Cap: 143,210,958,736


PE: 7.242

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by Aly Khan Satchu (www.rich.co.ke)
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April 2021

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