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Satchu's Rich Wrap-Up
Monday 01st of August 2022

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The Three-Body Problem Author: Liu Cixin

The Three-Body Problem Author: Liu Cixin

The Madness Years China, 1967
The Red Union had been attacking the headquarters of the April Twenty-eighth Brigade for two days. Their red flags fluttered restlessly around the brigade building like flames yearning for firewood.

the new rebels were a pack of wolves on hot coals, crazier than crazy.

The new girl clearly thought she’d be just as lucky. She waved the battle banner as though brandishing her burning youth, trusting that the enemy would be burnt to ashes in the revolutionary flames, imagining that an ideal world would be born tomorrow from the ardor and zeal coursing through her blood.… She was intoxicated by her brilliant, crimson dream until a bullet pierced her chest.

She spoke like a telegraph and gave him the impression that she was always extremely cold. It wasn’t the kind of coldness that some people put on like a mask—hers suffused her all the way through. Wang subconsciously thought of her as the long-obsolete DOS
operating system: a blank, black screen, a bare “C:>” prompt, a blinking cursor. Whatever you entered, it echoed back. Not one extra letter and not a single change. But now he knew that behind the “C:>” was a bottomless abyss.
King Wen and Follower stared at each other, and then turned as one to gaze at Wang, as though he was an idiot. “The sun? How can the sun tell us the time? We’re in the midst of a Chaotic Era.”
“What does what I said have to do with predicting the future? Everyone can see that the sun will rise in about another hour or two.” Wang pointed to the sliver of light above the horizon.
“This is a Chaotic Era!”
“What is a Chaotic Era?”
“Other than Stable Eras, all times are Chaotic Eras.” King Wen answered the way he would have spoken to an ignorant child.
Indeed, the light over the horizon dimmed and soon disappeared. Night covered everything. The stars overhead shone even more brightly.
“So that was dusk instead of dawn?” Wang asked.
“It is morning. But the sun doesn’t always rise in the morning.

That’s what a Chaotic Era is like.”
Wang found the cold hard to take. “It looks like the sun won’t rise for a long time.” He shivered and pointed to the blurry horizon.
“What makes you think that? There’s no way to be certain. I told you, this is a Chaotic Era.” Follower turned to King Wen. “May I have some dried fish?”

Wang walked past the three happily playing children and entered the room that Ye had indicated. He paused in front of the door, seized by a strange feeling. It was as if he had returned to his dream-filled youth. From the depths of his memory arose a tingling sadness, fragile and pure like morning dew, tinged with a rosy hue.

Cosmic microwave background radiation very precisely matched the thermal black body spectrum at a temperature of 2.7255 K and was highly isotropic—meaning nearly uniform in every direction—with only tiny temperature fluctuations at the parts per million range

The more transparent something was, the more mysterious it seemed. The universe itself was transparent; as long as you were sufficiently sharp-eyed, you could see as far as you liked. But the farther you looked, the more mysterious it became.

The red light had come from more than ten billion years ago. It was the remnants of the big bang, the still-warm embers of Creation.

By the faint dawn light, Wang looked for the entrance. When he found it, he saw that the opening had been sealed by blocks of stone. 

But next to it, there was now a staircase carved into the pyramid leading all the way to the apex. 

He looked up and saw that the top had been flattened into a platform. The pyramid, once Egyptian in style, now resembled an Aztec one.

“The search for extraterrestrial intelligence is a unique discipline. It has a profound influence on the researcher’s perspective on life.” Ye spoke in a drawn-out voice, as though telling stories to a child. 

“In the dead of the night, I could hear in my headphones the lifeless noise of the universe. The noise was faint but constant, more eternal than the stars. Sometimes I thought it sounded like the endless winter winds of the Greater Khingan Mountains. I felt so cold then, and the loneliness was indescribable.

“From time to time, I would gaze up at the stars after a night shift and think that they looked like a glowing desert, and I myself was a poor child abandoned in the desert.… I thought that life was truly an accident among accidents in the universe. The universe was an empty palace, and humankind the only ant in the entire palace. This kind of thinking infused the second half of my life with a conflicted mentality: Sometimes I thought life was precious, and everything was so important; but other times I thought humans were insignificant, and nothing was worthwhile. Anyway, my life passed day after day accompanied by this strange feeling, and before I knew it, I was old.…”

Everything was warm and intense: the heated kang stove-beds lined with thick layers of ura sedge, the Guandong and Mohe tobacco stuffed in copper pipes, the thick and heavy sorghum meal, the sixty-five-proof baijiu distilled from sorghum—
all of these blended into a quiet and peaceful life, like the creek at the edge of the village.

The listener read over the message from the Earth again. His thoughts drifted over the blue ocean that never froze and the green forests and fields, enjoying the warm sunlight and the caress of a cool breeze. What a beautiful world! The paradise we imagined really exists!

“You’ve pointed out a great danger. We must strictly control the flow of information from the Earth to the populace, especially cultural information.

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Liu Cixin’s War of the Worlds @NewYorker

Liu Cixin’s War of the Worlds @NewYorker 

Two rival civilizations are battling for supremacy. Civilization A is stronger than Civilization B and is perceived by Civilization B as a grave threat; its position, however, is more fragile than it seems. 

Neither side hesitates to employ espionage, subterfuge, and surveillance, because the rules of conduct—to the extent that they exist—are ill-defined and frequently contested. 

But the battle lines are clear: whoever controls the technological frontier controls the future.

In Liu Cixin’s science-fiction trilogy, “Remembrance of Earth’s Past”—also known by the title of its first volume, “The Three-Body Problem”—Civilization A is a distant planet named Trisolaris and Civilization B is Earth. Life on Trisolaris has become increasingly difficult to sustain, so its inhabitants prepare to colonize Earth, a project made possible by their vast technological superiority. 

Using higher-dimensional geometry, they deploy supercomputers the size of a proton to spy on every terrestrial activity and utterance; Earth’s entire fleet of starships proves no match for one small, droplet-shaped Trisolaran probe. 

Yet Trisolaris’s dominance is far from assured, given the ingenuity of the underdogs. 

Seeking out the vulnerabilities of its adversary, Earth establishes a deterrence based on mutually assured destruction and forces the Trisolarans to share their technology.

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“Taiwan is like two feet from China,” Trump told one Republican senator. “We are 8,000 miles away. If they invade, there isn’t a f***ing thing we can do about it.” @opinion @nfergus
Law & Politics

Chinese President Xi Jinping warned President Joe Biden that “resolutely safeguarding China’s national sovereignty and territorial integrity is the firm will of the more than 1.4 billion Chinese people. … Those who play with fire will perish by it.” Taiwan has been the key flashpoint of Cold War II — Berlin plus Cuba plus the Persian Gulf — since the Sino-American relationship decisively soured over four years ago.We have seen this movie several times before: in 1954-55, 1958 and 1995-96. The most recent case was the most similar to today’s. In June 1995, President Lee Teng-hui of Taiwan was granted a visa to deliver a speech at his alma mater, Cornell University, on “Taiwan’s Democratization Experience.”Why, when they already have their hands full with the Russian invasion of Ukraine, would Biden’s national security team want a repeat of that 1996 experience?In 1996, the Chinese had no way of sinking American aircraft carriers. Today they have missiles that can do just that. In 1996 their nuclear saber-rattling was a bluff. Today it is not.In recent weeks, I have discussed the implications with two eminent central bankers. One worried that the confiscation of private assets had fundamentally discredited the Anglo-American claim to uphold the rule of law and private property rights. Another feared that the freezing of the Russian Central Bank’s reserves could ultimately undermine the reserve currency status of the dollar. Neither talked of these measures as secret weapons China would be unable to withstand. As one of them put it, the key question is: “What do the Chinese do now that we’ve shown them our playbook?”  

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An important point to understand regarding Pelosi’s trip to Taiwan: @bidetmarxman
Law & Politics

An important point to understand regarding Pelosi’s trip to Taiwan: @bidetmarxman

The US isn’t “playing with fire” by pushing ahead with its instigation against China. It is intentionally trying to spark a fire that it thinks will burn China more than it burns itself.

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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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It will make the global shockwaves from this year’s events in Ukraine look like small ripples in comparison. @bidetmarxman
Law & Politics

It will make the global shockwaves from this year’s events in Ukraine look like small ripples in comparison. @bidetmarxman

If it goes ahead, this provocation will kick off a series of events that have the strong potential to dramatically escalate both economically and militarily. It will make the global shockwaves from this year’s events in Ukraine look like small ripples in comparison.

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They have had months (arguably years) to game this out and it appears the dominant faction truly believes the US can somehow be the ones to come out on top. @bidetmarxman
Law & Politics

They have had months  (arguably years) to game this out and it appears the dominant faction truly believes the US can somehow be the ones to come out on top. @bidetmarxman

But this shouldn’t be interpreted as the US being unaware of the consequences! They have had months  (arguably years) to game this out and it appears the dominant faction truly believes the US can somehow be the ones to come out on top.

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Illusions of Superiority. What’s Next? Alastair CROOKE
Law & Politics

Illusions of Superiority. What’s Next? Alastair CROOKE

It will need a long catharsis to purge Europe of its illusions of superiority – as perceived by the non-west.
In January 2013, President Xi Jinping gave a speech to the members of the Central Committee of the Chinese Communist Party. 

His speech gave insight into our world as it ‘is’, and secondly, though its analysis was firmly focused on the causes to the Soviet implosion, Xi’s exposition very clearly had wider meaning. Yes, it is addressed to us – the western construct – too.
Immanuel Wallenstein had already warned, in 1991, against the western ‘false consciousness’ of Cold War triumph: 

For, as Wallenstein points out, the Soviet collapse was not the demise not of Leninism alone. It was rather the ‘beginning of the end’ for both poles of the great ideological antinomy: That of “the ‘American Century, with God on our side’ construct on the one hand – with the Leninist, equally universalist, eschatologies, on the other”.
Since these two were woven from the same universalist ideological cloth – that is, with each defining (and co-constituting) the ‘other’ – the loss of its Manichaean enemy led to a series of geo-political structures from the Cold War fraying – as the prevailing, lone ideology lacked any satisfactory explanation for its global rule, objectives and purposes – absent the co-constituting ‘enemy’ (i.e. Communism).
In Xi’s address, he attributed the break-up of the Soviet Union to ‘ideological nihilism’: The ruling strata, Xi asserted, had ceased to believe in the advantages and the value of their ‘system’, yet lacking any other ideological coordinates within which to situate their thinking, the élites slid unto nihilism.
“Why did the Soviet Union disintegrate? Why did the Communist Party of the Soviet Union fall to pieces? An important reason is that, in the ideological domain, competition is fierce [and necessary, Xi might have added]! To completely repudiate the historical experience of the Soviet Union, to repudiate the history of the CPSU, to repudiate Lenin, to repudiate Stalin – was to wreck chaos on Soviet ideology and engage in historical nihilism”, Xi said.
Rings any bells? Such as Americans repudiating U.S. history as ‘White Man’s story’? As dismissing America’s former leaders as ‘slave owners’? As dissing the founding fathers, and toppling their statues?
“Once the Party loses the control of the ideology, Xi argued, once it fails to provide a satisfactory explanation for its own rule, objectives and purposes, it dissolves into a party of loosely connected individuals linked only by personal goals of enrichment and power”, (Xi again). The Party is then taken over by ‘ideological nihilism’.
This, however, was not the worst outcome. The worst outcome, Xi noted, was that the country had been taken over by people with no ideology whatsoever, but with an entirely cynical and self-serving desire to rule.
This is Wallenstein’s point: The Cold War’s ‘premature triumphalism’ – paradoxically – has made the ideological Manichaeism on which post-Enlightenment modernity functioned, so much harder to sustain. 

As one form of universalism – liberalism – eliminated all competition for hegemony, paradoxically in so doing, the consequence has been to lift the mental fog of ideology, permitting the return of particularity, rootedness and civilization.
This process has been at work for decades, recasting politics around the world and revivifying traditions, peoples, and different forms of life. 

Only in America, the Anglo sphere, and amongst European Russophobes, has the ruling class continued to resist these shifts, using significant resources to insist (now wholly cynically) on imposing the liberal ‘order’.
This then, is the crux of the Xi-Putin revolution: Lifting the fog and blinkers of ideology, to permit a return to a concert of civilisational, autonomous states.
Thus ‘Saving Ukraine’ has popped-up to become the latest ‘virtue signal’ in pursuance of the American Century; wearing now a ‘woke’ face, designed to project the U.S. as an international moral ‘police’, enforcing woke doctrines, rather than as a conventional great power. 

(Hence the symbol for supporting Ukraine comprises the transgender flag, emboldened with the word “peace”).
The Ukraine war, inadvertently, has become iconic to a bigger struggle. Ukraine is symbol to two intertwined ways of seeing the world. 

And, at the literal level, stands as the fulcrum to steps and counter steps in the strategic MacKinder Great Game that is being worked out.
The significance of the Ukraine war however, reaches far back – to the 5th Century – when the Frankish ‘barbarians’, later imbued with an Old Testament ethos of a divine elect, and to whom the world was destined to be ‘delivered’ through the annihilation of those resisting divine will, swarmed across western Europe. 

This brought Old Rome to its end (in 410), and ultimately instantiated the Carolingian Empire (Reich).
Forget about Napoleon as the root of European Russophobia. 

The Carolingian ideologists, in order to consolidate power, cynically launched a brutal culture war against the civilisation that had stretched from China and Tibet in the north, to Mesopotamia and Egypt in the South, and had roots in the Mediterranean basin, too.
Modern Europe, i.e. the “West”, is a product of the Frankish civilization and was built amidst the ruins and blood of the earlier civilisation. 

It took the Franks centuries to fully root-out the (Orthodox) Roman civilizations of southern Europe and to substitute themselves as the ‘new Romans’. 

The latter thus leans toward Judeo-Christianity, as Orthodoxy leans toward earlier impulses.
Though Russian traditional Orthodoxy is still in the process of reconstituting itself, it is powerful enough to make any attempts at submitting Russia to the neo-Frankish world futile. 

The point here is that to understand the Ukraine war in the context of the double-helix interplay of intrinsic Traditionalism and extrinsic literal ideology, is both to understand what Putin means when he refers to Nazism, and to understand why Russia sees History as a continuum of hostility to Russian civilisation – one stretching from The Great Schism (1054), through the two World Wars, to today’s schism pivoted around Ukraine.
But back to today, and geo-politics, and what comes next —
Firstly, the Great Game. The liberation of Ukraine’s Black Sea coastline including Mariupol and Kherson was a huge strategic ‘Great Game achievement’, 

since, as MK Bhadrakumar perceptively explains, securing the Kerch Strait ensures maritime transit from the Black Sea all the way to Moscow and St Petersburg, as well as providing the strategic maritime route between the Caspian Sea (via the Volga-Don Canal) to the Black Sea and the Mediterranean.
The ‘big picture’ point here is that not only does the Volga River link the Caspian Sea to the Baltic Sea, but it links as well tothe Northern Sea (Arctic) Route (via the Volga–Baltic Waterway). 

Suffice to say, Russia has gained control of an integrated system of waterways, which connects the Black Sea with the Caspian Sea, and thence to the Baltic, and also connects to the Northern Sea Route (which is an 4800 km long shipping lane that joins the Atlantic to the Pacific Ocean, passing along the Russian coasts of Siberia and the Far East).
The inexorable strategic logic to these moves is that Odessa must be on Russia’s strategic agenda, since it is the hub opening up the Danube system of waterways linking Russia to central Europe. 

The distance between Odessa and the Danube Delta is approximately 200 km.
Next, the Tehran Summit-Great Game play by Moscow. The earlier Caspian Summit (29 June), having secured the Caspian against NATO vessels entering it, opened the way at the Tehran Summit (19 July) for a major upgrading of the North-South corridor, linking St Petersburg port in the north, through Iran’s Bandar Abbas port in the Gulf, to Mumbai.
If Moscow’s Great Game play seems overly centred on waterway links, then we would be missing the second half to the story. 

The companion half is a ‘corridor and pipeline’ network strategy crisscrossing Iran, West and Central Asia, India and China. 

This is what the big contracts signed in Tehran were about ($40Bn with Gazprom and $30Bn with Turkey): Russian energy feeds China; Iran’s South Pars field development will feed India with low-cost energy; and Turkey will become a key energy transit state.
Naturally, the U.S. is busy with obstructing this Great Game move, with the CIA chief travelling to Kazakhstan, and the EU trying to woo Azerbaijan.
What else? For some time now, Moscow has been putting into place a security architecture for West Asia. 

The BRICS and the SCO are gaining potential heft; Lavrov’s Team has been working the Gulf hard; and the Tehran Summit took this wider project a huge step forward.
Soon, it seems, we may expect Moscow to have its ‘ducks all lined-up’ – so as to present Tel Aviv with a proposal: Let us say Moscow puts forward a Mid-East ‘Minsk Accord’, and tells Israel that this Accord represents the only path to avoid a multi-front war with Iran. 

Will it work? Can Israel transition? That is problematic. Netanyahu has pushed Israel towards a far right ideological stance. Israel now stands on the wrong side of the Middle East paradigm.
In parallel to the Iran–Israeli conflict, a Syrian ‘Minsk’ may come into view, too – as Moscow’s attention on Ukraine is relaxed. 

Russia, too, is gently widening the move towards a new commodity-based trading system for the non-West.
Reuters reported on Monday (July 18) that Russia is seeking payment from some Indian importers in UAE dirhams for its oil trade. 

An invoice accessed by Reuters showed that such payments are to be made to Gazprombank via its correspondent bank in Dubai, Mashreq Bank. 

At the Tehran summit, ties between Iran and Russia tightened and a joint financial clearing system was agreed.
We may expect more of this: The pace is accelerating. Gold and commodity trading, as well as some financial services such as vessel and cargo insurance, may well be uplifted out from Europe to the region (never to return) – and perhaps a Urals benchmark futures trading facility will be established in the future. 

The aim is to loosen the commodity markets from the Western grasp, through manipulating the paper-commodity markets, and by trading options.
As for Europe, Moscow’s ‘gas retribution’ for sanctions imposed effectively is prompting the EU to ‘self-harm’, through mimicking the same economic playbook vis à vis Russian gas supplies, as Germany employed vis à vis its cheap coal deposits. 

This event occurred after France, in 1923, seized the Ruhr (as penalty for defaulting on Reparations). 

Located in the country’s west, the Ruhr region was Germany’s industrial heartland, home of most of its coal and steel production. 

Germany (facing large Reparation payments), was determined both to subsidise its industrial base, and to finance its dismembered weapons supply lines in order to re-arm – yet facing a hijacked cheap energy supply, the Weimar government took to printing money. 

What Germany ‘got’ was hyperinflation and broken supply lines, compounding the inflation. Brussels seems ready to follow this same playbook.
What is extraordinary here is that Europe took this lacuna on itself, in an excess of enthusiasm for ‘saving Ukraine’. 

Public protest in Europe has begun, and likely will build further. In light of the huge pendulum swing by Europe from adherence to some semblance of strategic autonomy – only to abandon itself to Washington and NATO’s sway – the pendulum will likely swing back, as the recession and price-spikes bite.
The European Deep State will endeavour to hold the line, but a fault line will open up in Europe between those states who dare not let go of ‘Uncle Sam’ (such as Poland), and those determined to move away and to engage with Russia. These tensions may well fracture the EU.
It will need a long catharsis to purge Europe of its illusions of superiority – as perceived by the non-west – especially since its claim to a lineage deriving from ancient Rome or (even less so) ancient Greece is more propaganda than truth. 

Contemporary ‘EU civilization’ and values in no way connect to the pre-Socratic world. Modern Europe – the West – is more the product of the Frankish, Carolingian civilization.
Nonetheless, Moscow ultimately may offer the European rump a ‘Minsk deal’ too. That, however, is likely a long way off.

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

May 29 Vanity of Vanities! All is vanity

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

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The rouble is soaring and Putin is stronger than ever - our sanctions have backfired @guardian Simon Jenkins
Law & Politics

The rouble is soaring and Putin is stronger than ever - our sanctions have backfired @guardian Simon Jenkins
Western sanctions against Russia are the most ill-conceived and counterproductive policy in recent international history. 

Military aid to Ukraine is justified, but the economic war is ineffective against the regime in Moscow, and devastating for its unintended targets. 

World energy prices are rocketing, inflation is soaring, supply chains are chaotic and millions are being starved of gas, grain and fertiliser. 

Yet Vladimir Putin’s barbarity only escalates – as does his hold over his own people.
To criticise western sanctions is close to anathema. Defence analysts are dumb on the subject. 

Strategy thinktanks are silent. Britain’s putative leaders, Liz Truss and Rishi Sunak, compete in belligerent rhetoric, promising ever tougher sanctions without a word of purpose. 

Yet, hint at scepticism on the subject and you will be excoriated as “pro-Putin” and anti-Ukraine. Sanctions are the war cry of the west’s crusade.

The reality of sanctions on Russia is that they invite retaliation. Putin is free to freeze Europe this winter. 

He has slashed supply from major pipelines such as Nord Stream 1 by up to 80%. 

World oil prices have surged and eastern Europe’s flow of wheat and other foodstuffs to Africa and Asia has been all but suspended.

Britain’s domestic gas bills face tripling inside a year. The chief beneficiary is none other than Russia, whose energy exports to Asia have soared, driving its balance of payments into unprecedented surplus. 

The rouble is one of the world’s strongest currencies this year, having strengthened since January by nearly 50%. 

Moscow’s overseas assets have been frozen and its oligarchs have relocated their yachts, but there is no sign that Putin cares. He has no electorate to worry him.
The interdependence of the world’s economies, so long seen as an instrument of peace, has been made a weapon of war. 

Politicians around the Nato table have been wisely cautious about escalating military aid to Ukraine. They understand military deterrence. 

Yet they appear total ingenues on economics. Here they all parrot Dr Strangelove. They want to bomb Russia’s economy “back to the stone age”.
I would be intrigued to know if any paper was ever submitted to Boris Johnson’s cabinet forecasting the likely outcome for Britain of Russian sanctions. 

The assumption seems to be that if trade embargos hurt they are working. As they do not directly kill people, they are somehow an acceptable form of aggression. 

They are based on a neo-imperial assumption that western countries are entitled to order the world as they wish. 

They are enforced, if not through gunboats, then through capitalist muscle in a globalised economy. 

Since they are mostly imposed on small, weak states soon out of the headlines, their purpose has largely been of “feelgood” symbolism.
A rare student of this subject is the American economic historian Nicholas Mulder, who points out that more than 30 sanctions “wars” in the past 50 years have had minimal if not counterproductive impact. 

They are meant to “intimidate peoples into restraining their princes”. If anything they have had the opposite effect. 

From Cuba to Korea, Myanmar to Iran, Venezuela to Russia, autocratic regimes have been entrenched, elites strengthened and freedoms crushed. 

Sanctions seem to instil stability and self-reliance on even their weakest victim. 

Almost all the world’s oldest dictatorships have benefited from western sanctions.
Moscow is neither small nor weak. Another observer, the Royal United Services Institute’s Russia expert Richard Connolly, has charted Putin’s response to the sanctions imposed on him since his 2014 seizure of Crimea and Donbas. 

Their objective was to change Russia’s course in those regions and deter further aggression. 

Their failure could hardly be more glaring. Apologists excuse this as due to the embargos being too weak. 

The present ones, perhaps the toughest ever imposed on a major world power, may not be working yet, but will apparently work in time. 

They are said to be starving Russia of microchips and drone spares. They will soon have Putin begging for peace.
If Putin begs, it will be on the battlefield. At home, Connolly illustrates how Russia is “slowly adjusting to its new circumstances”. 

Sanctions have promoted trade with China, Iran and India. 

They have benefited “insiders connected to Putin and the ruling entourage, making huge profits from import substitution”. 

McDonald’s locations across the country have been replaced by a Russian-owned chain called Vkusno & tochka (“Tasty and that’s it”). 

Of course the economy is weaker, but Putin is, if anything, stronger while sanctions are cohering a new economic realm across Asia, embracing an ever enhanced role for China. Was this forecast?
Meanwhile, the west and its peoples have been plunged into recession. Leadership has been shaken and insecurity spread in Britain, France, Italy and the US. 

Gas-starved Germany and Hungary are close to dancing to Putin’s tune. 

Living costs are escalating everywhere. Yet still no one dares question sanctions. It is sacrilege to admit their failure or conceive retreat. 

The west has been enticed into the timeless irony of aggression. Eventually its most conspicuous victim is the aggressor. Perhaps, after all, we should stick to war.

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Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.
Law & Politics

Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.

One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity. 

There are plenty of examples of these inorganic price moves. In essence, the Tail wags the dog. 

The challenge is where the Supply/Demand balance is precarious and a small adjustment [reduce Supply or increase Demand] tips the situation into disequilibrium. 

The Tail will no longer wag the Dog and the Dog will simply run amok.

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When you have +10% inflation is very difficult to not have a gdp>0. I would suggest TO think that a y growth lower than CPI means the country in general is poorer. @JaimeC69827271
Law & Politics

When you have +10% inflation is very difficult to not have a gdp>0. I would suggest TO think that a y growth lower than CPI means the country in general is poorer. @JaimeC69827271

When you have +10% inflation is very difficult to not have a gdp>0. Just the deflactor of the gdp makes a lot. I would suggest TO think that a y growth lower than CPI means the country in general is poorer.

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How to prepare for the coming crisis @mtmalinen
World Of Finance

How to prepare for the coming crisis @mtmalinen

Many are currently debating, how deep/shallow the recession will be and when the Fed will ‘pivot’. I find such discussions to be rather heavily detached from reality.

The world economy is quite simply too fragile and too indebted to be able to sustain the combination of rapid inflation, rising interest rates, withdrawing (artificial) central bank liquidity, and the possibly industry-crippling shortages. 

I will return to specifics of these in my posts later, and concentrate now on the expectionality of the approaching crisis.

Into a ‘perfect storm’

We are now facing a possibility of a multitude of crises hitting the world economy in a consecutive or even overlapping order. The “mother of all economic crises” is likely to include:

Inflation crisis (already here).
A financial crash.
Global banking crisis.
Sovereign debt crisis.
Corporate debt crisis.
Currency crisis.

Needless to say, that we have never, in all of known history, experienced such a ‘perfect storm’. I will briefly go through all the crises.

Inflation crisis

Inflation crises can have two meanings. It can either be used to describe a period of rapid and/or unsustainably rapid inflation, i.e., hyperinflation.
In each case, periods of very rapid increases in consumer prices usually result from the monetization of government deficits.

During monetizations, fiscal agencies determine the real government budget deficit that the central bank must finance. 

Central banks cover this with seigniorage revenue by expanding the monetary base, and the rate of money growth determines in turn the equilibrium rate of inflation. 

This is especially true for periods of hyperinflation, when the monthly inflation rate exceeds 50 percent.

Currently, two of the main drivers of fast or even runaway inflation (hyperinflation) have emerged:

Excessive growth of money in circulation.
The possibility of a broad reduction in productive capacity
The balance sheets of central banks have swollen massively especially over the past year due to the QE -programs (see my previous post).

Production capacities may be hampered by forces that push companies into bankruptcy. 

One of the most historically common and pernicious is war, such as the Great War which contributed to the hyperinflation in the Weimar Republic between 1919-1924. 

Moreover, production capacities can also collapse due to the large-scale failure of zombified corporations. 

Thus, counterintuitively, rising interest rates, which are likely to push zombified corporations into bankruptcy leading to drop in production possibilities, may actually push us into a hyperinflation, although this scenario is a bit “theoretical”, at least for now.

Currency crisis

Generally, a currency crisis is an attack on the exchange value of the currency in the markets. 

If the exchange rate is fixed or pegged, such an attack will test the monetary authorities, that is, the central bank's commitment to the peg.

Market participants expect that the policy of monetary authorities will be inconsistent with the peg, and they will try to force authorities to abandon the peg thereby validating their expectations.

 What matters for speculators are the internal economic conditions relative to the external conditions set for the currency.

The foreign exchange rate of a currency can crash even if the rate is not pegged. 

During a currency crisis, the external value of a domestic currency decreases, which leads to an increase in the value of foreign debt, leading possibly to a corporate and/or a sovereign debt crisis.

The breakup of the Eurozone is probably the biggest currency crisis ‘tail-risk’, at the moment. 

A breakup of the common currency would mean that all sovereign debt would be subject to possible redenomination in new national currencies under the Lex Monetae, or the ‘Law of Money’. 

This specifies that a sovereign state has the right to regulate its currency under international law. 

Therefore, the creation and substitution of the national unit of payment is entitled to recognition by other countries including their courts and official bodies. 

This means that sovereign states can dictate the currency they use in debt repayments.

However, some national debt currently carries the Collective Action Clause, CAC, which means that they must remain in the euro.[1] 

If the euro is dismantled in totality, the redenomination will be decided by negotiations between the government and investors. 

In this case, it is impossible to predict in which currency principal and interest payments on the bond will eventually be made.

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How to prepare for the coming crisis @mtmalinen [continued]
World Of Finance

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

Sovereign debt crisis

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

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

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

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

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

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

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

IMF programs were originally constructed to help countries during balance-of-payment crises. 

In time, and especially after the fall of the Soviet Union, the IMF was forced to change its role quite drastically and diversify its portfolio of lending. 

Countries apply to IMF programs mostly because they provide emergency funding, technical and financial assistance and enforce unpopular but often necessary economic reforms during crises.

The key drawback to an IMF program are the conditionalities attached to them. 

These include removal of price controls from state economic enterprises (SEEs) and removal of subsidies. 

During the onset of the program, there are almost always agreements regarding ceilings for fiscal deficits and domestic credit. 

These lead to austerity. In addition, public and private debts are often rescheduled, and the nominal exchange rate regime is changed (see more, e.g., Malinen and Ropponen 2022; free older version).

Corporate debt crisis

A corporate debt crisis does not have a clear definition in the academic literature, but it can be considered as a situation where a large group of corporations are unable to make ends meet, implying that they will default on their debts. 

This will usually translate into a banking crisis, as banks tend to hold large quantities of loans to corporations.

And should corporations default on their debt, banks will suffer crippling losses. 

This is a major risk now, as the global economy is likely to be infested by hordes of ‘zombified’ corporations surviving on cheap (and plentifully available) funding alone, which is now disappearing. 

A corporate debt crisis usually turns into a fiscal and unemployment crisis as the ability of corporations to pay taxes and salaries declines.

The coexistence of crises

Economic crises have a tendency to coexist. For example, inflation crises sometimes cause a recession leading the economy to a stagflation, where prices rise rapidly but economic activity declines. 

Higher input costs and declining demand will lead to corporate losses, which will in turn lead to bank losses. 

Rising interest rates may further hasten this development crushing corporate and household sectors. 

The end-result is a corporate debt crisis and a banking crisis. 

Currency crises can also lead to bank losses and high inflation through devaluation and further to a debt crisis, as the principal and interests of a foreign-currency-denominated loans will increase (see, e.g. Malinen and Ropponen 2022). 

Banks may have contracts (e.g., loans, bond holdings) in foreign currency; a devaluation of the external value of the currency will cause the cost of these contracts to become more burdensome. 

This would have a highly detrimental effect on corporations holding large amounts of foreign currency denominated debt. If a country is highly dependent on foreign commodities, devaluation may increase their prices, causing inflation to peak.

A withdrawal of monetary support (quantitative tightening and/or interest rate hikes) in an extremely-levered market environment, like now, is likely to lead to crash in the asset and credit markets. 

This, on the other hand, may lead to both a banking and corporate debt crisis, as losses from the crash mount in banks and the price of corporate debt increases heavily. 

Financial markets crash can led to a currency crisis, as foreign investors leave the counrty, and even further to a sovereign debt crisis, when an over-indebted government succumbs to the rising yields and the combined effects of the crisis.

It is thus plausible not to prepare just for a recession, but to an outright economic collapse. This creates a swathe of challenges for preparation, on which we will start to seek solutions shortly.

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’Voodoo Economics’
World Of Finance

’Voodoo Economics’
We have reached the point when the curtain was lifted in the Wizard of Oz and the Wizard revealed to be ‘’an ordinary conman from Omaha who has been using elaborate magic tricks and props to make himself seem “great and powerful”’’ 

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Mohamed El-Erian, said on Bloomberg TV Friday that “the zip code for neutral is above where we are now,” and at least 50 basis points higher.
World Of Finance

Mohamed El-Erian, said on Bloomberg TV Friday that “the zip code for neutral is above where we are now,” and at least 50 basis points higher.

Summers, a Harvard University professor and paid contributor to Bloomberg TV, noted that Powell said in late-2018 that the Fed’s rate had reached neutral -- when inflation was running just below 2%. 

“How he could be saying the same thing today, when the inflation rate is where it is, is inexplicable to me.”
“If you think it is neutral, you are misjudging the posture of policy in a fundamental way,” said Summers. 

“It’s the same kind of, to be blunt, wishful thinking that got us into the problems we have now, with the use of the term ‘transitory.’”
The former Treasury chief reiterated his view that “we’re not likely to get out of this excess inflation situation without having a recession.” 

Looking at the latest slew of indicators on costs and prices, he said “inflation above 4 looks to be pretty securely built in.”

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Inflation picks up in June with concerning sequential momentum in core prices (ex. food & energy) via @EY_US @EY_Parthenon @GregDaco
World Of Finance

Headline PCE #inflation firmed 0.5pt to 6.8% -- highest since March '82

Core PCE inflation ticked up 0.1pt to 4.8% -- still near 1982 high

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Currency Markets at a Glance WSJ
World Currencies

Currency Markets at a Glance WSJ

Euro 1.022465
Dollar Index 105.828
Japan Yen 132.5960
Swiss Franc 0.951245
Pound 1.218035
Aussie 0.698655 
India Rupee 79.16105
South Korea Won 1306.46
Brazil Real 5.1727
Egypt Pound 18.914300
South Africa Rand 16.633255

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Debt Distress: Can Emerging Markets Withstand Rising Costs? @CFR_org @Brad_Setser
Emerging Markets

Debt Distress: Can Emerging Markets Withstand Rising Costs? @CFR_org @Brad_Setser 

Sri Lanka was headed for trouble no matter what happened in the broader global economy. 

It made its existing fiscal problems worse with a large tax cut in 2019 and added to its economic difficulties with a poorly timed fertilizers ban that created a need to import food. 

The government lost access to the bond market two years ago, then dug itself into an even deeper hole by drawing on limited foreign exchange reserves to pay maturing bonds and taking on a last-ditch loan from the China Development Bank. 

It should have called the International Monetary Fund (IMF) and sought a restructuring of its bonds back in 2020 or 2021, before it ran out of the reserves it needs to pay for essential imports.
While Sri Lanka is an extreme case, many other countries are poorly positioned to manage the current period of high oil prices and higher dollar interest rates. 

Vulnerable countries can no longer rely on the international bond market and Chinese lending to make up for a shortage of tax revenue to help pay for imports of oil and gas.

Many of the conditions needed to resolve a balance-of-payments crisis—such as a weaker currency and cuts to subsidies—are particularly painful at a time when shortages of food and fuel are driving up prices globally.

Several countries in South Asia and North Africa stand out. Pakistan has many of the same structural weaknesses as Sri Lanka, notably difficulty collecting taxes and limited foreign exchange reserves. 

Tunisia has more reserves than Pakistan and Sri Lanka but is also struggling to meet its budget without access to international bond financing. 

Meanwhile, Egypt has been hard hit by higher food prices. Like Tunisia, it had relied on the international bond market to cover a portion of its budget deficit and now faces difficulties borrowing sufficient funds at a reasonable rate. 

Some of these countries could have been able to muddle through in a more benign global environment but now have little choice but to seek assistance from the IMF.

Certain countries in other regions are also at risk: Ghana is clearly struggling with its large debt load, and Kenya too is in an increasingly uncomfortable position. 

El Salvador has a bond coming due in early 2023. Argentina is also in trouble again, but for slightly different reasons. 

It lost access to the bond market back in 2018 and had to restructure in 2020, so it doesn’t have large payments coming due on its external bonds anytime soon. 

At the same time, not all financial trouble stems from government borrowing and an overhang of public external debt. 

Turkey is an interesting case. It has one of the lowest levels of public debt of all the Group of Twenty (G20) countries. 

Yet, it could enter a currency, banking, and debt crisis because President Recep Tayyip Erdogan is determined to keep domestic interest rates low in the face of rising inflation. 

Turkey has sold so many foreign exchange reserves to prop up its currency over the last few years that it could conceivably default simply because it has run out.
Financial history certainly rhymes. Rising U.S. interest rates and a stronger dollar have always created a difficult financial environment for emerging economies, as many can only borrow abroad in foreign currency, and others have historically managed their currency to the dollar.

That said, there is one important difference from the past: the governments of the biggest and most economically important emerging economies, such as Brazil, India, Indonesia, and Mexico, generally haven’t borrowed a lot in foreign currency and now hold enough foreign exchange reserves to manage their external debt load

Despite China’s limited disclosure, its policy banks have lent most heavily to countries with strategic resources (Angola, Ecuador, and Zambia) or with a strategic location (Laos, Pakistan, and Sri Lanka). 

Chinese lending has generally been on commercial rather than concessional terms; it has not been intended as aid. 

Furthermore, Chinese banks don’t have a history of taking losses on their external lending, which can make debt workouts more difficult.

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US Secretary of State Blinken will be in SA from Aug 7-9 to launch the "US Strategy for Sub-Saharan Africa." @geoffreyyork

US Secretary of State Blinken will be in SA from Aug 7-9 to launch the "US Strategy for Sub-Saharan Africa." @geoffreyyork    

He says African countries are "geostrategic players and critical partners on the most pressing issues of our day" including climate change, food insecurity and technology.

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Creditors Give Zambia Assurances for $1.4 Billion IMF Deal

Creditors Give Zambia Assurances for $1.4 Billion IMF Deal

Zambia’s official creditors, led by China and France, agreed to provide financing assurances the country has been waiting for to secure final approval from the International Monetary Fund for a $1.4 billion bailout.
The commitments to provide debt relief were the final hurdle needed for the Washington-based lender’s board to sign off on a deal Zambia first requested in 2019. 

It’s a significant step in a slow-moving debt-restructuring process that the government started in 2020, when it became Africa’s first pandemic-era sovereign defaulter.
“The support from the Official Creditor Committee for Zambia’s envisaged IMF-supported program, together with its commitment to negotiate debt restructuring terms, provides the IMF with official financing assurances,” IMF Managing Director Kristalina Georgieva said.
“The delivery of these financing assurances will enable the IMF Executive Board to consider approval of a Fund-supported program for Zambia and unlock much needed financing from Zambia’s development partner,” she said in a statement on Saturday.  
The IMF loan that will be disbursed over three years also comes at a crucial time for Zambia. 

It faces a steep increase in fuel- and fertilizer-import bills and a collapse in the price of copper, which the nation relies on for more than 70% of export earnings 
The bilateral creditors met for a second time July 18 to consider Zambia’s request to rework dollar liabilities that grew to $17.3 billion at the end of last year. 

Chinese lenders account for more than one-third of the total, and faced blame for delaying progress on Zambia’s restructuring.
The government is using the so-called Common Framework that the Group of 20 wealthy nations drew up in 2020 to help poor countries restructure unsustainable debts in the wake of the Covid-19 pandemic. 

That process calls for official creditors to agree on reducing debt in net-present value terms if needed, and extending maturities.
This week’s committee meeting of Zambia’s 16 official creditors “gives some sign of hope” in a process that had stalled, 

World Bank President David Malpass said July 19. Ethiopia and Chad also applied to rework their debt using the Common Framework, with no resolution yet. 
Zambia’s next steps will include meeting with commercial creditors, including the holders of its $3 billion of Eurobonds, to seek relief “at least as favorable as that provided by official bilateral creditors,” as required by the framework.
“Zambia remains committed to implementing the much needed economic reforms, being transparent about our debt and ensuring fair and equitable treatment of our creditors,” Finance Minister Situmbeko Musokotwane said in a statement. 

“We will continue to work cooperatively with both official and private creditors to agree on the terms of the debt restructuring.” 

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South Africa's trade surplus remains large but is falling quickly, a reminder that South Africa's underlying current account remains in deficit. @SergiLanauIIF

South Africa's trade surplus remains large but is falling quickly, a reminder that South Africa's underlying current account remains in deficit. @SergiLanauIIF

That won't change unless fiscal deficits shrink a lot.

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FALLING KNIFE Nigeria: Bureau de change hub raided as naira collapses to N710 on the black market @TheAfricaReport

FALLING KNIFE Nigeria: Bureau de change hub raided as naira collapses to N710 on the black market @TheAfricaReport 

The Economic and Financial Crimes Commission (EFCC) on Friday, 29 July, 2022, raided the Wuse Zone 4 bureau de change hub of Abuja in the wake of currency speculation that has forced the naira to tumble to N710 against the dollar

Government sources told The Africa Report that the EFCC operatives were working on intelligence that some individuals were buying up all the dollars on the black market thereby causing an artificial scarcity of the greenback and a drop in the local currency.
An EFCC detective who wished to remain anonymous said, “Today, 29 July, we stormed Wuse Zone 4, Abuja, home to most bureau de change operators in Abuja in what was a covert operation to dislodge currency speculators who are alleged to be massively mopping up available foreign currencies.

“The anti- graft agency is working on intelligence that some forces with massive naira inflow have mobilised resources and, are busy buying up available foreign currencies especially the US Dollar, to either hoard or smuggle the same put of Nigeria.”
The Africa Report learnt that some operatives of the EFCC have also been spotted at major airports in the country, in what a source said is a coordinated nationwide operation that will be extended to all the major commercial cities such Kano, Lagos and Port Harcourt.
The Central Bank of Nigeria had last year stopped selling dollars to BDCs, accusing them of terrorism financing and currency manipulation.
The CBN had also forced the shutdown of Aboki FX, a website that provides updates on the black market exchange rate in real time.

country’s local currency has continued to dip, falling from N650 to N710 to the dollar on the parallel market within a space of one week

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9 DEC 19 :: Time to Big Up the Dosage of Quaaludes

9 DEC 19 :: Time to Big Up the Dosage of Quaaludes

Everyone knows how this story ends. When the music stops, everyone will dash for the Exit and the currency will collapse

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Cargo traffic at Dar es Salaam Port in Tanzania 🇹🇿 (tonnes) 2021: 17 million @TanzaniaInsight

👉 In 2021, Kenya's Mombasa handled 34.5 million tonnes of cargo

👉Durban in South Africa handled 79.2 million tonnes in 2021

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Kenya Election Expected to Be Closest in Years as Debt Crisis Looms @BW @economics @malingha & @herbling

Kenya Election Expected to Be Closest in Years as Debt Crisis Looms @BW @economics @malingha & @herbling 
Kenyans will head to the polls on Aug. 9 to choose a new president in a contest pitting fifth-time contender Raila Odinga against William Ruto, a challenger who’s anchored his campaign on a rags-to-riches story.

It’s poised to be one of the closest elections in Kenya’s three-decade-old multiparty democracy, largely because of the involvement of outgoing President Uhuru Kenyatta—the son of the country’s first president who’s been in power for nine years and wields considerable influence on domestic politics. 

The incumbent has reneged on a promise to back his 55-year-old deputy, Ruto, and has instead thrown his weight behind Odinga, a former prime minister. 

Odinga, 77, ran against Kenyatta in 2017 in a bitter election marred by violence, but the two later reconciled.

The intrigue generated by this political triangle has the electorate on a knife edge. 

Tensions came to a head in early July when Ruto confirmed it was him speaking in a leaked audio recording in which he said he almost slapped his boss in 2017 when Kenyatta considered walking away from the presidential race after the Supreme Court nullified his win and ordered a new vote. 

Ruto, who was Kenyatta’s running mate, has said he was speaking figuratively and would never have assaulted the president.

Kenya’s population of 51 million includes more than 40 ethnic groupings. 

Divisions among some of the biggest communities have caused election-related violence in the past, notably when more than 1,100 people died in clashes following a disputed vote in December 2007.
A July 11 opinion poll by Nairobi-based Tifa Research shows Odinga, of the Azimio La Umoja One Kenya coalition, with a narrow lead—42% of sampled voters, compared with 39% for Ruto, of the Kenya Kwanza group. The two other candidates each garnered less than 5% support.

Kenya’s population of 51 million includes more than 40 ethnic groupings. Divisions among some of the biggest communities have caused election-related violence in the past, notably when more than 1,100 people died in clashes following a disputed vote in December 2007.
Kenya’s debt has surged more than fivefold since Kenyatta took office in 2013, as his administration increasingly turned to loans to finance its infrastructure expansion agenda. 

The International Monetary Fund has provided $1.21 billion to the government under a 38-month, $2.34 billion program that seeks to address the country’s debt vulnerabilities as well as the impact of the pandemic.

Ruto is campaigning on what he calls a “bottom-up economic model” that seeks to channel government funds into sectors that have the potential to generate the most jobs.  

He has pledged to invest at least 500 billion shillings in farming, which employs more than 40% of the labor force, and in small businesses.
“I’m talking about growing the economy deliberately to create jobs,” Ruto said in an interview with Bloomberg. 

“We have close to 5 million young people out there, out of college, out of school, with nothing to do—hanging around shopping centers and doing all manner of things.”
Ruto is often described as a “hustler” who went from selling live chickens on the side of the highway to owning one of the biggest poultry farms in the country, while expanding into businesses including hospitality and real estate. 

He entered politics in his 20s and secured a seat in the National Assembly in 1997. 

He’s held various posts in the Kenya African National Union party as well as in successive governments. 

Despite that, he continues to paint himself as a scrappy, anti-establishment figure.
Odinga’s campaign has portrayed Ruto as a leader tainted by scandals, including the potential loss of government revenue in a deal that involved developing dams in the Rift Valley region, allegations Ruto has denied.
In a manifesto released in June, Odinga vowed to “fight corruption in all its forms,” partly by fast-tracking reforms and strengthening anti-graft institutions. 

He’s widely regarded as a crusader because of his role in ensuring that Kenya’s 2010 constitution enshrined rights for women, minorities, and marginalized communities while curbing the power of the executive.
Odinga, also known as Baba, has pledged that if elected he’ll enact a monthly stipend of 6,000 shillings for the poorest households to relieve the sting from inflation. 

He says he’ll also help Kenya’s 47 counties develop manufacturing capacity for at least one product, and increase the contribution of agriculture to the economy to 30%, from 22% last year. 

His so-called Baba Care program involves enhancing universal health care and social protection.
A victory for Odinga may result in Kenya having its first female vice president. 

His running mate is Martha Karua, a former cabinet minister and lawmaker. 

Women account for 51% of Kenya’s population, and the nation’s constitution requires that no more than two-thirds of elective posts be represented by a single gender. 

Ruto, for his part, has promised that women would make up half of his cabinet.
Kenyatta has told audiences at rallies on the campaign trail to vote for Odinga, while describing his deputy as unhelpful in times of crisis. 

“I kindly ask you to vote for Raila, who can safely steer this country to another level of socioeconomic development,” said the president at an event in Samburu county in July. 

“When you give leadership to a good person, I know when I come back you will give me a good report of more development taking place.”
Declan Galvin, head of information at Kenya-based security consulting firm WS Insight, says there’s cause for optimism that this year’s balloting will not spark upheaval, as in the past. 

“There is little indication that post-election violence will be widespread or so severe that it could change the outcome, depending on the credibility of the election results,” he says. 

“There has been a lot of good-faith preparation by security services and efforts to curb the negative use of ethnicity or violence.”

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ONGC Videsh, Indian Oil Weigh Stake in $3 Billion Kenya Project @markets
Kenyan Economy

ONGC Videsh, Indian Oil Weigh Stake in $3 Billion Kenya Project @markets 

ONGC Videsh and Indian Oil Corp. are in talks to acquire a stake in Tullow Oil Plc’s $3.4 billion project in Kenya, according to people with knowledge of the matter.
The transaction’s value may be between $2 billion and $3 billion, the people said, asking not to be identified because the talks are private. 

The Indian state-backed companies will be joint operators of the project after the deal, they said. 

Tullow is the current operator of the project and has a 50% stake, while partners Africa Oil Corp. and TotalEnergies SE hold 25% each. 

The potential deal signals the revival of Kenya’s aspiration to export oil on a commercial scale since Tullow discovered crude in the East African country in 2012. 

Tullow submitted a final field development program to the government in December, boosting the project that had stalled as the company focused on managing debt and finalizing its strategy.  
The talks are on-going and the companies could still decide against pursuing a transaction, the people said.
A Tullow spokesperson said the company will respond to a request for comment when contacted on Friday. ONGC Videsh and Indian Oil didn’t immediately reply.

Tullow said in July that progress on the Kenyan project depended on finding a partner. 
“A confidential process to secure a strategic partner for the material development project in Kenya continues and Tullow is confident that it will make substantial progress in the second half of the year,” Tullow said at an investor briefing.
ONGC Videsh, an explorer with interests in 35 oil and gas assets in 15 countries will be the lead on the project, backed by Indian Oil, the South Asian nation’s biggest refiner, according to the people.
Kenya’s south Lokichar fields in blocks 10BB and 13T are projected to produce 120,000 barrels of oil per day, with expected gross oil recovery of 585 million barrels over the full life of the field, according to Tullow. 

The company estimated the cost of production from the wells at $22 a barrel.
From an earlier plan, the waxy crude will be shipped from the fields via a 20-inch, 825-kilometer heated pipeline to a port in the archipelago of Lamu. 

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

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