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Thursday 30th of June 2022
 
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For the first time in history, the US is experiencing a confluence of three macro extremes all at once: @TaviCosta
World Of Finance

For the first time in history, the US is experiencing a confluence of three macro extremes all at once: @TaviCosta

The debt problem of the 1940s

The rising inflationary environment of the 1970s
The excessive financial asset valuations of the late 1990s

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A REGIME CHANGE IS UNDERWAY [in the markets]
World Of Finance



A REGIME CHANGE IS UNDERWAY [in the markets]


There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. 

There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones




The Music has been playing for Eternity and its about to stop


Love Fellini. So brave, with that whiff of insanity. @DiAmatoStyle Federico Fellini's 8 1/2 @tcm
https://twitter.com/tcm/status/1232079264385773570?s=20


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“I am not writing to you, suddenly I look at the sky, that passing cloud'' @GerberArancio
Misc.

“Non ti scrivo, d’improvviso guardo il cielo, quella nuvola di passaggio

e forse tu nel tuo lungomare guarderai una nuvola
e quella è la mia lettera, qualcosa che scorre indecifrabile
e pioggia”

J. Cortazar

“I am not writing to you, suddenly I look at the sky, that passing cloud
 and maybe you on your waterfront will look at a cloud
 and that is my letter, something that flows indecipherable
 It is rain"

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Sunday, April 10, 2022 Apocalypse Now
Law & Politics


Sunday, April 10, 2022  Apocalypse Now

The moment we find ourselves is in is one of extreme stress and complexity. The Geopolitical fault line is most visible in Ukraine and therefore at the European periphery, however, fault lines are emerging all over the global landscape and exhibiting multiple feedback loops, which feedback loops all have viral and exponential characteristics.

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In America – as in Europe – there is fear and anger at system disintegration, Alastair Crooke writes.
Law & Politics


In America – as in Europe – there is fear and anger at system disintegration, Alastair Crooke writes. 

The train wreck has been expected for so long that we have become comfortable living under its shadow. 

Life went on; markets were sanguine that the market lifestyle subsidy provided by the Central Banks would continue unabated. 

And not without good reason either: Any trader disappointment at Central Bank action, any dip in markets, brought forth a collective market hissy fit that usually strong-armed the Central Banks into immediate appeasement. We were hard pressed to imagine differently.
Now, however, we’re in a new era, in many ways. The West has entered upon a war with Russia and China. 

The West, however, did not do its homework first, and now is finding that the ‘war’ is cruelly revealing the structural rigidities and flaws integral to its own economic system, rather than mining the weaknesses of its rivals.
Why is this new era so grave? Firstly, because of what lies ‘beneath the stones’. These structural contradictions have been accumulating over decades, lurking in the dark damp underside to the stones. 

Kept hidden from sight by the serendipitous (for the U.S.) economic outcome to WW2, and the equally serendipitous combination of factors that kept inflation low (so low that western economists believed they had found the ‘holy grail’ of monetary ‘easing’ – they had banished recessions for ever). 

So simple, really, just turn on the money-printer!
Hubris prevailed. It was magic: a ‘new economics’. 

And then inadvertently, Team Biden kicked over the stones in their eagerness to cut Russia down to size (instigating sanctions and stealing Russia’s foreign reserves). 

And Inflation was the serpent under the rock. Long latent, unseen, yet always present. And no longer one serpent, but now many.
And then they found they are fighting the wrong war: Ukraine was conceived as the urban war American and NATO trainers had absorbed from the jihadists fighting President Assad in Syria. 

But Russia knew this type of war well – they did not bite; instead, they fought a classic artillery war (in which Russia traditionally has excelled).
So, the serpents of inflation – at a time of structural economic checkmate – are loosened, as they always are in war. 

And as pressures mount, ‘things’ and people get thrown under a bus. 

‘War’ makes for clarity: It becomes starkly clear what baggage must go overboard to save the vessel.
Saving the vessel, of course, is imperative. Thus, America has decided to look after ‘its own’. 

The Davos-Brussels plan to eventually to roll-up the over-indebted European commercial banks into a single, Brussels-controlled digital currency suddenly is seen – as if scales had fallen from the eyes – as potentially threatening to hole the hull below the waterline.
What this reveals is that the ‘strong dollar–weak dollar play’ – in tandem with Treasury sanctions – has been ‘not so bad’ for the NY Big Banks! 

Why let the Europeans scoop up all those distressed assets that pop-up in times of crisis? 

Why allow the U.S. big banking sphere to dissolve into a world of fin-tech Apps? 

Why deprive the former of their historic raiding rights? Why stop now because the Europeans want ‘Davos’.
So, the U.S. Big Banks are thinking, let the ECB – and by extension the Euro Zone – ‘fall under the bus’. 

Co-ordinating policy with the ECB anyway has tied the hands of the Fed to manage affairs to its own advantage.
With ‘war’, the serpents crawl out. Again, a stark clarity emerges: What worked when inflation was less than 2% doesn’t ‘cut it’ at double digit inflation. 

The low inflation era was dominated by monetarist dogma. And so, it also bred structural contradictions. 

Even moderate interest rate increases now risk eviscerating bonds and highly leveraged U.S. companies, and yet still will not be high enough to stem inflation. 

The Fed’s 75bps rate hike is a drop in the bucket compared to what will be needed to slow the inflationary crisis.
What to do? With war comes inflation and a decline in those willing to fund the U.S. government’s borrowing requirement – as interest due on $30 trillion blows out. 

Interest rates therefore must rise (even if they do nothing to stem inflation) to keep ‘value’ in Treasuries. Thrown under the next bus too then is the U.S. consumer as inflation will soar.
Higher rates however, have not been enough to lure outside investors into treasury markets, with treasuries now facing the worst bond market collapse in half a century. 

This has led China to dump U.S. Treasuries to the lowest level in 12 years, and Japan, once a stalwart pillar of U.S. investment, is cutting their holdings as well.
The decline in U.S. treasuries along with the ongoing decline in the U.S. dollar as the world reserve currency leads to one thing: More inflation; more pain.
Here is another structural contradiction thrown up by the monetarist era. Theoretically, should the Fed crash ‘demand’ enough (by making people so poor they cannot afford things), inflation can quicky be lowered to 2%. 

Huge sigh of relief ensues – Can the Fed then get back to printing money again? Not so quick, please – this outcome is ‘monetarist group think’. It is part of the hubris: 

Today’s narrative is that the Fed can hike until the year-end; hammer the consumer senseless; and then start the printing presses again, so that the market lifestyle subsidy is ‘on’ again.
It’s the war, stupid (to misquote President Clinton). If you take a sanctions hammer to a fragile ‘just in time’ complex supply network, you will have supply blockages – and cost push inflation is inevitable. 

Turning-on the money tap when you face supply-generated inflation will only return the inflationary dynamic to the system. 

What the Fed is trying to do is to keep some benefits of a reserve currency intact, at a time when commodity-value as a trading medium commands the world’s attention.
What is this likely to mean in terms of practical politics? Well, cost-of-living crises are already here, as is the beginning to the ensuing political ructions. 

The ECB last week announced the end of the asset purchases and did not put anything else in place. All the ECB said was that it would work on an ‘emergency instrument’.
So clearly there is an emergency – yet there is no new instrument and there won’t be one

The ECB can use an existing QE tool to buy an unlimited amount of sovereign bonds, or not. It’s a choice, not a new tool.
The Euro is but a derivative of the dollar (which itself is a derivative of the underlying collateral). 

The Euro-system (to use a military metaphor) was built to protect existing, static, defensive lines: It is no roving, mobile expeditionary military force.
The systemic basis to the Euro-zone has been the ECB’s absolute commitment to keep German 10-year Bund at a managed premium over 10-year U.S. Treasuries (these are respectively the two ‘value anchors’ underpinning the functioning of the Euro-zone).
And, as interest rates rise in the U.S., this must be reflected in the Bund (to preserve its ‘value’) – for sovereign bonds represent the highly leveraged collateral upon which the European banking edifice stands (or not). 

If the value of, say, Italian collateral declines, a financial doom loop sets in – as it did in 2012. In a word, the Euro Zone potentially would collapse.
At 2% inflation, European sovereign bonds could be kept more or less aligned. At 8% they cannot. And the bond market is fragmenting. 

The spreads between states’ bonds have skyrocketed in recent weeks. As a stopgap, the ECB seems to be selling German bunds to buy Italian debt.
What does this portend for the future? A hint of what might be coming was when Christine Lagarde left no doubt that the ECB will at least try to tough it out. 

She said during a conversation at the London School of Economics that the ECB would not subject itself to financial dominance. 

Financial dominance is a broader concept than ‘fiscal dominance’ because it includes bailing out banks and other financial institutions, as well as government borrowing needs.
That sounds very much like her stating a readiness to throw either EU banks – or countries, or both – under a bus.

Hypothetically, the only remedy might be a mutualised Eurobond and full QE (though that would require EU treaty renegotiation). QE would of course, exacerbate inflation and the spreads.
But would the northern frugal states acquiesce? Might they not prefer to opt for a truncated, frugalist mini-Euro Zone by throwing Portugal, Italy, Greece, and Spain under the bus?
This effectively might at least, save a core to the Euro ‘project’ by winnowing out the weaker states, and reserving the Euro to the less indebted northern economies. 

The consequence would be a Europe emulating that which Wall Street did to Russia during the Yeltsin era: i.e., imagine it as Italy, with its assets ‘privatised’ and sold-off for $1 (as Draghi once did to Banco Popular, which he ‘took over’ as ECB chief, and then sold to Santander for Euro 1).
As of now, it seems the Euro-élites have not sensed the danger they are in. They entered ‘a war’, and already three major geo-political tectonic shifts are visible. 

Firstly, Putin’s ‘rebellion’ has prompted the Rest of the World to say that they have ‘had it’ with ‘Westification’ (by which is meant the predatory, grasping type of colonialism that has characterised western foreign policy). 

By all means, be ‘the West’, but not ‘Westified’; by all means be ‘European’, but not an ‘EU-values missionary’, the non-westerners suggest.
Secondly, European voters are not looking for more efficient markets or regulatory structures. 

As the cold winds of recession blow, they look to their leaders for protection from markets and regulatory absurdities. 

They sense the danger of unknown ‘doom-loops’ imploding parts of their economy. They are beginning to understand that in wars, rivals strike back too. War is ‘what it is’.
The risk coming from the cost-of-living crisis is easy to grasp. The risk from additional food shortages is almost beyond calculation. 

But what we observe from America, and the recent round of the French Assembly elections, is normal politics checkmated; social distrust; widening reservations toward the legitimacy of central authority; and increasing scepticism and doubts about ideologised SCIENCE.
In the U.S., there is evident a centrifugal separation reflected in migratory flows: The checkmating, the toxification of politics is leading Americans to want to live amongst their like-minded counterparts. 

It is, as it were, a political Ben Op – a literal and geographic mass movement to live within ‘encircled wagons’. 

And in states such as Florida and Texas (with their clear ‘tribal’ immigration), an increasing self-definition in opposition to the Federal government.
Thirdly there is in America – as in Europe – fear, and anger too, at system disintegration. 

Fear, as cities become both violent and mal-administered. 

The situation at Europe’s airports in these last weeks of sheer chaos and unbelievable queues gives a foretaste of the angst that is unleashed toward remote, techno fragile systems that simply freeze solid under pressure, triggering both anger and grievance.
War – even a war of choice – always reveals the fragility of complex systems. 

An article in the Atlantic recently noted that if “you, as a typical urban professional Millennial, woke up on a Casper mattress, worked out with a Peloton, Ubered to a WeWork, ordered on DoorDash for lunch, took a Lyft home, and ordered dinner through Postmates only to realize your partner had already started on a Blue Apron meal, your household had, in one day, interacted with eight unprofitable companies that collectively lost about $15 billion in one year”.
It has been a Millennial lifestyle subsidy that may vanish in the twinkling of an eye (or in one hike of an interest rate). It is a mirage. 

One that reflects the absurdities of the ‘cult of tech’ in a zero-interest rate era. It will soon be gone.
Yet, if our various crises stop at such minor inconveniences, we shall be lucky. 

Rather, we may well see ideological movements (as likely upper middle class, as drawn from the blue-collar sphere) split – with one part staying mainstream, and others seeking violence and revolution, as did the Baader-Meinhof and the Red Brigade groups in 1970s Europe.
In the U.S., there are already intimations of such armed actions stemming from splinters of the pro-abortion movement, but in Europe (and particularly in Germany), we may see the anger deriving from radical Climate Activists, furious at finding that it is the Energy Transition that will be thrown under the bus, as states struggle to do as best, they can to keep a system afloat, as cheaply as they can. 

Self-survival invariably takes priority, pushing other interests aside.
A book by Swedish academic and climate activist, Andreas Malm, Wolfgang Münchau has noted, carries the title, ‘How to blow up a pipeline’. 

Its most important message was a battle cry for climate activists to burn and destroy all CO2-emitting machinery. 

It also invoked Meinhof’s most famous statement – that it was time for a transition from opposition to resistance.
Caveat: A violent late summer may be brewing.

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


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''
Less than two months ago The ''Leader of the Free World'' President Biden said his sanctions against Russia would “reduce the Ruble to rubble” and this has happened
The Architect of the Sanction warfare program said 
The @POTUS Official Who Pierced Putin’s “Sanction-Proof” Economy @NewYorker [4]
Singh said, “We’ve made him stare into an economic abyss. But he could choose to pull back.”
The markets are where these two systems touch—the supply of buckwheat, the joint energy ventures, the price of the ruble—and within this arena the sanctions were a demonstration that Washington still had levers to pull.
“You know, we can play chess, too,” Singh said. “It was important for us to show that the fortress could come crumbling down.”
The geoeconomic debacle is off the scale.  




The Music has been playing for Eternity and its about to stop


Love Fellini. So brave, with that whiff of insanity. @DiAmatoStyle Federico Fellini's 8 1/2 @tcm
https://twitter.com/tcm/status/1232079264385773570?s=20


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A REGIME CHANGE IS UNDERWAY [in the markets]
Law & Politics


A REGIME CHANGE IS UNDERWAY [in the markets]


There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. 

There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones


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Vanity of Vanities! All is vanity
Law & Politics



Vanity of Vanities! All is vanity

The geoeconomic debacle is off the scale. 


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Can I impose a price cap on my gasoline price at the filling station? @True_2_power
Minerals, Oil & Energy


Can I impose a price cap on my gasoline price at the filling station? @True_2_power

What happens when Russia imposed a supply cap on Russian oil in response to this “price cap”?
Which of the G7 have agreed to take the political heat for the inevitable shortages?

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What’s behind the sharp drop in Bitcoin’s value? $BTC #Bitcoin @AJInsideStory
World Currencies


What’s behind the sharp drop in Bitcoin’s value? $BTC #Bitcoin @AJInsideStory 
Presenter: Sami Zeidan
Guests
Aly-Khan Satchu – Investor and CEO at Rich Management
Naeem Aslam – Chief market analyst at AvaTrade
Brian Lucey – Professor of international finance and commodities at Trinity Business School

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Costly food and energy are fostering global unrest @TheEconomist
Commodities


Costly food and energy are fostering global unrest @TheEconomist 

''Money no longer had any value in Istanbul,” laments the narrator of “My Name is Red”, a novel by Orhan Pamuk set in the 16th century. 

“[B]akeries that once sold large…loaves of bread for one silver coin now baked loaves half the size for the same price.” 

The royal mint was slyly reducing the amount of silver in each coin. When the Janissaries (an elite military force) found that their wages had been debased, “they rioted, besieging Our Sultan’s palace as if it were an enemy fortress.”

Galloping inflation afflicts Turkey again today. Officially it is 73%, but everyone suspects it is higher. 

Mr Pamuk, a Nobel laureate for literature, says he has “never seen such a dramatic rise in prices”. 

He makes no predictions about what the political consequences might be. 

To criticise Turkey’s modern sultan, Recep Tayyip Erdogan, would be risky.

 But from his book-strewn flat overlooking the Bosporus, Mr Pamuk observes that his compatriots are reacting with “shock, surprise and anger”.

A visit to a street market suggests the novelist is right. A vine-leaf seller gripes that he has had to treble his prices since last year.

 “People used to buy 5kg at a time and put them away for winter. Now they can only afford 300g.” 

A grandfather complains that his pension has been so eroded that he has not eaten meat this year.

“The government is responsible, who else?” he says. He voted for Mr Erdogan’s party at the most recent election, in 2019, but will not do so again. 

“The solution is to change the government,” says the vine-leaf seller. “I want to leave the country,” says his younger brother. “I’ll clean toilets in Europe if I have to.”

All around the world, inflation is crushing living standards, stoking fury and fostering turmoil. 

Vladimir Putin’s invasion of Ukraine has sent prices of food and fuel soaring. 

Many governments would like to cushion the blow. But, having borrowed heavily during the pandemic and with interest rates rising, many are unable to do so. 

All this is aggravating pre-existing tensions in many countries and making unrest more likely, says Steve Killelea of the Institute for Economics and Peace (iep), an Australian think-tank.

The strongest predictor of future instability is past instability, finds a forthcoming paper by Sandile Hlatshwayo and Chris Redl of the imf. 

Historically, the probability that a country will experience severe social unrest in a given month is only 1%, but this quadruples if it has suffered it within the previous six months and doubles if a neighbouring country has experienced it, they calculate. 

Protesters are more likely to surge onto the streets if they think others will join them.
This is bad news, since unrest has been building for years. The iep calculates that 84 countries have become less peaceful since 2008; only 77 have improved. 

Its measure of violent protests is up by 50% over the same period. 

Using a different method—counting mentions in the media of words associated with unrest across 130 countries—the imf estimated in May that social turmoil was near its highest level since the pandemic began.

The Economist has built a statistical model to assess the relationship between food- and fuel-price inflation and unrest. 

We used data from acled, a global research project, on “unrest events” (ie, mass protests, political violence and riots) since 1997. 

We found that rises in food and fuel prices were a strong portent of political instability, even when controlling for demography and changes in gdp.

We also found cause for alarm about the coming months. Expenditure on imports of food and fuel is set to increase, especially in poor countries (see chart 1). 

Poor countries’ debts have also risen (see chart 2). 

The average low-income country has a public-debt-to-gdp ratio of 69.9%, estimates the imf. This, too, is set to increase, and to overtake the (unweighted) average for rich countries this year

Since poor countries typically have to pay much higher interest rates, many of their debts look unsustainable. 

The imf says 41 countries, home to 7% of the world’s population, are in or at high risk of “debt distress”. 

Some, such as Laos, are on the brink of default. Our model suggests that many countries will see a doubling of the number of “unrest events” in the coming year (see map).

Places that were precarious before may be tipped over the edge. 

In Turkey, for example, the disruption of food and fuel imports from Ukraine and Russia adds to the damage already being caused by barmy monetary policy. 

Mr Erdogan believes that high interest rates cause inflation, rather than curbing it. So he has ordered rates cut even as prices have raged out of control.

To defend the Turkish lira, Mr Erdogan has since the end of 2021 urged people to put their money into special depreciation-proof accounts. 

The state promises to make up the difference if these deposits lose value against the dollar, as they have been doing. 

The lira has already fallen by almost 25% this year. No wonder that over 960bn lira ($55bn, or 7% of gdp) has been stashed in the accounts in six months, creating a vast liability for the government.
“It’s the dynamite under the system,” says Garo Paylan, an opposition mp

It will probably explode before the next election, which is a year away. 

Mr Erdogan is expected to lose unless he does something drastic, so he might do something drastic. 

He could start a new war in Syria against the pkk (a Kurdish group the government calls terrorists) or ban his strongest opponents from politics, speculates Behlul Ozkan of Marmara University. 

In short, the economic crisis could lead Turkey to eject an erratic strongman who has ruled for nearly two decades—or the strongman could throttle what is left of Turkish democracy. Tranquillity seems the least likely scenario.

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13 AUG 18 :: Cold Turkey.
Minerals, Oil & Energy


13 AUG 18 ::  Cold Turkey.

In 1998, Prime Minister Margaret Thatcher told the House of Commons: “There is no way in which one can buck the market.”

He said, “Don’t get high on your ambitions. You won’t be able make money on the back of this nation. You won’t be able to make this nation kneel.”
And then ‘’Even if they got dollars, we got ‘our people, our God’’’ [In the markets that is called a ‘’Hail Mary’’ pass]

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Costly food and energy are fostering global unrest @TheEconomist continued
Commodities


Costly food and energy are fostering global unrest @TheEconomist continued

In country after country, the global economic storm has exacerbated underlying troubles. 

Take Pakistan, where squeezed living standards help explain why in April parliament ousted the prime minister, Imran Khan, with a nod from the army. 

He has since led mass rallies to get his job back. In India riots erupted over a plan to reduce the number of jobs for life in the army. (When times are hard, people particularly crave job security.)
Sri Lanka gives a taste of how quickly things can spiral out of control. 

President Gotabaya Rajapaksa banned agrochemicals last year and told farmers to go organic instead. Harvests plunged. 

Six months later he lifted the ban but, by then, thanks to other daft policies, there was too little hard currency to import enough chemical fertiliser. 

The next harvest is predicted to be miserable. Sri Lanka needs food and fuel, but cannot afford to import them.
On May 9th protesters clashed with a pro-government rally. They pushed buses into lakes or set them on fire. 

They attacked government supporters with poles; your correspondent also saw some wielding hockey sticks. 

They burned the homes of politicians and smashed up a museum dedicated to the Rajapaksa family. 

Troops dispersed protesters who burst into the prime minister’s residence. 

The president tried to calm the crowds by pushing out the prime minister (his brother).
But Sri Lankans are still furious. Shop shelves are bare, even for basics, and people queue for hours for petrol. 

Schools and government offices are temporarily closed. The government has defaulted on its debts. imf officials arrived in Colombo, the capital, on June 20th to discuss a bail-out.
Foreseeing red
No one can be sure which country or region will explode next. 

Mr Killelea frets about the Sahel, which has seen five coups in the past two years. Others point to Kazakhstan, where the government called in Russian troops to help suppress civil unrest in January, or Kyrgyzstan, which relies on wheat and remittances from Russia and has ousted three presidents since 2005.
One country with nearly all the harbingers of havoc is Tunisia. It has a history of unrest. 

Almost 12 years ago a Tunisian fruit-seller, Muhammad Bouazizi, set fire to himself after police kept shaking him down. His death set off the Arab spring, a wave of protests that swept the Middle East and toppled four presidents. 

Tunisia’s democratic revolution initially went well. But last year the president, Kais Saied, assumed autocratic powers. 

Falling living standards have turned the country into a powder keg once more.

Half the population is under 30, and a third of young men are unemployed. 

In slums around Tunis, the capital, they loiter on street corners, smoking and bellyaching. “Young people here have nothing to lose. They’ll join a riot just for a chance to steal phones and rob shops,” says Muhammad, a 23-year-old selling pot in the street.
“I’m always angry, from the beginning of the day to the end,” says Meher el Horchem, who works in a café in Goubellat, a small town. Business is down 70-80% in recent months, he reckons:

 “No one can afford to go out.” He waves a 20-dinar ($6.40) note in the air. It is his day’s wages. “You walk into a shop with this and you come out with nothing,” he complains.
He is in his 30s and lives with his parents. “Of course I want to be married. Everyone does,” he says. 

But he cannot afford to on his inflation-sapped wages. “I can’t have a life,” he fumes, adding: “All the youth are angry at the system. I’m hoping to God it won’t lead to a civil war.”
So far, it has not. But a general strike on June 16th stopped buses and trains. The government is trying to make a deal with the imf, but a big union objects to its conditions, which include cutting the public-sector wage bill. 

President Saied is trying to buttress his own power: on July 25th Tunisians will vote on a new constitution, the text of which he has not yet shown them.
Ordinary Tunisians yearn for calories, not constitutional reform. 

But policies intended to satisfy their hunger have perverse consequences. 

Like many countries, Tunisia fixes the price of a staple food (in this case, bread). Bread subsidies cost more as wheat prices rise; this is one reason why the government needs an imf bail-out.
Farmers, meanwhile, must sell their grain to the state for a low, fixed price. This discourages production. 

In a field near Goubellat a group of labourers share lunch. “The earth in this country is good,” says Neji Maroui, their manager. There is plenty of spare land. If they could earn a market rate for their wheat, they would plant more of it, he says. But they receive less than a fifth of the world price, so they don’t.
Inflation stimulates corruption, argues Youssef Cherif of the Columbia Global Centre in Tunis. 

In poor countries, each civil servant typically supports a large extended family. 

Grocery bills have gone up. Wages have not kept pace. “That creates an incentive to demand more bribes.”
That, in turn, makes unrest more likely. As graft intensifies, the chances of another frustrated victim like Muhammad Bouazizi staging a spectacular protest somewhere must surely increase. 

In Goubellat Rafika Trabelsi boils with rage as she slices potatoes. She wanted to expand her roadside kiosk and sell a wider range of drinks and snacks. 

But local officials refused her permission and bulldozed her tiny extension. Other people got permits because they paid bribes, she says.

Though Mr Putin is responsible for a big chunk of global inflation, people tend to blame their own governments. 

In Peru Pedro Castillo won power last year with the slogan “no more poor people in a rich country”. Covid-19 made that harder—it has been deadlier in Peru than almost any other country, according to The Economist’s excess-deaths tracker. 

And just as the economy was recovering, Mr Putin’s war choked off its supply of fertiliser. Peru had relied on Russia for 70% of its imports of urea, the most commonly used sort. Now farmers struggle to get hold of the stuff, and they are livid.

In April they blocked roads to protest against inflation. Toll booths were burned; shops were looted. 

Mr Castillo panicked and tried to impose a fresh pandemic-style lockdown on Lima, the capital. Critics howled “autocrat”. He relented.
The president’s approval rating is now around 20%. 

“We thought he was like us,” says Gricelda Huaman, a mother of three in a shantytown outside Lima, but, “he’s forgotten us.” S

he often skips meals so her children have more. She sometimes can’t afford pills for lupus, an autoimmune disease. Without them, she cannot walk.
Unless Peru secures more fertiliser, the next harvest could be drastically reduced, says Eduardo Zegarra of grade, a local think-tank. 

Mr Castillo has been distributing guano, a traditional fertiliser that Peru once produced in large quantities. 

He recently told farmers that “only the lazy” would go hungry. They are unimpressed. 

“If we don’t see concrete actions in favour of farmers soon, he’ll have us on the streets,” says Arnulfo Adrianzén, who grows rice. 

Peru has had five presidents in the past five years. It may not be long before another puts on the increasingly uncomfortable sash of office.
Some regimes will keep a lid on unrest through force. No one expects protests to get out of hand in China, for example. 

In Turkmenistan, where food shortages have long been rife because of a mismanaged economy, anyone who buys more than their allocation of bread faces 15 days in jail. 

Egyptians are wary of speaking up. The last mass protests, in 2013, ended when the regime massacred perhaps 1,000 people.
In Uganda, President Yoweri Museveni has told his people to eat cassava if there is no bread. 

An opposition leader has urged them to take to the streets. Kizza Besigye, a former presidential candidate, led protests during the previous big inflationary spike, in 2011. 

This time the state is taking no chances. Dr Besigye has been locked up.
Protests in Uganda are unlikely to succeed. The state, like Egypt’s, has no compunction about shooting demonstrators. 

Also, many Ugandans live hand-to-mouth, which makes protest difficult to sustain: if people don’t work, they don’t eat. Still, frustration is rising. Ugandans spend 43% of their income on food, so price rises hurt.
Authoritarian regimes such as Uganda’s face a dilemma. To crush dissent they must divert ever more resources to the security forces and patronage, reducing their capacity to respond to economic shocks. 

Dr Besigye says “the repressive apparatus” in Uganda is stronger than ever. But by squandering so much money on the army, he adds, Mr Museveni has “intensified the conditions for discontent”.
Uproar to downturn
Global unrest could hobble growth. Investors get skittish when mobs burn down factories or overthrow governments. 

A working paper by Metodij Hadzi-Vaskov and Luca Ricci of the imf and Samuel Pienknagura of the World Bank finds that big outbreaks of unrest are on average followed by a percentage-point reduction in gdp, relative to the previous baseline, a year and a half later. 

This could in theory be because, say, a previous policy of fiscal austerity led both to popular anger and to lower growth. 

But the authors find that the link holds true regardless of whether the unrest is preceded by fiscal austerity or low growth. They conclude that unrest does indeed hurt economies.
They also find that unrest motivated by socioeconomic factors (such as inflation) is associated with more severe contractions than unrest sparked by political factors (such as a disputed ballot). 

When the unrest has both political and socioeconomic motivations, the damage to gdp is worst of all. 

A good example was the rioting that rocked South Africa in 2021, when covid-19 was causing economic hardship and a rogue ex-president was urging his supporters to protest against his being put on trial for corruption. In the quarter when the looting occurred, gdp shrank by 1.5%.
A final and intriguing finding is that although unrest typically causes stockmarkets to fall, this effect has historically been negligible in countries with more open and democratic institutions. 

The implication is that societies cope better with turmoil when they have good institutions and the rule of law.
The thing protesters around the world so often demand—cleaner, better government—is exactly what their countries need. But it takes time, and stability, to build. The short term will be turbulent. ■

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The Phenomenon is spreading like wildfire in large part because of the tinder dry conditions underfoot.
Commodities


The Phenomenon is spreading like wildfire in large part because of the tinder dry conditions underfoot.

Prolonged stand-offs eviscerate economies, reducing opportunities and accelerate the negative feed- back loop.
Antonio Gramsci wrote, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum, a great variety of morbid symptoms appear. now is the time of monsters.”
Ryszard Kapucinski also said: “If the crowd disperses, goes home, does not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.

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Paul Virilio Speed and Politics
Law & Politics


Paul Virilio Speed and Politics

“The revolutionary contingent attains its ideal form not in the place of production, but in the street, where for a moment it stops being a cog in the technical machine and itself becomes a motor (machine of attack), in other words, a producer of speed.’’

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January 15, 2011 Tunisia's Jasmine Revolution @csmonitor
Law & Politics


January 15, 2011 Tunisia's Jasmine Revolution @csmonitor 

Mr. Ben Ali in a speech on Monday called the riots “terrorist acts” that were the work of “masked gangs” operating for foreign parties.
"We are not afraid, we are not afraid, we are afraid only of God," the crowds chanted on Tuesday in Tunis.
On Thursday, the American secretary of State said the following in Qatar.
“In too many places, in too many ways, the region’s foundations are sinking into the sand,” said Secretary Hillary Clinton. 

“Those who cling to the status quo may be able to hold back the full impact of their countries’ problems for a little while, but not forever, If leaders don’t offer a positive vision and give young people meaningful ways to contribute, others will fill the vacuum.”
The day’s seismic events in Tunisia were described by the broadcaster Abeer Madi al-Halabi as serving “a lesson for countries where presidents and kings have rusted on their thrones.”

John Donne wrote:

"...Therefore, send not to know
For whom the bell tolls,
It tolls for thee..."

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When the debt crises hit, don’t simply blame the pandemic @WorldBank MARCELLO ESTEVÃO & SEBASTIAN ESSL
Emerging Markets


When the debt crises hit, don’t simply blame the pandemic @WorldBank MARCELLO ESTEVÃO & SEBASTIAN ESSL 

Every debt crisis begins with unheeded warnings and ends with severe limits on investment in education, health, and infrastructure among other things. 

These crises often spark civil unrest and government collapse, delivering a lasting setback to the growth prospects of the affected country. 
In the wake of the COVID-19 pandemic, global debt has surged. Today, 58 percent of the world’s poorest countries are in debt distress or at high risk of it , and the danger is spreading to some middle-income countries as well. 

High inflation, rising interest rates, and slowing growth have set the stage for financial crises of the type that engulfed a series of developing economies in the early 1980s. 
But it would be a mistake to pin the blame on the pandemic should those crises arrive. 

The seeds were sown long before COVID-19. Between 2011 and 2019, public debt in a sample of 65 developing countries increased by 18 percent of GDP on average--and by much more in several cases. 

In sub-Saharan Africa, for example, debt increased by 27 percent of GDP on average.  

What drove the pre-COVID debt accumulation? Let’s be clear: it wasn’t economic surprises that were beyond the government’s ability to foresee. It was simply bad policy.   

Our analysis of debt sustainability in 65 developing economies suggests that sustained primary deficits were the single-largest driver of public debt in those countries. 

Countries were simply spending beyond their means

Between 2011 and 2019, the median public-debt increase attributable to primary deficits amounted to a whopping 14 percent of GDP. 

In sub-Saharan Africa, it was 18 percent.  Yet, in South Asia, it was just slightly over 5 percent.  
In Africa, in particular, the evidence is that governments ran up primary deficits not to make productive long-term investments but simply to pay current bills. 

They took on far more debt to pay the wages of public sector workers than they did to build roads, schools, and factories. 

Among the 33 sub-Saharan countries in our sample, current spending outstripped capital investment by a ratio of nearly three to one.  

That did nothing to strengthen their ability to repay the debt. Nor did these countries opt to borrow inexpensively—from multilateral lenders offering concessional financing rates. 

In 2010, multilateral lenders accounted for 56 percent of the public and publicly guaranteed debt of sub-Saharan countries; by 2019, that share was just 45 percent. 

In 2010, loans from Paris Club creditors accounted for 18 percent of the debt; by 2019, the share was just 8 percent. 

On the other hand, borrowing from China and commercial creditors nearly tripled over the same time: from 6 percent to 16 percent, and from 8 percent to 24 percent, respectively.   

So long as real economic growth remained strong, the risks were masked. 

Growth curbs the accumulation of public debt: according to our data, from 2011 through 2019, economic growth—adjusted for inflation—reduced public debt by the equivalent of about 12 percent of GDP.  

Today, however, the dynamics are in the opposite direction: developing economies are expected to grow just 3.4 percent in 2022, barely half the rate in 2021. 

And as interest rates surge to tackle inflation, growth is likely to remain weak for the next couple of years. 
It’s time for policymakers to adopt the first law of holes: when you’re in one, stop digging. Adopting good policies now can still repair a lot of the damage: 
Ramp up growth. The best way to escape a debt trap is to grow out of it. 

Measures to improve business conditions, better allocation of resources, and healthy market competition are essential policy actions to boost productivity growth.  

Governments should take advantage of this crisis to move faster on key structural reforms. 
Accelerate fiscal policy reforms. Improving tax administration efficiency and closing loopholes are a good start, but governments should move to broaden tax bases in ways that support rather than impede long-term growth. 

That can be accomplished by focusing on activities that are harmful to sustainable growth and public health—taxes on tobacco consumption and carbon emissions, for example—while reducing taxes on productive activities. 

Tax compliance can be improved by making tax systems more equitable. The debt overhang can be dismantled if governments improve debt-management procedures and public spending while strengthening the legal environment for debt contracting.  
Speed up debt restructuring. Many of the countries in trouble today are set to fail if they cannot get help. 

The international community must help them by improving global initiatives that facilitate debt restructuring.   

Policymakers should explore every opportunity to encourage different types of creditors—bilateral, commercial, and multilateral—to come quickly to an agreement that provides relief to overindebted countries. 
Crises also bring opportunities. Amid the overlapping crises we are seeing today, governments have an opening to plant the seeds for a more stable and prosperous future. They should not pass up the opportunity.

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. Mauritius has reopened nightclubs and bars, lifted restrictions on gatherings, and scrapped a public mask mandate as it eased Covid-19 measures in the Indian Ocean island paradise popular with holidaymakers. @AFP
Africa


. Mauritius has reopened nightclubs and bars, lifted restrictions on gatherings, and scrapped a public mask mandate as it eased Covid-19 measures in the Indian Ocean island paradise popular with holidaymakers. @AFP


Prime Minister Pravind Jugnauth said Mauritius had achieved a very high rate of vaccination and could "enter a new phase" of the pandemic more than two years after it began.

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Another sign of extreme tightness in the crude market comes from the Murban grade produced in UAE. @MenthorQpro
Minerals, Oil & Energy


Another sign of extreme tightness in the crude market comes from the Murban grade produced in UAE. @MenthorQpro

Conclusions

This is Kenya's main import. 

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@SafaricomPLC (+6.6%) touched a 9-day high share data
N.S.E Equities - Commercial & Services


@SafaricomPLC  (+6.6%) touched a 9-day high share data 

Price: 24.90

Market Capitalization: 997,629,157,200
EPS: 1.74
PE: 14.310

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@KeEquityBank gained 2.2% - hitting a 7-day high share data
N.S.E Equities - Finance & Investment


@KeEquityBank  gained 2.2% - hitting a 7-day high share data 

Price: 39.90

Market Capitalization: 150,569,624,600
EPS: 10.38
PE: 3.844

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Nairobi ^NSE20 Bloomberg
N.S.E General

Buoyed by notable gains across large-cap stocks, the NASI closed up 4.2% to 122.83

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