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Satchu's Rich Wrap-Up
 
 
Monday 08th of August 2022
 



Vanity of vanities! All is vanity
World Of Finance


Vanity of vanities! All is vanity

Vanity[a] of vanities, says the Preacher,
vanity of vanities! All is vanity.
A generation goes, and a generation comes,
but the earth remains forever.
The sun rises, and the sun goes down,
and hastens[b] to the place where it rises.
What has been is what will be,
and what has been done is what will be done,
and there is nothing new under the sun.
Is there a thing of which it is said,
“See, this is new”?
It has been already
in the ages before us.
There is no remembrance of former things,[c]
nor will there be any remembrance
of later things[d] yet to be
among those who come after.

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A reminder that nonfarm payrolls also surged by almost 500k right at the peak of the tech bubble in March 2000. @TaviCosta
World Of Finance


A reminder that nonfarm payrolls also surged by almost 500k right at the peak of the tech bubble in March 2000. @TaviCosta


Given the overwhelming optimism on the jobs report today:
A reminder that nonfarm payrolls also surged by almost 500k right at the peak of the tech bubble in March 2000.

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September 1, 1939 by W. H. Auden
Misc.


September 1, 1939 by W. H. Auden


But who can live for long
In an euphoric dream;
Out of the mirror they stare,

Faces along the bar
Cling to their average day:
The lights must never go out,
The music must always play

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This Means War Has Pelosis Visit Sealed Taiwan’s Fate? @TheNatlInterest
Law & Politics


This Means War: Has Pelosi’s Visit Sealed Taiwan’s Fate? @TheNatlInterest 


According to Chinese state media, China’s People’s Liberation Army is mobilizing for war in preparation for a potential pre-emptive attack against Taiwan in response to Pelosi’s visit.

Since the People’s Republic of China’s (PRC) inception over seventy years ago, China’s reunification with Taiwan has been its paramount foreign policy objective. 

Chinese president Xi Jinping has made repeated statements that China’s patience for Taiwan to accept its offer of peaceful reunification is running out. 

Over the past two decades, China has greatly increased its amphibious assault capabilities. 

Meanwhile, the frequency and scale of Chinese fighter and bomber incursions into Taiwan’s Air Defense Identification Zone (ADIZ) during the past year have been unprecedented, with more than 1,400 incursions, accompanied by large People’s Liberation Army Navy (PLAN) exercises off the coast of Taiwan, since Joe Biden became president.

Last month, Beijing took the unprecedented step of claiming full sovereignty over the Taiwan Strait and warned the United States against any attempt to circumnavigate it with its warships without its permission. 

The Biden administration has expressed concern that China would take military action against Taiwan within the next eighteen months, including a blockade of foreign ships sailing in and out of the Taiwan Strait. In response to the increasing threat, the Biden administration has dispatched a carrier battle group led by the USS Ronald Reagan to take a position east of Taiwan in an attempt to deter such Chinese aggression.

Now, there are indications that Beijing may use House Speaker Nancy Pelosi’s visit to Taiwan as a convenient pretext to finalize preparations for a long-planned air and sea blockade of Taiwan under the pretext of “thwarting her conspiracy to support Taiwan secession and split China.” 

Amidst increasing tensions over her planned visit, Biden and Xi convened an urgent video conference on July 27 during Xi warned Biden against U.S. interference in China’s plans to reunify with Taiwan. 

“Those who play with fire will perish by it,” Xi said. “It is hoped that the U.S. will be clear-eyed about this.” 

Beijing’s readout added the statement that the PRC should be “prepared for the worst scenario, especially military preparation,” for a potential conflict with the United States.

China’s Global Times state media reported that its military is mobilizing for war in preparation for a potential pre-emptive attack against Taiwan in response to Pelosi’s visit. 

Further, it warned the United States against a military response, saying it would lead to a “severe military conflict.” 

It added that Taiwan will be where the United States finally shows its “true paper tiger face” and that China does not fear any escalation in the advent Washington decides to take military action against Taiwan. 

Not uncoincidentally, China began conducting major ground and naval live-fire exercises in the Taiwan Strait on July 30, the very day that Pelosi departed for her tour of Asia. 

Following Pelosi’s arrival yesterday, China announced the People’s Liberation Army (PLA) would hold “live fire” air and naval exercises surrounding Taiwan and intrude on the island’s territorial waters from August 4-7, placing the PLA in position to begin a blockade after the exercises conclude.

For the past several years, I have been predicting Chinese aggression against Taiwan would likely occur sometime between 2021 and 2025. 

Since that time, the correlation of forces has continued to shift in Beijing’s favor with China now possessing the largest army, the largest navy, and the largest coast guard with the largest economy in the world and a manufacturing industrial base nearly twice as large as the United States’. 

China has also fielded DF-17 hypersonic missiles, DF-21 and DF-26B anti-ship ballistic missiles, and extremely powerful electromagnetic pulse (EMP) weapons, which could disable entire U.S. aircraft carrier battlegroups or even knock out the entire electrical power grids of the United States and its allies.
While many analysts claim that Russia’s continuing invasion of Ukraine, which has lasted over five months thus far, has caused China to postpone its plans to invade Taiwan, the truth is likely the opposite

Russia’s invasion of Ukraine is actually serving to increase the incentive for China to begin military action against Taiwan to take advantage of the current U.S. military preoccupation in Europe

Last week, Sen. Chris Coons (D-DE) stated that Chinese leaders may have learned from the Russo-Ukrainian War that they need to “go early and go strong” before Taiwan is able to strengthen its defenses

adding that “we may be heading to an earlier confrontation — more a squeeze than an invasion — than we thought.” 

Xi is likely planning on a show of strength potentially including reunification with Taiwan before the twentieth Communist Party Congress in November. 

Such a historic accomplishment would help him secure an unprecedented third term as China’s president.

According to a recently leaked PLA military leadership video recording of a joint civil-military meeting that appears to be genuine, China is mobilizing its economy and military for war. 

This top-secret war mobilization meeting occurred on May 14 and discussed the need to convert 365 10,000-ton Roll-on Roll-off (RoRo) ships to carry tanks and vehicles for an amphibious assault role and recruit tens of thousands of additional troops by the end of June, suggesting that China may be contemplating major aggression later this year. 

Chinese leaders also discussed the need to protect the forward deployment of China’s nuclear missiles and to conduct naval and coast guard missions “outside the first island chain” formed by the Japanese islands, Taiwan, and the Philippines. 

This suggests China’s offensive plans may be much broader than merely securing Taiwan’s capitulation.

On May 23, the day after this Chinese military video clip went viral, Biden was asked if the United States would defend Taiwan militarily against Chinese aggression. He replied by stating, “That’s the commitment we made.” 

However, given Biden’s prudent refusal to send U.S. troops to fight Russia in Ukraine, it seems highly unlikely that Biden would order U.S. military forces to defend Taiwan from Chinese military aggression, especially if it did not include an actual Chinese invasion of the island nation.

According to the Department of Defense’s 2021 annual report on the Chinese military threat, China could attempt an air and naval blockade of Taiwan to coerce its surrender, likely accompanied by the seizure of Taiwan’s offshore islands and potentially missile strikes on key Taiwanese military targets such as anti-ship and surface-to-air missile sites. 

Any U.S. attempt to break the Chinese blockade would likely result in China firing on U.S. ships and aircraft, leading to the outbreak of World War III in the Pacific

China would claim that it was not blockading Taiwan but rather enforcing a quarantine upon its own sovereign territory, which is not considered an act of war under international law, further reducing the chances of a direct U.S. military response.

As noted in the report, such a Chinese air and naval blockade would likely be preceded by massive cyberattacks against Taiwanese critical infrastructure including an attempt to jam or disable their communication systems to cut off their access to the outside world. 

Chinese leaders might deny responsibility for widespread power, internet and communications failures in Taiwan, perhaps blaming non-state hackers. 

A recent spate of such failures in Taiwan might well have been a test run for this planned Chinese cyber offensive given that, just like America’s own electrical power grid, Taiwan’s power grid utilizes dozens of large Chinese transformers which likely have back-doors that enable the PRC to turn them off or provide false readings which can cause such widespread power failures without being able to detect foreign interference. 

Such a cyberattack could knock out Taiwan’s Command, Control and Communications (C3) system and disable GPS satellites, rendering it unable to coordinate its defenses

Further, it could disable its gas pumps, causing its military vehicles, aircraft, and warships to quickly run out of fuel along with its cars, trucks, and trains, paralyzing Taiwan’s food distribution system. 

It would also disable Taiwan’s running water and water purification systems while taking down its emergency medical, fire, and law enforcement services, resulting in a breakdown of law and order. 

This might cause Taiwan to capitulate to China within a matter of weeks.

However, there have been indications that China may be preparing to implement its blockade strategy against Taiwan much sooner while occupying various island groups surrounding Taiwan, including the Pacific islands far to the southeast. 

National security expert Jeffrey R. Nyquist has been warning about the increasing threat from the Sino-Russian military alliance for more than two decades. 

Nyquist recently interviewed a Chinese military expert associated with Lude Media, which disseminated the leaked video. 

Their most recent information confirms that the Chinese plan is likely to initiate a blockade, rather than invade, Taiwan beginning in August.

China would then invade a number of islands surrounding Taiwan along with largely undefended and mostly sparsely populated island nations in the first and second island chains. 

Potential Chinese targets for military occupation include the Japanese Senkaku Islands, Micronesia, Fiji, Kiribati, the Marshall Islands, the Solomon Islands, Nauru, Palau, Tonga, Tuvalu, Vanuatu, East Timor the Bismarck Archipelago, the Paracel Islands, the Spratly Islands, and Brunei. 

According to the Chinese military expert Nyquist interviewed, if the United States reacted with direct military force to Chinese aggression, then China would initiate conventional or even nuclear strikes on U.S. military bases in Japan, South Korea, the Northern Marianas, and Guam). If the U.S. responded by attacking mainland China, 

Beijing would retaliate with a nuclear first strike upon the U.S. homeland.

Even though China is unlikely to preemptively attack U.S. military bases in the region barring direct U.S. military intervention, Biden would likely respond to a Chinese blockade of Taiwan by sending the rest of the U.S. Seventh Fleet to the Western Pacific in the vicinity of Chinese naval and amphibious forces in a show of force similar to the Cuban Missile Crisis of 1962. 

However, China has spent decades preparing for a potential clash with the United States over Taiwan, constructing the largest nuclear-capable ballistic missile force in the world and deploying much of it along its coastline. 

Accordingly, the main difference with this nuclear superpower standoff is that it would not be the United States with overwhelming theater nuclear and naval superiority, but China. 

This would greatly increase the chances that such a standoff would not end favorably for the United States.

Of all of China’s available options to retake control of Taiwan and its surrounding islands, its planned blockade strategy would be the one with the least amount of risk

According to former National Security Advisor John Bolton’s recent memoir, during a meeting in the White House, President Donald Trump stated that Taiwan is essentially indefensible due to the fact that it is only eighty-one miles from the PRC but 8,000 miles from the United States

Additionally, given the overriding U.S. national security interest in averting a nuclear war with the PRC, the risks of U.S. military intervention in terms of likely Chinese nuclear escalation may very well outweigh the U.S. national interest in attempting to defend Taiwan against Chinese aggression.

If Taiwan became convinced the United States would not break the Chinese air and naval blockade to resupply it with humanitarian aid, it is likely to quickly come to terms with Beijing in a reunification agreement that the United States might help to mediate. 

Such an agreement could be forged on the basis of the “one country-two systems” model that Deng Xiaoping proposed back in 1979, averting a potential nuclear holocaust. 

And despite a Chinese takeover of Taiwan’s advanced semiconductor manufacturing industry, the United States could probably live in a world in which Taiwan was part of China as long as its entire Indo-Pacific military alliance system remained intact.

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'That big thing may be that he who rules Taiwan rules the world'' @bopinion @nfergus
Law & Politics

'That big thing may be that he who rules Taiwan rules the world'' @bopinion @nfergus
The Matter is concluded 

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


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

It is inevitable he will roll the dice on Taiwan 

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15 OCT 18 :: War is coming
Law & Politics


15 OCT 18 ::  War is coming

In August 2017, I wrote a piece headlined ‘’China Rising’’ and said ‘’Apart from a few half-hearted and timid FONOPs [freedom of navigation operations], China has established control over the South China Sea. 

It has created artificial Islands and then militarised those artificial islands across the South China Sea. It is a mind-boggling geopolitical advance any which way you care to cut it’’ .

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1-4-2-1
Law & Politics


1-4-2-1

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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7 OCT 19 :: They have “stood up.”
Law & Politics



7 OCT 19 :: They have “stood up.”



The President for Life was see- king to project a sense of inevitable forward motion and a fulfilment of the promise that Mao Zedong made on the founding of the People’s Re- public of China on October 1, 1949 that China would stand up.
They have “stood up.”

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A Winter Of Anger @zerohedge Raul Ilargi Meijer
Law & Politics


A Winter Of Anger @zerohedge  Raul Ilargi Meijer


It is very simple: if you’d ask most citizens of whichever EU country if they are willing to risk being unable to feed and heat their children in order to support Ukraine and Zelensky, they would say NO. Hell no!
But that is what they’re all being pushed towards.
Food prices look to at least double from here, after they’ve doubled once already, while energy prices are set to triple or worse. And there’s no logical reason for it.

This is not due to some inevitable market mechanism, it’s because the west decided to halt all Russian imports after the latter’s Special Military Operation in Ukraine. 

All western leaders found that reason enough to cut all, or nearly all, imports from Russia. Gas, oil, fertilizer, food. Essentials. 

They could have been sitting around a negotiating table, but chose not to. Which only works as long as things remain sort of affordable. And then, it does not.
Problem is, they had and have no alternative to the Russian supplies of these goods (and there’s many more).
See, this is how we know they don’t make their own decisions. Those are made in Brussels and Davos, and then the “leaders” have to carry out the preconceived programs, and they will.
No elected official on his/her own would risk to destroy their own country’s energy or food safety, with elections coming up every few years. 

But their WEF/Davos connections have changed that “logic”. The WEF makes sure no western leader gets elected who is not a member of their club. There’s only one path to power these days.

But these people grossly underestimate the effect that hunger and cold -will- have on their citizens. 

The first signs of that are visible in the protests of truckers and farmers, but that’s just a start. 

You just wait till the cold sets in, and the running blackouts, and the hunger. Wait till people have to feed their kids scraps from a bare table in a cold dark home.

That’s when you will see who people really are. People in the west are overfed, and lazy, and not too sharp, but wait till their kids, and their families, are truly suffering. 

They’ve seen the example of the farmers and truckers. Wait for people to see the link between their own lives, and the farmers; then you will see who they really are.
“Leaders” like Trudeau and Rutte think they have this under control, that they can make the farmers do what their governments say they must, if need be with assistance from police or even the army. 

But you cannot send cops and soldiers against your farmers, because 1) they make your food, 2) the people support them, 3) they have a centuries-old democratic right to be farmers, and 4) they don’t take no sh*t for an answer.
This goes back 100s of years, much longer than the right of any politician to tell them what to do. 

The Dutch farmers on Friday told Rutte to prepare for the hardest actions yet, and they’re still not joking. 

My guess would be this time they will paralyze the country. Not because they are crazy; 10,000 of them would need to close shop if Rutte gets what he wants, and they won’t let that happen. 

Farmers will not idly stand by while their neighbor is forced out of business.
No, they are not crazy. They refuse to talk to Rutte, in a sign a of how much they trust him. He assigned a mediator, from his own political club, and all farmer org’s but one refused to talk to him too. The one that did, found the talk useless. 

Rutte wants the 10,000 scalps no matter what, but it’s just not going to happen. He is shown the limits of his power. Having been PM for 12 years, that’s a bit of a shock.
Obviously, this is all strongly connected to the past 2,5 years of measures and mandates and all. 

The political class got a taste of power that they did not have before, and got carried away. Well, they went too far this time. 

One telling number was that of US parents letting their youngest kids be vaxxed: what was it, 0.45%?! 

And 220 million adult Americans have either never been vaxxed or never boosted. No connection to the farmers? You wait and see.
The game is over. People’s patience with their politicians is ending. 

But the politicians themselves don’t see that; how could they when they censor all discontent and reports from doctors and scientists who don’t follow the “official” line? 

They’ve lost touch with the very world they’re supposed to represent. 

All they get to see is the info that is left after their own “norms” have censored the rest. They see only what they like to see.
In Europe, the Germans and Dutch will manage to be sort of OK, but only at the expense of poorer EU countries. 

And that won’t even be their main problem; that problem will be at home; their own farmers will come for them. And their poorest. 

Countries will leave the EU (and the euro). Hungary first to go?! In Greece, there’s already talk of rolling blackouts this winter, and they get most of their electricity from hydro. 

Italy is a shambles. 

How many present “leaders” will still be in place January 1 2023? How about June? After a winter of great discontent?
And they’re all telling you that “we” have to win in Ukraine first, and everything will be alright. 

But “we” have already lost in Ukraine, we did on February 24, and “we” should be talking to, and making peace with, Russia. Why are we not? Because we don’t want food and energy? The folks in Brussels and Davos will not be hungry and cold. But in other EU places they will be. And they will come to balance this thing out.
As for the US, I’m scared there too. Energy prices may not get as bad as in Europe, but food will be real bad (and how about housing?!).
And there’s this fight between two factions going on, that starts to feel like what went on before the Civil War.
I hope I’m wrong, but I feel it everywhere: Overreach.

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



May 29 Vanity of Vanities! All is vanity

@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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I believe @realGonzaloLira is making an important point in this thread. Re @amnesty and what it means for @ZelenskyyUa
Law & Politics


I believe @realGonzaloLira  is making an important point in this thread. Re @amnesty and what it means for  @ZelenskyyUa

and the early harbinger was @tomfriedman Regime Spokesman in the  @nytimesbusiness

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The Amnesty International report is a very big deal — it signals the Western Regime has turned on Zelensky. @GonzaloLira1968
Law & Politics


The Amnesty International report is a very big deal — it signals the Western Regime has turned on Zelensky. @GonzaloLira1968

Anyone who knows anything about the Ukraine conflict knows already that the Zelensky regime was using civilian infrastructure to hide from and bait the Russian army.

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“I think we are about to see — with mind-blowing speed — a cynical defenestration of Zelensky”
Law & Politics


“I think we are about to see — with mind-blowing speed — a cynical defenestration of Zelensky”

@GonzaloLira1968 The conclusion that I can’t help arrive at is that the Western regimes have decided to pull their support for Zelensky and write off the entire Ukraine debacle.
I think we are about to see — with mind-blowing speed — a cynical defenestration of Zelensky

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Jul 3 It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here.
Law & Politics


Jul 3 It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here.


It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here. 

As mentioned before, I see Russia moving eventually towards Odesa, landlocking Ukraine and only then coming to the Table.

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Chosen as Russia's next leader by Boris Yeltsin's inner circle, in 1999, Vladimir Putin appeared to be a blank slate on which his supporters, his country, and the world could write their desires. @VanityFair
Law & Politics


Chosen as Russia's next leader by Boris Yeltsin's inner circle, in 1999, Vladimir Putin appeared to be a blank slate on which his supporters, his country, and the world could write their desires. @VanityFair 


Nearly every weekday morning one of Moscow's central arteries, the Kutuzovsky Prospect, empties out suddenly, and an eerie, otherworldly silence takes hold. 

This means that police have sealed all the on-ramps to Kutuzovsky, an eight-lane avenue that cuts through the city from the west straight through to the Kremlin. 

Traffic backs up on the ramps for miles, but Kutuzovsky is quiet. Then a low hum can be heard, which quickly builds to a roar. 

Spread across the 60 yards of Kutuzovsky, a convoy of motorcycles and S.U.V.'s moves at breakneck speed, like fighter planes in tight formation. 

In the middle of it, veiled from onlookers by moving vehicles and densely tinted glass, rides Vladimir Putin, the Russian leader, in a custom-made black Audi with the license plate 007. 

He is commuting from his residence in Novo-Ogarevo, a country home that the Russians coyly refer to as a dacha but that a Westerner would recognize as a villa. 

He races along an avenue lined with enormous Stalin-era apartment buildings constructed for the Communist Party elite, then through the Arc de Triomphe, erected in celebration of Russia's victory over Napoleon, in 1812, and finally across the Moscow River. In years past, when the title Putin held was that of Russia's president, the formation would have headed for the Kremlin. 

Now the cars roar off toward the Moscow White House— the high-rise building that once housed the Russian parliament, where pro-Yeltsin Russians erected barricades against an attempted coup by hard-liners in 1991. 

his life's single, overriding ambition: to become a secret agent

I was most amazed by the way that a single person could accomplish something entire armies couldn't," Putin told the biographers. "A lone agent could rule the lives of thousands of people."

as tensions mounted between Russia & Georgia, Georgian president, Mikheil Saakashvili, reminded Putin that Georgia had statements of support from US and Western Europe. Putin told Saakashvili with anatomical precision where he should stick those statements

He favors mostly plain Russian food (but has acquired a love of sushi)

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Ladies and Gentlemen, we are under attack Farage opens. The threat is not external The biggest threat we face is from within. The biggest threat we face is the fifth column in all our countries that is attempting to destroy the family unit, Judeo-Chri
Law & Politics


Ladies and Gentlemen, we are under attack!,Farage opens. The threat is not external! The biggest threat we face is from within. The biggest threat we face is the fifth column in all our countries that is attempting to destroy the family unit, Judeo-Christian Culture...@LauraJedeed

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.017945
Dollar Index 106.608
Japan Yen 135.3695
Swiss Franc 0.9609
Pound 1.207455
Aussie 0.693355
India Rupee 79.59650
South Korea Won 1306.255 
Brazil Real 5.1647
Egypt Pound 19.110200 
South Africa Rand 16.788200 

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The @UNFAO food price index slumped 8.6% last month with the y/y rise slowing to 13.1%. @Ole_S_Hansen
Commodities


The @UNFAO food price index slumped 8.6% last month with the y/y rise slowing to 13.1%. @Ole_S_Hansen

All sectors dropped with declines being led by veg. oils such as palm, soy, rapeseed and sunflower (-19.2%) and cereals such as #wheat and #corn (-11.5%)

Conclusions

The correction is near over. 

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Is Sri Lanka’s implosion an isolated event or a harbinger of a broader debt crisis? @Shanta_WB & Homi Kharas consider the possibilities in @ForeignAffairs H/T @BrookingsGlobal
Emerging Markets


Is Sri Lanka’s implosion an isolated event or a harbinger of a broader debt crisis? @Shanta_WB & Homi Kharas consider the possibilities in @ForeignAffairs H/T @BrookingsGlobal


Sri Lanka is in the midst of the worst economic crisis in its 74-year history. 

An acute foreign exchange shortage has caused supplies of food, fuel, and other essential goods to dwindle. 

Almost 90 percent of Sri Lankans do not have enough to eat, according to the World Food Program. 

People stand in gasoline lines for days at a time, and schools have been closed for weeks. 

Power cuts of eight to ten hours a day are not uncommon. Patients die in hospitals for lack of medicine. 

For those goods that are available, prices are skyrocketing; overall annual inflation exceeds 50 percent, with the price of food rising by more than 80 percent. 

Since April, when the government announced that it would default on $51 billion in external debt, the Sri Lankan rupee has lost 75 percent of its value.

Popular outrage over the economic situation boiled over last month, igniting protests that eventually toppled President Gotabaya Rajapaksa’s government. 

Hundreds of thousands of Sri Lankans demonstrated outside the presidential palace, chanting “Go Home Gota” and waving signs decrying corruption and nepotism (three of Rajapaksa’s brothers served in his cabinet)

On July 9, protesters stormed the president’s office and residence, forcing him to flee to Singapore.

Sri Lankans have clearly laid the blame for their country’s economic woes at the Rajapaksa government’s feet. 

But Sri Lanka is not the only developing country at risk of tipping into a debt crisis. 

The question now is whether Sri Lanka’s implosion will prove an isolated event, the result of uniquely poor economic management, or a harbinger of a regional or even global debt crisis

Previous defaults have come in waves, sweeping through Latin America in the 1980s and East Asia in the 1990s. 

A similar string of defaults could hit highly indebted developing countries across the world as they cope with the lingering effects of COVID-19, Russia’s war in Ukraine, and rising interest rates in the developed world.


The good news is that international financial institutions such as the World Bank and the International Monetary Fund (IMF) have become more proactive about preventing, rather than reacting to, debt crises. 

The bad news is that friction between China and Western countries has made it harder for developing nations to renegotiate their debt, since Beijing does not want to bail out private U.S. or European financial institutions and Western governments do not want to bail out Chinese financial institutions

To stave off a string of devastating defaults in the developing world, two things will have to happen at once: at-risk countries will need to seek help from international financial institutions before it is too late, and Chinese and Western creditors will need to do a better job of coordinating their debt restructuring processes.

ROAD TO RUIN

Until recently, Sri Lanka was a moderately successful middle-income country with an enviable record on health and education. 

But soon after his election in 2019, Rajapaksa adopted a raft of misguided, arguably reckless, economic policies aimed at stimulating the economy. 

Chief among them was slashing taxes. His government lowered the value-added tax by seven percentage points and more than doubled the thresholds at which personal and corporate income taxes kicked in. 

As a result, Sri Lanka’s tax-to-GDP ratio fell to 8.3 percent, among the lowest in the world. 

The fiscal deficit ballooned. In 2020, international credit-rating agencies downgraded Sri Lanka’s sovereign debt to near-default levels, making it impossible for the country to borrow from world capital markets.

Most countries faced with such a situation would seek a bailout from the International Monetary Fund and begin negotiating with creditors to restructure their debt. 

But Sri Lanka’s government, wary of the conditions that typically accompany IMF programs and reluctant to tarnish the country’s reputation for repaying its debts, refused to do either of these things. 

Instead, it financed the fiscal deficit by printing money and negotiated a new $1 billion loan from the China Development Bank in 2020. 

It paid back sovereign bondholders with its foreign exchange reserves. By early this year, the country’s reserves were depleted, the money supply had increased by 40 percent in two years, and inflation was rampant. Sri Lanka’s default this spring was the first in its history.

The country’s missteps could not have come at a worse time. 

Tourism revenue plummeted during the COVID-19 pandemic, as did remittances from Sri Lankans working abroad, especially in the Middle East. 

But even the decline in remittances was at least partly the government’s fault: Sri Lanka maintained a fixed exchange rate until April 2022, which likely induced workers to send money home through unofficial channels, which offered more favorable exchange rates. 

After all, remittances rose in all South Asian countries in 2021—except in Sri Lanka.

CONTAGIOUS CRISIS?

Financial crises and debt defaults often hit developing countries in waves. 

After Mexico announced in 1982 that it could no longer service its foreign debt, many other countries followed suit. 

Twenty-seven developing countries, 16 of them in Latin America, ultimately restructured their debts in the wake of Mexico’s default. 

After Thailand devalued its currency in 1997, foreign investors raced to pull their money out of many East Asian countries, causing financial crises in the Philippines, Indonesia, Malaysia, and South Korea. 

The ripple effects of the 1997 Asian financial crisis were felt as far away as Russia and Brazil.

So it is little surprise that investors and analysts are asking whether Sri Lanka’s default will be a one-off event or the first of many crises to hit developing countries this year. 

Already, in 2020, Argentina, Belize, Ecuador, Lebanon, Suriname, and Zambia all defaulted on their sovereign debt. 

But fears of a broader debt crisis in the early days of COVD-19 went unrealized and eventually receded. 

Currently, Chad, Ethiopia, and Zambia are negotiating with creditors under a G-20-supported program designed to facilitate debt restructuring, but so far no other countries have sought similar treatment. 

There is a good case to be made, therefore, that each of these country-level crises is sui generis. 

Indeed, the G-20 framework takes a case-by-case approach in the debt restructuring talks between debtor countries and their creditors.

The specifics of the Sri Lankan case also suggest that its crisis could be an isolated event. After 70 years of responsibly managing its debt, Sri Lanka elected a populist president who ran the country into the ground in less than three years. 

Only Belize—also devastated by the collapse of tourism during the pandemic—and Sudan have built up similarly dangerous levels of debt relative to GDP.

But even if Sri Lanka really is a special case, there are systemic risk factors that could still touch off a string of defaults in developing countries. 

For one thing, developing country debt is often packaged and traded together, bought and sold in large portfolios that are constantly rebalanced against other assets. 

Reducing one’s holdings of Sri Lankan debt can most easily be done by reducing one’s exposure to all developing country sovereign bonds. 

This is why so-called sudden stops—large capital outflows from developing countries—are recurring events. Between March and June, roughly $22 billion in private capital fled the developing world.

For another thing, common global factors, not country-specific policies and politics, are often largely to blame for debt crises. 

In the lead-up to the Latin American crisis of 1982, many countries believed they could safely pile on large amounts of debt in a world of near-zero real interest rates and strong global growth. 

U.S. commercial banks, for their part, saw business opportunities in expanding their loan books to developing countries even though regulators were warning about the risks. 

As a result, from 1978 to 1982, total Latin American debt rose more than tenfold, from $29 billion to $327 billion.

But when the U.S. Federal Reserve raised interest rates to reduce inflation, the era of affordable debt in developing countries came to an abrupt end. Banks stopped lending out new money and started charging higher rates. 

Those countries that had leveraged up to indulge in overconsumption, exchange rate overvaluation, and greater public-sector involvement in the economy had to adjust rapidly and sharply. 

In some cases, public unrest put a stop to austerity policies and left governments no choice but to restructure their debt. 

In other cases, governments simply opted to default rather than make the painful cuts to social programs that would have been necessary to service their foreign debt on schedule.

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Time to Big Up the Dosage of Quaaludes
Emerging Markets


Time to Big Up the Dosage of Quaaludes

Quaaludes ‘’ promote relaxation, sleepiness and sometimes a feeling of euphoria. It causes a drop in blood pressure and slows the pulse rate. These properties are the reason why it was initially thought to be a useful sedative and anxiolytic It became a recreational drug due to its euphoric effect’’

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



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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Is Sri Lanka’s implosion an isolated event or a harbinger of a broader debt crisis? @Shanta_WB & Homi Kharas consider the possibilities in @ForeignAffairs H/T @BrookingsGlobal [continued]
Emerging Markets



Is Sri Lanka’s implosion an isolated event or a harbinger of a broader debt crisis? @Shanta_WB & Homi Kharas consider the possibilities in @ForeignAffairs H/T @BrookingsGlobal [continued]



THIS TIME IS DIFFERENT

The parallels between 1982 and 2022 are hard to ignore. 

A narrative of affordable debt has once again encouraged many developing countries to borrow heavily to prop up consumption and public employment, especially during the pandemic. 

And once again, global growth is decelerating rapidly and central banks in developed countries are raising interest rates to control inflation. 

Private capital has become less accessible and more expensive as creditors seek to reduce their exposure to developing countries.

But there are also important differences between 1982 and the present. Developing countries have become more resilient in the last three decades, and international financial institutions have gotten better at preventing crises rather than simply responding to them. 

In 2020, when fears of a systemic debt crisis arose, advanced economies acted swiftly to shore up the finances of highly indebted developing countries. 

They authorized a new allocation of Special Drawing Rights (SDRs), an international reserve asset maintained by the IMF that can be converted into U.S. dollars or another currency to service debt. 

By August 2021, the equivalent of $650 billion had been added to global reserves, of which $274 billion went to emerging and developing countries and $21 billion to low-income countries.

At the same time, the G-20 group of major economies launched an initiative to suspend debt service to help developing countries weather the COVID-19 crisis. 

Between May 2020 and the end of 2021, official bilateral creditors rescheduled $12.9 billion in principal repayments from low-income countries. 

Unfortunately, only one private creditor chose to participate in the initiative, and only low-income countries were eligible to participate. 

Middle-income countries such as Sri Lanka were excluded from the scheme.

Today, many countries have used up their new SDRs, but a process of reallocating unused SDRs is underway. 

Rich countries with excess foreign exchange reserves have lent their SDRs to a special trust dedicated to growth and poverty reduction that the IMF administers on behalf of low-income countries. 

And the IMF has established a parallel “resilience and sustainability” trust for middle-income countries.

Meanwhile, highly indebted countries have gotten more proactive about seeking help. 

Pakistan, for example, just renegotiated its program with the IMF, committing to undertake significant economic reforms to tame inflation, restructure state enterprises and the power sector, and strengthen governance. 

This will unlock $1.2 billion in IMF loans, and even more if the program remains on track. 

An IMF agreement of this type typically also opens the door for additional support from other international financial institutions.

The case of Pakistan suggests that countries may be learning to act before it is too late, although it is too early to tell if Pakistan or similar countries will be able to implement IMF programs and fully avail themselves of rescue packages. 

Democratically elected governments cannot always be trusted to manage debt properly. 

They tend to have short time horizons, and because of the near-continuous nature of campaigns, they almost never find it politically convenient to make necessary but unpopular economic decisions. 

So problems are left to fester, masked by ever growing levels of debt, until the situation becomes untenable. 

But the looming threat of a debt crisis and the absence of viable new financing alternatives have encouraged some countries to take preventive belt-tightening measures. 

Just this month, for instance, major credit-rating agencies upgraded the outlook for Angola, Brazil, Lesotho, Mexico, and Paraguay in part because of their improved fiscal position.   

THE CHINA FACTOR

These shifts in the international financial landscape make it less likely that Sri Lankan–style crises will spread across the developing world this year. 

But there is one additional complicating factor: growing friction between China and the West. 

Western-backed financial institutions do not want their financial support to developing countries—whether in the form of cheap loans or debt relief—to go toward servicing Chinese debts. 

Nor does China want to bail out Western bondholders and commercial banks; its debt restructuring talks with Sri Lanka have made no progress since the government there approached the IMF for a program. 

This has not proved fatal in the Sri Lankan case, since Chinese debt accounts for only about ten percent of the country’s foreign debt and an even smaller share of the debt that must be serviced this year. 

But elsewhere in the developing world, suspicions between Chinese and Western lenders could complicate debt restructuring talks, especially because China is not always transparent about its lending.

To ensure that economic headwinds and rising interest rates do not ignite additional debt crises in the near future, more countries will have to follow the example of Pakistan and seek help from international financial institutions before it is too late (and then follow through on their commitments to make necessary reforms, even when doing so is painful).

 These countries will have to build domestic political support for necessary reforms and stay the course for several years. 

For their part, official creditors—whether Chinese, American, or European—will need to give developing countries enough of a financial cushion that they can gradually phase in reforms. 

They will also need to set their geopolitical squabbles aside and focus on the needs of at-risk countries.

Sri Lanka’s debt crisis was the result of bad economic policies, an unwillingness to make hard decisions, and to a lesser degree, tensions between China and the West. 

Most developing countries have at least some of these risk factors. 

If they can commit to making necessary reforms, invite international financial institutions to come to the rescue, and maintain an even-handed approach to negotiations with their creditors, they are likely to weather the storm. If not, the number of defaults in the developing world will mount.

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@SecBlinken heads to Africa ‘to counter Russian influence’ on the continent @FRANCE24
Africa


@SecBlinken heads to Africa ‘to counter Russian influence’ on the continent @FRANCE24 


US Secretary of State Antony Blinken arrives in South Africa on Sunday to kick off a three-country tour that will also take him to DR Congo and Rwanda, aimed at "developing a strategy to counter Russian efforts to undermine democracy in Africa", according to a France-based political scientist.  
Russia, France, and now the US. "It's like a new Cold War is playing out in Africa," William Gumede, director of Democracy Works, told AP, ahead of US Secretary of State Antony Blinken's three-nation African tour.
It follows the tours of Russian Foreign Minister Sergei Lavrov, who visited Egypt, Uganda, Ethiopia and the Republic of Congo to rally support for Russia amid its ongoing war in Ukraine, and of French President Emmanuel Macron, who visited Cameroon, Benin and Guinea-Bissau with the aim of renewing France’s relations with the African continent. 

US Agency for International Development head Samantha Power and US ambassador to the UN Linda Thomas-Greenfield also embarked on Africa tours of their own. 
The trip is Blinken’s second to Africa since being appointed secretary of state. 

His first visit in November 2021 was aimed at "resetting US-African relations following Donald Trump’s presidency, demonstrating the US’ commitment to democracy and showing that the US cares about its relationship with African countries", according to Douglas Yates, a political scientist specialised in African politics who teaches at the American Graduate School in Paris.
Blinken visited Kenya, Senegal and Nigeria during his 2021 tour, three countries that "meet the minimum requirements for democracies and have all come out of military rule," Yates said.
Since Trump’s presidential term, during which the US pulled out from a number of initiatives important to South Africa, including the Paris Climate Agreement and the Green Climate Fund, South Africa has seen the US as an "unreliable partner", Yates said. 
As such, the US, South Africa’s second-largest trading partner in 2021, is "trying to get South Africa back in the fold", he said.  
Countering 'malign' Russian activities
According to Yates, the purpose of Blinken's second trip to Africa, however, is to "develop a strategy with African partners to counter Russian efforts to undermine democracy" on the continent.
Blinken has been given authorisation for such a mission by H.R. 7311, the "Countering Malign Russian Activities in Africa Act", which the US House of Representatives passed on April 27, 2022

So-called malign Russian activities include the use of hard and soft power to expand Moscow’s influence on the continent.
Russian hard power includes the Wagner Group, a mercenary group with apparent links to Moscow that is present in many countries including the Central African Republic, Sudan and Mali. 

The group has been sanctioned by the EU for fuelling violence, looting natural resources and intimidating civilians. 

Russian soft power includes the use of social and official media to disseminate anti-Western and anti-democracy propaganda.
Blinken has carefully selected the three countries he will visit, "as, excepting South Africa, they [DR Congo and Rwanda] are not considered models of democracy and the US wants to make sure these countries are on their side, as they have military capacity, which they can use to counter Moscow’s influence", Yates said.
South Africa, like 16 other African countries, abstained from voting on the UN resolution condemning the Russian invasion of Ukraine, while DR Congo and Rwanda voted for it. 

Furthermore, South African President Cyril Ramaphosa refused to condemn Russia's invasion. South Africa is part of the BRICS group, composed of Brazil, Russia, India, China and South Africa, countries that are seen as the world’s leading emerging market economies. 

While Russia’s February 24 invasion resulted in widespread condemnation from G7 countries and their allies, the only BRICS country to support the UN resolution was Brazil, with South Africa, China and India abstaining.  
Will South Africa now condemn Russia?
Blinken will be in South Africa from August 7-9, when he will launch what the State Department calls the US Strategy for Sub-Saharan Africa

which "reinforces the US view that African countries are geostrategic players and critical partners on the most pressing issues of our day, from promoting an open and stable international system, to tackling the effects of climate change, food insecurity and global pandemics, to shaping our technological and economic futures".
South African Minister of International Relations Naledi Pandor, who is scheduled to meet with Blinken on Monday, said that the bill H.R. 7311 is "intended to punish countries in Africa that have not towed the line on the Russia-Ukraine war" in an opinion piece for The Daily Maverick, a South African newspaper.
The South Africa visit and the Africa trip as a whole "would be a major success for Blinken if he managed to get a statement from Ramaphosa condemning the Russian invasion of Ukraine and ensure that South Africa does not migrate to the Russian camp", Yates said.
"This is not just a shaking hands with different officials trip, but rather a policy-oriented one," he said.
Ensuring Russia influence 'doesn’t spread south'
After his visit to South Africa, Blinken will head to DR Congo from August 9 to 10, when he is expected to state US support for regional efforts, led by Kenya and Angola, to advance peace in eastern DR Congo and the broader Great Lakes region.  
Blinken’s last stop will be in Rwanda from August 10 to 11, where he will meet for the first time with President Paul Kagame, whom DR Congo has accused of supporting the M23 rebel group in eastern DR Congo. 

"In both the DRC and Rwanda, the secretary will highlight the need for respect for territorial integrity and explore how the United States can support efforts to reduce tensions,” US assistant secretary of state for African affairs Molly Phee, who will be accompanying Blinken on his tour, told The Africa Report.

Yates said that in addition to these official reasons for visiting DR Congo and Rwanda, "behind the scenes, this is about developing a strategy to counter Russian influence in Africa and its efforts to undermine democracy. If Rwanda, DR Congo and South Africa are stable allies, they will be able to contain Russian influence and ensure it doesn’t spread south of the equator, to countries like Madagascar and Mozambique."
"Despite Rwanda's small size, it has the most impactful military in the region," he added. 
One of the many reasons some African countries have not taken a stance on the war in Ukraine is the continent's historical relationship with the former Soviet Union, which supported several independence movements in Africa – diplomatically, and eventually, financially and militarily – against European colonial masters. 
Theodore Murphy, director of the Africa programme at the European Council on Foreign Relations, wrote a piece in which he stated that the West made a strategic error "by asking African countries to choose a side over Ukraine", as it allows Russia to adopt an anticolonial posture even as it sends unofficial military support and has strong economic ties with the continent.
According to Russia's TASS news agency, Lavrov, in an article "for the African media" published on the foreign ministry's website, said that Russia "does not impose anything on anyone or [tell] others how to live. We treat with great respect the sovereignty of the States of Africa, and their inalienable right to determine the path of their development for themselves".
The challenge that Blinken, along with other Western powers, seems to be facing is that many African countries simply do not want to get entangled in what appears to be a new cold war between the US and Russia and have to adopt a definite position.

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From Russia with Love
Law & Politics


From Russia with Love


“Our African agenda is positive and future-oriented. We do not ally with someone against someone else, and we strongly oppose any geopolitical games involving Africa.”

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

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

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

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

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A year ago Zambians voted out a repressive regime and some Africans flooded our comments telling us we would regret it and that a new government would do nothing. @DonCorleANN
Africa


A year ago Zambians voted out a repressive regime and some Africans flooded our comments telling us we would regret it and that a new government would do nothing. @DonCorleANN

Today the Zambian Kwacha is the best performing currency in Africa & 2nd best in the world, from the worst in 2021.

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This is all thanks to the Zambian Youth. We knew that if we didn’t act and vote in a better leader, many of us would be forced to leave our country because it would have gone to hell. @DonCorleANN
Africa


This is all thanks to the Zambian Youth. We knew that if we didn’t act and vote in a better leader, many of us would be forced to leave our country because it would have gone to hell. @DonCorleANN

This is all thanks to the Zambian Youth. We knew that if we didn’t act and vote in a better leader, many of us would be forced to leave our country because it would have gone to hell. But this doesn’t mean we won’t hesitate to vote out the new government should they fxxk us over.

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We are not allegiant to any political party or president. Quality life and respect for human rights is all we seek. What this has taught us is how much power we have and what we can do when we come together. @DonCorleANN
Africa

We are not allegiant to any political party or president. Quality life and respect for human rights is all we seek. What this has taught us is how much power we have and what we can do when we come together. Voter apathy only serves corrupt leaders.



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Nigeria Cracks Down on Forex Hoarders to Stem Naira Crash @markets
Africa


Nigeria Cracks Down on Forex Hoarders to Stem Naira Crash @markets 


Nigeria’s anti-graft agency said it would arrest foreign currency traders found to be hoarding the dollar after a plunge in the country’s currency last month. 
The Economic and Financial Crimes Commission called foreign exchange dealers to a meeting in a bid to end “brazen foreign exchange speculation” that’s causing “a run on the value of the naira,” the agency said. 

It has intelligence linking some persons and organizations to the hoarding of foreign currencies, it said.
It warned “those involved to desist or risk arrest as a major offensive against the speculators is under way.” 
Africa’s largest economy has been rationing dollars following the drop in income from oil which accounts for about 90% of its foreign exchange earnings. 

The nation also suffers theft of crude oil and uses petroleum revenue to subsidize gasoline prices. 

The shortage of dollars at the banks is forcing many individuals and businesses to access them on the black market.
For people changing money on the street, the nation’s currency has strengthened in recent days, at least partly due to increased surveillance from the authorities. 
The nation’s currency strengthened on the unofficial market on Friday to 660 naira a dollar after weakening to a record 710 naira last month, according to Abubakar Mohammed, an operator of a bureau de change that tracks the data in the commercial capital, Lagos. 
“Speculators are realizing that the EFCC are coming after them and as a result decided to dump their dollars,” he said by phone.
The country’s foreign-exchange reserves have dropped 3.5% this year to $39.1 billion. 

Besides demand management of the available foreign currency, the Central Bank of Nigeria operates a tightly controlled official exchange rate to halt a rout of the local unit. 

The official naira rate is currently about 424.04 a dollar. 

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


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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Pushed up demand for FX, leading to a drawdown on Ghana's limited reserves. @Markbohlund
Africa


Pushed up demand for FX, leading to a drawdown on Ghana's limited reserves. @Markbohlund

Nonresident outflows from the domestic government bond markets, a lack of access to Eurobond markets, retail $ purchases, dividend payments to foreign investors and more expensive  petroleum imports have pushed up demand for FX, leading to a drawdown on Ghana's limited reserves.

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.@StanbicKE PMI TM Output declines at sharpest pace in 15 months
Kenyan Economy


.@StanbicKE  PMI TM Output declines at sharpest pace in 15 months 

Both output and new orders fell at accelerated rates

The headline PMI dropped to 46.3 in July from 46.8 in June, thereby signalling a solid decline in the health of the Kenyan private sector, and one that was the most marked since April 2021. 

Business conditions have now deteriorated in each of the past four months.

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