Encouraged By Their "Success" In Europe, European Investors Position East Africa For Looting Too

   (Commentary posted by Roger Erickson)



Whoa!

This is quite a story. Not only is the whole financial system WAYYYYYY more trouble than it's worth, the euro system is the worst of the worst, including deadly trouble.

Looting Rwanda is what Davos touts as Euro investing options?

The confluence of statements in this Rwanda story also implies a bevy of Rwandan elites eager to sell the rest of their citizens to the highest bidders. (Those bidders will also throw in assassinations, gratis, as a show of good will? Wow!)

This is so worth reading that a few comments are posted in-line [bold text].

Rwanda emerges as East Africa’s investment gateway

Rwanda’s finance minister Claver Gatete waxes lyrical over the country’s bid to become an international-investment hub for the budding East African Community and defends the administration’s security policy.

Claver Gatete, Rwanda’s minister of finance, has but only a few minutes to spare on the phone with Euromoney as he darts from one meeting to another at this year’s World Economic Forum in Davos, Switzerland. The minister is upbeat as investors praise the administration’s deft stewardship of the economy, which is rapidly entrenching its status as an innovative hub for central and east Africa. Gatete’s gallivanting zeal as the country’s chief sherpa on the global economic stage is designed to send a clear message to the international investment community: Rwanda is open to global business.

The Davos exposure comes as Rwanda braces for a landmark economic event in May – the annual African Development Bank forum. Gatete says the event will prove a watershed in the country’s economic rehabilitation in its post-conflict age. “Having the forum in Rwanda this year is a vote of confidence for us,” he says. “It shows the region and the rest of the international community that we are capable of successfully hosting such a central event in African development.”

Rwanda has proven itself to be an extraordinary African success story relative to expectations in 1995. Although there was a slight slowdown in economic growth in 2013, between 2001 and 2012, real GDP growth averaged 8.1% per year and, between 2006 and 2011, an estimated one million people were pulled out of poverty. Underscoring the country’s economic ascent, the Kigali Convention Centre, an impressive glass dome that will become a focal point of the city upon completion, was financed by a successful Eurobond issue in April 2013.

The debut issue was priced at the tighter end to yield 6.875% and attracted a $3.5 billion order book – more than eight-and-a-half times the issue size and more than half the country’s GDP. The conference centre will house a five-star hotel with 292 rooms, a large conference room with a capacity to hold 2,600 people, as well as 24,000 square metres of office space.

The administration hopes the China-backed project won’t in the coming years be seen as an under-used vainglorious construction effort. 

[rge: Good luck with that.] 

Instead, it’s hoped it will be seen as a proactive capacity-building project as Rwanda attracts greater FDI flows, buoyed by its reputation as a regional business and transport hub for the East African Community.

Early signs are encouraging. Last year, the World Bank ranked Rwanda – a commodity-poor landlocked nation – the second-easiest country to conduct business in sub-Saharan Africa, after Mauritius.

[rge: That defines success? Or could that WB ranking be calling looters to Rwanda? After all, "pro-active" capacity building has a 'sterling' track record. Even in China. :) ]

Globally, Rwanda is ranked at 32. The Rwanda Development Board has drastically cut the time it takes to register a business in the country: it’s possible to be in and out of their offices with all necessary licences in less than six hours. 

[rge: For foreigners only, or local citizens as well? They don't say.]

However, questions over president Paul Kagame’s human-rights record, and tolerance of dissent continues to dog the administration, testing international support. In the latter part of 2012, Kagame was accused of supporting the Democratic Republic of Congo’s M23 rebels in the Great Lakes conflict. Gatete is anxious to reject any accusations of collusion. “It was proven that the government of Rwanda had not provided any assistance to [the M23],” he says. “The country got all of its aid back, all bilateral and multilateral agreements were restored, and donors are continuing to offer their support with no exceptions. As I have said, confidence in Rwanda – politically and economically – remains firm.” He adds: “We work closely with the international community to reach a peaceful solution in the Congo, nothing more.”

However, Rwanda’s international standing came under the spotlight again recently, after the US criticized scathing comments made by Kagame, who claimed that political opponents ought to be treated harshly. The remark came after one of his exiled critics, Patrick Karegeya – a former director of external intelligence and a former opposition leader – was found dead in a hotel room in Johannesburg, raising questions about the administration’s involvement. “We didn’t do it, but my question is: shouldn’t we have done it?” said Kagame at prayer breakfast on January 12, as was reported by Reuters.

Says Gatete: “Karegeya was part of the opposition and was responsible for setting off bombs in Kigali, but the death had nothing to do with us and we will leave the South African government to look into the case. All Kagame is trying to do is protect the country.” Anxious to shift back into Rwanda’s international-investment bid, Gatete cites two landmark projects that highlight the country’s dynamism. “One of the most interesting [projects] is Visa International’s project here to roll out mobile payments and transfers,” he says. “If it’s successful, it will be rolled out in the rest of the region. “The East African Commodities Exchange is another example. Rwanda was chosen for the site of this despite its size and because of its insight into business. Rwanda is a good place to do trials such as this one.

We are a government that international companies can trust and it’s a place where business runs smoothly.”

[rge: A place even Al Capone couldn't resist? With the way paved by missionaries of finance, hosting prayer meetings?]

The exchange aims to increase liquidity and offer a commodities market for 130 million people in the region. One of its goals is to create a platform for smaller, regional producers and give them access to futures and options – an ambitious project given nascent financial infrastructure, limited listed equity products and issuers, as well as illiquidity. Nevertheless, the commodities exchange is another step towards East African integration, aimed squarely at the economies of scale.

“We already have freedom of movement and freedom to seek employment within the region, which helps business in Rwanda and elsewhere,” says Gatete. “We already have certain things in place, including a customs union and a common market. “The next phase will be a monetary union and a single currency.”

[rge: You just HAD to expect that that was coming at some point, given input from the looters in Brussels.]

Few consider the integration project will be plain sailing, but Gatete’s enterprising zeal highlights how Rwanda – the small country with big ambitions – represents a competitive challenge and opportunity for its reform-shy regional neighbours.

[rge: Right! "Painful structural adjustments will be necessary." Just like in Greece. Maybe Rwanda's "reform-shy" neighbors are right to hunker down & hope to survive another round of colonialism. Evolutionary resiliency is, after all, built through maintenance of diversity, not the brittle "efficiency" of over-adapting everything to transient contexts. Every time "we're all (anything-uniform) now," we're mostly all dead just one context later, when the Luddites offer their standard excuse that "no Luddite could have predicted this!"]

Luddites Tout Luddite Internet

   (Commentary posted by Roger Erickson)



Luddites Tout Luddite Internet

'Nuff said? Where have you heard that refrain before? Another variant of the constantly declining "Austerian Toolkit?"

Slow down ... the most commonly heard LAST MESSAGE heard from Old Generations .... as their newly spawned generations rapidly recede into the future.

Every generation, the new crop of humans leaves a "breadcrumb" signpost engraved with 4 characters - "WHY?"

There's never yet been an a meaningful answer. So no reason to slow the pace of cultural evolution yet.

For Cultural Adaptive Rate To Stay The Same ... Every Luddite Has To Be Stood Upon, Not Argued With

(Commentary posted by Roger Erickson)



Paraphrasing Isaac Newton and  Giuseppe Tomasi di Lampedusa.

Reviewing "Game Tape" of Human Cultural Development, Before And After Designing New Plays To Try Out

Though relevant, this is not pure accounting hyperbole, so I posted it to the OpenOps blog.

And A Market-Culture Is A Projection Of All The Operations That Generate Economic Paradigms?

(Commentary posted by Roger Erickson)

[Simplified] Simulations back up theory that Universe is a hologram

The emerging paradigm they're talking about here is not just a fusion of not just the wave & particle duality of physical information. Rather, the authors are discussing fusing the Relativistic and Quantum-mechanic nature of our physics paradigms into one perceptual lens, and thereby modeling all data gathering whatsoever as effectively looking at a hologram constructed from all incident information.

Abstract stuff, but conceptually simple once you wade through the layers. Just reflects a large number of inter-dependencies, rather like a market or human culture.

So, by analogy, what's that make a human culture? A group-feedback-o-gram? Always one step short of a growing whole-o-gram?*

Makes you wonder where we keep the backup copy? :) (A hologram image, if erased, is re-created from the incident data that feeds it. In our case, our emerging behaviors and cultures are constantly rebuilt, from our ongoing operations, REGARDLESS of how we interpret them.)

And where does the universe keep it's backup! In it's fundamental operations too?

And how out-of-date is each whole-o-gram projection, at any one paradigm?

Believe it or not there is a simple, relevant message buried in this, for Jane & Joe Sixpack. To understand a human culture, we must understand the multi--component nature of group intelligence (the spectrum from dumb-to-genius nature of paradigms)?

Data is useless without context. 

Further, even context is useless without paradigm. (Ever look at an image and not see anything ... until you finally look at it the right way? Whole groups do that too. ESPECIALLY economists, it seems. They almost define those who refuse to look at the basic operations at all, let alone from diverse perspectives.)

What we see & do is a reflection of what we expect. 

Yet we have zero predictive power. Ergo, the only thing worth expecting ... is the value of resetting our individual and group expectations, without bias or prejudice. 

Emerging success and survival is a simple matter of accurately reflecting ALL emerging feedback?**

Comically, that is exactly the last thing most of us expect! And we're still actively training our offspring to BE that way.

Gag me with a restricted-paradigm. We're all Luddite's tomorrow.

* (for those who don't know, TJ called that a "more perfect union"-o-gram). It's an ongoing thing.

** (And re-projecting that whole-o-gram through our net actions? The whole-o-gram is in front of our faces all the time. We just have to keep dabbling our projections in it, and see which ones don & don't get burned. Those that do that fast enough, come square back to tripping over Darwin's paradigm of Adaptive Rate.)

James Grant Throws His Tea Towel In With Boehner - Calls For Cold Turkey US Default to "Stabilize" $US

Commentary by Roger Erickson

With idiot savant advisers like this, who need enemies?

According to Grant, America’s default on its debt is inevitable.

His reasoning is so precious that it's worth reviewing in full. Here's his text. My comments are in [red]

             ***********

By James Grant, Published: October 10

James Grant is the editor of Grant’s Interest Rate Observer.

“There is precedent for a government shutdown,” Lloyd Blankfein, the chief executive officer of Goldman Sachs, remarked last week. “There’s no precedent for default.”

How wrong he is. [Or so James Grant says.]

The U.S. government defaulted after the Revolutionary War, and it defaulted at intervals thereafter. 

[Yet NEVER on our current, fiat currency regime, since 1933? He's mixing apples, oranges & pomegranites ... and who knows what else. Vodka?]

Moreover, on the authority of the chairman of the Federal Reserve Board, the government means to keep right on shirking, dodging or trimming, if not legally defaulting.

Default means to not pay as promised, 

[which is, by the way, clearly unconstitutional; & hence illegal]

and politics may interrupt the timely service of the government’s debts. The consequences of such a disruption could — as everyone knows by now — set Wall Street on its ear. But after the various branches of government resume talking and investors have collected themselves, the Treasury will have no trouble finding the necessary billions with which to pay its bills. The Federal Reserve can materialize the scrip on a computer screen.

Things were very different when America owed the kind of dollars that couldn’t just be whistled into existence. 

[Yes. Faux power for gold plutocrats ... and itty bitty Policy Space (and atrophied Policy Agility too).]

By 1790, the new republic was in arrears on $11,710,000 in foreign debt. 

[Did he say "FOREIGN" debt? You heard him? Is he deaf to his own semantic peg?]

These were obligations payable in gold and silver. Alexander Hamilton, the first secretary of the Treasury, duly paid them. In doing so, he cured a default.

Hamilton’s dollar was defined as a little less than 1/20 of an ounce of gold. So were those of his successors, all the way up to the administration of Franklin D. Roosevelt. But in the whirlwind of the “first hundred days” of the New Deal, the dollar came in for redefinition. The country needed a cheaper and more abundant currency, FDR said. By and by, the dollar’s value was reduced to 1/35 of an ounce of gold.

[Yes. So what? The bigger point was that we finally had as much currency as we needed to denominate as much fiat - public initiative - as we could muster, just as fast as we could muster it! James Grant seems to have his head up a dark place confined to his own personhood, where it's difficult for him to see the collective light of 315 million coordinating citizens.]

By any fair definition, this was another default. 

[Per unitary definition of "fair," perhaps. Yet for those members of a social species who CAN see further than the end of their own nose, personal definitions of fair are trumped by collective definitions. Where has James Grant been since the concept of group unity was 1st proposed, say, >200K years ago? Good grief! Where do we find sociopaths like this, and who decides to feature them in the Washington Post?]

Creditors both domestic and foreign had lent dollars weighing just what the Founders had said they should weigh. They expected to be repaid in identical money.

[Ludicrous, Mr. Grant! Creditors lend present social credit denominated in some form of public initiative. They ALWAYS take the chance that the FUTURE amount of public initiative returned remains as or more relevant than the past public initiative did. Yet find ANYTHING from today that isn't obsolete in 50 years, including all the "lenders" and "creditors" themselves.   Worse, you're conflating static commodity value (e.g. a stick) with dynamic value (e.g., the agility of the opponent wielding it). Hint for Mr. Grant, the dynamic value of agility, especially NATIONAL agility, always trumps the static values possessed by any opponent. Just ask any trained unit, from a band to a sports team to the USMC - or the informed electorate of the USA (at least when they stick together).]

Language to this effect — a “gold clause” — was standard in debt contracts of the time, including instruments binding the Treasury. But Congress resolved to abrogate those contracts, and in 1935 the Supreme Court upheld Congress.

The “American default,” as this piece of domestic stimulus was known in foreign parts , provoked condemnation in the City of London. 

[Perhaps, although England and all other countries - before or soon after us - also left the gold std.  Plus, by the end of WWII, they all thanked us for enlarging our Policy Space and Policy Agility beyond anything they had ever done, in order to save their complaining butts! Capiche?]

“One of the most egregious defaults in history,” judged the London Financial News. “For repudiation of the gold clause is nothing less than that. The plea that recent developments have created abnormal circumstances is wholly irrelevant. It was precisely against such circumstances that the gold clause was designed to safeguard bondholders.”

[WTF?  England had already exited the gold std itself, in 1931. France held out only until 1936.]

The lighter Roosevelt dollar did service until 1971, when President Richard M. Nixon lightened it again. In fact, Nixon allowed it to float. No longer was the value of the greenback defined in law as a particular weight of gold or silver. It became what it looked like: a piece of paper.

[Pieces of paper denominating the rapidly growing fiat of the collective citizens of the USA. Liquidity of growing fiat is accomplished precisely by upping the volume and deflating the unitary buying power of a currency unit, while increasing collective buying power of the net currency volume.]

Yet the U.S. government continued to find trusting creditors. Since the Nixon default, the public’s holdings of the federal debt have climbed from $303 billion to $11.9 trillion.

[Good lord! Can someone tell James Grant that this is ENTIRELY a case of his own, broken semantics? An increase in required & issued fiat currency supply is NOMINALLY called "debt," ONLY because there's a change in net volume of fiat. It also happens to be the amount of currency held in private hands, as financial savings. If you know Mr. Grant, please send him some of Wynne Godley's old books?]

If today’s political impasse leads to another default, it will be a kind of technicality. Sooner or later, the Obama Treasury will resume writing checks. The question is what those checks will buy.

“Less and less,” is the Federal Reserve’s announced goal. Under Chairman Ben Bernanke (with the full support of the presumptive chairman-to-be, Janet Yellen), the central bank has redefined price “stability” to mean a rate of inflation of 2 percent per annum. Any smaller rate of depreciation is an unsatisfactory showing to be met with a faster gait of money-printing, policymakers say.

In other words, the [unit] value of [one $US] has become an instrument of public policy, not an honest weight or measure.

[He seems to think that's a bad thing? What's dishonest about maintaining an agile fiat currency supply in order to maintain agile fiat of a growing nation?]

In such a setting, an old-time “default” is impossible. 

[Glad you heard it from the horse's mouth.]

How can a creditor cry foul when the government to which he is lending has repeatedly said that the [unitary] value of the money he lent will shrink?

[AND, that the amount of currency issued will automatically rise to be able to buy whatever NEW products and services become available. As an alternative, is Grant proposing a Luddite Political Party?]

The post-1971 dollar derives its value from the stamp of the government that issues it. 

[That's been true since 1933, Mr. Grant.]

Across the seas, this imprimatur is starting to look a little tenuous. Lend us your dollars for 10 years, the Treasury proposes. We will pay you the lordly interest rate of 2.7 percent per annum. And at the end of those 10 years, we will hand you back your principal, which will almost certainly buy less than the money you lent.

[?? Who, besides counterfeiters, even TRIES to lend us any $US? Nevermind. There's so much wrong there that it's not even worth trashing. It's all completely out-of-paradigm, non-sense.]

This is the unsustainable conceit of the world’s superpower-cum-super debtor. By deed, if not audible word, we Americans say: “The greenback is the world’s great monetary brand. You have no choice but to use it. Like it or lump it.” But the historical record of paper currencies is clear: Governments always over-issue it. The people finally do lump it.

[Wow! Good thing only Luddites constrain themselves to opinion alone.]

What to do? Let us face facts [Note: he means "face my Luddite propaganda"]: We have defaulted in the past. Let us confront the implied message of the Federal Reserve’s pro-inflation policy: We will default in the future, though no lawyer will call it “default.” And let us preempt the world’s flight from our intangible money by taking steps to fashion a 21st-century improvement. We have the gold and the brains to find the solution.



[Doubt we have the gold, but - based on what James Grant says - we CERTAINLY haven't the brains! At least we won't if anyone remotely like him ever gets anywhere near enough to our policy offices to be taken seriously.]

Fiat Debt Limit Again? Is This A Sign Of The End Times?

Commentary by Roger Erickson

US faces mid-October deadline to raise debt limit

I sincerely wish it would end. It's getting as bad as radio or tv commercials.

Isn't this the 12th time we've heard this message, in recent memory? Who's paying the advertising bill for this campaign?

Let me get this straight, the issuer of a fiat currency is in "danger" of not being able to issue fiat? ...  Uh, .... how is one supposed to respond ... to something that disorienting?  Do you just back away slowly?  Or relieve the derelict of their duty, on the spot?

I'm losing track, what's the difference between:

fiat debt limit ... & ... FUD bet Luddite?

Seriously, you have to wonder how long Socrates listened to Sophists say that HIS dog, which was a mother, was therefore HIS mother ... before 'ol Soc got tired of the inane BS, kicked 'em in the arse, and threw 'em bodily out of the lecture hall!

Seriously folks, we got a country to run here.  And, a half-starved Middle Class to resuscitate. We ain't got time for this.

There are limits to listening to nonsense from Sophist Luddites. Surely 12x is an acceptable limit ... in one month? Even in 3 generations!

Public Policy Luddites Deserves A DUH! Award. Putting Banana Slugs To A Brake Test

Commentary by Roger Erickson

And maybe free polishing of their dragging knuckles too? They like perks.

With So Many Job Openings, Why So Little Hiring?

Easy! Public liquidity lag precedes a public initiative lag, which precedes an employment lag, & training lag, & practice lag ... and they all precede a job/skills mismatch? Can Luddite's say F.L.O.W? As in a sequence of linked, causal events?

What? We're going way too fast for 'em? 

What's that? Come back in 3 generations, to see if their train of thought has started boarding at the station? What if - after another 3 generations - we're no longer using things called trains? What then, genius? Can we move along a bit quicker, and leave the knuckledraggers to graze in blissful ignorance?

Come on! Even Herodotus noticed this fact, first hand, over 5000 years ago, in the first Pyramid scheme. Preparation precedes results. Don't faint. It's a simple truth.

Not sure how el Knuckledragger says the following with a straight face. Did he get a repeating recording saying "breathe-in, breathe-out" as a graduation gift?

"One possibility is that there is a mismatch between the work that companies need done and the skills that workers have."  

Really! Ya Think? BRILLIANT! Where has he been the last 5000 years? Words fail me, witnessing this blinding display of perception in action. He'd put a banana slug to a brake test, that's for sure.

Was this particular genius coached to come up with this breathtaking concept, before anyone else?

Where do they find people this thick? And why put them in policy positions?

Which Part of "Dynamic Systems" Don’t These People Get?

In a comment at WWS, one F. Beard clarifies a key Luddite rallying cry:
”loans create deposits” = counterfeiting.

It's the new mantra of the slow & left behind.

How else does he imagine a fiat currency system works?  Agile exploration of national policy options is not counterfeiting, it's adaptation & survival.

Statements like F. Beard's miss the point completely. Truth is that an increasingly complex national economy demands increasingly agile & complex policy decisions. There's a time element to agility. Making an increasingly complex system increasingly agile requires making all operations increasingly dynamic - while ALSO independently tightening tolerance limits on ALL our increasingly distributed processes.

That's the only way we can explore our options as fast as they keep expanding.

Throughout history, the slow have always been easily daunted, and left not believing that progress is possible. However, the very existence of history refutes them, immediately & utterly.

One billion years ago, flatworms couldn't imagine that mammals, primate & humans were possible.  Luckily, some fraction weren't cowed ... and here we are, nonetheless.  Rest assured that the future will proceed regardless of F. Beard's advice to deny & ignore it.  That's the comical part.

The sad part?  That we're even continuing a discussion with the F. Beard's of the world.  Must we all also be left behind in the dustbin of history, dragged down by the slow & left behind? As usual, it's a policy choice. Gentlepeople, start your decision engines!  In a complex, dynamic culture such as ours, all distributed decision-making sums to a survive-or-not outcome in each, fleeting context.

We have to choose to embrace the future & move forward - RAPIDLY - or submit and relegate our children as well as ourselves to being left behind with the Luddites.

It's your choice, and this is the last year it matters.  Maybe the last month.

ps:  Policy displays many analogies to sport.  Both require agility in competitive  situations, seconds count, "losing" habits acquire their own institutional momentum, and the glory goes to those unafraid to seize new opportunities ... by embracing new, more dynamic methods.  So why is there a whole field of sports kinetics, while we have no comparative field of Policy Kinetics?

For example, it's common to hear economists & politicians say "I don't deal with operations."  Have you EVER heard a sports coach say "I don't deal with fundamentals?"  Coaches or leaders in any other setting are rapidly fired if they only draw up plays and don't worry about execution.

What the heck has happened to our economics, general policy and especially fiscal policy staff? They're all making the one mistake Napoleon noted as terminal: "paint an imaginary picture of a situation and accept it as real."   In short, they've abandoned the adaptive yoke linking theory & practice, imagination and reality.  Theory is something you diversify to excess, and then select from - but NEVER SETTLE ON!  The only purpose of theory is to compare to operations.  Yet here we are, in the USA, in the 21st century ... idly sitting by while our own policy twits say with impunity "I don't do operations."


Fine.  We don't hire them!  That's the only survival option.  When we have that many schizophrenic thinkers at large, YOU and you alone must select to NOT vote them into either legislative or teaching positions.  It's your choice, and you must select as though it matters.  Because it does.