July 11, 2010
Deals vs Rule: Good obs on how it works in emerging mkts
This speaks to me.
Deals vs. rules - PSD Blog - The World Bank Group
Over on the All About Finance blog, Mary Hallward-Driemeier has an excellent post on the "deals" that firms have to make in countries with excessive regulations. Money quote:
For countries with lengthy requirements...almost no firm actually faces the formal burdens on the books.
This does not mean that lengthy formal practices are costless. Rather, firms ‘pay’ through other channels. This variation in implementation is associated with greater activities on the part of firms to influence the actions of officials (e.g. paying bribes or spending time with officials). Rather than coping with the application of (more or less favorable) rules, firms face deals. And the larger the gap between the de jure and de facto outcomes, the greater the potential space for deals, and indeed, the more prevalent are bribes.
Spot on comment actually.
July 04, 2010
Muslim Periphery: Guinea Conakry (Elections and opportunities)
On the fringe of the MENA world but increasingly of interest to the Maghreb from a business point of view (and having long historical connections, if not entirely profound), West Africa is of increasing interest to folks like me. Interestingly I was speaking with a Senior US diplo in the Maghreb a few days before he disappeared into 4 July vacation land, and he noted that the US policy on Maghreb was awkward as it worked (from a Washington DC end) from the presumption that the most important ties and issues were East (Mashreq) - West, but he'd found after several tours, that they're moving more North - Maghreb - South. I found it an interesting comment from such a person as I have made similar observations (here even).
FT.com / Africa - Guinea election set for run-off
Guineau is a place that if they get a modicum of stability can bloody well take off.
Guinea election set for run-off
By Tom Burgis in Lagos
Published: July 3 2010 17:57 | Last updated: July 3 2010 17:57
The race for the presidency of mineral-rich Guinea is set for a second round after no candidate won a decisive victory in Sunday’s elections.
The poll is the first free ballot in 52 years of dictatorship and penury since the west African nation’s independence from France, as the military prepares to hand power to a civilian ruler.
It comes as mining investors tussle for Guinea’s bauxite, used to make aluminium, and iron ore, used to make steel.
Cellou Dalein Diallo, a former prime minister, won nearly 40 per cent of the vote, election officials said.
That was well ahead of his nearest rival but not enough to win outright at the first attempt with a simple majority.
Alpha Conde, a veteran opposition leader, came second with 20 per cent.
Subject to verification by the supreme court, the two men will go to a run-off scheduled for July 18 but which is widely expected to face delays.
Foreign observers praised the spirit of the polls but warned that logistical flaws risked undermining the process. ....
Here's hoping the elections wrap well and they don't take Cote d'Iviorian turns. That would be a bloody shame.
December 27, 2009
The Madness of USofA Security Overreaction
While understanding that Americans are sensitive creatures unused to risk, and sympathising with being rattled by the incompetent Nigerian cretin who failed in his terror attempt (but seems to have done a fine job in burning his inner thighs, I hope with the proper results to his privates as well insofar as reports suggest the materials were in his undies areas):
What kind of lunacy is this: New American flight rules, no getting up from seat during last hour of flight and no electronics.
No more than one carry on, including handbags. The reports from others flying into the US of A seem to confirm this hysteric over-reaction in now in place.
What the logic of this is escapes me insofar as no reports indicate any electronics were involved, the explosives (same failed method as that Jamaican sneaker-non-bomber cretin) were power sewed into his pants.... and the mere fact he did it in the past minutes of the flight seems to have fuck-all to do with methodology.
Well. I for one am cancelling my plans for a business meeting in New York. Let the fuckers come out here, damned if I am going to spend 9 hours on a flight without my laptop.
And for the US TSA: get some fucking ball you cowardly gits. All the Al Qaeda people need to do now to send America into a hysteric tizzy is to yell boo for fuck's sake.
November 29, 2009
Algeria's charming obsession with "settling scores" with foreign investors
Profits being sinful and all that (oh and buying another foreign investor out without the prior blessing (and cut) of the Pouvoir):
L'Algérie veut renforcer sa présence dans le secteur du ciment | Reuters: which is about the Algerian government's scheme to magically make its state cement plants competitive entities and national champions to fight the evil French Lafarge group for its sin of successfully buying out Orascom.
September 16, 2009
Entertaining Algerian Scandals: Or speaking too bluntly in confidential memos
One has to take this online news source's articles with no small pinches of salt, but this is an amusing article even allowing for shoddy journalistic standards (some things don't read quite right for a DG of a private company, some seem rather Algerian...): Le DG français du concessionnaire Diamal compare Bouteflika à un parrain et accuse Ouyahia d'être «maqué» avec Sovac (The French Director General of the Diamal concession compares Boutflika to a Godfather and accuses Ouyahia to be pasted on Sovac.)
Ah this is fun.
Serge Gurvil est le directeur général de Diamal, un concessionnaire automobile algérien filiale du groupe français CFAO. Dans ses notes internes adressées régulièrement à sa hiérarchie à Paris, il ne se contente pas de commenter les résultats financiers de sa société florissante - 146 millions d'euros au premier semestre 2009. Ce directeur commente également la situation politique en Algérie et émet des commentaires sur les personnages clé de l'Etat algérien, notamment le président Bouteflika.
Dans une note datée du 15 avril, dont TSA s'est procurée une copie, Serge Gurvil commente les résultats du premier semestre de Diamal. Mais la première partie du document est consacrée à l'évolution de la situation politique en Algérie au lendemain de la réélection du président Bouteflika pour un troisième mandat, le 9 avril dernier.
« La crise n'est pas encore officiellement arrivée en Algérie, puisque la confiance est là, traduite par 74% de votants et 90,24% de pro-Bouteflika. Le monde continue donc de tourner autour de la planète Algérie et ceux qui nous gouvernent de se faire la guerre sur leur console Nintendo, absolument pas préoccupés des dommages collatéraux - augmentation terrible du coût de la vie résultant de la dévaluation du dinar et de l'absence de contrôle des prix, renforcement des tracasseries bureaucratiques pour les sociétés organisées et en même temps embellie de l'informel et de la corruption à tous niveaux (à commencer par l'Etat), malaise social profond ... De nombreux partisans du Président sont amers, considérant que c'est le mandat de trop », écrit-il à l'adresse de ses responsables à Paris.
Et de poursuivre, plus dur à l'égard du pouvoir algérien et du président Bouteflika : « Le fait est, que l'homme (ndlr : le président Bouteflika) est de plus en plus isolé (et fragile ?) et que dans son ombre les règlements de compte saignent l'économie, le personnel politique et les cadres, avec un arbitraire sidérant (certains magistrats sont aux ordres). Le Président est devenu ventriloque, en Juillet 2008, disant le contraire de ce qu'il affirmait précédemment : depuis, le Chef du Gouvernement se prend pour lui, assenant l'exécutif de directives assassines trop riches (et trop pauvres de contenu) pour être mises en oeuvre. Et maintenant : « same player shoots again » ? En l'attente du changement de gouvernement annoncé, impossible de se faire une idée sur la ligne à venir - s'il y en a une. »
Mais, dès le 1er août, Serge Gurvil récidive dans une autre note. Il compare le président Bouteflika à Don Carleone, le personnage du célèbre film « Le Parrain ». « Nous sommes dans une période, où l'Algérie peut imploser - Don Corleone semble dépassé, dans son entourage chacun est armé, pourtant on entend tirer pas très loin (recrudescence du terrorisme dur depuis Mai) ! la chorba n'a plus de goût, à force de cuire et recuire ; où est passée la mama ? », écrit-il.
TSA a tenté de faire réagir l'intéressé, mais il n'a pas répondu à nos appels téléphoniques.
Les propos de Serge Gurvil ne constituent pas le premier dérapage du patron d'un concessionnaire automobile français en Algérie. En mai dernier, le DG de la filiale algérienne du groupe GBH (représentant de Citroën) était au coeur d'une polémique après avoir traité les agents algériens de sa marque de « terroristes » et de « moutons ». Quatre mois après les faits, l'homme est toujours en poste.
I'll just translate the juicy and amusing parts of the supposed document (as bolded above):
"The crisis hasn't yet officially arrived in Algeria, insofar as confidence is in place, translate by 74% of voters [voting] and 90.24% of [tehm] pro Bouteflika. [i.e. in the elections] The world continues to turn around Planet Algeria, and those who govern us continue making war on their Nitendos, absolutely not at all concerned by collateral damage - terrible increase in the cost of living resulting from the devaluatin of the dinar and absence of price controls, reinforced by the bureaucratic bother for formal sector companies, at the same time making the informal sector and corruptoin more attractive, at all levels (starting with the State), profound social malaise ... Numerous partisans of the President are bitter, considering the [pres.] term one too many.Actually, in my read, while not diplomatic, this is pretty much spot on. I have serious doubts, however, this note is (a) real and (b) if real, not "augmented" from the actual original.
... "The fact is, the Man ... is increasingly isolated (and fragile?) and that in his shadow the score settling is bloodying the economy, policy staff and managers, in staggering arbitrariness ... Waiting for the announced change in goverment, impossible to have an idea on the [political] line coming - if there is one.
September 14, 2009
Algeria Incoherences - Jihad against rational import policy
I shall have to come back to this, but LFC : le bâtiment et les travaux publics déjà touchés par les pénuries but the Algerian state's illiterate jihad against imports is having the expected effect:
Le gouvernement multiplie les obstacles à l'importation et des pénuries commencent à affecter certains secteurs économiques. L'indisponibilité de nombreux produits importés sur le marché a déjà forcé plusieurs entreprises à arrêter les chantiers de bâtiment et de travaux publics. « Faute d'une teinte que j'utilise pour colorer le béton, j'ai arrêté le chantier de construction d'un centre commercial. Cette teinte n'est pas produite localement, elle est importée », affirme le directeur d'une entreprise de bâtiment. Le manque d'ampoules, de faux plafonds, de vis et d'autres accessoires nécessaires à la réalisation de centres d'affaires, salles de conférences et logements de haut standing commencent à se faire sentir chez les revendeurs habituels.Not unconnected with the above madness, Nouvelles stratégie d'aide aux entreprises publiques : l'Etat efface les dettes de l'entreprise Eniem the Algerian state has a brilliant and cunning plan to achieve growth, writing off the debt of loss-making state firms, and making them the centre-piece of their economic strategy. That worked so well in the 1970s....
Depuis l'entrée en vigueur, fin juillet, des nouvelles mesures économiques contenues dans la Loi de finances complémentaire 2009, de nombreux importateurs trouvent des difficultés à importer et à renouveler leurs stocks. « Rien n'a été importé depuis fin juillet », jure un importateur. Les marchandises déjà arrivées au port d'Alger sont toujours en attente de déchargement, faute de places mais aussi de papiers nécessaires au dédouanement.
La Banque d'Algérie a demandé aux opérateurs économiques de refaire toutes les factures et de présenter de nouveaux dossiers aux banques pour pouvoir effectuer le paiement et le transfert des montants correspondants. « Les banques nous ont demandé de réécrire en lettres les montants inscrits en chiffres. Du coup, il faut refaire toute la paperasse et ça prend du temps », explique un importateur. « La manœuvre est destinée à retarder au maximum les paiements et les transferts », estime t-il.
En outre, la décision contenue dans la LFC d'instaurer le crédit documentaire comme unique moyen de paiement des importations a provoqué une ruée des importateurs sur les banques, selon plusieurs témoignages recueillis par TSA. Mais là encore, les obstacles administratifs ne manquent pas. "Pour obtenir une lettre de crédit, la banque exige une attestation fiscale. Et pour avoir cette attestation, les Impôts demandent la fiche des stocks. C'est l'agent des Impôts qui va juger si l'entreprise a un stock suffisant ou non. C'est inadmissible!", regrette le patron d'une PME privée.
"Le gouvernement ne cherche pas seulement à réduire, il veut stopper carrément les importations pour avoir une balance de paiement positive ou équilibrée à la fin de l'année", redoute un chef d'entreprise qui a requis l'anonymat. Des économistes évoquent des pénuries de nombreux produits dès 2010, dans un pays qui importe entre 92 et 95% de ses besoins en produits alimentaires et équipements. "Les stocks actuels vont s'épuiser dans 3 à 4 mois. Si les importateurs ne renouvellent pas les stocks, il y aura des pénuries", prévient un économiste.
L'ensemble des dettes de l'Entreprise nationale des industries et de l'électroménager (Eniem) viennent d'être rachetées par l'Etat, a appris TSA auprès de son Président directeur général M.Yadaden Dahmane. Ce montant représente 16 milliards de dinars (160 millions d'euros) dont 13,4 milliards de dinars de découverts auprès des banques. Ces dettes engendraient annuellement des frais financiers de 1,1 milliards de dinars, mettant en difficulté cette entreprise, jadis fleuron de l'économie nationale.
L'Eniem, basée à Tizi Ouzou, fait partie d'une liste de 250 entreprises publiques jugées « solvables » par le gouvernement. Elles vont bénéficier d'un soutien financier de l'Etat pour pouvoir se relancer dans le cadre d'une nouvelle stratégie destinée à soutenir le secteur public.
Selon nos informations, le gouvernement prépare une batterie de mesures destinées à mettre les entreprises publiques au cœur de la nouvelle stratégie de relance économique. La loi de finances 2010, actuellement en préparation, devrait favoriser largement les entreprises publiques et certains groupes privés nationaux. But : créer des champions locaux capables de favoriser l'émergence d'une offre domestique et contribuer à l'atteinte de l'objectif d'une forte réduction des importations dans les prochaines années.
September 13, 2009
Dubai and Criminals, Bouncing a check
Not particularly news, but the mediaeval character of Dubai / Emirates legal system is rising in profile. Doubtless the impact on the non-Arab Expat community is the main driver. For a Bounced Check in Dubai, the Penalty Can Be Years in Jail - NYTimes.com
I rather take with a grain of salt the corruption crack down.
By ROBERT F. WORTH
Published: September 11, 2009
DUBAI, United Arab Emirates — For more than a year, prosecutors have been cracking down on the corruption and kickbacks that thrived during the boom years in this Persian Gulf city-state. Dozens of executives have been arrested and charged in a high-profile effort to show that fraud will no longer be tolerated. Investigators say their cases have uncovered $3.58 billion that was stolen or used as bribe money.
But alongside the con artists and crooks, a rising number of businesspeople have been sent to jail for going into debt. Bouncing a check is a criminal offense here. That fact has begun raising questions about the fairness of Dubai’s laws, especially among the foreigners who make up about 90 percent of the population.
September 06, 2009
The UAE Real Estate Ice Berg
A quick list of arties around the UAE Real Estate market and financial sector, as a laconic comment; one rather suspects UAE is hiding substantial insolvency of its RE and Financial sectors.
FT: Real estate: Are prices at the bottom?
FT: Dubai’s property market crumbles in crisis
FT: Malls still bustle but spending sprees have ended
FT: Banks - Fears over lack of transparency in region (This one amuses me given Dubai has been a corporate black box for the entire past decade)
Fears over lack of transparency in regionActually I don't think they have avoided the fall out at all. They've hidden how much they're hurting.
Gulf-based banks may have largely avoided the initial stages of the credit crunch, but the subsequent economic fall-out is increasingly impacting financial institutions across the region.
And on this:
Costly UAE mortgages repel buyers - The National Newspaper
Banks say that despite falling interbank borrowing rates, they remain under pressure to meet strict government capital adequacy targets, while a continuing liquidity squeeze makes it more difficult for them to offer more competitive loans.
“Banks are stuck between a rock and a hard place. They are exposed to developers, in terms of project finance, and to individuals on home financing. To say the least, they are in trouble and hence extra-cautious,” a senior Dubai based analyst says.
This is utter bollocks. Well not utter bollocks, deceptive bollocks. They're under pressure because they're virtually underwater relative to real estate and idiotic lending on what was so painfully clear was an insane speculative boom..... UAE captial requirements are merely baseline, not strict. Rock and a hard place is right.
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August 25, 2009
I have never been a huge fan of Wikipedia, although it is useful. This NYT arty is interesting as a point of reflexion. Wikipedia Will Limit Changes on Articles About Living People - NYTimes.com
An observation here:
And for seven months beginning in November, The New York Times worked with Wikipedia administrators to suppress information about the kidnapping of David Rohde, a correspondent in Afghanistan, from the article about him. The Times argued that the censorship would improve his chances of survival. Mr. Rohde escaped from his Taliban captors in June, but the episode dismayed some Wikipedia contributors.
Why it would "dismay" contributors escapes me. Wikipedia proposed to be an encyclopedia, not a new site. It seems eminently reasonable to engage in restraint and yes censorship in this sort of instance, where a man's life might be put in jeopardy if certain kinds of information become too available, and where the issue is likely to be time sensitive. That some stupid little cunt in California (or elsewhere) wants to blither on without regard to such issues merely highlights the irresponsibility of certain kinds of people.
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Fed Chair reupped, good.
Has been some anxiety among market peeps as to whether Bernanke, who's been a darned good crisis manager would fall to the axe of politics, he did not: Bernanke to Be Nominated for Second Term as Fed Chief (Update1) - Bloomberg.com
Federal Reserve Chairman Ben S. Bernanke, who led the biggest expansion of the central bank’s power in its 95-year history to battle the worst economic slump since the Great Depression, will be nominated to a second term by President Barack Obama.
Bernanke “has led the Fed through one of the worst financial crises that this nation and this world have ever faced,” Obama said in remarks prepared for delivery today in Martha’s Vineyard, Massachusetts, where Bernanke is to join him.
“As an expert on the causes of the Great Depression, I’m sure Ben never imagined that he would be part of a team responsible for preventing another,” Obama said. “But because of his background, his temperament, his courage, and his creativity, that’s exactly what he has helped to achieve.”
I rather like Obama, cool hand he has.
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August 17, 2009
Egypt as Multilingual Outsourcing Destination, Well I'll be bugered
Frankly given my experience with Egyptian non-mastery of accents, of course anecdote I must confess, this FT.com arty Egypt invests in outsourcing industry raised me eyebrows. Nevertheless it appears to be working, doubtless for reasons similar to why the Tunisian and Moroccan outsourcing industries have worked - a pool of otherwise unemployable university graduates with useless degrees, but reasonable language skills. If one is willing to train them up (which is not such a bad option given the way university tracking works in most of MENA, there may well be among the French and English Literature students perfectly fine IT Response Tele-Monkies or Tel-Services Monkies who merely did not have the cash to go for private coursework (of suspect quality anyway). Of course, the flip side to this is that the depth of the pool of talent is not that great, and if one does not price in the training, bad results will happen.
Gulf Stymies Entreprenurial Behaviour!!!!!
I was amused by this article and shall come back to it: FT.com Gulf stymies the start-up spirit
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August 02, 2009
Algeria: Expropriations & Import Substitution, Just Because it worked so well in the 1970s
Prompted by the advert next to the article cited (which was is an advert for the sale of a small import-export operation), a small reflexion on Algerian economic politics and policy, insofar as Algeria - no doubt thanks to The Lead Comb-Over, is bizarrely unearthing the import substitution and nationalisation measures of the 1970s as its lead economic policy reaction to ongoing problems.
The "Why" of course is mixed. Absolute incomprehension of market economics and operations is certainly a major factor, as is the regime's paranoia in general another, and specific national paranoia regarding foreigners after the French experience - which remains terribly damaging, in particular for the generations over ~45 years old.
July 25, 2009
Algeria, a small step in being less pointlessly contrarian (Weekend change to Friday-Sat)
Le "week-end" en Algérie réaménagé à vendredi et samedi
About bloody time. The current system - if it can be called that - in Algeria of "most but not all of private and public sector" on a Thurs-Fri weekend, but Financial Sector on Fri-Sat is retarded. The change in weekend some years back for the sole purpose of showing how Algeria was going to be more "Arab" (fuzzily meaning Islamic / Middle Eastern / Not French!!!!) was rather stupid.
November 22, 2008
Crisis Economics & MENA
Now that my obsession, the global financial crisis is migrating to home turf, I shall try to have some comment now and again. Unfortunately, professional limitations shall rather hinder my ability to be as entertaining as usual. Otherwise, I put E100 that Citi is toast.
September 28, 2008
I am afraid of late I have little heart for talking MENA, as I watch the Global Meltdown. Fortis has apparently failed today, and that is probably going to do bad, bad things to some of my business. Well, markets are learning a lesson. Even a deep (kha) and well developed market like the US of A, if badly run and managed for a decade or so, can blow up.
I think in the medium run, post crisis, one shall do better with emerging and frontier markets as the US has probably forever [that is in the next ten years] blown its mythic (as opposed to merely analytically correct) status as safe haven of investment. The fundamental errors, the gross incompetence worthy of an Argentina, the real regulatory incompetence and time wasting.... with securities that were at the heart of the US system. They will weight heavily on the US system.
On the flip side, the US has a flexible and agile system. And it is big. It will come back, but I think the days of the sacred US Treasury (as opposed to the merely analytically attractive) are over.
September 18, 2008
Lounsbury, the good old days when Credit and MENA were merely theory
Ah, the good old days well, I should give the Wise Men a ring up, it's been a while.
Timely Comment - FT
While no fan of regulation, I can only agree with John Gapper's note here as we watch what is in fact, without hyperbole, the worst financial meltdown since the 1930s, all because of American incompetence in properly overseeing their jerry rigged financial system, and their half assed approach to fiscal policy....
September 17, 2008
Extinction Level Events
A fine turn of phrase with respect to the current financial markets crisis: regarding AIG and the narrowly averted (inchallah) collapse: "Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression."
I also liked this blog post: taking the same highly useful metaphor.
Que dieu nous....
AIG is going down. I rather feel this was a bad moment for me to engage in a spin off, fuck.
September 15, 2008
I am afraid that I am distracted. I never thought I would witness the beginning of a general meltdown of the US financial sector, and thus global financial networks, but my sense is I am doing so now. Those idiots in NY played chicken one too many times.
Worse, yet, that there is talk of AIG being near failure (although this seems exagerated), is disastrous for confidence. AIG is the world's largest insurer. An AIG going down spells systematic trouble, rescued or not.
September 13, 2008
Semi-MENA: Amusing critique of The Moustache's new book
Not precisely MENA, but close enough with a fine review of Friedman's new idiotic book.
I liked in particular the following below:
Not MENA but: Lipstick, Pig, Financial Markets
Perhaps a bad sign for the Right Bolshy loons in the US, but regardless a wonderful bit of financial market commentary playing off of political mockery: Putting lipstick on a pig Wall Street suffered from the illusion that it could make beautiful bonds out of piles of dubious mortgages.
Not unrelated to my prior post, re Bankers Heading East. A concern, the hotshots newly fleeing their self-created disaster in the West, don't import the same rubbish here. I predict, however, they will, and faddishly in so-called Islamic Finance.
August 06, 2008
Public Relations Loons
Next week off to Ianki land. This week meeting the new head of public relations over on the Continent. I am bloody beat, but I have to share that every day has been an exercise in fabulousism in the manner of the String Sketch.
July 18, 2008
In all indications, the concept of equity was not well understood
Although it means that I am an evil person, the news of rioting over dropping equities on the Pakistan bourse really amused me.
The best one:
I am upset because I am constantly losing money and there is no one ready to help me,” said Naeem Jehandad, an equity investor in Islamabad. He said the value of his shares had halved in the past four months.
“For me, this is just a murder for my economic future,” said Usman Khan, a lift operator who returned from the Middle East last year and invested his savings of Rps350,000 ($5,000) in the KSE.
Why he bet after seeing what the Gulf bourses did....
July 16, 2008
The Dollar Banana Republic
There is nothing much to add to Willem Buiter's observation regarding American financial sector policy
The bail-out of Fannie Mae and Freddie Mac by the combined forces of the US Treasury and the Federal Reserve Board is the ugliest exercise of its kind I have ever observed outside early transition economies and mature banana republics.
July 13, 2008
Dollar Pegs & Syrian Investment
Two items to return to:
The possible end of the Gulf dollar peg, which is an increasing necessity for the Gulf, and;
Syria looking east for FDI, a statement on the changing dynamics of investment flows.
(Ooops fixed the link)
July 06, 2008
International Accounting Standards, Dangerous to the vital American ability to be unique
This NY Times article at first amused me, given its cloddishness and in my opinion that the author clearly had no clue what he was writing about, and so went for the classic journo "Contrasts method." (Presuming that the article is actually about the US SEC moving to IFRS standards)
Then I rather thought about they typical American hysteria about international standards...
The S.E.C. also plans to announce details of a pilot program that would enable foreign brokers to deal directly with American investors, while continuing to be largely regulated by the foreign country. The first country in the program will be Australia, although officials hope to eventually include other countries. In a third move, the Public Company Accounting Oversight Board, which works under the supervision of the S.E.C., is preparing a rule that would allow it to defer to foreign regulators for inspections of some of the 800 foreign auditors of overseas companies that sell stock in the United States.
My God, just imagine if those those thieving Aussie bastards could sell their listed equities freely. Bloody criminal elements would take over.
May 25, 2008
Arabic Lang News: Econ & Stupidity
Following up on my comment on Les Afriques let me once again bemoan the unending lack of good quality business and economics reporting in Arabic. And when I say quality I mean, reporting that makes some minimal degree of effort to go beyond the PR news release.
Otherwise, the little op ed in the New York Times is a nice reminder of the strange bizarro-world vision the US maintains on MENA, although I also notes this idiocy with respect to 'Islamist' Sadaam Hussien....
March 28, 2008
Behind the scenes credit
Plugs are being pulled. I am currently working on the wind up of a deal - big one, my baby. No going. We're restructuring, but that's just polite language for letting it die. But I understand the Chinese will come in. Fucking brilliant, the Americans are subsidizing their own loss of influence. Bloody morons, almost as full of themselves as the Edwardian cretins.
March 14, 2008
If I needed an even to say financial crisis is now the ordre du jour, this was it. The US is kicking off a global financial crisis of truly epic proportions.
March 09, 2008
Financial Issues: American Subprime, Crime & Emerging Mkts
Not particularly MENA, but of global importance as the Americans seem to have managed to have concocted all by their own little selves what may be the most intractable financial crisis we have seen in 30-50 years (with the vaguely amusing spectacle a major American money centre bank 'reassuring' its shareholders over getting enough cash from Arabs, etc), it is a moderately positive step to see the American federal investigators going after one of the leading sources of toxicity.
I am not much of a believer in criminalizing business stupidities, however the sheer enormity of the "problems" in sub-prime and the securitization of said mortgages give one the sense that more than mere stupidity and cupidity was involved at source.
February 24, 2008
Emerging MENA & Global Froth
Given the real potential for a catastrophic melt down in the US, driven by a credit bubble and solvency crisis, and the unknowns of the overall US securitised assets market crisis (sub-prime etc), nicely boosterish articles such as this FT Funds article on MENA markets being the next hot thing make me smile. My thinking since the US credit crisis began has been that until the crisis triggers a global recession, Emerging Markets are going to do better on the basis that "you know what you don't know" or rather the transparency issues are well-known versus the US where suddenly what one thought one knew.... well, who the fuck knows where the bad instruments are now. For all that, the boosterism of observations like "Funds investing in the Middle East and North Africa could be the next hot spot for investors seeking high returns in emerging markets, as some report returns in excess of 50 per cent" strike me as buying into the market after the opportunity has already moved on. 2 years ago this was a good deal. Now?
October 27, 2007
Bang, bang goes petrol
I don't know that I could put it better than Stephens: "the White House once again seems hell-bent on being outwitted in the court of global opinion; and, maybe, on making a strategic miscalculation that could make the war in Iraq look like a sideshow."
Regardless, while dealing with big international money center banks has its efficiencies, there is other non-transparent sources of financing, and while perhaps less skilled, their equally non-transparent friends in Dubai's 2nd to 3rd tier operators can get by.
I am merely happy to have a new found interest in likely benefiting parties.
October 16, 2007
A Fat Lady Clears her throat
The Treasury International Capital report, known as the TIC, on Tuesday revealed that net sales of US market assets, including bonds, notes and equities were $69.3bn in August after a revised inflow of $19.5bn during July. The scale of the outflow exceeded the previous record decline of $21.2bn set in March 1990.
October 10, 2007
As fun as the typical response to the Hidjab note is (oh so predictable, anything touching on women...), I was most engaged in in correcting fruitlessly the fevered response to K. Drum's illiteracy regarding private equity.
October 03, 2007
On Credit - Wolf
A quick recommendation to read Martin Wolf's column on the credit "wrinkle" and securitisation in FT
Quite good, although I am personally not particularly enamoured of securitisation in practice, but his parallel to junk bonds is good. Somewhat interestingly, I am pleased that my suggestion that emerging markets would hold up as a sort of counter-intuitive safe haven has played out fairly well.
August 22, 2007
That whole risk dispersion thing
Well, I guess my gut that credit risk is like a baloon... well I feel better about it.
August 17, 2007
Terror & Credit
It's a sad statement that only our newsroom alerted me to the fact that the very week I opposed in Casa a retard decided to undertake to blow himself up, in a sad attempt to commit a suicide bombing perhaps indicative of a wider plot, whose perhaps only edifying result is to suggest that Moroccans inclined to suicide bombing are incompetent idiots. I have been rather more obsessed with the unwinding of over-leverage (and by extension possible implications for myself, but who is not without sin?
August 15, 2007
MENA & Credit Crunches, further thoughts
This interestingly timed article in the FT on the sharp rise in Islamic bond issuances provoked some thought, in conjunction with FT REPORT - FT FUND MANAGEMENT: Gulf pensions law promises a bonanza for fund managers from 13 August.
Although the arty has Humphrey Percy, chief executive of the Bank of London and the Middle East, London’s second biggest wholesale Islamic bank, saying “The growth of the sukuk market is a result of far greater knowledge about Islamic finance and much readier acceptance of sukuk as an investment vehicle.” I rather think it's a picture that looks more like CDOs before the tires got kicked this month, insofar as Sukuks haven't been stress tested in reality.
However, the plausible deniability, the lack of clarity and funky issue of "rating" (which frankly I think the rating agencies have become so lax as to make almost fictional)... all strike me as likely to fuel a boom. Liquidity flowing off, non-transparent funds....
August 08, 2007
The Madness of King George: or Americans Chicken Little Approach to Travel Security
This bit of news positively incensed me: The new Smoot Haley: Transatlantic travellers on 48-hours notice to US. What the bloody hell is wrong with America? Bloody cowardice, chicken littlism.
And it is no surprise:
“Obviously, it’s a big inconvenience” said Filippo Pandolfini, a London-based investment banker at JPMorgan, referring to the 48-hour measure. “You never know when you have to travel for business, plans can change”. He later added that many would support the measure if it helped shorten queues at immigration on arrival.
Visits to the US from countries other than Canada and Mexico have fallen 17 per cent since 2000, in spite of a 20 per cent increase in cross-border travel elsewhere in the world.
While part of me rather does hope the EU does in fact have the balls to retaliate to this monstrous idiocy by imposing the same kinds of idiocy, the better part of me says that given comments like this:
Russ Knocke, spokesman for the Department of Homeland Security, said the US was “comfortable” with the EU having a reciprocal system. “It would lend itself to increasing baseline security for air travel throughout the west,” he saidthe wilting shrieking cowards in America will take hermetically sealed borders behind which they can cower as a good thing.
Rather the EU should profit from American idiocy and see more business shift out of the US and overseas.
I can only imagine how London would have developed if after a few IRA bombings, however bloody, the UK had shut down travel from America - on the real threat of Irish American support to the IRA murderers.
July 26, 2007
Why FT is brilliant
February 16, 2007
Oh the ports again.
I haven't much to add to this short note, other than the observation that the hysterical whinging on about 'national security' with respect to the Dubai Ports World disposal (and the relevant regulatory authority's rather queer position re a transfer fee) only serves to increase my contempt for the hysteria among US authorities of late.
January 23, 2007
Un-MENA Biz-Econ articles
I am too tired to comment really, but this arty in New York Times deeply irritated me.
Can't a journo talk to one proper trade economist to get it through the fucker's thick head the time frames goods trade move in? And what the fuck the whinging on about Euro tourist prices..... bloody morons.
January 12, 2007
I have made this point before, but after a particularly annoying moment just now at my favourite bodega with the usual idiotic scrum of semi-literate peasants squishing together, I remain convinced one can get a decent sense of economic potential (excluding hard police state situs) by the uncoerced ability to form proper lines.
January 10, 2007
Naivete, oh so naive these Americans who are unloved...
I had lunch today with a US diplo who likes to talk to me for financial sector intelligence in MENA (I presume said diplo gets to write blisteringly interesting cables back to Washington about such things).
I sometimes even get snippets of intel for meself (good to know if a certain firm has been in town with US Emb. assistance prospecting etc), and at least a lunch (although most tediously they can't buy alcohol, bloody puritans).
I was amused, in my convo, to get a reaction of shock - actual genuine shock - when I declined to intro to some local financiers because I felt they'd react badly to a US Gov contact.
(The image supra is from the online edition today of a Maghrebine business daily - I use it here to illustrate merely the image problem the US faces. The topic was business, but the imagery, Sadaam.... Unfair, but there it is.)
January 08, 2007
Emerging Market Real Estate Madness
It is hard to credit that the concept of buying illiquid real estate assets on the AIM market in London is a good idea, but per this FT arty India properties are indeed selling.
I have to suspect that no small portion of the money passing through London into these India RE assets is in fact Gulf money. Gulf is utterly bonkers for RE, and given the exposure to India, in some queer way makes sense.
January 07, 2007
Globalisation and Wages
A fine Opinion art in FT, by Bhagwati, Technology, not globalisation, drives wages down, atlhough one rather doubts this will sink in - rather easier to whinge on about the cheap labour in emerging markets (entirely neglecting that the cost basis is not such an easy comparison) than to accept that beloved technology advances are pushing developed market wage changes.
November 28, 2006
MENA Govs - Still don't get Free Market
I just came away from an interesting yet profoundly frustrating meeting with some Sr. officials from the Maghreb on investment projects in the "Technology Space" - one can interpret that broadly to mean any technology new to the Maghreb, not just North American style Hi Tech.
Motivated folks, smart and well-educated.
And without the slightest fucking clue as to how the bloody fuck the private sector invests. Painfully clueless.
October 22, 2006
Bedou Scum & Destination Aqaba - Incentives and Disincentives to Investment
A peculiar article from The Financial Times on a new emergence of little old Aqaba, that almost famous Ottoman fort, "Incentives make Jordanian port investor haven".
Never liked the place myself, but more interesting than the somewhat hypish headline is the discussion of barriers:
October 08, 2006
Al Hurra and Market Driven Advice
Related to Tom's recent note on the TV in the Middle East, our old Aqoul amigo Abu Aardvark has some Advice for al-Hurra which I found quite on point, being at once driven by a good understanding of American interests and the media market in region.
I am sure longer term readers will recall some commentary back in the old livejournal days regarding the supposed al Jazeerah privatisation and related Arab Media Policy. Some simple minded commentators cheered without understanding the media market.
The Father of Aardvarks has what I consider rather savvy market-oriented advice, which I am sure this current American Administration will not heed, despite their faux-Conservatism with their magical Right Bolshy inclination to unrealistic Bolshy type transformationalism. Real, honest market driven evaluations and pragmatic market driven policy utterly escapes them.
October 07, 2006
A quick note on some recent items from FT regarding investment flows, which will be of interest to some readers. Fund to invest $100m in African real estate, on the CDC fund for Africa (North and sub-Saharan) which is intersting as there are now also relatively substantial Gulf funds heading into real estate in North Africa as well.
And then Algeria, where supposed reforms seem to be going nowhere: Algiers turns up nationalist heat in oil and gas industry, one step back after a half step feint forward.
Algiers is reasserting control over its oil and natural gas fields barely a year after the North African country wooed international energy groups with friendlier investment terms.
August 17, 2006
MENA Trade, Business Culture & Americans
While I confess this note is in part motivated by my desire to have an excuse to share this cartoon from the Moroccan business daily, l'Economiste from yesterday's - 16 Aug edition. This was emailed to me yesterday, and is worthy of a good laugh, I thought it also worthwhile to undertake some reflexions on both the subject matter and some generalisations about practical issues.
The text, by the way, reads roughly, "Let's go, don't be so timid." I presume everyone gets the allusion.
The subject matter is the fairly substantial non-impact of the much ballyhooed - in US circles - and much feared -in Maghrebine circles- Free Trade Agreement with the United States.
Utterly unsurprising, I may add, despite the rather overdone expectations on the American side (based on painful conversations with earnest American officials I have had from time to time) and fears on the Maghrebine side (who delusionally feared the US was going to come in and buy everything. If only.)
July 14, 2006
UAE shifting reserves to Euro
A quick note drawing attention to this story by Roula Khalaf in the FT, which is likely to be lost: UAE shifts 10% of its reserves into euros.
June 28, 2006
NYT & US SWIFT 'spying' prog bis
I noted that Kevin Drum has linked to an intriguing but I think rather wrong-headed discussion at Crooked Timber with respect to the SWIFT program. How the author at Crooked concludes that the Central Banks were not the proper authorities for SWIFT to communicate with truly escapes me, as in most jurisdictions they are precisely the authorities that most jurisdictions have regulating payment systems, and for most GAFI compliant countries, have dedicated staff for these kinds of issues...
May 25, 2006
A quick comment, while Enron is not something normally in my "beat" as it were, I'd like to say I am pleased that Lay and Skilling were slammed today. Enron set a rather bad example of incompetent scumminess overseas (as well as in the US), and I have no patience for the ideologues complaining about it being taken down. Scofflaws need to be punished if markets are work.
[Edit Added Thought]
Reading the accounts of the jury at NYT and Washington Post I was impressed. The entrepreneur spoke best to me, but I found overall this trial speaks to the best things in the American system: tolerance for risk, tolerance for trying, but punishment for making a mockery of both. The Sr management of Enron (as any honest business person should admit given the facts in the record) made a mockery of that. I will add as an expat working in emerging markets that these kinds of lessons and punishments are invaluable for making markets really work. Never forget that.
May 18, 2006
Hot News: Egypt urges greater Arab integration
I am beginning to have a sensation that someone needs to send William Wallis of FT some news clippings before he writes more .... well waste of time articles such as this one Egypt urges greater Arab integration.
I suppose a short brief might be merited, but a full length arty? We have little enough proper news reporting on MENA economic issues, do we really need to waste valuable space repeating tired and worn out Egyptian attempts to distract from their domestic crises?
May 16, 2006
Possible Asset Bubbles in Gulf, Moody's explores the art of understatement [Updated]
Well, to be fair to Moody's, given their position, they can't say definative things.
Rather, they're issuing a useful but likely to be ignored (in the region) warning. It does come at a bad moment generally with today's "flight from risk" with all signs of a bit of old fashioned emerging markets contagion rearing its ugly head.
I have always been of the opinion head-long flight from risk is idiocy, but on the other hand it's sensible if you've placements in places not well-known.
May 15, 2006
Saudi index soars after removal of regulator
There's a title you just do not read every day in finance.
Regulator. Removal. Index. Soars.
No, just a string of words that do not typically strike one as going together.
It's the very really. Soars. No, indices just don't typically soar on such news.
But we are talking here about KSA and it's strange little fantasy world of hydrocarbon income fueled pretend economics.
However, before moving along, I would draw attention to a fine book I am perusing The (Mis)Behaviour of Markets : A Fractal View of Risk, Ruin and Reward , very much worth consideration.
April 25, 2006
On Iraq and funny little investments.
Since the deal fell through and now is pushing up the daisies, I thought I might take a moment to illustrate and reflect on some recent news out of Iraq, notably the move of Shia militias into Kirkouk and the overall rise in tensions with the Kurds.
As longer term readers knew, I grew tired of commenting on the Iraq war after it reached the stage of what I named "no escape from the Lebanese logic."
I should say that my calling the development just about two years was not particularly prescient, all one had to do was be familiar with Lebanese style civil wars and the perverse incentives that drive factions towards escalating violence, as well as assess the ability of the security forces to stop the evolution. In terms of Iraq, if one was not being willfully blind, it was painfully clear as of early to mid 2004.
April 08, 2006
Dinar Trading - Odd North American Delusion?
I was bemused to find The Financial Times reporting on Dinar Traders in "Dinar traders bet on Iraq’s future". Hardly worth an immense amount of attention, but frankly it is puzzling.
April 03, 2006
NYT can do, FT?
Remodel in an attractive way. Why can't bloody FT?
Someone needs to beat the living crap out of the FT IT people. Bloody hell, I am subscriber and I still get shit.
March 15, 2006
A Round Up: Gulf Markets, DPW & Related Matters
While it has been mooted here (well at 'Aqoul in all liklihood, but no matter), that the Gulf Markets were due for a bit of a tumble, this week, perhaps tipped by the DPW dust up, perhaps by an unheard of bit of sense penetrating the neophyte Khaliji day trader..... they tumbled.
Most interestingly, however, is the reactions, not the fall. Picking through the serivicable FT arty "Gulf markets fall amid crisis after bull run" covering the nice digger the Gulf markets took Tuesday and what the journos called " a deepening crisis of confidence after a three-year bull market" we find early rumours of State support to share prices. First some detials, Dubai equities were down nearly 12 per cent, Saudi Arabia equities 4.74 per cent, Abu Dhabi’s 4.44 per cent and Kuwait’s, 3.67 per cent. What caught my eye was "Markets in Jordan, Egypt, Morocco and Lebanon were also hit." Sure enough Casa bourse was down last two sessions. That's a surprise. Well it's overbought and needs to take a break for a buying opp.
DPW was cited by some as a trigger, which I suppose works for Dubai and KSA markets, but given months of warnings that the markets were over-bought, the slightest ripple was set to reset them. What's more interesting, as I noted, is the fall-out and interventions. .
March 13, 2006
Bloody Goddamned Useless Financial Times website
As any regular reader knows, I consider The Financial Times to be among the best bloody papers out there. Consistently liberal (in the proper sense of the word, not US Left), sane and well-balanced. A fine companion to The Economist, its quasi-sister weekly.
However, FT's website remains one of the most atrocious, hard to use, idiotically set-up irritating pieces of rubbish this side of the millenium. Perhaps, just perhaps, the design made sense c. 1997 or 1999. Now, in 2006, it's fundamentally annoying.
I pay good extra money for "third level" (or something like that) "membership" for advanced features and access to its databases and the like. The databases, etc. are fine in terms of actual content, but bloody fucking hell, the interfaces and ease of manipulation (and I say this as someone who taught himself a modicum of UNIX during the days when my employment was in Pharma and involved db) are possibly the shittiest utter crap this side of hell itself. What could possibly be possessing the FT and its benighted IT spending managers to continue to indulge in such clear and profound idiocy? Their step-sister, The Economist manages a clean, well-laid out and above all fucking functional site. Why does FT have to have a site that is not only irritating to use, it is positively maddening? Are they not in competition with the Evil Ones based in Manhattan, whose site is somewhat less irritating?
I am at a loss. And I fear for my dear FT as it is gratitiously losing readership, I am sure, due to its Neanderthalic incompetence in the area of website functionality.
I may add that my letters to this effect to FT "Help" have gone unanswered or have merely received mechanical pen "blah blah blah."
I despair. I hope to save the brilliant FT from its clear IT incompetence, but how?!?!
A Pained Lounsbury.
January 30, 2006
MENA Finance and News, some interesting notes - Iraqi Bonds, Project Finance &
I would normally place this in 'Aqoul, but I don't want to push down more general conversations.
First, and most intriguing is this one:
Then there is this little dandy,
A few quick excerpts and droolingly ignorant comments on my part:
January 29, 2006
Historical Economics, Modern Islam
An item I intend to return to, when more in a right mind:
Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation
Journal of Economic Perspectives
Volume 18, Number 3, Summer 2004
Also in conjunction with that article, this interesting essay is worth returning to (okay actually it is typical superficial Poli Sci tripe):
Liberalism in the Middle East: Prospects and Mechanisms of Change
Christopher J. Coyne
Department of Economics, Hampden-Sydney College
Hampden-Sydney, VA 23943
Research Fellow, Mercatus Center
Arlington, VA 22201
December 12, 2005
Having just seen this film, I thought I might make a comment or two.
Overall, a very interesting film, I rather liked it. Somewhat on the dramatic side, as relatively large budget film has to be, but very nicely done overall. I shall not pretend to review the film as a film reviewer, but some thoughts on its MENA subject matter and small details that pleased me (as well as displeased), from someone who operates in this kind of world.
What follows will have direct reference to the film’s events, “spoilers” to use that silly precious little phrase. Don’t want to read them, don’t read on. For those who may want to see the film, my summary is I found the film to be a very nice rendition of affaires here in my region, although to be sure dramatised.
September 26, 2005
Gulf Finance, Booms & Inefficiencies
Our friend and sometime contributor Waterboy draws attention to something obvious to all involved, and yet an item that remains out of control: overliquidity in the Gulf region and the consquent mad asset price boom in the Gulf. His observation is spot on, that there is
there's too much cash chasing too few investment opportunities in the region; too little oversight, regulation or transparency; too much exuberance - bear in mind, as Japanese bank Nomura pointed out, that Saudi Telecom's market capitalisation of US$74bn is worth more than BT (US$35bn), AT&T
(US$15bn), SK Telecom (US$15bn), and Telekom SA (US$9bn) combined - and far too many unsophisticated investors who think that having the names of a couple of ruling family members in the IPO prospectus is a valid alternative to a business plan - or, for that matter, an existing business.
No doubt about this at all. Some conversations I had over the past week painfully illustrated that. This aside, a key point of disequilibrium is the degree to which despite the asset valuations in the Gulf being absolutely looney to the point of surreal, the money is not flowing within the region to a reasonable degree.
September 12, 2005
Underdevelopment as Dilettantisme: Why MENA Does Not Attract Capital, Reason No. 5
While sadly behind on my ability to comment substantively, I thought a bit of a comment on dilettanstisme would be worth a quick intervention (and it being all I have time for, it's what one gets).
The comment is provoked by a series of convos over the past few days in regards to a certain MENA country (which for various sensitivity reasons shall remain unnamed) and its hosting of a MENA region investment conference. Let's say that our certain MENA country is not exactly a star performer in the realm of attracted FDI, per capita or in gross. Of course neither is the region.
August 26, 2005
Structuring Private Equity in MENA for Development (bis)
Added Thoughts on Private Equity for Devleopment MENA
I neglected to touch on a few key points in my original note, below are further thoughts on private equity and economic development for the MENA region.
August 25, 2005
Structuring Private Equity in MENA for Development
Structuring Private Equity in MENA for Development
A few weeks ago I raised the subject of emerging markets private equity in particular in the context of US Gov efforts to utilize the vehicle to further its political / development goals in the Middle East – North Africa region. One of our online world colleagues if you will posed a question to me as to what the “The Lounsbury” approach would be, in the context of my expressed skepticism in regards to the investment vehicle / definition chosen by The Overseas Private Equity Corporation.
Ironically (well not really) at present I am working on materials closely related to just this question, although not really in regards to development – but as much of the private equity activity in region has been international development institution driven there is a clearly overlap. Now, having sent drafts of my materials off for comment I can take a moment to sketch out some preliminary thoughts on the issue that will be the basis for future comment.
First, my assumptions, based on personal experience in the region and in the “sector” if we can call it that. Again, these are my a priori assumptions and principes.
August 22, 2005
On MENA Business & Rescued Excel Sheets, a Sneak Peak
Being impossibly pleased with myself for having found a way to rescue the data which my untrustworthy Excel whacked this weekend, I thought I would share the product of that work (well a sample) and a quick note on something I intend to expand upon.
[Update, hmmm, I obviously don't know what I am doing with the image taggery, but if one reads discussion below one sees the image better/ Fixed -E]
August 11, 2005
Market Madness or Brilliance? US Gov Private Equity for MENA Announced (cross from Aqoul main)
At the risk of descending into flackery or something approaching it, I thought a brief comment here might be fun.
Certainly this plays into my personal interests. (and in this cross post I indulge in them)
August 09, 2005
Iraq - Reconstruction - Knowing when to get out of the way [Cross from Aqoul]
This article from The Washington Post (Op Ed actually) struck me as if not important a useful point of reflection for a moment:
Less Is More in Iraq
By Michael Rubin
Tuesday, August 9, 2005; Page A17
Let us leave aside Rubin's sketchy history in regards to Iraq as part of what one might properly and non-abusively call a "Neo Conservative" circle in Washington re Iraq (and his direct and personal contribution to the fiasco via his work with CPA-Iraq). Let us leave aside as well the question of whether a US draw down of troops is a good or bad thing (I might argue either way on any given day). Rather, merely look at the question of the US contractor presence.
August 01, 2005
How (Not) to Execute Meaningful Privatisation Policy
I found this morning, despite being rather dead due to perhaps a bit too much scummy extracurricular sportingness, and a terrible weekend being surprised by a face to face with some fuqaha as part of the ongoing transaction to close the Apartment Plus Joint Venture, myself a bit upset with policy issues.
The Moroccan government, in all its (non-)brilliance announced that it was selling off the State sugar refineries in block (good thing) to the King's holding company in a rather peculiar result from the international tender it ran.
July 29, 2005
Iraq: Peculiar and Misunderstanding Journals
I got this comment on my brief comment on an Iraqi brokerage (
July 18, 2005
I had dinner with some senior finance and US officials this evening, and discussed with them a concept that is being batted about among US Gov re a equity fund for the region. I was in love with this until this evening. As I listened I went from being voluble to silence. It is so stunningly badly conceived as to take my breath away. Among the key snippets I share is the argument from the main US Gov mover on this, that they could use the proposed fund to lobby and force political change.
July 14, 2005
Iraq Brokerage Comment
Well, at the request of Jerry I had a look at the brokerage site of www.isx-aman.com and company.
Interesting to be sure. My remarks are inherently superficial as I haven�t much time, but some initial thoughts.
July 11, 2005
A Collounsbury Take on Frontier Investing
This was written for comments re investing in Iraq, thought I would reproduce as I rather like it on some level:
That aside, 30 percent is a quality return, if and when you realise it. Thin illiquid markets can often show "quality returns" without being able to deliver the liquidity to realise. [In short, a market under buying pressure but little liquidity may appear to be delivering healthy returns, but when it comes sales time to realise, the same mechanics can make it impossible to sell without serious discounts, i.e. price decline - liquidity is the key, else one is trappe, many an emerging markets investor learned that in the gogo years of the emerging markets stock market boom of the mid-1990s.]
Further, electronic trading systems [noted in relationship with Iraq] have never stopped front running, playing with orders and the like. They make it a slight bit harder, but w/o oversight you have false confidence. Among the many things you need is delivery against payment with an operative guarantee system (still doesn't remove the risk as I have seen personally, but helps), and one has to be sure it is operative.
But what the fuck do I know, I've only seen it done in these markets under an electronic trading platform that was and is state of the art.
Finally on the underlying peg discussion, Frankel's theoretical proposal [in an article in the Financial Times suggesting a basked peg with roughly 1/3 Euro, 1/3 dollar, 1/3 weighted price of oil] is an interesting one as a variation on a crawling basket peg, although your online discussion takes his phrase rather far too literally in a classic case of seeking justification for a desired result. The obvious item, rather than the appreciation issue itself or false analogies to post-WW II Germany, to analyze is what a large appreciation means to the Iraqi economy. Any large, short term currency move is a shock to the real economy and few real world policy makers generally avoid such for very good reasons. In Iraq the play off is between current cost of consumption versus current income. That breaks out between consumption of domestic goods and that of tradeables - imports - although obviously some domestic goods depend on imported inputs. Immediately exporters lose the X percent of income, consumers of imports gain X percent of buying pozer, an implicit subsidy to consumption of imports and an implicit tax on domestic production that competes with imports. In short a penalty to the domestic producer economy ex-hydrocarbons.
Second of course, is the impact on real investment (in explicit contrast to speculative hot money such as yours). An X percent appreciation due to a revaluation on a peg immediately raises the cost faced by foreign currency investors for Iraqi assets, with no change in potential returns in the near term, insofar as no economic fundamentals, ex the penalty to real productive economy that is import competing (but with a boost to productive economy that has imported inputs, to the degree they are import factors and cost drivers). It is an effect a penalty to incoming money - as say for example the private equity fund I have consulted with which has USD 70 million in hard currency raised. [I of course did not touch on the disruptive effects of serious real price deflation]
Now, obviously Iraqi policy makers should be looking at these real economy choices, and not things that make hot money speculators happy. It may be that they will decide that subsidising current consumption of imports and current capital imports is more important than creating a stable real economic environment that is well-priced in regards to real assets and allows export competivity. Choosing near term "gifts" to urban consumers, who are heavier consumers of imported goods and services (running from food to white goods) than others typically in this kind of environment, and subsidising capital imports to the detriment of labour competivity is a frequent choice in these economies - certainly Egypt managed to do this ever so brilliantly over the last 30 years with a "strong pound" regime partially backed by its nat gaz and petrol exports.
I certainly hope they don't - but then to you this is merely being "negative." Contemptible speculation aside, I favour the real market and policies to grow it.
July 06, 2005
Very good arty from FT on MENA markets:
Will try to do an Aqoul item on this.
June 29, 2005
Why I do what I do.
Interesting point of reflexion emerged on my post on policy and funding last night. I shall extend commentary but for the moment, this post merely allows you to opine.
Well, before letting you opine, if I ever even bother, let me reproduce the comment that provoked this:
Your final paragraph is the key one.
First, all else being equal in theory developing markets ought to offer excess returns in pretty much every sector because they are not as efficient/sophisticated as developed markets. I made a sneering remark earlier about exporting best practices to Nigerian breweries. "Best practices" which ignore local political/cultural/social conditions are unworkable practices or, worse, practices that, when implemented, achieve some completely unintended effect. But you don't need to implement best practices to beat your competition in developing markets, just better practices. To do that, you must understand how and why things work they way they do in the country you're in.
The problem is that all things are not equal. Developing markets must compete for human capital just as they must compete for investment capital. The educated people who would normally be smart, agressive entrepreneurs in developing countries are either a) already part of the established rent-seeking system and, therefore, already making excess returns or b) taking advantage of better opportunities elsewhere. Why mess about with trying to crack the local system when you can make piles of cash in the developed world without having to worry about being economically or physically knee-capped?
In other words, you need the right kind of local partner to make these investments work. But the right kind of local partner often has better things to do than be your local partner. Thus, you're left to choose between various wrong kinds of local partner.
China is a good example of this. When China first opened up, it was as worthless a mess as you could ever hope to see. The best and the brightest Chinese got out of China and never went back, often starting or working for extremely innovative companies in the U.S.
But China did have a lot of highly-trained smart, agressive people who were willing and able (language skills) to game the system -- Hong Kong. They turned China into a place to do business. Now, many Chinese who left China back in the 70s and 80s have gone back or at least established strong business links there and have made piles of cash in the process.
Had you tried to convince some of these people to go back to China to start a business in, say, 1985, they would have laughed at you and quite right, too. But without their (or someone like them's) cultural/political/linguistic skills, any enterpreneurial effort would have been doomed to failure.
In conclusion, if you have the right sort of local partners with the right sort of modern business attitudes you ought to make money in almost any sector -- the more basic the better. If you don't have the right sort of local partners with the right sort of modern business attitudes, you're probably going down in flames no matter how good your idea is.
For example, few things are less sexy than distribution systems. But if you had people with the guanxi to pull it off and the modern business attitudes to run it, you could make piles of money with a Walmart-style business in almost any region in the developing world. The problem is that the folks with the guanxi are already part of the system and the folks with the modern business attitudes are in London.
I plan to comment more on this. The commentator has hit on a number of points that I absolutely agree with. Some items I would qualify, and an excellent area of discussion.
February 18, 2004
An Entreprise Fund
Informed sources tell me that influential staff in the MEPI are going to opt for an entreprise fund, over a regional private equity fund model. This is a stupid decision. A large pot of USG money, admined from Washington to do 'entreprise grants' in a region they are not well-connected with, do not have on the ground business intelligence, and for which the bureaucrats in charge really do not have a direct risk involved. Risk is discipline.
This is a perfect way to piss away a rather large number of millions. Morons.