Biz - Policy & Development Archives


May 23, 2011

Dollar naivete

A remarkably naive note, A Strong Dollar Isn’t Always a Good Thing - Economic View - NYTimes.com


AT a recent news conference, Ben S. Bernanke, the Federal Reserve chairman, was asked about the falling dollar. He parried the question, saying that the Treasury secretary was the government’s spokesman on the exchange rate — and, of course, that the United States favors a strong dollar.

Listening to that statement, I flashed back to one of my first experiences as an adviser to Barack Obama. In November 2008, I was sharing a cab in Chicago with Larry Summers, the former Treasury secretary and a fellow economic adviser to the president-elect. To help prepare me for the interviews and the hearings to come, Larry graciously asked me questions and critiqued my answers.

When he asked about the exchange rate for the dollar, I began: “The exchange rate is a price much like any other price, and is determined by market forces.”

“Wrong!” Larry boomed. “The exchange rate is the purview of the Treasury. The United States is in favor of a strong dollar.”

For the record, my initial answer was much more reasonable. Our exchange rate is just a price — the price of the dollar in terms of other currencies. It is not controlled by anyone. And a high price for the dollar, which is what we mean by a strong dollar, is not always desirable.

Come now, I think the whole world understands the USGov's Kabuki theatre regarding the dollar. Say that they're in favour of a strong dollar, but take no such action. the reason it is not stated straight out is of course that would be interpreted as a signal of active devaluation, which could launch some major unruliness in the markets, particularly chez sovereign buyers.

Posted by The Lounsbury at 10:29 AM | Comments (0) | TrackBack

March 11, 2011

Euro Pact (The German Medicine

A side comment, the German suggestions on Euro support I think are much needed to move the Mediterranean countries forward - although what to do about Greece... Germany Sets Steep Price to Shore Up Euro Zone - NYTimes.com

But in return for this “solidarity,” the Germans say they want “solidity” on limiting benefits and accepting monitoring. Among the measures it is pressing is an agreement to raise retirement ages closer to Germany’s, where access to government pensions begins at age 67, well above the European average. Germany would also like others to stop pegging wage increases automatically to inflation. That is a necessary step if wages are to shrink in absolute terms, which some economists argue is necessary if bitter medicine to inject some competitiveness into the economies of Europe’s southern tier.

...

The Germans would also force private bondholders who bought the high-yielding debt of the most troubled euro-zone countries to bear part of the burden if countries defaulted or needed to restructure their debt — and not be protected by taxpayers.





Posted by The Lounsbury at 09:21 AM | Comments (2) | TrackBack

July 17, 2010

Interesting reflexion on Credit & Inequality

Interesting comment worth reflexion also relative to emerging markets (and the naive obsession of the development community with expansion of credit to any and all):

Credit Drives Income Inequality Drives Credit - Business - The Atlantic

Jul 17 2010, 10:15 AM ET | Comment

As economists continue to sort through the causes of the financial crisis (even though Congress already fixed the problem), there's one cause you don't hear very often: income inequality. Economist Raghuram Rajan explains this point in a recent article at Project Syndicate. He says that income inequality was growing prior to the housing bubble, which is part of what drove policymakers to champion subprime mortgages. Since these individuals couldn't actually afford as much as more affluent Americans, they could now tap into credit to feel just as wealthy. The corollary to his point is what too much credit can do: help to mask income inequality and cause it to further grow.


Empirically something to be studied.

Posted by The Lounsbury at 07:23 PM | Comments (0) | TrackBack

July 12, 2010

Frontier Markets: new fad but there is reality

I've been convinced that the frontier markets are improving more than commonly understood for a while, although they are indeed the frontiers... As such, I don't think frontier markets is a good place for index investing. The idiosyncrasies and lack of data make the precepts of index investment .... mmm "aggressive" relative to reality.

Frontier Markets Are Getting a Second Look - NYTimes.com

Almost everyone, including MSCI, puts Nigeria in the frontier category. “I get people asking, ‘Who’s the next Brazil?’ ” said Adam J. Kutas, manager of the Fidelity Emerging Europe, Middle East and Africa fund. “I answer without hesitation that it’s Nigeria,” because it also has a large population and a huge base of natural resources.
This however is insane bollocks. Brazil had far better possible governance than Nigeria has ever had. I am not a Nigeria optimist overall.


Posted by The Lounsbury at 09:21 AM | Comments (0) | TrackBack

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.

Posted by The Lounsbury at 07:29 PM | Comments (0) | TrackBack

December 07, 2009

Algeria, Tourist Destination

I am amused by this: Reuters AlertNet - INTERVIEW-Algeria counters violent image to woo tourists 

ALGIERS, Dec 2 (Reuters) - Algeria is an emerging tourist destination which is spreading the word to potential visitors that the image of a country overshadowed by extremist violence is out of date, the tourism minister said in an interview.

Ahem, as Algerian security convoys are still being attacked, I would say the image is not really out of date at all. Never mind the horrible standards of hosting service.... Algeria isn't ready to be a beach destination (as the Minister would like per the arty).

Posted by The Lounsbury at 10:35 PM | Comments (1) | TrackBack

November 28, 2009

Funny side item on Dubai

I love Roula Khalaf FT.com / Comment / Opinion - Reality catches up with the Gulf’s model global city

Perhaps none of this should surprise us. Dubai is a place where investors fell for trick advertising a few years ago that said the emirate would build a “bubble city”, a development of restaurants and museums suspended above ground by helium balloons and surrounded by a transparent enclosure.

This fantasy was never meant to get off the ground. But maybe it secretly did? And maybe that is where some of the decision-makers have been living.


Kha.

Posted by The Lounsbury at 02:56 PM | Comments (0) | TrackBack

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.

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.
(emphasis added)
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....
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.

Posted by The Lounsbury at 06:03 PM | Comments (1) | TrackBack

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 


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.
I rather take with a grain of salt the corruption crack down.

Posted by The Lounsbury at 01:02 AM | Comments (2) | TrackBack

August 15, 2009

Algeria & Chinese in Algeria: the riot & fallout

I was somewhat bemused to find Global Voices Online post on Algeria & the Chinese incident  although the choice of contrasting blogs was.... interesting (insofar as one is just an ignoramus blithering on without a bloody clue and the other was Moor Next Door). The summary notes

The influx of Chinese immigrants to Algeria ignited a face off between the immigrants and locals in the Algerian capital Algiers. About 100 residents and migrants clashed, using knives and bludgeons, sparking a debate over whether this incident would impact Chinese investments in the North African country

Leaving aside the first blog cited, which is merely stupid, Kal's commentary deserves some further thought. I am going to leave aside the geopolitical relations side of this - which deserve comment as Kal's characterisation's has a slightly .... well I think too much focus on the macropolitics, which in most respects is not the interesting angle.

Also picked up in French:Global Voices en Français » Algérie : Après les affrontements entre Chinois et Algériens
L'opinion algérienne semble considérer que les chinois sont responsables des tensions : ils « ne respectent pas les mœurs locales », ils « boivent de l'alcool », et si l'on en croit Kimo, drogue et prostitution ne tarderont pas à arriver avec les « chinetoques ».

Au-delà de ces réactions, cet incident fait se poser la question de savoir s'il aura un impact sur les nombreux investissements chinois [en anglais] en Algérie.

Continue reading "Algeria & Chinese in Algeria: the riot & fallout"

Posted by The Lounsbury at 03:05 PM | Comments (4) | TrackBack

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.

Continue reading "Algeria: Expropriations & Import Substitution, Just Because it worked so well in the 1970s"

Posted by The Lounsbury at 05:29 PM | Comments (0) | TrackBack

May 02, 2009

Outside my normal brief, but highlighting the stupidity of laywers in strategy

It is my firm view that lawyers are trained to be tacticians, in the greater scheme of things (not belittling long term purely law focused strategy) and they have a strong tendency to mistake law for strategy.

Here in the bankruptcy of Chrysler, I see lawyers fingerprints:The Lenders Obama Decided to Blame for Chrysler’s Fall - NYTimes.com

These investors together hold about $1 billion of Chrysler’s secured debt. The Treasury offered to pay all of Chrysler’s senior lenders $2.25 billion in cash if they forgave most of the company’s debts. Perella Weinberg and the others demanded more, arguing they would receive at least that much, and possibly more, under ordinary bankruptcy proceedings.

But this is no ordinary bankruptcy. JPMorgan Chase and other large banks involved in the negotiations are, to greater and lesser degrees, beholden to Washington. Many have received billions of taxpayer dollars, as well as other generous subsidies. For the banks, defying the administration was never a serious option, according to people close to the talks with lenders, who asked not to be identified because they had signed confidentiality agreements.

The other creditors, who sought to distinguish themselves from those who have received bailout money, believed they had a stronger hand. Many of them bought Chrysler debt for about 30 cents on the dollar, long after it became clear that the company was in trouble. Most of this debt is secured by Chrysler assets — factories, equipment, real estate and the like. The thinking was that in the worst case, these assets could be sold at a profit if Chrysler were liquidated.

Emphasis added.

Now the layers can't be blamed for that perhaps, but the presumption Chryslers fixed assets would get a good return (even if one came in at 30 cents on the dollar) given one is facing a depression-level economic crisis, and the rest of the auto industry is on the brink. Never mind the very industry being on a Gov't equity lifeline. In such conditions, normal rules can be pretty much counted on as being out the window.

But it is plain retarded to whinge on about the Gov't changing the rules when as a Vulture investor it's transparently obvious you were making a moral hazard play, that the Gov't wouldn't dare go nuclear.

Well, they did.

Too bad, your dumb call.

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Posted by The Lounsbury at 05:50 PM | Comments (15) | TrackBack

April 07, 2009

Transparent Donor whankery - Iraq microfinance

More on this later, but this quote is transparent donor whankery. Small US loans are catalyst for Iraqi business

“I have increased my earnings and improved my family’s quality of life,”

Odd every donor story always has "increased my earnings and improved my family's quality of life. Queer, this coincidence.

More tomorrow, must piss off

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February 05, 2009

MENA Melts: the Dubai & Abu Dhabi show

FT's arty "Focus on Dubai as Abu Dhabi looks to its own": something to watch, the ongoing slow-motion melt-down of Dubai Land. Pity really, after doing things right for a good decade, for the past five or seven years Dubai went overboard on a speculative binge and now has to contend with commentary like this "Bankers warned on Thursday that Abu Dhabi’s go-it-alone attitude could
mean that the federal government may not be as willing as expected in
rescuing Dubai entities which face default.
"

That's a nice whiff of early stage panic.

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Posted by The Lounsbury at 11:56 PM | Comments (0) | TrackBack

August 15, 2008

Corruption in Dubai

From the FT a very interesting development: Dubai fund chief held as graft probe widens. This shall be very interesting to follow. Shall try a comment further tomorrow.

Continue reading "Corruption in Dubai"

Posted by The Lounsbury at 05:15 AM | Comments (3) | TrackBack

July 13, 2008

Islamic Finance in Maghreb bis

An unsurprising arty on Islamic finance from Khaleej Times: Islamic finance makes slow start in N.Africa (or rather the Maghreb):

As I have noted previously the hype about a big 'Islamic' finance market englobing the poorer sections of the Islamic world, extrapolating off of the habits of the more conservative (or I would say, narrow minded) Gulf with its luxury orientation is not well placed. The article from last week makes the point.

Some comments:

Continue reading "Islamic Finance in Maghreb bis"

Posted by The Lounsbury at 04:16 PM | Comments (0) | TrackBack

June 23, 2008

Algerian Youth arties in New York Times

Of great interest to the Aqoul community as it were, an interesting (if flawed) article on Algeria, Youth, Employment and Radicalisation, and attendant Expert Commentary.

I shall try to generate some commentary on this.

Posted by The Lounsbury at 08:20 PM | Comments (14) | TrackBack

October 03, 2007

Sov Funds, Petrodollars

I believe I display no great prescience in returning to my prediction that Arab Gulf State Sovereign investment funds (state investment funds) will be an emerging scare issue from the same crowd that brought you Dubai Ports World and other silliness.

Rather like a more charged replay of the Japan Inc scaremongering, but with extra xenophobia thrown in.

Continue reading "Sov Funds, Petrodollars"

Posted by The Lounsbury at 11:49 PM | Comments (2) | TrackBack

September 02, 2007

Morocco gets the Millenium Challenge Loot

Well, near 700 millions of USD in grants is not bad, over 5 years - of course with a USD that's declining unless MCC has fully hedged itself, that's more like 500 million Euro I'd guess, but not a bad chunk of loot, eh?

I recall running into a US diplo a few years ago who went on and on about the Moroccan proposal being nothing but a bunch of incoherent demands to plug budget holes, now it seems that the Moroccans wore them out.

More to the point for characters like me, is there possibility to leverage this money on private investments (i.e.hopefully all the blithering on about investment to boost productivity will have some foundation).

One item to note:

On the corruption front, Morocco has slipped to 79th out of 163 nations on Transparency International’s corruption perceptions index, from 45th out of 100 nations in 1999.

Transparency's index has always irritated me as frankly my experience tells me that Morocco is less corrupt now than it used to be ten years ago. Tolerance for corruption rather seems to be decreasing.

Granted this is not an easy thing to measure, but nevertheless.

Posted by The Lounsbury at 10:58 AM | Comments (7) | TrackBack

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....

Posted by The Lounsbury at 09:03 PM | Comments (0) | TrackBack

April 24, 2007

Wolfowitz Must Go.

On reading this headline and article: Wolfowitz Hires Prominent Lawyer in Fight to Stay at World Bank I have to say the lingering respect for Wolfowitz that I had evaporated. The man clearly lacks even a shred of good judgement. Even if he wins his senseless battle to stay, the fact he had to undertake such, under such circumstances means he will be gutted....

It is rare to see such a colossal example of bad judgement on display.

Posted by The Lounsbury at 10:10 AM | Comments (4) | TrackBack

March 14, 2007

Development Investing & Indiscipline

I just came away from one of the most profoundly frustrating meetings in a while.

Talking with some local business people about potential financing for an investment project (in real industry, for a change).

Not a bad proposition.

Except for the life of me I can't get them to express their god damned concepts and value proposition.

Continue reading "Development Investing & Indiscipline"

Posted by The Lounsbury at 12:51 PM | Comments (4) | TrackBack

February 18, 2007

Reflexions on Talent, Markets, MENA & Development - The Value of Initiative

Inspired in part by a comment by Shaheen, and in part by some convo I dimly recall from a few months back somewhere in bloggy land about the value of expats and overseas educated and experienced staff, I thought I might make a comment on the value of staff with international experience.

While perhaps potentially self-serving, I really mean to briefly reflect on barriers to growth in MENA, as a business as well as a social problem.

Continue reading "Reflexions on Talent, Markets, MENA & Development - The Value of Initiative"

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January 19, 2007

Iraqi Factories Arty

It becomes tedious in some ways to constantly harp on the sheer, mind-numbing incompetence of the Bush Administration (and in its own way, the Poodle's complicity in enabling such), however articles like this constantly remind me of the utter idiocy.

What is most painful is the degree to which this Right Bolshevism has given ammunition (rhetorically, not fundamentally factually) to attack free markets, etc. in a Naomi Klein sort of fashion.

Of course, the arty, on reviving the Iraqi state factories, includes this more depressing note:

There are also serious questions on whether officials in the focus of the United States presence in Iraq, within the fortified Green Zone in Baghdad, are ready to support factories that were seen as no more than relics of an era that American ingenuity and reconstruction were going to make forever obsolete.

I am sure. Bolsheviks live in a fantasy world.

Posted by The Lounsbury at 07:58 PM | Comments (2) | TrackBack

Two Huge Middle Eastern Stories: One Good, One Bad

Continuing the economics discussions, an interesting editiorial from Al Hayat (English site) on economics changes in region, and the tensions between a nasty political enviro and improving economics.

Posted by The Lounsbury at 06:45 PM | Comments (5) | TrackBack

January 16, 2007

Frightened Bunnies

That is what North African businessmen remind me of.

Frightened bunnies.

Trying to put together a deal involving North American parties, UK party and some North Africans.

I get a message today, everything looks attractive, but couldn't I find a French partner instead?

Continue reading "Frightened Bunnies"

Posted by The Lounsbury at 04:51 PM | Comments (2) | TrackBack

December 05, 2006

Economic Freedom in MENA versus Oligarchies: How?

I take as axiomatic that the real place for reform in the MENA region is found in creating economic liberty that will, in the long run, help create the social conditions necessary for MENA socio-political systems to move to real pluralism from their long love affaire with Dirigisme and Oligarchic autacracies.

However, in looking hard at what I do in fact in terms of what economic actors and agents are necessary to deal with to make a successful business, I am left with a contradiction. There is no natural exit from the death grip of the Oligarchs. It strikes me that the "West" needs to support economic liberty, but how does one do so without letting economic liberty be captured by the Oligarchs. And don't anyone tell me "regulation" or other such socialist nonsense, for rather clearly the Oligarchs in MENA are very happy with the "Socialist" systems and state domination, for they milk Leviathan rather well. And the masses are sold on "solidarity" that is not.

Continue reading "Economic Freedom in MENA versus Oligarchies: How?"

Posted by The Lounsbury at 01:46 PM | Comments (22) | TrackBack

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.

Continue reading "MENA Govs - Still don't get Free Market"

Posted by The Lounsbury at 03:51 PM | Comments (7) | TrackBack

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:

Continue reading "Bedou Scum & Destination Aqaba - Incentives and Disincentives to Investment"

Posted by The Lounsbury at 08:01 PM | Comments (4) | TrackBack

October 04, 2006

Dubai, the Attraction

A quick note to draw attention to a recent arty by Roula Khalaf of FT on Dubai and the why behind its success to date: Dubai cultivates oasis of calm where Arab business life can flourish

The main thrust of the article is to highlight some of the why behind Dubai's success to date, beyond just stupid amounts of capital. Although that is a clear major condition, it is not a sufficient one as the other petro-giants of the region never managed to achieve Dubai's success (even if we mitigate our appreciation of the success by noting a definately unsustainable aspect doped by too much liquidity chasing too few quality assets).

Despite my own critical attitude towards Dubai - much is clearly illusion and can not survive, there are also clear lessons with respect to the ability of the Arab/MENA region entreprenurial classes actually being able to flourish when a moderately liberal (quite liberal for the off-shore aspects) business environment is established. I do note that some of - indeed in some ways much of Dubai's liberalism is rather Potemkin liberalism insofar as it is all of a very temporary, Enlightened Despot Suffrage quality. That being said, if one takes Dubai with a grain of salt, it does illustrate via its off-shore business services sector the degree to which Arabo-Muslim entrepreneurship is seeking a place to flourish away from the dead hand of the state, and the degree to which even in the temporary, Prince-dependent liberalism of Dubai seems vastly attractive in a world where the West is growing stupidly more hostile to Arabo-Islamic money.

Continue reading "Dubai, the Attraction"

Posted by The Lounsbury at 03:38 PM | Comments (2) | TrackBack

September 26, 2006

Dubai tapping out the logic

I am about to fly out of that strange theme park for construction towers and glad to do so.

While I have been convinced of Dubai's logic in the past, it seems fairly clear that the flood of liquidity and declining planning discipline (1.2 hour to go 1 KM at 8pm?) are beginning to kill the tree that bears the golden fruit. Rather like the gardener who mistakenly thinks more water is always good, so Dubai seems to be mistaking more growth as always good.

Posted by The Lounsbury at 09:14 PM | Comments (2) | TrackBack

August 29, 2006

Development as Follow Through or Under-Development As Attention Deficit Disorder

Doing a bit of macro-economic research to justify some lies I am about to tell with respect to a financing project - well not lies, maquillage, some beautifying and promoting, and having the occasion to reflect on one of the great failings of MENA region governmental services - the sustained production of useful information.

Note the word sustained. I am .... well not surprised but irritated, frustrated and otherwise unhappy ... given my expectation that last years useful updating of statistical series X has not been followed through. No, the Attention Deficit Disorder Statisticians have decided to do an utterly different series (of fuck all utility to the investor, although I guess some academic might find it useful).

Continue reading "Development as Follow Through or Under-Development As Attention Deficit Disorder"

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August 27, 2006

Published: World Bank's MENA Econ Dev and Prospects 2006 "Financial Markets in a New Age of Oil"

Perhaps I will make this a tradition, but let me draw your attention to The semi-newly published (June, hey I didn't notice) World Bank report on MENA economic prospects, for 2006.

Last year's got me all inspired to rant on a bit and otherwise criticise a noble if somewhat flawed effort. It also inspired some parties to suggest I write "Development Porn" - I suppose writing the following engendered this:

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August 24, 2006

Real Challenges - Competing With Hezbullah

I had another convo with the American group on the US Gov propo regarding Lebanon reconstruction.

The thinking is going in the right direction, they realise on reflection that rushing in to compete with Hezbullah is a great way to do CPA bis, but now the question is "How do you compete with Hezbullah to mitigate its wins?"

Regardless of American stupidity in regards to its FP, the question is a real one.

How indeed does the US compete with Hezbullah?

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August 23, 2006

Pimping Giddiness: MENA Private Sector & New America Foundation

In reading the first paragraphs of a Washington Post Op Ed by a fellow at the New America Foundation, entitled The Real 'New Middle East' I thought I was going to be pleased, sadly though the author took real observations and mixed them in with simple-minded swallowing of corporate and governmental PR spin to produce absurd tripe typical of the wide-eyed neophyte or the paid propagandist.

A pity as the author's main thesis in a less over-done and gullible form has merit.

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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.)

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July 18, 2006

Transparency, FDI & Foreign Groups - Counterintuitive Observations

An amusing side note to distract from the Lebanon hysteria that is sucking us all in.

I'm presently doing research on North African financial groups for a potential new piece of business (my idiot whankers back on the other side of the Atlantic still not grasping the lack of transparency that renders any given piece of research in MENA twice as hard at minimum than in the developed world).

It has been amusing so far to find that despite all our talk in sector about how foreign groups bring best practices, better governance and more transparency, that in the Maghreb -comparing like to like, i.e. listed to listed- the locals are actually rather better about publishing their financial reports than the French groups(*). Never mind site functionalities. Not really surprising, if one knows French banks, but provides a bit of nuance to easy talk about FDI and benefits. Not, mind you, that I am against FDI and all things being equal foreign groups usually do raise standards....

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July 14, 2006

Islamic Banking - Incoherent Whinging

It is not often I read something in The Financial Times that provokes me to think in contempt, what the fuck were they thinking, but today’s arty entitled Banks subvert Islam’s ban on usury by some cretin named Tarek el Diwany certainly did.

The commentary piece, which largely covers a truly superficial and irrelevant ‘history’ of
European lending institutions supposed origins, does put its finger on a real issue, the superficiality and conflict of interest ridden process by which “Islamic” products are being created today. Whatever one’s interpretation of the religious ban on usury (whether you have the economically illiterate if traditional penchant for seeing it cover all interest or whether you see it in the more rational and economically literate light of a ban on abusive lending), one can not deny that the current system which institutions are creating “Islamic” products is entirely incoherent and more than a bit of a sham; or at least that it is ridden with severe conflict of interest issues that are bound to result in debilitating corruption.

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May 27, 2006

Economic Progressivism: Left Things to Love in Islamic "Economics"

I ran across a press release from some US Uni by some anthro-sociology professors on 'progressive' features of Islam ironically pointed to by an 'Islamic Investing' website trumpeting it as Study Finds Muslim Scholars An Egalitarian Force For Economic Reforms, a fine illustration of the brainless lack of confidence among certain circles that they take anything with a remotely positive spin on anything "Islamic" and wave it around, saying "See Islam positive, Islam positive!!!!" like five year olds. Witless gits.

The site itself I came across from a decent arty on the diversity of fatwas and the general focus on small things in life although in fact although I am of the opinion that foolish fatwa shopping is a bad sign of a rather brainless 'islamisation' but that is probably my general snobbery and contempt for people running after ill-groomed 'religious men' for advice when half a brain and some reasonable reflexion would suffice.

However, let me get on to the silly stereotypically Left academics' silly PR note on "Progressivism" and Islam:

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Posted by The Lounsbury at 08:15 PM | Comments (11) | TrackBack

Whanking Ignorance on Dubai

In writing a little bit on some idiotic whanking about "progressive" economics and conservative Islamists, I reminded myself to return to something I spotted via GrapeShisha

A truly stupid article on Dubai which only deserves comment on these excerpts

Dubai sounds like a fake country. Or an exotic place only vacationing al-Qaida cellmates and CIA spooks know how to find. ..... Dubai's connections to al-Qaida terrorism apparently were accidental, not government-countenanced. But Islam is the state religion ..... So beneath the glitz and gleaming skyline Dubai is a theocratic Islamic state that no American would want to be a citizen of for more than an hour. But it's spectacular proof that the Middle East is not monolithically backward, hopeless or anti-Western. And it shows that relatively good things can evolve in the Muslim world without the United States having to use force to create them.

I honestly am impressed the author could pack quite so many stereotypes, just plain idiotic mischaracterisations (hint having a state religion does not a theocracy make you semi literate git, else England would be a theocracy (and in terms of enforcing 'uniformity would not have been far off Dubai if one rewinds not so far, but no one would think of writing seriously that Elisabeth I was a 'theocrat' ).

I honestly wonder at the literacy and rationality of American commentators on Islam, the Islamic world and... well just the outside bloody world in general. Theocracy....

Posted by The Lounsbury at 08:09 PM | Comments (5) | TrackBack

January 26, 2006

Development & Means

The Pratike responds to my half-meant statement, "Assistance is political. Now, if the US process can't distinguish between long term and short term objectives, having some bizarro wall between the diplos and the assistance people is not going to help much overall. In any case, I rather suspect Bishop is the sound of comfy sinecures being gored":

Maybe so. I don't know anything about InterAction or the Center for Global Development. But it seems to me that if you want to "depoliticize foreign aid," you ought to advocate that the U.S. funnel more money through international organizations rather than via the U.S. AID pipeline, which is about as political as it gets.

I am at a loss to think of an international organisation where the spending of money is not political as well.

Nor would I think it would depoliticise foreign aid, it would merely politicise the financing of that organisation.

Posted by The Lounsbury at 01:16 AM | Comments (0) | TrackBack

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.

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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.

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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.

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Posted by The Lounsbury at 01:22 PM | Comments (0) | TrackBack

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.

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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.

slide0001_image002.gif

[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]

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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.

OPIC BOARD APPROVES $75 MILLION FOR MIDDLE EAST & NORTH AFRICA FUN

Certainly this plays into my personal interests. (and in this cross post I indulge in them)

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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.

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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.

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