RSSEconomics Archives
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.
Posted by The Lounsbury at 10:48 PM | Comments (3) | 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.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.
(emphasis added)
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 07, 2009
Ramadan & Economic Illiteracy (And exageratted Ftour tables)
This is sure to get me in trouble, but reading articles like this, (Citizens call for sit ins against rise in food prices [during Ramadan]) irritate me:
Des groupes de citoyens appellent à des sit-ins contre la hausse des prix alimentaires (Magharebia.com) (also see La hausse des prix se poursuit pendant le ramadhan en Algérie (Rise in prices continues during Ramadan in Algeria).
It's really quite simple. Despite being a month of "fasting," in fact Ramadan is a month of gorging. At night-time, but nevertheless. It's impossible to go to a Ftour / Iftaar and not find a table loaded down with an absurd amount of food, never mind the dinner that follows or the Suhour in the wee hours. I'd guess that consumption actually rises by about a third. And the law of supply and demand kicks in, spike in consumption means a spike in prices. I can't locate the article, but when I was just in Algeria last week, I ran across a particularly cretinous bit of idiocy written by a supposed business journo claiming there was no reason at all for such price rises, other than "speculation."
Of course part of this is few people want - in public - to admit the obvious, that Ramadan is effectively treated as a month long excuse to gorge oneself at night on sweeties, roll into work an hour late, malinger about and repeat. Now, this is not particularly news or a new development. But the whinging on about prices really gets on my nerves for its sheer illiteracy. I was just at a friends Iftar in Algeria (at least it spared me eating Iftar in the hotel, given the horrid standards of Algerian state hotel cuisine), and sadly my amigo whinged on about how Ramadan prices killed his pitiful little state salary. Salary is genuinely sad, although given my interactions with his division what comes to mind is "you get paid for your value add...." - the department if not him personally. But the other item that went through my mind was "for the love of God, then chill the bloody hell out with the Ftour table." Which was loaded down with enough sweets to keep Cuban sugar imports high for a decade, never mind the boureks and etc. etc. Of course the whole guest angle was there, but I've been to enough of these to know the lay-on was not really upped much for the guest.
I'll admit that fasting all day, one has the natural desire to kick in a big of a sugar rush, and "compensate" for the annoyances as it were. Entirely human, and my general philosophy is Beni Adam, Beni Adam - people are people and one shouldn't expect magical variations in basic human nature. Nevertheless, I feel confident in opining that generally throughout MENA it goes far too far (and in many ways defeats the whole philosophy of the month, but that's religious philosophising, which I don't care to engage in).
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Posted by The Lounsbury at 10:47 AM | Comments (10) | TrackBack
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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Posted by The Lounsbury at 10:34 PM | Comments (0) | TrackBack
August 25, 2009
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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Posted by The Lounsbury at 11:21 AM | Comments (1) | 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.
Posted by The Lounsbury at 05:29 PM | Comments (0) | TrackBack
April 14, 2009
Observation: Any Blog with the title "Watch" in it has a high liklihood of being a hysteric conspiracy mongering nutjob site
Case in point: Shariah Finance Watch
Terribly deranged by the concept of needlessly complex financial transactions which pious but economically naive Muslims use to pay more money for the exact same economic transaction one can do straight.
This is somehow a threat to the writer of the blog, whose weak-minded panic is possibly slightly more droolingly idiotic than declarations that Islamic Finance (sic) will replace conventional finance.
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Posted by The Lounsbury at 12:05 AM | Comments (4) | TrackBack
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)
Posted by The Lounsbury at 05:22 PM | Comments (0) | TrackBack
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
December 29, 2007
American Idiocies & Reasons to Fear Left Bollocks
While I await with impatience the end of the current American administration, as its gross incompetence and sheer idiocy are in themselves reasons to see them off, this bit of blogging nonsense and the coverage from the Financial Times reminded me that the American left has its share of incompetent posturing morons, and not merely in blogging land. Leaving aside the blog partisan, whose silly ranting on about Mr Guilani's having done business with Qatar, and oh horrors a "Qataran" [the same author mocked 'poofed' up hair as an expression...] or rather Qatari minister of the responsible ministry having supposed connexions to al Qaeda. Insofar as the fellow is the Interior Minister of Qatar, and member of the Royal family which runs Qatar (a close US ally), the posturing is idiotic.
Or more directly, the harmlessness of the supposed measure which pretends to allow private American citizens to attempt to sue Sovereigns they pretend are state sponsors of terror [presumably defined by Americans] (never mind the potential of it having been overlooked, which does not strike one as impossible) is clearly false proposition.
The Iraqi government was quite right to object, and the US Presidency was right to veto this idiocy.
Continue reading "American Idiocies & Reasons to Fear Left Bollocks"
Posted by The Lounsbury at 11:50 AM | Comments (7) | TrackBack
November 11, 2007
Curse of the Dilettantes: celebrity interest in MENA (and other) causes
Worthy of a quick reada note on the celebrity aide complex for Africa which as well applies to the MENA fringe, I draw particular attention to this:
Twenty years on, more “fockin’ money” is still the musicians’ basic prescription for Africa. Bono’s crusade centres around foreign aid and debt relief. There are experts who agree with him. Jeffrey Sachs, the stars’ favourite economist, favours an aid-driven approach to African poverty – and, according to Angelina Jolie, he is “one of the smartest people in the world.”But the Sachs-Bono-Jolie prescription for Africa is hardly uncontested. There are experts who believe that aid to Africa is often counter-productive. Even some of those who agree that aid and debt relief are important see them as only a small part of the solution. In a much-praised book on global poverty, The Bottom Billion, Paul Collier argues that many of the problems of Africa are essentially political. He laments the fact that at the G8: “We have had leadership without an adequate agenda, because to date the agenda has been dominated by aid.
As all know, I frankly detest Sachs as an idiot theotician.
Posted by The Lounsbury at 03:47 PM | Comments (0) | TrackBack
October 03, 2007
The return of the anti-globalization anti-market twits
I believe I may have to return to my old hobby of whacking anti globo idiots, as it is sad that someone at Foreign Policy (even an idiot blogger) can write "[Naomi the financially and economically illiterate scare mongering idiot] Klein has produced some trenchant criticism of free-market orthodoxy in the past and she should not be dismissed offhand.
Bollocks. She's produced semi-literate "cultural criticism" (i.e. ignorant emoting) trash recycling the lamest of fuzzy-headed "humanities Leftism."
Posted by The Lounsbury at 01:45 AM | Comments (3) | TrackBack
September 19, 2007
In Defence of Wealthy Royals and Against Monopoly
I was seduced by this item noted via our News Room on the Moroccan Monarchy & the King's wealth to make a long comment in defence of a wealthy royalty (or as an observation that the criticisms were wrong headed in a typical wooley headed Left way) but against Monopoly - as a good Liberal that I am.
Continue reading "In Defence of Wealthy Royals and Against Monopoly"
Posted by The Lounsbury at 06:42 PM | Comments (1) | TrackBack
September 06, 2007
Iranian Central Bank: Most interesting views on banking, I would like to subscribe to their
Following this Financial Times arty regarding "a plan to eliminate interest rates on loans as a way to encourage "real and genuine" banking services" I am most keen on learning more and would like to subscribe to their economic commentary.
However, it is a bit obscure and I am not an Iran watcher by profession or inclination.
Posted by The Lounsbury at 11:30 PM | Comments (3) | 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 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?
Continue reading "Terror & Credit"
Posted by The Lounsbury at 12:43 AM | Comments (0) | TrackBack
April 16, 2007
French Political Tests, and relationship to MENA
Via Ibn Kafka (whose comments on the recent Casablanca bombings are very much following), a test for your Francophone political instincts.
Continue reading "French Political Tests, and relationship to MENA"
Posted by The Lounsbury at 08:39 PM | Comments (8) | TrackBack
March 28, 2007
Economic Policy & Lessons for Maghreb: The pain in Spain will follow years of rapid economic gain
Although not directly MENA related, this is worthy of quick attention as it shows someone besides Hogan going for painful punditry, although with an underlying point, and because Spain is beginning to have a truly important influence in the North Africa - essentially Maghreb - region on an economic basis. As well, I would add, to a limited extent on a political basis.
So, here it is The Groan Worthy: The pain in Spain will follow years of rapid economic gain
Posted by The Lounsbury at 04:50 PM | Comments (3) | TrackBack
March 06, 2007
Opportunity Cost
I just had an amusing, even hilarious for me, lunch with my attorney who was ranting on about how his local clients have to be brow-beaten (and we're talking corporates, name brand even) into conveying timely information, to him, their attorney, for work they've demanded.
I actually have the exact same experience. It's amazing, really, what it takes to get the simplest fucking things done in this region. Efficiency. What's most irritating and yet in some ways puzzling (in others not when you think about internal organisational structures and incentives) is the foot dragging raises their costs as much as mine (or the attorney's). Of course the constant whinging on about costs etc when they sit down with a bill makes this even more infuriating.
But there are clear organisation incentives to non-performance in the typical MENA company, nothing shocking that doesn't exist in the West of course - see Dilbert. But as always, these things are a question of degree, and indeed the weakness of countervailing incentives.
In some ways it's a good way to look at the failures of Iraq, since the American decision makers innocently assumed the exact same incentive structures, decisional processes and worst yet, reactivity. And being arrogantly blinded to the sometimes (indeed often) subtle differences - any one of which may be individually trivial, but cumulatively is fatal - were unable to react, to adjust and change at once tactics and conceptual strategy in ways that actually responded to the real incentive structures.
I've noted in places like our fool Andrew Sullivan (and even more egregiously chez the Moustache of Understanding) comments tending to indicate that Arabs (or Muslims, en grosso modo) don't value / want / desire Liberty, etc. etc. That's bollocks - but the operational incentives for making changes to achieve those things require different approaches, and realisation that the near term incentive structure is weighted towards avoidance of decisions etc. - nails get pounded down - unless one has a means to control - as in guns.
Posted by The Lounsbury at 01:53 PM | Comments (1) | TrackBack
December 05, 2006
Flocking to Sukuk... well, maybe
The Financial Times has a moderately interesting article on the supposed flocking of Western investors to the sukuk market.
I am skeptical that the end buyers are in fact 'Western' but I was amused by the framing at the opening, with its perhaps unintentional, but certainly very clever accuracy as to reality, if adopting the double-language of the Islamist take:
Continue reading "Flocking to Sukuk... well, maybe"
Posted by The Lounsbury at 01:36 PM | Comments (0) | 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 07, 2006
Maghreb Economics
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.
Posted by The Lounsbury at 10:32 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
August 01, 2006
Reflexions Economic & Practical - MENA During Times of Conflict
If I may (and of course I can, as this is my bloody bloggy and I do whatever I bloody want) some indirect comments on the current environment in region. Sitting in region, I will nevertheless note that spending evenings watching (as this evening) imagery of shattered children's bodies (headless even, on Al Arabiyah) is not precisely cheery. Even my JV partner, normally an almost pro-Israeli type said this evening something along the lines of "They want to impose their rule over all their neighbours like tyrants." Utterly out of character. And certainly the Arabic for tyrants carries a lot of meaning.
But on the environment, I spent this evening between popular (working class) beach and consular parties, an interesting contrast on some level, and an occasion to reflect on the diffent worlds, perceptions and understandings of crisis. Best of all, plenty of American diplos showed up at the later, I suppose needing to mingle with people less likely to tell them straight out their employer is a stupid git.
Continue reading "Reflexions Economic & Practical - MENA During Times of Conflict"
Posted by The Lounsbury at 11:57 PM | Comments (0) | TrackBack
July 26, 2006
Economics: Leb Land and Israeli bloody mindedness
Earlier I noted some thoughts on the economic impact. To be developed further, FT provides some more concrete information with numbers on Leb Land Central Bank liquidity.
Rather clearly they are looking at a currency crisis if this runs through August and into September, which seems likely. (Of course this is not inevitable, large gifts by Gulf powers flush with liquidity can help stave off disaster).
The question becomes whether there is contagion for the other weak MENA currencies. Egyptian, Turkish and other currencies could take some serious hits. Possible to avoid, but there is going to be a lot of downdrafts to evade in order to do so.
Posted by The Lounsbury at 06:42 PM | Comments (0) | TrackBack
July 22, 2006
Lounsbury Musings - The Leb Crisis & Economy
Some thoughts or concerns without any particular answer at present regarding the Leb Land-Israel cris and its economic impact in the region (ex the clear disaster for Leb Land).
Continue reading "Lounsbury Musings - The Leb Crisis & Economy"
Posted by The Lounsbury at 12:26 AM | Comments (2) | TrackBack
July 16, 2006
Travel; Wealth & Arabic & Superficial Gits Pimping Idiocy
On the road, last preps for me home base return. Will return soon to ordinary commentary.
A side note on something that both annoyed and amused me, thanks to Comrade Hogan:
From this silly article Language and wealth.
The arty wonders "Does the language you speak or use help influence how wealthy you are?" in a faux naive fashion and notes that when "When trying to determine why some countries are wealthier than others, economists rarely, if at all, consider language. However, if you look at the list of wealthiest countries on a per capita income basis, you will notice almost all the top 20 are English-speaking, or use some other Germanic language, with the exception of France, Japan, and Finland (however, most Finns know German and English as well as Swedish, and many Frenchmen know German and/or English)."
Continue reading "Travel; Wealth & Arabic & Superficial Gits Pimping Idiocy"
Posted by The Lounsbury at 08:42 PM | Comments (4) | TrackBack
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.
Continue reading "UAE shifting reserves to Euro"
Posted by The Lounsbury at 10:48 PM | Comments (6) | TrackBack
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.
Continue reading "Islamic Banking - Incoherent Whinging"
Posted by The Lounsbury at 10:41 PM | Comments (1) | TrackBack
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?
Posted by The Lounsbury at 04:04 AM | Comments (2) | TrackBack
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.
Continue reading "Saudi index soars after removal of regulator"
Posted by The Lounsbury at 08:00 AM | Comments (11) | TrackBack
April 04, 2006
Wolf on Imbalances
Pantom, one of our regular commentors, occasional rascally criminal engaged in attempts to subvert my editorial independence (one may reflect on whether the concept even makes any sense), has flogged this, but I wanted to as well. Sadly with the mere commentary that Martin Wolf's We should still worry about imbalances is a must read (it was good to get the fear of being long dollar back in me, I was so very distracted by my stupid tumour, but as it appears I am not about to die of the same tumour in the immediate future, I can go back to being rationally disturbed by my long dollar position while hand wringingly doing little about it).
I also note the somewhat sad attempt by Wolfe / FT at a blog type event. Global Imbalences
Sadly underlining that while its cousin, The Economist has a more or less delightful site with useful subscription features, The FT remains shambolically neanderthalic in its approach to online presence, and queerly less fun than the WSJ, while its physical paper I love to death.
Were I not obsessing about a potential exit, some disasters in my normal brief, I might well try to reflect on MENA meanings. Not for the FT's cretinous site, but the imbalances.
Posted by The Lounsbury at 04:10 AM | Comments (6) | TrackBack
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:
Bullish Investors Chase New Iraqi Bonds
Then there is this little dandy,
Mid East becomes project finance hub
and finally,
Scramble for shares in Islamic bank
A few quick excerpts and droolingly ignorant comments on my part:
Continue reading "MENA Finance and News, some interesting notes - Iraqi Bonds, Project Finance &"
Posted by The Lounsbury at 03:54 AM | Comments (1) | TrackBack
December 12, 2005
On Syriana
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.
Posted by The Lounsbury at 08:49 PM | 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.
Continue reading "Gulf Finance, Booms & Inefficiencies"
Posted by The Lounsbury at 04:59 PM | Comments (1) | TrackBack
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.
Posted by The Lounsbury at 02:49 PM | Comments (0) | TrackBack
September 05, 2005
Iraq, the silly Iraqi Dinar currency speculators again, more amusement
I stopped by what has become my weekly source of amusement, investorsiraq.com to see what sort of lies were being pimped to the gullible this week.
I was quite amused to see this: complete fabrication regarding Agency valuation of the currency, as of course the claim the Agency (which is hardly an economic analysis bureau) does not actually exist on said pages. Pure outright lying to the gullible. Amusing although sad in many ways.
Continue reading "Iraq, the silly Iraqi Dinar currency speculators again, more amusement"
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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.
Continue reading "Structuring Private Equity in MENA for Development"
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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.
[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]
Continue reading "On MENA Business & Rescued Excel Sheets, a Sneak Peak"
Posted by The Lounsbury at 06:04 PM | Comments (0) | TrackBack
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)
Posted by The Lounsbury at 06:22 PM | Comments (7) | TrackBack
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.
Continue reading "How (Not) to Execute Meaningful Privatisation Policy"
Posted by The Lounsbury at 03:21 PM | Comments (2) | TrackBack
July 18, 2005
Stunningly bad
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.
Continue reading "Stunningly bad"
Posted by The Lounsbury at 11:00 PM | Comments (0) | TrackBack
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:
The Problems
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.
Posted by The Lounsbury at 10:07 AM | Comments (7) | TrackBack
July 06, 2005
Last item
Very good arty from FT on MENA markets:
http://news.ft.com/cms/s/a66c3ca8-ed8a-11d9-9ff5-00000e2511c8.html
Will try to do an Aqoul item on this.
Posted by The Lounsbury at 06:33 PM | Comments (0) | TrackBack
June 28, 2005
Economic Development - Med Basin and Bindings Constraints, or rather The Binding Constraint
While this article is not about "my" region per se, it is evocative for everything noted here is equally true of the entire southern Med basin. Something that wet climate people do not properly appreciate and I suspect a nasty item that may not be easily surmountable or perhaps not surmountable at all.
Let me run through quickly.
Spain's worst drought just the start as deserts spread
The Financial Times
By Leslie Crawford
Published: June 27 2005 19:41 | Last updated: June 27 2005 19:41
A severe drought in Spain, the worst since records began in 1947, is playing havoc with livelihoods, sparking forest fires and threatening millions of tourists with water rationing as they head for the beaches this summer.
Worse yet, 2005 is unlikely to be a freak year. Spain is getting hotter and drier, with average temperatures rising by 1�C since 1960. The European Environment Agency estimates that average temperatures will rise by a further 4�C over the next century.
Winters are now so mild that storks have stopped their annual migration to north Africa. Scientists are witnessing desertification many estimate that up to one third of the country may be a desert within 50 years.
This is Spain recall. Now think of the pressures on the southern side of the Mediterranean, from Morocco all the way around to Jordan, Syria and Lebanon.
Official figures show that two thirds of the country is now affected by severe drought, with areas around Valencia, Andalusia and Catalonia, where populations more than double during the summer months, among the worst hit. Farmers and town councils in these areas are already fighting over the allocation of scarce water.
Tourism, the holy grail of interim development. A good economic boost. Long term costing however is not being done. Possible to do? Hard to say.
Agricultural losses are estimated at 1.6bn ($1.9bn), with much of the olive crop in Jaen, Andalusia, the principal olive-growing area, given up for lost. Catalonia has slapped restrictions on water for irrigation and industrial use in the hope of forestalling broader rationing during the dry summer months.
�We desperately need rain before October,� says Jaume Sol�, Catalonia's regional environment minister.
Season starts in October, roughly.
The drought has been exacerbated by Spain's construction boom, which saw a record 700,000 new homes built last year about half of them on the coast.
But the frenzy of building in one of the driest regions of Europe has severely challenged the ability of town planners to provide basic services such as running water.
In the provinces of Alicante and Murcia, on the Mediterranean coast, the regional water authority has asked councils to delay water connections to new tourist developments until after the summer.
The World Wildlife Fund estimates there are 10,000 illegal wells in the Costa del Sol, many of which supply tourist developments and are accelerating the depletion of water resources.
�Spain is abusing the sustainable limits of tourism development,� says Chuck Svoboda, a former Canadian diplomat who leads Abusos Urban�sticos No, a campaign group that is fighting corruption in real estate development on the coast. But the building boom shows no sign of slowing despite the lack of water. The J�car water authority, which supplies Valencia's 4.5m residents, estimates 1m new homes will be built in Valencia over the next decade. In addition, it says town councils have approved the construction of 67 new, water-needy golf courses in the region, bringing the total to 69.
Rafael Blasco, Valencia's regional housing minister, describes golf resorts as a �new kind of agriculture�. He wants the European Union to allocate farming aid to them and dismisses talk about development being overdone.
Emphasis added.
Well, among the items here (besides corruption) that attracted by attention was the amusing assertion of golf resorts as a "new kind of agriculture" and the idea of EU farming aid monies going to such.
I find that a delightfully stupid idea, delicious really. Delicious in its scope for corruption.
Cristina Narbona, Spain's environment minister, says the drought has put the spotlight on the country's farmers, who account for four-fifths of water consumption in Spain. Ms Narbona says fewer than 10 per cent of farmers use efficient irrigation methods. �The remaining 90 per cent still resort to flooding their fields, an incredibly wasteful practice that needs to be eradicated,� Ms Narbona says.
Ms Narbona has secured a 370m budget to fight the drought with desalination plants, more water recycling and the drilling of new wells in the worst hit regions. The risible price Spaniards pay for their water 30 times lower than the European average remains a taboo subject.
Earlier this year, Spain's agriculture ministry shot down a plan drafted by Ms Narbona's department that would have imposed punitive water rates on farmers who waste water.
Tourist resorts and golf courses, with their heavy water consumption, would also have had to pay 15 times more for their water than the average Spanish household.
Without cost incentives to reduce consumption, Ms Narbona can do little more than issue new appeals to save water.
Ah the taboo topic of water pricing. One that gets the Left all in a lather when it is in the context of emerging markets/developing world. The whole "water is a human right" blather. Senseless, mindless oppositionalism (why I have contempt in general for "progressive activism"), when the reality is that personal usage water is fairly trivial as compared to "productive."
Easy, price water. Nope. Not so easy. Emotive, a bit harder to pull off than the academic solution might suggest (proper pricing requiring infrastructural improvements that may be quite vast and expensive). However, absolutely necessary.
Even then, with declining input rates - i.e. less rain - and increasing reliance on non-renewable water resources (fossil ground waters), there is a real recipe for disaster. Now, Spain will have the resources (in theory) to address. Will the Southern Med basin be able to, and in the required time frames.
An idea I have been kicking around, by the way, is in regards to reforestation (a useful form of water retention as well as interesting for carbon sequestration) as a long term investment. Massive reforestation as say a 50 year time horizon placement. Problems, many problems, but as a private placement of capital, could be very interesting, and addresses the chronic problem of little namby pamby development projects - that is they're too fucking small and weak to make a difference.
Private capital mobilsation, with some helpful upfront development capital kickers to incent the initial projects.
Posted by The Lounsbury at 05:23 PM | Comments (0) | TrackBack
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.
Posted by The Lounsbury at 09:10 PM | Comments (0) | TrackBack
