Playing the Market, Kenyan Style

The Washington Post has an interesting piece on the current enthusiasm for the stock market in Kenya. Of particular interest is the discussion of how the development of the stock market required a reorientation in the way people think about investment. In the past, investment meant buying a cow or some land; now investment means buying a stock certificate. One has obvious value; the other has value that is somewhat less obvious to new participants.

The article fails to delve deeply into possible problems--how well regulated is the market? How much fraud? Seems like these are important questions that, in the context of a country with a known record of corruption, one might want to think about prior to purchasing stocks (at least in the secondary market).

Isn't it Ironic...

Is Mugabe practicing irony, or is this for real?

Zimbabwe Update

Inflation hits 7,638%

China's Growing Presence in Africa

The New York Times had an interesting article on China's growing economic involvement in sub-Saharan Africa. The piece is somewhat successful in portraying the differing perspectives on China's investment and exports--some see it as imperialism with a Chinese rather than western face; others see it as an important alternative to the west that will promote economic development.

“There is no doubt China has been good for Zambia,” said Felix Mutati, Zambia’s minister of finance. “Why should we have a bad attitude toward the Chinese when they are doing all the right things? They are bringing investment, world-class technology, jobs, value addition. What more can you ask for?”

“Who is winning? The Chinese are, for sure,” said Michael Sata, a Zambian opposition politician who campaigned in last year’s presidential election on an anti-China platform. “Their interest is exploiting us, just like everyone who came before,” he said. “They have simply come to take the place of the West as the new colonizers of Africa.”

Dubai Seeks to Monopolize Gambling

Last time they tried to take over our ports. This time they target our casinos. In addition, "Dubai World this month signed an agreement for control of the Barneys New York department store. A division of Dubai World spent $100 million this year to buy the QE2, the majestic ocean liner that has carried millions of people across the Atlantic during its 40-year history."

Oh, and by the way, this is a sovereign wealth fund.

Sovereign Wealth Funds

The Times has an interesting article on emerging Bush administration efforts to encourage global codes of conduct to govern the activities of so-called sovereign wealth funds. These funds, which are government controlled funds, are estimated to control about $2.5 trillion in assets. They purchase a range of fixed assets, including real estate and companies--thus transforming financial and somewhat liquid assets into fixed investments. As many of the funds come from holdings of U.S. treasury notes, these transactions also reduce foreign holdings of U.S. government debt.

Apparently, some administration officials worry that these government-controlled investment funds are insufficiently transparent given the size of the assets they control. Hence, they are pressuring the IMF and World Bank to develop codes of conduct to encourage greater transparency in the funds' investment decisions.

Your Move Now, Jean-Claude

Now that the Ben cut the discount rate by a half point (after adding liquidity to keep the federal funds rate from rising), the European Central Bank must decide whether it wants to keep on course to raise its rate. "The bank's president, Jean-Claude Trichet, hinted earlier this month that he would lift interest rates again to cool inflation from an expanding economy, a stance he appeared to reaffirm earlier this week by declaring that the period of recent financial market turmoil was largely over."

Monetary interdependence could make this interesting, not least because rising rates in Euroland and falling rates in the U.S. may push the euro up against the dollar, thereby sparking more pressure from Sarkozy...

Claiming

Technorati Profile

Take a Pill

Valium, that is. "Taking aim at opponents who say he is assuming too much power, Chávez said, "I recommend they take a pill, what do they call it, a Valium."

The remark came as Chavez announced his intention to alter the Venezuelan constitution to remove term limits.

His other proposals include reducing the working day to six hours, easing restrictions on the government's ability to nationalize industries, and reasserting government control over the Venezuelan central bank

In other news about autocrats' economic policies, Mugabe's Zimbabwe draws ever closer to chaos. "Official inflation is given as 4,500 percent, the highest in the world, but independent estimates put it closer to 9,000 percent." The price controls that Mugabe imposed have emptied shops of goods as people find it unprofitable to produce anything at the price the government deems reasonable.

Not that Mugabe is unconcerned about the crisis: "I would like to invite our true and genuine friends to join hands with us in investing in the abundant natural resources of this country," Mugabe said at a ceremony to mark Defence Forces Day. Apparently not appreciating the irony, he noted that "The security and safety of their investments is guaranteed by the professionalism and loyalty of our defence forces."

Vacation

I'm heading north for a week in Fletcher, Vermont to escape this unbearable heat (forecast of 105 tomorrow). There is no internet access where I will be staying, so no posts until the middle of next week.