18 April, 2014


Seems like almost every country in the world is now selling its debt (or is it buying debt? What's the "euro-debt markets", anyways?.) Apparently Turkey just raised 1 billion this way.

Why can’t countries in Africa, which supply all the metal that make up today’s Apple computers, or places like Nepal, which supplies the world with semi-precious jewels and pashmina scarves, do the same, and print a few billion dollars a year for free?  

According to this article, there’s someone out there saying: you guys can issue debt and we’ll buy it. You guys can’t.

According to the same article quoted above: The euro debt market is so far open only to investment grade-rated, frequent issuers, says SocGen's Cherpion. Lowly rated or debut issuers, from Africa for instance, are unlikely to find takers.

Seems like these higher authorities, arrayed like a pantheon of Roman gods, doling out the cash are:
JPMorgan's EMBI Global or CEMBI
And SocGen’s Cherpion

Now who are these folks?

Cherpion, who sounds like a Harry Potter character (yes, that bearded guy in the underground who guards the gold and hands it out to his favorites) is “Managing Director, head of global bond syndicate at Societe Generale.”

Notice the word “syndicate”—usually found in association with “Criminal syndicates” and the like.

Now what are these bonds, anyways? Apparently its these papers that countries issue and from which money magically springs forth. That is reserved only for white people, because the rest of the world doesn’t get Cherpion’s approval to issue it. In countries like Nepal, people are forced to work as bonded laborers in the Gulf or Malaysia for 1/100th of the salary because they don’t have these elaborate methods of generating free cash for their government and people.

Now lets go on to JPMorgan’s EMBI Global or CEMBI.  According to Rimes.com:
J.P. Morgan’s Corporate Emerging Markets Bond Index (CEMBI) is a global, liquid corporate emerging markets benchmark that tracks U.S.-denominated corporate bonds issued by emerging markets entities. The corporate CEMBI is a liquid basket of emerging markets corporate issues with strict liquidity criteria for inclusion in order to provide replicability, tradability, robust pricing and data integrity.
  • CEMBI countries include: Asia (China, Hong Kong, India, Malaysia, Singapore, Taiwan), Europe (Kazakstan, Russia, Ukraine), Latin America (Brazil, Colombia, Jamaica, Mexico, Peru), Middle East (Israel) and Africa (Egypt)
  • CEMBI sectors include: Banks, Industrials, Oil, Retail, Telecom, Utilities, and Metals
Basically, JPMorgan CEMBI is another syndicate that is set up to decide which economic and business ally gets some of the 10 billion free dollar notes the USA prints every month. Note the inclusion of Israel and Egypt, but I don’t see any other Middle Eastern country. Note China and Malaysia—important as allies and business partners which continue to suck up the resources and exploit labor of neighbouring countries and which spit out everything from metal to wood in processed form that the USA then “buys” at super cheap rates. With its billion dollar notes, of course.

The world is clearly more unequal due to the existence of these syndicates and economic entities that continue to suck up vast amount of the world’s resources through opaque means and incentives for the benefit of the few. Capital by itself has become suspect—clearly the rich countries are just churning out this stuff (whether dollar or euro) with abandon, and the unsuspecting Third World continues to handover their coffee, sugar, chocolate, timber, precious metals, oil, and gems everything else in between for those pieces of paper. Remember the exchange that occurred between the Europeans and the Native Americans—tobacco and useless beads for an entire continent. Nothing much has changed, in many ways.

There has to be a  conscious rebalancing of global trade and labor relations in this century, that much is clear. What form that will take may herald the end of the most exploitative of economies, mainly that of Europe and America, for more balanced trade relations towards Asia, Africa, Eastern Europe, Latin and South America. It is clear some of it is already happening automatically—a country like the USA cannot keep printing trillions of dollars each year and not expecting that to have an inflationary impact on its economy. 

The American attempts to destabilize Ukraine may have the opposite consequences that they intended-suddenly the BRICS have become aware that the dollar may no longer be necessary as an intermediary currency. America may have been a “Safe Haven” in the 1940s—it may even be a safe haven as long as its opaque financial wizardry continue, but ultimately there’s going to be an accounting of its actual assets and liabilities. Psych-ops has worked for the past century in keeping the currency liquid. But what now? The rebalancing of the world’s economic inequalities may, ironically, have begun from a miscalculated attempts to beat down the Russians, by  the very economy that kept the economic status quo firmly in place for the last century.

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