Blumenkrieg Capital

Well, the Chinese Premier arrived in Kenya a few days ago and yesterday, a broad trade-deal was signed amid all the statist fanfare and diplomatic tinsel that attends such events. Journalists, in their characteristic wide-eyed naïveté, were not slow to herald the deal with the Asian ‘economic powerhouse’ as a welcome shift in policy. For a long time, it has been common belief that the Chinese have pursued a policy of mutually beneficial trade relations with respect to Africa, while consistently staying out of internal affairs. This was a notion that was reiterated by Yoweri Museveni at the ceremony at statehouse: unlike other countries, he said, which want to dictate how to run government, China was solely concerned with development and mutual engagement.   It obviously did not occur to him that perhaps the reason China would not bother with such dictation- even if they had the will- is that the Chinese communist Party is one of the most brutal and repressive regimes in th...

The United States was in focus last week. Not because of the sensational- albeit rather nonsensical- controversy surrounding Donald Sterling, but because of two important macroeconomic events. The first- the Fed’s monetary policy statement released Wednesday night- bore no surprises whatsoever. The second event was a string of labor market reports that were released at the open of the New York session Friday. Key among these was the Non-farm Payrolls report which showed that the U.S. economy added 288,000 jobs in April, beating expectations of about 210,000. Unemployment figures also outstripped expectations (6.3% against expectations of 6.6%). Within seconds of the release of these reports, the U.S. dollar rallied aggressively against other currencies, most notably the Euro and Yen. Although the dollar lost these gains in the course of the New York session (owing to the escalating situation in the Ukraine), many analysts expect the reports to buoy the dollar over the coming days....

Over the last year, the world of finance has been treated to a singular spectacle that is equal parts farcical and worrisome. The spectacle, involving no less an entity than the U.S. Federal Reserve, has occasioned concern among savvy investors the world over. And not without reason, because the implications of the scandal at hand could prove to be far more severe than anything the modern world has seen in decades. But before we get to the bare bones of the spectacle I speak about, we have to go back to its roots: the Cold War. During the Cold War period, West Germany held its Gold Reserves outside Germany over fear of a potential military conflict with the Eastern Bloc. The bulk of the gold- about 1500 metric tons- was held in the United States, with smaller amounts being deposited in France and Britain. Germany has continued to keep its Gold reserves in trust with foreign Central Banks; the Bundesbank- the German Central Bank- holds a paltry 31% of its gold reserves at its h...