US Obesity & Stupidity: Barr, Pompeo & Trump

♠ Posted by Emmanuel in , at 12/28/2020 02:49:00 PM

Who's the fattest of them all? Everyone else's well-being may be victims of their brainless girth.

[WARNING: In the spirit of Trump's disdain for political correctness, I am waiving it for this post, although the subjects here fully deserve the opprobrium they receive.] I do not need any encouragement to poke fun at American obesity since I've always considered it as part of US descent into, ah, fatheadedness. Prominent examples of US decline are its recent political class: Chicken Barr, Portly Pomepo and Plump Trump. These lard-assed eater-leaders exemplify current Americanness to the rest of the world--fat and obnoxiously loud despite having nothing good to say (or do). While busy wrecking the United States--and the rest of the world by sheer dint of America's influence and reach--the question is posed: How can the planet be saved from more malevolent Yankee lardasses?

This post was inspired by a Quora question asking who is the most obese among these biggies. I'm not entirely certain, but I'd say (1) Barr, (2) Pompeo, (3) Trump in terms of body mass index. No matter; all are comfortably obese. The more important question is the relation between obesity and stupidity as the title states: Trump and Pompeo have teamed up to destroy America's reputation abroad. Barr has done the same to the Department of Justice but lost Trump's favor anyway. That's some reward for longtime sycophancy.

Now, the evidence is not clear on whether low IQ leads to being fat or the other way around. Is it that fatsos like these cannot comprehend what it takes to maintain one's health, or that being fat has deleterious effects on cognitive functioning? That chicken-and-egg question remains unresolved. (In terms of sheer idiocy, Trump's idea that minimal exertion is the key to health literally takes the cake[s].) Still, one can probably make the intermediate argument that low IQ is an obesity risk based on existing research on the subject matter:

Although the present findings provide valuable information on the link between low IQ and obesity, it is important to understand that IQ is a nonmodifiable risk factor that is rarely assessed in the general population. Therefore, the development of obesity prevention programs focusing on intelligence is difficult to implement. Nevertheless, IQ may be regularly assessed in specific situations such as the follow‐up of children with developmental difficulties or the follow‐up of adults with psychiatric disorders. Our findings suggest that low IQ is an independent risk factor for obesity even after adjusting for several potential confounding factors. Thus, we believe that individuals with low cognitive abilities should be screened for obesity on a regular basis. Furthermore, the management of individuals with low IQ should be transdisciplinary, and should involve several health professionals (eg, dietitian, physiotherapist, and general practitioner) in order to evaluate their health behaviors (eg, diet and physical activity) that may lead to obesity.

They say that people choose the leaders they deserve. In the US case, you can at least vouch for its leaders exemplifying the, ah, width and breadth of its population. Physique-wise, and I would argue intellect-wise, these three are representative democracy weighing in fully on leadership attributes. 

Stopping Americans from electing obese people--who then put even more of their kind in leadership positions--is probably an overlooked way to avoid further American damage to the rest of the world. Given current trends, though, non-obese people are becoming an endangered species Stateside, so too bad for us all.

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The British Empire Died on 1 September 2020

♠ Posted by Emmanuel in at 12/14/2020 03:04:00 PM

The chief architect of British decline at "work".
 

What marks the end of Britain's dominance in world affairs? That question has always been tied to that on British identity in the post-WWII era. To be sure, there are some who would say the ascent of the United States relative to the United Kingdom's fall rendered that debate moot a long time ago. (And many now question whether the US remains hegemonic, anyway.) Regardless, there have been bits of evidence to suggest how Britain still plays an outsized role in global affairs even after its numerous former territories--most notably India--became independent. 

Prominent among these has been London's status as a global financial capital. Many have argued that, at least until recently, London vied with New York for this status. Brexit largely put paid to that argument--not so much that New York is outperforming London so much as London has slumped so far back of New York (even if NY is not appreciably moving ahead). 

For me, then, London's loss as a global financial capital reached its apotheosis a few months ago. On 1 September 2020, a single US-listed firm, Apple, was worth more than the entire 100 corporations making up the FTSE 100 stock index:

Apple has notched up another milestone by overtaking the combined market value of the entire FTSE 100 index of the UK’s biggest publicly listed companies.

The iPhone and iMac maker has had a stellar performance this year with its share price rising an astonishing 75%, and last month it became the first US company to reach a $2tn (£1.48tn) market value. It has since climbed even further, reaching a new record of $2.268tn (£1.69tn) in early US trading on Tuesday.

In contrast London’s blue-chip companies, from Shell to HSBC, have lost nearly a quarter of their combined value since the start of the year. On Tuesday the FTSE 100 was down by 1.7% to 5862, its lowest level since the middle of May. In total the index is valued at £1.5tn.

Despite COVID-19 inflicting more damage Stateside than the UK, the US benefits from having many more "winners" in the pandemic era: technology companies offering the tools people living and working from home rely on nowadays. By contrast, British companies are in old school industries that have been losers during the pandemic. Think of the likes in energy, financial services, or even worse still, tobacco:

But the [FTSE 100] index has also missed out on the technology boom seen in the US and elsewhere during the coronavirus pandemic. 

Businesses in tech and e-commerce, from Apple and Amazon to online retailers, have benefited from consumers turning to digital services for entertainment and shopping while stuck at home during lockdown. The FTSE 100 is light on technology businesses and heavily populated by companies badly affected by the pandemic in sectors including property, aviation, hospitality and bricks-and-mortar retail.

Neil Wilson, chief market analyst at Markets.com, said: “The FTSE 100 is a dinosaur, full of rather lumbering old-world stocks with precious little growth to offer. The FTSE 100 is a very good proxy for the global economy, which we know is on its knees. And if not exposed to the global economy (non-sterling earners), then they are fully exposed to the UK economy (eg Lloyds, RBS), which is doing worse than peers, we think.”

Years of British stock underperformance have dispelled the argument the UK is economically better off outside the European Union. Yet, the beating UK stocks have received post-Brexit vote has been such that people are beginning to look at them as promising dirt-cheap investments [1. 2]. The larger point remains: any "empire" worthy of the name would be able to command higher valuations befitting the regard others show it instead of being bargain basement buys. Insofar as UK plc has been deemed nearly worthless as evidenced by the discount placed on British companies, 1 September marked an important milestone showing just how far Blighty's standing has fallen in global league tables.  

The British Empire died on 1 September 2020, indeed.

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Trump's Losing War on ESG Investing

♠ Posted by Emmanuel in , at 12/06/2020 03:32:00 PM

Funds like this one from BlackRock's iShares now list ESG no-nos. Trumpists couldn't care less.

The Trump administration is essentially a throwback to a time when white men ruled the world, burned fossil fuels with wild abandon, and were unapologetic about America's dodgy history concerning racism. So, it was perhaps inevitable that one of its last few efforts on the way out the door was to throw a middle finger to the very idea of environmental, social and governance [ESG] investing. You see, the US government manages any number of funds, including those of government employees for retirement. 

The Department of Labor manages one of these, and under the guise of maximizing returns and not entertaining misguided leftist ideas about being politically correct while investing, it has ruled out ESG criteria:

In a new Department of Labor (DOL) rule issued on October 30, the DOL essentially prohibits the use of widely used environmental, social and governance (ESG) factors in selecting investments for employee retirement plans...

For 30 years, however, the US Department of Labor has been considering whether recommending these kinds of investments in employee retirement accounts - that is, those factors which look at other than financial objectives - might be problematic. Their concern was that by focusing on the ESG needs, a manager using ESG products was not focusing attention on the client's financial goals - which is the basic fiduciary requirement under DOL rules.

Alike with many of these parting shots from the Trump administration, however, the mad rush to get them done make them vulnerable to rollbacks when Joe Biden becomes president.

Unlike many DOL rules, which typically take at least 18 months and often years to be passed, the ESG rule was pushed through at "warp speed," commented Bryan McGannon of US SIF, a sustainable business policy group. But it is considered likely that litigation under the Administrative Procedures Act may reverse the rule or that an incoming Biden administration may well act to reverse the rule. The Biden administration has been predicted to be far more sympathetic to ESG issues and is expected by some to begin reversing controversial Trump administration policies such as this.

In the end, the large and growing interest from investors in ESG investments as well as the likely hostility of the incoming administration to the new rule make it unlikely that the rule will stand. Moreover, the current research and performance history demonstrate that it probably shouldn't.

I think the economic rationale of ESG will ultimately prove irresistible anyway. Arms, energy and tobacco are your archetypal sunset industries, and stock valuations do bear this assertion out. The days of--shall we call it antisocial investing?--are numbered.

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Trump's Expanding PRC Blacklist: CNOOC, SMIC

♠ Posted by Emmanuel in , at 12/01/2020 06:59:00 PM

If you think Trump's 2020 electoral defeat at the hands of Joe Biden have slowed his anti-China instincts, then you are sadly mistaken. Given that Biden has historically been sanguine about free trade, his policies towards China are expected to be more moderate than the orange China-basher. To preempt Biden, therefore, the Trump administration is speeding up plans to blacklist even more state-owned companies over their Communist Party links. 

Reuters reports that China's largest energy company, CNOOC, and its largest chipmaker, SMIC. In reaction, their share prices declined significantly:

The Department of Defense (DOD) is poised to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the total number to 35. A recent executive order issued by President Donald Trump would prevent U.S. investors from buying securities of the blacklisted firms starting late next year.

It was not immediately clear when the new additions to the blacklist would be published in the Federal Register, making the move official. But the list includes China Construction Technology Co Ltd and China International Engineering Consulting Corp, as well as Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to the document seen by Reuters and four sources.

SMIC said it continued “to engage constructively and openly with the U.S. government” and that its products and services were solely for civilian and commercial use. “The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses,” it said in a statement. Shares in SMIC closed 2.7% lower on Monday.

CNOOC’s listed unit CNOOC Ltd, whose shares fell by almost 14% on Monday, said in a statement that it had checked with its parent and no formal notice from relevant U.S. authorities had been received.

What is the practical implication of this move, though? As mentioned, Biden will probably roll things back to try and bring the temperature down in Sino-US relations. What's more, some US fund managers may have to divest their holdings in these large PRC SOEs:

This month, the White House published an executive order, first reported by Reuters, that sought to give teeth to the list by prohibiting U.S. investors from buying securities of the blacklisted companies from November 2021.

The directive is unlikely to deal the firms a serious blow, experts said, due to its limited scope, uncertainty about the stance of the Biden administration and already-scant holdings by U.S. funds.

Still, top U.S. asset managers Vanguard Group and BlackRock Inc each own about 1% of shares of CNOOC’s listed unit CNOOC Ltd, and together own roughly 4% of outstanding shares of SMIC, disclosures show.

Like Trump's other scorched earth measures, the intent is not only meant to irreparably harm relations such that Biden's team can't fix them but to also show action on anti-China rhetoric. Unfortunately, Trump remains a political force Stateside, and he will be able to point to actions like this in the future should he choose to run again or endorse allies or relatives running for office.

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Trump's Racism: Introducing African Travel Bonds

♠ Posted by Emmanuel in , at 11/23/2020 07:21:00 PM

In the final days of the horrid Trump administration, they are putting the final touches on his most blatantly isolationist and racist pipe dreams to put President-Elect Joe Biden in the worst position to possible to try and undo the damage. Just when you thought thing couldn't sink any lower in these categories, the State Department is mulling the requirement that travelers from--you guessed it--African countries put up bonds of up to $15,000 if they want to travel to the US that would be forfeited to Uncle Sam if they overstayed in America. From Reuters:

The outgoing administration of U.S. President Donald Trump on Monday issued a new temporary rule that could require tourist and business travelers from two dozen countries, most in Africa, to pay a bond of as much as $15,000 to visit the United States.

The U.S. State Department said the temporary final rule, which takes effect Dec. 24 and runs through June 24, targets countries whose nationals have higher rates of overstaying B-2 visas for tourists and B-1 visas for business travelers. The Trump administration said the six-month pilot program aims to test the feasibility of collecting such bonds and will serve as a diplomatic deterrence to overstaying the visas.

Depending on the average "overstay rate," consular officials could make them post bonds of up to $15,000--a huge sum for nationals of the countries being targeted:

The visa bond rule will allow U.S. consular officers to require tourist and business travelers from countries whose nationals had an “overstay rate” of 10% or higher in 2019 to pay a refundable bond of $5,000, $10,000 or $15,000.

Twenty-four countries meet that criteria, including 15 African countries. While those nations had higher rates of overstays, they sent relatively few travelers to the United States...

Countries whose tourist and business travelers could be subject to the bond requirement include those from Democratic Republic of Congo, Liberia, Sudan, Chad, Angola, Burundi, Djibouti and Eritrea. Other countries include Afghanistan, Bhutan, Iran, Syria, Laos and Yemen.

The draft text of this abomination is available online. 

Although I am sure the Biden administration would roll back any such implementation of this hideous policy, Trump and his minions realize that doing so will take some time. Meanwhile, the white supremacist faction of today's Republican Party--unfortunately large as it is nowadays--will cheer this move. It's a racist populist ploy that further threatens to harm freedom of travel in the COVID-19 era. Just be glad Trump will soon be out of the White House. 

When leaders of other countries make harebrained policies, their citizens suffer. When the US president does so, the whole world suffers. Exhibit A is four years of Trump. Thankfully, all bad things must come to an end. 

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Asia's Giant US-Free FTA, RCEP, is a Go

♠ Posted by Emmanuel in , at 11/15/2020 06:14:00 PM

Spot the missing country during this mother of all virtual meetings (read more below).
 

This just in: After being on the drawing board for eight years, the Regional Comprehensive Economic Partnership (RCEP) has been agreed to at the regional level.  Featuring 15 countries with a combined GDP of over $26 trillion and a third of humanity, its dimensions exceed all those that came before. Befitting the vast expanse of the "Asia-Pacific," its pan-regional free trade agreement was destined to be geographically expansive as well.

Fitting the times, the region's countries agreed to it during a meeting hosted by the Vietnamese in a virtual Hanoi. RCEP will include China, Japan and South Korea in East Asia; Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam in Southeast Asia; and Australia and New Zealand in Oceania. We are 15 all in all, a mix of developing and developed (Japan, South Korea, Australia and New Zealand specifically) countries. With the US spinning its wheels in the trade negotiation realm--Trump is more interested in leaving than negotiating them--the spearhead for RCEP is, unsurprisingly, China:

Amid questions over Washington’s engagement in Asia, RCEP may cement China’s position more firmly as an economic partner with Southeast Asia, Japan and Korea, putting the world’s second-biggest economy in a better position to shape the region’s trade rules. The United States is absent from both RCEP and the successor to the Obama-led Trans-Pacific Partnership (TPP), leaving the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.

By contrast, RCEP could help Beijing cut its dependence on overseas markets and technology, a shift accelerated by a deepening rift with Washington, said Iris Pang, ING chief economist for Greater China. RCEP groups the 10-member Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand. It aims in coming years to progressively lower tariffs across many areas.

It bears repeating that while news reports emphasize the US falling even further back in the regional FTA sweepstakes having spurned the Trans-Pacific Partnership (TPP), it was never a party to the RCEP negotiations. What's more, the current US "president" is too preoccupied with cooking up inane conspiracy theories about his recent election defeat that he's missed his third straight Association of Southeast Asian Nations (ASEAN) shindig. And considering all Trump the Plump had to do was ask his toadies to set up a virtual attendance this time. Such an exemplary [non-]work ethic:

President Donald Trump skipped summits with his Asian counterparts for the third year in a row on Saturday, even as rival China is set to expand its influence with a massive free trade deal in the region. National Security Adviser Robert O’Brien said Trump regretted he was unable to attend the online summit with the 10 members of the Association of Southeast Asian Nations, but stressed the importance of ties with the region.

Trump attended the ASEAN summit in 2017, but sent only representatives during the last two meetings. A special summit with ASEAN that he was supposed to host in Las Vegas in March was called off due to the pandemic.

Another notable non-RCEP participant (for now) was India. As I've noted elsewhere before, RCEP actually just consolidates free trade agreements ASEAN has with the three aforementioned East Asian nations as well as Australia/New Zealand (ANZ). In this sense, RCEP is actually missing a country, India, which ASEAN also has an FTA with. The Times of India identifies a number of sticking points for Indian negotiators that were not resolved to their linking, making it pull out of RCEP last year: unfavorable rules of origin, large and rising deficits with other negotiating parties, and inadequate protections for its service industries:

India pulled out of the China-backed trade agreement as negotiations failed to address its core concerns. These were threat of circumvention of rules of origin due to tariff differential, inclusion of fair agreement to address the issues of trade deficits and opening of services. 

The deal would have brought down import duties on 80% to 90% of the goods, along with easier service and investment rules. Some in Indian industry feared that reduced customs duty would result in a flood of imports, especially from China with which it has a massive trade deficit. India’s trade deficit with other RCEP countries were also rising.  

If I were uncharitable, I'd put it down to domestic protectionism. The current leadership's allusion to swadeshi (self-reliance) is unmistakable:

For India, it will be an opportunity to strengthen its domestic industries and move towards its dream of becoming self-reliant. A large number of sectors including dairy, agriculture, steel, plastics, copper, aluminium, machine tools, paper, automobiles, chemicals and others had expressed serious apprehensions on RCEP citing dominance of cheap foreign goods would dampen its businesses.

Oh well; India may still join at a later date if it believes it's losing out to the others due to trade diversion effects. Already, there's talk of the US rejoining the TPP's successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Maybe RCEP coming into effect will spur President-Elect Joe Biden--a joiner, not a leaver. 

India pulled out of the China-backed trade agreement as nego ..

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COVID-19 Victim: Privatizing NZ All-Blacks

♠ Posted by Emmanuel in at 11/06/2020 12:20:00 PM

Sold?! The NZ national rugby squad may be on the auction block.

Imagine Brazil's national football team the Seleção privatized. Or Germany's Mannschaft and Italy's Azzurri for that matter. The uproar would be deafening since these storied squads are parts of their national identities instead of being mere corporate identities. There is a saying that everyone has their price, though, and something akin to that may be happening in the Southern hemisphere. Whereas Brazil [5x], Germany and Italy [4x each] represent the winningest nations in Football World Cup history, international sports aficionados should be well aware that the Rugby World Cup's winningest teams are South Africa's reigning champions the Springboks and New Zealand's All-Blacks at 3x apiece. The NZ squad is called such because they dress all in black, whereas their footballing compatriots are the All-Whites for obvious sartorial reasons. 

No matter: Just as the pandemic has laid waste to the financial well-being of one of the world's previously well-off petrostates in Kuwait, it is now besieging one of the most storied names in international sports--the NZ All-Blacks. Keeping some of the world's top rugby talent on one squad, training them and keeping them in peak condition is not exactly cheap. Simply put, there are not enough paid appearances nowadays during the pandemic to keep team operations afloat. Apparently, the operating costs are such that the Kiwis are thinking of a private equity buyout of the national rugby team:

The All Blacks rugby team is in talks with private equity investors as it struggles with the financial impact of the Covid-19 pandemic. New Zealand's national treasure has seen its cash reserves slashed by almost half due to lockdowns. New Zealand Rugby (NZR) said it is now looking at alternative sources of funding, such as private equity.

The move raises the prospect that the famed All Blacks name could be sold to the highest bidder. On Thursday, New Zealand Rugby chief executive Mark Robinson told the New Zealand Herald that it had burned through 47% of its NZ$86m ($56m; £44m) cash reserves during the pandemic.

A counterargument is raised though that the New Zealand squad is, if anything, under-commercialized and would benefit from being bought out by private equity to unleash the name's unrealized commercial potential:

The team has the most valuable brand in world rugby, according to British consultancy Brand Finance, which values it at £144m (NZ$278m). "The All Blacks have not been slow to embrace commercial opportunities," said Tom King at sportbusiness.com. "Their deal with kit suppliers was hailed as ground-breaking as was the 2012 shirt sponsorship with AIG which ends next year.

COVID-19 has made profaned so many things previously thought sacrosanct, such as freedom of movement and what else have you. "NZ All-Blacks plc" may just be the next big thing to emerge. It makes you angry enough to do the Maori war dance Haka, but that too would be sold to the highest bidder in the purchase price.

 

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Adios Trumpian Shithole: Surrendering US Citizenship

♠ Posted by Emmanuel in , at 9/14/2020 04:03:00 PM
Well, OK, Trump is not really the main cause of expatriate Americans wanting to surrender their citizenship...but it likely doesn't help matters. 2020 is shaping up to be a banner year for citizenship renunciations, and the proximate cause is the ridiculous amount of paperwork expats must fill to be in compliance with US financial regulations. Especially after 9/11, American authorities have kept a tighter leash on financial record-keeping worldwide. And, unfortunately, US citizens abroad have borne a disproportionate share of the pencil-pushing burden. So, it was only a matter of time that more wanted out of America for good:
A record number of Americans are renouncing their citizenship. In just the first half of this year, 5,315 Americans gave up their citizenship. That puts the country on track to see a record-breaking 10,000 people renounce U.S. citizenship in 2020. Until a decade ago, fewer than 1,000 Americans per year, on average, chose to renounce their citizenship... 
In surveys and testimonials, these people say they’re dropping their U.S. citizenship because American anti-money-laundering and counterterrorism regulations make it too onerous and expensive to keep... 
Still, all American expats — even those who’ve lived abroad for decades, earn no income in the U.S., and hold no U.S. assets — must submit an annual tax return to the Internal Revenue Service. Now, ever since Congress strengthened anti-money-laundering and counterterrorism financial reporting requirements, many have had to hire costly international accounting firms to do their taxes.

A firm offering tax services to expats cites its straw poll indicating almost a quarter of all US expats want to give up citizenship already. You'd think the firm is honest since it would be lost business to them:

89% of expats feel their concerns are less likely to be addressed than those of Americans living in the U  23% of expats are seriously considering renouncing their US citizenship or already have plans to renounce. 23% said they were interested in citizenship renunciation because they were disappointed with the direction of the US government—a 6% increase from last year. 

The world looks at America and sees an inequitable, racist and violent society with next to nothing going for it. Filled with COVID-19 and massive debt loads, what person in his or her right mind would want to be financially shackled to such a decrepit society? Why pay for the "privilege" of being American, in short? To invert Trump, before calling other countries "shitholes," see just how your people with knowledge about the wider world regard your country. 

Unsurprisingly, more and more expat Yanks want out... for good. 

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COVID-19 Victim: Kuwait is Broke

♠ Posted by Emmanuel in ,, at 8/19/2020 05:52:00 PM
Kuwait's energy-dependent economy is not coping well with the pandemic like its neighbors.
How the mighty have fallen together with the collapsing demand for hydrocarbons as tourism and travel have been grounded around the world due to the ongoing coronavirus pandemic. Kuwait is a famously rich--albeit geographically tiny--country whose invasion sparked the first Gulf War. Nevertheless, its geopolitical clout was such that then-US President George HW Bush gathered together American allies to summarily eject Saddam Hussein's invading forces.

Thirty years later, we see it confront perhaps a more invidious threat in the form of the spread of a pandemic. Kuwait's current plight reflects that of its neighbors--albeit in a more extreme way. You see, Kuwait is burning up its liquid reserves at a prodigious rate, so much so that it projects being unable to pay its civil servants after October. While it has a sterling credit rating (like most other Middle Eastern energy exporters, it must be said), its legislature's delays in authorizing further borrowing are causing it to unsustainably deplete its liquid reserves in the meantime:  
Kuwait has 2 billion dinars ($6.6 billion) worth of liquidity in its Treasury and not enough cash to cover state salaries beyond October, Finance Minister Barak Al-Sheetan warned parliament, as political wrangling again delayed efforts to return to international bond markets.

The government is withdrawing from its General Reserve Fund at a rate of 1.7 billion dinars a month, meaning liquidity will soon be depleted if oil prices don’t improve and if Kuwait can’t borrow from local and international markets, he said.

As energy-rich Gulf states see their finances hammered by the collapse in oil prices and the coronavirus pandemic, the remarks point to a dramatic reversal of fortunes for some of the world’s wealthiest nations. Managing the crisis has proven especially challenging for Kuwait, where all laws must be approved by lawmakers who accuse the government of mismanaging public money and are blocking legislation that would allow it to borrow abroad.
The General Reserve Fund is a separate pot of money from that which is invested by its sovereign wealth fund mostly in less liquid foreign assets. Overall, the Kuwait Investment Authority is the fourth-largest of its kind in the world. Yet, [GRF] funds can be used to pay for civil servants' salaries are dwindling. Note there is also a "good governance" complaint thrown in here as well as lawmakers point out that the country's leaders have not been [surprise!] exemplars of fiscal accountability and rectitude with regard to past petrodollar earnings. Imagine the Middle East being run by a jillion Jared Kushners and you wouldn't be far off.

The end result is that Kuwait, of all places, is facing a credit downgrade:
In March, Standard and Poors Global Ratings put Kuwait’s sovereign rating on negative watch, and Moody’s Investors Service followed. The IMF said that month that while Kuwait has large financial buffers and low debt, its “window of opportunity to tackle its challenges from the position of strength is narrowing.”

In June, Sheikh Sabah Al-Ahmed Al-Sabah, Kuwait’s ruler, issued a call to transform the economy to one less reliant on oil and urged rationalizing spending. More than 90% of the country’s revenue is generated from oil.
The reality is that Kuwait is an energy-reliant one-trick pony like its neighbors. Worse still, the bulk of its employment is in the public sector and predicated upon the fortunes of the aforementioned state-led energy exports. Even if it is able to cover its current fiscal shortfall by issuing debt, you have the feeling that the hydrocarbon age is nearing its end. What this future means for the fate of various authoritarian Middle Eastern regimes like Kuwait's is an interesting question.

Who knows? Perhaps Kuwait's fiscal reckoning--and its lawmakers' nascent questioning of the entire Middle Eastern petrostate model--foreshadow the region's political future
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Paris St-Germain v RB Leipzig = Qatar v Red Bull

♠ Posted by Emmanuel in , at 8/18/2020 05:48:00 PM

Battle of the bad guys? Many see it that way.

A few hours after I publish this post, two of the world's most reviled football clubs will meet in the first match of the Champions League semifinals in Lisbon, Portugal. (Normally, there would be home/away ties for these clubs in their respective stadiums, but the pandemic has forced them to play a single winner-takes-all match in relatively COVID-free Lisbon as a neutral site. Needless to say, the thousands of fans are also missing.)  This being the International Political Economy Zone, we have international politics in abundance with Paris Saint-Germain [PSG] being bankrolled by the Qatari government, and international economics too with RB Leipzig being bankrolled by drinks company Red Bull. 

To be sure, there is a good chance that it will be a good match to watch. Among other stars, PSG features Brazilian drama queen Neymar and the rather more likeable (to me, at least) French speedster Kylian Mbappe. Meanwhile, RB Leipzig features a bevy of up-and-coming young stars. For all that, though, the way these teams got here--and many say they shouldn't be here at all if fair play were observed--make them arguably the two most hated teams in world football. 

Let's begin with PSG. Although the pandemic has smashed the fortunes of Middle Eastern oil and gas-exporting nations--including PSG's benefactor Qatar--that came after it had already spent EUR1 billion-plus trying to win this biggest prize in the global game--the Champions League. Qatar likes to portray itself as a progressive absolute monarchy, but many would of course point out that is an oxymoron. Two of Qatar's most visible attempts to make its regime more palatable are the TV network Al Jazeera, which likes bashing other Middle Eastern nations for totalitarianism when, er, it is sponsored by one of its practitioners. So in more recent years, they came upon the gambit of purchasing a languishing Ligue 1 franchise, spending big loading it up with high-priced talent, and winning heaven knows how many of the France's league titles amid less competitive opposition:

PSG have spent over a billion Euros since their takeover, and have become virtually unassailable in their domestic league, winning seven of the last eight Ligue 1 titles. The malice directed at them, however, isn’t due to the amount of money they spend. It’s the source of the money, and what it represents. The club is fully backed by a Gulf state that is frequently criticized for denouncing basic human rights. PSG stands accused of being a tool of political “soft power,” whereby Qatar aims to increase its appeal and standing in the western world via its megastar-laden soccer team...

For many, however, PSG’s combination of problematic funding, a lack of history and a healthy dose of hubris form a particularly unedifying combination.  Thus, Tuesday’s Champions League semifinal is the Battle of the Maligned Monoliths. It is not Paris against Leipzig; it is Political Influence against Rampant Commercialism.

Admittedly, I dislike PSG more than RB Leipzig. Making a mockery of UEFA's financial fair play rules, it has bought its way thus far into the semis. They have more connections to Qatar than to their city or country, and seems smugly content beating up other French teams unable to muster the same kind of financial muscle. Elsewhere in the commentary above, while the Premier League's Manchester City (Abu Dhabi) and Chelsea (Russian oligarch Roman Abramovich) have equally problematic ownership, these are clubs with substantial histories that could stand apart from their current owners. The same cannot be said for PSG.

How about RB Leipzig, then? Its story is well-known: Red Bull bought a fifth-tier club, renamed it RB Leipzig (RB stands for RassenBallsport, although it's really a not-so-subtle abbreviation of Red Bull), and has since blossomed into one of the Bundesliga's top clubs. Germans are purists about their football clubs, believing that they should be substantially run by the fans who provide inputs on their operations. RB Leipzig upends all that, inviting much ire in their home country since it makes no pretensions about being anything more than a marketing ploy for Red Bull:

The Independent has meanwhile been told of one early meeting at RB Leipzig, when Red Bull owner Dietrich Mateschitz was asked about the project. “Oh, it is a commercial enterprise,” Mateschitz said. “I won’t sell one extra can through this, but we will create a lot of brand awareness.” A phrase as corporate as “brand awareness” isn’t what most of us got into football for. And while it’s true the purpose is not as consequential as soft power or sportswashing, it is questionable, and provokes a lot of debate about the direction of the game and its role.

That difference over what the game is supposed to be for fosters the central tension around RB Leipzig.

While figures like Mateschitz see it is a vehicle for commerce, German football culture sees it as about community representation, and much more than the match. It is a communal experience, where they have agency. This is a viewpoint that was most aggressively articulated by magazine 11Freunde this week, who announced they are refusing to cover Tuesday’s semi-final. “RB Leipzig isn’t a football club, but an imitation… it never intended on just playing football.”

Unlike PSG, though, RB Leipzig has rather more welcome attributes. For starters, its wage bill is nowhere as large as PSG's, and it has achieved success in one of Europe's more competitive leagues with many journeymen of little pedigree. Leipzig's manager is only 33 years old. It's also in the economically less-prosperous former East Germany, which earns it additional sympathy...albeit from non-Germans like me:

What’s more, they’ve managed it in quite a progressive way. Their entire team will cost less than half of Neymar’s fee, and just over a half of Kylian Mbappe’s. They are as refreshing a new face in the Champions League semi-finals as they are at the top of the Bundesliga.

If RB Leipzig were not controlled and owned by a domineering drinks giant selling quite unhealthy, sugar-laden beverages and were run by the fans instead, it would be considered as a good example of how to nurture a modern club. But it isn't run that way, and for some it makes all the difference. Me, I am not a German purist, so I am more lukewarm about it. PSG, though, is hard to cast as anything but a panto villain people describe it to be. Money usually talks in sport, but sometimes people get offended when some do not take any pains to downplay this fact. 

Anyway, here's hoping it's a good game. From the above, you won't be surprised this neutral is rooting for Red Bull (for the first time ever!)

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