The last widespread financial crisis was a decade ago. To be sure, such cyclical crises are the built-in features of the prevailing world system. Be that as it may, the global status quo never really cared about devising a relatively more stable monetary order to help alleviate such recurrent crisis. Instead, every time there is a crisis, entrenched interests, with the help of their paid politicos, pumped money, (phony money that is) into the system as if there is no tomorrow. But tomorrow has now arrived! The excess liquidity pumped into the system (after the 2008 crisis) is going to bring havoc, perhaps with vengeance! In this regard, the newcomer to the system, China, went overboard in its enthusiasm and allowed the massive creation of credit, with a view to bring about stability and continuous growth to the global system!
The humongous credit China crafted to thwart off full-blown global depression is truly without precedence. The trillions that were thus created by the Chinese state, predictably, resulted in massive mal-investment, both locally and abroad. Domestically, the excess credit manifested itself as unnecessary infrastructure, including ghost cities, brand new idle factories, etc., etc. Internationally, it created plenty of cheap consumables and asset bubbles, real estate, etc. As a result, the world is much more in debt today at @ $250 trillion than in 2008 (@ $170 trillion). In 2018, the world is facing similar predicament, but in a highly viral form! Amongst the consequences of easy or unearned money, one can mention wasteful activities/enterprises that continue to abuse non-renewable natural resources. Socially, easy money promotes visible decadence. See Smith’s article next column and others on page 45. The banking system creates phony money and unfairly rewards those in close proximity to the money spigot, while the working stiff is left with only crumbs, dispensed by the moneyed as compensation to exerted labor power! By and large, it is not those who actually work, create, etc., that are rewarded by the current system, but rather, it is those who manipulate the system mostly via finance. In late modernity or crony capitalism, it is ‘financialization’ that runs the world!
In the world of unearned money/excessive credit, zombie companies tend to dominate economic activities (Minsky, et al). Sure enough, today, from listed corporations that live by hype, not earnings, (like Tesla etc.) to so-called national champions that leverage the state, to small-scale operators created and encouraged by the various political orders; all belong to the make believe world of ‘Alice in Wonderland”. It seems the world is now facing a generalized ‘Minsky Moment’. The systemically built parasitic economic order operating globally, doesn’t take the global sheeple (human mass) into serious consideration. Obviously, the sheeple is not allowed to have any real say about the workings of the economic system. Even some of the very destructive operations that have become detrimental to life, are not to be questioned by labor/sheeple; as doing so would negatively impact its precarious position. Blinded by greed, oligarchs and politicos are destroying the existing system from within. The so-called emerging markets are also repeating mistakes that have been widely and thoroughly known to be duds. Politicos in emerging markets allowed their cronies/oligarchs to over indulge in debt, mostly accrued from abroad. Both knew beforehand, when the time comes to honor the various commitments they will all be safely gone!
If truth be told, financial crisis are mere symptoms of underlying economic distortions/imbalances. Fractional Reserve Banking (FRB) is what allows banks to create money out of thin air. Without a doubt, FRB is the greatest non-violent crime of the millennium. When the global economy is based on this massive fraud, outcomes cannot be all the way satisfying, to say the least. It is such nonsense that allows the perpetuation of the stupid idea of infinite growth on a finite planet! The global economic system we are all forced to live under is irrational, pure and simple! Its logic is oriented towards the temporal and unsustainable. It gives priority to the frivolous while undermining the irreplaceable, like natural resources. Ecosystem destruction doesn’t bother the prevailing economic system. It is a very dangerous concoction systemically insulated from serious interrogation, enabled by human vice, namely greed. But there will be a price to pay, a dear one at that!
‘Bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze.’ Hyman Minsky.
“When Money Is ‘Free,’ Discipline Evaporates; When Discipline Evaporates, Decisions Are Disastrous.” Charles Hugh Smith. Good Day!
CRISIS IN THE MAKING
GMO corn test starts in Ethiopia
Genetically modified maize dubbed ‘Water Efficient Maize for Africa (WEMA)’ has been planted at Melkassa Agricultural Research Center on a trial basis and if successive trails bring about good results it will be commercialized. Currently the Maize has been planted on one confined hectare. The plants are being supervised by the National Biosafety Advisory Committee. There are plans for more trails over the next five years.
The GMO seed which came from, Monsanto an American agrochemical and agricultural biotechnology corporation will also be planted in Bako Agricultural Research Center located at Wellega.
WEMA introduced its first TELA brand white maize hybrids developed using biotechnology in South Africa in October 2016 to address insect pest challenges. Insect-protected maize has been grown widely in other areas of the world for about two decades. TELA brand hybrids are intended to be introduced (pending regulatory approvals) in other African countries within the next few years.
Getnet Worku, an expert at the National Biosafety Advisory Committee told Capital that the main aim of the trail is to how well the GMO maize resists drought and the insects.
“We need to upscale our maize production and the best way is to use a better seed which both resists water shortages and insects. If we get positive results on the trail we will carry out more over the next five years. If the seeds don’t have a problem with the environment and soil we will used them commercially.”
Drought TEGO hybrids have positively impacted the lives of approximately 250,000 sub-Saharan African farming families and more than 1.5 million people.
Conventional WEMA varieties already have been introduced onto the market in target countries, Tanzania, Uganda, Kenya, South Africa and Mozambique except.
In 2016, South Africa became the first project country to commercialize GMO maize for use by smallholder farmers. Mozambique hopes to release the WEMA maize as the country’s first genetically modified organism
Maize is one of Ethiopia’s most important cereals in terms of production; grown by about 8 million farmers. A primary challenge of the Ethiopian maize value chain is access to quality improved maize seeds, which substantially impacts the productivity of smallholder farmers. Also, once harvested, maize is extremely vulnerable to significant postharvest losses due to mold, vermin and theft. Over 17 million quintals of maize are produced annually from about a million hectares of land since 1985
Water Efficient Maize in Africa is led by the African Agricultural Technology Foundation (AATF), and funded by the Bill and Melinda Gates Foundation, the Howard G. Buffett Foundation and the United States Agency for International Development (USAID).
DBE replaces Ayka manager for poor performance
The Development Bank of Ethiopia replaced the company appointed General Manager of the Ayka Addis Group with an expat, saying this was a management intervention based on the company’s stagnant performance over the past four years.
“We hired the best expert in the area to replace the owner who had been leading the company since its establishment,” Haileyesus Bekele, the President of the Policy Bank told Capital. “It was not appropriate for that person to claim leadership just because they owned the company.”
The General Manager has been assigned to prepare a report for the Bank about the status of the company.
“We will take other action based on his report in order to transform the company,” Haileyesus added. “I believe he will bring the change we are aspiring for.”
The company which was founded in Alemgena Town invested USD 240 million when it was established in 2010.
The company has created 7,500 jobs and was invited to invest in Ethiopia by the late Prime Minister Meles Zenawi and Mulatu Tesome(PhD) who was an Ambassador to Turkey at the time.
The company acquired a loan of 2.3 billion birr from the bank and then, kept declaring an increasing rate of loss since 2013. The Bank had been trying to help the company in order to get some of its money back but eventually felt that things were not working out.
The policy bank has a good track record of recovering businesses that were abandoned. The Else Addis was abandoned by its Turkish Investors and later taken over by the creditor, DBE, which took only a few months to make millions of birr in profit.
Capital attempted to get a statement from the company but was unsuccessful.
