Oil prices fell overnight as the debacle of the Russian Oil Price Cap scheme continues in Europe.

The biggest news is that the EU ambassadors are considering setting the Russian oil price cap at between $65 and $70 (which is around the level Russian crude currently trades at).

“A $65-$70 price cap on Russian oil would not mean that much considering the discount Urals is currently selling at,” said Ole Hansen, head of commodities strategy at Saxo Bank.

“The market is struggling to make its mind up given the multiple uncertainties regarding supply and demand.”

Vitol CEO Russell Hardy said “I’m only imagining this, but it’s going to be a number that looks like $60,” adding that the cap will be set at a point where it “causes the minimum amount of disruption” because the market is still facing a difficult supply scenario, particularly in Europe Western banks, insurance companies won’t want to participate unless there’s absolute clarity that the sale price is below the cap.

Amid a US-holiday-week-driven illiquid market, crude prices tumbled with WTI falling back to a $78 handle (holding around the pre-OPEC-production-hike rumor plunge)…

Ironically, as Bloomberg’s Javier Blas reports, “Just days before the US and Europe impose fresh sanctions on Russian energy – supposedly the strongest thus far – Moscow has lifted its oil output to the highest level since its invasion of Ukraine.” It seems European buyers are desperate to fund Putin’s war before the sanctions hit.

Russia has already made it clear it will not take this lying down saying multiple times that it would not sell oil to countries with a price cap in place.

“In my opinion, this is utterly absurd. And this is an interference in the market mechanisms of such an important industry as oil,” said Deputy PM Alexander Novak, who represented Russia at OPEC+.

“Companies that impose a price cap will not be among the recipients of Russian oil,” a Kremlin spokesman said on Friday, adding “We simply will not cooperate with them on non-market principles.” 

Former US Treasury Secretary Steve Mnuchin panned the proposal to cap prices as “not only not feasible, I think it’s the most ridiculous idea I’ve ever heard.”

The chances of a G7 price cap on Russian oil being remotely effective are perhaps best summed up by a recent tweet from a Bloomberg energy and commodities columnist:  

“My friends and I have agreed to impose a price cap on our local pub’s beer. Mind we actually do not plan to drink any beer there. The pub’s owner says he won’t sell beer to anyone observing the cap, so other patrons, who drink a lot there, say they aren’t joining the cap. Success.”

What is of course the most ironic thing about this oil price cap is the simple fact that once again politicians can only think linearly and one-step ahead. In their efforts to punish Russia and make this scheme as bearish as possible for oil prices, they will inevitably drive the price dramatically higher as Russia pulls its exports from any nations that agree with the price cap (as they have explicitly warned).

Authored by Patrice Douglas via RealClearEnergy.org,

Our nation’s Strategic Petroleum Reserve (SPR) is running dangerously low. New statistics released indicate our national emergency oil stockpile, which is intended to protect the United States from unexpected and severe supply disruptions, has hit another historic low. It’s a dangerous point for the United States, and even worse, it’s self-inflicted. With these facts in mind, new reports indicate the Biden administration plans to sell oil from the Strategic Petroleum Reserve in an attempt to assuage fuel prices, which was on the forefront of the mind of voters in last week’s midterm elections.

According to new data released from the Energy Information Administration, our oil reserves stockpile is down to just 396 million barrels. The sharp drop, now down to its lowest level since April 1984, isn’t due to natural disasters, trade embargoes, or acts of God, but instead due to politics.

Congress established the SPR following OPEC’s 1973 decision to halt oil trading with the United States. This situation illustrated the vulnerability of being overly reliant on foreign producers to supply our energy needs. As a result, President Ford signed the Energy Policy and Conservation Act, which permitted the federal government to hold up to 1 billion barrels and disperse as necessary in cases of “severe energy supply disruptions.” 

President Biden has been using the SPR, which historically has been used in the wake of natural disasters like Hurricane Katrina or in times of war, as his personal political tool. Knowing high oil and gasoline prices may be a political liability to his party in the November midterms, President Biden has been withdrawing from the SPR to keep prices artificially low. Since being inaugurated in January 2021, President Biden has drained 230 million barrels of oil. That is the steepest drop in reserves by any president in U.S. history. 

Even needing to tap the SPR is an acknowledgment of the president’s hostile oil policies and how they have contributed to the imbalance between supply and demand. This imbalance has caused volatility in the oil markets, resulting in record-high gasoline prices over the summer. 

This concerning reality could have been avoided if President Biden had prioritized American energy production, specifically of crude oil and natural gas. Instead, his administration has championed harmful oil and gas policies that have handcuffed the energy sector. He canceled the Keystone XL pipeline, halted new drilling on federal lands, implemented regulatory hurdles, and raised taxes on energy companies. 

Moving forward, if the SPR is too depleted, we must have viable options to effectively respond to natural disasters and times of war. Unleashing American energy production, not draining our own emergency supply, is the lasting solution to stabilizing prices at the pump and protecting national security. Still, oil production is far short of where it was prior to the pandemic. In 2019, the U.S. Energy Information Administration calculated that we produced roughly 12.3 million barrels per day, but in 2021, we produced roughly a million fewer barrels than that period. 

Despite the ongoing energy crisis, and with gas prices beginning to creep back up to an average of $4 per gallon, this president is unwilling to encourage more oil from U.S. producers. The White House and Department of Energy signaled all options are on the table to stabilize prices and now they’re pivoting back to tapping the SPR again. In mid-October, the Biden administration announced it will withdraw another 15 million barrels over the next few weeks to lower prices before the midterm elections.

Now, nearly 50 years after an OPEC decision spurred the creation of the SPR, the U.S. is once again facing the consequences of allowing our energy supply to be reliant on the OPEC cartel. In October, OPEC+ announced their intention to slash oil production by 2 million barrels of oil per day. This massive cut will have sharp consequences for Americans – pushing high energy costs even higher. President Biden is running out of ineffective solutions now that he has depleted the SPR to a dangerous low. Instead of utilizing our robust resources at home, President Biden is looking abroad, and even to hostile nations, for answers. In fact, recent reports have revealed that the White House is in talks with Venezuela. 

High gas prices are a real national concern, and steps must be taken to lower energy costs for Americans. But playing politics with a national security asset is not the way to address the problem.

We need a real long-term strategy to keep both energy prices affordable and our country’s oil reserves fully stocked. We can accomplish this through building more pipelines, reducing regulatory burdens, reforming our permitting laws, and supporting energy producers. 

On Wednesday, unrest broke out at Foxconn’s massive iPhone factory in Zhengzhou, central China, reported Bloomberg. Videos on social media showed hundreds of workers, if not more, clashing with security personnel after a month of strict Covid restrictions. 

Manufacturer Foxconn confirmed the outbreak of “violence” and said it would work with local authorities to quell further violence. It released a statement that said workers were furious about pay and living conditions. 

“Regarding any violence, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” the world’s largest producer of iPhones wrote in a statement. 

As Covid infections increased across Zhengzhou and iPhone factory, Foxconn adopted a “closed loop” system for employees in October. Workers were forced to live on campus and were prohibited from physical contact with the outside world – including family members.

Then by late October, strict Covid restrictions for workers sparked minor unrest at the facilities of about 200,000 workers — all were banned from eating in public and forced to eat meals back at their dorms. 

By early November, while Beijing ramped up its zero Covid policy by locking down the surrounding metro area — workers began to flee the factory. 

Now in videos posted on Weibo and Twitter that AFP and Reuters have verified, all hell appears to have broken out as hundreds of workers clash with security guards and people in hazmat suits. 

Violent #protests erupt at #Apple‘s Main #iPhone Plant ( #Foxconn ) in #China ……Staff clash with security as tensions boil over in #Zhengzhou pic.twitter.com/xUjvhSz5sX

— Smriti Sharma (@SmritiSharma_) November 23, 2022

At #Foxconn, #Zhengzhou City, #CCPChina, newly recruited workers break out of the #iPhone city after they found they have to live and work together with veterans who might have #Covid. The terms of their contracts were not the same as they were promised, social media post says. pic.twitter.com/QTtBpLpVUD

— Jennifer Zeng 曾錚 (@jenniferzeng97) November 23, 2022

China: Workers inside Foxconn iPhone plant protest. Earlier, the workers were locked inside the plant as part of COVID measures. pic.twitter.com/35T5l6iVmi

— Annu Kaushik (@AnnuKaushik253) November 23, 2022 Annu Kaushik (@AnnuKaushik253) November 23, 2022

A worker who resisted is said to be surrounded by security guards at the Foxconn plant in Zhengzhou (China’s iPhone factory).#TheGreatTranslationMovement pic.twitter.com/lBbRuJQEoS

— The Great Translation Movement 大翻译运动官方推号 (@TGTM_Official) November 23, 2022

According to Reuters, delayed bonus payments triggered Wednesday’s protest. Workers were heard chanting, “Give us our pay!”

China: Protests break out at Foxconn’s largest iPhone factory in Zhengzhou over tight Covid restrictions

Live Updates: https://t.co/9F4fILNLBT pic.twitter.com/R4q9ga0kqF

— Economic Times (@EconomicTimes) November 23, 2022

Escalating unrest at the factory added new uncertainties for iPhone production. Weeks ago, Apple said it had reduced iPhone 14 production because of the Covid restrictions at the plant. The latest round of unrest could dramatically impact output. 

A source told Reuters that Foxconn would be unable to achieve production targets. They said much of the unrest is centered around recruits hired to replace a gap in the workforce. 

“Originally, we were trying to see if the new recruits could go online by the end of November. But with the unrest, it’s certain that we can’t resume normal production by the month-end.”

Wednesday’s protest underscores how President Xi Jinping’s zero Covid policy that requires factories like the iPhone one in Zhengzhou to operate as “closed loops” can backfire. 

“It’s really a mess,” Barry Naughton, a professor at the University of California San Diego who specializes in Chinese economics, told Bloomberg. “They’ve created a situation where the local decision-makers are under intolerable pressure,” he said. 

Besides backfiring zero Covid policies, mounting trade conflicts and geopolitical tensions have forced Apple to review its global supply chain, primarily centered in China. Some iPhone 14 production has been shifted to India as Apple begins to diversify away from China.

Authored by Alexander Zhang via The Epoch Times,

The UK economy will contract more than any other G-7 nation next year, according to the latest forecasts from the Organisation for Economic Cooperation and Development (OECD).

The OECD expects the UK economy to shrink by 0.4 percent in 2023 and grow by just 0.2 percent in 2024.

Germany is the only other G-7 country set to see a contraction in GDP next year, with a 0.3 percent drop, according to the report.

Italy will see only paltry growth of 0.2 percent, while the United States will eke out 0.5 percent expansion, with GDP set to rise by 0.6 percent in France, 1 percent in Canada, and 1.8 percent in Japan.

The UK is also the third-worst performing nation of all the G-20 countries worldwide, with only Russia and Sweden seeing a bigger decline in GDP, at 5.6 percent and 0.6 percent.

‘Untargeted’ Energy Support

The OECD blamed the predicted downturn partly on the UK government’s energy support scheme, which caps average household energy bills at around £2,500 ($2,960) until April.

Under the energy price guarantee introduced by then-Prime Minister Liz Truss, the cap—limiting the price companies can charge customers per unit of energy they use—was to have lasted for two years from Oct. 1.

But after Jeremy Hunt replaced Kwasi Kwarteng as chancellor of the Exchequer, he announced that it would end at its current level after six months, after which more targeted help would be provided to the most vulnerable.

In his autumn budget, unveiled on Nov. 17, he announced that the energy price guarantee will continue for a further 12 months from April, but will rise from the current £2,500 to £3,000 ($3,560) per year for the average household.

The OECD report said the support package will push up inflation, forcing policymakers to raise interest rates further as they try to rein in price and wage rises.

It said: “The untargeted Energy Price Guarantee announced in September 2022 by the government will increase pressure on already high inflation in the short term, requiring monetary policy to tighten more and raising debt service costs.

“Better targeting of measures to cushion the impact of high energy prices would lower the budgetary cost, better-preserve incentives to save energy, and reduce the pressure on demand at a time of high inflation.”

A woman selects fruits at a supermarket in London, on Nov. 17, 2021. (Frank Augstein, File/AP Photo)

Risks ‘Considerable’

The OECD said UK inflation—which hit a 41-year high of 11.1 percent in October—will likely peak at the end of this year and remain above 9 percent into early 2023, before slowing to 4.5 percent by next year-end and to 2.7 percent by the end of 2024.

The report sees UK interest rates rising further from 3 percent currently to 4.5 percent by April 2023, while unemployment will lift from 3.6 to 5 percent by the end of 2024.

On Britain’s outlook, the OECD cautioned: “Risks to the outlook are considerable and tilted towards the downside. Higher-than-expected goods and energy prices could weigh on consumption and further depress growth.

“A prolonged period of acute labour shortages could force firms into a more permanent reduction in their operating capacity or push up wage inflation further.”

But it said households may choose to return to the jobs market to help boost stretched finances.

“While households may seek to boost their real income by striking for stronger wage increases, they may also increase their labour supply either by returning from inactivity or by increasing working hours, which would be an upside risk,” the report stated.

‘Tory Failures’

When asked for Prime Minister Rishi Sunak’s response to the OECD, his official spokesman said, “These are challenges that are affecting different countries at slightly different times.”

On the criticism over the energy support package, he added, “We’re taking a different approach post-April to the energy support, targeting it towards the most vulnerable.”

The main opposition Labour Party blamed the dismal outlook on the Conservative government’s economic management.

Shadow Exchequer Secretary to the Treasury Abena Oppong-Asare said it was a “direct result of 12 years of Tory failures on both our energy and our economic security.”

“They’ve failed to secure our economy and get it growing which has left us exposed to any external shocks,” she said.

Recession

The Office for Budget Responsibility (OBR) confirmed on Nov. 17 that Britain was officially in recession and that the previous eight years’ growth would be wiped out.

The OBR, in its assessment of the UK economy, said: “Rising prices erode real wages and reduce living standards by seven percent in total over the two financial years to 2023–24 (wiping out the previous eight years’ growth), despite over £100 billion of additional government support.

“The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of two percent.”

The OBR also predicted unemployment would rise to 4.9 percent in the third quarter of 2024.

The head of Twitter’s France office announced he’s leaving the company ahead of more potential layoffs at the recently-acquired social media platform.

Damien Viel, who led Twitter France for around seven years, announced in a Sunday tweet that he would be leaving.

“It’s over. Pride, honor and mission accomplished,” Viel tweeted, apparently unaware of what “mission accomplished” means. “Thank you all for these 7 incredible years.”

C’est fini 🫡 Fierté, honneur et mission accomplie. Au revoir #twitterfrance 🇫🇷. Quelle aventure ! Quelle equipe ! Quelles rencontres ! Merci à tous pour ces 7 années incroyables et intenses💙. #workhardplayhard #OCaptainMyCaptain #LoveWhereYouWorked

— damien viel (@damienviel) November 20, 2022

As Bloomberg notes;

A number of workers at the Paris office, which had fewer than 50 employees before billionaire Elon Musk took over last month, are focused on advertiser relationships.

Musk, who’s already slashed Twitter’s workforce in half in sweeping job cuts that included much of the company’s management, is considering additional layoffs to begin as soon as Monday. They’ll likely focus on the sales and partnerships side of the business, people familiar with the matter have said.

Viel’s departure follows mass layoffs of around 3,700 jobs, which was then followed by a company-wide email from new boss Elon Musk requiring employees to opt in to a “hardcore” work environment, or take a pay cut.

By Tsvetana Paraskova of OilPrice.com

Surging tanker rates are weighing on the crude trade two weeks ahead of the biggest uncertainty for physical oil flows this year—the EU embargo on Russian crude oil imports and the associated price cap on Russian oil.

On Monday, the earnings on the benchmark key crude oil trading route hit $100,000 per day, according to Bloomberg’s estimates. That’s the highest crude oil tanker rate since the beginning of 2020, just before Covid sapped global oil demand.

The much higher cost of shipping crude this year is the result of the longer voyages many tankers are now making because of the EU sanctions on Russian exports. Russia’s oil cargoes from the Baltic ports in Russia are now traveling months on a return trip to Asia – now Moscow’s key export market – instead of just a week from a Russian Baltic port to Rotterdam in the Netherlands 

Falling premiums on spot prices for various crudes, however, could offset some of the high shipping costs, traders told Bloomberg.

The surge in freight rates adds an additional layer of uncertainty for crude oil buyers, on top of the EU embargo and price cap set to enter into force on December 5. After that date, Russian oil will have to be sold at or below a certain price – yet to be announced – otherwise the cargo will not be able to use Western maritime transportation services, including financing and insurance.

Some analysts say that there aren’t enough non-Western tankers available to carry the current volumes of Russian oil to markets. Yet, other analysts note increased vessel-buying from unknown entities in recent weeks in preparation for what they believe is Russia’s copycatting the oil export tactics of Iran and Venezuela, which have been exporting their crude under the radar for years now after the U.S. sanctioned their oil exports in 2018 and 2019, respectively.   

Europe is facing a mounting diesel crisis as a strike at one of the largest refineries on the continent begins, reported Bloomberg. The combination of a labor action – depleted crude product stockpiles – and the EU preparing to choke off Russian supplies might be a toxic cocktail for the EU and could worsen the energy crisis. 

Dutch unions appear to have stopped the restart of production units at BP Plc’s refinery in Rotterdam after a technical issue brought fuel production to a standstill last week. The refinery processes 400,000 barrels of oil annually and is a top supplier of diesel to Northern Europe.

A spokesperson for one of the unions, CNV Vakmensen, told Bloomberg that workers wouldn’t restart production unless a pay dispute is resolved.

BP has indicated that it plans to restart the refinery early this week.  

“We will help resolve the problems until the facilities are ready to be restarted, and then we’ll stop, that’s our intention,” Jaap Bosma of the CNV union told Reuters on Monday.

European refinery outages are closely monitored after strikes in France led to a severe tightening in the continent’s diesel supplies. Supply woes come as the EU plans to cease Russian diesel imports. 

Last week, BP workers started a work-to-rule action but called it off following a technical issue at the facility that hindered production. The unions previously gave BP a Nov. 23 deadline to resolve pay disputes.

Labor actions affecting one of the largest refineries on the energy-stricken continent come as global diesel markets are incredibly tight. 

According to Wood Mackenzie Ltd, stockpiles of fuel in northwest Europe may slide to record lows.

The strike at one of Europe’s biggest refineries comes weeks after strikes at refineries in France left more than 60% of the country’s refining capacity offline while gas stations in and around Paris and in the northern part of the country began to run out of fuel.   

A delay in the BP Rotterdam refinery restart also comes as Europe is scrambling for diesel supply and stocking up on Russian diesel while it still can. Europe has hiked its diesel imports from Russia this month as the EU embargo on imports of Russian oil products starting on February 5 draws closer, oil flow analytics showed. 

As the EU embargo on imports of Russian diesel enters into force, “The competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the US, Middle East and India away from their traditional buyers,” the International Energy Agency (IEA) said in its Oil Market Report for November.

The disappearing supply leaves Europe vulnerable this winter as the continent’s refining capacity has been falling recently. There’s also a diesel crunch in the US. 

Via Remix News,

Czechia may produce much of its own food, but that has not stopped the country from seeing a dramatic increase in food prices. On top of the usual suspects such as rising energy prices, part of the problem for Czechs is that a substantial amount of that domestically produced food is exported abroad.

Food prices rose by more than a quarter in the Czech Republic in October. This was not only due to soaring energy prices but also partly because Czech stores copy prices in Germany, which has also seen an explosive growth in food prices this year.

The data shows just how bad food inflation in Czechia has become. The country experienced the largest percentage rise in sugar prices in Europe; the second-largest in vegetable oils; and the third-largest price increase in butter, milk, and bread.

Part of the problem is that Czech producers continued to export many of these commodities abroad, creating a shortage at home and keeping prices high, according to Czech news outlet Seznamz Pravy. The situation the country finds itself in reveals some of the downsides of free trade and globalization, in which companies and producers can often profit more by selling key products abroad rather than selling domestically.

In October, Eurostat data showed domestic food prices rose by 26.7 percent, the seventh-fastest rate in Europe after Hungary, Slovakia, and Bulgaria. At the same time, Czechia has food in abundance from its own production, or at least enough to cover most of its domestic needs.

The increase in the price of sugar by 100 percent, and butter, flour, and vegetable oils by more than 50 percent, is hard to compare in Europe. Inflation is mainly kept below a tolerable level by imported goods, such as fish, vegetables, fruit, and chocolate, where price growth is below the 10 percent mark compared to last year.

Oldřich Reinbergr, the former director of the largest sugar company in Czechia, Tereos TTD, explained the increase in the price of sugar, which occurred at the beginning of October in all supermarkets. He said that sugar factories’ old contracts for energy have expired, and they now have to buy the energy to produce sugar at a higher price.

“Farmers are facing the same problem,” he said in an interview with the Seznam Zprávy news outlet.

Yet there is a simpler explanation.

On Oct. 4, all supermarkets in Germany raised the price of sugar; instead of 80 cents per kilogram, they suddenly asked for €1.30. Czech retailers simply copied the price of their neighbors.

For domestic customers, this has the disadvantage that they pay the same for sugar as rich Germans.

That was not the norm for most foods until now because according to Eurostat, Czechs paid less than 90 percent of the European average for food last year. Because this year’s inflation hit Czechia more strongly in terms of food prices, local prices reached 96 percent of the EU average. The situation can be even worse for food produced in the Czech Republic.

Detailed foreign trade statistics from the Czech Statistical Office show that during the year, local producers took advantage of bottlenecks in the supply of certain foodstuffs, especially in the south of Europe, and began to export more. For example, temporary shortages in neighboring countries allowed them to raise export prices for wheat and sunflower oil by 40 percent to 50 percent. Logically, they demanded the same price from domestic customers. In other cases, for example in the case of sugar and eggs, they increased export quotas and thus limited what was offered on the Czech market.

Less than a week following the errant Ukrainian missile fiasco which killed two people just inside the Polish border, but which was initially blamed on Russia, Poland has confirmed it will host a US-made Patriot air defense system on the Ukrainian border.

Bloomberg reported on Monday, “Germany will send Patriot missiles and fighter jets to Poland as part of an air-defense deal following a strike that raised fears of a significant escalation between NATO allies and Russia.”

German Defense Minister Christine Lambrecht said in relation to the deal, “Poland is our friend, ally and stands out as a neighbor of Ukraine.”

It comes as a bit of a surprise given tensions are high between Warsaw and Berlin after the former recently requested $1.3 trillion in war reparations from World War II. Polish officials have also of late heavily criticized German Chancellor Olaf Scholz for unwillingness to issue greater commitments in arming Ukraine. 

According to more via The Associated Press:

Polish Defense Minister Mariusz Blaszczak said he received Germany’s offer of additional Patriot missiles “with satisfaction” and will have them deployed close to the border with Ukraine.

He tweeted that during a phone conversation Monday with the German side, he will suggest the location for the Patriot missile reinforcement. Poland already has a deployment of U.S. Patriot missiles.

Ironically all of this comes in response to a deadly border incident which later was shown not to have involved Russia. Instead the Nov. 15 explosion was likely the result of a Ukrainian anti-air missile, despite the Ukrainian government insisting that Russian forces had “attacked” NATO member ally Poland. 

But rare tensions emerged between the Zelensky government and his Western backers after both NATO and the White House laid out a clear case that it was an accidental Ukrainian missile which landed on the Polish village of Przewodów, very close to the border with Ukraine. 

Authored by ‘Alexandria’ – a citizen of Zimbabwe – via BitcoinMagazine.com,

Bitcoin offers financial opportunities that have been explicitly taken from Africans in recent history…

HAVE THE MAJORITY OF AFRICANS EVER HAD ACCESS TO WEALTH LIKE BITCOIN?

If the question were to be posed, “Do many people in Africa have shares in Google, Amazon or Microsoft?” or “Have many people, from Africa, built wealth from any of the above listed public companies?” The answer, for the majority of individuals in Africa, would be a resounding “No.”

The main reason why a lot of Africans are not able to participate in the New York Stock Exchange (NYSE) is that one has to have banking interoperable with American systems. Within this American system, individuals operate and deal with either American brokers or American banks that are all part of an exclusive and impenetrable closed monetary network. These financial institutions and organs almost always require sizable amounts of money from foreigners for the minimum account opening deposits or balances.

In recent years another crippling stipulation posed to non-American applicants is that their country of citizenry must presently have good bilateral relations with the United States of America. If, like myself, you were born in a sanctioned country, you will suffer from unilateral illegal sanctions imposed by the U.S. Office of Foreign Assets Control (“OFAC”) which will block any access to the NYSE and many other Financial markets and services.

“I was born in 1930 the odds were probably 40/1 against me being born in the United States. I did win the ovarian lottery on that first day and on top of that I was male and if I’d been female my life would have been far different. So put that down as 50/50 shot and the out of the odds are 80/1 against being born a male in the United States and it was enormously important in my whole life.”

– Warren Buffett

Warren Buffett states that it was enormously important that he was born in the USA. This is true because if you were to Google search Warren Buffett’s annual report you would see that his returns, over the last 57 years, averaged 20% returns on compound interest alone. This resulted in Warren Buffett achieving a compounded 3,641,613% return on his investments.

Warren Buffet demonstrates the numerical importance of accessibility and the importance of participation in financial markets, especially markets as liquid as the NYSE. This, for the most part, excludes Africans.

ACCESSIBILITY TO WEALTH THROUGH CREDIT FOR AFRICANS AND AFRICAN AMERICANS

The Great Depression may have started because of a stock market crash, but what hit the general economy was a disruption of credit — every citizen was unable to borrow money, rendering them incapable of doing anything. Credit has the ability to build a modern economy, but lack of credit has the ability to destroy them, swiftly and absolutely.

Let’s start off with the subject of discrimination that has lead to part of the impoverishment of my people.

AFRICAN AMERICAN ACCESS TO CREDIT:

Redlining: The term came about when the government created color-coded maps that told banks where they could give out housing loans. Green sections were a go ahead and red sections populated by black people were deemed too risky. Redlining blocked off entire black neighborhoods from access to public and private investment. Banks and insurance companies used these maps for decades to deny black people access to loans and other services based purely on race. Home ownership is the primary driver of wealth but African Americans in their neighborhoods paid higher insurance premiums, higher interest rates and were denied mortgages more often.

“You can’t get a loan, you can’t own a home, you can’t start a business. Which means you can’t build wealth. You’re excluded from the American dream. Why is it so important to you to exclude an entire race of people from the American dream?”

–  Anthony Mackie in, “The Banker”

AFRICAN ACCESS TO CREDIT:

In 1930 the land apportionment in Rhodesia (now known as Zimbabwe) made it illegal for native Africans to purchase land outside of the established native lands. The native African population was above 1 million while that of the Europeans was less than 50,000. That put the European population at only 5% of the population yet they had more than 51% of the land while 95% of the population only got 28% of the dry rocky lands which were called “reserves.”

In 1980 Zimbabwe became independent, after a long war. They then began negotiations for a settlement at the end of the war which led to an agreement termed The Lancaster House Agreement. The Lancaster House Agreement stated that the new government could not draft legislation to compulsorily take land for the next 10 years. The only way landless black people could be resettled is if they were to buy from whites that wanted to sell. Only a few white farmers did sell. Up until the 1990s less than one million hectares of land was given up for resettlement only.

“Only 19% of the almost 3.5 million hectares of resettled land was considered prime or farmable. 75% of the best land was still about 4500 white farmers.”

– Human Rights Watch

In 2000 land reform programs began, white farmers were forcefully displaced from farms and were replaced by new black farmers. This was a massive deal internationally and historically. It had never been attempted before. Zimbabwe also challenged imperialistic powers by joining the fight for an apartheid-free in South Africa. Zimbabwe also joined the fight against imperialism in The Congo. So in 2001 the United States of America reacted by enacting two types of sanctions.

The first were Congestional Sanctions: ZIDERA , Zimbabwe Democracy and Economic Recovery Act Stops Zimbabweans from getting loans from multilateral lending institutions. Especially restructure and development loans.

The second are Executive Order sanctions. America has tried to call it targeted sanctions but when you look at the list of targeted sanctions you see a prohibition for any company in the world to do business with Zimbabwe. Otherwise those companies will be penalized or face jail sentences according to the International Economic Emergency Powers Act.

These were unilateral sanctions imposed by the United States of America. These unilateral sanctions were only possible because the United States currency dominates the world’s payment systems and a major portion of the world’s global business is done in America. So anybody that wants to do business often has to do it with America and has to cooperate with America. They need to have a bilateral agreement and relationship with America. Yet these bilateral relationships are the ones that America uses to enforce its sanctions or what we call the executive order Sanctions and these ensure that other countries across the world implement those sanctions or suffer secondary sanctions.

Executive order sanctions actually state that if a country or company assists the government of Zimbabwe with software, finance, logistics, machinery, equipment in trade that company can also face sanctions because the Americas are trying to make the sanctions effective. However, those who place international sanctions argue that our sanctions are actually self imposed sanctions due to the fact that even before the ZIDERA sanctions of 2001 — in 1999 Zimbabwe failed to pay its debts to the International Monetary Fund and the World Bank which meant that Zimbabwe was banned from access to credit from these two multilateral institutions. Then again there is a misconception that sanctions in Zimbabwe did not start in 2001 but rather actually started in 1980 when we got independence. At independence Zimbabwe was left with Rhodesia’s debt. Additionally Zimbabweans were not given reparations for the destruction made by the Rhodesians that cost the nation over a trillion dollars.

ANOTHER CASE OF SELF-IMPOSED SANCTIONS

In Zimbabwe the interest rate is 30% per month. In only four months the interest paid on the loan would be more than the principal. This is because Zimbabwe’s interest rates have to continuously be re-adjusted in order to compensate for the hyperinflation which peaked at a whopping 600%. In addition — Zimbabwe does not have a sovereign credit rating from the three international credit rating agencies. The government has not yet solicited a rating from the big three rating agencies. It is among the African countries that are yet to request an international sovereign rating. A favorable rating enables governments and companies to raise capital in the international financial market. Institutional investors in both the developed and developing world rely heavily on rating agencies in making investment decisions.

Being unrated makes it harder for the government to get funds for big debt projects or to get debt relief. It makes it harder for entrepreneurs who are struggling to grow their businesses due to lack of funding. Individuals who lack funding cannot get a mortgage and hence cannot own a home of their own. The end result is that under these circumstances one cannot build wealth.

CAN BITCOIN FINALLY GRANT AFRICANS FAIR AND FREE ACCESS TO WEALTH?

For centuries, Africans and African Americans have suffered from severe discriminatory policies in regards to access to credit through redlining and sanctions which both prohibited credit or increased the cost of credit. The innovation of Bitcoin was imperative for Africa and African Americans as it allowed anyone on earth access to it, and this time it includes Africans. It is not a surprise at all that Sub-Saharan Africa is leading in Bitcoin adoption.

This time Africans and African-Americans don’t have to worry about discrimination. Thanks largely to the innovation of DeFi on bitcoin, this is the long awaited-for innovation and crucial step in Bitcoin scalability and utility in Africa.