Just watched Bernanke's meeting with the Senate house banking committee and the picture he painted of the expected outcome if they continue politicking with the debt floor was extremely gloomy for the US economy. This is what's going to enable them pay off the current debt from what i could get from this.

Tomorrow is May 16 when US debt will hit the 14 trillion limit. Alas! The sideshow starts again... IMF MD is arrested on the same charge like the wikileaks founder - sexual assault...

I am smelling burnt ugali instead of freshly mint euros and dollars??!


http://www.telegraph.co....sault-on-hotel-maid.html

@hisah. Back to the question about inflation. They can't control inflation that's out of their control so the only options are price control or spending forex reserves (which they are reluctant to do). The price controls aren't helping anything much and giving people excuses to hoard (create artificial shortages). I think we pretty much see shortages for food items and now fuel, a large extent because people are taking advantage of the situation.

But you notice that CBK is attempting to manange money supply through OMO sales (a policy driven by the IMF under the ECF agreement). The reason. The number of new bank loan accounts in the first two months of 2011 were 50% of total 2010 loan accounts. Banks are lending aggressively to the private sector (more specifically personal/household credit) and CBK needs to arrest the growth in NDA.

Should we therefore be going the route of China ... raising our reserve ratio to say 5.00%, so that CBK can tighten liquidity (thus stop selling OMO bonds). This means they can provide liquidity support to public debt auctions, thus ensuring bond prices don't continue to drop. Don't we need a permanent solutions like raising the RR to 5.00%?

@Scubidu - What I meant by taking back the streets is to kickout all the honchos in gubberment (Mpigs and financiers). CBK can come up with the best system of tackling all the monetary issues, but if the gubberment is not interested, their policies are toast. Btw the Chinese reserve ratio mechanism is a better tool. Another thing I dislike is this IMF/World Bank advisories. Due to my dislike of this bogus institutions I cannot take their recommendations. It is no hidden secret that 3rd world countries have been properly messed up by IMF/World Bank policies as global bankers/corporates profiteer behind the scenes.

At the moment I don't see any policies no matter how good they are, working in the current Hague and 2012 election mood coming into play. Too much vested interests...

And that incredible 2011 loan book expansion is what made me put my call that banks stocks at NSE are about to go to the cleaners... It is not healthy at all and CBK needs to control this loan sharking or it will heat up inflation for another year (an election yr to boot). Throwing money at an economy to avoid a slow down (less profits or more losses) does not guarantee deflation arrest as clearly shown by the US and eurozone economies.

In the meantime I like what Iceland has done. Default,default and default and declare bankruptcy and tell the bankers to shove it and reboot the system. All over sudden their economy is now recovering while ignoring EU and IMF recommendations...

I know this doesn't answer the question as you may have wanted to hear, but I'm just fed up with the pretext I see in the international banking system which infects all nations.

@hisah. I understand your frustration, but I wonder if we have the kind of leadership your looking for. Personally not sure whom I'm voting for next, possibly Martha, but I'd like to side with the zeitgeist chap who says that politics solves nothing. I agree with u that CBK needs to be independent from Treasury and that the reserve ratio mechanism would be beneficial now given the improved lending and looming budget deficit. Also agree with u about IMF and have had arguments with them (the Kenyans working in the World Bank/IMF; they try to do good though)...

As for the lending by banks, you can see the improvement in listed banks Q1 lending & response from CBK March MPC tightening ... though I was just as surprised as you were. I'd been told about the banks going to estates in Nai to hawk products, but didn't think they'd gone that aggressive. Let me run you through some interesting numbers ...

Last year loan accounts to trade sector rose by 22,775 accounts to 285,763, but in the first two months of 2011, down 30,176 accounts (massive deleveraging for trade). Then there's financial services up 2,532 accounts in 2010, but already up 5,807 accounts by Feb 2011 (financial sector is leveraging up now). Personal/household were up 78,256 accounts in 2010, but by Feb 2011 they were up 75,308 accounts (consumers leveraging up; taking on more debt than they can handle?).

Off course we have the darling of most Kenyans. Despite rents (at least mine) rising in Jan, Hass tells us in their Q1 report the rental markets is depressed ... falling Q1 due to a slower rise in rents than than house prices, pushing the Nai yields from about 5.75% in Q4 of 2010 to 5.62% in Q1 of 2011. Is it that household incomes are not rising as fast, but the populous is taking on more debt? Are there parallels with the 2001 US in terms of whose leveraging up?

Real estate loans were up 435 accounts in 2010 to 14,495 accounts (2009; 14,060) but were up 1,039 accounts by Feb 2011. The stats tells us that credit to real estate rose from 53bn to 99bn in 2010 even though accounts rose by only 435 (avg loan per account went up from 3.8 million to 6.8 million in 2010), imagine how much credit may have gone to the 1,039 new accounts in 2011. psss. real estate loans are for the purchase of ready made properties.

Opposite is true for building & construction which was up 2,255 accounts in 2010 to 7,923 accounts (2009; 5,668) but was only up 751 accounts by Feb 2011. The stats tells us that credit to building & construction dipped from 45bn to 33bn in 2010 (avg loan per account went down from 8.0 million to 4.1 million in 2010). Why does the housing boom see construction loans down, but real estate loans up? ... are people moving around previous built inventory? psss. building loans are for construction purposes.

@hisah. The stats were to show you that the inflation is money supply related (hence the mention of the key sectors receiving credit). Indeed the IMF would applaud becauze they endorse private investment in Kenya which is what every banker would love to hear (as you say).

I hope both of us will be at the front line of the revolution ... I'd like to think we cud move things in the right direction. Unfortunately at this moment we're heading into IMF's financial programming as a result of the loans they've ended to us under the ECF (until 2013).

So what's in store? Inflexible monetary policy of continued tightening ... so typical ... the only solution for developed countries ... if only strauss-kahn could suggest the same the US :) Vote Ron Paul.

http://www.youtube.com/watch?v=Ka3Pb_StJn4

This is the very game being played in the public's full view, but nobody sees it. The sideshows game...

Hegelian Dialectic -> http://www.crossroad.to/...icles2/05/dialectic.htm

http://www.youtube.com/watch?v=uJJJsGsdWYI

http://www.democracynow....ein_on_anti_union_bills

The global economic system is being dismantled and realigned and the problem-reaction card is being played on the populace to usher in the change. There will be no resistance since the public will think they brought in the change... It has always worked like this for centuries. Until the public wakes up, it will be a recycle act like a karmic wheel; repeat until you learn.

What is recoinage? Is it happening now? Will it happen? Who will benefit during this wealth transfer cycle?

Hint -> Follow the money around 2014...

http://www.democracynow....epartment_prosecute_bank

Spain goes on protest... EU needs to watch out here. If Spain tips, the euro experiment will experience winter...

http://www.france24.com/...ent-demonstration-youth

http://www.youtube.com/watch?v=n4yX6GlH-yk

A spaniard's blog. Spain is europe's boiling pot. But none see it...

http://pauagainstthewall...ishrevolution-quick.html

http://www.bloomberg.com/video/70028488/ - US college agents...

http://www.bloomberg.com/video/69993606/ - NY tower buildings planned construction spree tenants or no tenants & finance!?

http://www.bloomberg.com/video/68188702/ - Irish housing market carnage. Ireland will be back in the news this Nov after the Greece drama cools down.

http://www.youtube.com/watch?v=fWacc6L9NoU