Government or sovereign debt is widely regarded as risk-free, a falsehood. Debt is an asset class, subject to the ebb and flow of confidence. At some point, the debt troubles in the European (dis)Union will cross the Atlantic to the U.S. mainland.

"Greece made a successful return to capital markets on Monday as it raised €5bn in a new syndicated bond issue. But the high price it had to pay signalled that markets were unconvinced by last week’s European Union-led rescue package.

However, the euro rose against a clutch of currencies, including the dollar, yen and sterling, after the Greeks achieved the amount targeted for the seven-year bond..."

Read more:

http://www.ft.com/cms/s/...-a1e7-00144feabdc0.html

The Foundation of Economies

"I’ve been talking a lot to people lately about the rule of law and how important it is to the foundation of our economy. It is THE critical element, without it, no functional economy. You can have massive human and natural resources, but without the rule of law, you will not have capital formation and you will not have an economy that works.

The basis of a functioning economy is a rule not of man, but of nature. It is natural because man can attempt to manipulate or bypass the process, but man will lose every time they stray outside of the rules. The same rules win out every time they are tested, just like gravity. The basis of economies are ruled by the same rules of mathematics and of physics, it is bound and limited in its construct by both. Create a system that is not harmonious with those bounds and well… welcome to exponential math and the limits of the physical world.....

Read more:

http://economicedge.blog...ation-of-economies.html

@ Scubidu. I echo your sentiments - it is a fantastic blog. The greatest fear an investor has is an arbitrary change of the rules of engagement, the likes of which Hugo Chavez or Robert Mugabe are famous for. Contracts must be enforcable and the law courts must be able to exercise justice in the arbitration process. Without which, stagnation envelopes a society as only the most intrepid of investors ventures there.

Gone are the days the ruling class in Kenya would abuse the government machinery to try and take over assets such as property and business. We have made the necessary steps to ensure that ownership rights are adhered to.

Corruption is the next major hurdle.

The bulls are back in town.

A significant resistance level on the NSE 20 Share Index lies at the 50% Fibonacci retracement line or in other words, half of the previous decline from 6161 to 2360. That technical lies at 4260.5 points. Should the index slice through that level, the next significant technical level is the 61.8% Fibonacci level or 61.8% of the decline from 6161 to 2360 which lies at 4709 points.

Nota bene, the leaders of this upswing in stocks worldwide are commodity stocks.

"Nairobi Stock Exchange has closed the first three months of the year on a high note after gaining more than a quarter of its valuation with companies in the agricultural sector dealing the most.

The bourse has been in a lull over the past two years driven by a slowdown in economic activities, global financial crisis that saw near collapse of world financial markets and low investor confidence.

Poor market confidence was triggered by collapse of stockbrokers and the backlash after the mis-handling of Safaricom shares sale.

NSE 20 share index widely used as the measure of market performance saw market valuation gain 25 per cent to close at 4,060 points up from 3,247.44 recorded at the end of trading last year....."

Read more:

http://www.nation.co.ke/.../-/1glocvz/-/index.html

Witness Phase II of the Debt Crisis as the maelstrom transitions from the corporate sector (Lehman, AIG, Bear Stearns) to the nation state. Interest rates on long term U.S. treasuries are inching upwards crimping any hope of recovery in the real estate sector, a vital source of tax dollars for states such as California. In addition, interest rate payments on outstanding debt for these fiscally challenged states are bound to increase with growing uncertainty as in the case of Greece.

" April 5 (Bloomberg) -- Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.

The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn’t send an anticipated $73 million payment to the city’s general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.

“The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.....”

Read more:

http://www.bloomberg.com...0&sid=arnmmSbN5qLY#