This morning’s key headlines from GenerationalDynamics.com

Thousands die in sectarian herder-farmer clashes in Nigeria


Herd of African cattle (AFP)

Boko Haram violence in Nigeria has left over 600 dead in the last six weeks. Since Boko Haram began operating in 2002 they have caused over 13,000 deaths.

And yet, Boko Haram is not the only source of violence in Nigeria. What has been going on for years is sectarian violence between Muslims and Christians. Much of the sectarian violence occurs in Jos, in the Plateau region in central Nigeria.

Jos is in the middle of Nigeria, right on the fault line between Muslims who live in the north and Christians who live in the south.

The northern part of Nigeria is mostly Muslim, because of centuries of migration from the Maghreb, the region in northern Africa that was conquered by Arab Muslims in the centuries following the death of Mohammed.

The southern part of Nigeria, especially around the Port Harcourt area, is predominantly Christian, following centuries of colonization by the Europeans, taking advantage of opportunities for mining and the slave trade. Over time, many of the southern tribes were converted to Christianity.

In the middle of Nigeria is the city of Jos, heavily populated by both Muslims and Christians. There are frequent really horrific attacks by Muslim gangs against Christians, and by Christian gangs against Muslims.

Although these are nominally secular attacks, religion is not the core reason for the attacks. The Christians are almost all farming tribes that settled long ago. In the last few decades, Muslim nomadic Fulani cattle herders from the north have been moving south looking for new pastures and water for their herds.

Battles between farmers and herders occur in country after country, as I have described many times in Central African Republic, Rwanda, Sudan, and even America in the 1800s. The farmers accuse the herders of letting the cattle either their crops, while the herders accuse the farmers of planting on land that’s meant for grazing. If the farmers put up fences, then the herders knock them down.

In one refugee camp in Wende, south of Jos, there are thousands of people who have lost their homes and become “Internally Displaced People” (IDPs) because of clashes between herders and farmers. Strategy Page and All Africa and All Africa (2-Jul)

Emotions running high over Eurogroup ultimatum to Greece

Many citizens of Greece are accepting the demands that the Eurogroup is making of Greece in return for bailout money, while others are furious, feeling that they have been betrayed and sold out by Prime Minister Alexis Tsipras, who agreed to demands that were harsher than the ones that had been rejected just a week earlier in a nationwide referendum.

There are big disagreements by analysts about the demands that the Eurogroup has put on Greece before any new bailout money can be provided. If Greece’s parliament passes the first round of laws Wednesday, then they will receive a bridge loan that will allow the banks to re-open and keep Greece from defaulting. Most analysts are expecting parliamentary approval on Wednesday, as Tsipras’s far left Syriza party is being joined by the right of center New Democracy party in voting to accept the deal. After that, Greece’s parliament will have pass additional laws to receive an additional 86 billion euros in bailout money. This will kick the can down the road, but there may be an additional crisis at any time if the committed reforms are not implemented.

According to far left NY Times political commentator Paul Krugman:

The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

The first terms of the deal have to be enacted by Greece’s parliament by Wednesday. Well-known investor Wilbur Ross, whose consortium last year invested 1.7 billion euros in Greek banks, said that this deal is the best thing for Greece and Europe, in an interview with CNBC (my transcription):

I believe it will go through [in the parliament], and I think maybe in some ways it’s more important that there will be a change in the political situation in Greece. So I think it will not only be enacted, I think it will be implemented. …

I think that Greece needed societal reform, and that’s what’s coming as part of this package. They’re not calling it that, but that’s really what it is. There was a lot of dysfunctionality in the way that both the economy and society were structured. Those are now being addressed. In terms of moral hazard, if there’s one thing that a politician wants, it’s to be re-elected, and if I’m right, there’ll be sufficient changes in the political scene – that will be a deterrent from other countries from playing games with the EU. So I totally disagree with the notion that there’s anything here that will encourage bad behavior on the part of the other euro countries. …

As for the amount of the debt itself, what Greece really needs is to get to a primary budget surplus, because right now they’re going cash negative every month, without reference to any interest or principal. A lot of these reforms will cure that.

The last sentence refers to the fact that even if the entire debt were written off, and Greece was debt free, then Greece would immediately go back into debt, and would have to borrow more money.

Those who favor the deal point to privatizations of the seaports and airports as favoring growth in Greece, since they would remove a huge source of fiscal losses, and turn them into profit-making entities that would benefit the entire country and Europe. Reuters

China cracks down on ‘peizi’ or ‘fund-matching’ stock market businesses

China’s stock market bubble that caused stock prices to rise by a factor of 250% before the bubble began to burst on June 12 is being blamed on “peizi,” or “fund-matching” businesses that allow individual citizens to lend money to stock market investors in an unregulated manner. As of June 17, the outstanding margin loans in Chinese stock markets reached 2.26 trillion yuan (US$364 billion), which is equivalent to 4.1% of the total market value.

Ordinary people deposit money into the peizi funds, which do business online. All this money is pooled, and investors can then borrow money from the pool to invest in stocks, using the purchased stocks as collateral. The depositors earn a fixed rate of about 1%-1.2% per month, and the financing firms earn a fee. The rest of the money from increases in the value of the stock shares goes to the investors.

You don’t have to be a rocket scientist to see what could go wrong with this. The peizi business are allowing leveraged margin loans of something like ten times the amount of margin that’s permitted by regulated brokers. This allows stocks to be traded quickly between investors, bidding up the prices and creating a stock market bubble, which is what happened.

If stock prices start falling, as they have since June 12, then investors who pledged stocks as collateral have to sell the stocks in order to maintain the margin requirements. This creates a vicious cycle, where falling stock prices cause margin calls, margin calls cause stock sales, and stock sales cause falling stock prices. This was the major characteristic of American’s 1929 stock market crash, and in fact it’s a characteristic of the bursting of most asset bubbles.

The China Securities Regulatory Commission (CSRC) has been promising for months to crack down on peizi companies, and has finally begun to do so in the past week. Three such companies (Miniu98.com, Xunqianwang and Quchaoguwang) shut down their peizi services on Monday because of the CSRC crackdown.

The Shanghai Composite stock market index plunged 30% in the days following June 12, but then recovered almost 10% in the last three trading days (Thursday, Friday, Monday). There is widespread fear in China, sometimes approaching a state of panic, that the index will start to fall rapidly once more. This is a well-founded fear. The stock market bubble has burst but has only partially fallen. When stock market bubbles burst, they never stop collapsing until they overshoot the index value at the time the bubble started to expand, so it’s likely that the cumulative fall will be 60-75% before it’s over. The Australian and Want China Times (17-Dec-2014) and Want China Times (22-Jun-2015)

KEYS: Generational Dynamics, Nigeria, Boko Haram, Jos, Fulani, Greece, Eurogroup, Alexis Tsipras, Paul Krugman, Wilbur Ross, China, Shanghai, China Securities Regulatory Commission, CSRC, peizi, fund-matching
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