This morning’s key headlines from GenerationalDynamics.com
- Sierra Leone starts 3-day lockdown to battle Ebola
- Yemen violence may be proxy between Iran and Muslim Brotherhood
- China’s Alibaba IPO causes lightheaded investors to pop champagne corks
Sierra Leone starts 3-day lockdown to battle Ebola
Streets in Freetown, the capital city of Sierra Leone, were desertedon Friday, the first day of a 3-day lockdown of the entire country.People were told in advance to stock up on food so that they wouldn’thave to leave their homes for three days. Muslims were told to pray onFriday, and Christians were told to pray on Sunday.
The plans are that nearly 30,000 health workers, volunteers andteachers aim to visit every household in the country to educate peopleabout the disease and isolate the sick. There are 6 million people inthe country, so that’s 200 people per volunteer. Each volunteer isgiven a kit containing soap, stickers and flyers before leaving.
Sierra Leone is one of the poorest countries in the world, and theeconomy gets worse every day because of the Ebola crisis. Manyfamilies could not stock up on three days of food, and some peoplewill starve. Investors are concerned that the lockdown willaffect Sierra Leone’s iron ore production.
Médecins Sans Frontières (MSF – Doctors without Borders) is condemningthe plan, saying that it will have no effect on the spread of Ebola.
Yemen violence may be proxy between Iran and Muslim Brotherhood
Violence continued on Friday in Sanaa, the capital city of Yemen, betweenHouthi militias from north of Sanaa versus Yemen’s army backed bypro-government ethnic groups. Houthis have been camped out in Sanaasince mid-August, paralyzing government offices and businesses. TheHouthis have been demanding a restoration of fuel subsidies that werecut in July, increasing gasoline prices by 60% or more. Violence hasbeen increasing, and by Friday the airport was shut down, phone linesand internet services were down, and residents were forced to stayindoors.
Although the Yemen conflict is largely fought between ethnicgroups, each side has powerful political supporters.
The Houthis are in the Zaidi branch of the Shia Muslim religion andare in control of large swathes of territory in northern Yemen, alongthe border with Saudi Arabia. It’s widely believed that Iran has beentraining and supplying arms to the Houthis, with a view todestabilizing both Yemen and Saudi Arabia.
The most important militias opposed to the Houthis are those who arein the Sunni political group al-Islah, which is Yemen’s branch of theMuslim Brotherhood. Much of the fighting in and around Sanaa involvesal-Islah-allied militias, rather than Yemen’s military.
However, more intriguing are the reports that the Houthis are beingsupported by the former president Ali Abdullah Saleh, who was oustedby his vice president, and now the current president, Abdrabuh MansurHadi. Saleh is also a member of the Zaidi sect, while Hadi is a SunniMuslim. Saleh was in power from 1992 until his ouster in 2012, and heand Hadi had a good relationship. But Saleh is extremely bitter aboutbeing overthrown and it’s suspected that he wants to destabilizeHadi’s government and have him replaced by his son, Ahmed Ali Saleh.VOA and Middle East Eye and Daily Star (Beirut)
China’s Alibaba IPO causes lightheaded investors to pop champagne corks
Here’s how one news story began:
Alibaba debuted as a publicly traded company Fridayand swiftly climbed more than 40 percent in a mammoth IPO thatoffered eager investors seemingly unlimited potential for growthand a way to tap into the burgeoning Chinese middle class.
The sharp demand for shares sent the market value of thee-commerce giant soaring well beyond that of Amazon, eBay and evenFacebook. The initial public offering was on track to be theworld’s largest, with the possibility of raising as much as $25billion.
Jubilant CEO Jack Ma stood on the floor of the New York StockExchange as eight Alibaba customers, including an American cherryfarmer and a Chinese Olympian, rang the openingbell.
We’ve now completely returned to the euphoric hysteria thatpreceded the 2007-2008 financial crisis. At that time, investorswere going nuts over one IPO after another, one leveraged buyoutafter another. Each one was a sure thing, just like Alibaba,and I’m told that there are a lot more IPOs coming in the nextfew months.
There aren’t any “real people” investing in Alibaba. The investorsare almost all hedge funds and financial institutions. A hedge fundcan borrow $10 million and use it to buy Alibaba stock, since it’smarket bubble are created. Different hedge funds borrow money and useit to buy stocks, pushing up the prices of the stocks, and in essencecreating money backed by a chain of debt. The problem arises when onehedge fund loses money and can’t repay its debts, causing a chainreaction that results in a financial crisis.
Stock market valuations are going farther and farther into the ozonebubble layers. The last time I mentioned the S&P 500 Price/Earningsratio, just a couple of weeks ago, it was at 18.97, which is alreadyastronomically high by historical standards. But now, according toFriday’s Wall Street Journal, the S&P 500 Price/Earnings index (stockvaluations) on Friday (September 19) has shot up to 19.36.
It wasn’t very longago, in 1982, when the S&P 500 P/E ratio was below 6. Itfalls to that level every 30 years or so, and it’s overdue to doso again. This would push the Dow Jones Industrial Averagedown to the 3000 level.
By the way, those hedge funds didn’t really invest in the Alibabacompany on Friday. Alibaba is described as “China’s e-commercepowerhouse,” bigger than eBay and Facebook combined. But the Chinesedo not permit foreigners to own Chinese internet stocks. So they setup some kind of holding company in the Cayman Islands, with some kindof relationship to Alibaba. Investors who bought stock on Fridayactually bought shares in that holding company. Even large investorshave absolutely no say in how Alibaba is run, and China’s regulatorscan pull the plug at any time. But apparently today’s investors areso imbued with sheer stupidity that they bought the stock anyway andpushed its opening price of $60 per share all the way up to $93 pershare, within just a few hours. AP and Washington Post
KEYS: Generational Dynamics, Ebola, Sierra Leone, Freetown,Médecins Sans Frontières, MSF, Doctors without Borders,Yemen, Sanaa, Houthi, Zaidi, Saudi Arabia, Iran,al-Islah, Muslim Brotherhood, Ali Abdullah Saleh,Abdrabuh Mansur Hadi, Ahmed Ali Saleh,Alibaba, China, Cayman Islands