Bottom Dollar, Big Blue, and Helping Kenya by remembering MLK

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Kenya: What Can We Do? Remember MLK
First, let me be clear that the violence in Kenya, the most severe in the western regions near Eldoret, is horrific and deplorable. Worse, it appears that the violence was premeditated in that region by groups of disenfranchised Kenyans reacting against land-use and ownership policies that date back to Jomo Kenyatta, independent Kenya's first president. The resentments and anger have been smoldering for decades, having last flared up in the 1990s. These groups were looking for a reason to take up the machete again and the disreputed elections was the chance they were waiting for-- but many of the attacks near Eldoret aren't about freedom in Kenya, nor democracy. They are about groups of have-nots attacking the have-alots, under the teachings of old and troubled men.

What can we do when we are faced with situations like Kenya? What can we do when images of Rwanda, the Congo, Sierra Leone flash into our thinking? We can do something very simple: we can remember Martin Luther King, Jr. We can remember that fifty years ago, in the time of my father, MLK stood up and changed the free world by changing the way people thought about their fellow man. He wanted us--all of us-- to be judged based on the content of our character, not the color of our skin. MLK, and those that followed him, did so using a weapon more powerful than the gun, more effective than the bullet, more immediate than the machete. He used shame. In his time, he shamed the largest and wealthiest population of racists the modern world has endured, and it worked!

It's too easy to say that Kenya could use its own MLK; someone who can wield the weapon of righteousness so effectively. In time, I'm confident a hero will emerge in Kenya. But it's also important to confront our own prejudices when we think about Africa and situations like Kenya. Too many times I've read or heard the word "tribal" used to describe Kenya. We in the West use this word and ignore the insulting nature behind it-- as if Africa will always be medieval in some way. It generalizes, and that's insulting as if all Italians are mobsters or all Southerners are rednecks. "Tribal" reminds me when we used to say "colored," as a softer way to say something else.

Want to help Kenya? Let's change the way we think and when we hear CNN or read the NYtimes, and when we come across the word "tribal" let's think about that word differently. Perhaps we might all uncover some of our own prejudices, and there is no shame in that. MLK wouldn't think so. MLK would think anyone overcoming their own prejudices was nothing short of righteous.

If you want to directly help Kenya, here are some organizations I can vouch for:
A small terrific orphanage in Naivasha: http://childshopeinternational.org/donate.htm
Help Kenya kids get computers and books: http://www.hkenyaproject.org/donate.html
Kenya Red Cross: http://www.kenyaredcross.org/donate.php?subcat=91

Prognostication: Betting The Bottom Dollar and eeks for IBM
I'm going to call the bottom of the US dollar here. Okay, it might erode a bit more, but here's a good place to get into the greenback. There's calamity across the world markets and the de-coupling theory (the idea that emerging markets like Asia are no longer dependent upon the US ecomony) is getting pushed to the breaking point. Stock markets across the globe had a freefall day on Monday and the press thinks the US sub-prime housing infection has spread to once-hot markets like China and India.

Two points here: first, the fact that an ill-informed HR manager in Naperville Illinois who thinks his 2 bedroom 1.5 bath split-level really is worth $400,000 and takes out an ARM only to realize that at most it will fetch $200,000... it's hard for me to draw the line that this means China and India markets should freefall. Second, I do believe that China and India markets should correct, but not because that HR manager won't be buying that giant flat-screen TV for his living room. China and India markets were bubble markets to begin with. And now it appears that the formula used to measure those economies (something called the price purchasing power or PPP) was flawed and based on an out-of-date 1980s formula. The central banks have all updated their calculations and it turns out China's market, for example, appears to be about 40% smaller than forecasted the past few years. Does it appear there is a cause/effect here with the US subprime meltdown? Absolutely, but its a case of Post Hoc Erego Propter Hoc-- just because one followed the other, does not mean the first caused the other.

Another reason I'm calling the dollar here is the HUGE influx of capital that foreign soveriegn funds have poored into US companies recently-- including the funny Loonies from up north, (Oh, Canada!).And not just any companies, but financial services firms where the dollar is king. There is no way these firms-- from China to the Middle East to the boys up Nort-- there's no way they pump in that kind of money without knowing a currency bump is coming. If the dollar strengthens against the other currencies, these guys make billions in risk-free action. The Federal Reserve should comp these guys free rooms, drinks, and get some showgirls to sit next to them at the next G8 and APAC meetings.

Up Dollar = Trouble for IBM
IBM was heralded recently for its foresight in puting hundreds of millions into overseas investments, and the weakening dollar meant they got the currency bump right a time when Wall Street was desperate for any good news. But that strategy is a double-edge sword for Big Blue. When the dollar rises, that buffer is going to evaporate quickly. They'll likely be able to hedge that risk for a quarter and soften the impact for 90 days-- so this will likely take a quarter or more to play out-- but the piper will be paid (and no not Piper Jaff). The second element to IBM's strategy was to focus on small to medium size businesses. Anyone want to guess who suffers first and hardest in a recession? Hint: it's usually not the Fortune 1000.

What about Gold then?
Traditionally, a rising dollar means bad news for Gold , but the overseas volatility means there will continue to be a rush to liquidity, and that means good news for Gold and other precious metals. I still like Silver here too. I said Gold could go above $950 (see previous posts)-- I'm now thinking that might be too low. Record levels would have to hit close to $2,000 (back in the 1980s, that's about what Gold was going for in current dollars). Therefore, I think there's still plenty of upside to Gold. In fact, I'm wondering if there will be pressure to start backing currency again with precious metals. I'm waffling on that one, but what was once ridiculous to consider doesn't seem so ridiculous anymore. I will say this: there is a second global currency to the US dollar, and that's oil. This is why I think de-coupling is actually a valid theory but that's for another post.

Humor Stuff
Speaking of the meaning behind words, The Washington Post has a contest for readers to provide alternate meanings to everyday words-- called Neologisms. Here are some winners that made me smile:
Coffee (n): a person who is coughed upon
Abdicate (v): to give up all hope of ever having a flat stomach
Flabbergasted (adj): to be appalled over how much weight you have gained
Balderdash (n): a rapidly receeding hairline
Oyster (n): a person who sprinkles his conversation with Yiddish expressions
Circumvent (n): the opening on the front of a pair of boxer shorts
Pokemon (n): a Jamaican proctologist
Excruciate (n): the ligament that joins your ex-wife to your paycheck
Perplexed (adj): lost in a movie theater
Discussion (n): a Frisbee-related head injury
Bustard (n): a rude bus driver... (it takes a second on that one)

One Tribe!