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As Djibouti Prepares To Topple Next, Should One Go Long A Girl's Best Friend?

Tyler Durden's picture




 

As what is rapidly becoming the biggest wave of revolutionary discontent since 1989 Eastern Europe spreads to every less than wealthy country and region, the next regime to topple may be that of smallish Ethiopia and Somalia neighbor Djibouti. The tiny country, with a population of less than a million, known only for being situated at the horn of Africa, has just seen a major (relatively speaking) protest, calling for President Ismael Omar Guelleh to step down. And while the country is completely insignificant geopolitically, it is merely a stepping stone as the African dominoes spread south: are Ethiopia and Somalia next to go? And after them all of central, and then southern Africa? So here's a thought - should the unrest reach Congo, and eventually South Africa, what will happen to the price of diamonds? While De Beers will be giddy to see a plunge in already artificially low supply, the story will be of course that no more shiny pure carbon crystals are made. And as the natural market for diamonds tends to be the rather affluent portion of society which is the only one to have benefited from loose liquidity, passing on diamond prices may not be perceived as all that difficult?

More on Djibouti from the BBC:

Thousands of people have taken to the streets of Djibouti to call for President Ismael Omar Guelleh to step down.

The demonstrators were reportedly monitored closely by security forces in riot gear.

Mr Guelleh's family has governed the Red Sea city state since independence from France in 1977. The United States has a large military base in Djibouti.

The constitution was last year amended, to let Mr Guelleh seek a third term.

Some of the protesters say they will stay in a stadium until Mr Guelleh, 63, leaves power in the Somali-speaking country.

Elections are due in April. Mr Guelleh was re-elected unopposed in 2005.

The protesters held banners reading "IOG out" and "No to a third mandate", reports the AFP news agency.

How long before we read a comparable report about all the largest diamond exporters in the world?

 

 

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Fri, 02/18/2011 - 14:30 | 975020 AN0NYM0US
AN0NYM0US's picture

are Ethiopia and Somalia next to go?

 

I think if you'll check Somalia is already gone but fear not, Canada, yes Canada is a repository of the shiny pieces of carbon

 

http://www.cbc.ca/money/story/2011/02/16/consumer-ekati-diamond.html

Fri, 02/18/2011 - 14:34 | 975064 covert
covert's picture

the majority of the people of the world have forgotten history. they have fallen in love with stupidity and because of necessity are returning to practically.

http://covert2.wordpress.com

 

Fri, 02/18/2011 - 14:49 | 975112 velobabe
velobabe's picture

this is suspect, this is the third time you have been 1st †

Fri, 02/18/2011 - 15:28 | 975239 Huck T
Huck T's picture

This is true.  There has been no effective national government there for twenty years. 

Fri, 02/18/2011 - 15:45 | 975296 SteveNYC
SteveNYC's picture

Diamond (for) bitchez!

Fri, 02/18/2011 - 16:22 | 975406 bankonzhongguo
bankonzhongguo's picture

Djibouti has a largely unknown US C4I complex in the form of Camp Lemonnier - still spelled wrong? - watching entrance into the Red Sea.  I think its the only official US base - beachhead for Africa.  The 13th demi brigade French Legion still ops out of there also.  Also some regular French army.  About a million skinnies.  Very interesting geology.

Fri, 02/18/2011 - 14:26 | 975024 redpill
redpill's picture

Yeah Somalia doesn't have anything to worry about since they don't really have a government anyway

Fri, 02/18/2011 - 14:27 | 975033 Henry Chinaski
Henry Chinaski's picture

The shift is hitting the fan. The countries in discontent seem to be largely aligned and/or supportive of US interests in the region.

This is an ongoing power shift.

Fri, 02/18/2011 - 14:31 | 975048 Henry Chinaski
Henry Chinaski's picture

I wouldn't call Djibouti completely insignificant geopolitically.  The US has had a signficant military presence in that country for a while.

Fri, 02/18/2011 - 14:44 | 975099 Caviar Emptor
Caviar Emptor's picture

Agree. Like it's model, the British Empire, US hegemony depends on control of key shipping lanes. The straight of Bab el-Mandab is crucial to supplying Western Europe through the Suez. 

Bahrain and Djibouti are two potential flash points where the US has key bases. For context, look at what happened after Marcos was deposed in the Philippines: two major US bases had to close (Subic Bay naval base and Clarke AFB). 

Fri, 02/18/2011 - 15:01 | 975159 Coast Watcher
Coast Watcher's picture

The U.S. base in Djibouti also controls the drones operating over the Horn of Africa and across the straits in Yemen and southern Saudi Arabia, as well as serving as a listening post for tat part of the world. The rocket attacks on suspected AQ targets in Yemen were likely controlled from Djibouti.

Fri, 02/18/2011 - 14:27 | 975036 MonsterZero
MonsterZero's picture

Much like dollars, diamonds can also be produced out of fairly worthless carbon.

 

Investment?  I think not.

Fri, 02/18/2011 - 14:27 | 975037 Tric
Tric's picture

I would never go long diamonds LOL

I think we'll see all kinds of diamonds come out of the woodwork the longer this recession is allowed to go on. 

Fri, 02/18/2011 - 14:29 | 975038 savagegoose
savagegoose's picture

umm you gotta have a gov to protest against , so somalia is out, unless hanging out side pirate bases demanding a cut is considered protesting.

Fri, 02/18/2011 - 14:28 | 975040 Cognitive Dissonance
Cognitive Dissonance's picture

Man, this world wide case of revolutionary lice is getting way out of hand.....er....head.

Fri, 02/18/2011 - 14:37 | 975072 jus_lite_reading
jus_lite_reading's picture

It's more like a case of a runaway wagon as the horse gets bitten by fleas as the wheels fall off.

SILVER! SILVER! SILVER!

We don't need money. We need a whole new society!

Fri, 02/18/2011 - 14:30 | 975043 malikai
malikai's picture

Never mind the diamonds. Mind the oil in Nigeria and Algiers. Not to mention the other resources in Africa. Gold, Silver, and Copper comes to mind.

Fri, 02/18/2011 - 14:35 | 975069 Tyler Durden
Tyler Durden's picture

Since the (upcoming) surge in the price oil, and the other items you mentioned, is now in the vernacular, and has been discussed on ZH extensively, it seems rather logical to expect a jump there. The question is what else, in addition to cocoa of course, will soon be a "story" bubble.

Fri, 02/18/2011 - 14:52 | 975082 jus_lite_reading
jus_lite_reading's picture

Just a thought- if for some reason, the "debt ceiling" is not raised and the gubmint puts martial law into effect as some say they will, would you trust having your cash in a bank?

Another reason to buy silver and smelt it...

Fri, 02/18/2011 - 15:01 | 975148 redpill
redpill's picture

The problem with diamonds is their value has been inflated by artificially constrained supply for many decades.  As a result, I would think the diamond cartel would make sure that diamond prices stay at the ideal point on the supply/demand curve intersection regardless of geopolitical turmoil.

Fri, 02/18/2011 - 15:21 | 975221 Tyler Durden
Tyler Durden's picture

If the idea is to find how inelastic demand is, this could serve as a strawman. Demand for high margin diamonds comes primarily from the uber wealthy who can probably meet new price levels. If the diamond cartel works in unison, it should be an easy transmission.

Fri, 02/18/2011 - 16:24 | 975412 velobabe
velobabe's picture

i junked you, sorry dude†

did you get my email? you seem to like this subject matter!

Fri, 02/18/2011 - 20:34 | 976176 Ratscam
Ratscam's picture

A good friend of mine is a known diamond dealer in central Europe.

He is one of the guys who does'nt get the De Beer's closed box to sell off to his customers. He can choose.

So we discussed exit strategies to this global mess. He refuted my precious metals arguments in a smart way.

I said hey, I can move USD 1M in platinum in one suitcase. 

He replied i can move USD 10M with one diamond I can swallow.

End of discussion! 

The problem is knowledge. Not only the 4 C's  but also the experience, the suppliers, the dealers, the customers, the entire environment around diamonds, not easy to attain, it all depends on how well you're connected and of course how knowledged you are about the "blood diamond" topic.

But give credit where credit is due, he definitely convinced me on his strategy.

Now the question would I invest with him and do I trust him?

Yes I do, because all the big diamond deals are based on trust, else you're out of business. It's a very small group and that's how business is done since decades, else you're out immediately! Being Jewish in this business has it's advantages. He's living it up.

Fri, 02/18/2011 - 15:09 | 975192 malikai
malikai's picture

Many fruits and vegetables on the shelves here in the UK and I suspect most of Europe, are produced in various parts of Africa. Morocco, Congo, Cameroon, and Ghana are some of the big agri exporters.

If history is any predictor of the future, diamonds will indeed be a major source of funding for any wars in Sub-Saharan Africa. Depending on the scale, we could be facing a diamond glut as the factions pay for soldiers, food, and guns with their rocks.

Sat, 02/19/2011 - 02:10 | 976931 StychoKiller
StychoKiller's picture

Unfortunately, it'll probably be Coffee, one of my drugs of choice!

Fri, 02/18/2011 - 14:41 | 975087 dick cheneys ghost
dick cheneys ghost's picture

the chinese are colonizing africa. 

 

nakedempire

Fri, 02/18/2011 - 14:31 | 975050 lieutenantjohnchard
lieutenantjohnchard's picture

no way i could get the rock off wife's finger no matter the price of diamonds. and besides, after the price i paid with her dragging me to every single diamond parlor to find just the right one for her no way i sell, just on principle alone.

Fri, 02/18/2011 - 14:45 | 975100 Cognitive Dissonance
Cognitive Dissonance's picture

The finger can be removed as well when the price is right. Outsource the extraction and retain plausible deniability.

Fri, 02/18/2011 - 14:57 | 975140 velobabe
velobabe's picture

no i go to hospital a lot with accidents of my arms and fingers. you can drink a whole heck of a lot of water, to get swelling down, and slide rings off with some grease. they cut one ring off my finger, and just had the jeweler re solder it back together.

Fri, 02/18/2011 - 19:53 | 976061 andybev01
andybev01's picture

Just out of curiosity; what exactly does one do to end up in the hospital so often?

Sat, 02/19/2011 - 02:11 | 976932 StychoKiller
StychoKiller's picture

Drama Queen springs to mind...

Sat, 02/19/2011 - 08:50 | 977160 velobabe
velobabe's picture

breaking human bones and cutting skin open in varying degrees.

Fri, 02/18/2011 - 14:32 | 975053 jus_lite_reading
Fri, 02/18/2011 - 14:34 | 975055 AN0NYM0US
AN0NYM0US's picture

want to hear an angry rant on the US and its Mid East policy

 

check out this interview from this AM (WLS chicago) with ex Shell guy Hofmeister

 

http://wlsam.com/FlashPlayer/default.asp?SPID=17424&ID=2114220

Fri, 02/18/2011 - 14:33 | 975062 Bruno the Bear
Bruno the Bear's picture

I suspect the Somalian pirates have used all that blackmail loot to seriously arm themselves. Pirates aren't gonna let some protesters screw around with their chosen, and very lucrative, profession.

Fri, 02/18/2011 - 14:34 | 975063 Dick Darlington
Dick Darlington's picture

If girl's best friend is too pricy, one can always try best friend's girl. ;-)

Fri, 02/18/2011 - 14:35 | 975066 almost_have_a_name
almost_have_a_name's picture

It’s the United States of Africa coming right at you.

All we need to kick this thing over is a few hundred thousand soldiers, clean and fresh, back from a Vegas massage. You can accomplish almost anything after a well-deserved vacation.

Fri, 02/18/2011 - 14:37 | 975071 koeleköpke
koeleköpke's picture

than the market will be spoiled by a flood of blood diamonds.

 

Fri, 02/18/2011 - 14:41 | 975090 Rodent Freikorps
Rodent Freikorps's picture

Holy crap.

Civil wars in Africa are not for the squeamish. Don't you all remember how freakin vicious the last ones were?

Not something to crow about.

Fri, 02/18/2011 - 14:50 | 975120 LFMayor
LFMayor's picture

For real.  Nevermind the diamonds, go long on pangas.  You could make a fortune selling bulk Frost cutlery machetes to them.

Fri, 02/18/2011 - 14:51 | 975126 Rodent Freikorps
Rodent Freikorps's picture

You should read all the bloody details of Rwanda. The French and Brits did just that.

Fri, 02/18/2011 - 16:23 | 975408 trav7777
trav7777's picture

good thing we have cities loaded with africans, huh?  Should be real entertaining

Fri, 02/18/2011 - 16:28 | 975421 Rodent Freikorps
Rodent Freikorps's picture

It'll get out of control, and we'll be lucky to survive.

 

Fri, 02/18/2011 - 14:47 | 975111 Caviar Emptor
Caviar Emptor's picture

As tensions rise in sovereign nations with key US bases the risk of US armed incidents and intervention rises. The stakes just keep going up as the status quo crumbles. 

Fri, 02/18/2011 - 14:49 | 975113 Ahmeexnal
Ahmeexnal's picture

The power elite need to sell guns and steal gold.

 

Fri, 02/18/2011 - 14:50 | 975119 lieutenantjohnchard
lieutenantjohnchard's picture

remember a few weeks back when all the usa ambassadors were recalled to the home office. i can't exactly remember the timeline but it sure seems like there might have been a heads up in there somewhere.

Fri, 02/18/2011 - 14:54 | 975132 lieutenantjohnchard
lieutenantjohnchard's picture

who knows the truth anymore but i also remember a year ago harry schultz reporting that all usa embassies were directed to keep six months or so of cash on hand for whatever reason. seemed odd at the time. maybe just planning. who knows?

Sat, 02/19/2011 - 02:14 | 976937 StychoKiller
StychoKiller's picture

When all of your "secure" communications end up on WikiLeaks, guess a face-to-face has to substitute!

Fri, 02/18/2011 - 14:54 | 975134 The Answer Is 42
The Answer Is 42's picture

What kind of pervert would get a hard on from the toppling of Djibouti?

Fri, 02/18/2011 - 14:58 | 975146 savagegoose
savagegoose's picture

its actually saudi that has me interested. i mean thats a hardcore US supporter and supported. how about if people starting wanting democracy there? theres some pretty big deals with oil going on, does america support the gov and supply tewar gas, rubber bullets, and water cannon. to the gov or support democracy loving people?

 

my bet is the gov. because you dont have an allience with people, or their ideals you have it with the guys in charge.

but it will be interesting to see how things pan out. as expediancy  buries idealism in the sand.

Fri, 02/18/2011 - 15:06 | 975176 Cash_is_Trash
Cash_is_Trash's picture

A fire sale of anarchy!

Fri, 02/18/2011 - 15:06 | 975183 Sabremesh
Sabremesh's picture

Diamonds are the biggest scam out there. You have to be out of your mind to buy diamonds unless you a retailer and are confident of finding someone really stupid you can sell them on to (eg a man desperately trying to bribe a woman to marry him).

Fri, 02/18/2011 - 16:14 | 975391 Pool Shark
Pool Shark's picture

Exactly.

Diamonds are ubiquitous.

The only thing that lends value to a particular diamond is 'expert' grading that distinguishes almost imperceptible differences between stones. Kind of like grading of numismatic coins.

Thanks, but I'll take government-minted gold and silver bullion coins; an ounce, is an ounce, is an ounce. Universally recognizable with pure liquidity.

Fri, 02/18/2011 - 17:07 | 975536 weinerdog43
weinerdog43's picture

Exactomundo.

Still, given the choice between greenbacks, yen, Euros, or whatever flavor of paper, I'd wager having some of that paper 'money' tied up in pretty stones is not a bad thing.  The wimmens muy likey.

Fri, 02/18/2011 - 17:15 | 975559 Rodent Freikorps
Rodent Freikorps's picture

Always preferred opals.

Women are weird.

Fri, 02/18/2011 - 17:19 | 975574 weinerdog43
weinerdog43's picture

I think opals are really beautiful.  Too lazy to use teh google, but my recollection is that one has to periodically soak, wash, oil or something them.  Is that correct?

Sat, 02/19/2011 - 01:03 | 976824 Hephasteus
Hephasteus's picture

Opal strengthens will to live and comes in many colors versions.

 

Fri, 02/18/2011 - 15:19 | 975218 Oh regional Indian
Oh regional Indian's picture

The staged-ness of this spawntaneous set of uprisings (Erecting a revolution? Now that sounds funny) is looking rather obvious now.

One after another. And people dying. Seems like givernments are putting crazy pressure, one death can ignite a city (remember Paris a few years ago, or Rodney King)...

Destablize the middle east, spike oil, destablize the world. After that, he who controls the oil controls the world.

Oil shock seems to be upon us.

ORI

http://aadivaahan.wordpress.com/2011/02/16/truth-about-america-truth-about-us/

Sat, 02/19/2011 - 01:06 | 976830 Hephasteus
Hephasteus's picture

Oil will mean exactly dick and bubkiss in just a few short years. We'll get electricity directly from the sun through the earths magnetic fields and store it in ultra stable super capacitors for transport. Unfortunately that particular future won't happen if government doesn't settle it's ass down.

Fri, 02/18/2011 - 15:29 | 975243 andybev01
andybev01's picture

Completely off topic, and I must not have had enough coffee yet but, does anyone else want to see Bang Dae-Ho in Djibouti...?

Fri, 02/18/2011 - 18:00 | 975711 Bastiat
Bastiat's picture

Sheik Djibouti!

Fri, 02/18/2011 - 19:54 | 976066 andybev01
andybev01's picture

(sheik sheik sheik!)

Sat, 02/19/2011 - 05:55 | 977073 Rodent Freikorps
Rodent Freikorps's picture

Damn you for making me remember Disco Fever.

http://www.youtube.com/watch?v=N1YXcD0njts

 

Fri, 02/18/2011 - 15:54 | 975322 SheepDog-One
SheepDog-One's picture

I'd never buy the biggest scam in the world- diamonds. What a bunch of BS that whole thing is.

PS- You definitely cant eat em.

Fri, 02/18/2011 - 16:08 | 975367 gwar5
gwar5's picture

Jya-booty. Go long the big pants. 

 

Fri, 02/18/2011 - 16:16 | 975396 TheMerryPrankster
TheMerryPrankster's picture

Florida is a new source of very high quality diamonds.

 

http://www.wired.com/wired/archive/11.09/diamond.html

 

Takes about 3 weeks to turn a "seed diamond" into a flawless yellow diamond. Other colors are available but they take longer and aren't as expensive, so for now they are just making yellow diamonds. Cost to manufacture - less than 100 usd.

Fri, 02/18/2011 - 16:26 | 975415 trav7777
trav7777's picture

i prefer natural ones from conflict regions, because nuthing poolishes a doymuhnd like the blood of a bleck man

Fri, 02/18/2011 - 17:16 | 975560 weinerdog43
weinerdog43's picture

Very interesting article, but it's from 2003.  Have you heard anything more recent?  Diamond prices have definitely not gone down.  I'm in the insurance biz, and we regularly replace lost/stolen rings.  Diamonds, especially 1 carat and over have appreciated substantially.

Fri, 02/18/2011 - 16:53 | 975492 gwar5
gwar5's picture

Phone rings in Djibouti...

Bang Dai-Ho: Her-row, Hosni? Me call.... you OK?

Pres. Guelleh: Sorry, Bang, this is Djibouti, think you have a wrong number.

Bang Dai-Ho: No, is good for me, like da-booty!

Pres. Guelleh: No, Djibouti is a country.

Bang Dai-Ho: Oh, me like try cunt too. We party. Me bring friends Sal At-Tosir and Doo Nos-Topp

 

 

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