"Go South, Young Man": The Africa Scramble

Tyler Durden's picture

While those in the power and money echelons of the "developed" world scramble day after day to hold the pieces of the collapsing tower of cards in place (and manipulating public perception that all is well), knowing full well what the final outcome eventually will be, those who still have the capacity to look, and invest, in the future, are looking neither toward the US, nor Asia, and certainly not Europe, for one simple reason: there is no more incremental debt capacity at any level: sovereign, household, financial or corporate. Because without the ability to create debt out of thin air, be it on a secured or unsecured basis, the ability to "create" growth, at least in the current Keynesian paradigm, goes away with it. Yet there is one place where there is untapped credit creation potential, if not on an unsecured (i.e., future cash flow discounting), then certainly on a secured (hard asset collateral) basis. The place is Africa, and according to some estimates the continent, Africa can create between $5 and $10 trillion in secured debt, using its extensive untapped resources as first-lien collateral.

Africa is precisely where the smart money (and those who quietly run the abovementioned "power echelons"), namely China and Goldman Sachs, have refocused all their attention in the past year precisely because they both realize that Africa is the last and only bastion of untapped credit growth and capacity. But you won't read about it in the mainstream papers: the last thing those who are currently splitting up Africa into its constituent parts want is for the general public to become aware what is in play. You will, however, read about it on these pages (see here and here and here). Also, if you are a Goldman client, you will certainly know all about it, as the firm ventures out with reverse inquiry indications of interest to its wealthy clients giving them the right of first equity refusal, and slowly but surely providing "financial services" to the last great hope for the developing world, which ironically is what most still consider the poorest continent...

Africa in geographical perspective...

And in every other, from Goldman Sachs:

 

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SilverDoctors's picture

yes, time to build up the 3rd world, and then ensure they store their gold reserves at the NY Fed to make up for Germany and now the Netherland's repatriation requests!

http://www.silverdoctors.com/netherlands-citizens-group-demands-central-...

DoChenRollingBearing's picture

Excellent reporting SilverDocs!  + 1

Are we getting any hints now?  Stack physical PMs!

Popo's picture

The world ends in Africa.

It's the last emerging market. After that there is no expansion left. and when the expansion stops, the fighting begins.

But even if that werent the case (and it is) the bankers are making a critical mistake if they thtnk Africa can be industrialized like Asia. The cultural differences are huge. Africa is where the current breed of corporate / banker colonialists will have their Waterloo. Africa can not, and will not be held.

Hedge accordingly,

WmMcK's picture

As/where it began, so/there it will end.
-- Some Mayan dude.

francis_sawyer's picture

Niggaz iz da same from 'Watts' 2 'Brooklyn'...

TRAV777 ~ can fs get some love?... Where are you in the hour of need?... The freshly minted 'PC' lot of ZH hasn't figured out yet that the BATTLE FOR MIDDLE EARTH is between the Jews & the Russo/Chinks... That's why I pack my .45...

"Ain't no bloodin' ain't no crippin ~ ain't no punk ass niggaz set trippin'"...

~~~

http://www.youtube.com/watch?v=a3QAHZicSjQ

~~~

Come on y'all let's take a ride
don't you say shit just get inside
It's time to take your ass on another kind of trip
cause you can't have the hop if you don't have the hip
grab your gat with the extra clip and,
close your eyes and hit the switch
We're going to a place where everybody kick it
kick it, kick it, yeah, that's the ticket
ain't no bloodin', ain't no crippin'
ain't no punk-ass nigga's set trippin'
everybody's got a stack and it ain't no crack
and it really don't matter if you're white or black, I
wanna take you there like the Staple Singers
put something in the tank and I know that I can bring ya
If you can't take the heat get yo' ass out the kitchen
we on a mission
Come along and ride on a fantastic voyage
slide slide slippity-slide
with switches on the block in a '65
Come along and ride on a fantastic voyage
slide slide who-ride
no valley low enough for mountain high

I'm tryin' to find a place where I can live my life and
maybe eat some steak with my beans and rice, a
place where my kids can play outside
without livin' in fear of a drive-by
and even if I get away from them drive-by killers
I still got to worry about those snitch-ass niggas
I keep on searchingc and I keep on looking
but niggas are the same from Watts to Brooklyn
I try to keep my faith in my people
but sometimes my people be acting like they evil
you don't understand about runnin' with a gang
cause you don't gang bang, and
you don't have to stand on the corner and slang
cause you got your own thang
you can't help me if you can't help yourself
you better make a left

Come along and ride on a fantastic voyage
slide slide slippity-slide
I do what I do just to survive
Come along and ride on a fantastic voyage
slide slide who-ride
that's why I pack my .45

Life is a bitch and then you die
still tryin' to get a peace of the apple pie
every game ain't the same, cause the game still remains
don't it seem kinda strange, ain't a damn thing change
if you don't work then you don't eat
and only down-ass niggas can ride with me
hop-hop-hop your five quickly down the block
stay sucka-free and keep the busters off your jock
you gotta have heart son, if you wanna go,
watch this sweet chariot swing low
ain't nobody cryin'` ain't nobody dyin'
ain't nobody worried, everybody's tryin
nothin' from nothin' leaves nothin'
if you wanna have something, you better start frontin'
what ya gonna do when the 5 roll by
you better be ready, so you can ride

Come along and ride on a fantastic voyage
slide slide slippity-slide
when you're living in a city it's do or die
Come along and ride on a fantastic voyage
slide slide who-ride
you better be ready when the 5 roll by
just roll along- that's what you do
just roll along- that's right
just roll along- that's what you do
just roll along- that's right
do you want to ride with me, do you want to ride with me
do you want to ride with me,do you want to ride with me
do you want to ride with me, do you want to ride with me
do you want to ride with me,do you want to ride with me

deKevelioc's picture

Hate to rain on a parade, but $10 trillion ain't enough to dig the world out of a collapsing $1.2 quadrillion of tier-three assets.

SGS's picture

Sooooooooo, when Africa has been rapped and pillaged by you know who, then what...?  Does conquering the moon hold $44,000,000,000,000,000,000 in collateral?  Mars.  Its must be Mars then.

markmotive's picture

Africa is the last continent to be fully raped by mankind. Sure we've done our damage, but there so much more work to do.

In a peak oil world, the world will scramble desparately as children starve and 401k plans implode.

http://www.planbeconomics.com/2012/10/11/2012-presentation-dr-colin-camp...

cynicalskeptic's picture

Seems like the economic (as well as actual) raping and pillaging have been going on for some time - I suspect that much of the continent's assets have already been pledged against IMF and other outside loans.

Stock Tips Investment's picture

From my point of view, there is no doubt that the world is changing. And changing rapidly. There are numerous studies that show that as of 2015, 5 of the 10 fastest growing economies will come from Africa. Not that these countries have all their problems solved. However, the experience of many years of economic mismanagement, seems to have left some lessons. Considering the African countries that are doing a good job, with Latin America that are also doing (Brazil, Mexico, Colombia, Peru, Chile, Panama, Costa Rica) and the fast-growing countries in Asia, and the Middle East, it will be appreciated that a good portion of the world population is living in fast-growing countries. Asia and Middle East, focused much population. And these countries are growing quickly and solidly. What I mean by this is that probably the success (or failure) of many companies in USA and Europe depend on the success (or failure) that have to sell in all these countries. The world is changing and we have to go further to sell our products and services. Without understanding this fundamental change, we can not survive commercially in the future.

Fox-Scully's picture

Sorry, but you forgot Antartica

falak pema's picture

ANd Atlantis if you can find it under the sea! 

honestann's picture

Atlantis was a few miles off San Francisco the last time I checked.  :-)

Coke and Hookers's picture

Good point. There are several very resource rich areas that have not yet been raped, pillaged and securitized. Antartica is certainly one but the Arctic region and Greenland are also on the menu. There's a mad scramble for the arctic by Canada, Russia, Norawy and others - with the EU trying to get their snouts in the trough through Iceland and Greenland. China has also been showing interest, particularly in Greenland. Greenland may have seriously massive resources; gold, uranium, all kinds of metals and oil.

billsykes's picture

its like afghanistan times a continent.

Silver Bug's picture

Growth in the resource sector of Africa is exploding. China is investing massive amount of money to secure those resources.

 

http://schiffblog.blogspot.ca/

Rochefort10's picture

How might that affect the paper gold market ala Greenspan?

 

mmmm, somehow this comment ended up down here. The question was in relation to SilverDoctor's comment re the repatriation of gold

DoChenRollingBearing's picture

Africa is still too risky for me.  Peru is enough geographical diversity for me.

Go ahead Goldman!  You and China go for it!  

Goldman and China have plenty of the culture of corruption necessary to succeed in Africa!  But, woe to you if Africans themselves clean up their act!

PUD's picture

Not content until every last square meter and every last living soul is raped.

john39's picture

that is how the locusts operate.

francis_sawyer's picture

only "zionist" locusts... NOT & NEVER "jew" locusts...

michael_engineer's picture

Adding Canada or Russia overswamps the African continent.

Pure Evil's picture

Hell, just add Alaska and the bitch will sink like the Titanic.

Belrev's picture

This is silly idea. As soon as you build up things there, hordes of negros will quickly destroy all of it. Just look at black neigborhoods in USA or Europe.

Urban Redneck's picture

Don't confuse Africans with "African-Americans" who most certanly are not African.

wee-weed up's picture

What about the Kenyan-American? Certainly everything he touches turns to shit!

Urban Redneck's picture

For a supposed anti-colonialist- he was all for supressing the Mau Mau uprising a few years ago, but then- what would one expect from a Luo?

Walt D.'s picture

So what if we decide to back our currency with crap, at a par value of one dollar to one pound. We owe $16 trillion dollars. That is a ton of crap for every person on the planet.  OK, both Obama and Romney are full of it - but not that full! 

Now we see why the problem of fiat money is intractible.

wee-weed up's picture

Junked by the Obama apologist, yet again! He/she never has the guts to post - just junk!

adr's picture

I don't know; Angola, Uganda, and Somalia could be interchanged with Detroit. Maybe that is why Detroit looks that way.

RiverRoad's picture

Can't wait to watch the African Muslims sic themselves on the Chinese.

hannah's picture

what good is it to own raw materials when the developed world cant get credit to buy stuff....denial denial denial.

Segestan's picture

PC .........bullshit.

Michelle's picture

Well I'll be damned! What the hell is up, Tyler? You removed the entire article with my post and I thought the BLS was bad!

Tyler Durden's picture

Perhaps you should learn how this 'interwebs' thing works before you make silly accusations - your comment can be found in the original article which was merely unhooked.

As to your suggestion, the referred Felix Salmon article is the usual rambling mish-mash of irrelevant observations, confused facts and outright misinterpretation of reality by a journalist with zero credit background, and who has gotten virtually nothing correct in the past 5 years - for some amusing examples see here, here and here (but has some tremendous insights on book cover fonts).

The only thing that matters, and will matter, is the contractual obligation divergence of local vs non-local bonds as we explained first in January, and as Lee Buccheit confirmed last week. As to Argentina, this has been a priced in non-event for a long time. Will they default: quite possible, although not probable as the financial system has reached an equilibrium where creditors stand to lose more by forcing debtors into default as that exposes the insolvency and the interlinkages of the entire world - the bonds are merely pricing in a return to reality. That's not the point. The point, as what Paul Singer is actually engaged in, is taking advantage of a strong-covenant bondholder paradigm to enforce creditor protections. Everything else, circuit and appeals court decisions, is absolutely meaningless, as no court of law can supersede the strong covenant indenture as that would undo roughly $60 trillion in bondholder arrangements. As such the Argentina case is completely irrelevant for the time being.

What is relevant, is for readers to reacquaint themselves with the subordinatiuon paradigm as the only thing that matters and will matter, is who is the junior-most bond in the sovereign capital structure, and will thus be progressively impaired once the sovereign defaults resume. As Buccheit explained recently:

"Notwithstanding this revulsion to a debt restructuring, if one becomes unavoidable the process will be facilitated -- as it was in Greece -- by the high percentage of local law instruments in the affected debt stock"

And that is all that matters: the local vs non-local bond divergence, which those who actually have been following our writing, is something we have discussed virtually every month in 2012.

Michelle's picture

Tyler, my bad, thanks for the clarification on both ends. Can you repost this explanation into an article for all? Definitely worth revisiting imo.

Yen Cross's picture

 Compliance is another boring, understaffed website!

billsykes's picture

your comments are always better than your commercials

1996

http://www.youtube.com/watch?v=v2U9C-LS8M8

 

lolmao500's picture

$5-10 trillion in new debt... that ought to give Bernanke and Draghi at least another year!!

Eally Ucked's picture

Yeah! go for it!

"The place is Africa, and according to some estimates the continent,Africa can create between $5 and $10 trillion in secured debt, using its extensive untapped resources as first-lien collateral."

They don't know them yet there! Lets fuck all those bushmen!


mkkby's picture

Most locals won't even know what happened.  Africa will not be industrialized.  It will just be stip mined and abandoned.  It would be too expensive to secure large swaths of territory, build the infrastructure and educate/train the locals.  So it won't happen.

AnAnonymous's picture

There is zero growth possible coming from Africa: all the wealth is already allocated to sustain 'american' nations or wannabee 'american'nations in their way of life.

Put the same map 100 hundred ago and the share allocated to European countries would be the majority of it.

As Europe seems to be the elected one to be the required sacrifice among the big consumers, this share is now redistributed over some other countries.

The most important point: all the resources of Africa is already allocated and every forecasting schedule show that 'americans' only make a matter of time the consumption of these resources. It is a store that is known to be consumed in the future to support 'american' nations.

Therefore no growth.

The only place of growth possible: central Asia, where USSR used to lie.

Reason: while communists were inept at consuming the wealth from these places, they were able to withdraw it from the 'american' consumption pattern.

As a result of the fall of USSR, these resources are still not allocated for the most of them. There is room to expand.

Africa is just a game of musical chairs, which show shifting between benefactors of the african wealth, Europe is clearly losing ground while other 'american' or wannabee 'american' nations are taking the seats.

Peterus's picture

Thin is an exercise in ignorance, not even a comment on this article.

logos5's picture

The trouble with Africa is that it's full of Africans.

WmMcK's picture

And the trouble with enginnering firms is that enginners work there.
(so it's hard to sell them insurance a/o securities)
Forget about discussing PM's with them completely.

cardis's picture

@logos5;

let me add: from bare feet straight to 747 and now 380.  

logos5's picture

My comment was a variation of what Longshank

(king of England) said of Scottland in the movie

Brave Heart.

The Shootist's picture

The only thing China is doing is raping them of Uranium and other rare earth elements. The only thing the ANC is doing is becoming more like their ZANU friends. The only thing the U.S. is doing there is misallocating resources there.