Working on my new book … The Fight For Freedom

Not much time for blogging, as I am writing, writing, writing. Here’s the book I am working on:

Paraguay rushes out first bond issue (it tops Transparency International’s corruption index)

Yesterday I wrote about Paraguay and its piano and why investors should beware this dubious country planning to make its first public international bond issue ($500 million). Today I see that the deal is almost done and dusted. I also see that Barclays are the only ones to issue a word of caution.

I wonder why this has been rushed out only three months before a new government is elected in Paraguay, all the more since the country has a long history of one government repudiating the debts of a previous one.

I was forwarded a list of questions raised by an investor I know who invests his own money (and not earning management fees from handling other people’s). Having seen the preliminary prospectus, he had these questions for the Paraguayan Minister of Finance and Citibank (lead manager of the bond issue):

1 – Why were investors not told that Paraguay has for years kept its funds safe at the Bank for International Settlements (BIS) in Basle because it is immune from legal attachment from creditors (not vulture funds in the case of Paraguay)?

2 – Why were investors not told that Paraguay will continue to keep its money protected at the BIS and therefore, in the event of the new government reneging on payments for the bond, a judgment against it will be worthless for enforcement purposes?

3 – Although the prospectus did mention a list of problem creditors, why did it not state clearly that they all refer to undertakings by one government repudiated by another?

4 – In view of allegations by the leading candidate for the Presidency in Paraguay about corruption in the current government http://www.abc.com.py/edicion-impresa/politica/federico-franco-y-la-primera-dama-con-una-fuerte-contestacion-a-cartes-528578.html, what guarantee is there for investors that a new administration will not declare the bond issue fraudulent and that Citibank should have known better?

5 – Why were investors not told what it costs Paraguay to keep its money protected at the BIS?

6 – What difference would it make to the economy of Paraguay if the bond issue was delayed until after the elections in April and proceeded with the backing of the new government which should be in power for five years? After all the current government is temporary, its mandate dubious and not widely recognized until the elections in April.

An expensive piano for a disputatious borrower

Paraguay’s parliament has just bought a brand-new Steinway piano for which it says it paid US $241,000. The local newspaper ABCColor however found out from Steinway in New York that this particular model cost only $148,000 and transport would be no more than $3,000 – http://www.abc.com.py/nacionales/us-93-mil-mas-por-el-piano-526351.html

So into whose pocket did the extra $90,000 go? That is hard to say, as it was in the case of $85 million which a Paraguayan entity borrowed from a consortium of banks in Switzerland in the mid-1980s, providing a government guarantee and written ministerial undertakings. None of that money was ever spent on the infrastructure projects for which it was raised. It disappeared.

A new Paraguayan government subsequently repudiated that debt and continues to refuse to repay it despite exhausting all legal channels of appeal following a Swiss Supreme Court judgment against it. The country has a history of one government reneging on the financial undertakings of a previous one. There are further claims of about $100 million in the pipeline in this category.

None of this would be of much concern for the rest of the financial world, if Paraguay were not just now planning to float its first public international bond issue in living memory. In the next few weeks, just before elections for a new government, it says it will raise $500 million in an operation managed by a U.S. bank to invest in infrastructure projects.

Paraguay will doubtless give a full account of all outstanding claims against it in the prospectus, and investors will no doubt give it a fair reading. They may also recall the old adage caveat emptor.

Carmen Bugan’s book on Romania – both heart-warming and spine-chilling

Carmen Bugan had an idyllic childhood in the Romanian countryside, relishing home-grown food, unspoilt nature, a benevolent climate and quaint old country customs. Her new book Burying the Typewriter in this respect reads like memoirs from elsewhere in Europe in the early 20th century.

Except that Carmen is in her early forties, and it comes as a shock to realise that this is Romania in the 1970s and 1980s – a land held back in cruel backwardness by the misguided tyranny of Nicolae Ceausescu. If electricity is scarce, that’s not because it has only just been invented. It’s because the regime cares nothing for the wellbeing of its people.

Shock number two comes as a teenager when Securitate police burst in on her when she’s alone at home, interrogate her for weeks, wire the house up with listening devices, come in and out at all times of the day and night, stop her going to school, and make her life a torment for year after year.

Unbeknown to the family, her father had paraded ostentatiously through the centre of Bucharest with protest banners against the communist regime. He was in prison, and the family from then on were pariahs. Only when the mother agreed to divorce her husband did the school allow Carmen to return to classes.

One or two people discreetly showed the family solidarity. But the majority of those around her had no scruples in ostracising them. So shock number three is that these collaborators in her persecution now carry passports of the European Union, despite having shamefully betraying the principles it stands for.

Carmen finally dared to contact the U.S. Embassy to ask for asylum for the family. As she crossed the square to the Embassy, Romanian guards converged to try to stop her while a female diplomat she’d alerted headed out of the gates to meet her. The diplomat reached her first. When she left to return home, the guards seized her and berated her as a treacherous whore. But the diplomat had told her she should say she was under the protection of the United States. It worked and they let her go.

Then followed emigration to the U.S. and scholarships to study at Oxford University. Surprise number four is how exquisitely Carmen writes. From her earliest youth, she immersed herself in the great authors of European literature. When the stress of persecution became intolerable, she wrote quatrains to relieve her despair.

Now, at little more than 40, she lives in Geneva with an Italian physicist husband and two small children. She has come far in a short time.

Burying the Typewriter is a masterpiece of refined expression and a moving story of the victory of light over darkness. Read it.

Canadian police fine Swiss ski jumping gold medallist for speeding

Canadian police fined Swiss ski jumping gold medallist Simon Ammann 138 dollars for speeding. Quite right. Those crazy guys need showing who’s in charge. They caught him on the road heading for a TV studio for an interview.

Pity they did not measure him on the ski trampoline too. They could have fined him twice. I mean: jumping off a huge steep hill into mid-air? Reckless. Asking for trouble. Obviously a misfit.

Dealing with snow: Mont Blanc tunnel motorway shows how

Amid all the grouses about not coping with snow, I should like to pay tribute to the Mont Blanc tunnel motorway operators. I drove back through falling snow 140 kms from Aosta to Geneva last Saturday and never had the slightest problem, even though the road rises to a height of 1,250 metres.

I saw at least 15 teams of snowploughs on the way, moving three abreast each way, allowing space for vehicles to thread in between. Big powerful, snow-moving equipment, with a host of trained personnel ready to turn out late on a Saturday evening to keep the road clear.

The tunnel motorway’s tolls have always struck me as expensive, but if that’s what they spend them on, that’s OK by me. Thank you for helping me to reach home safely.

20 cms of snow and UK airports close down – except one

20 cms of snows fell over night in the SE of the UK last Friday 18.12.09 and had stopped before dawn. Luton airport and the airlines however failed to get more than about half a dozen flights into the air by nightfall that day. I was one of the thousands of passengers checked in and waiting most of the  day before my flight was cancelled. My airline, Easyjet, refused to rebook passengers at the airport and closed their ticket counter at 1650.

“Severe weather” they all said. What “severe weather?” It was sunny all day.

My score: operational efficiency: 1 our of 10, communication with passengers 1 out of 10. Overall: a miserable experience.

Next day at Oxford Airport, its first ever international flight – Baboo to Geneva – took off on time, with mulled wine and mince pies served beforehand. What a difference! I could take the place I reserved 3 months ago for Don Giovanni at the Geneva Opera that evening. Fancy that: an airline which gets you there in time to do what you travelled for!

Not heard of Oxford Airport? It’s on my map now.

Individuals v. nations: footballers show the way

In the globalised world, does an individual owe loyalty primarily to work place or nation? The work place is where you spend most of your time. Colleagues from all cultures and origins make a coherent whole which you identify with. But can you then still identify with your own nation, which has different values?

Modern footballers show the way. Cristiano Ronaldo plays for Real Madrid, together with other players from all over the world, but in the World Cup he joins Portugal, his home country. He identifies with a totally different group. No problem.

At the Christmas dinner of my local Slovene Association (my wife is Slovene), I met a young Slovene woman who works in Geneva for a multinational. There nobody notices she is Slovene. She is one of the team, and belongs there because of her professional qualities. The company sets her values. But at the Christmas dinner, her heart beat for Slovenia. She sat listening to folk songs and mixing with old and young people who lead quite different lives from her.  Sloveneship brought them together, just for that one evening. Next Monday we were all back in our other worlds.

A Day in the Life of Calvin

It’s the 500th anniversary of the Geneva protestant reformer Jean Calvin, so I went to see the virtual exhibition “A Day in the Life of Calvin.”

Calvin pioneered freedom of speech, self-determination of peoples and individual responsibility – he installed clocks in public places and insisted citizens were punctual.

But the speeches and sermons which the exhibition cleverly presents are heavy going: rasping admonitions and complaints about his fellow human beings.

I finally got his idea of “predestination.” We are all sinners in the eye of God. But God’s grace saves some from perdition. ONLY God’s grace. It does not matter whether you are more virtuous than others.

This was a nice justification for his own autocratic powers. It certainly discouraged democratic questioning. His successors quietly dropped the idea not long after his death.