Politics always intrudes into the economy, the world over. Over the last 12 months, we have watched a white-knuckle rollercoaster ride any way you care to look at it. Brexit kicked it all off but far from being a political clean break, that vote looks like it was a high-water mark for the merry band of Brexiteers. Theresa May increasingly looks like a Prime Minister without a mandate. Over in the US, the rank outsider Donald Trump, ranked at a one per cent chance at the start of the Republican primaries, overturned the odds and today he resides in the White House, from where Zeus-like he hurls Twitter thunderbolts. Last week, President Trump decided to showboat his ‘’insanity’’ again on a public timeline.
My use of social media is not Presidential - it’s MODERN DAY PRESIDENTIAL. Make America Great Again! @realDonaldTrump
I heard poorly rated @Morning_Joe speaks badly of me (don’t watch anymore). Then how come low IQ Crazy Mika, along with Psycho Joe, came..@realDonaldTrump to Mar-a-Lago 3 nights in a row around New Year’s Eve, and insisted on joining me. She was bleeding badly from a face-lift. I said no! @realDonaldTrump
President Macron who announced his arrival on the world stage by handshake-wrestling Trump to a stand-still has given Europe its Mojo back.
This political ‘’intrusion’’ is best viewed via the prism of the $5.1 trillion a day foreign exchange markets.
Margaret Thatcher, who admittedly needed a war with General Galtieri’s Argentina to catalyse three consecutive election victories, famously said:
‘’You cannot buck the markets’’ and what I know is that the $5.1 trillion dollar foreign exchange market is one market that cannot be bucked. So let’s start with the dollar which is at a nine-month low. The pound has traded a range of more than 24 per cent since Brexit. The euro has exploded 7.5 per cent higher in 2017. Everyone is piling into Europe and the euro and dumping the dollar.
Closer to home, you will recall that Egypt’s Sisi, Friend of Donald and the man who issued the Qatar blockade signal, wisely decided this was not a time for Egypt to fight the forex markets and devalued the pound last year by about half. Over in Nigeria, which entered a Yar’Adua deja-vu worm-hole, the authorities continue to take the fight to the forex markets. What we know is that the day of reckoning cannot be side-stepped. South Africa’s rand has had to hurdle numerous multiple finance minister decapitations.
The ‘’Political Economy’’ here in Kenya is super-sized in relation to the size of our economy. I have seen very compelling analysis that this election will in fact see a total spend in the order of $4b across the Presidential, gubernatorial et-al elections. That’s a very big number for an economy the size of ours. The intrusion of the political economy into the real economy is a very expensive thing.
The real economy needs a transparent process, a first round result and a gracious loser. That’s the ask.
Aly-Khan Satchu is a financial analyst