*National Debt vs Foreign debt argument.* * * *Q1: Why borrow from WB and not Kenyan Banks?* When you borrow locally, you are essentially getting money from the market, thus you are stiffing purchasing power parity. This means you are mopping money from the markets thus meaning there are more goods and no/little money. When you borrow abroad, you are immediately adding money into the economy, and run the risk of loosing more in the future through interest and loan repayment. Means more money today, less goods*.* * * *The key is, what policy the government is pursuing at that time (of borrowing). Typically, loans from abroad mature after several years, 20, 30 or even 40 years! Local commercial bank loans mature in 2, 5, 8, max 15 years. Local loans cannot be differed! This helps in checking inflation (now you understand what Areba is talking about?). * * * *A ballooning local debt is a bigger threat to GDP than a ballooning foreign debt.* *Q2: Why do we get loans from China and not WB, USA/Britain and Kenyan Banks?* The cost of borrowing is high in Kenya. Its very cheap in China. In the US and WB its relative. Now, Chinese offer cheaper technical expertise while doing the same, the WB dispenses expensive technical personnel thus inflating the cost. Think about the flopped Kenya Railways privatization by the WB. The Chinese would have built us new rail network by now. *When you default on the Chinese loans, they don't send you to credit reference bureaus, they simply come for your oil or natural resources. When you default on WB/USA/Bristish loans, they lower your credit rating thus you cant borrow at cheaper cost no more/you top up your loan to repay your loan! Now thats why we keep going to the east with our bowls.* My 2 cents On Mon, Jun 6, 2011 at 8:28 PM, Odhiambo Washington <odhiambo@gmail.com>wrote:
On Thu, Jun 2, 2011 at 21:43, Mark Mwangi <mwangy@gmail.com> wrote:
I think we forget our history too fast. The Americans, The British etc are represented by the Facebooks, Googles, Nestles, Unilevers, CocaColas, BPs, Totals, and Shells operating freely in the country just like the East India company walked in through Mombasa in the name of trade.
The Chinese are the smartest around in my view. Shut down any fishy foreign companies reaping a profit from your peoples data and skill. And don't apologize for it. Rhetoric about global villages and the world being flat doesn't faze me.