Tag Archive: Investment

Bitcoin – Is It Merely ‘A Speculative Bubble’?

One of my favorite reads this weekend is Oaktree Capital co-founder Howard Marks’  latest memo to clients- “Yet Again?”

I can totally relate to the issues he highlights about Bitcoin and the numerous digital currencies we have these days. Particularly, i fully understand the honest statement he makes –” I think I understand what a digital currency is, how Bitcoin works, and some of the arguments for it. But I still don’t feel like putting my money into it, because I consider it a speculative bubble. I’m willing to be proved wrong” ( Page 8 of the Memo “Yet Again?”)

In fact, Just a few weeks ago, a friend of mine, and a reader of my blog, wrote me a message on WhatsApp after I shared an article about How Bitcoin Is Reducing The Need For Trade financing.

She asked me-

“Rahab, what do you think of Bitcoin and all these digital currencies I hear about? You know, I still don’t understand this whole buzz in Finance these days.”

She continued to ask me –

” And with all this fraud going on these days, Is it real, or is it another one of those scams? I hear people are making tons of money in this business. But how?”

I had to be honest with her. I told her,

“Reen dear, I am still learning about these things too.” 

From his memo, i believe there is a lot investors can learn. For example, It’s not enough to accept Bitcoin merely as a medium of exchange. For investors, it is also worth considering issues such as ‘Bitcoin price volatility and it’s future’ and some of the ‘factors that lead to it’s volatility.’

Still wondering what Bitcoin is and how it works? A great place to start is by reading this article ‘Why Bitcoin Matters’ by Marc Andreesen, the co-founder of the venture capital firm Andreessen Horowitz.

Renewable Energy Investment: Google’s Commitment To Invest in Africa’s Biggest Wind Farm In Northern Kenya

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Google Company is actively taking part in minding the future. The company has progressively made a positive impact in the society and built a reputation for itself in the last few years by being actively involved in sustainable investments and developments. Google is known for investing in renewable energy, which is not only an innovative and altenative solution for their data centers, but also a means to offer sustainable solutions to real life problems facing the society today. Such innovative solutions is what the world currently needs, especially in times like these where one of the biggest challenges we’re facing today is the problem of energy. It’s no secret that most of the energy we use comes from burning fossil fuels which produce large volumes of Co2, that not only damage the environement, but also contribute to the so called ‘man-made’ climate change. In the current condition of our society, what we urgently need are innovative and sustainable solutions that try to solve or end the cycle of global warming.

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Google’s continous  and latest commitment to making a positive impact in our society, is to take part in a huge investment in Africa for the second time, by commiting to invest in a wind power project, in Northern Kenya, which when completed will be Africa’s Largest wind power farm.

(Read about the first one here here-‘Investing in a South African solar project’)

The Lake Turkana Wind Power Project is located in the Loyangalani district of Kenya, Marsabit West County, in North-Eastern Kenya and the wind farms site is single and biggest wind farm in Africa covering 40,000 acres (162km2). According to Lake Turkana Wind Power Project ( LTWP), the project will comprise of 365 wind turbines (each with a capacity of 850 kW), the associated overhead electric grid collection system and a high voltage substation. (More on the Lake Turkana Wind Farm Site and Wind Turbine details- here)

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The location of the wind turbines is also an important aspect to think about.  Even landscapes for low carbon power also call for a careful thinking where to put the wind turbines. For the Lake Turkana Wind Power Project, the site is said to be optimal! Even though it is known that everything else can be quite hard in the Turkana region, Lake Turkana is a proven ideal location because there, you get literally one of the best winds in the world,  which is reliable for this sort of project. –The area is a relatively a desolate spot with no transmission line networks.  The winds sweeping through the area have their origins from the Indian Ocean and are channeled through the “Turkana corridor” which are created by both the Ethiopian and Kenyan highlands.

(More details on Turkana corridor Phenomenon -here)

For this project, Google is joining a large group of international investors which include, Overseas Private Investment Corporation (OPIC) the U.S. government’s development Financial InstitutionsVestas which is supplying the turbines for the wind farm.  Google intends tp purchsase Vestas’ 12.5% stake in Lake Turkana once it comes online  (More about the Investors here)

The Lake Turkana Wind Farm project which achieved it’s Financial close  on 19th December 2014,  is being financed through a combination of both debt and equity financing. More information about the financing structure can be found on the Lake Turkana Wind Power Project – Fact Sheet

The Lake Turkana Wind Power Project in Northern Kenya will be of great help and beneficial for the organisations involved (including Google) and the society at large. The investment is expected to bring 310 Megawatts to Kenya, enough to provide power to more than two million households in Kenya. This is quite beneficial because it brings   stability to Kenya’s energy supply and to enable reduce reliance on burning fossil fuels, which we all know is a major contribution to Co2 that are quite damaging to the environment. Wind Power is sustainable and it is a source of elecrtic power generator which is cheaper and reliable. Clean energy is the future.

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Wall Street And Pope Francis

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Pontiff’s scepticism about capitalism may not have been everyone’s favourite topic. Atleast not to the ‘solely money and profit’ minded people. But i am glad more financial professionals are beginning to spot the need to show concern about human welfare and advancement. Some may wonder, “Why much effort to focus on showing love for humanity in a world where showing some compassion is close to none?” The answer is right there-” It’s starts with you, anywhere, anytime!” It’s starts with everyone. I agree, this may may not be easy as it sounds, especially in a world where people are mostly profit oriented and all that matters to most is money, power, technology and materials. Inequality in today’s society and the growing gap between the rich and the poor is no news to our ears. The imbalance of distribution of wealth is sharply visible.

Nevertherless, Pope Francis criticism on money and wealth matters is a reflection of what he himself has already gone through. I like to think that he is preaching what he practices and vice versa. This for example is reflected in the case of the Vatican Bank (also known as ‘The Institute For the Works of Religion (IOR)’ ), where the private bank was linked to money laundering, financing terrorism and tax evasion. Pope Francis worked further on the reform efforts started by his predecessor Pope Benedict XVI to ensure that the bank was complying with international banking standards and other transparency rules. Among his actions, he also replaced many bank’s advisors and to mend it’s secretive ways. Although Pope Francis went beyond making the bank more open in its business dealings and changing its mission to emphasize helping the poor, the best economic news were that the private bank tremendously improved and is making huge profits.

(More on ‘Reforming The Vatican Bank’ can be found on the Huffington Post)

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Indeed, the Pope’s criticism was warmly welcome by a few financial institutions professionals at the wall street.  Of course this is not to say that they waited until the Pope said something. In fact, certain corporations and  financial instituitions had already started doing this. And through his criticism on this issue, many more are now slowly taking part in philanthropy and social investments and are striving to impact the society in a positive way. More organisations are taking part in the sustainable social investments. In fact when it comes to investment banks and financial institution catering for the poor and needy, i like to give a practical example of Goldman Sachs 10,000 Women. I followed up on their citizenship program especially in underserved economies like Africa and parts of  Asia and South America, where the instituition  empowered women entrepreneurs in Africa by giving them access to an educational training and enabled them to start sustainable businesses.

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On another article by K.J. McElrath, i  fully agree with the author that Pope Francis actions of eliminating a few traditional practices in the banking industry is simply a way of sending a strong message to the for-profit banking industry, to show them that profit making and considering the needs of  low-income people can be done without oppressing them. In third world countries, even though micro finances are proving that banking with the poor can be successful, i strongly believe the traditional banking institutions should rethink their ways of catering for the underserved economies and aggressively take part in addressing the issues of poverty and social justice.