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HA Commentary
Doesn’t take a genius to figure out who is killing off productivity here, productivity being a real driver of economic growth, unlike government spending and money printing.
New rules hit cellphone boom
Jun 17 2010 08:55
Nairobi – A push by African countries to require mobile phone users to register their numbers is curbing the continent’s spectacular market growth of recent years and jeopardising the goal of telephone access for all.
Analysts said that mobile operators were set for a short-term hit in revenues as many of Africa’s poorer or more remote users struggle to produce the necessary documents and so risk being cut off.
A number of African governments are calling on companies to register all their pre-paid mobile phone users, who make up 97% to 99% of the market on the continent, in order to boost national security and help fight phone-related crime.
HA Commentary
Who said the rate cut cycle was through? Certainly not us. (see Jan and March 2010). Manufacturing and industry will require another money printing spree to keep the ‘growth’ going.
Manufacturing rebound loses momentum
Jun 17 2010 13:18
Johannesburg – South Africa’s manufacturing rebound lost momentum in the second quarter of 2010, the Bureau for Economic Research (BER) at the University of Stellenbosch said on Thursday.
After the patchy export-led rebound in manufacturing business conditions during the first quarter, the latest BER manufacturing survey showed some momentum loss.
“The stimulus from exports and restocking seems to have waned to some extent and domestic demand remained weak, leaving the sector without the necessary growth momentum and resulting in broad-based softness,” said BER senior economist Christelle Grobler.
She said manufacturing business confidence had declined marginally from 28 to 27 index points, and remained at a low level.
It was currently 20 points below its long-term average.
HA Commentary
It is unfortunate that economists add up aggregate spending in an economy – whether private or public – to calculate GDP, and hence to them, higher spending means higher growth. An economy is the sum of all its households and businesses, so if households must budget and cut back spending to restore financial order, and set the platform for future prosperity, this is also what’s right for the economy to return to health and on a path of prosperity and real growth. Government spending to offset this decline only prevents the necessary corrections from taking place, further damaging the economy. Pravin Gordhan should send the section on “How to avoid an own goal during the Cup” to all his departments and give instructions to follow strictly.
How to avoid World Cup overspending
Jun 15 2010 10:17 / Helena Wasserman
Johannesburg – Feel it, it is dear. Catching the 2010 FIFA World Cup vibe can be an expensive exercise.
The cost of soccer gear, vuvuzelas, alcohol, party food, entertainment and going out – combined with a potential loss of income for many as the traditional economy grinds to a halt – may result in an almight financial hangover for households.
Anecdotally, it seems South Africans are splurging on apparel and World Cup tickets as well as on entertainment, says Derek Engelbrecht, head of Ernst & Young’s retail and consumer products sector.
This artificial, short-term spending spike will probably have a “December effect” (an expenditure boom followed by two lean months). July and August should be tough, according to Engelbrecht.
While workers in the hospitality and entertainment industries may benefit during the World Cup, employees in other sectors – particularly those paid on a commission basis – may be hit hard.
In addition, for some South Africans the World Cup was less of a financial windfall than expected, says Herculaas van Heerden, spokesperson for the financial comparison portal Justmoney.co.za.
HA Commentary
To those South Africans who fear Malema’s calls to nationalise the mines as they consider packing their bags to make a run for Australia: your new PM down under has just effectively nationalised the mines who by 2012 will have an effective corporate tax rate of some 57%. Where lies the political risk and who are the communists now?
State participation in mining will grow
David McKay | Sun, 13 Jun 2010 12:04
[miningmx.com] — BHP BILLITON chairman Jac Nasser’s letter to the Australian Stock Exchange last week is a strong indication of how political the dispute against the Australian government’s proposed super tax on the resources industry has become. Nasser’s chief concern is that the tax reform proposals come with almost no consultation and he is attempting to raise popular consciousness against the government’s apparent insouciance.
“One of the key questions you asked,” wrote Nasser of requests by shareholders to the company, “… is why BHP Billiton and the resources industry do no engage in more consultation with the Government to find a solution in Australia’s best interests …. For reasons we do not understand the Government chose not to undertake consultation on the nature and design of the proposed super tax prior to its announcement.”
BHP Billiton’s position is why some fundamentals of tax reform have not been applied in this case. For instance, if the tax puts the Australian minerals industry as a disadvantage, then why is it being applied? Nasser also calls for flexibility. Profits on mineral production alone should be taxed, not infrastructure investment. Rate variations should also be applied accounting for the mining of certain minerals, he says.
It’s difficult to avoid comparisons between the Australian government and South Africa’s much-derided Department of Mineral Resources (DMR), formerly the Department of Minerals & Energy (DME), which has never shirked consultation. The Royalty Act, for instance, was first a levy on revenue and has now been negotiated into a pretax levy. Account has also been made for marginal producers and there are different rates of tax for minerals.
Let’s not put the DME on a plinth (hell, no), but credit where credit’s due: the South African government wears a silk glove compared to the iron clad first of Kevin Rudd’s Australian administration. The expectation, however, is that the Australian government will have to negotiate. Perhaps that will be only after a successful election race. Elections must take place within 10 months from now.
HA Commentary
Would you even have known about this had it not been for the FIFA retaliation?
Bavaria flew in ‘orange dress’ organisers: Fifa
June 17, 2010
Dutch brewery Bavaria flew in two co-ordinators from the Netherlands to organise the “orange dress” ambush marketing campaign, world football body Fifa said on Thursday.
“In this case, it has surfaced that at least two co-ordinators were flown in from the Netherlands to organise this ambush activity — they hired innocent local girls and devised a strategy,” the Fifa media desk said in a statement.
This included training the group of local girls before the match.
Also, the two organisers’ strategy included “disguising them as Danish fans (covering their orange dresses) and using a decoy group to divert the attention of Fifa and safety and security authorities to another area while the big group entered the stadium through another side, and then compelling them to lie to the police about the organisers’ involvement in the activity.”
“They also obtained tickets from unauthorised sources,” said Fifa.
Two Dutch women, Barbara Castelein and Mirte Nieuwpoort, appeared in the Johannesburg Magistrate’s Court on Wednesday after a few dozen women, all dressed in the same orange mini-skirts, were taken in for questioning by the police on Monday.
HA Commentary
And so the real estate ponzi continues to grow.
17.8% rise in size of bonds approved
Thursday Jun 17, 2010 / Sapa
Home buyers have benefited from relaxed lending criteria, according to data released by bond originator ooba.
“Banks continued to relax their lending criteria in May, with larger bond sizes being approved and smaller deposits being required,” ooba said in a statement.
The oobarometer price index showed other positive news, with the average purchase price increasing 12.2 percent year on year in May to R872 083.
“This represents the third double-digit growth percentage recorded this year,” ooba said. “The average purchase price for the first five months of 2010 increased 10.5 percent over the same period in 2009.”
The statistics showed that the average approved bond size increased 17.8 percent year on year in May to R716 862, from R608 337 in the same month last year.
The average deposit size was also significantly lower, at R155 221 down 18.0 percent year on year, and 17.8 percent of the average purchase price.
According to ooba, the average purchase price paid by first-time buyers grew year on year by 9.1 percent to R604 857, from R554 303 a year earlier.
This brought the average purchase price paid by first-time buyers for the first five months of this year up 10.6 percent over the same period last year.
According to Saul Geffen, chief executive officer of ooba, the buy-to-let and holiday home statistics remained down year on year.
“Only 6.3 percent of application intake in May was for these purposes, compared with 9.4 percent in May 2009, as investors and holiday home buyers remained cautious,” Geffen said.
The banks’ ratio of declined applications showed a year on year increase of 3.4 percent to 52.9 percent.
“The combination of a consistent upward trend in year on year property purchase prices, improved affordability,” Geffen said.
“Increased access to credit through lower deposit requirements and higher approval rates all point to positive market conditions for the remainder of 2010.”
HA Commentary
This global warming is just getting too hot to handle. Call the IPCC!
Cold snaps SA
Jun 17, 2010 3:35 PM | By Sapa
Ice on Sandton’s roads, penguin chicks struggling to cope with cold rain, snow, and frozen football pitches took South Africa by surprise during the first week of the World Cup soccer matches.
On Thursday, the coldest towns in the country were Deneysville and Villiers in the Free State, recording temperatures of -13.4 degrees Celcius according to Weathersa.
Alexander Bay in the Northern Cape recorded winds of 46km/h, with warnings of black frost — melting ice — on many of the country’s roads, making travel perilous.
Guardian.co.uk blogger Sean Ingle wrote on Thursday morning: “Last week the temperatures in South Africa were pushing 25c – today, however, Ghana’s training session was delayed for two hours due to frozen pitches at their training base north of Rustenburg.”
In Algoa Bay near Port Elizabeth, extreme cold, wind and heavy rain killed 600 African penguin chicks on Bird island.
The Salvation Army, which usually plans for higher demand for help during winter, said it had noticed an increase in the number of people arriving at its soup kitchens.
“I think this is our first real cold snap and we have seen numbers increase in the city [Johannesburg],” said spokesman Garth Niemand.
HA Commentary
How about what proponents of the free-market, those loonie right wingers, would call bankruptcy?
Fixing bankers’ pay
Felix Salmon|17 June 2010 02:03
Soapbox
It’s important to get incentive alignment,” said Stein, between managers and taxpayers.
I’m at a conference on the Squam Lake Report this afternoon, where Harvard’s Jeremy Stein has just given a very compelling presentation on the subject of executive compensation at banks. His bright idea is that you don’t regulate the level of pay at banks, and that you certainly don’t try to convert pay into stock, for reasons similar to those glossed by Justin Fox at HBR:
Equity in a highly leveraged firm (banks and investment banks have debt-to-equity ratios that start at 10-to-1 and go much higher) is equivalent to a call option. That is, if the firm goes bust the equity holders only lose a little but if it does well they can reap huge rewards. So shareholders have every incentive to push executives at highly leveraged firms to take big risks (and executives with big equity stakes have every incentive to take big risks).
This conforms with what we saw at Bear Stearns and Lehman Brothers, where the managers had large equity stakes.
So what to do? “It’s important to get incentive alignment,” said Stein, between managers and taxpayers. And one way of doing that is to force a large part of executive compensation to be paid in cash – and then to hold back that cash for several years, to be surrendered in the event that the bank fails or receives exceptional government support.
