No president has faced problems like me – Rupiah
Written by Zumani Katasefa and Abigail Chaponda in Luanshya
Sunday, December 14, 2008 10:15:10 AM
PRESIDENT Rupiah Banda yesterday said he does not think that there has been a president in Zambia who has faced problems like him.
Speaking before he held private talks with members of the Mine Workers Union of Zambia (MUZ) at Luanshya Copper Mines general offices, President Banda said Zambia was facing very serious problems specially with the massive job cuts in the mines following the global financial crisis and the fall in copper prices on the international market.
President Banda said his government was concerned about the problems the country was facing particularly on the Copperbelt.
"A lot of companies have been closed because we depend on each other, belong to a global village. What is happening is very serious," he said. "This is coming immediately after my election, I do not think there has been a president who has faced these problems I am facing."
President Banda said it was important for the press to help the people that there was a problem worldwide. He expressed concern that Luanshya town had experienced a lot of problems for some time, such as hunger and unemployment. He said he had rushed to Luanshya to hold meetings with the concerned stakeholders to try and find solutions to the problem resulting from the job cuts that have rocked mining firms.
"Most people thought I have come to watch football (CHAN match between Zambia and Angola in Chililabombwe). I would have loved to watch football but it is not time for me to watch football when we're facing problems," said President Banda.
He said Luanshya was known for problems adding that the people there were anxious over the future of Luanshya Copper Mines (LCM), the main economic lifeline of the town.
"I am sure you remember that in 2004, Luanshya Mine was handed over, ... when production resumed, Luanshya mine brought economic life back to Luanshya town. Employment at the mine then increased from about 600 at the beginning of 2004 to more 3,200 in 2007. This was all driven by this government's desire to support our people," President Banda said.
He said people should not be used by those who wanted to bring anarchy in the country because this might make development impossible.
"We have an obligation to ensure that this country remains a good destination for investment," he said.
President Banda said he was committed to ensuring that his government continued to attract strategic partners to invest in key sectors of the economy and that he would not allow any delay in the issuance of trading licenses.
President Banda's meeting was prompted by information that LCM was under threat of closure.
"We are not going to allow any bureaucratic delay in issuing licenses, we are not going to allow that. That is my position," he said.
President Banda arrived at the Ndola International Airport at about 08:00 hours and there were no MMD cadres to welcome him.
Some cadres who spoke on condition of anonymity said they were not allowed to go to the airport to receive the President.
President Banda was accompanied by finance minister Situmbeko Musokotwane and other government officials.
Labels: JOBLOSSES, MINING, MUZ, RECESSION, RUPIAH BANDA
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8 really, really scary predictions
5 of 8 Jim Rogers
The commodities guru predicted two years ago that the credit bubble would devastate Wall Street.We are in a period of forced liquidation, which has happened only eight or nine times in the past 150 years. The fact that it's historic doesn't make it any more fun, of course. But it is a pretty interesting time when there is forced selling of everything with no regard for facts or fundamentals at all. Historically, the way you make money in times like these is that you find things where the fundamentals are unimpaired. The fundamentals of GM are impaired. The fundamentals of Citigroup are impaired.
Virtually the only asset class I know where the fundamentals are not impaired - in fact, where they are actually improving - is commodities.
Farmers cannot get a loan to buy fertilizer right now. Nobody's going to get a loan to open a zinc or a lead mine. Meanwhile, every day the supply of commodities shrinks more and more. Nobody can invest in productive capacity, even if he wants to. You're going to see gigantic shortages developing over the next few years.
The inventories of food worldwide are already at the lowest levels they've been in 50 years. This may turn into the Great Depression II. But if and when we come out of this, commodities are going to lead the way, just as they did in the 1970s when everything was a disaster and commodities went through the roof.
What I've been buying recently is agricultural commodities. I've also been buying more Chinese stocks. And I'm buying stocks in Taiwan for the first time in my life. It looks as if there's finally going to be peace in Taiwan after 60 years, and Taiwanese companies are going to benefit from the long-term growth of China.
I have covered most of my short positions in U.S. stocks, and I'm now selling long-term U.S. government bonds short. That's the last bubble I can find in the U.S. I cannot imagine why anybody would give money to the U.S. government for 30 years for less than a 4% yield. I certainly wouldn't. There are going to be gigantic amounts of bonds coming to the market, and inflation will be coming back.
In my view, U.S. stocks are still not attractive. Historically, you buy stocks when they're yielding 6% and selling at eight times earnings. You sell them when they're at 22 times earnings and yielding 2%. Right now U.S. stocks are down a lot, but they're still very expensive by that historical valuation method. The U.S. market is yielding 3% today. For stocks to go to a 6% yield without big dividend increases, the Dow will need to go below 4000. I'm not saying it will fall that far, but it could very well happen. And if it gets that low and I'm still solvent, I hope I'm smart enough to buy a lot. The key in times like these is to stay solvent so you can load up when opportunity comes.
Labels: GREAT DEPRESSION II, JIM ROGERS, RECESSION
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60% drop in nickel prices necessitated restructuring at Munali – Albidon
Written by Joan Chirwa
Monday, December 08, 2008 11:44:21 PM
ALBIDON Zambia Limited has said the 60 per cent drop in nickel prices in the last nine months necessitated its restructuring process at Munali Nickel Project, leading to job cuts of 53 workers.
The company, a 100 per cent shareholding of Albidon Mine of Australia, stated that it was inevitable for the company to trim down its workforce to respond to the declining nickel prices.
“As much as the company regrets this turn of events, metal prices are beyond the company's control and rationalisation was inevitable if Albidon was to continue its operations at Munali for the benefit of all stakeholders,” stated Grant Pierce, Albidon Zambia Limited's general manager. “The total number of employees affected is 53, not 271 as reported on Monday.”
Pierce stated that the company acted in accordance with the country's labour laws.
“Accordingly, management had no choice but to restructure its operations and reduce staff numbers. This reduction follows a previous reduction in expatriate and contractor labour following completion of construction activities and a reduction in staff at Albidon's corporate office in Australia,” stated Pierce. “The company has acted in accordance with Zambian labour laws on advice that the redundancy provisions and procedures under section 26 B of the employment Act, chapter 268 of the Laws of Zambia, relate to oral contracts only and therefore do not apply to Albidon employees as they were engaged on written fixed term contracts of service. Any employees not entitled under the terms and conditions of their contracts to a redundancy payment, were in fact paid an ex-gratia redundancy package regardless.”
He stated that it would not ramp up to full production until the end of March 2009, coinciding with the drop in nickel prices.
“Projections by experts are that low nickel prices will continue for the foreseeable future. Albidon was not in production to enjoy higher nickel prices during the mining boom. Furthermore, Munali has not reached a financially viable position and cannot do so unless significant cost savings can be achieved immediately,” stated Pierce.
Labels: JOBLOSSES, MUNALI NICKEL MINE, NICKEL, RECESSION
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Chambishi smelter closes indefinitely
Written by Mwila Chansa and Zumani Katasefa in Kitwe
Sunday, December 07, 2008 6:31:45 PM
CHAMBISHI Metals smelter has been shut indefinitely, sources have revealed.Well-placed sources within the company, which is the sister company to Luanshya Copper Mine, told The Post that management told the employees through their union that the smelter had been shut and would only remain open for care and maintenance purposes.
But Chambishi Metals chief executive officer Derrick Webbstock said the smelter had been shut down temporarily because of the losses it was making as a result of the falling prices of cobalt.
"Yes, it has been closed temporarily but operations will be re-started as soon as prices pick up but the rest of the operations continue as normal," said Webbstock.
According to sources, about 90 per cent of the workforce at the smelter faced the possibility of redundancy.
"This afternoon [Friday], management informed the employees through their union that the smelter has been shut. It will only remain open for care and maintenance purposes and that about 90 per cent of the workforce at the smelter face being laid off," the source said. "They will be entitled to all their conditions of service as in salaries, their leave days will accrue, housing allowance and everything except that they will not be reporting for work."
The source feared that the closure of the smelter would soon affect all areas of operations because the smelter fed all the other plants.
"It is a kind of a forced leave where you get your money and all but you don't report for work," the source explained.
According to the source, management would only consider recalling their workers once the metal markets stabilise.
The source appealed to the government to quickly intervene in the matter, saying management was playing "hide and seek" because no investor would continue paying workers who do not report for work.
"They are just short of telling us that we have retrenched you because eventually this thing will lead to retrenchment because even during ZCCM days, first people were sent on what they were calling a recess whilst they were home, the letters of retrenchment found them there," the source added.
The source observed that it would be very difficult for employees to regroup and negotiate for a reasonable retrenchment package if the letters found them at their homes.
The source said there were over 200 employees at the smelter whilst the old plant had 700 plus employees.
Meanwhile, Luanshya Copper Mine (LCM) has retrenched five more expatriates as a cost-saving measure following the falling prices of copper and cobalt on the international market.
This brings the total number of expatriates retrenched so far to 13 out of the 18 expatriates the company had employed.
LCM public relations officer Sydney Chileya confirmed the development yesterday, saying management had also intensified its cost-saving measures by cutting on contractors whose contributions did not directly affect the operations of the company in the short term.
“Other cost measures taken are further reduction in expatriate staff, critical review of all required spares, consumables as well as continued negotiations with all major suppliers for price reduction,” Chileya said.
And according to a management brief, the company would now focus on improving production at the Baluba mine shaft.
The brief signed by chief operations manager James Bethel stated that during this time, it was more critical than ever for the company to maintain its focus on safe production and workers should not allow the situation to distract them from discipline and compliance to safe production.
The local staff directly employed by LCM have however not been affected by the retrenchment exercise.
Anxiety has gripped many Luanshya miners who fear that the mine, which forms the economic back bone of the town, might be closed. Others have suggested that they be given their terminal benefits before the situation worsens.
Other mining companies like Konkola Copper Mines, Mopani Copper Mines and Bwana Mkubwa have started cutting down on their workforce systematically in view of the low copper prices and the global economic meltdown, which they say has raised their cost of production.
Labels: CHAMBISHI MINE, MINING, RECESSION
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Fed Keeps $2 trillion secret, Goldman Sachs shorted its sales
Much of high finance lately has not been legal
This policy of socializing risk and individualizing profit may be getting out of hand. To update the Wall Street bailout, we trim, blend, and append five 2008 articles from: (1) Bloomberg about the secret recipients on Nov. 10 by Mark Pittman, Bob Ivry, and Alison Fitzgerald; (2) the Los Angeles Times about Goldman’s duplicity on Nov 11 by Sharona Coutts, Marc Lifsher, and Michael A. Hiltzik; (3) the Washington Post about bank tax breaks on Nov 10 by by Amit R. Paley; (4) USA Today about AIG by Barbara Hagenbaugh on Nov 10; and (5) Reuters about Fannie on Nov 10.
by Jeffery J. Smith, November 2008
Fed Refuses to Tell Whom It Gave $2 trillion
The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or what assets the central bank is accepting as collateral.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. In a Sept. 22 campaign speech, Obama promised to ``make our government open and transparent,” yet he as remained aloof so far.
Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.
Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.
Mark Cuban, an activist investor and owner of the Dallas Mavericks professional basketball team, created the Web site BailoutSleuth.com; in a possible move of retaliation, he has recently been charged with insider trading.
JJS: The loans reached two trillion pretty fast. How big will the bailout be before it’s over? Already, two trill is about $15,000 for every registered voter. Rather than bail out Big Banks and Big Business then hope for trickle down, we could pay citizens a dividend then not even worry about trickle up.
Goldman Sachs urged bets against California bonds it helped sell
Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds despite having collected millions of dollars in fees to help the state sell some of those same bonds.
The giant investment firm did not inform the California Treasurer what it was doing. Goldman's strategy would tend to drive down the price of California bonds which would raise the interest rate the state would have to pay to borrow money, thus costing taxpayers more. An increase of a single percentage point on a $1-billion bond issue would cost taxpayers an additional $10 million a year in interest. Gov. Arnold Schwarzenegger has warned that the state could run out of cash as early as February.
Goldman stood to profit from several aspects of California's sale of bonds. First, it collected millions of dollars in fees for bringing the bonds to market and finding buyers. Then it sold a credit default swap (CDS), that is essentially an insurance policy against a bond default.
In a CDS, the buyer pays a fee in exchange for a promise of a full refund of the bond's face value should, for example, California refuse to pay back what it owes. While California has never defaulted, the swaps' prices rise as states or municipalities slide deeper into debt. If a bond issuer does default, the swap sellers might not be able to pay the swap buyers.
When the prices of default swaps on Lehman Bros, Bear Stearns, and American International Group soared, it signaled to investors that the firms were in trouble; then the three collapsed. Investigations continue into whether insiders manipulated those prices to undermine confidence in the firms and drive them out of business and out of competition with the survivors, such as Goldman Sachs, which provided Washington with Hank Paulson, now Secretary of the Treasury.
With Attention on Bailout Debate, Treasury Made Change to Tax Policy
In the midst of the late-September bailout, the Treasury Department issued a five-sentence notice creating a sweeping change to two decades of tax policy, giving banks a windfall of as much as $140 billion. Until the financial meltdown, it was impossible to revamp this section of the tax code because this would look like a corporate giveaway, according to lobbyists.
No one in the Treasury informed the tax-writing committees of Congress about this move. Some congressional staffers privately concluded that it was illegal. But they did not say so publicly, since a repeal could unravel several recent bank mergers made possible by the change.
Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Robert L. Willens, a prominent corporate tax expert in New York City, said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change.
Treasury will give AIG another $40 billion
T he Federal Reserve and Treasury Department upped the government's role in American International Group (AIG) to more than $150 billion with a restructuring of its loan package that includes $40 billion from the financial rescue package and other measures.
As a result, the Fed is cutting a previously announced loan to AIG to $60 billion from $80 billion. A previously announced $37.8 billion loan from the New York Fed Oct. 8 will be repaid and ended because of the new program.
AIG is now the largest recipient of tax revenue during this bailout. The Federal Reserve in mid-September said it would provide AIG with an $85 billion emergency loan, putting the government in control of the flailing insurance giant. Less than a month later, the Fed added $37.8 billion to the deal.
AIG spent $443,000 on a week-long celebration. AIG had a net loss of $24.47 billion or $9.05 per diluted share, in the third quarter.
Fannie Mae posts record $29 billion loss
Fannie Mae lost a record $29 billion in Q3. Their quarterly loss is their fifth consecutive.
Fannie Mae's loss equaled $13 per share, compared with a loss of $1.4 billion, or $1.56 per share a year earlier. Stockholders equity fell to $9.3 billion from $44 billion at the end of 2007. The figure may be negative by December 31, the company said.
Fannie Mae and rival Freddie Mac own or guarantee nearly half of all US residential mortgages.
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Jeffery J. Smith runs the Forum on Geonomics.
Labels: BANKING, INFLATION, RECESSION
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Form task force to deal with global economic crisis, advises Sichinga
Written by Chiwoyu Sinyangwe
Friday, December 05, 2008 11:50:42 PM
ZAMBIA should constitute a Task Force to deal with effects of the current global economic crisis unlike seeking help from another country that is equally facing similar challenges, economic consultant Bob Sichinga has advised.
Commenting on recent requests by President Rupiah Banda for Nigeria to help Zambia deal with the impacts of the current global economic crisis which has seen the country's mining sector affected on account of declining metal prices, Sichinga said Zambia had enough manpower to devise a plan of mitigating the impact.
Sichinga said there was need for domestic policy response to the current challenges the country was facing as a result of the global economic problem.
He further said there was also need to ensure efficient delivery of services by the government.
Sichinga, however, acknowledged that Nigeria had over the years developed its local economy and was in much stronger position to deal with the effects of the current global crisis than Zambia.
President Banda, on his first foreign trip since he came into power requested for Nigeria's assistance to tackle effects of the global economic crisis on Zambia's economy.
“I don't think Nigeria has any particular solutions to which we as Zambia can pick any new ideas from. What I would like to acknowledge though is the country needs a strategy to address the global financial crunch,” Sichinga said. “Zambia needs to address reduced earnings from copper due to declining copper prices.”
And Sichinga said the immediate challenge facing the country right now was to manage the exchange rate regime which has seen the local currency continuously collapse against major convertible currencies.
“Zambia needs to address this dual challenge of deteriorating exchange rate while at the same time, allowing the current foreign exchange control regime continue because right now the Bank of Zambia has been repeating that they are going to introduce measures to control the flow and outflow of foreign currency. I think they are mistaken,” Sichinga said.
“There is no single country in the world where you can do just as you like. There is need to manage the investments in the country and how that money gets re-externalised. I am not advocating that movement of foreign currency should be restricted.”
Labels: ECONOMY, KWACHA, RECESSION, ROBERT SICHINGA
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Kwacha depreciation to continue, warns Expert
Written by Joan Chirwa and Kabanda Chulu
Thursday, December 04, 2008 5:14:55 AM
ZAMBIA will continue to witness huge swings in the exchange rate as long as it remains porous in terms of foreign currency regulation, a local economist has warned.
But Central Bank governor Caleb Fundanga has said the government will not introduce exchange controls to prevent the outflow of funds since that was not the solution to the current global economic crisis.
Meanwhile, the Databank Group, a Ghanaian institution that monitors and assesses the performance of selected African stocks, has observed that the drying up of foreign investments on some African stock markets may persist until next year.
The local currency has significantly depreciated against major foreign currencies within a short period, following an increased demand for foreign currency by some market players. Foreign exchange experts had earlier predicted that the kwacha would gain its ground against the US dollar around this time. The local currency has however, depreciated to trading levels of around K4,500 against the US dollar last week from around K3,700 a few weeks ago, with some experts blaming the situation on falling copper prices on the international market.
Foreign exchange experts last week indicated that declining commodity prices globally remain a concern among economies in general and Zambia was no exception to his. They explained that volatility in the local currency would thus be a consequence of movements in copper prices 'by and large'.
Copper fell nearly three per cent last Thursday, shrugging off a softer dollar, as the persistent weak demand outlook dragged down prices. Copper for March 2009 delivery edged down to US $1.52 per pound while copper for three month delivery on the London Metal Exchange dipped to US $3,685 per tonne on Thursday.
Metals analysts say until there is a turnaround in the physical demand picture, it seems unlikely that these rallies will be sustained for any significant period of time. Others say by looking at historical data, the copper price could fall as far as US $2,000 per tonne in the near future.
“The kwacha’s depreciation is attributed to short term portfolio investors’ decision to withdraw their money’ should never take away our responsibility to regulate the economy against speculative behaviour. As long as we remain porous in terms of foreign currency regulation and liberal in the treasury bill transactions, we will witness huge swings in the exchange rate,” said local economist Chibamba Kanyama, who is also the immediate past national secretary of the Economics Association of Zambia (EAZ).
“For the past four years, the Zambian economy has been the target for international financial speculators who took advantage of the under-priced stocks on the stock market; high interest rates for the government securities and no regulation governing the foreign exchange remittances. The same speculators are watching the market for the kwacha to depreciate to higher margins and then dump the dollar to cause another artificial appreciation of the local currency.”
Kanyama disagreed with earlier explanations that swings in the exchange rate have sorely been caused by falling investments in government securities.
“Investors are largely targeting the kwacha itself for speculative gain. They buy off the dollar, squeeze it from the market to create an artificial depreciation and then offload it as happened during the election time. Once they have made huge margins, they start the process again,” Kanyama observed. “This current trend is highly artificial, not backed by fundamental economic movements but by local and international speculators taking advantage of weak regulation on the foreign exchange regime. This is inadvertently hurting the real sector that requires a stable predictable currency for long-term investments.”
Kanyama indicated that the investment and economic climate of a country was threatened by a foreign exchange regime which was dictated by portfolio investors penetrating the economy through the stock market and banking systems.
“Latin America ten years ago was initially excited by huge inflows of foreign capital but did not realise that initial appreciation of the currency was not backed by economic growth but by short-term portfolio investment of which 90 per cent was merely speculative,” Kanyama said. “The banking system collapsed and the governments experienced deteriorating foreign currency reserves. Zambia has suddenly become an attractive haven for these local and international speculators.
“We should not look at the depreciation of the kwacha as an issue associated with the global financial crisis. While this remains true, countries with a weak and porous foreign exchange regulation mechanism and poor monitoring systems of hard currency inflows will experience a financial crisis.
“It is high time we monitored the true sources of these inflows; who are the speculators and which local institutions are accommodating these transactions.”
It has been observed that much of the capital fleeing some developing countries, including Zambia, was heading towards the banking systems of the rich countries since their governments have created a subsidy by guaranteeing large parts of their financial system.
But Dr Fundanga said the outflow of foreign currency from Zambia was not as widespread as portrayed by some people.
“It is true there is an outflow of funds going out of the country because various investors are hedging their investments and this is a normal business phenomenon but the outflow is not massive and widespread and this situation does not call for exchange controls whatsoever and we are also in a position to monitor all outflows,” Dr Fundanga said. “And I can’t see any reason why we should put stringent measures like exchange controls because there are no solutions at all and this is a free market economy and soon the market will stabilise itself.”
And an official at the Ministry of Finance who preferred anonymity said there was no control over what private companies, including those in the mining sector, did with their profits.
The official said the government's responsibility was to ensure a stable economy that would result in establishing Zambia as the most preferred investment destination in Africa.
“The government through the revenue authority collects taxes and what remains is net profit which is basically salaries for shareholders and we have no control over what a company can do with its profits and normally externalisation becomes prominent when the economic outlook is bleak but in Zambia things are looking positive and if investors are making profits, they will be inclined to stay and reinvest because of the prevailing favourable policies,” said the official. “Also government through the Bank of Zambia is able to monitor funds taken out or brought into the country since all financial flows are documented but any system is prone to loopholes hence the need to tighten monitoring controls and points of entry.”
And the Databank Group stated that Zambia’s stock market was among the worst decliners during the previous week, with index levels down between 10 and 20 per cent.
Other worst decliners were markets in Mauritius, South Africa and Egypt.
“Bearish investor sentiments seem to be arriving late on African markets as investors have decided to cut their losses, thereby deepening the already sour performances on the various markets,” stated Databank. “This is attributable to both local and foreign investors, with foreign investments also drying up on some markets. Every indication points to the fact that this trend will persist for the rest of the year.”
Labels: CALEB FUNDANGA, CHIBAMBA KANYAMA, EAZ, GLOBALISATION, KWACHA, RECESSION
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Rupiah needs support of all Zambians — Mabenga
By Times Reporter
ACTING MMD president, Michael Mabenga has called on party members and all Zambians to support President Rupiah Banda for him to concentrate on developing the country.
And the national executive committee (NEC) will soon meet to decide on several disciplinary cases, including the one involving party spokesperson, Benny Tetamashimba and Deputy Minister, Jonas Shakafuswa.
At a Press briefing in Lusaka yesterday, Mr Mabenga said that Mr Banda needed the support of all Zambians so that he could serve to the expectations of all.
Mr Mabenga, who was flanked by party chairperson for commerce, Sebastian Kopulande and deputy national secretary, Jeff Kaande, said the party believed that Mr Banda was capable of developing Zambia.
He said, however, that President Banda could only be able to deliver with the support of all party members and the citizens.
“We were and still are convinced as a party that Mr Banda can deliver,” he said.
He paid tribute to other party officials who stood against Mr Banda during the identification of the MMD presidential candidate and lost but continued supporting the party and the Republican President.
Mr Mabenga said that the party was mindful that Zambia was in a hurry to develop and, therefore, it would give maximum support to the president who was steering development in the country.
On the disciplinary cases, Mr Mabenga said the national secretariat had been tasked to investigate further the squabbles in the media between Mr Tetamashimba and Mr Shakafuswa and referred further queries to Mr Kaande.
Mr Mabenga was responding to a question on the continued Press statements on party policies even after he had banned the practice.
Mr Kaande said the NEC would soon meet to look at the case and several others, including those which happened before late president Levy Mwanawasa’s illness.
He said the secretariat had administratively looked at all the cases and made relevant recommendations to the NEC.
“No case will be swept under the carpet. Even those which took place before the death of the president will be looked at and sentences will be passed by the NEC,” he said.
Labels: MICHAEL MABENGA, RECESSION, RUPIAH BANDA
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UN team warns of hard landing for dollar
By Harvey Morris in New York
Financial Times, 1 Dec 2008
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published on Monday, the economists said the dollar's sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.
"Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession," the report said.
Publication of the annual survey by the UN's Department of Economic and Social Affairs, its trade organisation Unctad and UN regional bodies, was brought forward by a month in the light of the financial crisis. It was launched in Doha to coincide with the UN-sponsored development financing conference in the Qatari capital.
The UN team said that, as the financial crisis spread beyond the US, there had been a massive shift of global financial assets into US Treasury bills, driving their yields almost to zero and pushing the dollar sharply higher. At the same time, however, the US's external debt had risen to new heights that could provoke a dollar collapse.
The report recommends reform of the international reserve system away from almost exclusive reliance on the dollar and towards a globally backed multi-currency system.
Rob Vos, a Dutch economist who heads the UN's policy and analysis division and who is responsible for the annual economic review, said the global economic pain could be eased if governments co-ordinated a spate of stimulus packages that were already under way.
"There has been a sea change in attitudes in favour of intervention and concerted action," he told the Financial Times. He welcomed statements from US president-elect Barack Obama's transition team in support of spending on infrastructure.
Labels: CURRENCY, RECESSION
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Economic crisis was expected, says Chiluba
Written by Lambwe Kachali
Monday, December 01, 2008 3:44:25 AM
FORMER president Frederick Chiluba yesterday said the current economic crisis Zambia is facing and the subsequent job losses in some mining companies was expected.
Speaking to journalists at Lusaka International Airport before departure for South Africa for his medical review, Chiluba said the job losses experienced in some mining companies in Zambia were expected because of the credit crunch, which had hit the world over.
“This thing started with the credit crunch in the United States of America. America has been called the biggest economy in the whole world but it was so hard hit that it began crumbling.
So you know that Western economy believe in the market forces, market economy, demand and supply. For the first time ever... those who articulate the working of the free market have been confused,” Chiluba said.
“Today for the first time, in the history of Western economy, banks, companies have been subsidised. The whole of Europe had been so hard hit, and there have been job losses everywhere.
“So if somebody tells you that there will be job losses in Zambia, it is not a prophecy, it is not even a prediction, anybody knows that it will happen. Our economy is so tiny that it does not have that kind of thread of resistance.”
Chiluba was accompanied by his wife Regina, and his administrative assistant Emmanuel Mwamba.
Among those who saw Chiluba off included PF Luapula member of parliament Peter Machungwa, Gladius Mulobeka [husband to Kawambwa PF member of parliament Elizabeth Chitika-Mulobeka] and some sympathisers.
Labels: CHILUBA, RECESSION
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This is a very serious crisis
Written by Editor
WE are in the midst of an economic Tsunami. And we share the bitter feeling of impotence that most of our politicians have in the face of such problems and their concern for the political instability to which this economic crisis may give rise.
So gloomy are the realities and prospects for the future viewed as a whole that they could generate pessimism and discouragement if we are not sure of our aims. They are an inevitable bitter pill to swallow, but if we are to face up to the realities, we first have to become aware of them.
We do not have, nor do we think anyone has, magic remedies for such difficult, complex and apparently insoluble problems. History shows, however, that no problem has ever been solved until it has become a tangible reality of which everyone is aware. Today, we are faced with the most universally serious and anguishing situations ever known in recent years. In short, for the first time, we are faced with the question of whether or not we are to survive.
But no matter how enormous the difficulties, no matter how complex the task, there can be no room for pessimism. This would be to renounce all hope and resign ourselves to death. We have no alternative but to struggle, trusting in the great moral and intellectual capacity of the human race and in its instinct for self-preservation, if we wish to harbour any hope for survival.
Only with a tremendous effort and the moral and intellectual support of all can we face the future that objectively appears desperate and sombre.
The difficulties we today face are very distressing. But it is utterly impossible to situate ourselves in the reality of today's world if the panorama that is unfolding is not made reality that is understood by our politicians who should dedicate profound meditation to it. This problem needs to be understood very clearly by our politicians for them to appreciate the tragedy of our people.
We appreciate the fact that as politicians, they derive great experience from the exercise of their political functions but they do not have the privilege of being - nor could they be - specialists in all economic and social spheres. They are basically politicians - in itself one of the most difficult tasks in today's world - and above all, they must be responsible ones.
The present crisis should be understood clearly. This crisis is part of the typical cyclical course of the developed capitalist economies. Now, however, it has acquired new complications and aggravating dimensions.
This is not the place for a theoretical analysis of the issue, yet it is obvious that certain basic observations must be made if we are to draw up a realistic and effective strategy in line with the circumstances.
These crises - the most severe faced in the cyclical evolution typical of capitalist development - date back to at least the second quarter of the 19th Century. In the course of time, they have tended to produce sharper, deeper and more generalised interruptions of the economic upsurge with world-wide effects.
In the mid-1990s, when globalisation was extending around the planet, the United States achieved the most spectacular accumulation of wealth and power ever seen in history. As the absolute master of the international financial institutions and through its immense political, military and technological strength, it was able to do so.
The world and the capitalist society were entering an entirely new phase. Only an insignificant part of economic operations related to world production and trade. Every day, trillions of dollars were involved in speculative operations such as currency and stock speculations. Stock prices on United States exchanges were rising like foam, often no relation at all to actual profits and revenues of companies.
A number of myths were created: that there would never be another crisis and that the system could regulate itself. Capitalism had created the mechanism it needed to advance and grow unimpeded.
The creation of purely imaginary wealth reached such an extent that there were examples of stocks whose value increased a thousand times in a period of less than ten years. It was like an enormous balloon that supposedly could inflate toward infinity.
As this virtual wealth was created, it was also invested, spent and wasted. Historical experience was completely ignored. The world's population had quadrupled in only a hundred years. There were billions of human beings who neither participated in nor enjoyed this wealth in any way whatsoever. They supplied raw materials and cheap labour, but did not consume and could not be consumers.
They did not constitute a market. They were not part of the immense sea fed by the almost infinite river of products flowing, in the midst of fierce competition, from ever more productive factories that created ever fewer jobs, based in a privileged and highly limited group of industrialised countries.
An elementary analysis was sufficient to comprehend that this situation was unsustainable. Nobody seemed to realise that, apparently, insignificant occurrences in the economy of one region of the world could shake the entire structure of the world economy.
The architects, specialists and administrators of the new international economic order - economists and politicians - now look on as their fantasy falls to pieces, yet they barely understand that they have lost control of events. Other forces are in control: on the one hand, those of the large, increasingly powerful and independent trans-nationals and, on the other, the stubborn realities that are waiting for the world to truly change.
There is no doubt, this crisis is a consequence of the resounding and irreversible failure of an economic and political conception imposed on the world: neo-liberalism and neo-liberal globalisation.
The economic crisis also means the aggravation of major problems that are far from being solved: poverty, hunger and disease, which kill tens of millions of people in the world every year; illiteracy; lack of education; unemployment; the exploitation of millions of children through child labour and prostitution; money laundering; lack of drinking water and a scarcity of housing, hospitals, communications, schools and educational facilities. Fundamental rights of all human beings are affected.
The crisis will have a special negative impact on the struggle for sustainable development; the preservation of the environment and the protection of nature from the merciless destruction it is being subjected to and which is causing the poisoning of water and the atmosphere; the destruction of ozone layer; deforestation and so on and so forth.
There are nations that could be annihilated if this economic crisis is not resolutely confronted. Now is the time, more than ever before, when cooperation among all countries is needed.
We are saying all these things to help our politicians and our people understand that this economic crisis that is being expressed in the frighteningly very high depreciation of the kwacha, fast-rising interest rates, extremely low copper prices which have rendered almost all our mines technically bankrupt or insolvent, the increasing job losses is a portrait of the distressing difficulties we are facing today.
The effects of this crisis are being transmitted in a very dramatic way, worsening our already precarious situation characterised by poor development of our productive forces and the deformation of our socioeconomic structures.
For our people, the present crisis has meant the almost complete ruin of their economies; the dashing of their hopes for improvement - in short, a prospect of hunger, poverty and disease for a painfully growing proportion of our impoverished people.
In recent years, it has been possible to note, first of all, our subordination to the general trends in the developed capitalist world, which passes on the effects of their crisis to us. The crisis is expressed in all its severity in the indicators related to our foreign economic relations.
They clearly show how the negative effects of the cycle are passed on to us. And if there will be no immediate significant improvement in the international economic situation, the clear possibility of a regression in our weak countries cannot be excluded.
However, what is extremely worrying is the poor attitude and apparent lack of capacity on the part of those in charge of the management or administration of the affairs of our country. For them, it seems it's business as usual and things will sort themselves out. They seem to believe that someone in America, Europe or Asia will sort out things and eventually everything will return to normal, without them doing anything. And this may explain why in the midst of such a gigantic crisis, Rupiah Banda says he is happy to increase his own salary and those of his ministers and other politicians and top government officials.
If he really understood the situation and cared about it, he wouldn't be speaking that type of language and would be very sad to have assented to that bill that increased those salaries.
Let our people not be cheated by anyone that the current downturn will quickly adjust itself as we move away from the uncertainties of last month's presidential election.
This crisis is far much bigger than our presidential election and is not a simple, temporary phenomenon; it may last much longer and with devastating effects on our people. We seriously need a survival plan. But Rupiah and his friends don't seem to realise this. All they seem concerned about are their personal benefits - salaries, allowances, cars, houses and offices.
There is need for serious discourse in the nation about this crisis. We need to find ways of surviving or mitigating its worst effects. We also need to reflect on the nature of our economic development and how far it should be based on a speculative capital that is continually in-flight and changes course any time depending on the weather.
This has exposed us to the fact that running an economy needs much more than just making nice statements inviting foreign investors to come and develop our country. Things don't work that way, at least not in the world we today live in.
We have to think for ourselves because no one will think for us; we need to see things for ourselves; we need to act and speak for ourselves because nobody will effectively do so for us. We need to analyse things for ourselves and find our own solutions or formulas. That's the only way we can hope for a meaningful reversal of fortunes.
Labels: RECESSION
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EU implores donors to honour pledges despite financial crisis
Written by Kabanda Chulu
Thursday, November 27, 2008 11:52:16 AM
THE global financial crisis cannot be an excuse for not meeting donor aid commitments, European Union director of aid financing Maciej Popowksi has said. And Popowksi has said
there is need to have legitimacy in resolving global economic crises through a new world financial ‘architecture’ that would be all inclusive in policy and decision making.
During a satellite video conference in Lusaka on Monday, Popowksi said the financial crisis that is translating towards economic recession would put a lot of stress on public financing in most developed countries.
“But this is no time to postpone meeting the targets because these are our commitments and we need to fulfill them or else things will get from bad to worse. As the EU, we are ready to meet our pledges and we appeal to other donors especially the United States and Japan, to meet their commitments as well,” Popowksi said.
“And there is need to go beyond Overseas Development Assistance (ODA) if we have to address other emerging challenges like climate change but also developing countries need to improve on governance and fighting corruption.”
He said the cost of not attaining the millennium development goals (MDGs) would be very high for both the developed and third world countries.
“We should not postpone the MDGs target because already, remittances are declining and in some countries remittances are equivalent to 50 per cent of gross national incomes and the cost of not attaining the MDGs will be very high for both of us, for instance, the issue of migration will rise,” Popowksi said. “It is true the crisis will put stress on fulfilling development assistance but the EU will not curtail support for MDGs and other commitments.”
And Popowksi said there was need to improve on world trade and to legitimise global economic decisions by including developing countries in policy implementation.
“Inclusiveness is the key message and we need to engage emerging economies like South Africa, India, China, Brazil, among others, because they have also become donors hence including them in the financial architecture,” said Popowksi. “We need a new economic order, which we all can manage together, whether we call it Bretton Woods or whatever it does not matter but it should be all inclusive.”
Labels: DONORS, EU, MDGs, RECESSION
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Zesco to switch off Lumwana
By CHARLES MUSONDA
ZESCO Limited will with effect from January 26, 2009, stop supplying power to Lumwana Copper Mine (LCM), which has no alternative source of electricity.
This is because
LCM has allegedly defaulted in paying for the service, thereby breaching its obligations contained in the Power Supply Agreement (PSA) the two companies signed on February 15, 2006.
LCM has applied to the Lusaka High Court for protection, pending arbitration in the London Court of International Arbitration.
In a notice of termination of the PSA dated July 28, 2008 and addressed to LCM managing director Harry Michael, Zesco managing director Rhodnie Sisala said: “Please note that the termination of the power supply agreement does not release LCM from its obligations to settle outstanding amounts with all interests and or damages as may be applicable.”
But in his affidavit in support of originating summons filed in the Lusaka High Court on November 20, 2008, Mr Michael said LCM was likely to suffer substantial and irreparable harm if no protective relief against the threatened termination of the PSA was granted.
“The plaintiff has no alternative source of electricity…in the premises an application is hereby made for protective relief pending arbitration,” Mr Michael said.
High Court Judge Hilda Chibomba has set tomorrow as the date for an interim hearing of LCM’s application.
Mr Michael, of house number 4, Lumwana, said in February 2006 his company and Zesco entered into a power connection agreement where it was agreed that Zesco would design, construct, install and commission a 330KV power transmission network from Kansanshi to Lumwana.
He said LCM met all conditions prescribed in the agreement, including payment of US$ 16 million (about K50 billion) to Zesco as its share of the capital costs.
He said pursuant to the agreement, Zesco was required to complete its works within 18 months from the date of payment of capital contribution or as might be agreed by the parties.
Mr Michael said Zesco’s works were completed on November 16, 2007, while LCM completed its works on April 14, 2008, and accordingly the mine was connected to the Zesco network on April 16, 2008.
He said the connection agreement required completion tests to be carried out and Zesco was to give LCM a 14-day notice prior to the tests.
Mr Michael said after differing on the tests and following connection and commencement of power supply to the mine, LCM notified Zesco on May 1, 2008, that the PSA had come into effect.
He said LCM also submitted its demand schedules in pursuance of the PSA.
“Zesco made no reply to the said letter but in its letter dated June 20, 2008, Zesco stated that it has met both the completion date and the first supply date defined in the PSA.
“Zesco further stated that if LCM did not immediately settle outstanding invoices it will exercise provisions of the PSA,” he said.
Mr Michel said on June 27, 2008, LCM wrote to Zesco disputing allegations of default and asked for a good-faith negotiation to try to resolve issues amicably.
He said Zesco did not reply to the request and instead issued a 180-day notice on July 28, 2008, to terminate the PSA effective from January 26, 2009, and alleged that LCM had breached the agreement.
Mr Michael disputed that LCM had breached the agreement and accordingly declared a dispute, after which it issued a notice of intention to arbitrate.
He said LCM had made several requests to Zesco to withdraw its notice of terminating the PSA but the power firm had refused.
Mr Michael said on September 30, 2008, LCM proposed to Zesco a payment in final settlement of the dispute and repeated its request for the latter to withdraw its notice of terminating the PSA.
He said his company further withdrew its intention to arbitrate on August 1, 2008, in a bid to persuade Zesco to withdraw its notice of termination.
“Despite LCM withdrawing its notice of intention to arbitrate, Zesco has not withdrawn its notice of termination and this remains effective and will be implemented unless an order protecting LCM is made by this honourable court,” he said.
Mr Michael said consequently LCM was left with no option but to re-issue a notice of arbitration and had asked the London Court of International Arbitration to resolve the dispute between the two parties in accordance with provision of the agreement.
Labels: LCM, LUMWANA MINING COMPANY, PSA, RECESSION, ZESCO
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Economic slow down unavoidable
November 25, 2008
Economic experts have said the on going economic slow down in Zambia, which has seen the local currency depreciating against major convertible currencies, is a phenomenon induced by global market forces and will need economic strategising to mitigate.
Zambia Association of Manufacturers (ZAM) chairman, Dev Babbar and economic consultant Oliver Saasa in separate interviews pointed to the global economic developments as the main influences on the local economy currently.
Professor Saasa said that the depreciation of the Kwacha against major convertible currencies was as a result of low copper and other metal prices on the world metals market.
Prof Saasa said much of the Kwacha’s depreciation was as a result of the global financial crisis, which had deprived financiers money to invest in other economies.
He said what could be done for the Zambian economy was to maintain high production levels.
Prof Saasa urged the manufacturing sector to stabilise production costs because this was the only way that the sector could manage to keep afloat in the current difficult times.
He said there was need for all stakeholders to present a calm investment picture of Zambia through both speech and actions.
Prof Saasa projected that the economy may not manage to attain the targeted seven per cent growth rate under the current circumstances.
A slump in the price of copper arising from dampened demand saw foreign exchange inflows from the export of the metal dwindle in the last six months or so.
The mining sector had experienced a boom in the last seven years, largely because of soaring metal prices riding on a huge demand for metals by economies like China and India.
Since April how ever, metal prices have been in free fall on the LME, with the price of copper falling from the record high of US$8,900 then to below $3,500 as at the end of last week.
The slow down in the economy has seen prices of commodities including the staple maize meal rise in the last two months.
Mr Babbar retaliated that the Kwacha’s decline was a function of global economic issues whose effects on an economy like Zambia’s, which is still in its development stages, cannot be avoided.
Zambia had adopted an open market economy, which is susceptible to any development in the global economy.
Economics Association of Zambia(EAZ) president, Mwilola Imakando said the current fall in the value of the Kwacha was based purely on economic factors and had nothing to do with local politics or any other non economic factors.
“The local economy is responding to market forces following developments in the global economy, any other view on this is mistaken.” Dr Imakando said.
The EAZ president said that at the moment, Zambia was experiencing a low inflow of foreign currency owing to reduced copper earnings because of the metal price slump.
Consequently, this had exerted much pressure on the local currency as per the supply and demand rule.
He said it was likely that demand for metals would still be dampened in the near future meaning that the foreign exchange inflow would yet still be affected.
“Zambia has no control over the pricing of metals on the international market, the strategy should be to diversify the economy and promote high value crops including cotton and tobacco to enhance export earnings,” Dr Imakando said.
In this way, the fall in foreign exchange inflows would be compensated to a certain extent.
Adapted from Times of Zambia
Categories: Economy
Labels: MANUFACTURING, OLIVER SAASA, RECESSION
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Slump in copper prices worries Lumwana Mining
Written by Mwala Kalaluka in Kasempa
Saturday, November 22, 2008 11:52:55 PM
LUMWANA Mining Company (LMC) managing director Harry Michael
has expressed serious concern over the slump in copper prices on the global market slightly a week before the mine kicks off production.
Michael told United Nations Development Programme (UNDP) country representative, Macleod Nyirongo, who toured the mine on Monday that everybody in the country’s mining sector was worried with the down turn in copper prices.
“Nobody should think that some countries are immune from the world financial crisis. It is going to require, by any government or any business, a cool head to navigate around this unfortunate situation. It is going to be difficult times going ahead for the mining industry,” he said.
Michael explained that whilst the prices of copper were going down, the operation costs were on the high side.
Asked to explain if the slump in copper prices will have a bearing on the number of people they would employ when the mine starts production, Michael said that was a difficult question to answer.
“We are a business. We have a debt which we have to repay…that has to be the first priority, that is servicing our debt,” he said. Michael said the mine was remaining with only about nine years for them to repay the US $690 million debt acquired from 14 lending institutions to inject into the mining investment.
“This is a 37-year mine, we do not want to do things for the short-term. A lot of planning has gone in place,” said Michael.
Labels: COPPER, LUMWANA MINING COMPANY, MACLEOD NYIRONGO, RECESSION, UNDP
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‘Financial crisis may erode economic gains’
Written by Maluba Jere
Saturday, November 22, 2008 11:47:
UNITED Nations secretary general Ban Ki Moon said there is a clear risk that the recent improvements in social and economic indicators could be eroded or reversed due to the global financial crisis.
In his message to mark this year’s Africa Industrialisation day which fell yesterday (November 20) under the theme ‘Processing of Raw Materials for Sustainable Growth and Development’, Ban said the accelerating impacts of challenges such as climate change were becoming more apparent, saying although the full impacts of these crises are not yet known, some of the effects were already being felt.
“This year’s observance of Africa Industrialisation Day takes place at a challenging time. We face a global financial crisis. Food and fertiliser prices are significantly higher than they were two years ago,” he said.
Ban emphasised that the ability to process raw materials into high value added goods was essential. He noted that industrialisation had led to broad-based development and economic transformation in other parts of the world saying it can and must do the same in Africa.
“On this Africa Industrialisation Day, let us pledge to do our utmost to strengthen African industry so that it can play its rightful, catalytic role in sustainable economic growth and the eradication of poverty,” Ban said.
Ban has since warned that the global economy will hit exporters of primary products hard as they account for more than 50 per cent of the value of Africa’s exports.
“This makes the continent especially vulnerable to global economic shocks,” he said.
“It is essential for Africa to be able to process its raw materials into higher-value products, both for domestic consumption and for exports. Malaysia and Thailand, for example, are among the countries that have progressed rapidly by moving into processing their primary and mineral products into high-value-added products.”
He observed that more than half of Africa’s people were employed in the agricultural sector, adding that the development of the agri-business and agro-processing industries was essential.
“In many cases, domestic markets already exist for these products. There is also great potential for links with other sectors of the economy, which would provide opportunities for employment and economic growth,” said Ban.
Labels: BAN KI-MOON, NEOLIBERALISM, RECESSION
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‘Govt faces challenge of external economic shocks’
Written by Chiwoyu Sinyangwe and Nicholas Mwale
Saturday, November 22, 2008 11:44:14 PM
THE government of President Rupiah Banda faces even a greater challenge
in managing Zambia's economy due to increased external economic shocks, International Monetary Fund (IMF) resident representative Birgir Arnason has observed.
And Arnason said IMF stands ready to increase Zambia's access to its funding under the Poverty Reduction Gross Facility (PRGF) if the current global crisis results in substantial diminution of the country's foreign reserves.
In an interview, Arnason said there was need for the government to accelerate structural reforms that could boost growth in the medium term as a measure to help mitigate the impact of current external shocks while at the same time maintaining prudent macroeconomic stability.
Arnason said the IMF was hopeful that the country would continue on the path of sound macroeconomic policies as the regime of President Banda had repeatedly indicated intention to continue with the policies of late president Levy Mwanawasa which were anchored on stringent fiscal and prudent monetary policies that provided an environment for growth in the country.
He also said IMF was also happy with the appointment of Dr Situmbeko Musokotwane as the new Minister of Finance, whom he said the Fund had previously worked closely with over a long period both in his capacity as deputy governor of the Bank of Zambia (BoZ) and also as Secretary to the Treasury.
"There are a number of challenges the new government faces that are slightly different from those that the previous government encountered because the external environment is no longer as favourable as it used to be and the Mwanawasa government particularly in the last two years enjoyed exceptionally very good external circumstances," Anarson said. "It is very clear that the initial period of the Banda administration will face more challenging environment where copper prices will be lower, access to international finance maybe lower, global economy is much weaker than we had in the last five to ten years. But this does not spare any disaster for Zambia as the country has a lot of potential and an extended period to build on and going forward, it would be important to maintain Zambia as an attractive destination for investment and we encourage the government to maintain Zambia's attractiveness in that area."
Anarson said the new government should focus on structural areas such as management of the budget, ensuring increased revenue collection, making resources available and at the same time using government resources effectively.
"There is need for the government to accelerate implementation of the Private Sector Development Plan. Progress should also continue on the Financial Sector Development Plan and it is absolutely imperative to implement the strategy to alleviate the electricity shortage in the country," Anarson said.
And Anarson said IMF might consider increasing the scope under PRGF if the current unfavourable external situation as measured by international reserves were to deteriorate.
He also announced that an IMF mission coming to Zambia next month would continue discussions under the PRGF and also look at the preparation for next year's budget. Arnason added that the team, in consultation with the government, would "try to draw the clear picture of where the Zambian economy is headed" amidst the current financial crisis.
Labels: BIRGIR ARNASON, ECONOMY, IMF, NEOLIBERALISM, RECESSION
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The copper boom is over,what are you going to do Local businessman?
By Son Mumbi
November 22, 2008
The recent copper boom has been short lived. From about 2005 when there was massive reinvestment in the mines and speculation of more, the Copperbelt and Lusaka saw a proliferation of all manner of mine suppliers- Robin Hood copper recyclers (stealing from the mines dump to sell to ‘venture capitalists’).There was a boom in trade with Dubai, China, Dar es Salaam.We saw an increase in property investment, transport and prostitution (Solwezi notably). And boy did it boom! A check on the social spots of the Copperbelt town of Kitwe and one was likely to meet all manner or businessmen and a few businesswomen.
There were excursions across the border into Congo and into the new wild west of Zambia, North Western Province to get villagers to dig for copper using crude tools and haul 50kg bags of ore on the backs. Stories of copper truck hijacks became the norm. The Chinese where the villains of the show. While a not too close look revealed that other country nationals were the villains also, namely Australians, South Africans and Zambians too! Pot-bellied Zambians and Afrikaners with attractive mistresses to swing
around the town with sleek 4 by 4’s.They lounged around the popular night spots with very attractive mistresses, who if times had really been good, might have been walking the cat walk. Well that is all coming to an end!
My advice to all local mine suppliers, transporters, copper labour exploiters, start farming now. The good times are coming to an end. A global economic depression is inevitable. Forget about joining an NGO and stealing aid money for a ‘poverty’ project, there will be no money for Africa from the West.Not with increasing poverty levels in America and Europe; they will look to their own first. Forget migration, it will only get harder for you to get in, you won’t get past the British Embassy.
Local businessman, with the loot you have left from copper ‘gains’ invest in a low energy consuming tractor to help you cultivate the land, not the new set of shiny wheels you have been contemplating. Do not grow maize, fertilizer subsidies only come during election period. Grow sweet potatoes,groundnuts and soybeans. Practice plant rotation, yes you remember it from secondary school production unit.Plant indigenous trees, keep hardy chickens. Avoid goats and large herds of cattle, they overgraze, but you might want to keep a few pigs, they are not picky about what they eat. To avoid energy problems, go solar, forget about that diesel generator you were planning to buy in Dubai.
And lastly, if you are going to have multiple partners, marry them under traditional polygamous arrangements, and stick to those that you do marry. Be open about it, sly sneakiness won’t do you any good when things are falling apart. Besides, honesty is the best way to get the co-operation of your wives for that extra labour. By being open and sticking to your partner or partners you also minimise the risk of contracting HIV, drugs may get very expensive when things fall even further apart.
If the above is all too much, I recommend an honourable death, volunteer your services to the SADC peace-keeping mission for the DR Congo, Laurent Nkunda is guaranteed to kill you, but at least you would have done one good service, to possibly enter heaven. Isn’t that what most Zambians want judging from the proliferation of pastors in every conceivable social setting, even public transport.
Categories: Economy
Tags:
Labels: COPPER, RECESSION
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(Mailing List) Robert Shu's China Strategy Newsletter
By Robert Hsu, Editor, China Strategy
Fellow Investor,
Just because Barack Obama won the election, doesn’t mean this credit crisis is now over, that housing prices will automatically rebound, or that the stock market will hit new heights.
On the contrary, it's about to get a whole lot uglier, and there’s nothing the President-elect can do to stopping it.
If you don’t reposition your assets now, as I’ll show you in tonight’s issue (posted online), the continuing financial collapse could wipe out what’s left of your wealth.
Here’s why…
The banking crisis, the liquidity squeeze, and the collapse in home prices has sent investors fleeing U.S. stocks as if by being chased by the running of the bulls in Spain.
The result has crushed the U.S. financial system, triggered a $700 billion bailout, and led to the demise of many hallowed financial institutions—blindsiding U.S. investors who have been told that “everything would be OK with President Obama at the controls. ”
And that’s not even the half of it
The financial crisis has now spilled over to Europe, Russia, Latin America and Asian markets. Which is why European and U.S. central bankers coordinated a global rate cut of epic proportions.
And now with the International Monetary Fund estimating US loan defaults could hit $1.4 trillion in short order, it’s no wonder why foreign investors are avoiding ALL U.S. investments at all costs and are piling into China stocks hand over fist—despite Obama’s stunning victory.
The reason is simple:
China is the only country that’s not only growing but also has the financial muscle to pull the world out of this economic mess.
You needn’t take my word.
World Bank President Robert Zellick said the same thing on October 8th. What’s more, experts estimate that China’s growth will hit 8.5% for 2009 and accelerate to nearly 9% again in 2010.
On top of that, the Asian Development Bank estimates that China’s trade surplus and surging capital inflows will not only increase the country’s liquidity but also result in faster appreciation of the yuan against the dollar.
Do you realize what this means?
As the Fed hands out money like pancakes at a fireman’s picnic, more foreign investors are going to flee U.S. stocks and head straight for China where they will profit not only from economic growth but also from currency appreciation as well.
And the result will enrich those investors who understand that capital flows to the highest return in good times and bad…
…and are taking this opportunity to scoop up world-class assets at 40%, 50%, even 70% off their past highs in advance of the pending recovery.
That’s why it’s crucial that you add our top China stocks to your holdings now and why I’ve sent you this Special Alert.
If you can buy our top stocks today—while they’re still bargains—you could be looking at 20% to 40% gains in the next 12 months as the flight to safety lands squarely in China.
Details in tonight’s China Strategy.
What the Government Isn’t Telling You Could Send You to the Poorhouse …
…or Make You Wall Street’s Next Millionaire
I’m Robert Hsu, and as you’ve suspected, you’re not getting the full story on the continuing credit crisis from the U.S. government or the Fed.
The shocking truth is that Bernanke’s monetary policy and the Fed’s bailout plan has flattened economic growth like a mud hut in the middle of a hurricane.
The long-term results are so disastrous for U.S. markets, that foreign investors are now saying “thanks, but no thanks” to U.S. stocks—despite their love affair with Barack Obama.
The reasons are simple:
Foreign investors know the U.S. stock market won’t come back for some time. They know that layoffs in the U.S. manufacturing jobs will result in new hires in China. They also know that as U.S. growth slows, China growth will drop too—but to nowhere near U.S. levels.
In fact, our research shows that China growth will hit a mind-boggling 8% in 2009.
To be sure, that’s less than the sizzling hot years of 11% annual growth, but compared to the negative U.S. growth next year, you don’t have to be a computer scientist to know where the big money will be made in the next two years.
What’s more, foreign investors also know something that Obama and his team of advisors would never admit: that unlike the U.S. banking system, the Chinese banking system is much safer now—with none of the exposure to the subprime mess.
In fact, most U.S. investors don’t know this, but the Chinese banking system is dominated by four big state-owned banks—banks backed by the world’s largest foreign reserve that can write a check anytime they want—and without Congressional approval or bickering!
And with $1.4 trillion in cash sitting in their banks, there’s no liquid crisis in China. The Chinese government can write a check anytime they want—and it will clear!
Which is why the smart money is flooding into China at light speed, with investors cherry-picking world-class Chinese companies for pennies on the dollar.
And if Warren Buffett’s $230 million investment in China’s leading car and manufacturing company is any indication of the opportunity at hand, this is a situation you can’t ignore.
Which is why…
You Must Reposition Your Assets Now
Let me sum up the dangers and the opportunities:
Obama’s proposed bailout plan is sending U.S. stocks into the tank. The giant sucking sound you hear are foreign investors who are fleeing U.S. markets in search of safer and higher returns.
The result has slowed U.S. and global growth, forced energy prices to fall to eight-month lows, and triggered a global rate cut of epic proportions.
The chain reaction will make the US stock market even less attractive to U.S. investors…as the combination of low energy costs, low interest rates, and a stable banking system drives more investment into China.
If you can take a small position in just one of our top China stocks—before the flood of cash begins in earnest—I guarantee you’ll not only thank me 1000 times come this time next year…
…but I’ll win you as a subscriber for life.
Details in tonight’s issue.
Your Timing Is Perfect
As U.S. investors continue to hide in panic, shrewd investors like you and me are going to make a bundle as investment in China surges and the country uses its newfound capital to build more roads, bridges and infrastructure at record pace.
You needn’t take my word, a recent report by McKinsey Global Institute will tell you the same thing:
“In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today.”
“By 2025, China will have 221 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.”
“By 2030, 1 billion people will live in China’s cities…170 mass-transit systems could be built…40 billion of square meters of floor space will be built in five million buildings—50,000 of which could be skyscrapers.”
In other words, as China transforms itself from a nation of farmers to a nation of urban dwellers, the equivalent of 10 New York cities will need to be built, and in doing so will richly reward U.S. investors who invest now.
Truth is, China will continue to grow…
Despite the collapse in the U.S.
Despite the failure of the U.S. banking system
Despite the demise in the U.S. housing market
The reason is simple:
With 8% growth, China’s economy is still growing like a weed. Its standard of living is on the rise. And its people are spending like there’s no tomorrow: buying into a much richer lifestyle, filled with cell phones, big-screen TVs, and cars—the same things we Americans take for granted.
When you consider that by the year 2025 China will have 221 cities with more than one million people living in them, you can only imagine the kind of money that is going to be made, as China’s newfound consumer class enters the marketplace and replaces the American consumer as the supreme driver of world growth.
All thanks to infusion of cash from foreign investors that’s going on behind the scenes now.
Tragically, the financial media is missing this investment story by a country mile. That’s because they’re blinded by the daily ups and downs in the Dow and simply can’t see beyond U.S. borders.
And since by all accounts “China’s growth is dead,” Wall Street’s analysts are not only missing this story…
…but also U.S. investors are missing out on huge profits that are headed this way.
And I’d like to help you grab your share.
For more than a decade, I’ve been helping my readers and clients grow steadily richer investing in Asia.
And I can tell you with unmatched certainty that if you invest alongside us now—while Wall Street is looking the other way—you’ll be in a superb position to pyramid your wealth as the coming capital infusion triggers a second wave of growth to hit China.
In fact, since I’ve been telling my readers about China’s next phase, our individual stocks have banked up to 130% profits…while our total holdings have beaten the S&P 500 by more than $4-to-$1 in 2007.
But even these great gains will pale in comparison to what lies ahead as China continues to build more factories, more roads, more bridges and more skyscrapers.
When you consider the U.S. economy is projected to contract next year while China is on track to grow at 8%, you don’t have to be an Einstein to know that the surge in China stocks will form the foundation for a turnaround in the U.S. stock market as many leading China stocks are traded right here on the NYSE and NASDAQ.
The bottom line is this:
In a world that’s been crippled by the U.S. financial crisis, the Fed bailout and collapsing consumer and investors confidence, the flood of capital pouring into China will not only put powerful upward pressure under the stock prices of companies that are fueling China’s new growth…
…but also change the face of Wall Street forever.
Which is why I’m telling my readers to expect…
20%—40% Profits in the Next 12 Months
Here’s where the biggest profits will be made:
Profit From China’s Thirst for Oil:
Our top oil stock here has handed my readers 30% gains so far. Our newest recommendation could be even bigger. Two reasons: 1. Rising oil prices, and 2. China’s dependence on foreign oil to fuel its growth.
When you consider that China’s dependence on energy exports is expected to increase significantly over the next 20 years and it is projected that China will need to import at least 60% of its oil and 30% of its natural gas by 2020…
… you can see why I’m confident our oil strategy ALONE will make you 20%-40% richer in the next 12 months alone. Details here.
Profit From China’s New Housing Boom:
As Chinese workers invest their newfound wealth, their first goal is to own their own home.
Our top company in this sector is China’s leading real estate services company, whose earnings have not only risen an incredible 84% in the last quarter, but whose revenue has jumped 79%
In tonight’s issue (posted online), you’ll read how the company’s transactions grew fivefold in the past year and why we see the company repeating its two-month gains of 70% that it enjoyed in 2007.
Profit From China’s Love for Cell Phones and All Things Wireless:
Make no mistake about it, China leads the world in telecom growth. By 2010, half of the world’s 1 billion global subscribers will be located in China.
This is what makes our top China telecom a great play for American investors. It’s not only a state-run oligopoly but also has handed us 74% gains since we bought it.
Our most recent update, now posted online, brings you the full story on all of our current holdings and why we’re banking on another 50% profits by year’s end.
As you’ll see…
The Biggest Move Will Come
in the Next 15 Days
As you know, nobody rings a bell to tell you when the big buying wave will begin, but I can tell you this:
Our time-proven, momentum-based stock-picking system continues to deliver profits for our readers, not only beating the market by more than $8-to-$1 since 2005…
…but also thrashing the market by $7-to-$1 last year, specifically with 35% returns vs. 5% for the Dow.
Our biggest winners to date include:
CNOOC, +30%
Ctrip, +30%
Aluminum Corp of China, +285%
New Oriental Education, +133%
Mindray Medical, +41%
Sinopec, +58%
SPDR Gold, +30%
Apple, +118%
Las Vegas Sands, +52%
Yum Brands, +15%
Now with China’s second wave set to deliver even greater growth, even these great gains could look like a drop in the bucket.
Frankly, no other investment newsletter advisory in the world knows the China market like we do, spends as much money on research as we do or makes as much money in China as we do.
Which is why I can tell you with unmatched certainty that our research shows there’s a buying wave forming within the next 15 days.
That is also why you can invest in our recommendations with confidence that you’ll grow 20%-40% richer in the next 12 months.
My $99 Trial Guarantees
You’ll Profit or Pay Nothing
Look…
A regular one-year subscription to my China Strategy service costs $199.
However, because my research shows the big move on these stocks will be coming in the next 15 days, my publisher has let me open the door to a limited number of trial subscriptions for just $99, along with our “profit or pay nothing” guarantee.
By simply accepting my trial offer today, you get to…
Try China Strategy risk-free
Profit from Wall Street’s turnaround
Bank your profits and decide on your own terms
And that’s just the beginning.
You’ll also receive five FREE bonus reports:
5 Stocks to Buy Now
China’s Golden Age: Companies Cashing In on China’s Next Generation
China’s 5 New Energy Opportunities
Wall Street’s Biggest Losers: Stocks to Avoid
The Chuppie Strategy
Once you receive everything, you will understand why my approach has not only delivered $8-to-$1 gains since 2005…
…but also beat the market by $7-to-$1 last year…
…and why nobody makes more money investing in China than we do.
Window of Opportunity
Closes at Midnight
When it comes to China, the big money is always made when most investors are looking the other way. Frankly, it’s been that way for the past 120 years. It will continue to ring true for the next 20 as well.
With all eyes on the U.S. economy NOW, you couldn’t ask for a better time to add our top stocks to your holdings—before free-market forces smell a turnaround and bid our stocks higher and higher.
That’s why my offer to join me expires tonight.
My China Strategy service is for investors who understand the great opportunities that lie in China RIGHT NOW and are willing to act on my recommendations—and without reservation.
If you can’t make up your mind before midnight on my $99 money-back trial, chances are you won’t follow our recommendations, and you would take away a slot from an investor who would profit from our advice.
Which is why my window of opportunity expires tonight.
That’s why if you are serious about profiting from China’s second wave and are willing to take me up on my special offer today …
… I guarantee you’ll be the first in line to profit from Wall Street’s China-driven turnaround, or you won’t pay a dime.
And the best part is, you have nothing to risk by accepting my invitation today.
Join me now. I guarantee it will be the best financial decision you’ll make in 2008.
Sincerely,
Robert Hsu
Editor, China Strategy
P.S. If you’ve read this far and decided not to grab my $99 offer and profit from China’s second wave, please remember this:
China will continue to grow at 8% in 2009…
Despite the collapse in the U.S.
Despite the failure of the U.S. banking system
Despite the demise in the U.S. housing market
As one of my readers, you’ll not only be first in line to catch the next wave of China profits, but also find yourself 20% to 40% richer in the next 12 months.
Today’s issue and your free report reveal why, and promises you’ll profit or get your money back.
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11/13/2008 9:03PM
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Labels: CHINA, COPPER, FINANCIAL CRISIS, RECESSION, ZOELLICK
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In Praise of a Rocky Transition
Lookout
By Naomi Klein
The more details emerge, the clearer it becomes that Washington's handling of the Wall Street bailout is not merely incompetent. It is borderline criminal.
In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed--a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "Treasury had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has negotiated with many of the country's banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, "Any use of these funds for any purpose other than lending--for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.--is a violation of the act." Yet this is exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.
Despite all of this potential lawlessness, the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the lame-duck Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140 billion in missing tax revenue is almost the same sum as Obama's renewable energy program. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.
Yes, there is only one president at a time, but that president needed the support of powerful Democrats, including Obama, to get the bailout passed. Now that it is clear that the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right but a grave responsibility to intervene forcefully.
I suspect that the real reason the Democrats are so far failing to act has less to do with presidential protocol than with fear: fear that the stock market, which has the temperament of an overindulged 2-year-old, will throw one of its world-shaking tantrums. Disclosing the truth about who is receiving federal loans, we are told, could cause the cranky market to bet against those banks. Question the legality of equity deals and the same thing will happen. Challenge the $140 billion tax giveaway and mergers could fall through. "None of us wants to be blamed for ruining these mergers and creating a new Great Depression," explained one unnamed Congressional aide.
More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for "change," the mantra abruptly shifted to "smooth transition" and "continuity."
Take Obama's pick for chief of staff. Despite the Republican braying about his partisanship, Rahm Emanuel, the House Democrat who received the most donations from the financial sector, sends an unmistakably reassuring message to Wall Street. When asked on This Week With George Stephanopoulos whether Obama would be moving quickly to increase taxes on the wealthy, as promised, Emanuel pointedly did not answer the question.
This same market-coddling logic should, we are told, guide Obama's selection of treasury secretary. Fox News's Stuart Varney explained that Larry Summers, who held the post under Clinton, and former Fed chair Paul Volcker would both "give great confidence to the market." We learned from MSNBC's Joe Scarborough that Summers is the man "the Street would like the most."
Let's be clear about why. "The Street" would cheer a Summers appointment for exactly the same reason the rest of us should fear it: because traders will assume that Summers, champion of financial deregulation under Clinton, will offer a transition from Henry Paulson so smooth we will barely know it happened. Someone like FDIC chair Sheila Bair, on the other hand, would spark fear on the Street--for all the right reasons.
One thing we know for certain is that the market will react violently to any signal that there is a new sheriff in town who will impose serious regulation, invest in people and cut off the free money for corporations. In short, the markets can be relied on to vote in precisely the opposite way that Americans have just voted. (A recent USA Today/Gallup poll found that 60 percent of Americans strongly favor "stricter regulations on financial institutions," while just 21 percent support aid to financial companies.)
There is no way to reconcile the public's vote for change with the market's foot-stomping for more of the same. Any and all moves to change course will be met with short-term market shocks. The good news is that once it is clear that the new rules will be applied across the board and with fairness, the market will stabilize and adjust. Furthermore, the timing for this turbulence has never been better. Over the past three months, we've been shocked so frequently that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that clearly predates him, or fault him for honoring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories fade.
When transferring power from a functional, trustworthy regime, everyone favors a smooth transition. When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.
About Naomi Klein
Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism (September 2007); an earlier international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002). more...
Labels: BARACK OBAMA, FINANCIAL CRISIS, GW BUSH, NAOMI KLEIN, NEOCONSERVATISM, NEOLIBERALISM, RECESSION
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