Troubles in Mozambique

The trouble with being an economist who writes about Africa is that it has a habit of making you look stupid very quickly indeed.  Even when you try and keep up, I use a VPN like this to regularly connect when I can’t visit,  I’m sure I’m not alone having written a piece full of optimism and economic good news on an African country only to see it all start to fall a part only a couple of years later.  Africa has a habit of doing this, turning the positive around very quickly usually it has to be said as a result of some pretty incompetent leadership.

Mozambique is the latest African country to seem to snatch economic disasters whilst heading for seeming prosperity.   The economy was growing, almost 7% a year for nearly a decade, there was gas discovered off the coast of the country and investors were flocking to the country to help exploit it.   Investment was heading for other areas too, attracted by the political stability,  $850 million of state sponsored bonds in the Tuna fishing industry was eagerly purchased at exceptionally high yields.

Ironically it looks like the ‘tuna bonds’ were the first mistake leading to a growing scandal that looks like destroying the growth of the last few years.  Indeed on January 16th, Mozambique announced to the chagrin of the rest of the world that it would default on it’s international debts.

So why has the government fell into such economic chaos so quickly?   There are some mitigating factors, the global fall in commodity prices have played a part and caused a slowdown in growth to a still respectable 3.4% in 2016.  However as usual the main reason is the economic mismanagement by the government, if you weren’t a citizen of Mozambique it could almost be seen as laughable.

Take the huge investment in the Tuna fishing industry, the state funded industry unfortunately never caught many fish certainly nowhere near enough to repay the generous yields owed on the supporting investment bonds.   This is not actually that surprising because the majority of the investment raised was not spent on fishing boats but rather the sort of boats with guns on the front.    The bonds were hastily swapped for government ones when it became clear they were unsupportable yet almost immediately the Government also admitted that it had hidden further loans of $1.4 billion guaranteed.  This is a huge amount for a country the size of Mozambique and represents almost 11% of their GDP.

Not surprising this sleight of hand dismayed international organisations with the IMF and other donors freezing their existing support.   This is a disaster for a country that despite it’s economic progress still relies heavily on international aid to provide even basic functions and services.   Mozambique’s debt now represents over 110% of it’s GDP and some experts thing even this is optimistic,  however the country is now engaging in a phase of ‘restructuring’.

This is of course merely another way of saying our debts are out of control and we need to bailed out quickly something that the IMF are probably reluctant to do. Missing payments on existing debts is not the way to attract additional funding for obvious reasons.   Few of the existing bondholders are likely to trust the government  after recent events and even the IMF has now insisted on a full of audit of all it’s debts.   There is also the question of where all the original loans and investments have disappeared to as well.

John Williams

Spoof my IP

Education and the Velvet Revolution

Peace education stands as one of the most undervalued and underfunded points of our educational system that is world-wide. If we look at the typical education curriculum at elementary school, or a high school , which is where youth are most impressionable, any site of compulsory non-violent schooling is almost entirely non existent. Regardless, we often find compulsory history classes, which describe every single war in detail, including its death toll, its generals and all the other players.

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Yet given this educational dilemma that is lopsided, once in a while an enthusiastic humanitarian comes to champion a brand new form of instruction about peace, rather than violence.

The Revolution was named “Velvet” due to its soft and non-violent method of peace.

The power of this movie lies in the way it can capture the essence of the Velvet Revolution and how power shifts when individuals the youth, stand up against protest and repression in a non-violent way. The solidarity of the Czech people was so overwhelming that it forced them to bring in new leadership, namely Vaclav Havel, the leader of the revolution and basically crippled the government.

Broken educational systems could no doubt use this picture as a model to teach students at all levels of education about non-violence’s tremendous impact on world history and it. There’s a host of information online yet it doesn’t make it onto the curriculum of most of our schools, lots even on social media, but again you’ll often find facebook blocked in these situation.

Once peace and non violence become “required” curriculum in schools, especially for teens, we’ll begin to find a shift in our belief system regarding what alternatives are accessible to our issues. If a kid has just seen violence, at home, in history books and in the media, then that kid will act accordingly. If a child sees and is educated peaceful approaches to solve disputes and problems subsequently teens will naturally choose this path for resolution.

James Elsworth

Author of How to Watch BBC Abroad

Will Falling Oil Prices Stimulate US Growth?

Over 75% of economists said their sector or company will feel the consequences of the petroleum cost fall, with 18% anticipating a negative impact, and 57% expecting an optimistic impact, based on a survey in the National Association for Business Economics Monday released.

“By a three-to-one ratio, it is favorable,” said James Diffley, a senior manager at IHS Economics as well as the survey’s chairman. “The 18% though signify those businesses that benefit directly from petroleum and gasoline.

Economical fuel is anticipated to provide a boost in 2013 to the market as consumers turn about and spend what they are saving in the pump. Gasoline costs have dropped to close to $2 a gallon, and therefore are poised to drop below that, among the speediest declines.

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But it is crucial to remember that some of the additional stimulation may be taken away, Mr. Diffley said, as petroleum and gasoline companies scale back investment and development. Other occupations will suffer changes in the supply chain for pipe fitters and tool makers, as just one example.  Other reports are difficult to assess simply because of the problems in assessing if they are genuine, many digital businesses for instance – especially those which hide their identity with fake details – like here.

“That takes off several tenths of the percentage point on the increase the market could have gotten,” he said.

Economists reported enhancing conditions at their companies in the fourth quarter.  These

NABE said only rising prices were reported by 16%, compared with 25% in the July and October surveys. And 65% said they anticipate no change in the costs their companies will charge in the first quarter.

And more than half said economists expect salaries and wages to rise in the following three months, compared with.  Sales increase improved somewhat, with 54% of economists reporting increasing sales compared with.

Ninety three economists-who work for private sector companies or industry trade groups-reacted to the survey, that was conducted from Dec. 18 through Jan. 8.

Additional Reading

Military Funding Increases in 2014 — Civilization’s Decline in Full Swing

Perhaps it’s a bit irresponsible to link the world’s military budgets to the decline of civilization.  Regardless, there’s no question that most militaries around the world continue to fund at record levels.  In the USA, where politics and finances have been particularly turbulent lately, the military will be given a 1.0-1.7% raise for 2014 according to current tables.

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President Obama increased military pay scales in December 2012 as per the National Defense Authorization Bill. The 1.7% pay increase was effective on every member of the uniformed forces. However, salaries for enlisted soldiers and for officers follow a slightly different scale. Both members receive a basic pay, which is augmented with allowances, incentives, tax advantages and recoupment benefits.   This doesn’t compare that favorably with some other military forces from European countries, these can be checked directly although you’ll need something like a German proxy because of various geo-blocks.

The military pay chart is readily available on the US Undersecretary of Defense, Personnel and Readiness website. The chart lists separate payments for enlisted members and for officers according to rank and years of service. Enlisted officers are referred to as E and are graduated from E — 1 to E — 9. Some branches may have a Warrant Officer rank and this is referred to as W with different W grades from W -1 to W – 5. Similarly, officers are referred to as O with grades from O-1 to O-10. Please note that these pay grades may vary considerably if incentives, taxes, and benefits are added to the basic pay grade. The chart only provides a list of base pay. Members also get drill pay when they are on active duty. Housing allowance is provided to family of members. Unmarried members usually stay in military barracks but standards have changed and each member is allotted a single room with shared or single bathroom. All active duty military members also get a monthly allowance for food called substance allowance.  Family separation allowance and combat allowance is provided to military members when they have to travel or are deployed on government work. Some grades also get an annual pay raise which increases the basic salary that is offered.

It’s a good idea to check with the Department of Defense website to get an accurate idea of current pay grades and scales.

The Battle of Climate Change

For most of us the question of climate change is pretty straight forward, the earth is getting warmer and we are causing it.  But there are people who would rather the issue be a little bit more uncertain.  Yesterday a UK Newspaper called the Independent ran a story revealing that there are those who secretly fund organisations and people who promote this uncertainty – Climate Science Attacks.

Apparently a secret organisation exists called the Donors Trust based in Alexandria, Virginia.  This group is funelling millions of dollars into the counter claims of climate change doubters.  Most of the wealthy backers of this group are anonymous, but an audit trail has led back to one of it’s biggest supporters- the American billionaire Charles Koch.  Koch Industries you will probably not be surprised to hear is a large oil, gas and chemicals conglomerate from Kansas.  In Australia, climate change and the economy is always on the political agenda and it’s worth keeping an eye on the media reports here, ABC Iview is the easiest way to get access.

Just for clarification that’s a big fossil fuel company donating money to sponsor scepticism about global warming.    This is not small amounts of money either, it’s the sort of cash that gets you onto the big stage.  A researcher in Philidelphia estimated that nearly half a billion dollars has been donated in the last ten years specifically to undermine climate change science.

So no vested interests there at all and I suspect we can all work out where the rest of the sponsors are from.  It is perhaps worth checking out the UK Newspapers and media about this story as it develops.  Normally the BBC is great at covering environmental issues and scandals like this – watch for Panorama and Newsnight for any stories.  Those outside Britain can access them by using a UK based proxy server to change their IP address as explained on this site – http://thenewproxies.com/british-ip-address.  It’s quite a simple process if you use the recommended software and only takes a minute or two to access media sites anywhere on the planet, essential if you want to get a proper world view of climate change news.

Show Business For Ugly People?

It has been said that politics is just show business for ugly people and the way that some countries are being run they would do well to work in a circus. Financial stability is a dream for many countries at the moment so if some of these over inflated egos spent more time actually speaking to one another in trying to find the best way forward we might get somewhere.

Of course these thing are not easy but working together is definitely the way forward and I can appreciate that politicians rely on the media to some extent so the occasional beauty treatment wouldn’t be out of the question, although I don’t know whether the recent expenses scandal would appreciate seeing http://www.snowberrylane.co.uk/treatments/mole-removal on an invoice no matter how good a job they are capable of doing.

It is easy and a very popular thing to sit and pick holes in politicians appearance or the way they go abou their business but when a countries future hinges on them making the right decisions it is only right that we scrutinise every move they make. It is our right to know that they are doing the right thing and that they have our best interests at heart with every decision made.

At times it must be an unenviable position to hold but that is the route that they have chosen and they have been trusted with steering the country through the unstable times. Certain politicians in history come out with a glorious reputation like Winstone Churchill however some are vilified for decisions that they have made and may have proved to be poor choices.

 

Does peace stand a chance in the Middle-East?

The Middle-East has long been a problem area for the West as they look to spread their liberal ideals around the globe. Over recent years we’ve seen uprisings in Libya, Egypt and a number of other countries who have ousted their leaders in a bid to earn themselves more freedom. However, it is unlikely that these states will now turn to the peace and democratic ideals that the USA and the Western world would like to see.

A recent post from how to get an American IP address  on the impact of the USA Presidential Election and the effects it could have on the Middle East, outlined how the election of Romney would have been bad for the region, however, with the current troubles rising up between Israel and Palestine, it looks unlikely that even President Obama will be able to stop the issues of the Middle-East from getting worse.

With nuclear proliferation around the world getting worse and worse, many will have their eyes on Iran and North Korea who are seen as threats to the West and the free-world as they continue with the uranium-enrichment programmes.

The USA’s history of interventionism looks as though it is unlikely to continue against nations who have an arsenal of weapons that are capable of wiping out half of the USA with the press of a single button. It would be foolish for any president to think that entering a country with ground troops is a good idea when a rocket attack on home soil could kill almost all of the US’ population.

While many may have thought that the uprisings in the Arab Spring may lead to peace in the region, it’s now looking unlikely that this will come about. Instead, new questions of the issues in the Middle-East look to plague Obama’s second term in the White House.

 

Rare Earth Metals

Rare earth metals have been hitting the news recently. They are a set of 17 elements that are hardly famous outside of academic and industrial circles. Rare earth metals include such elements as Scandium, Yttrium, Promethium,  Europium and Erbium. These elements are confusingly called ‘rare’ despite being relatively plentiful in the earth’s crust. They are used for a number of applications including lasers, rare earth magnets, nuclear batteries and high index refractive glass. In short they are used in a lot of different ways, and are thus of great economic value.

Although deposits of rare earth metals in ores are widely spread across the world, there are few places that concentrated ore deposits can be found. China in its ever increasing need for raw materials to keep its economic miracle going have developed several rare earth mines. By doing so, China has captured 90% of the rare earth supply in the world.

It was interesting to note that in April this year (2012) Japan, the EU and the USA complained to the World Trade Organization about China reducing its supply of rare earth elements. They accused China of having a monopoly and deliberately holding back supplies in order to drive up the price.

China responded by saying it wanted to standardize the price for rare earth metals and that they were not to be blamed for developing this natural resource when other countries were reluctant to do so.

If prices for rare earth metals continues to go up no doubt other economic superpowers will do something about it.

This anecdote clearly shows the strategic importance of natural resources including those that are less well known. China is positioning itself for the future when resources become more limited.