A sure sign of economic competence is when your central bank issues trillion dollar notes.
Via Greg Mankiw.
A sure sign of economic competence is when your central bank issues trillion dollar notes.
Via Greg Mankiw.
Posted at 04:26 PM in Africa | Permalink | Comments (1) | TrackBack (0)
What, is Hank Paulson and Ben Bernanke running Zimbabwe too?
Haha, just kidding.
From the CATO Insitutute.
Posted at 08:33 AM in Africa | Permalink | Comments (0) | TrackBack (0)
With the sham re-election in Zimbabwe of the incompetent thug, Robert Mugabe, its timely to note that inflation - the ultimate indicator of government failure - has risen, by my calculations, 56,807,877% - give or take a couple hundred thousand percent - over the past year, assuming the inflation index lows occurred 12 months ago, not an unreasonable assumption.
Josh estimates that last weekend, the annual rate of inflation was 430,000,000,000,000,000,000,000,000,000,000,000,000% per annum.
I don't even know how to pronounce that number.
The good news is that Mugabe may not last much longer. As Johan Norberg notes
... no leader ever survives hyperinflation, because it doesn´t just threaten most people´s survival, in the long run most of his privileged supporters also see their privileges stolen by the destruction of money.
Here's hoping.
Posted at 08:41 AM in Africa | Permalink | Comments (0) | TrackBack (0)
Hint, the country had an annualized inflation rate of 355,000% last month.As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their National interests.
That is precisely the path that we began over 4 years ago in pursuit of our own national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification and demonization we have endured from across the political divide.
Yet there are telling examples of the path we have taken from key economies around the world. For instance, when the USA economy was recently confronted by the devastating effects of Hurricanes Katrina and Rita, as well as the Iraq war, their Central Bank stepped in and injected life-boat schemes in the form of billions of dollars that were printed and pumped into the American economy.
A few months ago, the USA economy confronted a severe mortgage crisis, which threatened to spark an economy-wide recession.
The USA Central Bank again responded by injecting over US $160 billion between December, 2007 and March, 2008, to provide impetus to the American economy and prevent a worse crisis from happening....
Here in [your guess here] we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander....
As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.
Posted at 09:09 AM in Africa, Mayhem | Permalink | Comments (0) | TrackBack (0)
Yes, says Loretta Napoleoni.
Billions of dollars raised for African famine relief by celebrities Bono and Bob Geldof have instead funded civil war across the continent, says terrorism expert Dr Loretta Napoleoni.
London-based Napoleoni, in Auckland to appear at the Writers & Readers Festival, has written two books, Terror Inc: Tracing the Money Behind Global Terrorism and Insurgent Iraq: Al-Zarqawi and the New Generation, on the economics of terrorism.
Her latest book, Rogue Economics, studies the destabilising effect of economic globalisation, focusing in part on why more than half a trillion dollars worth of aid sent to Africa since the 1960s failed to reach the intended destination - developing the nations' economies.
That huge amount of aid, which includes money from the United Nations and donations generated by Live Aid for Ethiopia, organised by Geldof, and the Live 8 concert in 2005, organised by Bono, has instead "served as a rogue force, notably as an important form of terrorist financing" in countries such as Ethiopia, Somalia, Sudan, Zimbabwe, Tanzania and Kenya. Ethiopia, for example, received $1.8 billion in foreign aid between 1982-85, including a large contribution from Live Aid; $1.6 billion of that, she points out, was spent on buying military equipment.
"The money has ended up making Africa poorer and more violent because the money has been diverted towards warlords, weapons and armed invasions," she says. "The problem of Africa is corruption."
Napoleoni says there are parallels with Burma in the aftermath of the cyclone as aid organisations appeal for donations. "What is happening in Burma is a good example. You can have the best intentions but getting the money to the people in need is very hard because you have to go through the bureaucracy. The problem is the governance. You also need expertise. What the international relief organisations are saying is, you should send people from our team who know exactly what to do in these circumstances."
The cult of celebrity means that people who are famous for nothing more than being pop or movie stars speak out on issues they don't fully understand. "People like Bono and Bob Geldof are not ill-intentioned," she says. "But the simple fact that being a celebrity puts you in a position above everybody else is unacceptable.
"These people don't realise they are being manipulated by politicians and others. That is the case in the relationship between Bono and [American economist] Jeffrey Sachs, who is among the people who caused the chaos of the transition of the former communist countries into free-market economics. Sachs has been trying to relaunch himself as a sort of economist celebrity so he has been linking himself to Bono.
"Bono is repeating what he has been told about Africa. I am sure Bono hasn't got a clue about economics."
Napoleoni, who knows Geldof as a neighbour in the London suburb of Battersea, says he told her the first Live Aid was the "worse experience of his life because he found it very difficult to control where the money went. He suddenly realised it's easy to put famous musicians together to make money but to bring the money to the people in need is another matter."
Napoleoni adds that there is a certain amount of hypocrisy among stars linked to good causes. Nobel Peace Prize-nominated Bono and the other members of U2 were last year outed as tax-evaders for diverting their funds to the Netherlands, circumventing their democratic responsibilities to their home country of Ireland.
And Brad Pitt, Napoleoni points out, may drive a hybrid car, but he and Angelina Jolie use a private jet. Their trip to Namibia a couple of years ago, she notes, burned up enough fuel to take Pitt's hybrid all the way to the moon.
Posted at 05:55 PM in Africa | Permalink | Comments (2) | TrackBack (0)
An account from an economist who notes that improved property rights have lead to an increase in living standards in Africa.
Posted at 10:53 AM in Africa | Permalink | Comments (0) | TrackBack (0)
That is the conclusion of Nathan Nunn, via Economist's View.
Slavery, according to historical accounts, played an important role in Africa’s underdevelopment. It fostered ethnic fractionalisation and undermined effective states. The largest numbers of slaves were taken from areas that were the most underdeveloped politically at the end of the 19th century and are the most ethnically fragmented today. Recent research suggests that without the slave trades, 72% of Africa’s income gap with the rest of the world would not exist today.
Posted at 02:11 PM in Africa | Permalink | Comments (0) | TrackBack (0)
It's growing.
Economic growth rates in sub-Saharan Africa have over the past 10 years started to catch up with the rest of the developing world, the World Bank said on Wednesday in a survey reflecting cautious optimism in the markets about the continent’s business prospects.
The report, Africa Development Indicators 2007, concluded that growth in the decade from 1995 contrasted strikingly with the “collapses” of the years between 1975 and 1985 and the “stagnations” of the next 10 years.
“For the first time in three decades African economies are growing with the rest of the world,” the report said. “Average growth in the sub-Saharan economies was 5.4 per cent in 2005 and 2006. The consensus projection is 5.3 per cent for 2007 and 5.4 per cent for 2008.”
The findings echo the conclusions of a recent report by the International Monetary Fund, which said that sub-Saharan Africa was benefiting from the strongest economic growth and lowest inflation in more than 30 years. ...
John Page, the World Bank’s chief economist for Africa, told the Financial Times he was “prudently optimistic” that this was not a “premature Africa turning point”, a reference to several false dawns in the past 30 years. He highlighted that while oil and mineral exporters were driving the increase in growth rates 18 “non-mineral” economies, accounting for 36 per cent of sub-Saharan Africa’s population were also doing well.
Further grounds for hope, he said, stemmed from the fact that the countries in this second group had prospered for a range of different reasons, and that it appeared that “geology and geography” were no longer so crucial in determining a country’s future.
The report, however, cautioned there was also a third tier of countries where growth remained stagnant. More than 40 per cent of the population of sub-Saharan Africa lived on less than $1 a day and life expectancy had stalled and retreated in a number of countries, the report found.
While Africa’s export base remains concentrated and rates of private investment are still low, Mr Page argues the key change in the region has been a marked improvement in macro-economic management, and governance.
“Inflation, budget deficits, exchange rates and foreign debt payments are more manageable,” the report said. “Economies are more open to trade and private enterprise. Governance is also on the mend with more democracies and more assaults on corruption.”
Posted at 03:55 PM in Africa | Permalink | Comments (0) | TrackBack (0)
Africa has many problems, but perhaps its worst is the incompetent, venal and corrupt leaders who rule so many countries on the continent.
The rule of Robert Mugabe is one of the worst as food is running out in Zimbabwe because only his ego is greater than his gross incompetence.
Panic buying swept through the streets of Zimbabwe yesterday, as stores ran out of basic goods and shopkeepers complained that they were selling goods at a loss after the government ordered prices to be halved in a last-ditch effort to tackle hyper-inflation.
Shoppers desperate to restock in a country ravaged by shortages cleared out supermarkets in the capital, Harare, and Bulawayo, where shelves were bare of essential items such as maize meal, cooking oil, sugar, milk, soap, bread, chicken, beef and other items.
"I am selling goods at less than what I paid for them. I am selling bread at less than what it costs to bake it," a distraught Harare shopowner said, pleading for anonymity so as to avoid government retribution. "I am following the government's orders. Army soldiers came here this morning to check prices. Mugabe has threatened to seize any business that does not do what he says. I don't know how long this can continue."
Inflation is currently estimated at 10,000% and rising. Armed soldiers and the youth militia are patrolling shops and open-air markets to enforce President Robert Mugabe's price controls. More than 200 retailers have been charged with crimes of charging more than the official prices, police confirmed yesterday.
By making it uneconomic to produce and sell goods and food, Mr Mugabe risks further damaging the country's limping economy, which has shrunk by 50% over the past seven years. Economists warn the move will not control inflation but will simply push goods on to the thriving black market. Analysts say many companies and industries could go bankrupt, adding to Zimbabwe's unemployment, which is already estimated at 80%.
This is a self-induced crisis, pure and simple.
And now, as one would expect, and as he has done repeatedly, he simply fails to understand the root of the problem and attempts to treat the symptoms, which of course will exacerbate the situation.
Police arrested 16 more business leaders in a crackdown on those suspected of violating the government's order to slash prices by 50 percent, the official media reported Sunday.
The mandated price cuts are a desperate attempt to confront inflation that has spun out of control during Zimbabwe's economic crisis. The falling prices have caused stampedes, panic buying and near-riots by impoverished Zimbabweans. ...
The country's economic crisis, the worst since independence from Britain in 1980, began with the seizure of thousands of white-owned commercial farms for redistribution to blacks in 2000. The country's agriculture-based economy collapsed as a result.
Official inflation is running at 4,500 percent, the highest in the world, though independent financial institutions estimate real inflation is closer to 9,000 percent.
Business executives argue the price cuts threaten to force them to shut down. The government accuses them of being part of a political and economic campaign of "regime change" to bring down longtime ruler President Robert Mugabe. ...
Store shelves remained empty of corn meal, bread, meat and other basic foods Sunday as police and government inspectors continued raiding shops and businesses to force them obey the new price controls.
Police on Friday arrested 17 business leaders.
At least 200 businesses already have been charged for alleged price violations and 40 market vendors were arrested for hoarding goods.
Utterly tragic.
And completely avoidable.
Posted at 07:47 PM in Africa | Permalink | Comments (0) | TrackBack (0)
In nominal terms, the best performing market on the planet has been the Zimbabwe Industrial Index. It has risen from 10,000 at the end of 2005 to 22,000,000 as of the close yesterday.
The reason why it has soared is because the currency has collapsed due to the utter incompetence, venality and thievery of Zimbabwe's President, Robert Mugabe, who has embarked on a disastrous policy of land expropriation and hyperinflation, which has lead to the collapse of the Zimbabwe dollar.
In 1983, the conversion rate was Z$1=US$1. In 1987, it was Z$10=US$1. Today, it is Z$55,000=US$1. Inflation rates of 3000% a year will do that to a currency.
I am told, however, that even with the tremendous devaluation of the Zimbabwe dollar, the Zimbabwe Industrial Index is up for the year in real terms. Now that's global liquidity!
What Zimbabwe demonstrates is that stocks can be a good hedge against even the most extreme inflation.
If you are interested in investing in Zimbabwean stocks, contact the Zimbabwe Stock Exchange.
Posted at 10:50 PM in Africa | Permalink | Comments (10) | TrackBack (0)