Editor's Desk

Emotionally it sounds good, but it is not good investment

waldo@economist.com.na (Daniel Steinmann) — Fri, 24 May 2013 15:31:53 +0100

It is somewhat baffling to find a foreign investor so eager to enter the local scene, it embarks on a social investment programme less than a month after it started construction of its facility. To the shareholders of that entity, it means that after all statutory obligations have been complied with and after all levies and other charges have been settled, the local community gets to benefit before the investors who supplied the capital, see any return on investment.
Recent events are not the first instance of social investment taking precedence over dividends. This pattern has been repeated so often over the past few years, it has now almost become a new standard to all foreign investors. This is indeed an indication of a very high expectation of future profits.

How many billions can the mattress hold?

waldo@economist.com.na (Daniel Steinmann) — Fri, 17 May 2013 16:45:04 +0100

My views on the informal economy are regularly sought by policy makers and entrepreneurs alike. The reason is rather straightforward: by all observations there is a remarkable amount of cash in circulation but it is hardly captured in the conventional channels, and most important, it is also largely unreflected by the commercial banking sector.
Over the past decade attempts to analyse and measure the extent of the informal economy usually lead to disappointment. At some point, (more than ten years ago), the finance ministry was very interested to try and form some picture of the size and the tempo of the informal economy, mostly as part of its endeavour then, to expand the fiscal net. If I go by policy development of the last seven years, I get the impression these ideals have been abandoned.

Like all asset bubbles this one too will pop. When, is an open question?

waldo@economist.com.na (Daniel Steinmann) — Mon, 13 May 2013 17:00:32 +0100

Two major game auctions took place during April. At the Erindi auction, there were many animals offered which can only be described as types or mutants for instance white springbuck, black springbuck, golden gemsbuck, and white blesbuck.
At the Outjo Game Festival, none of these more popular fashion game was on offer, but a pattern very similar to the Erindi auction, became noticeable for the rarer species.
Game, or at least certain types of it, has turned into an investment commodity. And looking at the industry’s development over two decades, it is clearly in a classic asset bubble.
Now I know the game farmers, or the new “game investors” do not like to hear this and I have been taken to task on more than one count of my views on overpriced game. But unfortunately, I have to point out the economic anomalies, and I have to make the fundamental calculations to determine the potential return on investment as far as expensive game goes.

Load shedding is the best advocate for a reliable nuclear facility

waldo@economist.com.na (Daniel Steinmann) — Fri, 03 May 2013 16:25:46 +0100

It may be somewhat early to be too dogmatic about the prospects for the coming winter but the warning message broadcast every evening on DStv channels, to reduce electricity usage, does not bode well for the coming months.
More than one expert, either on energy or on weather, forecast a dismal picture for southern Africa in terms of electricity redundancy. As a matter of fact, redundancy is a dirty word and South Africa’s power utility has already warned that load shedding, or a modified form of it, is inevitable. The learned Eskom leadership ascribes this to their maintenance schedule, but the more sober analysts realise the utility simply cannot supply its own users, especially during the coldest part of the winter. Where does that leave us, who are also dependant on Eskom for about two thirds of our electricity during peak time.
Warning signals like these always make me wonder what have we been doing for the past twenty years. It must have been that long ago that I wrote a power station does not get built in one year, and not too far into the future, we shall need more than just one power station.

Not even boring academics can escape the allure of Schadenfreude

waldo@economist.com.na (Daniel Steinmann) — Fri, 26 Apr 2013 17:25:00 +0100

A not-insignificant storm in the academic teacup has been raging for the past few weeks. Celebrity US economists, Professors Carmen Reinhart and Kenneth Rogoff, were still basking in the glory of their most recent work, when a group of adamant peers said, May we please have that data, we want a review. As it happened, the learned academic duo allegedly ignored most if not all these requests.
Reinhart and Rogoff were noted scholars long before the publication of their most recent book, “This time it’s different.” They are well-known and highly regarded for their benchmark work in macro-economics, and both enjoyed a quasi-celebrity status, at least in the United States. The publication of their seminal work was in part the result of developments in the G20 economies following the 2008 crisis. The work’s title alludes to typical political and policy responses, citing economic planners who fell back on the argument that today’s conditions after the crisis can not be compared to any other period in economic history. But the title is meant sarcastically implying that this time, it is NOT different.

The market pendulum has resumed its violent oscillation

waldo@economist.com.na (Daniel Steinmann) — Fri, 19 Apr 2013 20:29:03 +0100

Volatility is back with a vengeance. The world’s big equity markets have taken most analysts by surprise in the early part of this year, when a rally across all sectors in these markets started and continued until early this week.
Granted, this upward move was supported in no small measure by a prolific infusion of liquidity over the past two years in markets across the US, the Euro Zone, and China, but still no investment report I am aware of, foresaw a 40% move in the Dow Jones Industrial Average, for instance. Then recently Japan joined the fray with a massive bond market intervention. This led to a major spike in the Nikkei, but during this week, the only evidence of the injection, was an index that shed as much on one day as it has gained the previous.
Similar performances manifested on other large bourses in the East, mirrored every day by enormous intra-day moves on Europe’s major exchanges, and eventually, also reflecting in trade on US markets. The attack in Boston lead to a brief contraction early in the week, but a day later US markets seemed to have shrugged off the impact only to be reversed a day later, leaving investors on the world’s largest stock exchange with a serious nervous tick.

NB - job and pregnancy case you pay after success

waldo@economist.com.na (Daniel Steinmann) — Fri, 12 Apr 2013 19:40:30 +0100

Every now and then some delightful contribution crosses my path to provide relief from the usual weekly tedium of reading umpteen reports, just to make a meaningful contribution to the local discourse.
Such an event actually crossed my windscreen, not my desk, but it gave me such a spectacular shot of whatever body chemical it is that laughter releases, that I felt compelled to share the uplifting experience with our regular readers.
Getting into my famous bakkie one evening, I found a small printed notice stuck under the windscreen wiper. Now, usually these brief notices get transported manually to the back of my bakkie, rolled into a tight ball, that I then later transfer to a designated garbage collection facility. But while retrieving the said pamphlet, I noticed the second line: “If you want to get marriage.” That simple question with its doubtful grammar let to a mental response of “Sure, why not. How many can I get - and what must I do to get marriage? Then I took a closer look at the rest of the services offered.
It turns out, the small note was prepared and issued by one Dr Hassan. He advertises “new amatree” herbal remedies for all sorts of complaints and aspirations. The entertainment value soared as I read further.

A capital tsunami is growing and it could wash over the entire world

waldo@economist.com.na (Daniel Steinmann) — Fri, 05 Apr 2013 16:08:04 +0200

While most of the attention is on Cyprus and Europe, a much larger catastrophe is being brought to a boiling point on the other side of the globe.
With a government debt of around 220% to GDP, the new Japan government is playing follow my leader to the Federal Reserve’s Chairman, opting to aggressively stimulate the Japan economy, a strategy that flies in the face of all rational economic considerations.
Depending on which metric one applies, the US government has debts and liabilities of around 90%, which are expected to cross the 100% mark within the next two years. This excludes entitlements and social insurance liabilities.
The Japan government is for all practical intents and purposes bankrupt. Its economy carries a debt burden that cannot be repaid by the next three generations. So, while Cyprus has kept the European Central bank occupied, it has shifted the spotlight temporarily away from Greece despite the fact that worthless Greece government paper is the fundamental reason why two Cypriot banks are bust. And skillfully maneuvering in the brief shadow cast by events in Europe, the Bank of Japan announced its own liberal Quantitative Easing programme on Tuesday catching most market players unawares, sending the Nikkei up by more than 3% over two days.

Everybody is invited for a seal potjie at Cape Cross

waldo@economist.com.na (Daniel Steinmann) — Thu, 28 Mar 2013 04:18:30 +0200

The self-styled conservationists who claim to protect seals, have turned into cyber terrorists. Realising that they have failed to stir emotions to create a large Namibian following, the organisation that calls itself The Seals of Nam, has now resorted to attacking everybody that disagrees with their point of view. Starting last weekend, they launched a concerted cyber attack against the mail servers of several groups that support the annual culling of the seal resource.
I am very confused over their definition of garnering support but there is no misunderstanding of their views on how to make enemies. Fortunately, Namibia is a free democracy and everybody is allowed to express his or her opinion provided it does not interfere with state security or infringes upon the liberties of others. But the actions of this week clearly indicate that the seal huggers are on a crusade and that they do not shy away from fighting dirty.
To try and make some sense of this clash that is now bordering on the irrational, let me try and put the facts into perspective.