central banks


Online Dating; You're Smart, Date Smart ... www.iSmartdate.com

Online Dating; You're Smart, Date Smart ... http://www.iSmartdate.com

Choose Your Language Of Preference Below  

 

 

French Version German Version Russian Version Spanish Version 

 

By ZamChro

It is very scary to see  Kwacha depreciating at a very fast rate. It is costing almost K6 000/per $1. The Jump from Nov’08 to February is just too enormous. This is what we predicated way back here at Zambian Chronicle, the collapse of the world economy is evidently has a lot of impact on the Zambian economy .

That is what happens when you are so dependent on the outside funding. Something is really wrong. This is what happened to Zimbabwe.

In America the economy is souring twice as much, although unlike Kwacha, the $ is appreciating. People are losing homes like crazy and job losses are sky rocketing.

US bank shares hit 17-year low yesterday on rising fears the government will have to nationalize troubled institutions such as Citigroup and Bank of America wiping out investors’ confidence as they feared government controlling of large portion of the financial sector.

According to the Financial Times report, Bank of America shares slid 14% to $3.93 their lowest point since 1984. Share in Citi were down 13.8%, closing at $2.51, their lowest since 1991.

There some options for the banks being discussed. One option, at least for Citi- would be to convert some or all of the government’s $45bn holding of preferred shares, as well as the $35bn in preferred shares held by sovereign wealth funds and other investors into common stock.

There is some refreshing news though from at least one country.

Canada has shown itself to be a pretty  good manager of the financial system in ways that haven’t always been in the United States. This is due to stricter regulation and their conservative culture, one that depends heavily on a vast and stable retail branch network, and clubby working relationship,.

Canada‘s banks have remained the strongest in the G7 and according to the October report by the world Economic Forum, the soundest in the world.

According to a Finance professor at the University of Toronto,  “… in Canada they do it the old fashioned way, where you need money you go to the bank and they will lend you no more than 75% of the value of your house. Canada is a more conservative place and as much as it limits growth in good times, that approach pays off when others begin a race to the bottom.”

It even gets better to know that there is a country like Canada in this world with reliable banks. Instead of our consulting Nigerians, it may be beneficial if President Banda would surround himself with world leaders like the Prime Minister of Canada.

In Canada, five banks the Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal , Largely control the market through thousands of branches across the country, forcing geographic diversification and efficiencies of scale generally not found in US or other countries.

Canadian investment banks, as part of commercial banks, are more tightly regulated and kept in check by main institutions, which would pay a price for unwise investing.

The Financial Times reported that after President Obama’s first visit to Canada, he has decided on taking a path that other presidents have not taken in the past putting banks his agenda and staying open minded to new ideas.

More drama on the souring economy.

On another note, UBS has been sued on account of 52,000 Account holders. The Department of Justice sued the Swiss bank giant for records on thousands of U.S customers. The DOJ says UBS agreed to pay a $780Million fine and reveal information on 250 US customers to avoid prosecution but vowed to fight the broader disclosure. Though some think the end of secret Swiss banking is nigh.

Copyrights © 2009 Zambian Chronicle. All rights reserved. Zambian Chronicle content may not be stored except for personal, non-commercial use. Republication and redissemination of Zambian Chronicle content is expressly prohibited without the prior written consent of Zambian Chronicle. Zambian Chronicle shall not be liable for any errors, omissions, interruptions or delays in connection with the Zambian Chronicle content or from any damages arising therefrom. 

Zambian Chronicle is a wholly owned subsidiary of Microplus Holdings International, Inc.

Copyrights © 2009 Microplus Holdings Int., Inc.

Advertisements

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

By Shapi Shacinda

LUSAKA (Reuters) – Zambia has enough currency reserves to protect the economy in case the illness of President Levy Mwanawasa prompts some reduction in foreign investment, central bank Governor Caleb Fundanga said on Tuesday.

Fundanga said the only slight worry of the Bank of Zambia (BoZ) was rising oil and food prices, which threatened its single digit inflation target. However, he remained optimistic of achieving 7.0 percent annual inflation in December this year.

Fundanga said it was evident the illness of Mwanawasa, who is in a French hospital after suffering a second stroke, had caused anxiety among some investors but that there was “no need for panic”.

“The investors in the mines will continue exporting copper. It is possible that … some investors may decide to pull out, but we have enough reserves, $1.4 billion held by the Bank of Zambia and another $1 billion by commercial banks,” Fundanga told a news conference, adding Zambia had 5.6 months of import cover.

Mwanawasa impressed the International Monetary Fund and other Western donors by cracking down on government spending and launching an anti-corruption drive.

Fundanga said Zambia had investment pledges totalling $1.8 billion so far this year compared with just $1 billion in the first six months of 2007. The government has previously said a number of these investments have been fulfilled.

“Naturally, as a result of the illness of the captain, as some refer to the president, there are some people who might be feeling uncomfortable. Given this situation, are we vulnerable? Will all forex (foreign exchange) dry up? The answer is ‘no’,” Fundanga added.

He said mining and non-traditional sectors had continued to perform satisfactorily with copper export earnings for the three months to June just 0.1 percent lower than the previous quarter’s earnings, at $967.6 million.

Fundanga said non-traditional exports at $187.6 million at end-June were 12.3 percent above the $167.1 million recorded in the previous quarter ending in March.

“Favourable export earnings have led to the strengthening of the external sector reflected in the appreciation of the kwacha against major currencies and a 10 percent increase in international reserves to $1,338.4 billion in June 2008 from $1,216.3 billion in March 2008,” he said.

There were inflationary pressures from a 15 percent wage increase for civil servants from January and from higher global oil prices, which would put pressure on transport and commodity prices.

“However, these pressures may be mitigated by pass-through effects of the appreciation of the exchange rate of the (Zambian) kwacha against major currencies on account of external sector performance,” Fundanga said.

Fundanga said the kwacha appreciated 11.3 percent against the dollar in the three months to June to trade at an average of 3,259/dollar.

“We cannot give up on 7.0 percent inflation at the end of the year because we have enough food to feed ourselves and we will not necessarily be affected by global food prices,” he added.

(Lusaka newsroom + 260-977843609/260-955779523)

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

 

Fed Can’t Print Its Way Out

A well-known stock market commentator this week said, “There’s been no growth in the money supply for two to three years.”

He also suggested that the recent increase in consumer credit is a positive economic development.

Well, here are the facts. At the end of November, the latest date for which data is currently available, the most common measure of the money supply, known as M2, had risen 11.4 percent since November 2005 and 16 percent since November 2004.

(Just in case you wanted to know: The M2 money stock includes currency, coins and traveler’s checks held by the public; balances in commercial bank checking accounts; balances at credit unions; savings accounts and certificates of deposit accounts less than $100,000; overnight repurchase agreements at commercial banks; and non-institutional money market accounts).

A broader measure of the money supply, the MZM money stock, has risen at an even faster rate over the past few years.

As of Nov. 30, MZM had risen 18.2 percent since Nov. 30, 2005 and 20.8 percent since Nov. 30, 2004.

(In detail, MZM includes all of the components of M2 mentioned before, plus institutional money market accounts and greater-than-one-day repurchase agreements).

So, as you can see, the money supply has clearly grown over the past few years.

My guess is that the well-respected economist who made the comments about the lack of growth in the money supply was referring to a different measure of money, known as the monetary base. That’s defined as currency in circulation plus funds held by commercial banks at their respective region’s federal reserve bank (“reserves”).

Although the monetary base also has risen over the past few years, it has grown at a much slower pace than the M2 or MZM money stock. As of Dec. 31, 2007, the monetary base had risen a modest 4.2 percent since December 2005 and only 8.5 percent since December 2004.

So, you’re probably thinking “Why all of the talk about the money supply?”

The answer is this: When the money supply increases, short-term interest rates tend to decline, and when the money supply decreases, short-term rates tend to rise.

In fact, the Federal Reserve adjusts the target rate for the Fed funds rate by affecting the level of the money supply, or more precisely, by affecting the monetary base.

When the Fed seeks to lower the target Fed funds rate — the rate at which commercial banks borrow (overnight) from one another — the Fed increases its purchases of U.S. Treasury securities in the open market.

(Those who follow the Fed may have noticed that the press releases issued by the Federal Reserve following meetings on interest rate policy always begins with statement, “The Federal Open Market Committee decided to… ”. That’s why it’s called the “open market” committee, because it buys securities on the open market.)

Likewise, when the Fed desires a higher Fed funds rate, it sells U.S. Treasury securities.

However, the Fed is not able to set the exact level of M2, MZM or other money supplies, because there are other factors that affect the money supply.

For example, the ongoing credit crunch and large sums of money that commercial banks have lent to financially-strapped businesses and to individuals over the past six months has caused commercial bank reserves to fall — even though the Federal Reserve has increased its purchases of Treasury securities.

As a result of the decline in bank reserves, the monetary base has grown at an anemic rate over the past few months. In fact, the monetary base rose only 1.5 percent during December 2007 from the same period a year ago.

In light of the ongoing credit crises, the Fed will likely need to significantly increase its purchases of Treasury securities in order to increase the monetary base. Many Wall Street economists have recently been encouraging the Fed to take this step in an effort to lower short-term interest rates.

(Note: When the Fed increases its purchases of Treasury securities, the prices of those securities rise as a result of their increased demand and the yields — interest rates — on those securities therefore fall.)

Well, here’s what I have to say about the recommendations of these “insightful” economists. Go ahead, persuade the Fed to increase the monetary base, because one outcome is certain if the Fed follows the desperate advice of these “experts.”

The result will be that the exchange value of the U.S. dollar will plummet and inflationary pressures will skyrocket. Gold prices, already breaking records, will continue to surge.

In regards to the esteemed economist’s comment regarding the supposedly positive increase in consumer credit, you should consider the following: When the economy is in an expansion mode, an increase in consumer credit is usually a positive development, because such a development indicates that consumers are confident in the future direction of the economy.

To be more specific, when consumers feel good about their employment prospects and their future earning power (that is, salaries and wages), they tend to take out more loans for automobiles, consumer electronic devices and home appliances. They also tend to use credit card debt more willingly for spending on clothing and other personal items, as well as dining out at their local restaurant.

As a result, aggregate consumer spending tends to rise during such periods, as does the total output of goods and services (GDP). That’s because consumer spending accounts for approximately 70 percent of U.S. GDP.

However, when consumers become more fearful of losing their jobs and their confidence in future economic conditions falls sharply — which is exactly what has been occurring over the past two months — an increase in consumer credit should be interpreted as a very negative development.

This is especially so when a large number of consumers begin using credit card debt to help pay their home mortgage loan, as they have also been doing over the past few months. But, don’t worry, there’s also a way to profit from this type of supposedly “positive” economic development.

How would what goes on in the US economy affect the rest of the world, one would ask? Because US Treasury Securities are the world’s most trusted and are purchased by almost every enterprise public or private. So when they are catch a cold, the world sneezes …

Copyright (c) 2008 Money News

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

ü      Create A New People Driven Constitution

The greatest single most achievement the Zambian Enterprise can accomplish for 2008 as a milestone is to produce a new constitution using the National Constitution Conference (NCC) as a vehicle.  

If all stakeholders felt that their constitution provided for equal opportunities, guaranteed civil liberties and protection for all, the enterprise would have achieved strides worth thousands in light years.  

In that regard it is highly palatable that peace loving individuals will give the NCC delegates all the needed support to achieve this milestone. The October 6, 2001 issue of the Economist magazine carried a story about Turkey’s Constitutional Amendments.

“… MANY Turks have long thought of their parliament as a bunch of buffoons interested mainly in making money, not laws. That may change, as the 550-member chamber keeps up a marathon session to pass a set of reforms that are intended to clean the face of Turkey’s constitution and reinforce the country’s still rather wobbly democracy.”

At issue was the fact that both political philosophies represented in the Turkish parliament approved what seemed on paper as the best brand of policies any mid eastern nation would espouse but the ideas only looked great on paper.

We are hoping the great genius minds of the smart people of our enterprise respresenting us in NCC will come up with a document that can stand the test of time. These delegates are the framers; we are hopeful they will envision a Zambia that will be there for centuries to come because they framed the right manuscript on behalf of us all. 

ü      Deliberate Infra-Structure Investment

Infra-structural development is about capacity building and very critical to national development. Without capacity economies don’t grow with healthy veracities.

Capacity enables a country to handle tasks with great ease and lack thereof creates auxiliary derivatives such as development of shanty compounds in the middle of a metropolitan area.  

In this modern day and age infra-structure capacity does not refer to road, railways, subways, modern airports, etc. alone, it also refers communication apparatus such as turning Mwembeshi into a super information highway, for instance. 

It involves well stocked libraries in city centers, schools, colleges and universities with a deliberate attempt to have all these connected to the internet.  Tunisians did it and their population is one of the most literate on our continent, it is no wonder they have poverty levels at 4% of their population with nearly a tenth of natural resources when compared to us. 

It involves well planned town, cities and provinces with town planners whose eyes are on the ball. Japanese planners have 15 year projections with simulations accompanying … it is no wonder they enjoy one of the highest qualities of life in the entire world.  

With a billion dollars in reserves, the Zambian Enterprise has more than enough in it’s back pocket to invest into infra-structure that matters …

ü      Create Economic Zones In Each Province

One of the greatest achievements of the UNIP government was the creation of provincial economic zones deliberately planned to urbanize rural areas. They were not termed that way but their objectives met all the prerequisites of such.  

Livingstone had ITT Supersonic and Livingstone Motor Assemblers, Mansa had Mansa batteries, lead and manganese mines, Chipata had Eastern Industries that made Eagle bicycles, Mongu had canneries and so did Mwinilunga; the copperbelt was an economic engine, the list is endless. 

When the MMD came into power they literately had no clue what they wanted to accomplish except privatization. In fact, they mistook democracy in many instances with privatization. They abolished the office of National Planning because they thought it advocated for a command economy. 

Using other forums at the time we advocated for national planning that had a neo-spin to it, laid down the benefits of such schemes but it wasn’t until the current president came into office that they reinitiated planning mostly tailored on proposal of this author. 

Well planned economic zones not only mitigate urban migration en masse, they also help accelerate national development at exponential rates well across the board.  Besides if you fail to plan, you are in an essence planning to fail …  

One reason, Malaysia stood out among the Asian tigers was because it deliberately initiated economic zones and today the world’s tallest buildings are not in Western Europe nor are they in the Americas but in Central Asia.  

ü      Continue Keeping Macro-Economic Factors Under Control

Macro-economic factors and dwindling investor confidence are always behind corporate underperformance.  Among the macro factors concerns over interest rates, high oil prices, staple commodity prices and jitters over the reserve currency weakness impact economic growth … 

These factors lead to markets savagely punishing companies thus failing to produce the goods and services at optimal capacity. Companies that record profits tend to be tarred with the same brush and their share price don’t respond to their profits.  

When the market starts to focus back on company-specific issues rather than the macro-economic picture and look at those that are turning themselves around, performance picks up. 

There is no doubt that Fundanga at BOZ and Mangande at Finance have been among the best choices our enterprise has picked for their respective jobs but short term gains can easily blur one’s focus. 

It is therefore extremely necessary that they keep their eyes on the ball with the big picture in mind because if we don’t continue keeping the macro-economic factors under check, the unprecedented 85% growth LuSE experienced last year might be lost … 

Strict investment philosophies in the market tend to sometimes make publicly traded companies to under perform but investor confidence makes people start looking at companies showing above average growth so long macro-economic factors are in favor.  

ü      Reform Tax Rules

The old adage of two things one should be sure of being taxes and death remains true to this day. So weaknesses in the institutional framework need to quickly be identified to make necessary adjustments. 

One of the most important factors in good policy-making is the strengthening of the institutions that contribute to it. The tax policy-making process should heavily rely on institutional strength to see it through periods of major transitions such as our Enterprise is going through right now … 

Dealing with enforcement and operational policies is not only a good initiative when it comes to strengthening the treasure, it also helps narrow the role of the other revenue  collecting units thereby reducing excesses while increasing proceeds. 

Parliamentary scrutiny of tax proposals tends to be increasingly ineffective as tax legislation becomes more complex. This is because our current Members of Parliament have no dedicated independent groups of economists and lawyers to support them on budgetary matters. 

Outside the framework of government,  institutions like the University of Zambia’s economic studies should provide virtually more and not just research-based independent economic analysis on taxation policy.  

Business leaders should also be encouraged in the systematic use of consultations, at least on business tax issues. Drawing business in to contribute to the refinement of ideas emerging from government helps fill the gap left by the broader weakness of institutions.  

But business should not be responsible for developing tax policy as this leads to signs of consultation-fatigue. Their role should be limited to consultancy and be used as a barometer that measures what impact tax proposals have on operational efficiencies. 

Given the importance of institutional strength to consistency and stability in policy-making and the classy-daddy-3.gifimportance of that consistency and stability in maintaining economic growth and development, there is a strong case for more comparative inter-jurisdictional work to be carried out on the institutional framework of tax policy-making.  

That’s this week’s memo from us at the Zambian Chronicle … thanks a trillion. 

Brainwave R Mumba, Sr.

CEO & President – Zambian Chronicle

Copyrights © 2008 Zambian Chronicle. All rights reserved. Zambian Chronicle content may not be stored except for personal, non-commercial use. Republication and redissemination of Zambian Chronicle content is expressly prohibited without the prior written consent of Zambian Chronicle. Zambian Chronicle shall not be liable for any errors, omissions, interruptions or delays in connection with the Zambian Chronicle content or from any damages arising therefrom.

Zambian Chronicle is a wholly owned subsidiary of Microplus Holdings International, Inc.

Copyrights © 2008 Microplus Holdings Int., Inc.     

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version

BERLIN — The dollar sank to a new low against the euro Wednesday on pessimism about the American economy and speculation Washington will soon cut interest rates again.

The euro spiked to $1.4855 before retreating slightly to $1.4787 in morning European trading. It broke the $1.48 mark for the first time on Tuesday, settling at $1.4815 late in New York.

The dollar also hit a two-year low against the Japanese yen, falling to purchase as little as 108.81 yen before rising slightly to 109.19 yen – compared with 109.69 yen in New York on Tuesday. It was last lower when it purchased 108.76 yen on Sept. 5, 2005.

The British pound was down slightly to $2.0639 from $2.0667 in New York.

The euro, the pound and other currencies have been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.

Surging oil prices – which rose to a new record high above $99 in early Asian trading Wednesday – have driven up commodity-backed currencies such as those of Canada, Australia and New Zealand.

The dollar has been further weakened by U.S. interest rate cuts – which can be used to jump-start an economy, but can also weaken a currency as investors transfer funds to countries where they can earn higher returns.

On Tuesday the U.S. Federal Reserve released the minutes of its October meeting and its economic forecasts for the next three years, which suggested to investors that a December rate cut was imminent given the state of turmoil in credit markets and the Fed’s forecast of decreasing inflationary risk – contributing to the dollar’s weakness.

© 2007 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version

The world does not want to give Africa the credit of establishing the first university. Out of the first five universities, three were on the continent of Africa. Before we could talk about the University of Bologna, Italy (Europe’s first), the University of Paris, France or Cambridge and Oxford of the United Kingdom we had two of our own.

The University of Al-Karaouine was established in 859 AD (approx CE) at Fes in Morocco, Al-Azhar University was established in 989 AD (approx CE) at Cairo, Egypt and the famous University of Timbuktu was established in 1139 AD (approx CE) at Timbuktu in Mali. Timbuktu was actually established after Bologna which was established in 1089 AD (approx CE).

We lag behind all else despite the fact that even the first ever recorded civilizations started in Africa along the Nile River then moved into Mesopotamia, China, Greco-Roman and then the much talked about western civilizations. I guess we don’t seem to take pride in our work and we let others write history for us. The advent of new universities in Zambia needs to be encouraged. For instance our main focus for this week is Northrise University and the above video clip is a testament to Zambian ingenuity and entrepreneurship which must be encouraged by every Zambia loving citizen.

There is great demand for higher education in Zambia because every year nearly 20,000 students who graduate from high school are eligible for a university education but only 1,000 are accepted by UNZA and CBU leaving 19 in 20 without a college education unless they seek it abroad.

Compounded with the fact that 50% of the Zambian population is under the age of 15 years old, there is not only a need for future trained and skilled individuals needed to fill the 21st century job market but also a crisis mode dilemma on what to do with such untapped potential for future economic development.

Northrise University offers degree programs in Information Systems, Business Administration, Agricultural Science and Theology. These courses are offered for both evening and day schedules as can been seen for the fall 2007.

The university was established in 2004 and during its three of operations it has seen a need to reduce operational costs, encourage a Christian Centered learning environment as well as provide the much needed bridge between business as usual with an ethical structure second to none on the Zambian Enterprise scene.

Northrise Campus

In fact some of the world’s best universities were built on that platform. Cambridge in the UK was initially built around strong Judeo-Christian ethics, so was Harvard, Sanford, Texas Christian University – TCU, Yale and Princeton and we see Northrise University following the same steps as an Ivy League college in the few years to come.

classy-daddy-3.gifThe challenge remains for all of us, either to embrace the new university and encourage it to grow and blossom into one of the best in the world or to denigrate it and let others write history on our behalf.

Not so with us here at the Zambian Chronicle, we will encourage and publicize it as much as we can, we will ring bells about it and we encourage others to do the same.

We highly commend both Moffat and Doreen Zimba who are the founders as we wish them God’s speed.

The Zambian government can take the challenge by also complimenting the efforts of the founders with new educational grants, sponsor a School of Agriculture research program under the auspices of the University of Zambia and the like – the list is endless.

That’s this week’s memo from us at the Zambian Chronicle … thanks a trillion

Brainwave R Mumba, Sr.

CEO & President – Zambian Chronicle

Copyrights © 2007 Zambian Chronicle. All rights reserved. Zambian Chronicle content may not be stored except for personal, non-commercial use. Republication and redissemination of Zambian Chronicle content is expressly prohibited without the prior written consent of Zambian Chronicle. Zambian Chronicle shall not be liable for any errors, omissions, interruptions or delays in connection with the Zambian Chronicle content or from any damages arising therefrom.

Zambian Chronicle is a wholly owned subsidiary of Microplus Holdings International, Inc.

Copyrights © 2007 Microplus Holdings Int., Inc.

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

LUSAKA: Zambia has acknowledged that India’s assistance to Zambia has gone a long way in supplementing its development agenda.Finance and National Planning Deputy Minister Jonas Shakufuswa commended India for its continued technical and economic assistance.

The close historic interaction between the two countries has paved way for the establishment of diplomatic relations since Zambia’s independence in 1964, Shakufuswa said during the Indian Technical and Economic Cooperation day (ITEC) in Lusaka last evening.

He noted that Indian investment is further contributing to Government’s economic recovery programme. Shakafuswa expressed hope that Zambian and Indian companies will continue to exploit the abundant resources in the country to explore new areas of cooperation.

The minister observed that cooperation between the two countries is a testimony of the commitment of both the governments towards promotion of south to south cooperation.

Speaking on the occasion, Indian High Commissioner to Zambia, River Wallang said ITEC is a vehicle which India utilises to channel its aid to Africa and other developing countries.

Wallang explained that the ITEC programme is based on India’s own experience in development. He disclosed that his country will this year alone provide about 4000 scholarships under ITEC in the civilian sector from which Zambia will have 60 places.

Wallang added that Indian government is currently working with the ministry of science and technology to set up two public computer learning kiosks to enhance computer learning skills among Zambians.

Source: Economic Times

Next Page »