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I have been inundated with a lot of questions about the global economy this week; a lot of these questions are to do with the impact of the US economical woes on our global franchise, the Zambian Enterprise included.

 

So, I decided to put on my financial consultant hat and delve into as many econometrical variables as possible to try and explain what a layman may not be told are actually the causes of the economic impasse in the United States.

 

We at the Zambian Chronicle saw this coming as early as last year and in January we published David Frazier’s Global Economic Briefing in US Recession Could Affect Our Global Enterprise, The Zambian Enterprise Included …. This was followed by the Bush Administration’s rebuttal in Bush Sees No Recession Yet the very next month.

 

The argument from the administration has always been that economic fundamental have been sound and therefore much of the attention has been on monetary policy as the Federal Reserve Board has been trying to work on efficacy by reducing Fed Funds Rates. By the way, the Federal Reserve Act of 1913 gave the Fed more power than even the President of the United States when it comes to fiscal policy …

 

The problem with the reduction(s) of the funds rates though was that it created an illusion that by lowering the rates, the cost of borrowing would be lower thereby encouraging market participation by increased credit derivatives (lending and borrowing) in the market.

 

So new buyers were introduced into the system; mortgagee(s) rushed in and started refinancing already existing loans at the new lower interest rates at times cashing in on existing equity and business was booming as finance companies managed to make tones of money from loan origination fees, increased their asset holdings at much higher appraised values while turning around to sell mortgaged backed securities on the secondary market.

 

This illusion missed one point though; liquidity, liquidity, liquidity … the US unemployment rate has steadily been increasing from a “One State Recession” in Michigan at about 12% to the national average of about 6%. This meant that more and more people were getting out of work and despite their new lower mortgage rates and cashed out equity, they had no “ability to pay”.

 

Meanwhile the Federal Reserve kept on lowering the funds rates which eventually became a stimulus that would only encourage further mischief as lenders abrogated their fiduciary duties extending credit to unworthy borrowers and cut corners to close on deals.

 

The Fed regime was an accomplice to that reckless behavior. A fed funds rate of around 3.5% was a detriment particularly with commodities prices soaring and incipient inflation coming to US shores from demand-pull pressures and rising labor costs.

 

A real palliative came in as home owners started defaulting due to their lack of liquidity, leading to foreclosures and short sells. As homes foreclosed and or are short sold, their values declined thereby creating negative equity.

 

But that’s not all, what added salt to the injury is what is called “securitization”. This particularly in the US market comes in the form of Mortgage Backed Securities – MBS. These are asset backed securities sold on the secondary market whose cash flow is backed by collateralized mortgages.

 

Any one with an understanding of basic finance knows that if you borrowed $100,000.00 for 30 years you would probably pay back $300,000.00 on that same mortgage, $200,000.00 of which would be interest income for the lender.

 

These MBSs are backed by that interest income, sold as bonds and or other financial derivatives on the secondary market with a guaranteed yield. Insurance companies, retirement funds and other ultra-virus thrifts like to invest into these marketable securities because of their guaranteed revenues.

 

Well, the problem is if people have no work and thereby are defaulting, then the MBSs are not in actuality guaranteed for the loan term(s) because of foreclosures and or short sells in a downturn economy or prepaids in a vibrant one.

 

These marketable securities (MBSs) are a prerogative of the Securities and Exchange Commission (SEC) and they are regulated by them but they were asleep at the switch. The Federal Reserve Board is in charge of monetary policy and just kept on lowering funds rates and was asleep at the switch.

 

The Department of Treasury has a stake in checking on the yields from MBSs because they affect yields on Treasury Bills but was asleep at the switch; the Bush Administration was busy chasing Bin Laden and was asleep at the switch while the US Congress are supposed to be the watchdog for the tax payers but were busy fighting partisan politics, sleeping at the swath.

 

As of the first quarter of 2006, the total market value of all outstanding MBSs was approximately USD 6.1 trillion, according to The Bond Market Association. These are paper assets in which tax payers’ retirement security has been vested and is likely to be lost if no one takes the right steps going forward.

 

There two schools of thought going on this weekend in Congress, one that says a Government bailout means socializing the markets. Another school of thought wants to lend money to Fannie Mae and Freddie Mac so they can pay back with interest using market forces.

 

We at the Zambian Chronicle see an opportunity for the Federal Government so good to be passed on. The best route would be an outright bailout that places Fannie Mae and Freddie Mac under receivership.

 

This route would not only make the American tax payers shareholders in the $700 billion bailout  enterprise but as these non-performing loans are turned around into performing assets all future interest income can be turned around to be invested into the Social Security and Medicaid/Medicare Trust Funds which are scheduled to go bankrupt by 2045.

 

… problem is I am not running for President of the United States of America; can’t run – not a US born citizen and so they probably would not listen …

 

In closing, this is a dire lesson for all emerging markets, the Zambian Enterprise included. What we have learnt is that greed is bad; using securitization, fund managers increased their income as they lowered their own risks.

 

By cutting corners, greedy loan officers and finance companies made a short term killing and by sleeping at the switch, the SEC, the Feds, the Bush Administration and the US Congress almost crushed the world’s beacon for capitalism.

 

Sometimes, it’s good to know that no one is actually looking out for you after all, you are on your own and you better watch your own back …

 

Live Long & Prosper; 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.

 

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Our worst fears have finally befallen us, the US State Department gave and they have taken away. Ambassador Carmen M Martinez will be leaving Lusaka for her new assignment this Tuesday and will no longer be representing the interests Zambian Enterprise to the powers that be in Washington.

 

In just about two and half years, Ambassador Martinez has done what many have failed to accomplish in longer tenures.

 

I am proud that we at the Zambian Chronicle were the first to rings the right bells about her accomplishments before the rest of the world started to notice.

 

Over a year ago, we wrote the article below crowning Ambassador Martinez as the best ever and before long, the article was read around the world.

 

It actually became one of the top 10 read articles on Zambian Chronicle with as many feeds from the US State Department, Wall Street Journal, London Financial Times, political forums, internet blogs and others.

 

Best Ever US Ambassador To Zambia – Carmen M Martinez

 

Zambian Chronicle’s 10 Most Read Articles

 

What is nostalgic though is that our worst fears of her being promoted and assigned to other projects have come to pass at a time when the Zambian Enterprise needed her most. Some people have a way of changing their environment and Ambassador Martinez has that.

 

She is such a captivating individual with the ability to change moods around her. Those who worked for her at the American Embassy in Lusaka would be the first to agree. But what is more profound about her is the way she actually viewed the Enterprise and its people and here below are some of her farewell comments …

 

"I think Zambia is making great progress and is getting a lot of attention internationally for the role it’s taking, speaking out on many issues; human rights, gender issues and many other areas."

 

“As I said, we love cooperating with Zambia but it will be a proud day for us when we are no longer in the business of assistance but we are in business with Zambia. That is when you will be able to take your rightful role on the world stage,”

 

“I really believe that the key to this country is economic development. You have a nation blessed immensely with incredible natural resources with smart, capable, hardworking people and I just would like to see Zambia a little bit proud. Zambia number one! Zambia could do it! I think everybody in this country put together, you could do this,”

 

“I hope that people will not become discouraged during periods of setbacks. This is a stable nation with processes and institutions in place that can continue to keep you continuing along the road to progress.”

 

“Zambia is a leader and you should be proud of yourselves. It’s like, Zambia go for it! Zambia number one! Thank you!”

 

From her comments above, she sees potential that not many of our own people within the Zambian Enterprise see. One can tell she believes in Zambia more than we ourselves do. You can tell she is proud of the Enterprise and that is at the core of why she accomplished so much within the shortest possible time.

 

We were the first to acknowledge her and we will be the first to thank her for tremendous strides others just dreamed of. We wish Ambassador Carmen M Martinez all the best in all her endeavors; her shoes at the Embassy will forever be unique both in perceptive and temperament …

 

Carmen, you will forever be missed. Thank you for all you did for Zambia, some visible and a lot more actually invisible; for us at the Zambian Chronicle, gratitude confirms relationship …

 

So long, our dearest of all ambassadors, wishing you God’s Speed and a happy life ahead. If any body deserves it, its you and thats the more reason we dedicated this week’s memo to you.

 

Every friend of the Zambian Enterprise remains a friend forever, please come back to visit in your private capacity some day and have some fun; farewell …

 

Live Long & Prosper; 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.

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The United States African Foundation has given Zambia a grant of $1 million to fund five agricultue projects.

Zambia’s Ambassador to the United States of America, Dr. Inonge Mbikusita-Lewanika received the grant along with a commemorative plaque at a ceremony in Washington DC Friday.

Dr. Mbikusita-Lewanika thanked the United States African Development Foundation for its continued support to grassroot groups and small businesses in Zambia.

This is according to a statement released to ZNBC news Saturday by Zambia’s First Secretary for Press and Public Relations at the Zambian Mission in Washington DC, Ben Kangwa.

The projects to benefit from the grant include the Chinjara Livestock Cooperative Society Milk Project in Chipata, Eastern Province.

The Cooperative will use the funding valued at 2-hundred and 35, united states dollars for purchasing livestock, creating a revolving loan for future purchase of livestosck, buying a refrigerated truck and training in breeding and veterinary care.

Part of the grant will also be used for improving marketing and distribution of milk.

Other projects include the Mpika Dairy Farmers Cooperative in Northern Province, Mpongwe Bulima Organics Cooperative a groundnut cooperative with a membership of 1-hundred and two on the Copperbelt and the Mumbwa District Farmers Association Paprika Project in Central Province.

The President and CEO of the Zambia Agribusiness Technical Assistance Centre Likando Mukumbuta also signed for a grant that is designed to fund small enterprises to create jobs and income at grassroots level.

 Source: ZNBC

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b6_edited.jpegNegative Campaign ,Malicious Rumors, Gossip and Hatred on Aspiring presidential candidates are set backs and can bring a Destruction in Voting for a Great President. 

By Belliah K Theise

Having followed USA presidential debates and making comparisons of what is going on in the entire world with politics, we found similar paterns that has made third world countries be the way they are now, in terms of economy.

Here is what we have to say at Zambian chronicle:

As a presidential candidate aspiring for a public office, or you may be a voter. This is a time to revisit your weaknesses and try to improve on them.

Listed below are some of the things future Leaders should avoid in order to maintain peace and trust in people who they lead.

1.      Negative campaigns that may bring damage to the image of  the country and future leaders.

2.      Malicious Rumors, without meaning or basis

3.      Cheap Gossip

4.      Hatred

5.      Tribal 

6.  Racial discrimination 

  By all means, the above six elements  should not be used as a tool to bring down your rival or to pick a right candidate for president. Positive campaign builds and unites nations. Negative campaigns, brings anger, violent and divisions.

As a voter, learn to validate each rumor, do not be a follower.  Learn to use your own discretion, good sense of judgement and common sense, in critical matters like choosing or picking the right candidate as your commander in Chief.  Avoid operating like robots that are programed to perform certain functions.  Operating like a robot, makes both leaders and their voters look like idiots, when things go sour.

Important factor to Remember :

Separate Hollywood gossip of celebrities to  a presidential candidate gossip. We do understand that, there is no smoke without fire , but on the other hand,  Learn to separate facts from gossip,  Every voter should know that, NOT every rumor or gossip comes out to be 100% true. You as voters only  come to realize when it is too late, after you have voted for a wrong person, because you based your judgement on rumors.  People use rumors and gossip  for many reasons. May be for financial gain, hatred or other things.

Always keep in mind that, we humans always enjoy negatives, We all focus on unproductive rumors and gossip, that diverts us from dealing with serious topics that is affecting the country.  If a negative outweighs a positive side of a candidate, it takes away all the good work he/she has done.

Remember, Media and campaigns are there to help voters to pick the best candidate, but at the same time, politicians uses that as a tool to bring down their rival candidates, depending  how strong one has links to the media.  Many great leaders are brought down in no seconds, and voters end up voting for useless candidates.

Again… use your common sense and your good judgement, when you read negatives that comes flying on potential candidates.

Good luck to all the presidential candidates, as they go on the road to lead their nations with a passion at heart for their people. Stay focused on important issues that affects your country. Do not get rapped up in personal issues, that can bring harm to your country and comes back to haunt you.

You all have one purpose:- To save your nation with integrity. The same people you are trying to persuade to vote for you, will be the same people who will vote you out. Voters always keep a record. Campaign with a passion for your people and country at heart.

For voters, validate your candidates with facts, and basing your votes on malicious rumors or unproductive  gossip , that will not do good to your country in the future, will not help.

Thanks a trillion

Belliah K Theise

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   

UN warns on food price inflation

Pakistani women at subsidised food store 03.03.08

Governments are urged to take action to help ease rising prices

The head of the UN World Food Programme has warned that the rise in basic food costs could continue until 2010.Josette Sheeran blamed soaring energy and grain prices, the effects of climate change and demand for biofuels.

Miss Sheeran has already warned that the WFP is considering plans to ration food aid due to a shortage of funds.

Some food prices rose 40% last year, and the WFP fears the world’s poorest will buy less food, less nutritious food or be forced to rely on aid.

Speaking after briefing the European Parliament, Miss Sheeran said the agency needed an extra $375m (244m euros; £187m) for food projects this year and $125m (81m euros; £93m) to transport it.

This is not a short-term bubble and will definitely continue
Josette Sheeran
WFP

She said she saw no quick solution to high food and fuel costs.

“The assessment is that we are facing high food prices at least for the next couple of years,” she said.

Miss Sheeran said global food reserves were at their lowest level in 30 years – with enough to cover the need for emergency deliveries for 53 days, compared with 169 days in 2007.

Biofuel prices

Among the contributing factors to high food prices is biofuel production.

Miss Sheeran says demand for crops to produce biofuels is increasing prices for food stuffs such as palm oil.

Miss Sheeran said governments needed “to look more carefully at the link between the acceleration in biofuels and food supply and give more thought to it”.

The WFP says countries where price rises are expected to have a most direct impact include Zimbabwe, Eritrea, Haiti, Djibouti, the Gambia, Tajikistan, Togo, Chad, Benin, Burma, Cameroon, Niger, Senegal, Yemen and Cuba.

Areas where the WFP is already seeing an impact include:

  • Afghanistan: 2.5 million people in Afghanistan cannot afford the price of wheat, which rose more than 60% in 2007
  • Bangladesh: The price of rice has risen 25% to 30% over the last three months. In 2007, the price rose about 70%.
  • El Salvador: Rural communities are buying 50% less food than they did 18 months ago with the same amount of money. This means their nutritional intake, on an already poor diet, is cut by half.
  • Anger over rising food prices have already led to riots in Burkina Faso, Cameroon, Senegal and Morocco.

    The BBC is planning a special day of coverage of this issue on Tuesday 11 March, online, on radio and on TV.
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    (CNN) — U.S. health officials said Wednesday they have found a contaminant in a blood-thinning drug produced by Baxter Healthcare Corp. that has been linked to more than a dozen deaths in the United States.

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    The drug can keep potentially life-threatening blood clots from forming in the veins, arteries, and lungs.

    In early February, the Food and Drug Administration launched an investigation and then a recall of some forms of the product.

    The scrutiny began after a spike in reports of health problems associated with heparin, a drug made by Baxter from pig intestines at plants in China and Wisconsin.

    Though the cause of the problems has not been determined, FDA investigators found “a heparin-like compound — that is not heparin — present in some of the active pharmaceutical ingredients” in both facilities, said Dr. Janet Woodcock, acting director of the FDA’s Center for Drug Evaluation and Research.

    The contaminant, which made up 5 percent to 20 percent of each sample tested, “reacts like heparin in some of the conventional tests used for heparin,” which explains why it was not picked up, she told reporters in a conference call.

    No causal link between the contaminant and the adverse events has been established yet, Woodcock said.

    She added that it was not clear whether the contaminant was added accidentally, as part of the processing or deliberately.

    It also was not clear whether the contaminant was introduced in the company’s plant in Wisconsin or the one in China, Woodcock said.

    Though she said the exact structure of the contaminant has not been identified, “it is similar to heparin glycans.” Glycans are polysaccharides, a complex class of carbohydrate.

    She added it was unclear whether other heparin products used outside the United States might also contain the product.

    Later this week, the agency will release recommendations on how manufacturers and regulators can screen for the contaminant, she said.

    Last year, pet food made in China was found to be tainted with an ingredient that replaced more expensive protein and that initial tests did not identify as a contaminant. Asked if the heparin contamination could be a similar case, Woodcock said, “It’s possible.”

    Doctors have used the blood-thinner for 60 years with “no history of any problems whatsoever,” said the FDA commissioner, Dr. Andrew C. von Eschenbach.

    Its intravenous use can keep potentially life-threatening blood clots from forming in the veins, arteries and lungs.

    Von Eschenbach said it would be “disingenuous” to expect the agency would be able to inspect “every institution in every case.”

    Over the last fiscal year, the agency reported having inspected more than 1,000 foreign plants, a record.

    Since the agency issued its report that 19 deaths had been linked to the drug since January 1, 2007, it has received word of another 27 deaths, “but many of those do not fit our definition of this type of event,” Woodcock said.

    In all, the FDA has received 785 heparin-linked reports of adverse events — including difficulty breathing, nausea, vomiting, excessive sweating and plummeting blood pressure that can lead to life-threatening shock.

    “They’re continuing to come in fairly rapidly because there has been a lot of reporting of this,” she said.

    In a written statement, Baxter said its tests have suggested “that the root cause may be associated with the crude heparin, sourced from China, or from the subsequent processing of that product before it reaches Baxter.”

    Meanwhile, Scientific Protein Laboratories LLC, which supplies the company with the active pharmaceutical ingredients, issued a statement saying it is working with the FDA, Baxter and outside experts to identify the cause of the adverse events.

    “Thus far, no conclusions have been reached about the root cause,” it said.

    “It is premature to conclude that the heparin active pharmaceutical ingredient sourced from China and provided by SPL to Baxter is responsible for these adverse events.”

    It said that its voluntary recall of suspect product was being made as a precaution. 

    CNN

    Bush says he wants McCain to win presidency

    • Story Highlights
    • President Bush pledges support to Sen. John McCain for president
    • McCain clinched GOP nomination with victories in Tuesday’s primaries
    • Republicans say Bush can help solidify GOP base behind McCain
    • Linking Bush, McCain helpful to Democrats, Democratic strategist says

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    WASHINGTON (CNN) — President Bush endorsed Sen. John McCain for president on Wednesday, saying the presumptive Republican nominee has the “character, courage and perseverance” to lead the country.

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    President Bush meets Sen. John McCain and his wife, Cindy, at the North Portico of the White House.

    McCain thanked the president for his support and the work he has done in the Oval Office.

    “I appreciate his endorsement, and I appreciate his service to our country,” said McCain, adding that he wanted Bush at his side as much as possible on the campaign trail.

    “Whatever he wants me to do, I want him to win,” Bush said, who was challenged by McCain for the GOP nomination in 2000. But he said the 2008 run for the Oval Office was not his battle.

    “It’s not about me. I’ve done my bit,” Bush said.

    Addressing the calls for change in the presidential campaign, Bush said McCain would be steadfast to one of his administration’s policies.

    “He’s not gonna change when it comes to taking on the enemy,” Bush said of the senator from Arizona. Video Watch Bush explain why McCain should be the next president »

    Protecting the American people was the No. 1 job of a president and McCain understood that, Bush said.

    “He’s gonna be a president who will bring determination to defeat an enemy,” Bush said.

    McCain clinched the GOP presidential nomination with victories Tuesday in Ohio, Texas, Vermont and Rhode Island. Watch McCain say how he will prevail in the fall Video

    McCain needed 1,191 delegates to secure the nomination and had 1,226 after Tuesday’s voting, according to CNN estimates.

    McCain said with the nomination secured, he would begin exploring possible running mates.

    He also said he called both Sens. Barack Obama and Hillary Clinton and pledged “a respectful campaign” no matter who wins the Democratic nomination.

    Before Wednesday’s event at the White House, both Republicans and their Democratic opponents expressed excitement about the possibilities of Bush endorsing McCain.

    Republican Sen. Kay Bailey Hutchison of Texas said McCain can now focus on solidifying support among conservative Republicans, the majority of whom backed candidates other than the Arizona lawmaker in the primaries, according to exit polls.

    “I think the endorsement of President Bush will certainly go a long ways toward that,” Hutchison said Wednesday. “John McCain is going to be very focused on our base and the people that he wants to have in full force behind him.” Video Watch Bush greet McCain at the White House »

    Despite overall approval ratings hovering just above 30 percent, Bush receives far higher marks from conservatives, and the McCain campaign thinks the push from Bush will bring the party in line behind their presumptive nominee.

    “He’ll have the [Republican National Committee] behind him. He’ll have a broad base of financial support. It’s a big step,” said Alex Castellanos, a GOP strategist and CNN contributor.

    A senior administration official concurred Wednesday, saying Bush will raise “a lot of money” for McCain.

    “He is extremely popular” with the GOP base, the official said. “And so can do a lot to drive the base in the election, which will help across the board.”

    William Bennett, a CNN contributor who was in the administrations of Presidents George H.W. Bush and Reagan, said Clinton and Obama will have to factor McCain into their strategies to secure the Democratic nomination, something that should help the Republican define whomever becomes his November foe.

    “They have to factor that in as they debate each other every time they put out an ad and make a position,” Bennett said.

    But Democratic strategist and CNN contributor Paul Begala said his party is happy to see McCain get the nomination — and happy to see anything the senator does that links him more closely with the Republican president.

    “He’s embraced the Bush tax cuts that he voted against. He was against them being temporary; now he wants them being permanent. That’s like marrying a girl you didn’t want to date. He rushed to Bush’s Social Security plan, even disavowing his own Social Security plan on his own Web site. He has now become Bush’s third term,” Begala said.

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    Begala called McCain’s victory speech Tuesday night “an eloquent but not very energetic defense of the status quo.” Video Watch McCain speak to supporters after clinching the nomination »

    “Democrats heard that speech and loved it,” he said. “To quote our current president, bring it on.”

    CNN

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