So you've been working 20 hours a day for months on your new business, have spent your last dollar and still have few results to show. Investors---not to mention your exhausted team---are bound to think that your dream vehicle doesn't have wheels, right?
Don't despair. Investors (the good ones, anyway) are smarter than that.
Here are 10 signs of tangible progress they look for---and that will keep you going the extra miles until your new venture really gains traction.
A Documented Business Plan
It's hard to build a business without a plan, just like it's hard to build a house without a blueprint. If don't have a plan, get to work--or risk not raising a cent. For help, check out
Realistic Objectives and Milestones
You can't measure results if you don't have a yardstick. On the other hand, if your objectives are off the chart, you'll look bad when you set them, and even worse when you miss them. Note: Only written milestones are credible.
A Well-Rounded Team
A great business often starts with one person, but it doesn't end there. Assemble a balanced crop of lieutenants who have real experience. A team of friends and family that work for free on weekends is not likely to impress investors---unless they are your investors.
A Qualified Advisory Board
If you can convince a couple of industry experts or experienced executives to join
your A Working Prototype
Savvy entrepreneurs know that product development never stops. That said, the earlier you can test something--anything--in the market, the better. Define the absolute minimum features you need to satisfy a customer's problem and move some product. It will be the wrong product, but you will learn something with each iteration. That's progress.
Thursday, June 24, 2010
Friday, March 05, 2010
Climate change human link evidence 'stronger'
A review from the UK Met Office says it is becoming clearer that human activities are causing climate change.
It says the evidence is stronger now than when the Intergovernmental Panel on Climate Change carried out its last assessment in 2007.
The analysis, published in the Wiley Interdisciplinary Reviews Climate Change Journal, has assessed 110 research papers on the subject.
It says the earth is changing rapidly, probably because of greenhouse gases.
In 2007 the IPCC's report concluded that there was "unequivocal" evidence that the Earth was warming and it was likely that it was due to burning of fossil fuels.
Since then the evidence that human activities are responsible for a rise in temperatures has increased, according to this new assessment by Dr Peter Stott and colleagues at the UK Met Office.
The Met Office study comes at a time when some have questioned the entire basis of climate science following recent controversies over the handling of research findings by the IPCC and the Climate Research Unit at the University of East Anglia.
Dr Stott denies that the study has been published as part of a fight back by the climate research community.
"We started writing this paper a year ago. I think it's important to communicate to people what the science is showing and that's why I'm talking about this paper."
'Consistent picture'
The study, which looks at research published since the IPCC's report, has found that changes in Arctic sea ice, atmospheric moisture, saltiness of parts of the Atlantic Ocean and temperature changes in the Antarctic are consistent with human influence on our climate.
"What this study shows is that the evidence has strengthened for human influence on climate and we know that because we've looked at evidence across the climate system and what this shows very clearly is a consistent picture of a warming world," said Dr Stott.
The study brings together other research from a range of disciplines.
 |  It's important to communicate to people what the science is showing  Dr Peter Stott |
"We hadn't [until now] looked in detail at how the climate system was changing," says Dr Stott.
"[Our paper looks at] not just the temperatures but also the reducing Arctic sea ice and it includes changing rainfall patterns and it includes the fact that the atmosphere is getting more humid.
"And all these different aspects of the climate system are adding up to a picture of the effects of a human influence on our climate."
The Met Office study said that it was harder to find a firm link between climate change and individual extreme weather conditions - even though models predicted that extreme events were more likely.
According to the report: "Extremes pose a particular challenge, since rare events are by definition, poorly sampled in the historical record and many challenges remain for robustly attributing regional changes in extreme events such as droughts, floods and hurricanes."
Wednesday, February 03, 2010
Tourism forecast to grow at 3-4pc
| he World Tourism Organisation (UNWTO) is predicting global tourism growth of between three and four per cent in 2010 after a fourth-quarter recovery in 2009, the UN body's secretary general said yesterday. The UNWTO said global tourism fell a less-than-expected four per cent to 880 million international arrivals in 2009, thanks to a return to growth in the fourth quarter, led by the Asia, Pacific and Middle East regions. "The global economic crisis aggravated by the uncertainty around the ... (H1N1) pandemic turned 2009 into one of the toughest years for the tourism sector," UNWTO Secretary General Taleb Rifai said. "However, the results of recent months suggest that recovery is underway, and even somewhat earlier and at a stronger pace than initially expected," he added. Europe, which receives over half the world's tourists, was among the hardest hit in 2009 and is expected to be the slowest to recover this year, Mr Rifai said. In Tanzania, arrivals in the first 10 months of 2009 fell 10.2 per cent due to the effects of the global downturn and the year was expected to end with a decline of eight per cent, tourism officials said recently. The most significant drop occurred in the first six months of the year, before tourist arrivals in the country started to pick up again in July, Mr Ibrahim Mussa, assistant director at the division of tourism in the ministry of natural resources and tourism, told Reuters early this year. "People usually book holidays to Tanzania one year in advance so we didn't feel the effects of the downturn last year," Mr Mussa said. Arrivals in the first 10 months fell to 576,643 from 641,951 for the same period in 2008. Full year arrival figures and earnings from the sector, which brought in $1.3 billion in 2008, will be released next month. The sector, whose contribution to the national economy rose sharply a decade ago, currently accounts for 25 per cent of the foreign exchange earnings and 17.2 per cent of the country's gross domestic product (GDP). Before the recession that has devastated the tourism industry worldwide, Tanzania had expected to host 950,000 visitors this year, which would have made the economy generate some $1 billion (about Sh1.3 trillion). Last year, the industry attracted about 840,000 tourists. Officials hope the sector, which attracts tourists with its offerings of wildlife safaris, mountain climbing and beach holidays, ranks as the country's biggest foreign exchange earner, will rebound quickly. "Our target is to reach one million tourists in the year 2012 and $1.5 billion in revenues," said Mr Amant Macha, director of marketing at the Tanzania Tourist Board. "There is hope that by mid-2010 people may find this threat of financial crisis is over, we are praying for that." Mr Macha said Tanzania hopes to boost visitor numbers by attracting soccer fans heading to South Africa for the 2010 World Cup, and South Africans keen to avoid the three million people expected to descend on their country during the tournament. America is the leading source of tourists to Tanzania, with 66,000 visiting in 2008, followed by 58,000 British holidaymakers. "We are also aiming at new markets, including the Indians, Chinese, Japanese; we have also Australians, eastern Europeans and of course Russians," said Mr Macha. The country is also keen to market less-visited game parks in the south of the country, and develop coastal beach resorts to mop up spillover from the Zanzibar archipelago. The tropical island destination, which relies on tourism for more than 25 per cent of its gross domestic product, has also been hit by the global downturn, with a 12 per cent drop in arrivals last year from 2007. "We want to open up our markets. We are really going for Russia and emerging markets," said Mr Ali Khalil Mirza, acting head of the Zanzibar Commission of Tourism. Traditionally, Italians make up a third of all arrivals to Zanzibar and 40 per cent of visitors arrive on charter packages. In Zanzibar's Stone Town, there are signs the drive to market the destination to new markets is paying off as Japanese tourists wandered slowly on the narrow winding streets, where boutique hotels alternate with crumbling 19th-century edifices. "We enjoy here. I like this weather, humid and hot," said Mr Miyako Saito, 33, a tourist from Japan. "When they see us they call 'China China' but I think for now the only Chinese people they see are only here for business." Mr Mirza said Zanzibar was targeting a steady arrivals growth rate of 10 percent a year, with an eye on 200,000 direct arrivals for 2011, up from 128,000 in 2008. |
Monday, January 04, 2010
Friday, October 23, 2009
Friday, October 02, 2009
AM MARRIED NOW
WE ARE TWO RATHER THAN ONE................
IF ONE FALLS...................ONE IS THERE TO PICK HIM/HER UP
IT IS THE BLESSEN FROM GOD....MADE FROM GOD
IF ONE FALLS...................ONE IS THERE TO PICK HIM/HER UP
IT IS THE BLESSEN FROM GOD....MADE FROM GOD
WE HAVE STARTED THE JOURNE.....LOOONG JOURNEY
.....SO HELP US GOD!
BAE SYSTEMS
SEE YOU IN COURT
A defence contractor and a fraud investigator brazen it out
PROSECUTION of BAE Systems, Europe’s biggest defence contractor, for alleged bribery came a step nearer on October 1st when the Serious Fraud Office (SFO) said it was referring the case to the attorney-general for permission to proceed. The SFO had been pressing BAE for an admission of guilt and a payment believed to be between £500m ($795m) and £1 billion for its dealings with officials in countries thought to include the Czech Republic, Romania, South Africa and Tanzania. The company has co-operated with the SFO but finally refused the deal, judging the figure too high and the case too weak.
The investigation is the biggest and most contentious in British corporate history. Arms sales are a dirty business and allegations that BAE, like some of its rivals, paid kickbacks to get foreign contracts have long swirled. In 2006 a separate investigation into payments to Saudi officials and members of the royal family, supposedly in exchange for a large arms contract in the 1980s, was shelved by the SFO, because of concerns that Saudi Arabia would otherwise cease to help combat terrorism.
BAE has maintained throughout that it made no irregular payments there or anywhere else, though it admitted last year that it has not always been ethically fastidious. It has, the company says, left itself open to accusations of “poor record-keeping”. That may now cost BAE dear, for Britain, accused for years of dragging its feet where corporate bribery is concerned, seems bent on making up for lost time.
Though Britain signed the OECD convention against bribery in 1997 and passed a law against it in 2001, the first successful prosecution of a British company for the offence of overseas corruption was concluded only on September 25th. Mabey & Johnson, a maker of steel bridges, was fined £6.6m by a London court after admitting to having bribed decision-makers in Jamaica and Ghana between 1993 and 2001. It also owned up to breaking UN sanctions governing Iraq’s “oil-for-food” programme in 2001 and 2002.
The company, which replaced five of its eight directors last year, reported itself to the SFO in February 2008, hoping for leniency. This is the model that the SFO hopes will prevail as it cracks down on corporate bribery: confession, co-operation and penalties set high enough to punish and deter but not so high as to cripple.
America’s Department of Justice, meanwhile, has also taken a robust interest in BAE’s overseas affairs. Since 2007 it has been looking into payments to officials in Saudi Arabia and elsewhere. There is no firm evidence that BAE’s American business has yet suffered as a result, but the firm appealed last month against the award of a contract for trucks to an American rival. If the investigation goes against it, America’s penchant for jumbo penalties could make £1 billion look like peanuts.
A defence contractor and a fraud investigator brazen it out
PROSECUTION of BAE Systems, Europe’s biggest defence contractor, for alleged bribery came a step nearer on October 1st when the Serious Fraud Office (SFO) said it was referring the case to the attorney-general for permission to proceed. The SFO had been pressing BAE for an admission of guilt and a payment believed to be between £500m ($795m) and £1 billion for its dealings with officials in countries thought to include the Czech Republic, Romania, South Africa and Tanzania. The company has co-operated with the SFO but finally refused the deal, judging the figure too high and the case too weak.
The investigation is the biggest and most contentious in British corporate history. Arms sales are a dirty business and allegations that BAE, like some of its rivals, paid kickbacks to get foreign contracts have long swirled. In 2006 a separate investigation into payments to Saudi officials and members of the royal family, supposedly in exchange for a large arms contract in the 1980s, was shelved by the SFO, because of concerns that Saudi Arabia would otherwise cease to help combat terrorism.
BAE has maintained throughout that it made no irregular payments there or anywhere else, though it admitted last year that it has not always been ethically fastidious. It has, the company says, left itself open to accusations of “poor record-keeping”. That may now cost BAE dear, for Britain, accused for years of dragging its feet where corporate bribery is concerned, seems bent on making up for lost time.
Though Britain signed the OECD convention against bribery in 1997 and passed a law against it in 2001, the first successful prosecution of a British company for the offence of overseas corruption was concluded only on September 25th. Mabey & Johnson, a maker of steel bridges, was fined £6.6m by a London court after admitting to having bribed decision-makers in Jamaica and Ghana between 1993 and 2001. It also owned up to breaking UN sanctions governing Iraq’s “oil-for-food” programme in 2001 and 2002.
The company, which replaced five of its eight directors last year, reported itself to the SFO in February 2008, hoping for leniency. This is the model that the SFO hopes will prevail as it cracks down on corporate bribery: confession, co-operation and penalties set high enough to punish and deter but not so high as to cripple.
America’s Department of Justice, meanwhile, has also taken a robust interest in BAE’s overseas affairs. Since 2007 it has been looking into payments to officials in Saudi Arabia and elsewhere. There is no firm evidence that BAE’s American business has yet suffered as a result, but the firm appealed last month against the award of a contract for trucks to an American rival. If the investigation goes against it, America’s penchant for jumbo penalties could make £1 billion look like peanuts.
Friday, August 07, 2009
What went wrong with economics
And how the discipline should change to avoid the mistakes of the past
OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers. And on the public stage, economists were seen as far more trustworthy than politicians. John McCain joked that Alan Greenspan, then chairman of the Federal Reserve, was so indispensable that if he died, the president should “prop him up and put a pair of dark glasses on him.”
In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”
In its crudest form—the idea that economics as a whole is discredited—the current backlash has gone far too far. If ignorance allowed investors and politicians to exaggerate the virtues of economics, it now blinds them to its benefits. Economics is less a slavish creed than a prism through which to understand the world. It is a broad canon, stretching from theories to explain how prices are determined to how economies grow. Much of that body of knowledge has no link to the financial crisis and remains as useful as ever.
And if economics as a broad discipline deserves a robust defence, so does the free-market paradigm. Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism. Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false—and dangerous—conclusion.
In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”
In its crudest form—the idea that economics as a whole is discredited—the current backlash has gone far too far. If ignorance allowed investors and politicians to exaggerate the virtues of economics, it now blinds them to its benefits. Economics is less a slavish creed than a prism through which to understand the world. It is a broad canon, stretching from theories to explain how prices are determined to how economies grow. Much of that body of knowledge has no link to the financial crisis and remains as useful as ever.
And if economics as a broad discipline deserves a robust defence, so does the free-market paradigm. Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism. Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false—and dangerous—conclusion.
Rational fools
These important caveats, however, should not obscure the fact that two central parts of the discipline—macroeconomics and financial economics—are now, rightly, being severely re-examined (see article, article). There are three main critiques: that macro and financial economists helped cause the crisis, that they failed to spot it, and that they have no idea how to fix it.
The first charge is half right. Macroeconomists, especially within central banks, were too fixated on taming inflation and too cavalier about asset bubbles. Financial economists, meanwhile, formalised theories of the efficiency of markets, fuelling the notion that markets would regulate themselves and financial innovation was always beneficial. Wall Street’s most esoteric instruments were built on these ideas.
But economists were hardly naive believers in market efficiency. Financial academics have spent much of the past 30 years poking holes in the “efficient market hypothesis”. A recent ranking of academic economists was topped by Joseph Stiglitz and Andrei Shleifer, two prominent hole-pokers. A newly prominent field, behavioural economics, concentrates on the consequences of irrational actions.
So there were caveats aplenty. But as insights from academia arrived in the rough and tumble of Wall Street, such delicacies were put aside. And absurd assumptions were added. No economic theory suggests you should value mortgage derivatives on the basis that house prices would always rise. Finance professors are not to blame for this, but they might have shouted more loudly that their insights were being misused. Instead many cheered the party along (often from within banks). Put that together with the complacency of the macroeconomists and there were too few voices shouting stop.
Blindsided and divided
The charge that most economists failed to see the crisis coming also has merit. To be sure, some warned of trouble. The likes of Robert Shiller of Yale, Nouriel Roubini of New York University and the team at the Bank for International Settlements are now famous for their prescience. But most were blindsided. And even worrywarts who felt something was amiss had no idea of how bad the consequences would be.
That was partly to do with professional silos, which limited both the tools available and the imaginations of the practitioners. Few financial economists thought much about illiquidity or counterparty risk, for instance, because their standard models ignore it; and few worried about the effect on the overall economy of the markets for all asset classes seizing up simultaneously, since few believed that was possible.
Macroeconomists also had a blindspot: their standard models assumed that capital markets work perfectly. Their framework reflected an uneasy truce between the intellectual heirs of Keynes, who accept that economies can fall short of their potential, and purists who hold that supply must always equal demand. The models that epitomise this synthesis—the sort used in many central banks—incorporate imperfections in labour markets (“sticky” wages, for instance, which allow unemployment to rise), but make no room for such blemishes in finance. By assuming that capital markets worked perfectly, macroeconomists were largely able to ignore the economy’s financial plumbing. But models that ignored finance had little chance of spotting a calamity that stemmed from it.
What about trying to fix it? Here the financial crisis has blown apart the fragile consensus between purists and Keynesians that monetary policy was the best way to smooth the business cycle. In many countries short-term interest rates are near zero and in a banking crisis monetary policy works less well. With their compromise tool useless, both sides have retreated to their roots, ignoring the other camp’s ideas. Keynesians, such as Mr Krugman, have become uncritical supporters of fiscal stimulus. Purists are vocal opponents. To outsiders, the cacophony underlines the profession’s uselessness.
Add these criticisms together and there is a clear case for reinvention, especially in macroeconomics. Just as the Depression spawned Keynesianism, and the 1970s stagflation fuelled a backlash, creative destruction is already under way. Central banks are busy bolting crude analyses of financial markets onto their workhorse models. Financial economists are studying the way that incentives can skew market efficiency. And today’s dilemmas are prompting new research: which form of fiscal stimulus is most effective? How do you best loosen monetary policy when interest rates are at zero? And so on.
But a broader change in mindset is still needed. Economists need to reach out from their specialised silos: macroeconomists must understand finance, and finance professors need to think harder about the context within which markets work. And everybody needs to work harder on understanding asset bubbles and what happens when they burst. For in the end economists are social scientists, trying to understand the real world. And the financial crisis has changed that world.
The state of economics
The other-worldly philosophers
Although the crisis has exposed bitter divisions among economists, it could still be good for economics. Our first article looks at the turmoil among macroeconomists. Our second (see article) examines the foundations of financial economics
ROBERT LUCAS, one of the greatest macroeconomists of his generation, and his followers are “making ancient and basic analytical errors all over the place”. Harvard’s Robert Barro, another towering figure in the discipline, is “making truly boneheaded arguments”. The past 30 years of macroeconomics training at American and British universities were a “costly waste of time”.
To the uninitiated, economics has always been a dismal science. But all these attacks come from within the guild: from Brad DeLong of the University of California, Berkeley; Paul Krugman of Princeton and the New York Times; and Willem Buiter of the London School of Economics (LSE), respectively. The macroeconomic crisis of the past two years is also provoking a crisis of confidence in macroeconomics. In the last of his Lionel Robbins lectures at the LSE on June 10th, Mr Krugman feared that most macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst”.
These internal critics argue that economists missed the origins of the crisis; failed to appreciate its worst symptoms; and cannot now agree about the cure. In other words, economists misread the economy on the way up, misread it on the way down and now mistake the right way out.
On the way up, macroeconomists were not wholly complacent. Many of them thought the housing bubble would pop or the dollar would fall. But they did not expect the financial system to break. Even after the seizure in interbank markets in August 2007, macroeconomists misread the danger. Most were quite sanguine about the prospect of Lehman Brothers going bust in September 2008.
Nor can economists now agree on the best way to resolve the crisis. They mostly overestimated the power of routine monetary policy (ie, central-bank purchases of government bills) to restore prosperity. Some now dismiss the power of fiscal policy (ie, government sales of its securities) to do the same. Others advocate it with passionate intensity.
Among the passionate are Mr DeLong and Mr Krugman. They turn for inspiration to Depression-era texts, especially the writings of John Maynard Keynes, and forgotten mavericks, such as Hyman Minsky. In the humanities this would count as routine scholarship. But to many high-tech economists it is a bit undignified. Real scientists, after all, do not leaf through Newton’s “Principia Mathematica” to solve contemporary problems in physics.
They accuse economists like Mr DeLong and Mr Krugman of falling back on antiquated Keynesian doctrines—as if nothing had been learned in the past 70 years. Messrs DeLong and Krugman, in turn, accuse economists like Mr Lucas of not falling back on Keynesian economics—as if everything had been forgotten over the past 70 years. For Mr Krugman, we are living through a “Dark Age of macroeconomics”, in which the wisdom of the ancients has been lost.
What was this wisdom, and how was it forgotten? The history of macroeconomics begins in intellectual struggle. Keynes wrote the “General Theory of Employment, Interest and Money”, which was published in 1936, in an “unnecessarily controversial tone”, according to some readers. But it was a controversy the author had waged in his own mind. He saw the book as a “struggle of escape from habitual modes of thought” he had inherited from his classical predecessors.
That classical mode of thought held that full employment would prevail, because supply created its own demand. In a classical economy, whatever people earn is either spent or saved; and whatever is saved is invested in capital projects. Nothing is hoarded, nothing lies idle.
Keynes appreciated the classical model’s elegance and consistency, virtues economists still crave. But that did not stop him demolishing it. In his scheme, investment was governed by the animal spirits of entrepreneurs, facing an imponderable future. The same uncertainty gave savers a reason to hoard their wealth in liquid assets, like money, rather than committing it to new capital projects. This liquidity-preference, as Keynes called it, governed the price of financial securities and hence the rate of interest. If animal spirits flagged or liquidity-preference surged, the pace of investment would falter, with no obvious market force to restore it. Demand would fall short of supply, leaving willing workers on the shelf. It fell to governments to revive demand, by cutting interest rates if possible or by public works if necessary.
The Keynesian task of “demand management” outlived the Depression, becoming a routine duty of governments. They were aided by economic advisers, who built working models of the economy, quantifying the key relationships. For almost three decades after the second world war these advisers seemed to know what they were doing, guided by an apparent trade-off between inflation and unemployment. But their credibility did not survive the oil-price shocks of the 1970s. These condemned Western economies to “stagflation”, a baffling combination of unemployment and inflation, which the Keynesian consensus grasped poorly and failed to prevent.
The Federal Reserve, led by Paul Volcker, eventually defeated American inflation in the early 1980s, albeit at a grievous cost to employment. But victory did not restore the intellectual peace. Macroeconomists split into two camps, drawing opposite lessons from the episode.
The purists, known as “freshwater” economists because of the lakeside universities where they happened to congregate, blamed stagflation on restless central bankers trying to do too much. They started from the classical assumption that markets cleared, leaving no unsold goods or unemployed workers. Efforts by policymakers to smooth the economy’s natural ups and downs did more harm than good.
America’s coastal universities housed most of the other lot, “saltwater” pragmatists. To them, the double-digit unemployment that accompanied Mr Volcker’s assault on inflation was proof enough that markets could malfunction. Wages might fail to adjust, and prices might stick. This grit in the economic machine justified some meddling by policymakers.
Mr Volcker’s recession bottomed out in 1982. Nothing like it was seen again until last year. In the intervening quarter-century of tranquillity, macroeconomics also recovered its composure. The opposing schools of thought converged. The freshwater economists accepted a saltier view of policymaking. Their opponents adopted a more freshwater style of modelmaking. You might call the new synthesis brackish macroeconomics.
Brackish macroeconomics flowed from universities into central banks. It underlay the doctrine of inflation-targeting embraced in New Zealand, Canada, Britain, Sweden and several emerging markets, such as Turkey. Ben Bernanke, chairman of the Fed since 2006, is a renowned contributor to brackish economics.
For about a decade before the crisis, macroeconomists once again appeared to know what they were doing. Their thinking was embodied in a new genre of working models of the economy, called “dynamic stochastic general equilibrium” (DSGE) models. These helped guide deliberations at several central banks.
Mr Buiter, who helped set interest rates at the Bank of England from 1997 to 2000, believes the latest academic theories had a profound influence there. He now thinks this influence was baleful. On his blog, Mr Buiter argues that a training in modern macroeconomics was a “severe handicap” at the onset of the financial crisis, when the central bank had to “switch gears” from preserving price stability to safeguarding financial stability.
Modern macroeconomists worried about the prices of goods and services, but neglected the prices of assets. This was partly because they had too much faith in financial markets. If asset prices reflect economic fundamentals, why not just model the fundamentals, ignoring the shadow they cast on Wall Street?
It was also because they had too little interest in the inner workings of the financial system. “Philosophically speaking,” writes Perry Mehrling of Barnard College, Columbia University, economists are “materialists” for whom “bags of wheat are more important than stacks of bonds.” Finance is a veil, obscuring what really matters. As a poet once said, “promises of payment/Are neither food nor raiment”.
In many macroeconomic models, therefore, insolvencies cannot occur. Financial intermediaries, like banks, often don’t exist. And whether firms finance themselves with equity or debt is a matter of indifference. The Bank of England’s DSGE model, for example, does not even try to incorporate financial middlemen, such as banks. “The model is not, therefore, directly useful for issues where financial intermediation is of first-order importance,” its designers admit. The present crisis is, unfortunately, one of those issues.
The bank’s modellers go on to say that they prefer to study finance with specialised models designed for that purpose. One of the most prominent was, in fact, pioneered by Mr Bernanke, with Mark Gertler of New York University. Unfortunately, models that include such financial-market complications “can be very difficult to handle,” according to Markus Brunnermeier of Princeton, who has handled more of these difficulties than most. Convenience, not conviction, often dictates the choices economists make.
Convenience, however, is addictive. Economists can become seduced by their models, fooling themselves that what the model leaves out does not matter. It is, for example, often convenient to assume that markets are “complete”—that a price exists today, for every good, at every date, in every contingency. In this world, you can always borrow as much as you want at the going rate, and you can always sell as much as you want at the going rate.
Before the crisis, many banks and shadow banks made similar assumptions. They believed they could always roll over their short-term debts or sell their mortgage-backed securities, if the need arose. The financial crisis made a mockery of both assumptions. Funds dried up, and markets thinned out. In his anatomy of the crisis Mr Brunnermeier shows how both of these constraints fed on each other, producing a “liquidity spiral”.
What followed was a furious dash for cash, as investment banks sold whatever they could, commercial banks hoarded reserves and firms drew on lines of credit. Keynes would have interpreted this as an extreme outbreak of liquidity-preference, says Paul Davidson, whose biography of the master has just been republished with a new afterword. But contemporary economics had all but forgotten the term.
The mainstream macroeconomics embodied in DSGE models was a poor guide to the origins of the financial crisis, and left its followers unprepared for the symptoms. Does it offer any insight into the best means of recovery?
In the first months of the crisis, macroeconomists reposed great faith in the powers of the Fed and other central banks. In the summer of 2007, a few weeks after the August liquidity crisis began, Frederic Mishkin, a distinguished academic economist and then a governor of the Fed, gave a reassuring talk at the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming. He presented the results of simulations from the Fed’s FRB/US model. Even if house prices fell by a fifth in the next two years, the slump would knock only 0.25% off GDP, according to his benchmark model, and add only a tenth of a percentage point to the unemployment rate. The reason was that the Fed would respond “aggressively”, by which he meant a cut in the federal funds rate of just one percentage point. He concluded that the central bank had the tools to contain the damage at a “manageable level”.
Since his presentation, the Fed has cut its key rate by five percentage points to a mere 0-0.25%. Its conventional weapons have proved insufficient to the task. This has shaken economists’ faith in monetary policy. Unfortunately, they are also horribly divided about what comes next.
Mr Krugman and others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn. Kahn pointed out that a dollar spent on public works might generate more than a dollar of output if the spending circulated repeatedly through the economy, stimulating resources that might otherwise have lain idle.
Today’s economists disagree over the size of this multiplier. Mr Barro thinks the estimates of Barack Obama’s Council of Economic Advisors are absurdly large. Mr Lucas calls them “schlock economics”, contrived to justify Mr Obama’s projections for the budget deficit. But economists are not exactly drowning in research on this question. Mr Krugman calculates that of the 7,000 or so papers published by the National Bureau of Economic Research between 1985 and 2000, only five mentioned fiscal policy in their title or abstract.
I
Do these public spats damage macroeconomics? Greg Mankiw, of Harvard, recalls the angry exchanges in the 1980s between Robert Solow and Mr Lucas—both eminent economists who could not take each other seriously. This vitriol, he writes, attracted attention, much like a bar-room fist-fight. But he thinks it also dismayed younger scholars, who gave these macroeconomic disputes a wide berth.
By this account, the period of intellectual peace that followed in the 1990s should have been a golden age for macroeconomics. But the brackish consensus also seems to leave students cold. According to David Colander, who has twice surveyed the opinions of economists in the best American PhD programmes, macroeconomics is often the least popular class. “What did you learn in macro?” Mr Colander asked a group of Chicago students. “Did you do the dynamic stochastic general equilibrium model?” “We learned a lot of junk like that,” one replied.
It takes a model to beat a model
The benchmark macroeconomic model, though not junk, suffers from some obvious flaws, such as the assumption of complete markets or frictionless finance. Indeed, because these flaws are obvious, economists are well aware of them. Critics like Mr Buiter are not telling them anything new. Economists can and do depart from the benchmark. That, indeed, is how they get published. Thus a growing number of cutting-edge models incorporate one or two financial frictions. And economists like Mr Brunnermeier are trying to fit their small, “blackboard” models of the crisis into a larger macroeconomic frame.
But the benchmark still matters. It formalises economists’ gut instincts about where the best analytical cuts lie. It is the starting point to which the theorist returns after every ingenious excursion. Few economists really believe all its assumptions, but few would rather start anywhere else.
Unfortunately, it is these primitive models, rather than their sophisticated descendants, that often exert the most influence over the world of policy and practice. This is partly because these first principles endure long enough to find their way from academia into policymaking circles. As Keynes pointed out, the economists who most influence practical men of action are the defunct ones whose scribblings have had time to percolate from the seminar room to wider conversations.
These basic models are also influential because of their simplicity. Faced with the “blooming, buzzing confusion” of the real world, policymakers often fall back on the highest-order principles and the broadest presumptions. More specific, nuanced theories are often less versatile. They shed light on whatever they were designed to explain, but little beyond.
Would economists be better off starting from somewhere else? Some think so. They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial. Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.
Mr Colander, therefore, thinks economics requires a revolution in technique. Instead of solving models “by hand”, using economists’ powers of deduction, he proposes simulating economies on the computer. In this line of research, the economist specifies simple rules of thumb by which agents interact with each other, and then lets the computer go to work, grinding out repeated simulations to reveal what kind of unforeseen patterns might emerge. If he is right, then macroeconomists, like zombie banks, must write off many of their past intellectual investments before they can make progress again.
Mr Krugman, by contrast, thinks reform is more likely to come from within. Keynes, he observes, was a “consummate insider”, who understood the theory he was demolishing precisely because he was once convinced by it. In the meantime, he says, macroeconomists should turn to patient empirical spadework, documenting crises past and present, in the hope that a fresh theory might later make sense of it all.
Macroeconomics began with Keynes, but the word did not appear in the journals until 1945, in an article by Jacob Marschak. He reviewed the profession’s growing understanding of the business cycle, making an analogy with other sciences. Seismology, for example, makes progress through better instruments, improved theories or more frequent earthquakes. In the case of economics, Marschak concluded, “the earthquakes did most of the job.”
Economists were deprived of earthquakes for a quarter of a century. The Great Moderation, as this period was called, was not conducive to great macroeconomics. Thanks to the seismic events of the past two years, the prestige of macroeconomists is low, but the potential of their subject is much greater. The furious rows that divide them are a blow to their credibility, but may prove to be a spur to creativity.
Although the crisis has exposed bitter divisions among economists, it could still be good for economics. Our first article looks at the turmoil among macroeconomists. Our second (see article) examines the foundations of financial economics
ROBERT LUCAS, one of the greatest macroeconomists of his generation, and his followers are “making ancient and basic analytical errors all over the place”. Harvard’s Robert Barro, another towering figure in the discipline, is “making truly boneheaded arguments”. The past 30 years of macroeconomics training at American and British universities were a “costly waste of time”.
To the uninitiated, economics has always been a dismal science. But all these attacks come from within the guild: from Brad DeLong of the University of California, Berkeley; Paul Krugman of Princeton and the New York Times; and Willem Buiter of the London School of Economics (LSE), respectively. The macroeconomic crisis of the past two years is also provoking a crisis of confidence in macroeconomics. In the last of his Lionel Robbins lectures at the LSE on June 10th, Mr Krugman feared that most macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst”.
These internal critics argue that economists missed the origins of the crisis; failed to appreciate its worst symptoms; and cannot now agree about the cure. In other words, economists misread the economy on the way up, misread it on the way down and now mistake the right way out.
On the way up, macroeconomists were not wholly complacent. Many of them thought the housing bubble would pop or the dollar would fall. But they did not expect the financial system to break. Even after the seizure in interbank markets in August 2007, macroeconomists misread the danger. Most were quite sanguine about the prospect of Lehman Brothers going bust in September 2008.
Nor can economists now agree on the best way to resolve the crisis. They mostly overestimated the power of routine monetary policy (ie, central-bank purchases of government bills) to restore prosperity. Some now dismiss the power of fiscal policy (ie, government sales of its securities) to do the same. Others advocate it with passionate intensity.
Among the passionate are Mr DeLong and Mr Krugman. They turn for inspiration to Depression-era texts, especially the writings of John Maynard Keynes, and forgotten mavericks, such as Hyman Minsky. In the humanities this would count as routine scholarship. But to many high-tech economists it is a bit undignified. Real scientists, after all, do not leaf through Newton’s “Principia Mathematica” to solve contemporary problems in physics.
They accuse economists like Mr DeLong and Mr Krugman of falling back on antiquated Keynesian doctrines—as if nothing had been learned in the past 70 years. Messrs DeLong and Krugman, in turn, accuse economists like Mr Lucas of not falling back on Keynesian economics—as if everything had been forgotten over the past 70 years. For Mr Krugman, we are living through a “Dark Age of macroeconomics”, in which the wisdom of the ancients has been lost.
What was this wisdom, and how was it forgotten? The history of macroeconomics begins in intellectual struggle. Keynes wrote the “General Theory of Employment, Interest and Money”, which was published in 1936, in an “unnecessarily controversial tone”, according to some readers. But it was a controversy the author had waged in his own mind. He saw the book as a “struggle of escape from habitual modes of thought” he had inherited from his classical predecessors.
That classical mode of thought held that full employment would prevail, because supply created its own demand. In a classical economy, whatever people earn is either spent or saved; and whatever is saved is invested in capital projects. Nothing is hoarded, nothing lies idle.
Keynes appreciated the classical model’s elegance and consistency, virtues economists still crave. But that did not stop him demolishing it. In his scheme, investment was governed by the animal spirits of entrepreneurs, facing an imponderable future. The same uncertainty gave savers a reason to hoard their wealth in liquid assets, like money, rather than committing it to new capital projects. This liquidity-preference, as Keynes called it, governed the price of financial securities and hence the rate of interest. If animal spirits flagged or liquidity-preference surged, the pace of investment would falter, with no obvious market force to restore it. Demand would fall short of supply, leaving willing workers on the shelf. It fell to governments to revive demand, by cutting interest rates if possible or by public works if necessary.
The Keynesian task of “demand management” outlived the Depression, becoming a routine duty of governments. They were aided by economic advisers, who built working models of the economy, quantifying the key relationships. For almost three decades after the second world war these advisers seemed to know what they were doing, guided by an apparent trade-off between inflation and unemployment. But their credibility did not survive the oil-price shocks of the 1970s. These condemned Western economies to “stagflation”, a baffling combination of unemployment and inflation, which the Keynesian consensus grasped poorly and failed to prevent.
The Federal Reserve, led by Paul Volcker, eventually defeated American inflation in the early 1980s, albeit at a grievous cost to employment. But victory did not restore the intellectual peace. Macroeconomists split into two camps, drawing opposite lessons from the episode.
The purists, known as “freshwater” economists because of the lakeside universities where they happened to congregate, blamed stagflation on restless central bankers trying to do too much. They started from the classical assumption that markets cleared, leaving no unsold goods or unemployed workers. Efforts by policymakers to smooth the economy’s natural ups and downs did more harm than good.
America’s coastal universities housed most of the other lot, “saltwater” pragmatists. To them, the double-digit unemployment that accompanied Mr Volcker’s assault on inflation was proof enough that markets could malfunction. Wages might fail to adjust, and prices might stick. This grit in the economic machine justified some meddling by policymakers.
Mr Volcker’s recession bottomed out in 1982. Nothing like it was seen again until last year. In the intervening quarter-century of tranquillity, macroeconomics also recovered its composure. The opposing schools of thought converged. The freshwater economists accepted a saltier view of policymaking. Their opponents adopted a more freshwater style of modelmaking. You might call the new synthesis brackish macroeconomics.
Brackish macroeconomics flowed from universities into central banks. It underlay the doctrine of inflation-targeting embraced in New Zealand, Canada, Britain, Sweden and several emerging markets, such as Turkey. Ben Bernanke, chairman of the Fed since 2006, is a renowned contributor to brackish economics.
For about a decade before the crisis, macroeconomists once again appeared to know what they were doing. Their thinking was embodied in a new genre of working models of the economy, called “dynamic stochastic general equilibrium” (DSGE) models. These helped guide deliberations at several central banks.
Mr Buiter, who helped set interest rates at the Bank of England from 1997 to 2000, believes the latest academic theories had a profound influence there. He now thinks this influence was baleful. On his blog, Mr Buiter argues that a training in modern macroeconomics was a “severe handicap” at the onset of the financial crisis, when the central bank had to “switch gears” from preserving price stability to safeguarding financial stability.
Modern macroeconomists worried about the prices of goods and services, but neglected the prices of assets. This was partly because they had too much faith in financial markets. If asset prices reflect economic fundamentals, why not just model the fundamentals, ignoring the shadow they cast on Wall Street?
It was also because they had too little interest in the inner workings of the financial system. “Philosophically speaking,” writes Perry Mehrling of Barnard College, Columbia University, economists are “materialists” for whom “bags of wheat are more important than stacks of bonds.” Finance is a veil, obscuring what really matters. As a poet once said, “promises of payment/Are neither food nor raiment”.
In many macroeconomic models, therefore, insolvencies cannot occur. Financial intermediaries, like banks, often don’t exist. And whether firms finance themselves with equity or debt is a matter of indifference. The Bank of England’s DSGE model, for example, does not even try to incorporate financial middlemen, such as banks. “The model is not, therefore, directly useful for issues where financial intermediation is of first-order importance,” its designers admit. The present crisis is, unfortunately, one of those issues.
The bank’s modellers go on to say that they prefer to study finance with specialised models designed for that purpose. One of the most prominent was, in fact, pioneered by Mr Bernanke, with Mark Gertler of New York University. Unfortunately, models that include such financial-market complications “can be very difficult to handle,” according to Markus Brunnermeier of Princeton, who has handled more of these difficulties than most. Convenience, not conviction, often dictates the choices economists make.
Convenience, however, is addictive. Economists can become seduced by their models, fooling themselves that what the model leaves out does not matter. It is, for example, often convenient to assume that markets are “complete”—that a price exists today, for every good, at every date, in every contingency. In this world, you can always borrow as much as you want at the going rate, and you can always sell as much as you want at the going rate.
Before the crisis, many banks and shadow banks made similar assumptions. They believed they could always roll over their short-term debts or sell their mortgage-backed securities, if the need arose. The financial crisis made a mockery of both assumptions. Funds dried up, and markets thinned out. In his anatomy of the crisis Mr Brunnermeier shows how both of these constraints fed on each other, producing a “liquidity spiral”.
What followed was a furious dash for cash, as investment banks sold whatever they could, commercial banks hoarded reserves and firms drew on lines of credit. Keynes would have interpreted this as an extreme outbreak of liquidity-preference, says Paul Davidson, whose biography of the master has just been republished with a new afterword. But contemporary economics had all but forgotten the term.
The mainstream macroeconomics embodied in DSGE models was a poor guide to the origins of the financial crisis, and left its followers unprepared for the symptoms. Does it offer any insight into the best means of recovery?
In the first months of the crisis, macroeconomists reposed great faith in the powers of the Fed and other central banks. In the summer of 2007, a few weeks after the August liquidity crisis began, Frederic Mishkin, a distinguished academic economist and then a governor of the Fed, gave a reassuring talk at the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming. He presented the results of simulations from the Fed’s FRB/US model. Even if house prices fell by a fifth in the next two years, the slump would knock only 0.25% off GDP, according to his benchmark model, and add only a tenth of a percentage point to the unemployment rate. The reason was that the Fed would respond “aggressively”, by which he meant a cut in the federal funds rate of just one percentage point. He concluded that the central bank had the tools to contain the damage at a “manageable level”.
Since his presentation, the Fed has cut its key rate by five percentage points to a mere 0-0.25%. Its conventional weapons have proved insufficient to the task. This has shaken economists’ faith in monetary policy. Unfortunately, they are also horribly divided about what comes next.
Mr Krugman and others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn. Kahn pointed out that a dollar spent on public works might generate more than a dollar of output if the spending circulated repeatedly through the economy, stimulating resources that might otherwise have lain idle.
Today’s economists disagree over the size of this multiplier. Mr Barro thinks the estimates of Barack Obama’s Council of Economic Advisors are absurdly large. Mr Lucas calls them “schlock economics”, contrived to justify Mr Obama’s projections for the budget deficit. But economists are not exactly drowning in research on this question. Mr Krugman calculates that of the 7,000 or so papers published by the National Bureau of Economic Research between 1985 and 2000, only five mentioned fiscal policy in their title or abstract.
I
Do these public spats damage macroeconomics? Greg Mankiw, of Harvard, recalls the angry exchanges in the 1980s between Robert Solow and Mr Lucas—both eminent economists who could not take each other seriously. This vitriol, he writes, attracted attention, much like a bar-room fist-fight. But he thinks it also dismayed younger scholars, who gave these macroeconomic disputes a wide berth.
By this account, the period of intellectual peace that followed in the 1990s should have been a golden age for macroeconomics. But the brackish consensus also seems to leave students cold. According to David Colander, who has twice surveyed the opinions of economists in the best American PhD programmes, macroeconomics is often the least popular class. “What did you learn in macro?” Mr Colander asked a group of Chicago students. “Did you do the dynamic stochastic general equilibrium model?” “We learned a lot of junk like that,” one replied.
It takes a model to beat a model
The benchmark macroeconomic model, though not junk, suffers from some obvious flaws, such as the assumption of complete markets or frictionless finance. Indeed, because these flaws are obvious, economists are well aware of them. Critics like Mr Buiter are not telling them anything new. Economists can and do depart from the benchmark. That, indeed, is how they get published. Thus a growing number of cutting-edge models incorporate one or two financial frictions. And economists like Mr Brunnermeier are trying to fit their small, “blackboard” models of the crisis into a larger macroeconomic frame.
But the benchmark still matters. It formalises economists’ gut instincts about where the best analytical cuts lie. It is the starting point to which the theorist returns after every ingenious excursion. Few economists really believe all its assumptions, but few would rather start anywhere else.
Unfortunately, it is these primitive models, rather than their sophisticated descendants, that often exert the most influence over the world of policy and practice. This is partly because these first principles endure long enough to find their way from academia into policymaking circles. As Keynes pointed out, the economists who most influence practical men of action are the defunct ones whose scribblings have had time to percolate from the seminar room to wider conversations.
These basic models are also influential because of their simplicity. Faced with the “blooming, buzzing confusion” of the real world, policymakers often fall back on the highest-order principles and the broadest presumptions. More specific, nuanced theories are often less versatile. They shed light on whatever they were designed to explain, but little beyond.
Would economists be better off starting from somewhere else? Some think so. They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial. Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.
Mr Colander, therefore, thinks economics requires a revolution in technique. Instead of solving models “by hand”, using economists’ powers of deduction, he proposes simulating economies on the computer. In this line of research, the economist specifies simple rules of thumb by which agents interact with each other, and then lets the computer go to work, grinding out repeated simulations to reveal what kind of unforeseen patterns might emerge. If he is right, then macroeconomists, like zombie banks, must write off many of their past intellectual investments before they can make progress again.
Mr Krugman, by contrast, thinks reform is more likely to come from within. Keynes, he observes, was a “consummate insider”, who understood the theory he was demolishing precisely because he was once convinced by it. In the meantime, he says, macroeconomists should turn to patient empirical spadework, documenting crises past and present, in the hope that a fresh theory might later make sense of it all.
Macroeconomics began with Keynes, but the word did not appear in the journals until 1945, in an article by Jacob Marschak. He reviewed the profession’s growing understanding of the business cycle, making an analogy with other sciences. Seismology, for example, makes progress through better instruments, improved theories or more frequent earthquakes. In the case of economics, Marschak concluded, “the earthquakes did most of the job.”
Economists were deprived of earthquakes for a quarter of a century. The Great Moderation, as this period was called, was not conducive to great macroeconomics. Thanks to the seismic events of the past two years, the prestige of macroeconomists is low, but the potential of their subject is much greater. The furious rows that divide them are a blow to their credibility, but may prove to be a spur to creativity.
Saturday, July 25, 2009
How viable is Kikwete's fiscal stimulus package?
It has been accepted that the world financial crisis and economic downturn have affected various sectors of the economy, leading to the revision of projected GDP growth rates.
As observed by the President, the growth rate for 2009 has been reversed from expected 7.5 to 5-6 per cent. According to the economists, the growth rate will be 4 per cent while the International Monetary Fund (IMF) projects at only 3.5 per cent.
The sectors adversely affected are tourism, textile and leather, mining, horticulture, agricultural exports, foreign direct investment and decline in domestic revenue including various tax revenues like customs duty. VAT and excise duty.
The President announced a financial stimulus of Tsh1.7 trillion, which is not intended to replace the annual budget or other development programmes, but is intended to address transitional problems and emergencies, especially liquidity problems caused by the global financial crisis.
It is perceived to be a comprehensive plan to revive all the sectors affected by the global recession. The financial rescue program targets to protect jobs and income generating opportunities and enhance food security as well as sustain investment in the key sectors of the economy .
Due to the decrease in demand for commodities such as cotton, buyers including cooperatives and 24 private buyers in the cotton industry have suffered losses because of a fall in prices from 82 cents per kilo in 2008 to Tsh40 cents per kilo in 2009.
These buyers have fatten loans from commercial banks, which have not been repaid. This means the banks would be unwilling to extend loans for crop purchasing in the coming cotton buying season and farmers would not be able to sell their crops.
The measures taken include the commitment by the government to compensate the companies for losses incurred, amounting to Tsh21.9 billion. It also involves to guarantee some banks. Some of the other measures taken is to guarantee outstanding loans at a ratio of 1:5, meaning in case of possible default the government will pay 20 pc of the bad and doubtful debts owed to banks by cooperatives and other enterprises.
This will not involve debts incurred before the onset of the global economic recession. The amount guaranteed is Tsh270 billion, which means the loans will be repaid after two years during which compound interest will not be charged.
The Government is expected to pay Tsh45 billion for the guarantee of 70 per cent of the loans owed by the ailing enterprises to CRDB and other commercial banks.
The mining sector will, in the two years' period of the rescue package, get a tax holiday in repayment of royalties and this amounts to a loss of 500, 000 in lost royalties and the goal is to prevent them from closing their operations.
As a result of the global economic down turn to all sectors of the economy, 48,000 jobs have already been lost, especially in tourism, horticulture and mining industries as well as leather and textile sectors.
A few years ago credit guarantee schemes were started by the government and these include the SME Credit Guarantee Scheme and Export Credit Guarantee Scheme to enable banks to lend to SMEs and companies involved in export trade.
The SME Credit Guarantee Scheme has been increased to Tsh60 billion and Export Credit Guarantee Scheme to over Tsh250 billion. The export credit guarantee scheme lent to a maximum of Tsh161.5 billion while the SME Credit Guarantee Scheme lent to a maximum of Tsh6.5 billion. This involved the amounts contributed by the government and the banking sector to the schemes.
The scheme also targets to facilitate commercial banks, lending at lower and affordable interest rates to the companies so get cheaper working capital. The Government will lend Tsh80 billion to the banks at an interest rate of two per cent and the banks will be required to lend 1 ½ times of this amount for working capital of enterprises, which amounts to Tsh120 billion, bringing the total to Tsh200 billion.
This means commercial banks and financial institutions in Tanzania have lending rates of up 15-21 per cent to hedge against default to repay the bank loans. The central tenet of the proposed economic resume package is to ensure that there is increased production of food.
To ensure increased loans to farmers, the Tanzania Investment Bank will be recapitalized by Tsh20 billion. A further Tsh20 billion will be given to the Bank of Tanzania (BoT) for importation of tractors and other farm implements.
There will be a Tsh40 billion credit from India for importation of tractors. Subsidized fertilizers through use of the voucher system will be expanded to benefit more farmers with a proposed injection of Tsh46 billion by the Government. That amount will be increased to Tsh92 billion as the world bank is expected to contribute Tsh46 billion to Agricultural inputs funds.
The funds for the strategic grain reserves (SGR) will be increased in order to buy grains to stabilize food prices. Expert banks of ford have not worked because neighbouring countries are offering higher prices for maize and this will be an additional task for the SGR to ensure they buy market prices for farmers' crops equal to those offered by smugglers.
TASAF will get an increase of Tsh30 billion to implement its projects while the Agricultural Sector Development Programme will get a boost of Tsh30 billion. The Chinese Development Bank will cooperative with the Government of Tanzania to establish the proposed Agricultural Development Bank estimated to start with an estimated capital of US$500 million (Tsh660 billion).
The funding of infrastructure development is expected to be sourced domestically possibly through the issue of bonds, considering that there is a lot of money in the hands of the people considering the over subscription in the initial public offer of NMB, DCB and many other companies in the DSE.
The success of the Tsh1.7 trillion package depends on the fact that the recession will not last by more than two years and become bigger in impact. There is a need to re-examine past economic policies because some of these problems are not a result of global economic recession only.
The objective of the proposed fiscal stimulus is to boost production in various sectors of the economy. Other goals are to boost domestic revenue which has declined by ten per cent and create more jobs and income generating opportunities as well as to boost exports and foreign exchange earnings.
As observed by the President, the growth rate for 2009 has been reversed from expected 7.5 to 5-6 per cent. According to the economists, the growth rate will be 4 per cent while the International Monetary Fund (IMF) projects at only 3.5 per cent.
The sectors adversely affected are tourism, textile and leather, mining, horticulture, agricultural exports, foreign direct investment and decline in domestic revenue including various tax revenues like customs duty. VAT and excise duty.
The President announced a financial stimulus of Tsh1.7 trillion, which is not intended to replace the annual budget or other development programmes, but is intended to address transitional problems and emergencies, especially liquidity problems caused by the global financial crisis.
It is perceived to be a comprehensive plan to revive all the sectors affected by the global recession. The financial rescue program targets to protect jobs and income generating opportunities and enhance food security as well as sustain investment in the key sectors of the economy .
Due to the decrease in demand for commodities such as cotton, buyers including cooperatives and 24 private buyers in the cotton industry have suffered losses because of a fall in prices from 82 cents per kilo in 2008 to Tsh40 cents per kilo in 2009.
These buyers have fatten loans from commercial banks, which have not been repaid. This means the banks would be unwilling to extend loans for crop purchasing in the coming cotton buying season and farmers would not be able to sell their crops.
The measures taken include the commitment by the government to compensate the companies for losses incurred, amounting to Tsh21.9 billion. It also involves to guarantee some banks. Some of the other measures taken is to guarantee outstanding loans at a ratio of 1:5, meaning in case of possible default the government will pay 20 pc of the bad and doubtful debts owed to banks by cooperatives and other enterprises.
This will not involve debts incurred before the onset of the global economic recession. The amount guaranteed is Tsh270 billion, which means the loans will be repaid after two years during which compound interest will not be charged.
The Government is expected to pay Tsh45 billion for the guarantee of 70 per cent of the loans owed by the ailing enterprises to CRDB and other commercial banks.
The mining sector will, in the two years' period of the rescue package, get a tax holiday in repayment of royalties and this amounts to a loss of 500, 000 in lost royalties and the goal is to prevent them from closing their operations.
As a result of the global economic down turn to all sectors of the economy, 48,000 jobs have already been lost, especially in tourism, horticulture and mining industries as well as leather and textile sectors.
A few years ago credit guarantee schemes were started by the government and these include the SME Credit Guarantee Scheme and Export Credit Guarantee Scheme to enable banks to lend to SMEs and companies involved in export trade.
The SME Credit Guarantee Scheme has been increased to Tsh60 billion and Export Credit Guarantee Scheme to over Tsh250 billion. The export credit guarantee scheme lent to a maximum of Tsh161.5 billion while the SME Credit Guarantee Scheme lent to a maximum of Tsh6.5 billion. This involved the amounts contributed by the government and the banking sector to the schemes.
The scheme also targets to facilitate commercial banks, lending at lower and affordable interest rates to the companies so get cheaper working capital. The Government will lend Tsh80 billion to the banks at an interest rate of two per cent and the banks will be required to lend 1 ½ times of this amount for working capital of enterprises, which amounts to Tsh120 billion, bringing the total to Tsh200 billion.
This means commercial banks and financial institutions in Tanzania have lending rates of up 15-21 per cent to hedge against default to repay the bank loans. The central tenet of the proposed economic resume package is to ensure that there is increased production of food.
To ensure increased loans to farmers, the Tanzania Investment Bank will be recapitalized by Tsh20 billion. A further Tsh20 billion will be given to the Bank of Tanzania (BoT) for importation of tractors and other farm implements.
There will be a Tsh40 billion credit from India for importation of tractors. Subsidized fertilizers through use of the voucher system will be expanded to benefit more farmers with a proposed injection of Tsh46 billion by the Government. That amount will be increased to Tsh92 billion as the world bank is expected to contribute Tsh46 billion to Agricultural inputs funds.
The funds for the strategic grain reserves (SGR) will be increased in order to buy grains to stabilize food prices. Expert banks of ford have not worked because neighbouring countries are offering higher prices for maize and this will be an additional task for the SGR to ensure they buy market prices for farmers' crops equal to those offered by smugglers.
TASAF will get an increase of Tsh30 billion to implement its projects while the Agricultural Sector Development Programme will get a boost of Tsh30 billion. The Chinese Development Bank will cooperative with the Government of Tanzania to establish the proposed Agricultural Development Bank estimated to start with an estimated capital of US$500 million (Tsh660 billion).
The funding of infrastructure development is expected to be sourced domestically possibly through the issue of bonds, considering that there is a lot of money in the hands of the people considering the over subscription in the initial public offer of NMB, DCB and many other companies in the DSE.
The success of the Tsh1.7 trillion package depends on the fact that the recession will not last by more than two years and become bigger in impact. There is a need to re-examine past economic policies because some of these problems are not a result of global economic recession only.
The objective of the proposed fiscal stimulus is to boost production in various sectors of the economy. Other goals are to boost domestic revenue which has declined by ten per cent and create more jobs and income generating opportunities as well as to boost exports and foreign exchange earnings.
The upbringing of today's children in Tanzania
THE heading above actually implies early training of our children. In other words, it is the way in which somebody has been brought up, or trained and educated early in life. Afterall, the background of an adult matters as far as he/she was brought up, reared or nurtured by his parents during childhood and enabled him to attend a good school and complete his basic education.Therefore, parents should be urged to take care of not only their own children, but also those children, who are not theirs. Being a good parent is not only a gift to your child, but also a gift to the whole society, particularly in Tanzania today.Parents must have the courage to say 'No' to their children who misbehave or drink alcohol, smoke hashish, cannabis or cigarettes, use drugs and so forth. In which case, a 'collective disapproval' should be a powerful tool in regulating behaviour. It is also important for parents to intervene when they see other people's children behave badly. This means that at least every parent has an obligation to say something if children he sees are misbehaving. Suppose we are met by a volley of abuse then other adults have a duty to intervene. We do not want to live in walk-on-by society. Most of our children have the most quality of life in this developing country. The authority or Parliament at large has to reform the law accordingly on child-maintenance so to compel the relevant parents to stand by their responsibilities including disciplining their children.It seems that some of the parents are completely incapable of getting to grips with the challenges today’s families are facing, both economically and socially because of poverty or joblessness.Of course, much more investment is needed in education for the sake of our children today, who need quality education to become good and law abiding citizens of tomorrow. In 2009 we were all excited by the government’s ditermination to eradicate children’s ignorance and the prevalent poverty.Tackling poverty generally should be the great promise of the government, but the world economic crisis today leaves the country with the pangs of poverty rising. The figures have gone up because of temporary blip in the income of self-employed and the impoverished society.Some people argue that many of this country’s problems can be traced back to the collapse of the relationship between parents and children and between adults or call them old men and young people or youths. In our society, we should not expect a kid punishing an adult person.The society has the duty to tackle malaises including binge drinking and the unacceptable rate of teenage pregnancies. How can we expect young people to act responsibly in this developing nation when so many of them are hopelessly drunk?Another appropriate example; how can girls - after only children themselves - be expected to bring up children effectively? This must be a problem for everyone of us! Not even for the feckless fathers and teenage single mothers.We ought to accept responsibility for our own children and for the way the young pleople are growing up now, who will be the future leaders and loyal citizens of this nation.Also, our respective religions should as well be responsible for teaching the society’s children good things and that wedlocks or marriages should be taken as that cement which can bind and hold society together.Parents of young children, who have been through a wedding ceremony to which we normally contribute financially and in kind, are hundred times more likely to stay together than those who have not.Consequently, if we observe the acceptable marriage systems properly, there is a possibility in future to deal with rising crimes. On top of that we shall create a better disciplined nation, which will be free from the current vices being perpatrated by existing evils dominated by prevalent joblessness and abject poverty.
Letter from Edinburgh:Here is solution for Tanzania’s power shortage
As Tanzania faces perennial electricity shortage it is the responsibility of patriots to come up with new ideas for remedial action that can make power blues a thing of the past. Our ideas will help us make a collective action to confront this problem. We can’t defeat past failure with old tired ideas. We must come up with new ideas. Yes, new ideas are the weapons for success if we want to achieve adequate and reliable power supply for the long term.Tanzania’s energy sector has been in the hands of ruling elite for many years. Poor performance of Tanzania’s Electric Supply Company (TANESCO) has, of course, been a cause of heated controversy in the company and the political arena. But all of that doesn’t stop us to ask ourselves the two fundamental questions concerning our energy sector? One, what are the factors which will bring about the transition from one point to another? Two, who will provide the necessary leadership to take us from one point to another?The first question is important because it will help us to wake up from the relaxed state we are in; of waiting for help instead of generating new ideas to solve our energy problem. Developed countries are working hard to solve their energy problems. Recently Twelve European companies launched a 400-billion-euro (560-billion-dollar) initiative to plant huge solar farms in Africa and the Middle East to produce energy for Europe (not for Africa). This is evident that though the project will take part in Africa, its intention is not to solve the energy problem of Africa. Thus this means Tanzania’s energy problem can be solved by Tanzanian initiatives.This takes us to the answer of the first question on how we can move forward. The main solution will be a need of collaboration between TANESCO and the Tanzanian public which is urgently needed. This collaboration will be a part of the solution towards significant investments which Tanzania needs to invest in and eventually cover the growing demand for energy. Such results can’t be achieved if we continue to rely on Aid or other financing methods which charges Tanzania (us) very expensive high interest rates.As a way forward we can take advantage of the Capital Market and Securities (Collective Investment Scheme) Regulations, 1997 by establishing a National Energy Public Investment Fund (NEPIF). The fund will aim to promote the development and use of renewable energy (Solar energy and wind power). Moreover, by investing in conjunction with TANESCO, the fund can achieve its aim without taking the whole business and technical risks involved.For example if we aim to issue 4 Million shares in three years of establishment of the fund, I am sure the shares will be oversubscribed before the end of the third year. And if each share will be priced at 100 USD, we will be able to raise 400 Million USD which will be used for development of renewable energy.To make sure this investment scheme gives a chance for all Tanzanian’s from all walks of life; the scheme can provide investors opportunity to buy shares through TANESCO pay points infrastructure or through mobile phone banking like M-PESA which can enable people who have no access to banking facilities to use their mobile phone to take advantage of this profitable and developmental scheme.We are very excited to join the East African Power Pool, but the question is, do we have enough electricity to export to other countries in the power pool? Or we are going to be the importers of electricity like the way we import most of the goods. The nature of our aspirations of Exporting power to other country is positive, but we can’t realize them by leaving this issue to TANESCO alone. Thus this provides the answering of the second question; who will provide the necessary leadership to take us from one point to another? I believe that me and you should provide that leadership because; the public interest requires men and women of intelligence and good will to do things that will transform the society of today and tomorrow. Moreover, an example of the above is seen in TANESCO’s Corporate Business Plan (2007-2011) which doesn’t provide clarity of our desired ends. When it says it wants to export electricity to Kenya by 2010 while at the same time saying we won’t have enough electricity for ourselves for the next two years, it depicts contradiction and it doesn’t make sense. Therefore we need more ideas which will provide knowledge of all the available alternatives and means to achieve these ends. To conclude, I return to the first question which this commentary has sought to answer. What are the factors which will bring about the transition from one point to another in the energy sector? It is a difficult, potentially threatening question, but it is obvious that the starting point if we are serious, as a nation, about wanting energy sector improvement, starts with a general sense of responsibility and the need of the Public to come up with new ideas one of which is the establishment of the National Energy Public Investment Fund (NEPIF).
Friday, July 24, 2009
East Africa gets high-speed web
The first undersea cable to bring high-speed internet access to East Africa has gone live.
The fibre-optic cable, operated by African-owned firm Seacom, connects South Africa, Tanzania, Kenya, Uganda and Mozambique to Europe and Asia.
The firm says the cable will help to boost the prospects of the region's industry and commerce.
The cable - which is 17,000km long - took two years to lay and cost more than $650m.
Seacom said in a statement the launch of the cable marked the "dawn of a new era for communications" between Africa and the rest of the world.
The services were unveiled in ceremonies in the Kenyan port of Mombasa and the Tanzanian city of Dar es Salaam.
School benefits
The cable was due to be launched in June but was delayed by pirate activity off the coast of Somalia.
It's not good. It's hanging and keeps wasting time and frustrating me
The BBC's Ben Mwangunda in Dar es Salaam says five institutions are already benefiting from the faster speeds - national electricity company Tanesco, communications company, TTCL, Tanzania Railways and the Universities of Dar es Salaam and Dodoma.
The BBC's Will Ross in Nairobi says the internet revolution trumpeted by Seacom largely depends on how well the service is rolled out across the region.
To the disappointment of many consumers, our correspondent says some ISPs (internet service providers) are not planning to lower the cost of the internet, but instead will offer increased bandwidth.
But businesses, which have been paying around $3,000 a month for 1MB through a satellite link, will now pay considerably less - about $600 a month.
The Kenyan government has been laying a network of cables to all of the country's major towns and says the fibre-optic links will also enable schools nationwide to link into high quality educational resources.
But our correspondent says it is not clear whether the internet revolution will reach the villages, many of which still struggle to access reliable electricity.
The fibre-optic cable, operated by African-owned firm Seacom, connects South Africa, Tanzania, Kenya, Uganda and Mozambique to Europe and Asia.
The firm says the cable will help to boost the prospects of the region's industry and commerce.
The cable - which is 17,000km long - took two years to lay and cost more than $650m.
Seacom said in a statement the launch of the cable marked the "dawn of a new era for communications" between Africa and the rest of the world.
The services were unveiled in ceremonies in the Kenyan port of Mombasa and the Tanzanian city of Dar es Salaam.
School benefits
The cable was due to be launched in June but was delayed by pirate activity off the coast of Somalia.
It's not good. It's hanging and keeps wasting time and frustrating me
The BBC's Ben Mwangunda in Dar es Salaam says five institutions are already benefiting from the faster speeds - national electricity company Tanesco, communications company, TTCL, Tanzania Railways and the Universities of Dar es Salaam and Dodoma.
The BBC's Will Ross in Nairobi says the internet revolution trumpeted by Seacom largely depends on how well the service is rolled out across the region.
To the disappointment of many consumers, our correspondent says some ISPs (internet service providers) are not planning to lower the cost of the internet, but instead will offer increased bandwidth.
But businesses, which have been paying around $3,000 a month for 1MB through a satellite link, will now pay considerably less - about $600 a month.
The Kenyan government has been laying a network of cables to all of the country's major towns and says the fibre-optic links will also enable schools nationwide to link into high quality educational resources.
But our correspondent says it is not clear whether the internet revolution will reach the villages, many of which still struggle to access reliable electricity.
Monday, July 20, 2009
Alarming Africa male gay HIV rate
HIV rates among gay men in some African countries are 10 times higher than among the general male population, says research in medical journal the Lancet.
The report said prejudice towards gay people was leading to isolation and harassment, which in turn led to risky sexual practices among gay communities.
But the risks are not limited to gay men, as many of the infected also have female sexual partners.
The report called for greater education and resources in the fight against HIV.
The Oxford University researchers found that the prevalence of HIV/Aids among gay men in sub-Saharan African has been "driven by cultural, religious and political unwillingness to accept [gay men] as equal members of society".
Lead researcher Adrian Smith told the magessa blog there was "profound stigma and social hostility at every level of society concerning either same-sex behaviours amongst men, or homosexuality".
"This has the consequence that this group becomes extremely hard to reach," he said.
Mr Smith said that gay male sex had always been acknowledged as being particularly dangerous in terms of contracting HIV/Aids.
But gay men were also more likely to be involved in other high-risk behaviours, including sex work, having multiple partners and being in contact with intravenous drug use, he said.
George Kanuma, a gay rights activist in Burundi, told magessa blog many men "hide their sexual orientation" to get married and have children, but continue to have sex with men.
"Most of them know that you can contract HIV/Aids or any infection when you are making sex with women, but not when you are having sex with another man," he said.
Mr Smith said there was "a desperate need for delivering a basic package of prevention for HIV", including ensuring supplies of condoms.
"There is also a need to sensitise, educate and train those involved in HIV, the interface with men who have sex with men, to educate those involved in care and prevention activities," he said.
The United Nations Aids agency estimates that 33 million people in the world have HIV, of whom two-thirds live in sub-Saharan Africa.
The report said prejudice towards gay people was leading to isolation and harassment, which in turn led to risky sexual practices among gay communities.
But the risks are not limited to gay men, as many of the infected also have female sexual partners.
The report called for greater education and resources in the fight against HIV.
The Oxford University researchers found that the prevalence of HIV/Aids among gay men in sub-Saharan African has been "driven by cultural, religious and political unwillingness to accept [gay men] as equal members of society".
Lead researcher Adrian Smith told the magessa blog there was "profound stigma and social hostility at every level of society concerning either same-sex behaviours amongst men, or homosexuality".
"This has the consequence that this group becomes extremely hard to reach," he said.
Mr Smith said that gay male sex had always been acknowledged as being particularly dangerous in terms of contracting HIV/Aids.
But gay men were also more likely to be involved in other high-risk behaviours, including sex work, having multiple partners and being in contact with intravenous drug use, he said.
George Kanuma, a gay rights activist in Burundi, told magessa blog many men "hide their sexual orientation" to get married and have children, but continue to have sex with men.
"Most of them know that you can contract HIV/Aids or any infection when you are making sex with women, but not when you are having sex with another man," he said.
Mr Smith said there was "a desperate need for delivering a basic package of prevention for HIV", including ensuring supplies of condoms.
"There is also a need to sensitise, educate and train those involved in HIV, the interface with men who have sex with men, to educate those involved in care and prevention activities," he said.
The United Nations Aids agency estimates that 33 million people in the world have HIV, of whom two-thirds live in sub-Saharan Africa.
Thursday, July 02, 2009
Neverland (Jacko) Vs Graceland (Elvis)
NEVERLAND LUNCH OWNED BY THE LATE MICHAEL JACKSON WORTH 35M POUNDS
ELVIS PRESLEYS GRACELAND WORTH 250M POUNDS
Tuesday, June 30, 2009
Full of life, just 2 days from death
Rehearsals....Michael Jackson performs on stage
HE looks in incredible form strutting his stuff on stage — but two days later Michael Jackson was dead.
These pictures are thought to be the last taken of the tragic superstar.
He was rehearsing for the gigs at London’s O2 starting next month.
This Is It lighting display is behind him as he pulls off an impressive high-energy routine.
A source who watched Jacko’s final rehearsal in LA said: “Michael was in better form than for years.
"He was preparing for what would have been an absolutely incredible show.
“He was laughing and joking with his dancers. He seemed to have so much energy — it’s hard to believe that 48 hours later he was dead.”
Photographer Kevin Mazur, who took the shots, said: “When he hit the stage I was thrilled that the magical Michael Jackson was back.”
Billion dollar beggar
Michael JacksonMICHAEL Jackson owed at least $300million when he died... and had been begging banks to lend him more money.
On paper, Jacko had assets worth $1.3billion - almost all tied up in his 50 per cent ownership of The Beatles' back catalogue with Sony Records.
But he was unable - or unwilling - to sell his share.
Financial papers seen by The Sun show Jacko was desperately seeking to borrow $43million in late 2007.
And we can reveal he signed his deal with O2 concert promoter AEG at that time in a bid to persuade the bankers he was good for the cash.
Black and White ... Jacko's assets and debts
On paper, Jacko had assets worth $1.3billion - almost all tied up in his 50 per cent ownership of The Beatles' back catalogue with Sony Records.
But he was unable - or unwilling - to sell his share.
Financial papers seen by The Sun show Jacko was desperately seeking to borrow $43million in late 2007.
And we can reveal he signed his deal with O2 concert promoter AEG at that time in a bid to persuade the bankers he was good for the cash.
Black and White ... Jacko's assets and debts
Enlarge
Jacko had been having difficulty getting a loan because a series of defaults on previous lending had left him with a disastrous credit rating.
The King of Pop's score was 447 - among the worst two per cent of all Americans.
One expert said: "Below 500 is pretty disastrous."
Royalties
The documents reveal the 50-year-old's moneymen claimed his comeback gigs at London's O2 Arena would generate a "guaranteed" $38.5million.
But they added there was the potential for the star to earn another $300million.
A source said: "He signed up for the live comeback about 18 months ago and told lenders he could make $300million.
"But the pressure of knowing what it would take to fulfil his promise could have helped kill him."
The documents seen by The Sun were produced to support a loan application for his Neverland ranch.
He also had a mortgage on his parents' home in Encino.
The papers also reveal Jacko was pulling in $33million a year in royalties.
In 2006 he pocketed $9million from his own songs and a staggering $24million from the Beatles hits.
As well as the back catalogue - worth around $1.15billion - Jacko valued his personal collection of cars, antiques and other collectibles at $20million.
He also had $668,215 in cash, $10.6million held in reserve to pay interest on his loan on Neverland, other property assets of £73million, including the Neverland ranch and parents' home in Encino, archive material worth $20million, song rights worth $85,000,000 and professional equipment worth $1million.
But he owed almost $300million to a private New York hedge fund, Fortress Investment Group.
There was also an outstanding mortgage on Neverland of $23million, one on the Encino home of $4million and another loan of $4million.
It gave him a net worth - on paper - of just over $1billion.
Jacko's business expertise had been hailed back in 1985 when he picked up the back catalogue - along with thousands of other songs - for $46million.
But just a decade later Michael was forced to sell half to Sony as his lavish lifestyle - and litigation - caught up with him. In 1994 he had been forced to settle a child molestation suit for $20million.
Legendary
Jacko's spending was legendary - he was dubbed "a millionaire who lived like a billionaire".
He became famous for blowing millions on glitzy videos.
For his 1995 album HIStory he shot a video in Hungary that featured real Hungarian soldiers.
A 35-minute film called Ghosts cost a reported $15million. He spent $8million a year on plane charters and hired Hollywood star Marlon Brando for a video for $1million.
His personal expenses were put at an amazing $7million.
The deal with AEG was supposed to mark the comeback and leave Jacko back in the black.
But the promise proved too much - and contributed to the superstar's death.
Jackson's $1billion fortune will now be the subject of a bitter legal tug-of-war.
Wednesday, May 27, 2009
Deforestation 'faster in Africa'
Africa's forests are disappearing faster than those in other parts of the world because of a lack of land ownership, a report says.
Less than 2% of Africa's forests are under community control, compared to a third in Latin America and Asia, say the Rights and Resources Initiative.
The deforestation rate in Africa is four times the world's average.
At the current rate, it will take Congo Basin countries 260 years to reach the level of reform achieved in the Amazon.
Action on land tenure could help to halt deforestation, slow climate change and alleviate poverty, says the report, entitled Tropical Forest Tenure Assessment: Trends, Challenges and Opportunities.
The study was presented in Cameroon's capital, Yaounde, at a meeting of forest community representatives from Africa, Latin America and Asia.
Slow progress
The authors compared the distribution of land ownership in 39 tropical countries, which represent 96% of global tropical forests.
The slowness of reform is suppressing opportunities to reduce poverty and improve livelihoods
They found that African citizens have far less control over the forests they inhabit than do the peoples of other tropical regions.
Several countries have introduced or amended laws to strengthen community land rights - including Angola, Cameroon, the Democratic Republic of Congo, Gambia, Mali, Mozambique, Niger, Sudan and Tanzania.
However, the report calls for these nations to "quickly scale up" the process.
"Recognising local land rights alone doesn't solve all the problems," said Andy White, coordinator of the Rights and Resources Initiative.
"Governments need to follow up by supporting local management and enterprises.
"There are some countries that have recognised local land rights, but the government still controls the forest, and hands out concessions to industrial loggers - leading to more degradation and corruption."
Failure to ensure land rights for indigenous peoples and particularly women, will impede efforts to stop deforestation and mitigate climate change, say the authors.
Clearing of land for agriculture, logging, and other extractive industries accounts for as much as one third of some countries' total carbon emissions.
Carbon payments
Payments for reducing deforestation could be a potential source of income in the region. But without tenure reform, the authors argue, these potential benefits will remain unreachable.
The rate of deforestation in Africa is four times the world's average
The conference aims to kickstart new initiatives to establish forest tenure rights in west and central Africa, building on recent steps to decentralise governance.
Cameroon has begun by negotiating a legally binding bilateral pact, known as a Voluntary Partnership Agreement (VPA), with the European Union.
The VPA will help ensure that wood products exported from Cameroon to the EU contain no illegally harvested timber and are derived from managed forests that benefit local communities.
"The slowness of reform is suppressing a whole range of opportunities to reduce poverty and improve livelihoods," said Emmanuel Ze Meka, Executive Director of the International Tropical Timber Organisation (ITTO), co-authors of the report.
"Africa's forest communities already generate millions of jobs and dollars in domestic and regional trade, and in indigenous livelihoods, but current laws keep some of these activities illegal and also undermine opportunities to improve forest management."
Less than 2% of Africa's forests are under community control, compared to a third in Latin America and Asia, say the Rights and Resources Initiative.
The deforestation rate in Africa is four times the world's average.
At the current rate, it will take Congo Basin countries 260 years to reach the level of reform achieved in the Amazon.
Action on land tenure could help to halt deforestation, slow climate change and alleviate poverty, says the report, entitled Tropical Forest Tenure Assessment: Trends, Challenges and Opportunities.
The study was presented in Cameroon's capital, Yaounde, at a meeting of forest community representatives from Africa, Latin America and Asia.
Slow progress
The authors compared the distribution of land ownership in 39 tropical countries, which represent 96% of global tropical forests.
The slowness of reform is suppressing opportunities to reduce poverty and improve livelihoods
They found that African citizens have far less control over the forests they inhabit than do the peoples of other tropical regions.
Several countries have introduced or amended laws to strengthen community land rights - including Angola, Cameroon, the Democratic Republic of Congo, Gambia, Mali, Mozambique, Niger, Sudan and Tanzania.
However, the report calls for these nations to "quickly scale up" the process.
"Recognising local land rights alone doesn't solve all the problems," said Andy White, coordinator of the Rights and Resources Initiative.
"Governments need to follow up by supporting local management and enterprises.
"There are some countries that have recognised local land rights, but the government still controls the forest, and hands out concessions to industrial loggers - leading to more degradation and corruption."
Failure to ensure land rights for indigenous peoples and particularly women, will impede efforts to stop deforestation and mitigate climate change, say the authors.
Clearing of land for agriculture, logging, and other extractive industries accounts for as much as one third of some countries' total carbon emissions.
Carbon payments
Payments for reducing deforestation could be a potential source of income in the region. But without tenure reform, the authors argue, these potential benefits will remain unreachable.
The rate of deforestation in Africa is four times the world's average
The conference aims to kickstart new initiatives to establish forest tenure rights in west and central Africa, building on recent steps to decentralise governance.
Cameroon has begun by negotiating a legally binding bilateral pact, known as a Voluntary Partnership Agreement (VPA), with the European Union.
The VPA will help ensure that wood products exported from Cameroon to the EU contain no illegally harvested timber and are derived from managed forests that benefit local communities.
"The slowness of reform is suppressing a whole range of opportunities to reduce poverty and improve livelihoods," said Emmanuel Ze Meka, Executive Director of the International Tropical Timber Organisation (ITTO), co-authors of the report.
"Africa's forest communities already generate millions of jobs and dollars in domestic and regional trade, and in indigenous livelihoods, but current laws keep some of these activities illegal and also undermine opportunities to improve forest management."
Thursday, May 14, 2009
Hunger threat forecast
Urgent action is needed to prevent hundreds of millions more people slipping into hunger as a result of volatile food prices and increasing energy and water scarcity, claims international agency Oxfam.
Decades of underinvestment in agriculture coupled with the increasing threat of climate change mean that despite recent price falls, future food security is not guaranteed, and in fact the situation could get worse. The warning comes in two new reports, A Billion Hungry People and The Feeding of the Nine Billion, published by Oxfam and the UK think tank, Chatham House respectively .
Although global food prices have fallen in the last few months, they are not back to previous levels, and are likely to rise sharply again in the future. Furthermore, price volatility itself is a problem, and more needs to be done to address the underlying structural issues that cause the chronic hunger affecting one in six people in the world today, says Oxfam.
“This should be a wake-up call for all those who believe that the food crisis is over,” said Barbara Stocking, Oxfam Chief Executive. “World leaders have a window of opportunity to prevent a worse situation resulting from the triple crunch of the economic crisis, climate change, and energy and water scarcity. They must act urgently to turn their plans into coordinated action that addresses immediate needs and begins to implement long-term reforms. Failure to act will see millions more people falling into hunger.”
Oxfam said current severe food shortages in Afghanistan, Ethiopia, Kenya, Mozambique and Zimbabwe are evidence that the global food crisis is far from over. Even before recent price rises, there were over 850 million people classified as undernourished. Now, there are nearly a billion, as a result of the price rises, alongside other factors such as political instability and conflict.
The Feeding of the Nine Billion predicts demand for food will increase as the world’s population grows by 2.5 billion to 9.2 billion by 2050. It also notes a UN forecast that climate change will increase the number of undernourished people worldwide by between 40 million and 170 million.
The report includes recommendations for reform of the humanitarian aid system and makes a strident call to poor countries to do their bit by investing more in agriculture, targeting women and small-scale producers. Developing countries must increase social protection measures for vulnerable populations – including cash payments and employment creation schemes for those at risk of hunger. Rich countries must ensure long-term predictable funding to developing countries for investment in agriculture and climate change adaptation.
The food crisis in figures
One in six of the world’s population is hungry, almost a billion people.
Between 50% and 60% of all childhood deaths in the developing world are hunger related.
The death risk is 2.5 times higher for children with only mild malnutrition than it is for children who are adequately nourished.
The proportion of overseas development assistance spent on agriculture has fallen from almost 25% in 1980 to just 3% today.
Poor people are particularly vulnerable to changes in food prices with many spending up to 80% of their income on food.
This should be a wake-up call for all those who believe that the food crisis is over.
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