Some recent items of interest

December 10, 2015


 
Back in June Prospect magazine published an article entitled “The SNP has failed Scotland”. I only just stumbled across it and its worth a read.

The article’s concluding paragraph says this:

“Over the past decade, the SNP has proven itself to be the most successful political party in Europe. It has won seemingly impossible majorities in Holyrood and of Scottish seats at Westminster. Scotland is now a democratic one party state. And from next April, it will be by some measures the most powerful devolved country in the world. Yet if politics is about power then policy is what you do with power. And the SNP has done very little indeed, especially for the poorest Scots it now claims to represent.”


 

The Wolf Street has an article entitled: “Rumors of New Bank Bailouts in Spain”

The article’s starts like this:

“Spain will hold do-or-die general elections on December 20. The Rajoy government hopes that recent improvements in economic performance will be enough to cast its gargantuan political scandals to the back of voters’ minds.

The economy is firing on all cylinders, it claims. To paraphrase Finance Minister Cristobal Montoro, Spain’s economy should serve as a shining example to the world. It is expected to grow by 3% this year, no mean feat in a region plagued by sub-par growth.

However, not everybody’s buying the government’s version of reality: poverty is growing at a startling rate, unemployment continues to hover on the wrong side of the 20% mark, and public debt is almost three times what it was at the beginning of the crisis [read: Six Nagging Facts About Spain’s Recovery].

To make matters worse, the European Commission has just pointed out, albeit as quietly as possible, that despite all the untold billions spent over the last four years trying to save Spain’s rickety financial system, the risk exposure of Spanish banks remains inordinately high. Many banks have been caught engaging in “abusive” mortgage lending practices and could end up having to pay back customers billions of euros.

But not until after the elections!”


 

The Wolf Street (which is a very interesting website) also has an article entitled “China’s Steel Industry Bleeds, Prices Collapse, Losses Mount, and Now the Government Gets Gloomy”

The article begins with this:

“Steel, which goes into nearly everything from skyscrapers to cookware, has become symbolic for what ails China, the world’s largest consumer of it. After years of colossal manufacturing and building booms, soaring demand for steel, and ballooning steel-making capacity, everything has curdled.

The average price of steel in China has collapsed 30.6% so far this year, after having already fallen four years in a row: 7.8% in 2011, 11.6% in 2012, 7.6% in 2013, and 16% in 2014, according to data from Beijing Lange Steel Information Research Center, cited by the People’s Daily, the official newspaper of the Chinese Communist Party.

Despite the crashing price, steelmakers have raised production: 881 million tons in 2011, 951 million tons in 2012, 1.07 billion tons in 2013, and 1.13 billion tons in 2014.

And just then, China’s miracle build-it-and-they-will-come, overstimulated, debt-bloated economy began plowing into a slowdown.“


 

Bloomberg has an article entitled: “Zuma Takes South Africa Economy to Brink as Credit Risks Rise”

South Africa, already mired in corruption, is the latest victim of the collapse in commodity prices triggered by the Chinese slow down (in South Africa’s case its plunging metal prices that are causing the problems). After all those years of hoping and dreaming of an ANC government in South Africa the actual reality now is pretty horrible.

The article has this to say:

“South African President Jacob Zuma took the economy closer to the brink of a junk credit rating after firing his finance minister in a move investors say may undermine fiscal credibility.

Zuma removed Nhlanhla Nene from his post after 19 months without giving any reasons except to say that he would be moved to another key role. His replacement is David van Rooyen, a lawmaker who is little known to South Africans or investors. The shock move came less than a week after credit-rating companies pushed the nation closer to junk status, citing concerns over a sluggish economy and rising debt. Nene’s departure, and uncertainty relating to his successor, raises questions about whether the National Treasury can stick to its spending targets.

“Especially at this point in time, we can ill afford to antagonize international investors,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said by phone from Johannesburg. “An event of this magnitude can even be the catalyst for a credit-rating downgrade to junk status. It could lead to a complete loss of investor confidence in South Africa, which could push us into a recession.”
The rand dropped as much as 5.4 percent against the dollar after Zuma’s announcement, the biggest decline since September 2011, hitting a new record low of 15.3857. Yields on benchmark government bonds due December 2026 soared 65 basis points to 9.46 percent, the highest since the 2008 global financial crisis.”

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