Comment 16 November 2016
The economist’s dilemma
by Cees Bruggemans words 900
Here is the economist’s dilemma of 1962, 1971 repeated in 2017. Does the US economy have resource slack, warranting a stimulating policy, harvesting mostly an increase in growth and jobs rather than imports and inflation? Or is it already at or near full employment and any belated stimulatory policies will run the US economy hot to the point of overheating, harvesting initially a growth and job burst but ere longer faster inflation, higher imports, rising bond yields and interest rates and an overvalued Dollar?
The Yellen Fed this past year has been cautiously in favour of allowing the US economy to slowly run hot. The gradual pace of recuperation these past seven years has kept inflation exceptionally low, the growth rate modest, and job and income growth slower than hoped for. A function of confidence, low business investment growth and low productivity growth.
Comment 10 November 2016
A new world opening up
by Cees Bruggemans words 980
Forget Candidate Trump. Anything goes to capture the minds and souls of a decisive majority of the American electorate, especially when apparently in its such a foul mood as the present. As you will know by now, having mostly come to dislike the man intensely these past 18 months.
So, for better & worse, for richer & for poorer, in sickness & in health, just accept it & get it over with. Now you have President-elect Trump. Will he surround himself with quality cabinet appointments, and reserve for himself the role of chairman of the board? With what kind of active policies, while what rough stuff will be allowed to fade?
Comment 9 November 2016
by Cees Bruggemans words 550
Things happened in SA yesterday, all ANC focused, but that somehow got drowned out by the surprise unfolding during the night. Trump won through, enough to win decisively. And take the House & Senate with him. That clean sweep is the real message.
It changed the global scenario. Where will this take us?
Comment 8 November 2016
Titanic anger meets order
by Cees Bruggemans words 820
From this afternoon SA time, American voting booths will be opening on the east coast, and by early tomorrow morning America will probably have chosen a new president after a titanic struggle between apparently mostly hated candidates. The choice has been extreme, indeed between anger and establishment, except that both candidates have suffered from the lowest approval ratings in modern times. No mean feat for both sides of the aisle. And yet a choice had to be made.
The outcome will determine how radical or disastrously (or not) America will be governed these next four years, with the future still to divulge the curved balls it will be playing as well. But the anger on show today isn't unique. Other episodes in America’s history were also marked by huge discontent, invariably economic in nature. Three stand out, for me. Two changed reality by electing a President, while the third attempt failed. The Trump campaign will join these earlier outbursts of popular discontent. As to the verdict, another 24 hours, please.
Comment 2 November 2016
Addressing confidence shortfalls
For many years, various time series and events have moved in lockstep. The SARB leading indicator topped out in 2011 after its revival from the 2009 recession plunge, thereafter hesitantly drifting, but with an accelerating slide. The RMB/BER business confidence index, after initially also reviving, got stuck halfway ‘normal recovery’ levels short of 50, from 2010 being in a sidewards drift with a downside bias.
Total vehicle sales peaked in September 2014 at 60780 units, thereafter starting a collapse that steadily accelerated (reaching 48740 last month). Private fixed investment in recent years steadily lost growth momentum, this past year turning negative. GDP growth peaked prematurely in early 2011, having barely recovered from the 2009 recession, thereafter starting a sideways drift with an accelerating downward bias, some of it globally instigated, and also by Mother Nature, but not wholly. There has been an accelerating move among businesses this past decade to increase their presence globally, and for households to invest overseas.
Comment 28 October 2016
Viagra for the Nation
by Cees Bruggemans words 950
When everything was said & done this week, an absence of growth (in GDP, in tax revenue, concerning our rating sustainability) was central to it all. There was a lot of action, opinion, advice, concern about what's to be done. And yet. Nada?
Is all of it at all relevant? Are we on the right path, just a few touches missing, or does it go deeper, aside of the internal ANC cat fights tearing all of us apart?
Comment 26 October 2016
Gordhan’s steel cable
by Cees Bruggemans words 860
For months we have been entertained with poor economic data undermining fiscal prospects. For weeks we have been threatened with a sudden Gordhan dismissal undermining the national interest. In the end, no doubt, we were hanging by a rapidly thinning, raveling thread.
But it turned out to be a steel cable after all as finance minister Gordhan survived to read his medium term budget statement to parliament, laying out how the budget spending (and taxes) will be changed these next few years for minimal erosion loss in the deficit & debt promises to the nation, markets & the rating agencies. And so onwards to the next instalment of this SA soapie…
Comment 25 October 2016
Are we reading this right?
by Cees Bruggemans words 800
Going by news flow and widely expressed sentiment these past few months, at least in some privileged corners, SA should have been junked a long time ago, growth should be recessionary negative, interest rates higher, the Rand a lot weaker, and many universities on their way to being written off. And this alongside the usual gamut of institutional corruption as reported, with the minister of finance about to be chopped (apparently a recurring daily hazard).
But that isn't quite what has happened. Our finance minister’s problems do reach the global news, as does our shaky debt rating, but only when things really get exciting which is sporadic. In between, nada.
Comment 19 October 2016
What was, is & might be
by Cees Bruggemans words 1150
Speaking to young economics students the other day, it struck me how limited knowledge is of our modern origins, but just as dim the outline of our immediate future. As to the present, one tends to take it as it comes, apparently, but do wonder about information sources and any deeper understanding.
This matters, presumably, because we tend to shape our future. And what it is that is taking shape, between society, politics and the economy?
Comment 18 October 2016
Risk keeps receding
by Cees Bruggemans words 1100
However unlikely, perhaps, but risk keeps receding. Trump shortly, Brexit is a British problem. The Fed remains very conservative, slow moving. And our local scenery is tackled one step at a time.
Trump parted ways with Clinton as long ago as late April, according to polls and betting shops. Brexit got that one spectacularly wrong in the British case but somehow the quality of the rising Clinton fortune comes across as believable, despite many naysayers, as much as those darkly hinting at Trump surviving after all as those questioning whether Clinton can make it.