realist's blog

They have a dream...

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Zimbabwean “Junior Doctors” (in reality about the only medical advisors left in the country) have been on strike now for a week. Yesterday, all nurses at the state owned hospitals joined in (According to the AngolaPress). So what are the doctors demanding? They want a wage increase to 5 million ZWD a month from their current salary of 56 thousand ZWD. Now this sounds like a lot, due to being an 8,928% increase. In fact at the official exchange rate of 250 ZWD per US dollar, it would amount to about $20,000 a month in US dollars, an hourly rate of $250 US dollars since the doctors work (on average) 80 hours a week.

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$1oo,ooo anyone?

My computer is being goofy today, so I can only give a brief run down of points.

1.Zimbabwe plans to splurge "$600 billion" on new luxury SUVs for it's MPs. The thing is that this is quoted at the official pegged rate, while the cars are being purchased in US dollars. Therefore one really needs to use the parallel market to determine the true rate of $1.8 Trillion being spent on these cars. The good news is that the cars come with shipping and handling. The bad news is that they do little to help the Zimbabwean people, 80% of whom are unemployed, and about 50% of whom will be reliant on US food aid in the comming year (and forseeable future). The proposed new $100,000 Bill will help the problem, but the government has no foreign currency to purchase ink and paper, so it is unlikely to be minted anytime soon, and no sample on what it looks like is available (my rendering is attached).Where has all the foreign currency gone? See above.

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Setting the (wrong) international model...

Again from the Sunday News, Zimbabwe. I have no idea why this story sent a chill down my spine, perhaps because it might be true:

Zim set precedence on land reform in Africa

Farming Reporter (Unnamed, likely Leon Mugabe, due to writing style, nephew of Zimbabwean Dictator.)

ZIMBABWE has set a precedence for most African countries on how to economically empower its people through the equitable redistribution of land among its people, analysts have said. (Delta beer must be incredibly intoxicating, as it seems to make every unnamed "expert" say exactly what the Zimbabwean government wants them to.)
This follows a five-day state visit by the Namibian deputy Minister of Land, and Resettlement, Mr Isak Katali, last week to see the success of the resettlement exercise embarked on by the Government.
Mr Isak Katali’s mission was to get first-hand information on the land reform exercise and to see progress made by the new farmers. (Who have been on these properties for over six years and have only been able to feed half the population on a good year.)
He said sanctions or no sanctions Namibia would continue with its land reform aimed at giving back land to the black majority. (Perish the thought, what a stupid idea.)
The Namibian minister visited A1 and A2 resettled farmers in the country to learn how Zimbabwe has tackled the challenges associated with land reform. (This line makes it seem like a lie, coupled with the fact that the day he returned, he proposed strengthening border security to keep starving Zimbabweans out.)
The delegation held a meeting with Ministers of State for National Security, Lands, Land Reform and Resettlement, Cde Didymus Mutasa, Environment and Tourism Cde Francis Nhema and Justice, Legal and Parliamentary Affairs Cde Patrick Chinamasa. Social commentator Mr Augustine Timbe said despite the continued isolation of Zimbabwe by Western countries (Here "West" means North and South America, Asia, Europe, Australia, and any African country with a positive GDP growth rate in the previous year. The notable exceptions are such glowing democracies and economnic giants as Iran, Cuba, North Korea, and a few others who shuffle on their Zimbabwe position) more and more African governments have begun to realise that the land reform programme is the way forward if the masses are to be economically empowered ("Economic Empowerment and an inflation rate of 1,042%, and widespread hunger all appear to be unrelated in these people's minds).
“There is no better way of empowering the people than giving them land (nevermind the tools to use it of course) and it is interesting to note that countries in Africa particularly in southern Africa (read those with negative GDP growth) are beginning to realise it,” he said.
The Namibian minister said, despite getting little assistance from the international community to carry out its land reforms, Namibia has mobilised its own resources to speed up the process and ensure that the re-distribution of land takes off. Namibia, like Zimbabwe, has embarked on a land reform programme under both the willing-seller willing-buyer basis as well as through appropriation as part of efforts to empower the black majority who have been robbed of their heritage by the imperialists (who paid huge sums of money for the land). Mr Timbe said land ownership was one of the key means of production and that is why the colonialists do not want to give it up.
He said Zimbabwe was now being viewed as a role model by other countries that want to embark on the exercise. Mr Katali said Namibia would expropriate land to speed up its land reform programme if the willing-buyer willing-seller system fails to address the land imbalances. Mr Katali said Namibia would follow Zimbabwe’s example to economically empower indigenous people by expediting its land reform programme.
“The purpose of our visit is to come and look and listen to our colleagues in Zimbabwe on how they tackled their successful land reform programme.
“We feel the speed they took the land is commendable and we would like to see how they did it,” Mr Katali said.
He added that land reform was an important aspect that needed to be urgently addressed as most of the land was still in the hands of the minority in his country.
“Land reform is important to Namibia and we feel that the same colonisers are the same people who colonised Zimbabwe. We also feel that, if the people of Zimbabwe did this we can do it in the same manner,” he said.
Another commentator, Prof Heneri Dzinotyiweyi, said there was no doubt that the land redistribution in the country will spur more countries to follow suit.
He said the problems with African countries were that they were afraid of the Western powers but since Zimbabwe has defied that notion, more were bound to do.
“Though we have had our fair share of challenges during the land reform, our African counterparts have more to learn from us so as to avoid making the same mistakes like we did,” he said.
He said it was such an honour for the country to have other countries to see how certain things are done.
“It’s encouraging to note that while other countries are not seeing anything positive in the programme there are others who actually want to emulate us.
“As a country we should ensure that we do not fail and continue working towards an efficient and total utilisation of the land that we have been given,” said Prof Dzinotyiweyi. Mr Katali said the country was facing various challenges and had decided to use the expropriation system together with the willing-buyer willing-seller policy. Namibia embarked on its land reform programme in 2002 but the process of acquiring land and redistributing it to the landless majority has been slow. Namibia has managed to acquire about 829 486 hectares so far, short of the land resettlement target of nine million hectares.
“Since independence, a number of people have been in need of land. We have managed to resettle a significant number and that is why we are trying to go with the willing-buyer willing-seller approach together with the expropriation system,” he said.
He said the Namibian government has already set aside funds to finance the programme. “In Namibia, government sets aside money every year for the purchase of land. If government is expropriating any property it will use its own money to compensate,” he said.
He said the opposition parties in Namibia were supportive of the land redistribution programme.

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Worst of the "Best Stock Market in the world"

From Zimbabwean Sunday Times for May 28, 2006, all comments are in Italics.

 

            Realist Note: This author has been previously described as the “Sunday News Business Correspondent”, a title he has likely recently lost for one reason or another. All
United States Dollar conversions are at the unofficial rate of $300,000 Zimbabwean dollars to one US Dollar. (Most recent confirmed parallel market rate. The reference to Delta (a Zimbabwean beer company) means that again the Sunday News reporter is likely intoxicated, but one almost has to be to write with any degree of respect about the Zimbabwean Stock Exchange.

 

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Eh, you're only off by $3o,ooo today...

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Really, when dealing with reality one rarely has a currency which does not just devalue rapidly, but one that devalues constantly at a fairly constant rate. On average, for the past 150 days, the Zimbabwean dollar has devalued at a rate of $1,000 ZWD per USD on the parallel market. There have only been two recorded deviations from standard, and those canceled eachother out.

Yet this was typically a value estimated by taking the price of a constant good and calculating the real per day change. Much of the work was done by Microsoft Office, who found the devaluation to be a fairly constant linear relationship with an overall R-squared value of around 99%. However data for today is slightly disturbing, hovering around $3oo,ooo ZWD per USD, a value which is supposedly a month away by my calculations, and 3o,ooo higher than the predicted 27o,ooo. This is according to the SABC, a news service in South Africa which typically gives great current data (though their claims that the parallel rates has been remaining constant is economically unsound, see point number 2 below). At present, this could just be an outlier, but it is impossible to know for certain. There are several possible reasons for the jump:

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Developments that Weren't

Well apparently I made a slight mis-statement. The Zimbabwean Stock Market is currently closed until further notice (due to a strike of the stock brokers over "un-realistic tax rates." Also, Mbeki is in London (meeting with Blair for the first time since 2004. They desire the UN to handle the Zimbabwe mess. (likelyhood of good result happening there is nil in my opinion, but the reason is only that Annan is unlikely to take the bold step of ordering the resignation of Mugabe until his current term expires in 2008. There is a problem here in that by 2008 the exchange rate should be over 1.5 million Zimbabwean dollars per USD. (Or more. Statistics Professors turn various colors when I extrapolate out the data, which is a taboo to them. I know that by the end of this year the parallel rate will be close to 5oo,ooo ZWD per USD.) A joke going around Harare is that the Zimbabwean government is paying the company that is printing the money in the newly printed cash. The odd thing about the Stock broker strike is that, if it continues till Friday it will mark the most stable week for the Market since the October 23rd 2005 chaos began. (On that day exchange rates jumped from $2,6004.45 ZWD per USD to $76,024.90) The next day it fell $15,000 but this was the last decline the nation's cash has seen. These days, the exchange rate is either a). $268,ooo (black market available cash rate believed). b). $2oo,ooo (www.zimtransfer.com) or c). $108,ooo (/www./rbz.co.zw NOTE: this link has been intentionally deactivated because of growing instability of government sites.) What has this lead to? Here is an interesting "nonreality" check (www.property.co.zw) take a look at that, and the autos and the computers, then realize that the average salary for the lucky 20% of the population with jobs ranges from 2 million to 10 million a month. (100 million+ for elected officials, which is ridiculous.) The good news is that Reserve Bank Director and Enemy of Diplomatic Freedom (I will try to find the complete list of all individuals given this designation by the US Government, but it changes so often it is difficult to find) has had little luck in making nice-nice with foriegn investors, so might be willing to consider taking an Economics course. (Well one could hope, it isn't as cool as Mugabenomics, as you don't get to build trillion Zim dollar homes, but it helps the people a lot more.) 

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Published for a Purpose

            Today on You Have To Be Kidding Me
Zimbabwe Really Is a Nation?:

 


~Zimbabwean Reserve Bank Head Gideon Gono announced in
Seoul that inflation would peak at around 1,200% for the month of May, and then recede to the single digits by 2008. According to unnamed economists who do not exist, this was met with laughter. The investors clamed that they would only invest in
Zimbabwe if the exchange rate was liberalized, human rights observed, and an audible voice from on high ordered them to. To this Gono admitted that the exchange rate would be “gradually” turned to normal, which will no doubt make his previous statements moot.

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50:50 Window

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Okay, in case you haven't figured it out yet, I blog on what I know, the Zimbabwean Crisis. Today marks a turning point in that this day decides where the month's inflation figure will go. Currently, the April figures are looking hideous at about 1,042%. (People who have to keep records are using a far more believable figure of 2,500%. Zimbabwe lost at Cricket (again).

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