A friend asked me how I felt about what is now happening in South Africa. I expressed my reservations about the new leadership of the ANC. Not only the president but the entire NEC. He reminded of one thing. The ANC rank and file were unhappy with the government’s delivery record - the failure to deal with crime, HIV Aids, the Zimbabwe policy and the failure to make major inroads into the alleviation of poverty.
While the black middle class are living the high life, for many there is not end in sight to poverty and the daily struggle for survival.
The ANC membership had taken the democratic option. Unhappy with government delivery, they removed the leadership and replaced it with an alternative. He pointed out that that is democracy in action.
Unfortunately democracy does not always deliver an ideal solution. The new president of the ANC - Jacob Zuma - faces a long string of charges of corruption, racketeering and fraud. He is actively trying to suppress the evidence that is available to the National Prosecuting Authority. Perhaps that is is only hope for a defence.
Last week, the Black Journalists Forum hosted a lunch at which Jacob Zuma was the guest of honour. Invitations were extended to everyone with press credentials – unless they were white. Speaking on 702 Talk Radio, Mo Shaik - Jacob’s strategy advisor and brother of the more famous Shabir – claimed that Zuma had no prior knowledge of the exclusionary nature of the event. Zuma himself later said that since he had had nothing to do with the organisation of the event, it didn’t really concern him.
No white reporters were allowed to enter, and a number of distinguished black journalists walked out of the forum in protest. They left to the derisive call of “Coconuts”. The preceding evening a vigorous radio call-in debate took place on this issue. Calls included many black people very upset at the turn of events.
In an attempt to regenerate the moral fibre of the country, a 12 point Bill of Responsibilities - endorsed by Thabo Mbeki, is to be taught in all schools as part of the Life Orientation programme. The bill is the brainchild of Chief Rabbi Dr Warren Goldstein. The aim is to instil a sense of morality and responsibility in the youth of the country to accompany the bill of rights.
Education Minister Naledi Pando also unveiled a proposed pledge to be recited daily at all schools.
Monday, 25 February 2008
Sunday, 24 February 2008
A Bill of Reponsibilities for the youth of South Africa
Preamble
I accept the call to responsibility that comes with the many rights and freedoms that I have been privileged to inherit from the sacrifice and suffering of those who came before me. I appreciate that the rights enshrined in the Constitution of the Republic of South Africa are inseparable from my duties and responsibilities to others. Therefore I accept that with every right comes a set of responsibilities.
This Bill outlines the responsibilities that flow from each of the rights enshrined in the Constitution of the Republic of South Africa.
My responsibility in ensuring the right to equality
The right to equality places on me the responsibility to:
* treat every person equally and fairly, and
* not discriminate unfairly against anyone on the basis of race, gender, religion, national-, ethnic- or social origin, disability, culture, language, status or appearance.
South Africa is a diverse nation, and equality does not mean uniformity, or that we are all the same. Our country’s motto: !KE E: /XARRA //KE, meaning “Diverse people unite”, calls on all of us to build a common sense of belonging and national pride, celebrating the very diversity which makes us who we are. It also calls on us to extend our friendship and warmth to all nations and all the peoples of the world in our endeavour to build a better world.
My responsibility in ensuring the right to human dignity
The right to human dignity places on me the responsibility to:
* treat people with reverence, respect and dignity
* be kind, compassionate and sensitive to every human being, including greeting them warmly and speaking to them courteously.
My responsibility in ensuring the right to life
The right to life places on me the responsibility to:
* protect and defend the lives of others
* not endanger the lives of others by carrying dangerous weapons or by acting recklessly or disobeying our rules and laws.
* live a healthy life, by exercising, eating correctly by not smoking, abusing alcohol, or taking drugs, or indulging in irresponsible behaviour that may result in my being infected or infecting others with communicable diseases such as HIV and AIDS.
My responsibility in ensuring the right to family or parental care
This right expects me to:
* honour and respect my parents, and to help them,
* be kind and loyal to my family, to my brothers and sisters, my grandparents and all my relatives.
* recognise that love means long-term commitment, and the responsibility to establish strong and loving families.
My responsibility in ensuring the right to education
The right to education places on me the responsibility to:
* attend school regularly, to learn, and to work hard,
* cooperate respectfully with teachers and fellow learners and
* adhere to the rules and the Code of Conduct of the school. and concurrently places on my parents and caregivers the responsibility to:
* ensure that I attend school and receive their support and places on my teachers the responsibility to:
* promote and reflect the culture of learning and teaching in giving effect to this right.
My responsibility in ensuring the right to work
This right carries with it the responsibility for all learners, parents, caregivers and teachers to:
* work hard and do our best in everything we do.
* recognise that living a good and successful life involves hard work, and that anything worthwhile only comes with effort.
* This right must never be used to expose children to child labour. (proposed alternative: prevent children being exposed to child labour).
My responsibility in ensuring the right to freedom and security of the person
The right is upheld by my taking responsibility for:
* not hurting, bullying, or intimidating others, or allowing others to do so, and
* solving any conflict in a peaceful manner.
My responsibility in ensuring the right to own property
The right to own property places on me the responsibility to:
* respect the property of others,
* take pride in and protect both private and public property, and not to take what belongs to others.
* be honest and fair, and for those who have, to give generously to charity and good causes.
My responsibility in ensuring the right to freedom of religion, belief and opinion
The right to freedom of conscience requires me to:
* allow others to choose and practice the religion of their choice, and to hold their own beliefs and opinions, without fear or prejudice.
* respect the beliefs and opinions of others, and their right to express these, even when we may strongly disagree with these beliefs and opinions. That is what it means to be a free democracy.
My responsibility in ensuring the right to live in a safe environment
This right assumes the responsibility to:
* promote sustainable development, and the conservation and preservation of the natural environment.
* protect animal and plant-life, as well as the responsibility to prevent pollution, to not litter, and to ensure that our homes, schools, streets and other public places are kept neat and tidy.
* In the context of climate change, we are also obliged to ensure we do not waste scarce resources like water and electricity.
My responsibility in ensuring the right to citizenship
The right to citizenship expects that each of us will be good and loyal South African citizens. This means that we are responsible for:
* obeying the laws of our country,
* ensuring that others do so as well, and
* contributing in every possible way to making South Africa a great country.
My responsibility in ensuring the right to freedom of expression
The right to free expression is not unlimited, and does not allow us to:
* express views which advocate hatred, or are based on prejudices with regard to race, ethnicity, gender or religion.
* We must therefore take responsibility to ensure this right is not abused by ourselves or others, to not tell or spread lies, and to ensure others are not insulted or have their feelings hurt.
Conclusion
I accept the call of this Bill of Responsibilities, and commit to taking my rightful place as an active, responsible citizen of South Africa.
By assuming these responsibilities I will contribute to building the kind of society, which will make me proud to be a South African.
The national school pledge
We the youth of South Africa,
recognising the injustices of our past,
honour those who suffered and sacrificed for justice and freedom.
We will respect and protect the dignity of each person,
and stand up for justice.
We sincerely declare that we shall uphold the rights and values of
our constitution
and promise to act in accordance with the duties and
responsibilities
that flow from these rights.
! KE E: / XARRA / / KE
Nkosi Sikelel’ iAfrika.
I accept the call to responsibility that comes with the many rights and freedoms that I have been privileged to inherit from the sacrifice and suffering of those who came before me. I appreciate that the rights enshrined in the Constitution of the Republic of South Africa are inseparable from my duties and responsibilities to others. Therefore I accept that with every right comes a set of responsibilities.
This Bill outlines the responsibilities that flow from each of the rights enshrined in the Constitution of the Republic of South Africa.
My responsibility in ensuring the right to equality
The right to equality places on me the responsibility to:
* treat every person equally and fairly, and
* not discriminate unfairly against anyone on the basis of race, gender, religion, national-, ethnic- or social origin, disability, culture, language, status or appearance.
South Africa is a diverse nation, and equality does not mean uniformity, or that we are all the same. Our country’s motto: !KE E: /XARRA //KE, meaning “Diverse people unite”, calls on all of us to build a common sense of belonging and national pride, celebrating the very diversity which makes us who we are. It also calls on us to extend our friendship and warmth to all nations and all the peoples of the world in our endeavour to build a better world.
My responsibility in ensuring the right to human dignity
The right to human dignity places on me the responsibility to:
* treat people with reverence, respect and dignity
* be kind, compassionate and sensitive to every human being, including greeting them warmly and speaking to them courteously.
My responsibility in ensuring the right to life
The right to life places on me the responsibility to:
* protect and defend the lives of others
* not endanger the lives of others by carrying dangerous weapons or by acting recklessly or disobeying our rules and laws.
* live a healthy life, by exercising, eating correctly by not smoking, abusing alcohol, or taking drugs, or indulging in irresponsible behaviour that may result in my being infected or infecting others with communicable diseases such as HIV and AIDS.
My responsibility in ensuring the right to family or parental care
This right expects me to:
* honour and respect my parents, and to help them,
* be kind and loyal to my family, to my brothers and sisters, my grandparents and all my relatives.
* recognise that love means long-term commitment, and the responsibility to establish strong and loving families.
My responsibility in ensuring the right to education
The right to education places on me the responsibility to:
* attend school regularly, to learn, and to work hard,
* cooperate respectfully with teachers and fellow learners and
* adhere to the rules and the Code of Conduct of the school. and concurrently places on my parents and caregivers the responsibility to:
* ensure that I attend school and receive their support and places on my teachers the responsibility to:
* promote and reflect the culture of learning and teaching in giving effect to this right.
My responsibility in ensuring the right to work
This right carries with it the responsibility for all learners, parents, caregivers and teachers to:
* work hard and do our best in everything we do.
* recognise that living a good and successful life involves hard work, and that anything worthwhile only comes with effort.
* This right must never be used to expose children to child labour. (proposed alternative: prevent children being exposed to child labour).
My responsibility in ensuring the right to freedom and security of the person
The right is upheld by my taking responsibility for:
* not hurting, bullying, or intimidating others, or allowing others to do so, and
* solving any conflict in a peaceful manner.
My responsibility in ensuring the right to own property
The right to own property places on me the responsibility to:
* respect the property of others,
* take pride in and protect both private and public property, and not to take what belongs to others.
* be honest and fair, and for those who have, to give generously to charity and good causes.
My responsibility in ensuring the right to freedom of religion, belief and opinion
The right to freedom of conscience requires me to:
* allow others to choose and practice the religion of their choice, and to hold their own beliefs and opinions, without fear or prejudice.
* respect the beliefs and opinions of others, and their right to express these, even when we may strongly disagree with these beliefs and opinions. That is what it means to be a free democracy.
My responsibility in ensuring the right to live in a safe environment
This right assumes the responsibility to:
* promote sustainable development, and the conservation and preservation of the natural environment.
* protect animal and plant-life, as well as the responsibility to prevent pollution, to not litter, and to ensure that our homes, schools, streets and other public places are kept neat and tidy.
* In the context of climate change, we are also obliged to ensure we do not waste scarce resources like water and electricity.
My responsibility in ensuring the right to citizenship
The right to citizenship expects that each of us will be good and loyal South African citizens. This means that we are responsible for:
* obeying the laws of our country,
* ensuring that others do so as well, and
* contributing in every possible way to making South Africa a great country.
My responsibility in ensuring the right to freedom of expression
The right to free expression is not unlimited, and does not allow us to:
* express views which advocate hatred, or are based on prejudices with regard to race, ethnicity, gender or religion.
* We must therefore take responsibility to ensure this right is not abused by ourselves or others, to not tell or spread lies, and to ensure others are not insulted or have their feelings hurt.
Conclusion
I accept the call of this Bill of Responsibilities, and commit to taking my rightful place as an active, responsible citizen of South Africa.
By assuming these responsibilities I will contribute to building the kind of society, which will make me proud to be a South African.
The national school pledge
We the youth of South Africa,
recognising the injustices of our past,
honour those who suffered and sacrificed for justice and freedom.
We will respect and protect the dignity of each person,
and stand up for justice.
We sincerely declare that we shall uphold the rights and values of
our constitution
and promise to act in accordance with the duties and
responsibilities
that flow from these rights.
! KE E: / XARRA / / KE
Nkosi Sikelel’ iAfrika.
Friday, 22 February 2008
Tuesday, 19 February 2008
Barry M's Images of South Africa
Durban. View from the ocean
Highveld Sunset
Why Not? Character scene in Kensington, Johannesburg
Stormy weather.
Sunday, 17 February 2008
Freedom
Watching the BBC Panorama special - "No More Mandela's" took me back to 1979 - when I returned to South Africa from the UK.
I had become accustomed to UK reporters' tough questioning of politicians (and any-one else for that matter). Fearlessly, hard-hitting questions were fired at anyone from the Prime Minister to the Chancellor, to the US President.
Back in South Africa, I watched in amazement as the SATV interviewer bowed his head while deferentially asking pre-arranged questions of the then prime minister - PW Botha. The questions were specially designed to show us only a positive view of the regime. There was only one view of the world. The view of the Nationalist Party Government.
Life in South Africa in those days was quite shallow. Immersed only in pop-culture, there was no discussion of politics. The government did as it pleased, led the country to economic disaster but was re-elected by the brain-washed minority.
Corruption by high government ministers was also rife then. The problem was that reporting it carried a risk for the newspapers and reporters. The Information scandal was followed by tougher legislation - to prevent such information reaching us again.
Censorship was rife. Everything – books, films, music - were subjected to the draconian arm of the censorship board. I saw an age 21 restricted film in the UK. In South Africa, the film was approved for all ages. However, it had become very difficult to follow.
By some miracle, we managed a peaceful transition. A transition that took us from totalitarianism to democracy and freedom. The new government has made more than its fair share of mistakes. Mistakes that have cost the country dearly. But at least the press are free to report on them. The President of the ruling party can be charged with corruption. The Chief of police can be charged.
There are many that are disenchanted with life in the New South Africa. Crime levels are high. We are facing an electricity crisis. But we are free to criticize, to make our voices heard.
Freedom isn’t just another word for nothing left to lose.
I had become accustomed to UK reporters' tough questioning of politicians (and any-one else for that matter). Fearlessly, hard-hitting questions were fired at anyone from the Prime Minister to the Chancellor, to the US President.
Back in South Africa, I watched in amazement as the SATV interviewer bowed his head while deferentially asking pre-arranged questions of the then prime minister - PW Botha. The questions were specially designed to show us only a positive view of the regime. There was only one view of the world. The view of the Nationalist Party Government.
Life in South Africa in those days was quite shallow. Immersed only in pop-culture, there was no discussion of politics. The government did as it pleased, led the country to economic disaster but was re-elected by the brain-washed minority.
Corruption by high government ministers was also rife then. The problem was that reporting it carried a risk for the newspapers and reporters. The Information scandal was followed by tougher legislation - to prevent such information reaching us again.
Censorship was rife. Everything – books, films, music - were subjected to the draconian arm of the censorship board. I saw an age 21 restricted film in the UK. In South Africa, the film was approved for all ages. However, it had become very difficult to follow.
By some miracle, we managed a peaceful transition. A transition that took us from totalitarianism to democracy and freedom. The new government has made more than its fair share of mistakes. Mistakes that have cost the country dearly. But at least the press are free to report on them. The President of the ruling party can be charged with corruption. The Chief of police can be charged.
There are many that are disenchanted with life in the New South Africa. Crime levels are high. We are facing an electricity crisis. But we are free to criticize, to make our voices heard.
Freedom isn’t just another word for nothing left to lose.
Friday, 15 February 2008
Hezbollah - a global threat
The death of Imad Mughniyah at 11:00 p.m. Tuesday night in Damascus has made headlines around the world. Hezbollah's chief of operations, Mugniyah was believed to have held ultimate responsibility for a huge range of terrorist attacks including the bombings of the US Embassy in Kenya and the 1992 bombing of a Jewish Community Centre in Buenos Aires and dozens of other attacks and kidnappings in Lebanon and elsewhere.
Imad Mughniyah was on the top wanted list of the FBI and was wanted by many other countries. His whereabouts were kept top secret by Hezbollah who afforded him the highest level of security.
Nasrallah has blamed Israel for his death, and has promised an Open War. In the meantime, Syria has arrested a number of Palestinians for their involvement in his death. Mughniyah was apparantly in Syria to meet with Hamas leaders. Could his assassination have been the result of infighting between these two groups?
Hezbollah has managed to get the sympathy of many Western Liberals and the left. Their actions are seen as driven by desperation in their struggle against Israel. What they do not see is that this is no liberation movement.
It is an organisation linked to Al Kaida intent on imposing a new World Order based on their fundamentalist interpretation of Islam. It is an anti-democratic organisation that took control of much of Lebanon despite having only a small support base.
There is no question as to whether Hezbollah will attack. It is a question of when, how and where. It does not matter who was actually behind the assassination. Hezbollah will target Israel and the world's Jewish comunities regardless.
Will Israel and the West be ready?
Imad Mughniyah was on the top wanted list of the FBI and was wanted by many other countries. His whereabouts were kept top secret by Hezbollah who afforded him the highest level of security.
Nasrallah has blamed Israel for his death, and has promised an Open War. In the meantime, Syria has arrested a number of Palestinians for their involvement in his death. Mughniyah was apparantly in Syria to meet with Hamas leaders. Could his assassination have been the result of infighting between these two groups?
Hezbollah has managed to get the sympathy of many Western Liberals and the left. Their actions are seen as driven by desperation in their struggle against Israel. What they do not see is that this is no liberation movement.
It is an organisation linked to Al Kaida intent on imposing a new World Order based on their fundamentalist interpretation of Islam. It is an anti-democratic organisation that took control of much of Lebanon despite having only a small support base.
There is no question as to whether Hezbollah will attack. It is a question of when, how and where. It does not matter who was actually behind the assassination. Hezbollah will target Israel and the world's Jewish comunities regardless.
Will Israel and the West be ready?
Thursday, 14 February 2008
Getting traffic to your blog!
This blog was started in December 2007. It has been quite an adventure! My time has been split between writing and trying to increase blog traffic! Attempting to cause a blog explosion that would provide me with thousands of daily visitors to click on the ads and use my affiliate services!
The Internet is full of blogs and free offers on how to make money from your blog. How to increase traffic to your blog and Internet marketing. Of course all these offers are totally free!
The offers include free ebooks, marketing tools and advertising. Each claims that the other sites are total garbage. Only this one has the true secret! The secret of how to make money from your blog.
I soon discovered that on the Internet "free" has very mixed meanings. Usually it involves spending money – sonetimes quite a lot of money. A down payment of $89.99 and a monthly subscription of only $29.99 – “guaranteed” to bring thousands of new visitors to your site every day!
My quest for traffic also took other routes. Blogosphere is really free. Display your widget and your site is displayed on other member sites. Yahoo offers some facilities to help promote your site. The I discovered Webring. Webring is a website containing hundreds of rings. Copy the widget, add your site to the rings and behold! More traffic.
My most recent attempt has been through Blog Explosion. Similar to the Webring, it is more open and blogs are not limited to small rings. The site works on the principle that you earn credits by browsing through the featured blogs. These credits can then be used to 'pay' for your site's promotion! A wonderful idea. Although I am still awaiting the approval of my blogs on Blog Explosion, I have come across at least one blog that really stands out.
I have also listed on Blog Catalogue and Technocrati. All of these are genuine sites offering a great free service. Not the type of free that you have to pay for. Their widgets are spotted around the blog. Click on them for more information.
So far, the most successful of my attempts to increase traffic was to take up a special offer from Bidvertiser. $20 of free advertising. The money lasted for four days. Yes, it did bring in traffic. It also generated about $5 in advertising revenue. Not a good enough return to actually pay for the adverts!
Of course there are always Key Words. These are very important to get onto the search engines! Google adwords has a free facility to generate key words, and there are many other free offers to get key words on a paid subscription basis.
Traffic to my blog is gradually increasing. I have also started a local blog in South Africa - Breathing Space , and have joined a get paid to blog site - MyDigitalLife.co.za - also local, and they do attract some traffic with little effort!
So generating site traffic is tough! Getting people to return is also tough - and maintains the pressure on to produce regular new material!
The Internet is full of blogs and free offers on how to make money from your blog. How to increase traffic to your blog and Internet marketing. Of course all these offers are totally free!
The offers include free ebooks, marketing tools and advertising. Each claims that the other sites are total garbage. Only this one has the true secret! The secret of how to make money from your blog.
I soon discovered that on the Internet "free" has very mixed meanings. Usually it involves spending money – sonetimes quite a lot of money. A down payment of $89.99 and a monthly subscription of only $29.99 – “guaranteed” to bring thousands of new visitors to your site every day!
My quest for traffic also took other routes. Blogosphere is really free. Display your widget and your site is displayed on other member sites. Yahoo offers some facilities to help promote your site. The I discovered Webring. Webring is a website containing hundreds of rings. Copy the widget, add your site to the rings and behold! More traffic.
My most recent attempt has been through Blog Explosion. Similar to the Webring, it is more open and blogs are not limited to small rings. The site works on the principle that you earn credits by browsing through the featured blogs. These credits can then be used to 'pay' for your site's promotion! A wonderful idea. Although I am still awaiting the approval of my blogs on Blog Explosion, I have come across at least one blog that really stands out.
I have also listed on Blog Catalogue and Technocrati. All of these are genuine sites offering a great free service. Not the type of free that you have to pay for. Their widgets are spotted around the blog. Click on them for more information.
So far, the most successful of my attempts to increase traffic was to take up a special offer from Bidvertiser. $20 of free advertising. The money lasted for four days. Yes, it did bring in traffic. It also generated about $5 in advertising revenue. Not a good enough return to actually pay for the adverts!
Of course there are always Key Words. These are very important to get onto the search engines! Google adwords has a free facility to generate key words, and there are many other free offers to get key words on a paid subscription basis.
Traffic to my blog is gradually increasing. I have also started a local blog in South Africa - Breathing Space , and have joined a get paid to blog site - MyDigitalLife.co.za - also local, and they do attract some traffic with little effort!
So generating site traffic is tough! Getting people to return is also tough - and maintains the pressure on to produce regular new material!
Wednesday, 06 February 2008
Supply-side economics: Do lower taxes increase a country's economic health?
Governments have tried to boost their countries' economies by lowering taxes. Tax represents a drain on the resources available for investment and entrepreneurship. Lower tax means more money in people's pockets. More money to circulate. More money available for goods and services. More money available for investment. The incentives to make money are also higher - you get to keep most of what you make! Lower business taxes in particular mean more money to invest in business.
The other side of the coin is that lower taxes mean less revenue for the government. Of course, government spending can also be used to boost economic activity, but the general consensus is that free enterprise is the healthier route. Government is a major spender. If there is insufficient money to fund government expenditure, then the government has two choices. It must cut spending or allow for a greater budget deficit.
Cutting government spending is generally considered to be the healthier route. Government spending is notoriously wasteful. Inflated departments that are not productive contribute little to the economy. While it is true that a government can spend its way out of recession, money in the private sector is much more likely to be used in a more productive capacity.
Government departments are there to maintain government services - services such as education, defence, justice and police. The departments create procedures that become a burden to the actual service providers, but create many government jobs. Spending cuts should be applied to these departments to achieve a less wasteful environment. Economies and efficiencies can be achieved by cutting back on administrative waste. For education, leave the funds for the schools, but cut departmental excesses. Reduce the administration effort required.
Funding tax cuts by increasing the budget deficit presents a number of problems. It means that government is spending money that it does not have. It also means that the country itself will be in debt. It is similar to a household. A certain level of debt is not a problem, especially where that debt is being used to finance capital assets. However, funding consumption with debt is destructive. Most government spending is consumption based.
The next part of the equation relates to how the lower taxes are distributed. If the majority of the tax cuts are for the benefit of the rich and the super rich, the benefit to the economy is likely to be moderate. Much of the tax relief will simply be added to accumulated wealth rather than put into productive use.
Extra money in the hands of the middle and working class is more likely to be put back into the economy. Growth is largely funded by spending.
Of course tax cuts in the hands of business can produce good results. Business could use the additional capital to fund additional investment, research and development and in reducing debt. However, some companies would simply use the additional funds increase the distribution of profits. Perhaps the cuts should be passed on to business as investment incentives.
So tax cuts can be healthy for economic activity.
In conclusion there are three parts to this equation. The amount of money being put back into the economy; funding of these cuts - spending cuts or deficit; finally the distribution of the funds - to assist the wealthy to accumulate more or to be placed into hands that will spend them.
The other side of the coin is that lower taxes mean less revenue for the government. Of course, government spending can also be used to boost economic activity, but the general consensus is that free enterprise is the healthier route. Government is a major spender. If there is insufficient money to fund government expenditure, then the government has two choices. It must cut spending or allow for a greater budget deficit.
Cutting government spending is generally considered to be the healthier route. Government spending is notoriously wasteful. Inflated departments that are not productive contribute little to the economy. While it is true that a government can spend its way out of recession, money in the private sector is much more likely to be used in a more productive capacity.
Government departments are there to maintain government services - services such as education, defence, justice and police. The departments create procedures that become a burden to the actual service providers, but create many government jobs. Spending cuts should be applied to these departments to achieve a less wasteful environment. Economies and efficiencies can be achieved by cutting back on administrative waste. For education, leave the funds for the schools, but cut departmental excesses. Reduce the administration effort required.
Funding tax cuts by increasing the budget deficit presents a number of problems. It means that government is spending money that it does not have. It also means that the country itself will be in debt. It is similar to a household. A certain level of debt is not a problem, especially where that debt is being used to finance capital assets. However, funding consumption with debt is destructive. Most government spending is consumption based.
The next part of the equation relates to how the lower taxes are distributed. If the majority of the tax cuts are for the benefit of the rich and the super rich, the benefit to the economy is likely to be moderate. Much of the tax relief will simply be added to accumulated wealth rather than put into productive use.
Extra money in the hands of the middle and working class is more likely to be put back into the economy. Growth is largely funded by spending.
Of course tax cuts in the hands of business can produce good results. Business could use the additional capital to fund additional investment, research and development and in reducing debt. However, some companies would simply use the additional funds increase the distribution of profits. Perhaps the cuts should be passed on to business as investment incentives.
So tax cuts can be healthy for economic activity.
In conclusion there are three parts to this equation. The amount of money being put back into the economy; funding of these cuts - spending cuts or deficit; finally the distribution of the funds - to assist the wealthy to accumulate more or to be placed into hands that will spend them.
Saturday, 02 February 2008
Subprime mortgage lending crisis would you buy bank shares?
The subprime mortgage crisis has brought the United States very close to recession. It was the banks that were the subprime mortgage lenders. In search of a quick buck, the banks sought out clients that would render subprime mortgage rates which were much higher than the prevailing rates.
Would you invest in a bank that poured millions of dollars into worthless investments in pursuit of quick profits? What kind of investment expert buys anything let alone major capital investment without even looking at the underlying value of the investment?
The subprime crisis is simply a result of large investors - including many big names in investment banking - putting money (not theirs, of course) into so-called investments with no inherent value. The promised returns were huge. The money came from here, there and everywhere including pension funds.
Subprime mortgage loans were offered to clients at the sub economic end of the property market. Because these clients were from the lower end of the economic spectrum, the banks were able to charge high rates of interest on these loans. This meant that for the banks the return was high. This high return was a long-term return, seemingly sustainable for years to come.
Huge returns with the only major expense being the mortgage broker's commission. Of course there was never any question of valuing the properties concerned. That would have added costs and slowed down the process. Greed was too great to be able to wait.
When there are no controls and money is advanced on an ad-hoc basis, anything is possible. From the start the amounts advanced far exceeded the inherent property values. With a decline in property values, some bright spark decided to look into the actual value of this highly lucrative investment. The actual value of the investments was minimal, sparking the start of the crisis.
Many people can be taken-in by the promise of huge investment returns. Investment scammers know this and prey on people's greed with promises of huge returns for a small investment.
But the scale of this crisis is mind-boggling! More worrying is the fact that investment into this market came not from the gullible man-in-the-street but from the major investment banks of the world - the investment bankers, the investment experts, people that should have known what they were doing.
Hardly a bank worldwide remains untarnished! The scale of this collective stupidity was enough to put us on the brink of a global recession. Governments have been called upon to bail-out those involved, to give them another chance to invest in another scheme. Taxpayers are now paying the price.
With this knowledge of what happened and why, can you still trust the banks? Would you buy shares in one of these banks? Would you be able to trust their judgement again?
I am not in the market to buy bank shares. If the banks en-masse were able to indulge in such collective stupidity, it casts a serious doubt on their ability to invest in the future. It casts a shadow over the entire financial services industry. Banks have been revealed as greedy and stupid, seeking out easy money and high returns without even valuing the investment.
No, I would not buy bank shares in the light of the subprime crisis.
Would you invest in a bank that poured millions of dollars into worthless investments in pursuit of quick profits? What kind of investment expert buys anything let alone major capital investment without even looking at the underlying value of the investment?
The subprime crisis is simply a result of large investors - including many big names in investment banking - putting money (not theirs, of course) into so-called investments with no inherent value. The promised returns were huge. The money came from here, there and everywhere including pension funds.
Subprime mortgage loans were offered to clients at the sub economic end of the property market. Because these clients were from the lower end of the economic spectrum, the banks were able to charge high rates of interest on these loans. This meant that for the banks the return was high. This high return was a long-term return, seemingly sustainable for years to come.
Huge returns with the only major expense being the mortgage broker's commission. Of course there was never any question of valuing the properties concerned. That would have added costs and slowed down the process. Greed was too great to be able to wait.
When there are no controls and money is advanced on an ad-hoc basis, anything is possible. From the start the amounts advanced far exceeded the inherent property values. With a decline in property values, some bright spark decided to look into the actual value of this highly lucrative investment. The actual value of the investments was minimal, sparking the start of the crisis.
Many people can be taken-in by the promise of huge investment returns. Investment scammers know this and prey on people's greed with promises of huge returns for a small investment.
But the scale of this crisis is mind-boggling! More worrying is the fact that investment into this market came not from the gullible man-in-the-street but from the major investment banks of the world - the investment bankers, the investment experts, people that should have known what they were doing.
Hardly a bank worldwide remains untarnished! The scale of this collective stupidity was enough to put us on the brink of a global recession. Governments have been called upon to bail-out those involved, to give them another chance to invest in another scheme. Taxpayers are now paying the price.
With this knowledge of what happened and why, can you still trust the banks? Would you buy shares in one of these banks? Would you be able to trust their judgement again?
I am not in the market to buy bank shares. If the banks en-masse were able to indulge in such collective stupidity, it casts a serious doubt on their ability to invest in the future. It casts a shadow over the entire financial services industry. Banks have been revealed as greedy and stupid, seeking out easy money and high returns without even valuing the investment.
No, I would not buy bank shares in the light of the subprime crisis.
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