By
Sampson I.M Onwuka
The new political framework of
these Nigerians and the new government which begins May 29th, 2015, may presume
to have in its muscles a daunting task of transforming Nigerian economic
landscape. But this is not the case, the in-coming administration would have
the shovel handed to them, it is really up to the new messiahs to apply the
spade astutely in nursing the economic fiber of the country.
While the theme of financial transformation
in the Nigerian and the wealth of debt in the country from power based
resources and deals will not like fracture, it is a very B category Junk bond
investment interest given what the country will likely to look like in the ten
years.
At least some of the men and women in office
will no longer be active; some of the principal dogma that has so far defined
the economy and the nations may also require additional remediation to cushion
effects of new era Nigeria. The past-present finance and economic minister
Ngozi Okonjo Iweala may be remembered for removing the oil subsidy may be
remembered for other incentive involving the NITEL.
But there are other
legacies such as the Sovereign Wealth and ECA from excess crude profit which
from systems lay down by Soludo and Aganga that Madam Iweala is to be
remembered. Information released by the
board of administration from previous month of March show a formidable new
administrative interest in new Nigerian Sovereign Wealth Fund Investment that
she brought into business and into focus.
According to the statement released
by the Ministry of Finance and Economic Planning,
“The Chair of the Board is Alhaji
Mahey Rasheed, a member of the Board of First Bank.
That, “Mr Uche Orji, Global Coordinator and Head of
US Semiconductor Research and Co-Head of US Tech Sector Research at a prominent
global investment bank, UBS has been appointed as Managing Director/Chief
Executive Officer following his top performance in the contest for the
position. Mr. Orji had also previously served as MD at JP Morgan.
“Other members of the Board
include: Mr. Arnold Ekpe, Mr Jide Zeitlin, Mrs Bili Awosika, Barrister Bisi
Soyebo (SAN), Alhaji Hassan Usman and Mrs. Stella Ojekwe-Onyejeli who will also
serve as Chief Risk Officer.
The report mentioned that, “In all,
730 applications were received for three executive positions - Chief Executive
Officer, Executive Director (Investments) and Executive Director (Risk). 40 of
these were long listed by KPMG which assisted in sourcing suitable candidates,
16 candidates were shortlisted before the final three were selected.”
• Build
a savings base for future generations of Nigerians;
• Enhance
the development of Nigerian infrastructure
• Promote
fiscal stability for the country in times of economic stress; and
• Carry
out such other matters as may be necessary in furtherance of these objectives
“The process that led to the
emergence of the new team kicked off on September 8 last year when the CME set
up a six-man Implementation Task Force headed by distinguished banker and
philanthropist Mr Fola Adeola with a mandate to assist in determining concrete
steps to be taken by the Federal Government to actualize the Nigerian Sovereign
Investment Authority (NSIA).”
“Following the recommendation of
the Task Force, an Executive Nomination Committee (ENC) composed of six
Nigerians with integrity, independence, proven qualification and tested market
experience from the six geo-political zones of the country established. The
Committee had the responsibility to assist with the selection of members of the
Board, a key plank of the governance structure of the institution.”
With the CME as chair, the six ENC
members are:
1. Mrs
Sola David Borha - (CEO, Stanbic IBTC; South West)
2. Lady
Nkoyo Toyo - (Hon. Member, House of Representatives; South South)
3. Mr
Uwa Etigwe, SAN - (Partner, Streamsowers & Kohn; South East)
4. Dr.
Obadiah Mailafia - (Former Deputy Governor, CBN, North Central)
5. Mr
Mahey Rasheed - (Board Member, First Bank; North West)
6. Mr
Hassan Usman - (CEO, Aso Savings & Loans; North East)
“The Task Force also recommends the
appointment of KPMG to assist in sourcing top quality candidates for the three
executive positions on the Board and the implementation of a competitive
recruitment process through local and international advertisement of available
positions. The vacancy adverts were subsequently published in prominent local
and international newspapers and magazines.”
Among the
names parties and interest is Shamudeen Usman and Dr. Mansur Muhtar and Mr.
Segun Agaanga .
According to a recent article by
Charles Soludo ‘
“My thesis is that the Nigerian
economy, if properly managed, should have been growing at an annual rate of
about 12% given the oil boom, and poverty and unemployment should have fallen
dramatically over the last five years. This is topic for another day.
“So far, the Government’s response
to the self-inflicted crisis is, at best, laughable. They blame external shocks
as if we did not expect them and say nothing about the terrible policy choices
they made. The National Assembly had described the 2015 budget as unrealistic.
The fiscal adjustments proposed in the 2015 budget simply play to the gallery
and just to pander to our emotions.
“For a $540 billion economy, the
so-called luxury tax amounts to zero per cent of GDP. If the current trend continues, private
businesses will come under a heavy crunch soon. Having put economics on its
head during the boom time, the Government now proposes to increase taxes during
a prospective downturn and impose austerity measures. Unbelievable!”
To understand the theory of Austerity
from public savings and the role of interest rate in progress based economic,
the two principle monetary based actors; Keynes and…, can be invoked in the
process. Obviously the argument that men like Hyman Minsky makes for investment
with or without government actions, seem to have descended from Adam Smith and
through to John Keynes. In fact, when in recent times that Joseph Stiglitz
argues for re-investment from Asia savings, he was perhaps toeing the lines of
the argument from these authors and actors of investment.
The origins of these
ideas are not totally depended on any of the formal founders of modern day
economics such as Adam Smith. Put it differently, the circumstances surrounding
the application of that process may have been keen in Europe and may have
worked, whereas Adam Smith was popular in US, his formative ideology of the
role of surplus in investment which Marx used for a different interpretation,
explicates on the general theory of his time and his day in the course of the
society’s structural and intellectual evolution.
It is easy to suppose that with
money comes the need to exercise a spending option that even if there are cases
of surpluses, that the saving or the conditional injection of money do not
really preserve value. Savings may be equal to value on the short run, long
run; savings do not yield money saving for investment. Money saved is not
confined to end of a flow given the issue of co-efficient rate, do not really
catch up to inflation if when we explain it from the problems of acceleration
or the earliest and misfit applications of Laffer’s curve to the end of a flow,
which continues into a stock.
Of course Laffer’s curve for taxes can only be
applied to taxes, which a constant not including the quantity, but a fixed variable
and has history given the bias to government bond and rate of investment and
spending, but would not apply at the level of quantity applicable to a running
investment and stock.
Put it differently, Minsky’s
investment options from surplus do not meet my argument or a general trade fair
observation, that investment in terms of a flow seem to a large extent closer
to Friedman than Keynes and Minsky, but it need to be said that Friedman did
not emphasis investment from debt as a way to understand the flow or direction
of inflation or income; each capable of playing the DNA of economics, yet
Friedman measure of the rate of investment from debt is reasonable stock and
flow option, that in realty, the illustration of aggregate demands by Keynes,
did not meet the idea of spending when there is surplus, rather the ‘demand
cave’ as I described in stagflation which is evident in the stagnation from
inflation - hardly the case as I argue
elsewhere - and stagnation from deflationary prices as in the case of Crude oil
in Global Market in 2014 which is the really a symptom of stagflation.
This sort of economic condition
could have been misdiagnosed in the years leading to what we presently have,
saving for emphasis on surpluses and investment, whereas Keynes argued for
de-linking of investment and savings, he never made to the summation or depth
valley of investment from debt.
He must have thought that over-investment is
root of inflation which is notionally correct, and on the underlying fact is
the premise perhaps started with Adam Smith and through to Karl Marx,
maintained in Ricardo, that with Surpluses come a re-investment, ameliorated in
Efficient Market hypothesis of Harry Markowitz and ability to expedite risk in
any society or under compulsive situation when there are material concerns of
excesses.
We consider the role of investment
from surpluses as a normative, we categorize this investment as only applicable
to ordinary level, we consider that somehow the idea of circulating savings
through investment in demand and supply, as only possible and profitable at the
period when there conditions of this reserves. It merits the issue of expansion
and contraction, it does not reach or abide with it, for if we put the theory
of investment as a form of expansion, we would have left aside the main event
of expansion during economic conditions, that the evidence of this expansion is
re-focus the market through propensity, that here, it is only investment from
debt without necessarily torching losses may fully justify the multiplier
effect and the actual meaning of investment from negative-negative truncation.
When we get into the way of debt from investment, the supply solution fits into
the banter of investment from debt only one condition, the case of future rewards.
In a sense, what causes the problem of depression mentioned by both Adam Smith
and Keynes is attributable to high expectations, for here he looks at flow
instead of stock, or stock of value away from flow.
In reversal of role maintained for
champions of Adam Smith such as Thomas Malthus, we prey on this error that the
a piece grafting of the price ceiling under the debt condition of a given
market is not justifiable under the nozzle of Austerity and lack of founding,
that in surpluses, there are material cases that the next best alternative is
savings, may also only appear to appeal from the issue of the levels and limits
of the application.
Combine this estimable of savings in the terms of surpluses
to materiality of production minus labor, we have a matter of price advantage
not competitive advantage, that price advantage in this case is a function of
any market, that re-investment in different market and through a different
stock of real capital is investment from savings.
It matters that this can only
apply to a certain period of profit – perhaps during ordinary levels of
application, second to this level of application is the issue of profit margin
which needs to be maintained without a diminishing effect on labor. But a true
measure of the investment is the future estimate of its possible rewards,
beginning with the applause of a negative balance when for all probably
purposes the flow is come to an end.
Here as I argued elsewhere, the
right form of investment is from debt where the propensity may be reduced to
the suppression of the market or the lack of general equilibrium during
excessive white noise leading or falling short of marginal value per execution
of stock or a given demand and supply, leads us into a question of measure,
that one, the only time that Joseph Stiglitz advice in 1997 to Asia and China
to expedite of their savings may work is when there is necessarily a standing
institution such as United States, that at the absence of a command value
system like the established value system and price function like the US, is
a problem of ensuring a continuity of
profit or returns of investment directly from labor or production based.
In
reality, China expanding through CIC investment routes, need not conform to the
standards of the general market that requires a certiorari of an existing
market, that a point is reached when the total amount on invested interest in
Chinese or elsewhere, do not conform to any standard and the question of
savings becomes a matter of reverting to metals and stable and non-perishable
economic tender other than cash.
Debt and Investing
Minsky “Hicks interpreted Keynes as
allowing for two sets of interdependent markets, one for commodities and the
other for money or finance (bonds). In each set of markets Hicks derived the
interest rate and level of income combination consistent with equilibria. He
identified the problem as asset up by Keynes as the determination of the
simultaneous equilibrium in both sets of markets. Hicks have aggregate output
and interest rates settling at the level that simultaneously satisfies the
equilibrium conditions in the commodity and money sets of market.”
“Hicks therefore t that would treat
the determination of aggregate demand as if it were a supply and demand
problem; he argued that there are combinations of interest rates and incomes
that would equate supply and demand in both commodity and money markets. As in
Hansen, private domestic demand for commodities is made up of two parts; the
demands for consumption, and the demand for investment. Consumption demand was
taken to be a function of income and the interest rate. The use of income as a
variable is a bow towards Keynes, while the use of the interest rate as a
determinative of consumption is a bow to classical views of savings.”
According to Minsky, “Hicks took
investment to be a function of the interest rate and the level of income
(mainly as an afterthought). At this point Hicks made a major step toward
forcing Keynes into the classical model, for he interpreted the relationship
between investment demand and interest rates as reflecting the marginal
productivity of capital.
This identification of the interest rate – with a
production – function attribute meant that Hicks was implicitly assuming that
the economy gravitates to some unique full employment income level. In an
economy in which the level of employed to employable labor varies, the profits
earned by capital assets depends upon the extent to which aggregate demand
leads to scarcity of capital-asset services.’
Wealth and Poverty by George
Gilder, a foreword by Steve Jobs ----who is one of the better journalists in
the world and a personal favorite arguing on the merit of wealth and money in
the opening brief to the George Gilder, stated clearly, that “Gilder understands
the intangibles of capitalism.
Wealth comes from ever expanding pools of
information. The greatest source of wealth-creation is the human mind.
Entrepreneurs don’t need all their money to meet their basic needs. But the
reason they should be able to continue to own the wealth they create is
precisely because they are better Stewards at reinvesting that capital – and
thereby multiplying it at for benefit of us all – than government bureaucrats
are.”
Education and lots of care ‘have
the scopes for free enterprise’ nominated ‘sound money’ and the crying need for
modern society, “Stable money conveys priceless information to entrepreneurs
and consumers. A government that undermines the basic values of money is the
equivalent of a hacker introducing a virus that corrupts information on your
computer.”
Surplus is argument centering on
both investment and savings. For all we care, there is an effective and
economic separation between resource allocations procured during surpluses that
are when there is more enough reason to accede exogenous recovery rate to
endogenous rate of balance. What happens during surpluses is that the national
expectations from year to year balance sheet exceed the balance sheet. There
are generally several reasons why this happens in any economy; perhaps it was
due to the issue of the foreign direct investment, which is argued to have a
short-term bias from long term disadvantage.
It could be the effects of new
policy and economic theory on a pre-existing economy for instance the introduction
of new rate of taxes, or the introduction of new tariff levels in any society.
It could be the same case with the problems of the migration increase – at
least at the onset of the boom economy which has its ingredients. It could be a
result of the presidential years where certain recycling of money and currency,
during perhaps periods of spending including presidential years or as part of
the recovery process of from depression economic when stimulus enters the
market.
Although anti-cyclical economics theorist such
as John Keynes may have given us some insight into means and ways of beating
the cycle economic paradigms leading to healthy economic advantage, his
theories gives hints of some gaps in the system that has not yet manifested –
which can however be averted through problems of return rate for instance
employment on an NAIRU level through to the land of exporting due to increasing
in labor and production but approaching problems high wages shifting from long
term fixed income attached to 10 year notes.
In some sense, we experience as a
consequence of boom economics the problem of inflation and balkanization of
currency, whereas money such as mutual funds may just be indicating a shift
from local economy to foreign markets due to shifts in bond prices away from
U.S Bank stocks, an inflationary pressure reverts to questions of Savings or
what I describe as price corruption given the burn rate between the new levels
of inflation and the rate of return of profits or banks that give you 1-2% on a
every 10-12% interest they charge.
These rate which correlate each
other between the Banks offered money market rate and the rate of returns at
the Federal Reserve or Funds Rate which is also correlative to what the banks
offer CDO accounts. The main issue as it affects our money is that inflation
usually go ahead of Bank estimate, as such price and market volatility do fetch
a balance between return rate and the percentage margins offered by the banks
over a period of time. In short, Banks can only increase forecast from year to
year and at rate of lending from 3-montsh period co-joined with Interbank and
overnight lending.
In sharp detour to the effects of profits or
unexpected bump in the economy it has been the expectation and practice of most
economists since Joseph and the Pharaohs of Africa to defray surplus through
savings for a better day. There is nothing wrong with this theory, it has been
practiced through and through, it leads to infinite speculations about the
exogenous causality, perhaps something is happening with economy which we do
not know, perhaps it has a mere disruption that fades the move for better
years?
What is important is that an economic analysis of this period will also
guarantee that Joseph ideological persuasion is first and fore mostly driven
by accurate fore-cast which even in
economist and market today is quite important, especially in market.
The
indications are very present when from signals in any system dynamic there are
signs for new reality and new cycle that these days of boom or surpluses lead
to days of burst. So when in Egypt and in Africa that the economic bubble
busted and their wall street went belly, most economies of the world were able
to trade with Egypt because from all account their stimulus was pre-set 7 years
from bust.
We can argue that Joseph’s economic
theories regarding surpluses – seemingly logically and provisionally accurate –
is faulty, if not faulty, it is entire restitution to the era when commodities
was the only currency. When we compare livestock and grains and corns from a
period no longer at ease with us, we remove this fear that welcomes the
acceptance that harder days are ahead and hedging may be appropriate.
That for
I, may discourage this idea on the count of flow and stock, that if the treasuries
of Egypt and Nubia were only meant to store nonperishable and end of flow
material such as grains and gold, the alter frozen in its scythe, there are
hardly any problems of defraying cost through cheap production on real time and
perpetual economy.
This idea of an ongoing economy and the continues flow,
allows to deal with the subject through ventricles of the currency, it’s a
product of free market and without government intervention allows you to play
around the fact that you (buyer/seller) can exchange goods with the next of
interest in class of business and interest using a pre-approved plan and tender
called currency. In some required measure, the shift from surpluses to savings
has a future which in Joseph’s case was a period of 7 years guarantee, a form
of investments through savings but tied in retrospect to national economy and
bond.
There is something to vitiate the bond; the
count that the market will reverse and like the forecast presaging a boom, that
there is additional forecast to make the argument about the Nigerian economic
future and why there is need to embrace their sovereign market. This defense
scenario leads into all forms of understanding, one of which is the case of the
defense against the future market well known and can therefore be mitigated by
savings and guarantee of returns absorbing the rate of diffusion.
There is
however the issue of currency bust and balkanization when in all l estimate that
a country is looking to save the economic condition of its future market by
guaranteeing a 10 year bond along the parameters of utility complex and
development of new roads and bridges and they end up creating more jobs and
more credit leading to new growth of the economy – asset allocation –
investment – and permanent money. In this case, the rate may differ when there
is a savings glut, when there is money is saved through treasuries.
Whereas in
Joseph and the Africans there is direct demands for products on hand, which may
not be diminished and the changes of these commodities expanding was totally
diminished by the savings rate and the building of seemingly bigger treasuries.
When there is more money out there in circulation, the economist say you can
raise interest rate, increase additional reserve balance sheet from banks and
above all, create a room for accommodating surplus.
One fine example of this scenario is the
recent issue of European system when there are cases of surplus currency
flowing in from the Crude oil and Arab dollars. European banks were saturated
with dollars that they began to experience a savings glut. Whereas we can push
that a shift from currency to Gold can help to micromanage the boom and
uncertainty with over-valued currency, there is nothing that can explicate the
rate of money base when it is scoring above the rate of interest and rate of
rate.
In this case, a mitigating process
like we say with European will be defraying the future problems of inflation
through investment in US and its real estate. By shifting the inflationary
pressures from Europe into America, you allow companies on both sides to
reposition themselves through the demands of the Reserve system and hope they
privately investment like many Chinese and Asia countries are doing in US
during this period.
This process in US put spank on the
real estate prices which injured the CPI and ended forcing the CPI to act ahead
of the overall market, removing the mark to market status of Commercial Banks
away from Investment threshold. This case did not pamper well and in
explicating, there was a need for US banks attached to local market and rate of
return to perform the frenetic rate of this hot money and shadow banking from
Europe and Asia and the end result was a drastic boom of the US housing market
and then the fall which was expected.
In this case away from the case of
Joseph and the Africans, we can see that lack of foresight or poor planning in
the United States proved dangerous for the health of the housing market when
there is a local rate of return that is behind the curtain on the presence of
foreign companies in US and Foreign Direct Investment, there was inflation
issue which China entering in the market helped to ease away.
From here, we compare carefully that the
attempt of distributing surpluses which is same as risk as we can better explain,
promotes the fractured economic view of that the several markets are required
during any event horizon from surpluses, whereas the advice that the shift is
reasonably acceptable and hedges against the problems of glut from production
or savings from reversals, it will take a different kind of market to absorb
the new money, that it will take an economic view with national agenda – even
with the Chicago School and free markets system – to sustain the rate of growth
through direct investment without abnormally injuring any core areas of the
economy; Core CPI and by direction, the VAR.
We may in this case laminate for
the records that China or prospective democratic economics of the world such as
those emerging from socialism characteristic of the BRIC or from Communist
economies such as those leading new ground in money and world market; China and
Russia to mention, reply extensively on pre-existing pro capitalist economy to
have a chance at survival. Without US and Europe, majority of Asia economies and
politically experiment and economic miracles will more than likely stagnate. It
is not wrong to impose that the frenetic rate of investment from Europe into US
was not from failure to come to grasp the danger in US or the risk from
inflation, that it exists from other principles of economic meaning, that a
buried treasure in US through house investment, more like Joseph’s saving glut
of maize and corn, will reap a harvest that will ensure any future years in
America by Asia and European countries hence a future is saved through a
desperate mitigating of sales force.
We can be sure that the temptation
to shift a surplus earned through savings and through perhaps a central Reserve
System, can distributed even through an efficient market hypothesis, and for a
case such as Joseph and the Africans, these actions were actually taken and
that it involves an end of flow or stock, a commodity and a perishable without
technology. We compare that this scenario is obtuse from European attempt at
deficit balance due primarily from the issue currencies flowing from Asia or
any part of the global macro into Europe leading to savings glut of some
proportions and some issues of saturation. It is common place that in Joseph
and the Africans, we notice that there is a forecast involved - away from any theories of modern financing
there is a process involved in this growth of the African economy and in Egypt,
that it was endogenous growth based on utility complexes transferred
differently or what they call in advanced money situation options, that the
rate of options available in transferring the risk in spending is deferment
based on running tendencies of the necessary new margins from previous economic
cycles – the bump – that the bump harvest is here deferred a form of mitigation
of risk and for term structure with 7-run rate and year to year agility given
the priced mention of maize and corns as the derived year to year to product.
This is the curve, that in terms of
European panoply with surpluses during the rise of crude oil and the forwarding
of fund rate, that the –crude oil prizes gouged upwards given the new grounds
for money initiated and sustained by money and by crude oil sales, that these
new grounds gave new and newer meaning to the monetary reality to defer in other
hedge against the bad weather. We notice that the exogenous growth driven
mainly foreign direct investment was meeting reason for attempting to diffuse
inflation through investment which the local return of rate was comprised by
the rate of influx of foreign currency hence the funk with ECB’s fund rate.
To
cut the fund rate inspired all kinds of reaction from crude oil and as long as
Arab dollars flowed in Europe and America received from both Asia and Europe
all savings funds and investment through third party cushioning it can afford,
there are emphasis on its CPI which the Taylor that Alan Blinder was argued was
principal in Greenspan’s use of moderation and its 4% was misled and ridden
off.
We notice that US unlike Egypt as Europe not unlike the rest of Africa, permission this increase in such a way that the fixed incomes earners with
poor adjustment bureau and tendency, bound to the main street and the mortgage
– its principal target and reason -
ballooned up and ended up in bankruptcies as the lines between the
investment banks and creating money from credit and commercial banks and
creating money from nothing or with future market; banks stock depended and
bond market driven, were crossed and the meaning no longer at ease.
