South Africa: Downgrade Likely as on Current Account Balance, Country is Heading South

Johannesburg — A FEW weeks ago, I raised the question of whether SA's credit rating should bynow have been downgraded. However much we hope it won't be, we cannot escape the possibility that the objective conditions will require a downgrade by the ratings agencies some time soon. The market is certainly pointing that way, since bond yield premiums between developing countries as a whole and US treasuries have just totally blown out. Incredibly, this premium almost disappeared a year ago.

The first point to note is that given the current reputation of the rating agencies, theoretically, we shouldn't have to worry that much. Massive companies, Lehman Brothers, Fannie Mae, Freddie Mac, and the municipal bond guarantors Ambac Financial and MBIA all had triple-A ratings, and they are all now parrots.

But for SA, the situation is tougher because our infrastructure spend means borrowing, and foreign borrowing in particular, will have to go up.

Furthermore, the fiscal deficit means the overall borrowing requirement has increased.

Brait economist Colen Garrow has done a peer group comparison of BBB countries, which pans out this way: In general, comparing government debt as percentage of gross domestic product (GDP), SA is in line with the BBB average. But looking forward, it falls below average during the 2008-11 period.

On a current account balance, SA is way behind median BBB and is heading south. On the crucial issue of real GDP growth, SA was dead on median BBB, but will fall below going into the future.

Rating agencies don't like to downgrade, particularly developing countries, because the act itself seems to play an abnormally large role in compounding the problems for the developing countries concerned -- which are also often their clients. But the counter argument is that if you have a temperature, you shouldn't blame the thermometer.

Odd jobs are becoming common for students in current economy

Many college students are looking for a quick way to bring in some extra cash.

Some are crunched for time and take on “chores” or odd jobs to make money, like junior accountancy major Brian Taylor. He once cleaned a church window for a day right before he went away to school.

“There were two of us that cleaned, we each had a window,” Taylor said. “I needed money before I went away to school, so that’s why I did it. They ended up paying us $100 a piece.”

As jobs become scarce, students may have to seek more of these types of jobs to make a quick buck.

“Students want money,” said finance professor Robert Miller. “I haven’t seen much change in the number of odd jobs available, but I have seen a change in part-time jobs. Part-time jobs are more related to the state of the economy over the typical odd job.”

Alex Linko, a junior physical therapy major, once had to put up fencing at his workplace, but had to do it for a separate contractor.

“I was told I was going to work for a contractor, and he was going to pay me cash at the end of the day,” Linko said. “I had to help these guys put up fencing and ended up getting $150.”

Some students get lucky and are at the right place at the right time, like freshman marketing major Michelle Tran. She once drove an elderly woman to an airport.

“I didn’t even know her, she just asked me to drive her to the airport,” Tran said. The older woman gave Tran $100 for helping her.

Madagascan president consults with political leaders over current political crisis

ANTANANARIVO, Feb. 21 (Xinhua) -- Madagascan President Marc Ravalomanana has expressed his willingness to respond positively to the request of political leaders of his country amid the current political crisis facing the country.

Meeting political leaders allied to the ruling I love Madagascar party late on Friday, President Ravalomanana reminded Madagascans to be alert of the attempt to violate the constitution by the opposition.

The president promised to find a political solution to the on-going political crisis prevailing in the country.

"In a democracy, the majority opinion is dominant, but it does not mean the president will not listen to the minority," he said, adding that "the problem facing the island country now is that the minority wants to take over power".

According to Le Quotidien, a French-language daily published on Saturday, Ravalomanana called the meeting to seek opinions from the political leaders on the current political crisis, which began last December.

The president told the meeting that his government has the capacity to address the social and economic challenges facing the country and "We have to find political solutions to ensure that such events do not recur."

The paper quoted the participants as telling the president that they wanted respect for constitutional legality and the return to calm in the capital city and across the country in general.

They urged Ravalomanana to convene a bigger meeting with all political parties in Madagascar to strengthen democracy.

Rakotonirina Manandafy, chairman of Mpitolona ho amin'ny Fanjakan'ny Madinika (MFM) party, stressed the importance of dialogue between President Ravalomanana and opposition leader Andry Rajoelina, who was former mayor of the capital city.

Manandafy reminded Ravalomanana of the event in August 1991, when hundreds of former President Albert Zafy's supporters were killed by the troop guarding the palace of his predecessor Didier Ratsiraka on their way to force the resignation of Ratsiraka.

Manandafy asked the president to bring all political leaders under the Council of Christian Churches and to make some sort of agreement between the parties.

Chairman of the ruling party Randriasandratriniony Yvan, who is also chairman of the Senate, said that the opposition should wait for next elections to take power.

The current political crisis, the worst in years in Madagascar, started in December, when Ravalomanana ordered to close down the radio and television station run by Rajoelina.

Dozens of people have been killed in the riots since then.lets hope the that he finds a solution soon ..

Mixed messages from Washington about a possible government takeover of some big banks sent their shares swooning Friday and pulled down the overall stock market.

"The problem is that the national leadership is having a public discussion about nationalizing the banks," said Jim Paulsen, chief investment strategist of Wells Capital Management. "In essence, they've created a run on bank stocks."


Of particular concern is that financial-service giants struggling with troubled assets could be taken over by the federal government, possibly wiping out the companies' current shareholders. An index of 24 bank stocks fell as much as 10% before rebounding to close down 0.6%.

But stocks of some big banks finished with much larger losses. Citigroup, for example, lost 22%. Wells Fargo dropped 9%, and Bank of America gave up 3.6%.

The Dow Jones industrial average fell 100.28 points, or 1.3%, to 7,365.67, a fresh six-year low. The decline came a day after the blue-chip gauge dropped below the current bear market's previous low-water mark, reached Nov. 20. The Standard & Poor's 500 index lost 1.1% on Friday after briefly nearing its November low.

Reports that Treasury Secretary Timothy F. Geithner would release more details next week about the Obama administration's plan for dealing with the shaky banking system may have helped pull the market off its lows Friday.

A lack of specifics about the bank-rescue plan has depressed banking stocks since it was outlined by Geithner last week. And the situation was muddied further Friday by conflicting statements out of the capital.

Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) told Bloomberg News that some lenders might have to be nationalized for "a short time," while committee member Sen. Charles E. Schumer (D-N.Y.) told HuffingtonPost.com that "failed" banks should be nationalized and their shareholders wiped out.

The White House tried to tamp the talk about nationalization, insisting that its policy is to keep banks in private hands. "This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government," said White House Press Secretary Robert Gibbs.

And House Financial Services Committee Chairman Barney Frank (D-Mass.) called nationalization an option "to be avoided."

"We need a definitive statement," said Paulsen of Wells Capital. "Either do it or say you're not going to do it."

Also hurting stocks Friday were disappointing forecasts from retailers J.C. Penney and Lowe's that provided fresh evidence that the recession continues to deepen.

The Standard & Poor's 500 index dropped 8.89 points to 770.05, while the tech-heavy Nasdaq slipped 1.59 points, or 0.1%, to 1,441.23.

Gold futures jumped above $1,000 an ounce Friday as investors sought shelter in the traditional hedge against economic disaster. The metal spiked as high as $1,004.90 an ounce, surpassing its all-time high of $1,004.30 reached last March, before closing up $25.70 at $1,001.80 an ounce.

Investors also flocked to Treasuries, another perceived haven, pushing down their yields. The benchmark 10-year Treasury note fell to 2.77% from Thursday's close of 2.85%.

"There's still a big fear factor syndrome," Michael Strauss, chief economist and market strategist at Commonfund, told the Associated Press. "There is a focus on what is happening here and now instead of six months to nine months from now."

Even a nine-month time horizon may be too short, said Jack Ablin, chief investment officer of Harris Private Bank. "I told a client today that five years from now, you would be very happy if you bought stocks today," he said. "And 18 months from now, you'd probably make money. But between now and then, it's anybody's guess what will happen."