Friday January 26, 2007

Zimbabwe : Not Reality TV

africantears.netfirms.com :

... long before dawn I received a phone call with the news that an elderly man had died. For the family the pain and grief of the loss was almost immediately swamped with the horrific reality attached to dying in Zimbabwe in January 2007. Doctors have been on strike for over a month and hospital mortuaries are overflowing. The body of the deceased had to be moved, immediately. Petrol has increased in price from 2900 zim dollars a litre on Monday to 3400 dollars a litre by Friday. It was going to cost a whole month's pension for the new widow to have her late husbands body moved the few kilometres to the funeral home.

... a wood fuelled cremation could be done but only in Mutare, a town 180 kilometres away. The funeral home wanted 700 000 dollars to transport the body - the same as two and half years of the woman's pension. The quoted cost for the cremation, including the transport, was the same as five years of the widow's pension. A simple burial in a local cemetery in the least expensive coffin now costs 400 000 dollars.

Young and old, professionals and workers - we are all alike in this horrible reality of Zimbabwe - we cannot afford to live or to die here. This is reality in Zimbabwe. Not reality TV, not a game show, just grim, sickening reality. We are a country that needs and deserves the world's attention. Is anyone watching?

- Thus wrote Cathy Buckle, who has been keeping the world updated on the horrific hyper-inflation situation in Zimbabwe. Note that these figures are *after* their government dropped three zeroes from their currency back in Aug 2006. The transport cost of the dead man's body would have been 700 *million* dollars under the previous currency.

I can talk and talk about M3 growth, I can talk and talk about inflation, or I can point you to a real-life example going on right now. So maybe you are thinking, nah, this is just some lousy, poor, starving African country, think again. Zimbabwe used to be referred to as the "bread basket of Africa". Meaning? They used to be a food exporter.

Or perhaps you are thinking, this can't happen to me, I live in a modern country, with an industrialized, well-connected economy. Well, this hyper-inflation thing happened to the French before. It happened to the Germans before. These are not exactly very backward countries, are they. If your leaders are not careful, it could happen to you.

See also :

1. Zimbabwe on brink of financial collapse
2. Peak Oil Crisis : Zimbabwe
3. Zimbabwe money loses three zeros

(2007-01-26 15:20:07 SGT) [Biz] Permalink

M3 is back

nowandfutures.com :

When the Federal Reserve stopped reporting the M3 money supply growth figures, a number of contrarian writers cried foul. The community considers the M3 growth rate as the true rate of inflation, as opposed to the more commonly reported CPI figures, which usually run at 2-3%.

Apparently, some enterprising folks have been able to re-construct M3 using various pieces of publicly available figures that are still available, and they call their figure M3b. They have back-tested their calculations, and the figures seemed to correlate quite well.

The big news is that the M3 growth rate has now gone over 12%. The last time I checked, it was at 10%, and I was telling people that your investment portfolio had to beat 10% in order to beat the true inflation rate. Well. That was then. From now on you have to beat 12%. Per year. Every year. And every time the M3 rate goes up, the goal posts are moved as well.

And with this, given the 10.01% annualized gain last reported, my portfolio is now falling behind M3. Have to try harder next round.

See also :

1. Many Happy Returns

(2007-01-26 13:21:12 SGT) [Biz] Permalink

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