Good morning

The headlines:

  1. In Eurozone news, there is talk that the EU countries are going to consider increasing the bailout limit on its member countries. The European Stability Mechanism has 500 billion euro sitting in it – which makes it the effective cap on total internal bailout funds available. Sadly, the G20 has just turned around and said that it won’t be helping – Germany was hoping to persuade the G20 countries to give more cash to the IMF, thereby boosting the IMF assistance available. Fail. And as I’ve previously pointed out, China and Japan remain firmly committed to assisting once the crisis has been averted. Which is possibly even less helpful that the G20’s straight-out refusal. Link: Europe focuses on increasing firewall.
  2. Warren Buffett released his annual shareholders’ letter yesterday, which included the announcement that his successor has been identified, and is being groomed to take over. Not that Mr WB had any plans of going anywhere – but these things are important for continuity. These shareholder letters are ridiculously famous and eagerly anticipated by the finance world. Here is the link: 2011 Shareholders Letter. I shall have to do a post on the letter’s highlights – because it’s a wealth of financial wisdom. But on the main story, there is now much speculation around who this unnamed successor will be. Link: Berkshire Board selects Buffett Successor.
  3. The BRICS are set to discuss the creation of an multilateral bank funded exclusively by the BRICS nations. The summit will take place at the end of March. It’s strange to see South Africa included in the traditional BRIC framework of Brazil, Russia, India and China – particularly with many more likely candidates floating around: South Africa’s economy is just so small compared to the others. But after a little googling, it turns out that the one needs to distinguish between the political organisation of the BRICS, which is formalised – and the BRIC economic acronym which is an industry reference first made by Goldman Sachs. Goldman refuses to include South Africa in that designation, for the exact reason that I just mentioned. But South Africa applied for, and was granted, membership status of the BRIC political organisation – which resulted in a subsequent name change to BRICS. Link: India’s proposed BRICS bank.
  4. Japan appears to be having some success with its new stimulus measures. Japan has been caught in a deflationary trap for many years. And recently, with speculators searching for a store of value following the debt woes of Europe and the US, a strengthening Yen has made the country’s exports less competitive. However, the Yen has been weakening of late, and the government has been forecasting increased inflation (actually, what I should be saying is that the government has been forecasting inflation, as opposed to deflation, which has generally been the case). Link: BOJ stimulus beating intervention.
  5. Gillard beat Rudd in the Australian prime-ministership vote. Link: Rudd’s defeat.
  6. And the Africa Business news in brief. Link: ABN Briefs. The highlights:
    • Angolan State Oil company Sonangol has pulled out of a $7.5 billion natural gas project in Iran. It says it cannot operate there as a result of international sanctions against Iran. 
    • Chevron has pushed back the expansion of a natural gas processing plant in Nigeria by three years. It’s not really clear why.
    • The Zimbabwe government has rejected part of Impala Platinum’s local ownership plan. If there is no deal for the transfer within 30 days, the Zim government will impose enforcement measures.
    • Malawi’s GDP growth slowed to 6% last year, which was lower than expected, as a result of higher fuel prices and lower revenues from tobacco.
That’s all for now.
Have a great week!