What you may have missed in the business news last week:
The House of Representatives has been rejecting bills and proposing new ones; the Senate has been doing the same. So unless things happen in this afternoon’s session, then tomorrow, the US Government will close its doors.
Well, not completely. But the call centres, the immigration departments, the museums and institutes, the non-core support staff, the national parks, and so on will tell their staff to stay home without pay. Only the essentials will keep going.
And this is ahead of the Debt Ceiling D-Day on October 17th (a thursday)*.*it can be isolated to a Thursday, because the Treasury rolls over debt issues on a Thursday.
To be clear – the United States has been operating at the debt limit since May (when it actually hit the limit). Since then, the Treasury has been taking “extraordinary measures” not to go over that limit – measures like delaying payments to pension funds and using up emergency reserves. But those measures are now near exhausted (you can only delay stuff for so long, as any small business will tell you). Eventually, you’re reduced to that moment where you can only spend the money that you collect in revenue each day.
And if you collect less than you need to spend, you default.
I wrote about it on Friday. The above link is to that post.
We all watched the Westgate shopping centre storming unfold in Nairobi at the beginning of the week. And this week’s Economist issue followed with a cover devoted to the new face of Terror.
I’m not trying to be callous, but after Kenya and the world is done with the human tragedy of this story, we’re going to be left with rippling economic impacts. The terrorism is far from over: in some ways, this was more of an opening sequence. We’ve had the hook, now we’ll get to watch the storyline unfold.
- Kenya is one of the poster-children for African economic growth. It got to be cosmopolitan and innovative with some of the quirky anecdotes that foreign investors love (the Kenya mobile banking success story seems never-ending: like the little African engine that could).
- Kenya also represented relative stability in comparison to, say, Zimbabwe, the DRC and most of West Africa.
- Sure, it had some political issues, like its president being involved in a crimes against humanity case in front of the International Criminal Court (he’s accused of causing post-electoral violence in 2007). But the West has listened to those kinds of stories for years. A little tarnishing maybe, but something that feels more like a little exotic spice on one’s venture capital.
- A terrorist attack by a group called Al Shabab that no reporter could resist associating (even if tenuously) with Al Qaeda is a new story though.
- It’s almost as though the West didn’t realise that most of Africa is muslim? And that the dividing line between the Arab-influenced countries of Central Africa and above, and the sub-Saharan south, is a hive of sectarian violence?
- It all sounds like a recipe for investor panic.
Here’s a map of the Islamic world (because I’m vaguely obsessed with these maps):
Amplats has been hit by strikes again, as the trade unions protest a downsizing of the mines. Amplats, which produces 40% of the world’s platinum supply, is consolidating five of its Rustenburg mines into three. This will result in 3,300 jobs being lost. According to Amplats CEO Chris Griffith, those mines are currently causing losses of around 1 billion rand ($100 million) for every six months of operations – hence the attempt to cost cut.
Which is what happens when you have trade unions striking for astronomical wage increases and getting them.
Trade unions. Bah humbug.
That said, I’m pretty sure that most of those losses are related to lost production, lower platinum prices, and impairment of capital equipment as a result of those first two. I’m just saying that if I were CEO, I would spin that into a more dramatic losses story. But that is entirely, 100%, speculation on my part.
China is apparently going to be farming on 3 million hectares of Ukrainian land (5% of the total country and/or 9% of Ukraine’s arable land) for the next 50 years. In return, Ukraine will get things sold to them at preferential rates, and a $3 billion loan from China’s Import-Export Bank. And a fertilizer plant.
Which doesn’t sound like a great deal to me – when you’re the seller, you’re not usually the one left paying off a loan?
Anyway, a bit of digging led me to this article, which says that the Ukrainian company mentioned as the seller (KSG Agro) denied that it had entered this deal with China’s Xinjiang Production and Construction Corps (the buyer). Regardless of whether the story is true, I think that the article is worth a read. Land-grabbing, being the purchase of large swathes of land from governments, is one of those undercover topics that probably needs more attention.
Example: Egypt bought 800,000 hectares of Ugandan land in 2008 to grow corn and wheat. That’s about 3.4% of Uganda as a whole. Or 12% of Uganda’s arable land.
Blackberry, disappointed by its sales of blackberries, has agreed “in principle” to sell itself to Fairfax Financial, one of their current large shareholders. The offer was for $9 per share.
For the next six weeks (or five from today), Blackberry will be attempting to solicit higher offers, while Fairfax will be trying to raise the financing.