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The NBA Is Rigged

May 27, 2018 by EconMatters   Comments (0)

By EconMatters

It has long been speculated that the NBA assigns certain refs to officiate games to get outcomes they want for either prolonging a series to get more game and advertising revenue or providing refereeing advantage where necessary to make certain more marketable NBA Finals take place which brings in higher ratings, more media coverage, and thus more money. I always say when in doubt, just follow the money trail.

This goes all the way back to the famous Lakers-Kings game 6 refereeing shenanigans where the NBA makes much more money if the large media market and sexy team the Los Angeles lakers advance to the NBA finals versus the small market Sacramento Kings without the likes of Kobe Bryant and Shaquille O'Neal.

Well even the casual NBA fan could see that the fix was on in the NBA last night as the NBA refs completely changed the tenor of the Houston Rockets and Golden State Warriors game last night right as the cash cow marketing machine Golden State Warriors where on the verge of being run out of the building.

The NBA is a often called a “Make or Miss League” because of the fact that if one team misses the level of talent is such that there is an immediate advantage gained by the defensive team that transitions to offense because this sets up a fast break the other direction against a defense that hasn't had time to set up its defense.

Well the lesser known truth is that the NBA has become a “Call Fouls or Don't Call Fouls League” which has the same result because if one team is allowed to foul the other team attacking or driving to the basket, or reach in and foul and cause a turnover, or body slam an opponent to the ground causing a missed shot these all set up fast break opportunities and often 4 on 5 scenarios on the other side of the court leading to easy baskets or wide open three pointers.

It was pretty obvious last night that the Houston Rockets were playing 5 on 8 from the start of the second quarter through the pivotal third quarter. The Houston Rockets made 8 out of 12 three pointers in the first quarter and were well on their way to upsetting the NBA`s Dream Team the Golden State Warriors. The Warriors were desperate they went into desperation mode, their only option at that point was to overplay the three point line, force the rockets to drive to the basket, and foul on every play, hoping that the referees would give them the benefit of the doubt. After All, they are the Dream Team, the favored media darling, the marketing cash cow for the league, there is no way the NBA referees will let them lose this series!

This was the strategy, but the Golden State Warriors didn't really have to hope the referees would oblige, just look at Game 2 of the Pelicans Series in the previous round at Oracle Arena, the fix was on in that game, and the small media market Pelicans Team would have won that game if the NBA Refs didn't step in and determine that game in favor of the Warriors.

So the Warrior players know through experience that they can camp out in the lane with Draymond Green and not get an illegal defense call, knock players to the floor, set illegal moving screens on offense, reach in from behind when they are beat causing turnovers, and hand check and hold on every drive to the basket because they are going to get the “Dream Team Treatment” in the end from the referees. The warriors are actually pretty bad on defense if you call the game legitimately, they have a bunch of offensive players who are slight in build and can't guard a ham sandwich besides the licensed thug that is Draymond Green. They have no hope for stopping drives to the bucket with a 6 foot 7 inch center the only thing standing in front of a made hoop on the defensive end of the floor. Golden State`s only defensive option to stop other teams from driving at will to the basket is to foul on every single drive! Steph Curry and Draymond Green would foul out by halftime if Warrior games were ever officiated correctly. Steph cannot keep anybody in front of him, and reach fouls/hand checks on every single drive and Draymond grabs and holds much taller guys under the basket, and comes in to body slam opposing players as they blow past Steph Curry on every drive. The Golden State Warriors have always been given preferential treatment on the defensive end of the court because of the Branding of the Team and what this means to the NBA coffers from a money perspective. They are very good offensively, and easy for the NBA to Sell to the public, so give them the benefit of the doubt on the defensive end of the court. In other words, for the sake of the NBA let them get away with employing a fouling on every drive strategy on defense, and we will just not make the call the majority of the time. They literally foul on every drive to the basket because they have no legitimate rim protection, and no other legitimate way to stop other teams from relentlessly attacking the basket except for routinely fouling on drives, thus daring the refs to make the call and upset the league office and revenue dollars of the NBA Marketing Machine.

The Golden State Warriors strategy is simple they can`t stop anybody driving legitimately, they have no center to speak of to protect the rim, so their only real option as a defensive strategy is to foul on every play, expect the referees to only call 15% of the actual fouls maybe 20% on a bad day, get away with and benefit from the other 60% where the other team is fouled but not called, and live with the miracle shots the opposing team makes on the other 20% that happen to go in through superhuman effort. All this relies on the Branding Effect that they are the Golden State Warriors, the NBA Dream Team, there is no way the NBA is going to allow the Cash Marketing Cow that is the Dream Team not advance to the NBA Finals - we are entitled to preferential refereeing when necessary! And it sure was necessary last night, good job NBA you pulled out all the stops last night - you were going to make that happen one way or another just like you did to the Sacramento Kings in the 2002 NBA Playoffs!

It was real obvious what was going on last night as the ball would be knocked out of bounds by Golden State in a very obvious manner yet they got the ball back without discussion, they would get two ticky tack fouls on one end of the court, the rockets drive to the basket get knocked to the floor by two players in a no-brainer foul, and play on, and then another ticky tack touch foul on the other end. There were three or four refereeing sequences in that game where it was very apparent the refereeing fix was on in that game, this was more than just good old home court calls, this was a rigged game with a massive agenda to do anything and everything possible to swing the momentum of that game!

Good job NBA you keep losing more credibility by the day, you allow a system where only 3 teams have a legitimate chance to compete for a championship every year, you fix games routinely through rigged officiating, either sending certain refs to various games who will guarantee a given outcome, or just blatant rigged officiating, and you now have the nerve to want in on the gambling money betted on your games - geez no conflict of interest looming there! Not going to watch a Golden State Warriors Finals - I can spot a Rigged Game or System a Mile Away!

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This week in monetary policy: Israel, Kenya, Kyrgyzstan, Indonesia, Mauritius, Canada, Fiji, Bulgaria, Gambia & Dominican Rep.

May 27, 2018 by CentralBankNews   Comments (0)

      This week - May 27 through June 2 - central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Kenya, Kyrgyz Republic, Indonesia, Mauritius, Canada, Fiji, Bulgaria, Gambia and Dominican Republic.
      Indonesia's central bank will hold an additional monthly meeting of its board of governors on Wednesday, May 30, triggering speculation that it will raise interest rates for the second time in less than two weeks to shore up the exchange rate of its rupiah and Indonesian assets. 
      On May 17 Bank Indonesia raised its benchmark BI 7-day reverse repo rate by 25 basis points to 4.50 percent - its first rate hike since November 2014 - but this did little to reverse the fortunes of the rupiah which has weakened in the last month.
      Wednesday's meeting by BI's board will be the first to be chaired by Perry Wariyo who took over from Agus Martowardojo on May 24.
      Wednesday also sees the first meeting of the Bank of Mauritius' new monetary policy committee, which includes three new members.
      On May 15 Mauritius' central bank reconstituted its monetary policy committee and postponed a meeting scheduled for May 18 to May 30 "due to administrative matters."
      The new committee will again be chaired by Yandraduth Googoolye, who took over as governor in December 2017, and includes previous members: Renganaden Padayachy, Mahendra Vikramdass Punchoo, Mustag Mohammad Namdarkhan, Streevarsen Narrainen.
      The new committee members are Sanjeev Sobhee  and Lim Chang Kwong Lam Thuon Mine, both appointed by the prime minister,  along with Ms. Pricilla Pattoo, who is appointed by the finance and economic development minister.
      The Bank of Mauritius has for several years been preparing to implement a new monetary policy framework to improve the responsiveness of market interest rates to changes in the policy rate.
      Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
     The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.
MAY 27 - JUN 2, 2018:
COUNTRY                    DATE                      RATE                 LATEST                     YTD               1 YR AGO       MSCI
ISRAEL 28-May 0.10% 0 0 0.10%          DM
KENYA 28-May 9.50% -50 -50 10.00%          FM
KYRGYZSTAN 28-May 5.00% 0 0 5.00%
INDONESIA *) 30-May 4.50% 25 25 4.75%          EM
MAURITIUS 30-May 3.50% 0 0 4.00%          FM
CANADA 30-May 1.25% 0 0 0.50%          DM
FIJI 31-May 0.50% 0 0 0.50%
BULGARIA 31-May 0.00% 0 0 0.00%          FM
GAMBIA 31-May 15.00% 0 0 20.00%
DOMINICAN REP. 31-May 5.25% 0 0 5.75%

Indonesia to hold unscheduled meeting, rupiah rises

May 26, 2018 by CentralBankNews   Comments (0)

      Indonesia's central bank will hold "an additional" monthly meeting of its governors on May 30, igniting speculation that it will raise its key interest rates for the second time this month.
       Bank Indonesia (BI) said in a brief statement on Friday the additional meeting of its board of governors (RDG) would not replace the regular monthly meeting, which is scheduled for June 28.
       "This additional monthly RDG will discuss current economic and monetary conditions and future prospects," BI said.
       On May 17 BI raised its benchmark BI 7-day reverse repo rate by 25 basis points to 4.50 percent its first rate hike since November 2014, "amid the escalating risks in the global financial market and global liquidity downturn." BI's other key rates, the deposit and lending facility rates, were also raised by 25 points.
       BI added on that day that it was "ready to implement stronger measures to maintain macroeconomic stability" and the governor subsequently said he was prepared to raise rates further.
        Since that board meeting, Perry Wariyo has taken over as governor after Agus Martowardojo's 5-year term expired.
       At the press conference in connection with his inauguration on May 24, Wariyo said his priority in the short term was to stabilize the rupiah through interest rates, adding he intended to be more pre-emptive in monetary settings.
       So far BI's main instruments in curbing the rupiah's decline has been raising interest rates combined with the sales of U.S. dollars and the purchase of government bonds from foreign sellers.
       Last week BI also conducted three foreign exchange swap auctions to ensure enough rupiah liquidity following the rate hike and currency market interventions, up from two the previous week and one each week in April.
       Immediately following last weeks' rate hike, the rupiah continued to slide to hit 14,210 on Thursday to the dollar, down 4.5 percent since the start of the year.
       But news on Friday of the unscheduled board meeting led to a bounce in the rupiah, which rose to 14,037 per dollar late that day, down 3.3 percent this year.
       Indonesia's economy has slowed in the last two quarters, with annual growth in the second quarter of 5.06 percent. In its last statement, BI forecast growth this year of 5.1-5.5 percent and in his press conference Warjiyo forecast growth of 5.2 percent.
       He also forecast inflation near the midpoint of the central bank's target range of 3.5 percent, plus/minus 1 percentage point.
       In April Indonesia's inflation rate was steady from March at 3.4 percent.

The Last Straw of “Shadow” National Debt

May 25, 2018 by EconMatters   Comments (0)

By EconMatters

America is truly a debt nation.  Our national debt is now $21 trillion on course to approach $29 trillion by the end of the next decade with more than $1 trillion in annual deficits according to the Congressional Budget Office (CBO).  Debt held by the public will be driven to nearly 100% of GDP by 2028.    
Consumer debt in America amounts to $14.9 trillion in mortgage debt.  Other types of debt such as credit card, car loans all exceed $1 trillion.  But the more troubling trend comes from the student or education-related loan. 
Boomers Carry More Student Debt than The Millennial  
Our entire nation has over $1.48 trillion in student loans, spreading out among about 44 million borrowers.  However, a recent analysis of American debt revealed boomer borrowers now owe more money in education-related debt, on average, than do millennial college graduates.  According to data from the Fed’s 2016 Survey of Consumer Finances, 65- to 74-year-old borrowers owe an average $35,400, while people under age 35 owe $32,900 on average in student debt. 
A recent study by the Consumer Financial Protection Bureau (CFPB) also finds the number of consumers age 60 and older with outstanding student loan debt hit $2.8 million in 2015, a whopping 400% increase in 10 years from 2005 to 2015.  (FIGURE 1).  
During the same period, CFPB says the share of all student loan borrowers that are age 60 and older increased from 2.7% to 6.4%.  That percentage is still relatively small, but the rate of acceleration is quite alarming.  While some of those older borrowers may have carried their own student debt, the majority took out or cosigned loans to help pay for their kids or grand kids college education.   
A separate report by Nerd Wallet paints a similar picture.  The share of federal student loan borrowers holding a Parent PLUS loan—a federal student loan available to the parents of dependent undergraduate students—roughly quadrupled over the period between the 1989-90 and 2011-2012 school years. 
There is also another compounding factor against older borrowers of the student loan.  Loan experts say parent PLUS loans can carry higher interest rates, and a higher origination fee than other types of financing. 
Default Risk Rising  
Blame it on the spiraling cost of college education tapping out the parents and/or grandparents, the most convenient candidates, to take out these educations loans than they might have been in the past.
The conventional thinking is that typical student debtors are younger, in the 20s and 30s, with increasing earning power in the coming years so debt re-payments should become easier, therefore, the default risk is lower.  The opposite is true for older borrowers. 
One in three or 37% of federal student loan borrowers aged 65 and older are in default, according to a recent GAO report, much higher than the younger age brackets.  Some of them even got their social security benefits garnished to repay a federal student loan.  
I imagine a lot of parents and grandparents probably took out second mortgages or other funding means to finance the education of their young.  The debt and default numbers are most likely far worse than the official books of student loan.    
Solving Problems, the Millennial way
For decades, the millennial has been complaining about how their generation is so special, but instead so sadly strapped down by high student debt, rising rent and housing prices and poor job prospect. 
One way to counter rising rent is to live with their parents or even grandparents.  That maybe a diminishing possibility as parents of grandparents, saddled with additional student loan, could lose their homes.  (The boomer generation also went through high inflation and recessionary periods without this "home with parents" phenomenon.)         
I now realize it seems the way around high student debt is getting their elders to share the debt load with little regard how the debt would affect their older family members. 
Of course, we all have seen the “poor job prospect” could be mitigated by long brainwashing corporations that the only way to save America is to replace older boomers in key managerial positions with inexperienced and barely qualified millennials.  
“Shadow” National Debt, The Last Straw  
The profile of the student debt portfolio has shifted dramatically towards the nation’s seniors on behalf of their next generations.  It is a debt bomb across multi-generations and nobody seems able to pay it back.  Eventually the government will need to come in and do another bailout.  There is already a U.S. corporate debt crisis in the making, and now student debt has escalated close to another debt crisis in the making. 
The $21 trillion nation’s debt is what’s on the books.  President Trump just signed a $1.3 trillion budget earlier this year.  His “tax cut” benefits primarily the corporations to pay less taxes.  The short-fall “deficit” will still come from the taxpayers. 
Student debt and corporate debt are two examples of “shadow” national debts that are off the books  and eventually will fall on regular taxpayers.  These additional debts the government may need to take on by issuing more Treasuries and bonds.  With rising interest rates and interest payments, how long do we think our nation could go on financing debt with even more debt?  The outlook is indeed grim, my fellow Americans.  The quietly off-the-books "shadow" national debt would be the last straw breaking this camel’s back.   

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Angola unifies lending and basic rate, cuts reserve ratio

May 24, 2018 by CentralBankNews   Comments (0)

      Angola's central bank unified its marginal lending facility with its basic interest rate as the BNA rate, which it said would now reflect the effective cost of providing liquidity to commercial banks.
      As part of the change, the National Bank of Angola (BNA) lowered the rate on its marginal lending facility by 200 basis points to 18.00 percent, the existing basic interest rate.
      The BNA also lowered the ratio on mandatory reserves in national currency liabilities by 200 basis points to 19.0 percent while the rate on the liquidity absorption facility was kept at zero percent.
      The adoption of a unified rate is the latest move by the central bank to change its monetary operations following the arrival of Jose Massano as BNA governor in October last year.
       In January the BNA replaced its fixed exchange rate regime with a floating exchange rate regime with bands and began auctions to set a reference rate for the kwanza, which subsequently depreciated.
       Against the U.S. dollar, the kwacha has been dropping steadily since the new exchange rate regime began on Jan. 9, with the kwacha today trading at 234.7 today, down 29.3 percent.
       The BNA said the latest change was aimed at improving the effectiveness of its monetary policy instruments and thus contribute to macroeconomic stabilization and a sound financial system.
       In the future, the central bank's monetary policy committee will now meet bi-monthly, with the next meeting scheduled for July 20.
       Angola's inflation rate declined for the sixth consecutive month in April to 20.22 percent and was sharply down from just over 41 percent in December 2016.
       The monetary base, which became an operational variable of monetary policy in November last year, shrunk by 2.48 percent in April for a year-on-year increase of 10.11 percent, BNA said.
       Credit issued in the national currency grew by 0.88 percent in April from March for an annual increase of around 8.73 percent, the BNA said, while it sold a total of 596.33 million euros for accumulated sales this year of 2.842.13 billion euros.
       Gross International reserves declined to $US17.55 billion in April from $17.70 billion in March, enough to finance 7.31 months of imports.
        Earlier this week the International Monetary Fund (IMF) welcomed the reform program adopted by President Joao Lourenco, which took over from Jose Eduardo dos Santos last September, vowing to root out an endemic culture of corruption. Dos Santos had been in power almost 38 years.
        Lourenco's reform program envisages upfront fiscal consolidation, greater exchange rate flexibility, reducing public debt to 60 percent of Gross Domestic Product, improving the public debt profile, settling domestic payments arrears and enhancing anti-money laundering.
        The rise in crude oil prices is giving Angola an opportunity to address its macroeconomic imbalances after the plunge in oil prices in 2014 was met by fiscal tightening and foreign exchange restrictions. In the run-up to the August 2017 elections, the government then embarked on fiscal expansion and a pegged exchange rate that further eroded fiscal and external buffers.
        The IMF welcomed Angola's transition to greater exchange rate flexibility and the new monetary policy framework that is anchored on base money targeting consistent with an inflation objective.
        But it also stressed the need for the central bank to gradually phase out direct foreign exchange sales and to set a clear strategy and timetable for eliminating foreign exchange restrictions.
        The IMF forecast that Angola's economy would expand 2.2 percent this year, up from an estimated 1.0 percent last year, and 2.5 percent in 2019.
       Inflation is seen declining to an average of 27.8 percent this year from 2017's estimated 31.7 percent and then easing further to 17.1 percent in 2019.


Turkey raises late lending rate 300 bps to curb inflation

May 23, 2018 by CentralBankNews   Comments (0)

      After weeks of speculation and pressure on the lira's exchange rate, Turkey's central bank raised its its late liquidity lending rate by 300 basis points to 16.50 percent and said it would use all available instruments in pursuit of price stability and continue to maintain a tight policy stance until there is a "significant improvement" in the outlook for inflation.
      The Central Bank of the Republic of Turkey (CBRT) said after an extraordinary meeting of its monetary policy committee that elevated levels of inflation and inflation expectations continue to pose a risk and it had "decided to implement a strong monetary tightening to support price stability."
      The rate hikes comes after top government economic officials on Monday met to discuss measures, including moves by the central bank, to address the pressure on the lira and accelerating inflation amid growing investor discomfort with President Tayyip Erdogan's determination to exercise control over monetary policy after June 24 elections and thus erode central bank independence.
       In response to the sharp rate hike, the lira jumped 6.6 percent to 4.56 to the U.S. dollar from a record low of 4.86. However, the lira is still almost 17 percent below its rate at the start of 2018.

      It is the central bank's second hike of its late liquidity lending rate this year and the rate has now been raised by 375 basis points this year and by 650 points since the start of 2017. 

       The previous increase of the rate on the bank's late liquidity window - used by banks to access funds shortly before local markets' close - came on April 25 when the rate was raised by 75 basis points.
      Keeping some of its power dry, the central bank left its benchmark one-week repurchase rate steady at 8.0 percent along with its other policy rates.
      While the repo rate has been kept steady November 2016, the CBRT has been tightening its policy stance by other means, including the late liquidity lending rate, the rate it pays on local lenders' U.S dollar reserves and required reserve ratios, and raising volume of foreign exchange deposits to boost the value of the lira and slow down inflation.
       On April 30 the central bank said it was moving closer to using a single interest rate as a policy rate, something analysts have long hoped for as the current system with multiple rates has made monetary policy less predictable and transparent,.
      Turkey's headline inflation rate rose to 10.85 percent in April from 10.23 percent in March while core inflation rose to 12.2 percent.
       Last month the central bank raised its 2018 inflation forecast to 8.4 percent from 7.9 percent but retained its 2019 forecast of 6.5 percent and its medium-term outlook for inflation of 5 percent.
       The CBRT's monetary policy committee had been scheduled to meet on June 7.

UPDATE-This week in monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine, Pakistan & Colombia

May 23, 2018 by CentralBankNews   Comments (0)

    (Following item is updated with Pakistan's central bank, the State Bank of Pakistan (SBP), which will announce its monetary policy for the next two months on Friday, May 25.)
     This week - May 20 through May 26 - central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine, Pakistan and Colombia.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.
MAY 20 - MAY 26, 2018:
COUNTRY                    DATE                      RATE                 LATEST                     YTD               1 YR AGO       MSCI
GHANA 21-May 17.00% -100 -300 22.50%          FM
HUNGARY 22-May 0.90% 0 0 0.90%          EM
NIGERIA 22-May 14.00% 0 0 14.00%          FM
ARGENTINA 22-May 40.00% 0 1125 26.25%          FM
PARAGUAY 22-May 5.25% 0 0 5.50%
SOUTH KOREA 24-May 1.50% 0 0 1.25%          EM
SOUTH AFRICA 24-May 6.50% -25 -25 7.00%          EM
UKRAINE 24-May 17.00% 0 250 12.50%          FM
PAKISTAN 25-May 6.00% 0 25 5.75%          EM
COLOMBIA 25-May 4.25% -25 -50 6.25%          EM

Ghana cuts rate 100 bps on subdued risks to inflation

May 21, 2018 by CentralBankNews   Comments (0)

      Ghana's central bank lowered its monetary policy rate by a further 100 basis points to 17.0 percent on subdued risks to the inflation outlook and "while global and domestic developments do not yet pose a threat to inflation in the near term, recent changes in global financing conditions and its impact on emerging market asset classes requires some vigilance."
      The Bank of Ghana (BOG) added its was "ready to take the appropriate policy measures to address any potential threats to the disinflation path."
      The BOG has now cut its rate by 300 basis points this year and by 900 basis points since embarking on an easing cycle in November 2016.
      Inflation in the west African nation dropped to 9.6 percent in April, the lowest since December 2012, and within the BOG's target range of 8.0 percent, plus/minus 2 percentage points.
      Underlying inflation pressures have also been contained, with the main core inflation measure, which excludes energy and utility, fell to 10.4 percent in April from 12.6 percent in December.
      Activity in Ghana's economy is supported by firmer prices of exports - oil, gold and cocoa - though BOG's leading indicator suggest a slower pace of growth in the first quarter of this year.
       However, the central bank said it expects a gradual rebound over the medium term, supported by a favorable external environment and policy initiatives to boost growth, the stability of the Cedi's exchange rate, lower interest rates and disinflation.
       "Although private sector credit growth remains below expectations, there are emerging sings of recovery evidence by increased new loan advances and easing credit conditions," BOG said.
       Ghana's economy grew by an annual 8.1 percent in the fourth quarter of last year for 2017 growth of 8.5 percent, the fastest in five years due to higher oil and gas output.
       Higher prices of exports have translated into positive trade and current account balances and Ghana's Gross International Reserves rose to US$8.1 billion as of May 17, up from $6.9 billion on March 20, helped by funds from the recent Eurobond issue that raised US$2 billion, well in excess of the government's initial expectations of raising $750 million.
       Based on the strong external payments position, improved fundamentals and liquidity, BOG said the foreign exchange market had remained strong, with the cedi's effective exchange rate down 0.9 percent over the first four months of the year showing "the cedi remains competitive and broadly aligned with the underlying fundamentals."
    Against the stronger U.S. dollar, the cedi has weakened in the last two months and was trading at 4.6 to the dollar today, down 1.3 percent this year.

      The Bank of Ghana released the following statement:

"1. Ladies and Gentlemen of the press, we welcome you to thismorning’s Press Conference on the 82nd meeting of the Monetary Policy Committee (MPC). The Committee undertook a review of the macroeconomic situation against the background of developments in the global economy, assessment of the pace of economic growth, the execution of the 2018 budget and the outlook for inflation.
2.Global growth is expected to strengthen in the short term supported by positive business and consumer confidence and expectations of stronger profitability. The higher growth will speed up exit from unconventional monetary policies in the advanced countries. Although global financing conditions remain favourable, the strengthening of the US dollar, rising oil prices and US long-term yields are beginning to exert pressures on emerging market currencies and could have implications on frontier economies.
  1. Global inflation increased in the first quarter of 2018, though core inflation remained sluggish. Inflation picked up in major advanced economies and most commodity-importing emerging markets due to higher oil prices and narrowing output gaps. However, inflation eased in key commodity exporting economies as the impact of past currency depreciation waned. Though core inflation in advanced economies was sluggish, indications are that it could pick up gradually, as wage dynamics start reflecting tighter labour markets.
  2. At home, economic activity remains strong as non-oil growth continued to show signs of a rebound following the slowdown in the last few years. We have however observed some moderation in economic activity in the first quarter of 2018 as measured by leading indicators monitored by the Bank. For instance, the Bank’s Composite Index of EconomicActivity (CIEA) recorded a 2.3 percent year-on-year growth in the first quarter of 2018, compared with 4.5 percent over the same period last year. However, the latest business and consumer confidence surveys show continued optimism based on improving macroeconomic fundamentals and realization of expectations, despite lingering concerns on employment opportunities by consumers.
  3. The pace of growth in key monetary aggregates moderated as aggregate demand pressures remained subdued. Annual growth in broad money supply (including foreign currency deposits) slowed to 17.5 percent in April 2018 from 26.6 percent last year.
    6.On fiscal operations, the provisional March 2018 data indicates that budget execution is in line with programme, but early indications from April banking data underscores the need for ramping up revenue mobilization to match the corresponding expenditure flows. Provisional data for the first quarter of 2018 show that revenue and grants amounted to GH¢9.4 billion (3.9% of GDP), representing 86.6 percent of target. Total expenditures amounted to GH¢12.9 billion (5.2% of GDP) and 94.3 percent of the target for the period. These developments resulted in an overall cash deficit of 1.3 percent of GDP, in line with the target for the first quarter of 2018 and same for the corresponding period of 2017.
    7.The total public debt declined from 69.8 percent of GDP (GH¢142.5 billion) at the end of 2017 to 60.0 percent of GDP (GH¢145.0 billion) at the end of February 2018, reflecting a higher GDP base. Of the total, domestic debt was GH¢68.2 billion (47.0% of total debt) and external debt was GH¢76.8 billion (53.0% of total debt).
    8.The favourable external developments from last year continued into the first quarter of 2018. Prices of Ghana’smajor exports have firmed up across board. Crude oil prices have increased by 11.5 percent since the beginning of the year to an average of US$71.7 per barrel in April 2018 due to oil supply constraints amid geopolitical and trade tensions. Similarly, gold prices gained 5.4 percent to US$1,334.9 per fine ounce, supported by rising inflation expectations, pick- up in jewellery demand and general trade tensions. Cocoa prices are also rebounding due to improved grinding data and cut back in cocoa production. Cocoa prices firmed up by 39.8 percent to US$2,664.0 per tonne in April 2018.
    9.These developments translated into positive trade and current account balances. Provisional external trade balance for the first four months of 2018 was a surplus of US$1.1 billion (2.2% of GDP) reflecting higher export receipts, mainly from crude oil. This compares with a surplus of US$1.2 billion (2.5% of GDP) recorded over the same period in 2017.
    10.The current account also recorded a surplus of 0.5 percent of GDP in the first quarter of 2018. However, the capital and financial account recorded a net outflow which more than offset the current account surplus, resulting in an overall balance of payments deficit of 1.2 percent of GDP compared to a deficit of 0.9 percent of GDP in the same period last year.
    11.The Gross International Reserves (GIR) position at the end of March 2018 was a drawdown of US$513.9 million in line with the projected cashflow for the period. However, the recent Eurobond issued has raised the level of international reserves to US$8.1 billion (4.4 months of import cover) as at 17th May, 2018, providing enough cushion against any potential external vulnerabilities.
    12.In line with the strong external payments position, sustained improvement in the macro fundamentals and improved liquidity, the foreign exchange market has remained calm. The cedi appreciated by 0.02 percent against the US dollar in the year to 18th May, 2018 compared to a depreciation of 0.97 percent in the same period of last year. Despite the marginal nominal appreciation of the cedi against the US dollar, the real effective exchange rate (in trade-weighted terms) depreciated by 0.9 percent over the first four months of the year showing that the cedi remains competitive and broadly aligned with the underlying fundamentals.
    13.There is evidence to show that some stabilisation and consolidation especially with respect to inflation and exchange rate expectations are taking hold. The fiscal and monetary policy mix and the corrective measures implemented to put the economy back on track are beginning to yield positive results. Headline inflation has declined steadily from 11.8 percent in December 2017 to 9.6 percent in April 2018, the lowest since 2013 and within the medium-term target band of 8±2 percent.
    14.Underlying inflation pressures have also been contained as reflected in the Bank’s core measures of inflation and inflation expectations. The main core inflation measure, which excludes energy and utility, declined from 12.6 percent in December 2017 to 10.4 percent in April 2018, converging toward the headline inflation. Evidence from the weighted inflation expectations by businesses, consumers and the financial sector also support the above.
    15.Money market interest rates have continued to ease. In April 2018, rates on the 91-day Treasury bill instrument declined to 13.3 percent from 16.5 percent a year ago. Similarly, the 182-day instrument declined to 13.9 percent from 16.8 percent, while the 1-year note also dropped to 15.0 percent from 18.3 percent over the same comparative periods. Also, the weighted average interbank rate, the rate at which commercial banks lend to each other, declined further to 17.5 percent in April 2018 from 23.3 percent a year ago.
    16.Private sector credit extension, though recovering, remains subpar due to on-going balance sheet restructuring by banks and adjustment of the monetary data to exclude the resolved banks. As a result, growth in credit to the private sector was 5.6 percent year-on-year in April 2018 compared with 16.1 percent a year earlier. In real terms, private sector credit contracted by 3.6 percent in April 2018 against 2.6 percent growth in the same period of 2017.
    17.These notwithstanding, the latest credit conditions survey showed an overall net easing in banks’ credit stance on loans to both households and enterprises. This was attributed to the improved macroeconomic environment declining monetary policy rate and anchored expectations. In addition, new advances (loan demand) in the banking sector rose by 27.6 percent year-to-date in April 2018 compared with 1.3 percent growth in the same period last year .
    18.The banking sector remains liquid and solvent with evidence of new capital injection as banks strategize to implement recapitalisation plans in line with the new minimum capital requirement. The total asset base of banks increased to GH¢97.8 billion in April 2018 indicating an annual growth of 15.7 percent compared with the 30.9 percent growth recorded in April 2017. The asset growth was mainly funded by deposits which went up by 15.7 percent on a year-on-year basis. The industry’s averageCapital Adequacy Ratio (CAR) improved to 18.2 percent in April 2018 against 17.4 percent last year, reflecting efforts by banks to recapitalize.
    19.Overall, financial soundness indicators of the banking industry measured in terms of earnings, liquidity, and capital adequacy improved moderately but the quality of loan portfolio remains a concern. The Non-Performing Loans (NPLs) ratio increased to 23.4 percent in April 2018 from 21.6 percent in December 2017. Adjusting for loan loss provision, the NPLs ratio increased to 12.3 percent from 10.1 percent in December 2017. The rise in NPLs reflects the migration of some legacy loans to non-performing category.
    Summary and Outlook
    20.To summarise, global conditions remain generally positive, with continued robust recovery and accommodative monetary policy stance alongside generally subdued core inflation. However, downside risks exist, including faster tightening of global financing conditions, trade protectionism and geopolitical tensions.
    21.Global financing conditions for emerging markets are changing as oil prices rise, the US dollar strengthens and US interest rates rise. These developments can moderate capital inflows and exert pressure on domestic currencies as already seen in some emerging market economies. In Ghana, the strong economic fundamentals including on-going fiscal adjustment, improved current account balances, declining inflation rates and relatively high domestic real interest rates, should combine to preserve competitiveness of our local currency bond market.
    22.The Bank’s leading indicator of economic activity suggests a slower pace of growth in the first quarter of 2018. There are however prospects of a gradual rebound over the medium-term. This is expected to be supported by the favourable external environment and policy initiatives to boost growth. The business environment is generally favourable due to the relative stability of the cedi, reduction in interest rates and the continued disinflation process. Although private sector credit growth remains below expectations, there are emerging signs of recovery evidenced by increased new loan advances and easing credit conditions.
    23.Fiscal operations indicate continued consolidation in the first quarter although revenue concerns remain. There is a need to strengthen revenue mobilisation efforts to help finance government priority programmes and increase the pace of arrears clearance to mitigate the spill over effects on the financial sector.
    24.Both headline and core inflation have broadly trended downwards, indicating easing underlying inflation pressures. Additionally, weighted inflation expectations across the sectors have continued to decline. Headline inflation trended within the medium-term target of 8±2 percent and the forecast points to sustained disinflation over the horizon, barring unanticipated shocks.
    25.Under the circumstances, the Committee noted that the risks to the inflation outlook are subdued in the forecast horizon. While global and domestic developments do not yet pose a threat to inflation in the near term, recent changes in global financing conditions and its impact on emerging market asset classes requires some vigilance.
    26.Consequently, the Committee decided to reduce the monetary policy rate by 100 basis points to 17 percent. The Committee, however, stands ready to take the appropriate policy measures to address any potential threats to the disinflation path."


This week in monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine & Colombia

May 20, 2018 by CentralBankNews   Comments (0)

    This week - May 20 through May 26 - central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine and Colombia.
     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.

     The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.
MAY 20 - MAY 26, 2018:
COUNTRY                    DATE                      RATE                 LATEST                     YTD               1 YR AGO       MSCI
GHANA 21-May 18.00% -200 -200 22.50%          FM
HUNGARY 22-May 0.90% 0 0 0.90%          EM
NIGERIA 22-May 14.00% 0 0 14.00%          FM
ARGENTINA 22-May 40.00% 0 1125 26.25%          FM
PARAGUAY 22-May 5.25% 0 0 5.50%
SOUTH KOREA 24-May 1.50% 0 0 1.25%          EM
SOUTH AFRICA 24-May 6.50% -25 -25 7.00%          EM
UKRAINE 24-May 17.00% 0 250 12.50%          FM
COLOMBIA 25-May 4.25% -25 -50 6.25%          EM

Corporate America vs. Margin Call, the Movie

May 17, 2018 by EconMatters   Comments (0)

By EconMatters

If you have watched the movie Margin Call, you should remember the scene where Stanley Tucci's character gets a knock on door by an HR woman and brought into a conference room in front of the entire floor.  Employees on the floor are all looking on and know exactly what's going on.  In the conference room, Stanley Tucci was coldly laid off by two paper pushers and immediately escorted by security out of the building.    

The movie also depicts how this "incident" has a reverberating effect on all employees.  I have always thought it was a dramatization of a movie script.  I get that laid-off has become a common event in Corporate America surviving in the less than prosperous bigger environment.  But I have always thought for sure American corporations go about it in a more dignified and respectful manner as the sudden job loss is quite traumatic for the employee to process already.  
Nevertheless, a recent event happened to one of my friends has totally changed my view and I am beyond flabbergasted how corporations have stooped so low treating employees.  

My friend has 20+ years of experience in her field with a Master’s degree and all the certifications to impress.  I'm flabbergasted not because of the fact she got laid off, but the way her company handled it.    
The New Order of "Public Lay-off"
She came to work as usual in the morning.  Then a lady she's never seen before and in a "not so inside voice" came over telling her to go to HR and take her belongings.  Mind you, she did not have an office, so essentially half of the floor, at the minimum, heard the exchange. 
This type of "direct" approach my friend experienced usually is "reserved" for employee facing termination due to some criminal or serious breach of ethics conduct.  Needless to say my friend was in a panic not knowing what she had done wrong. 
After she got to the HR office, another HR woman started by saying "I need to inform you that today is your last day of work and I'm here to go over some paperwork with you."  The HR woman went on to say the reporting managers of my friend were out of town not available in person (cowards!).  She then asked "Did you see this (laid-off) coming" and kept asking “Are you ok?"  

I mean what kind of question is that? 
Did You See It Coming?
Her company was acquired by a foreign competitor last year.  After the acquisition, the immediate impact was the laid-off of 1,000 U.S. employees.  There were 3-4 more rounds of laid-off and many employees quit within the past 14 months.  The senior management announced two weeks before that the department is “safe” from more layoffs.  Furthermore, my friend was recently assigned to a high profile project.  

So no, nobody could have seen it coming.    
Are You OK? What Do You Think?
Human Behavior 101:  
People usually are “ok” until someone asks “Are you ok?”.  

The more you ask "Are you ok?" to a person still processing the news of a job loss decided by somebody else, the more you are pushing that person into an emotional "bad place".  And I thought HR is supposed to be proficiently trained to handle this type of situation.     

After a bunch of paperwork and explanations how she needed to sign "The Release", my friend was taken into another conference room to an outplacement service person.  Her ex-employer of course outsources the outplacement service.  So she was forced to face yet another stranger while still sorting things out.

Are You OK? Again!

The outplacement service person also kept asking my friend "Are you ok?" (She and the HR must have gone to the same training class.)  Then the outplacement person went on asking if my friend has anyone at home to share "this" with and that it is best not to share "this" with kids as kids tend to worry more than adults.  My friend does not have kids and I think that person was just reciting a standard script. 

So here was my friend trying to process everything thinking about how to move on, but instead she was forced to dwell in the "job loss room" right there AGAIN.  Then my friend was escorted out the door by the outplacement person.
The Magic of Modern Communication
In Margin Call, Stanley Tucci at least was able to box up at his desk (albeit escorted by a security guard), but my friend was not allowed to go back to her desk.  So she had to think really hard what she had left behind to request her ex-employer to ship them back to her home.  

The next day, while my friend was still recovering, she got a Linkedin message from an ex-coworker who’s moved out of state that she had heard what happened.  From the way the message was worded, it seems none of my friends co-workers knew what happened and probably assumed my friend was terminated for cause.  

In this situation, her quite "public" and abrupt "departure" has also reverberated far and beyond, similar to Margin Call.   
How It Used to Be
The laid-off process I've witnessed usually starts with the employee getting a meeting invite regarding some vague subject, or a straight phone call by his/her manager.  Then when the employee appears in the meeting room, he/she sees the manager and the HR person.  The manager typically breaks the news and leaves before HR takes over.  The outplacement service comes later through email or phone calls outside the corporation after the employee has some time to process.   

One Hick “Fortune 500“  

If you think my friend's ex-employer is some hick mom-and-pop company, you would be wrong.  We are talking about a Fortune 500 company that ironically keeps preaching “Respect” as part of its corporate culture. 
Respect, Decency, Dignity
It is entirely unnecessarily that corporations have to let employees go in such an undignified manner.  It seems corporations are eager to show that employees are just numbers and should be treated as such.  If money is all companies care about, then treating employees (even the outgoing ones) or anybody with respect, decency and dignity does not cost money.  Do you think how this whole thing played out has not traumatized my friend's co-workers affecting productivity and morale?  Or does the company even care?   

I believe this is also a reflection of increasing workers in Corporate America with lower quality of education, training and EQ which is a deep-rooted problem taking decades to materialize. It is part of the reason why America has gradually lost its dominant position as the world leader.     

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