Portuguese protests against austerity

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It is reported that on Saturday, September 15, over one million Portuguese (about 10% of the population, something to think about) participated in protests over government actions that would see social contributions by workers rise by about 63%, and by companies fall by about 28%. A meeting of Portugal’s State Council is scheduled for today in an effort to diffuse what is said to be a potential political crisis. Life in the end isn’t complicated. Take things away from people that they have enjoyed, they become unhappy. Take enough things away from people, they become angry. If enough people become angry enough, look out below.

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The old saying ‘you can’t get blood from a stone’ seems relevant in the context of some countries simply running out of money, and not just Portugal. Watch to see what further develops in Portugal by way of social unrest, if for no reason other than as a proxy on what may happen in other countries where populaces are forced to cut back on their living standards. Topical Reference: Portugal in crisis after 1 million say No to austerity, from EUObserver, Valentina Pop, September 20, 2012 – reading time 2 minutes. Brief Commentaries prompted by world headlines (collective reading time 2 minutes) Asia >> China: Chinese latest factory output numbers down in September – BHP Billiton on China iron ore demand An article Wednesday says that in September China’s output index has dropped to the lowest level in 10 months. You might also want to read a very brief article Wednesday that reported BHP Billiton has said China’s iron ore demand has more than halved. Topical Reference: Chinese Factory Output Falls To Its Lowest Level In 10 Months, from Business Insider, Mamta Badkar, September 19, 2012 – reading time 3 minutes. Also see BHP Billiton Says China Ore Demand Halved, from Iron Investing News – Digg Media, from Bloomberg, September 19, 2012 – reading time 1 minutes. Eurozone >> Greece: Greece announces asset sales An article Wednesday reported that:

• on Tuesday Greece’s Finance Minister said that with Greece’s national income projected to fall 25% by 2014, Greece’s economy was ‘slipping inexorably’ into a 1930’s style depression’; and,
• Greece has announced it will ‘sell anything it can do without’.

The article also mentions asset sales, or attempted sales, by Ireland, Italy, Portugal, and Spain. While such sales are not unexpected, the statement by Greece’s Finance Minister is something to think about. I continue to think that with what seems to be going on in Spain, can Spain be far behind? Topical Reference: Greece Is Embarking On A Firesale, from Business Insider, from the Guardian, Helena Smith, September 19, 2012 – reading time 4 minutes. Brief Country Risk Commentaries prompted by world headlines (collective reading time 2 minutes) Africa >> Zambia: Zambia to publicly declare mining revenues An article yesterday reported that Zambia is the world’s 15^th nation to join the Extractive Industries Transparency Initiative (EITI). The EITI has said Zambia now “has an effective process for annual disclosure and reconciliation of all revenues from its extractive sector, allowing citizens to see how much their country receives from oil, gas and mining companies”. Zambia is said to be Africa’s largest copper producer, estimated to have generated U.S.$500 million from its mining sector in 2009. The article also reports that the:

• current Zambian government, elected in 2011, has “tightened control on mineral exports and doubled mineral royalties to 6%”;
• World Bank both welcomed Zambia’s EITI compliance, and ‘urged’ Zambia to “achieve stronger national consensus on how its mineral wealth can be used to reduce poverty and improve development prospects”.

One can hardly suggest that either Zambia’s new transparency or the World Bank’s suggestion are other than progressive. However, such things likely will impact both the activities and cost structures of mining companies operating in Zambia. That said, it seems to me one needs to consider what impact, going forward, organizations such as the EITI and the World Bank will have on Country Risk issues in the context of mining and oil & gas companies. Topical Reference: Zambia To Declare Mineral Revenues In Push For Transparency, from Fox Business, from Dow Jones Newswires, Nicholas Barlyo, September 20, 2012 – reading time 2 minutes. Important Snippets From Today’s Commentaries Snippet #1: The economic theory is obvious, and I think very worthwhile to understand as an intellectual underpinning. That said, while I try to see things simply, I don’t think that one can always push a number of very complex interactivities into neat and simple packages. Snippet #2: Could it be right to say that Canada’s recent monthly net trade deficits are “of no particular significance”? For sure that could be right if Canada reverts back to a monthly trade surplus, and does not find itself to be a ‘United States’ with a continuously building cumulative net trade deficits. Snippet #3: I plan to hold to my view that country-specific net trade deficits and net cumulative trade deficits (and trade surpluses) indeed are important – and plan to continue to reflect that view in my own investment strategies. Snippet #4: Life in the end isn’t complicated. Take things away from people that they have enjoyed, they become unhappy. Take enough things away from people, they become angry. If enough people become angry enough, look out below. Snippet #5: It seems to me one needs to consider what impact, going forward, organizations such as the EITI and the World Bank will have on Country Risk issues in the context of mining and oil & gas companies.

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