Now that the AMCON Bill is now passed into law, and accented to by the president, we remain interested in seeing how the passed bill will inject liquidly into the capital market. A school of thought believes that unless there is a provision in the bill that requires banks to provide margin loans to investors/traders with enhanced risk management regulations, the market will not have another bull run like the one experienced pre-the NSE market crash; while the otherb school of thought believes that extending margin loans for capital market investment purposes should only be extended to sophisticated investors and professional fund managers who understand the risk involved and are able to cover the exposures made.


This appears to be a legitimate debate to have. But then, there is a need to take on a much larger debate; one largely ignored for far too long.


On May 30th 2010, Proshare started a debate on the economic response of Nigeria to the current challenges. We ran the advertorial below and equally sought commentaries from the public. The outpouring of concerns over the ‘NNPC or Federal Government is broke’ debate provides a further proof about the necessity of this debate.

 



Intelligent discourse must shift away from the pedestrian argument that it was SLS (and his actions) that aggravated our problems to a more informed and superior argument that it is high time we discuss the economy and the direction and approach it should take; a larger and more meaningful debate to have. Should SLS have failed to act, would we not be in a worse off position to hold this debate, knowing we still have a lot of ‘waste to clear out of the barn’?


It is trite knowledge that we should reshape and reframe the discourse to answering such basic questions as:

1. Do we want a big government, where all the needs of the citizens are taken care off in a socialist agenda?

2. Do we seek to or is capable of pushing through the previously practiced form of capitalist agenda that was not pinned to any form of oversight?

3. Do we recognise the need for a gradual devaluation of the Naira as a natural step to take over the next one year, as against an inevitable one fell swoop decision at a latter stage?

4. Do we want to continue the incongruence in funding states to such an extent that it does not inspire self reliance?

5. Are we able to agree on how to develop alternative sources of income to mitigate the ‘illiquid’ positions of our key corporations that equally double as our chief earners?

6. What do we want to do about state pensions and increases in salaries at this time? Can we afford to place a freeze on such wage increases even as government struggles to deal with increasing staffing and the incidence of ghost workers?

7. How do we fund infrastructure in the country – national, state and local government level?

8. How well have we done with the PPP initiative and the BOT schemes we initiated?

9. How much is our true level of collective debt as a nation and how does that sit with our revenue profiles? How do we intend to pay this off without sacrificing growth and development imperatives?

10. The correlation between crime, unemployment and economic development has been made in Nigeria. What is the role of fiscal policies in ensuring that we grow jobs in Nigeria?


The responses so far have proven to be quite an interesting discourse and while compiling the comments so far sent in, we ran across the initiatives by the Economist and Financial Times in their series on the debate over stimulus or austerity.


We reproduce the intelligent debates from FT with the hope that commentators in Nigeria may gain an insight into why and how they should engage in the on-going debate locally.


FT: The great austerity debate
Published: July 18 2010

Over this week some of the world’s leading policymakers and economists will be addressing in the FT the all-consuming contemporary economic debate: austerity versus stimulus. The writers, including Larry Summers, Jean-Claude Trichet and the FT’s Martin Wolf will argue whether cutting now risks suffocating the fragile recovery of the global economy.

This page allows you to see the highlights from each contribution and join the discussion in the comment box at the end of this page. You can also click through to read each piece as a whole and comment on that specific contribution.


Martin Wolf, FT’s chief economic commentator
"The interaction of high indebtedness with deflation could create a cumulative downward spiral. A Japanese-style “lost decade” threatens the developed world. That is particularly likely if everybody starts to tighten together. If anything, further loosening is needed: in the first quarter of 2010, the gross domestic product of every member of the group of seven leading high-income countries was still below its pre-crisis peak.


Readers must make up their own minds on the merits of the arguments this week. My own strong sympathies are with the postponers. But of one thing everybody agrees: this debate matters. We cannot be sure who is right. But we can be sure that if policy-makers get it wrong, the results may well be dire."
>> Read Martin Wolf, Why the battle is joined over tightening


Lawrence Summers, director of President Barack Obama’s National Economic Council
"Economic commentators are mired in an unhelpful dialectic between “jobs” and “deficits” that, despite its apparent simplicity, has obscured rather than clarified the policy choices ahead in the US, Europe and elsewhere.


Critics have complained that President Barack Obama’s continued commitment both to support recovery in the short term and to reduce deficits in the medium and long term constitutes a “mixed message”. In fact, it is the only sensible course in an economy facing the twin challenges of an immediate shortage of demand and a fiscal path in need of correction to become sustainable."
>> Read Lawrence Summers, America’s sensible stance on the recovery


Niall Ferguson, Lawrence A Tisch professor of history at Harvard, and FT contributing editor
"It was said of the Bourbons that they forgot nothing and learned nothing. The same could easily be said of some of today’s latter-day Keynesians. They cannot and never will forget the policy errors made in the US in the 1930s. But they appear to have learned nothing from all that has happened in economic theory since the publication of their bible, John Maynard Keynes’s The General Theory of Employment, Interest and Money, in 1936.


In its caricature form, the debate goes like this. The Keynesians, haunted by the spectre of Herbert Hoover, warn that the US in still teetering on the brink of another Depression. Nothing is more likely to bring this about, they argue, than a premature tightening of fiscal policy. This was the mistake Franklin Roosevelt made after the 1936 election. Instead, we need further fiscal stimulus."
>> Read Niall Ferguson, Today’s Keynesians have learnt nothing


Responses hould be sent to info@proshareng.com