Record deficit for next president

BBC NEWS

28/07/08

The next US president is expected to face a record federal

budget deficit of almost half a trillion dollars.

The White House has lifted its deficit forecast for 2009 to $482bn (£242bn) up from $407bn.

The budget deficit measures how much more the government is spending than it is raising through taxes.

The slowing economy is reducing the tax take and the government has launched a stimulus plan by making payments to 130 million households to boost spending.

The forecast figure excludes about $80bn of war costs.

The budget deficit is measured from the beginning of October to the end of September.

It is possible that the deficit for 2008 will also break the record of $413bn, which was set in 2004.

A $482bn deficit would represent about 3% of the total output of the US economy, which is well below some of the deficits seen in the 1980s and 1990s in percentage terms.

Nonetheless, whoever turns out to be the next US president may be reluctant to enact any further tax cuts or increases in spending that would raise the deficit.

The deficit figure also is flattered by including the surpluses that are currently being accumulated by the social security trust fund, but that will soon turn into deficits in the next decade.

And it takes no account of the potential costs of a full-scale Federal bail-out of the mortgage giants Fannie Mae and Freddie Mac, who have been given a Federal guarantee in the housing bill that has just passed Congress.

Eritrea “must stop its interference” in Somali affairs…..

DJIBOUTI CITY, Djibouti

July 27/2008/ (Garowe Online)

Somalia’s opposition leader, Sheikh Sharif Sheikh Ahmed, has called for the withdrawal of Ethiopian troops and the ’speedy deployment’ of United Nations peacekeepers to the Horn of Africa country plagued by nearly 18 years of war.

Sheikh Sharif, chairman of the Alliance for the Re-liberation of Somalia (ARS), spoke Sunday in Djibouti City at the conclusion of the group’s Central Committee meeting, which opened nine days ago.

“The reasons we have accepted peace include the Somalis living under a tree for one year and seven months, the [Somali] youth dying in the high seas and the insecurity at home,” Sheikh Sharif said during a long speech to the ARS Central Committee.

He called on Somalis to “stop the bloodletting of other Somalis,” while urging the Ethiopian government to withdraw its forces from Somalia and appealing to UN member states to ’speedily deploy’ peacekeepers to replace the Ethiopian army.

The Djibouti Agreement – signed between the Somali government and the ARS – called for Ethiopian troops to leave Somalia after a ’sufficient’ number of UN forces are deployed.

But a faction of the ARS, led by Islamist hardliner Sheikh Hassan Dahir Aweys and based in Eritrea, has rejected the Djibouti Agreement and vowed to continue the anti-Ethiopia insurgency, which is now in its 19th consecutive month.

Sheikh Sharif said it is “unfortunate” that some ARS members have rejected the peace agreement, saying: “I appeal to my brothers [in Eritrea] to join their people and to accept peace.”

The Somali opposition leader, who accused the Eritrean government of opposing peace in Somalia, said Eritrea “must stop its interference” in Somali affairs.

Eritrea-based Sheikh Aweys has claimed to be leader of Somalia’s opposition, but 106 ARS members are in Djibouti out of the group’s total 191 members.

A bottle of Coke tracks changes in Africa

THE ECONOMIST

28/07/08

Africans buy 36 billion bottles of Coke a year. Because the price is set so low — around 20-30 American cents, less than the price of the average newspaper — and because sales are so minutely analyzed by Coca-Cola, the Coke bottle may be one of the continent’s best trackers of stability and prosperity.

“We see political instability first because we go down as far as we can into the market,” says Alexander Cummings, head of Coca-Cola’s Africa division. The ups and downs during Kenya’s post-election violence this year could be traced in sales of Coke in Nairobi’s slums and in western Kenya’s villages.

Events in the Middle East, such as the 2006 war between Hezbollah and Israel, can dent sales in Muslim parts of Africa, though anti-American feeling usually wears off quite quickly.

Coca-Cola says it is the largest private-sector employer in Africa. Its system of distribution, which moves the sugary drink from bottling plants deep into slums and the bush a few crates at a time, may employ around 1 million Africans.

A study at the University of South Carolina suggested that 1 percent of South Africa’s economy was tied up, one way or another, in the distribution and sale of Coke. The company has been in Africa since 1928. Its outgoing global boss, Neville Isdell, grew up — barefoot, he says — in Zambia. Cummings is from Liberia.

In Africa, as elsewhere, the company has to defend itself from critics who accuse it of “mining water” for production, encouraging expensive and environmentally harmful refrigeration, and hurting local producers of juice and water.

At a macro-level, when Coke fails, the country whose market it is trying to penetrate usually fails too. Coca-Cola’s bottling plant in Eritrea hardly works because the country’s totalitarian government makes it impossible to import the needed syrup.

The factory in Somalia sputtered on heroically during years of fighting but finally gave out when its sugar was pinched by pirates and its workers were held up by gunmen. Cummings admits that Coca-Cola is “on life support” in Zimbabwe.

Still, if Coca-Cola’s predictions are anything to go by, Africa’s future is mostly bright. The company expects sales in Africa to grow by an annual 10-13 percent over the next few years, handily outstripping economic growth.

The biggest markets will be in petro-economies such as Nigeria and Angola, and countries like Ghana and Kenya where a middle class is emerging. Kenyas citizens may like to know that, despite their country’s many troubles earlier this year, Coca-Cola has invested $50 million in a new bottling plant and $10 million in new offices.

From The Economist magazine. Copyright 2008 Economist Newspaper Ltd.