Why Labour/MMM Alliance is Dangerous

I'll give you three reasons.

1. It wants to change our excellent system of government – one of our most precious assets – for something inherently unstable to satisfy the fantasies of a couple of politicians. We don't want to do this as it would open a can of constitutional worms. Our Westminsterian system of government has enabled four smooth changes of government since 1968. This has allowed us to forge ahead at a healthy pace until 2005. And established our reputation as a vibrant democracy.
2. It wants to make all kinds of dangerous changes to our electoral system on the basis of a very weak report which has been demonstrated to be flawed beyond repair. That includes party lists which shift the loyalty of MPs from voters to their leaders. And double candidacies which are a recipe to make arrogant politicians unaccountable.
3. Sithanen has been chosen as its Minister of Finance. His regressive 'reforms' which began in 2005 have thrown 22,000 Mauritians into poverty – that's 17% of all poor people – and thousands more into a 9-year L-shaped recession. And he has proved to us that he doesn't understand at least two things: how the economy works and percentages. That's a pretty big skills mismatch.

This alliance will never win a 60-0. Far from it. The political exhumation of the toxic bean-counter will not exactly help. But we will have to vote very wisely – for example Lalit is good, Rezistans not really and abstaining bad – and send a very clear and loud message that we don't want any of this nonsense.

Pourquoi Ne Pas Echanger Lutchmeenaraidoo contre Sithanen?

La Crise Financiere A Bon Dos

Souhaitons Que Le Stimulus Package N'entraine Aucun Abus

Iceland Prosecutes Former PM

For failing to keep the country out of harm's way. Indeed 3 banks borrowed the equivalent of 10 times Iceland's GDP before failing and dragging the country into a deep recession. Interesting. I thing we should have this kind of accountability codified in our laws. And they should apply to senior officials in a position to mess up Mauritius in a big way.

You mess up, you don't collect 200.

Papandreou Wants Greeks To Vote on Rescue Plan

That would happen in January and increase uncertainty substantially. Or things could get out of hand if markets assume that the plan will never be approved by the Greek voters given how often the latter have been in the streets lately. But Papandreou's government may not survive a vote of confidence on Friday.

The effects of Greece defaulting or not implementing the strict austerity measures in the rescue plan are widely expected to be much more severe than when Lehman Brothers defaulted in September 2008. Which was considered as the triggering event of the last global financial recession. Greece is, at about USD300 billion, the 32nd largest economy.

Mauritius should be able to ride through whatever crises happen given how much slack we've got here.

The Economic Weather Under Federation 2

Sithanen likes repeating something the Prime Minister said in parliament back in April: In 2005 there was no recession, the sea was calm, the sky was blue and the sun was shining. That statement is not quite true as we've demonstrated before.

Indeed in 2005 our textile industry contracted by 14.7% after shrinking by half that amount in 2004. One of the causes of this severe recession in that industry -- about 25,000 people lost their jobs over a 5-year period -- was the expiration of the 30-year old multi fiber agreement. And given the weight of that industry in our economy (8.1% in 2004) its performance in 2005 was negative enough to drag GDP growth by about 1.2%.

Contrast that with the effect of the global recession that started about a year ago. The fact that it didn't affect Mauritius as much as the textile recession shouldn't have surprised us. Our banks have been churning out record profits and unlike in the US our financial system was not on the brink of collapse.

So, what you have to take away from this is that something affecting one of our main industries can be more devastating to us than a global crisis hitting many rich countries.

Global Recession Less Harmful than Sithanen

So far. That's what more and more voters of Belle-Rose/Quatre-Bornes are concluding. And they are perfectly right. I mean can the Finance Minister tell us what's the link between toxic financial assets almost breaking the US economy and the STC losing Rs3 billion on hedging exposures they don't even have?

Just like MK can't really blame factors beyond its control for its trouble. They got themselves in a mess because of a flawed commercial policy and because too many board members don't know what board members are supposed to do. And nothing much is going to change because they're not doing anything different.

External Factors are Unfavourable Only When Berenger and Sithanen Are in Government, Right?

Wrong. Take sugar for example. It's one of Sithanen's Triple External Shocks and one of the reasons he's put the middle-class and the poor on a strict diet for almost four years now. But sugar was already a small sector back in 2005 -- 4.2% as the above table indicates and close to 2% this year -- so that the initial 5% reduction in the price we sell our sugar at would have reduced growth by about a fifth of a percent. Not a lot you will concur.

Compare that to 30 years ago when sugar represented close to 19% of our economy and was hit by a pretty little thing called Claudette. That led to a sharp contraction in our national production in 1980 with the sugar sector responsible for over three quarters of the 10% decline in output. That year also witnessed the second oil shock with the real price hitting a level that was to be surpassed only last year. And as if that was not enough a new chairman of the Federal Reserve by the name of Paul Volcker took office and stopped targeting interest rates. The latter of course were to go through the roof and plunge the world economy into a nasty recession.

Majority of Voters Didn't Need The Global Economic Crisis to Fall into A Recession

Indeed, Sithanen and Ali Mansoor had already put them there right after the first of a series of bean-counting budgets back in June 2006 when they "let inflation come loose out of its moorings". The damage is substantial: cumulative inflation for the last 42 months will hit 30% by next week while the more vulnerable voters got clobbered with more than 40% cumulative inflation over the same period. And that's before the mess of the flat tax reform and playing Russian roulette with SC/HSC subsidies to quickly name just a few. 

And unsurprisingly, as the above graphic shows, inflation in the country where both Sithanen and Mansoor studied economics has behaved much better.