Toscafund: South Africa Is Going To " Blow Up" Worse Than Libya

Savaas Savouri

Toscafund's chief economist sees South Africa blowing up worse than Libya within 15 years, according to an interview he gave Reuters this week.

" It's socially, politically and demographically flawed. It will malfunction within 15 years. It will go the way of MENA (the Middle East and North Africa) but the blow-up will be much more serious," Savvas Savouri told Reuters in an interview last week.

" Professional whites and blacks are leaving in hordes -- the human capital is decaying," he said.

How will a South African blow up affect markets?

From Reuters:

A " malfunction" in South Africa, which is the world's biggest producer of platinum and a major producer of palladium alongside Russia, would push commodity prices higher, benefiting rival commodity-rich countries.

" Clearly Russia and Australia will win out. The surge in commodity prices will benefit them," said  Savouri.

Savvas Savouri has been researching South Africa, Africa's biggest economy, for ~4 billion Toscafund, a London-based asset manager. He believes its lack of centralized leadership will ultimately lead to the country's failure.

10 Surprising Truths About Lying

Behavioral experts have found that infants begin to lie from as young as six months.

Source: The Telegraph

 

In a poll, 75% of women say they lie about money to boyfriends, husbands, and family members.

Source: Susan Shapiro Barash, author of  Little White Lies, Deep Dark Secrets: The Truth About Why Women Lie 

 

Over 60% of people felt they could wiggle out of their lies once discovered and not suffer the consequences.

Source: Susan Shapiro Barash, author of  Little White Lies, Deep Dark Secrets: The Truth About Why Women Lie 

 

13% of 1,500 respondents admitted they lied to researchers in the study that found this statistic

Source: Newsweek

 

Nearly 40% of folks said the have lied about following a doctor's treatment plan and 30% lied to their doctors about their diet and workout regimen.

Source: Newsweek

 

60% of people lie at least once during a 10-minute conversation.

Source: EurekaAlert

 

People are most likely to lie on the telephone rather than via e-mail, instant messaging or face-to-face conversations.

Source: Cornell University

 

31% of people admit lying on a resume.

Source: Forensic Psychology via Westword Blog

 

Men lie twice as much as women. On average, men tell six lies per day to their spouses and colleagues women tell three.

Source: Forensic Psychology via Westword Blog

The most common lie told by both men and women? " Nothing's wrong, I'm fine."

Source: Forensic Psychology via Westword Blog

 

Is it okay for entrepreneurs to lie? Read this and see if you agree:

Image: Jennifer Su via Flickr

More CLICK ! !!

When Should Entrepreneurs Lie?

The 3 Huge Concerns Of Investors All Around The Globe

In his Monday Morning Musings note, Citi's Tobias Levkovich shares the results of conversations he's had with over 100 institutional investors all around the world over the last month.

There are a few particular concerns they overwhelmingly cite.

The first is kind of a duh: inflation. More specifically, the impact of rising commodity prices is on everyone's mind. How surging commodities impact central bank policy, specifically the Fed is a huge question.

Closely related: corporate margins.

As this chart shows, if margins are on the wane, stocks are likely to follow:

Image: Citi

And finally, investors have been caught flat-footed by the outperformance of US and European markets, when many had bet heavily on emerging markets.

The emerging markets/developed markets rotation clearly has impacted almost every investor we met around the globe. The outperformance of Europe and the US has surprised many money managers who were loaded up on EM trades and their underperformance has been painful which showed. There is much discussion about money flows switching back to the US as weekly mutual fund flows have moved decidedly west . That combined with the potential for more money flow movement away from bonds to stocks makes them very nervous about standing in the way of a possible tidal wave of cash. While most investors expressed a strong desire to maintain their long EM positions and indeed appeared to be digging in their heels, one might say that they are timid holders currently and could become further sellers if this “pain trade” keeps going against them.

What's particularly interesting is this comment. Everyone thinks everyone else is bullish:

We were somewhat surprised that investors were convinced that everyone allegedly was becoming bullish on the US, as they cited stronger economic growth expectations and the 30% gain in markets since the July/August 2010 double dip fears receded. Yet, our Panic/Euphoria Model (see Figure 13) does not argue for any such euphoric attitudes, though complacency may be a more accurate description versus the panic seen last summer. Nonetheless, the rolling four-week average flows into equity mutual funds does show more inflows than we have seen since 2007 and individual investors now are chasing stocks after an essential doubling of the S& P 500 from its early 2009 lows. In addition, we have seen flows start to favor growth and aggressive growth funds for the first time in a very long time, underscoring a willingness to take some risk again. However, a shift towards growth stocks is the right strategy if margins are peaking, in our opinion. Therefore, we are not overly worried by this development.

The Harrowing Chart The Shows How Close We Are To The Oil Spike That Caused The Last Recession

Oil prices likely to go higher but entering demand destruction range time to get more cautious. In contrast to the 2008 superspike, where oil prices spiked on runaway emerging market demand, the latest spike has been driven by supply issues as Middle East instability worsens. With unrest spreading from Egypt to Libya and Oman (and concern over possible unrest in Saudi Arabia), we believe oil prices could go significantly higher from current levels. Our price elasticity models indicate oil prices could spike to $160+/Bbl if we lost all Libyan production and one half of Saudi production.

That said, we are near levels where the market begins to worry about negative impacts on the economy (~ 5% of global GDP), which we believe warrants a more selective investment stance based on our analysis of the prior oil price spike cycle in 2008.

Since this scenario is somewhat different, being based not on demand but on supply, it is unsure whether or not it will have the same impact. But if you're looking at the oil price just in terms of GDP, we're nearing the point where things could turn ugly.

Don't miss: The 10 oil companies best positioned to win from the chaos in the Middle East >

Citi Hikes Its Outlook For Oil, While Questioning Saudi Arabia's Spare Capacity Claims