Is The Central bank of Kenya to blame?

I must admit it ain’t easy at any time to be a policy maker, an individual or corporate decision affects millions of people whether positively or otherwise. Political instability, oil crisis and weak government policies are to blame for the current economic phenomena. It’s therefore apparent that several factors are to blame for the weakening of the shilling and the runaway inflation. In my today writing allow me to single out government policies (both Fiscal and Monetary) which have brought us to this ugly state.

I woke up to peruse the business news as usual and was disappointed to see inflation has it a rapid high of 6.54 %.It’s disturbing to see the local investor unable to thrive in forex due to the daily souring of the shilling. An importer in Kenya today equals a speculator, with the fluctuation of the local currency. Many economists will argue that inflation is good for economic growth but what about a runaway one? .In the short run inflation might increase the GDP but that also affects the welfare of the general population negatively in accordance with the domestic consumption. Families moreover will channel more of their resources in purchase of basic consumption good and missing out on investment because of the savings dent.

When the regulator (CBK) reduced bank rate to 6.5% it was apparent that the economy would flood with liquid money. To highlight how this comes about let me illustrate it with the mushrooming infrastructure and growth of commercial banks portfolio. The additional currency in circulation is due to the rapid developments engineered by government (Fiscal policies),i.e. the channelling of resources to improve the road and housing network throughout the country, the profits released recently by commercial banks doesn’t amuse me either, when I see a commercial bank add a shilling from her final output,i see an extra shilling in circulation which demand an extra quick policy. With the public having a lot of liquid money (due to fiscal and monetary policies) in their coffers, demand for ‘needs’ highten, affecting the supply (due artificial shortage of goods). This therefore in line with the principle of demand and supply subsequently increases prices.

The Kenyan shilling hitting a high of 86 per dollar is a plus to the external economies, who are now able to import our good and services cheaply while it gags our forex players. The central bank of Kenya bonds with a coupon rate of 12% are indeed okay in mobbing some of the excess money in circulation but why drain a dam when it still has other tributaries to feed it?, With this reality hitting the public, its time policy makers rush to save the hoi polloi and investors from this crisis through rapid but feasible policies.

The financial crisis was a ‘stock market’ failure

The new year 2011 is here with us and with the number of financial resolutions Ecoke deemed fit to vividly look into the past year crisis which brought many economies to their knees, ‘The financial crunch’.Ecoke believes that the crisis was manmade and would have been avoided if all the stakeholders were involved. You are asking why?, Ever asked why these top firms were never affected by the global crisis?;
1. Primark
2. Pawnbrokers
3. BBC
4. McDonald’s
5. Ryanair
6. William Hill
7. Google
8. Wal-Mart
9. Exxom Mobil
10. Potential Entrepreneurs
At that moment, one could spot a common problem with Investment banks’ balance sheets, where you observed that on the left side nothing was right while on the right side nothing was left. The primary victims of the crisis were; the housing market which reported dramatic falls in activity as housing construction and buying collapsed in major economies, Secondly, the Bank and financial services which as the scale of ‘toxic debt’ and mortgage default unravelled, reported inevitable record losses and finally the Discretionary retail spending in particular the car industry, hotels, airlines and international travel sector in general. The US was at the receiving end, with many accusing it of making a new weapon that destroyed people ,but kept the building intact(The stock market).Its times like these when tremendous competitive success were achieved, Companies shifted positions in the market place, market leaders become followers and followers become leaders, because it was a period where everything was opening and unfreezing. Financial insecurity was real, a bank client in an interview once said... ‘What worries me most about the credit crunch is that if one of my cheques is returned stamped ‘Insufficient Funds’, I won’t know whether that refers to mine or the banks’. Do we have sound financial policies for this year and posterity?