Friday, 10 October 2008

6 degrees of seperation...

...and why you should not be surprised to know somebody affected by crime.

From wikipedia

Six degrees of separation refers to the idea that, if a person is one step away from each person they know and two steps away from each person who is known by one of the people they know, then everyone is an average of six "steps" away from each person on Earth.


A fascinating game grew out of this discussion. One of us suggested performing the following experiment to prove that the population of the Earth is closer together now than they have ever been before. We should select any person from the 1.5 billion inhabitants of the Earth—anyone, anywhere at all. He bet us that, using no more than five individuals, one of whom is a personal acquaintance, he could contact the selected individual using nothing except the network of personal acquaintances.


it is practically certain that any two individuals can contact one another by means of at least two intermediaries. In a [socially] structured population it is less likely but still seems probable. And perhaps for the whole world's population, probably only one more bridging individual should be needed." They subsequently constructed Monte Carlo simulations based on Gurevich's data, which recognized that both weak and strong acquaintance links are needed to model social structure. The simulations, running on the primitive computers of 1973, were limited, but still were able to predict that a more realistic three degrees of separation existed across the U.S. population, a value that foreshadowed the findings of Stanley Milgram.

I'm going to let the phenomena speak for itself. Given that a population as large as the United States should be able to connect within 3 degrees of seperation, what does that say about a small microcosm of a society existing in tight knit pockets such as white South Africans ?

Assuming there was only a tiny amount of violent crime in South Africa....let's is say 50 white murders a year (about 6-7 times less than the actual amount ?) then it is not only likely but highly probable that you would know AT LEAST someone who knew someone who was murdered. Be it a friend of a family member, a relative of a spouse, a mother of a child at the same school etc.

Given this it should never surprise you , even in a society with extremely low prevelence of violent crime to know someone or know of someone victim to it RELATIVELY well.

The tenedency then is to compare this to a past time when social networks were not nearly as broad. Or to take this perfectly natural phenomena of growing social networks and the increasing connectedness of people and cross referencing it and falsely correlating it with constant media insistance that crime is increasing.

It's certainly worth thinking about. Next time someone feautures in your local newspaper (for good or bad reason)I bet wth great ease you could find someone who knew that person (or someone close to them) within your social circles. Hopefully next time you want to drive yourself into a fit of panic just calm yourself and remember that anywhere in the world the same phenomena exists, just perhaps without the neurosis.


varkots said...

You are really stretching with this one bro.

The six degrees idea has been around for almost a 100 years but has not been proven, it would be really difficult to prove too, so don't take it as fact please... But hey, feel free to build your intellectual foundation on shaky ground as long as it makes you feel warm and nice and fuzzy inside..

Anonymous said...

Stat slap down no:3

"Assuming there was only a tiny amount of violent crime in South Africa....let's is say 50 white murders a year (about 6-7 times less than the actual amount ?"

Therefore there are only about 350 white murders per year.

This is out of a total of 18457 total murders therefore approx 1.9% of all murders victims are white.

According to some earlier stats, 9 out of every 10 victims of murder are men. Therefore only 1 is a woman which equals 10%.

10% of 350 = 35 white women murdred in SA every year.

Also in some earlier stats it was estimated that approx 80% of all murders are committed by someone who is well known to the victim.

80% of 35 = 28.

Therefore only 7 white women are killed by strangers per year.

Lastly, given the racial makeup of the total population (70% black)then only 5 of those 7 murders are committed by blacks who are a stranger to the white woman.

Makes sense to me.

Anonymous said...

Continuing from the stat slap down no3;

Only 5 white women are murdered by a black stranger per year.

Using the 3 degrees of separation and this is how I would know of at least one of those victims.

4,000,000 white population half of which are women = 2,000,000

2,000,000 /5 = 400,000

If I know 74 people who know 74 people who in turn know 74 people then by the 3degrees I will know at least one victim.

74 x 74 x 74 = 405,224.

Makes better sense to me

~- hows this work out

Anonymous said...

2nd follow up to stats slap down no3

Check your cell hone and email address book. I bet you know a hell of a lot more than 74 people.

Anonymous said...

2nd follow up to stats slap down no3

Check your cell hone and email address book. I bet you know a hell of a lot more than 74 people.

The Rooster said...

Er yes...there are around 350 white murders ...2%....or 1 a day as you say. I'm not sure if you're being sarcastic. You're stats however that suggest white people follow the law of 1 out of 9 and the 80% "someone they knew" rule is however totally irrational. There is no way every demographic group would be in those proportions.

The Rooster said...

Varkots...actually using social networks like facebook and tests done using forwarded emails and the like they've pretty much been quite impressive in proving the 6 degrees of seperation. It does assume you're an active part of the global village though.

Now White South Africans are a pretty tight knit group. The point is that certainly if someone were open enough to admit the they won the lottery , and there were 50 winners a year by white people....chances are very likely you'd "have a friend of a friend" who won it. Now if it were 350 winners........

The Rooster said...

Yes, you know a lot more than 74 people. You've likely got that many alone in family and extended family.

in fact there some genetic study that suggests for a population group like white south africans they're all related by 4 degrees or something. But don't take my word...let me see if I can find that somewhere.

varkots said...

"with constant media insistance that crime is increasing."

Rooster, I don't know where you live but when I was younger, there were never commotions outside when I went to bed. Now, there is gunfire and sirens every single night. There are gangs patrolling our street shooting random holes in street signs and whatnot. In the last 5 years 3 people from my street, were killed on my street in separate instances. My brother was held at gun point buying the Sunday paper. My friend was held at gunpoint buying us some beer. (both at local Spar, about 300m from us) There were 3 break in attempts on our house(twice when I was there) plus a gun fight between criminals and the police that spilled into our yard. There were the poisoning of about 7 neighbours dogs with two-step, oh and I forgot our next door neighbour was shot at, at the local petrol station cause he told a guy to stop pissing against the wall. He showed me the three bullet holes in his bakkie, 5min after it happenend. Then our first black neighbour moved and guess what, my dad, seeing his wide open door for a couple of hours, untied him where he was lying, tied up with belts and rope, on his bathroom floor, head smashed in, blood everywhere, someone robbed him blind, in broad daylight. All this, in a pleasant, relatively safe, Roodepoort suburb. (I left out the killings, hi jacking, robberies and whatnot of friends and family that did not occur in my neighbourhood, or break-ins into just my car (3)not in my neighbourhood)

I wish you were right. I fucking do. I hate nobody. I understand the relation between crime and economic wealth, the disparity between classes. But, I also understand underfunding, ill equipped, under trained, corrupt, non target oriented, police officials, and politicians aren't helping one fucking bit.

I like being optimistic myself, and I too get upset having to deal with super negative friends and family members, and some of the clowns that post here from that clown blog you keep mentioning, but shit, go live in my neighbourhood and then try and make up tripe like this, to explain away the shit that happens every single day, 10 meters outside your front door. Shit that wasn't there 10 years ago.

But anyways, you know what this 6 degrees thing means to some of us? Someone we know probably knows the thugs causing this shit. There is no separation between me, my family and my friends, from crime.

Your blind optimism is astounding, ignorant even, or perhaps you truly live in the safest neighbourhood in the country...

Anonymous said...

Read this article:

troubled said...

Mboweni owes it to South Africa to explain why the Bank simply cannot cut interest rates, in line with the globally co-ordinated central bank packages that continue to unfold, in an effort to restore stability to disemboweled world credit markets. On Thursday, Mboweni made the strange observation that "the exchange rate of the rand has been negatively affected by increased global risk aversion, resulting in higher volatility and a significant depreciation".

Translating this gobbledygook into vanilla English is no big deal. The rand is one of the worst performing currencies in the world against the dollar, along with the Pakistani rupee, Australian dollar, Colombian peso, Brazilian real, and Korean won. Each has lost around 30% of its value against the dollar within the past 12 months.

The reasons are as idiosyncratic as each country. South Africa's economic and political indicators are wobbling, and looking to start stumbling, amid the ANC's power drunk personality carnival, where "service" to the nation remains a foreign concept. Beneath that, South Africa has the highest unemployment rate of nearly 60 countries listed by The Economist magazine. South Africa's jobless percentage is so bad that it's more than twice as big as that in the country in number two position.

Seen alongside other emerging countries, South Africa's economic growth rate is modest, despite a commodities supercycle that's endured for six years. The cycle peaked and spectacularly blew off in mid-July 2008, something that's now severely hurting the country's dollar export receipts. If this were not enough, South Africa labours under one of the highest inflation rates in the world, driven mainly by horrifying pay hikes persistently granted to increasingly unproductive government employees, and structural inflation like the mind-blowing increases in Eskom's electricity tariffs.

For lovers of the macabre, South Africa also boasts, relative to the size of its economy, one of the highest trade deficits in the world. Trade deficits accumulate when imports exceed exports; here, it follows years of profligate ghetto blaster consumerism encouraged by cheap-credit, rather than importing of capital items that can be used in productive processes.

A increasingly widening trade deficit undermines South Africa's ability to accumulate foreign reserves, which stood at just $31bn, at latest count, compared to (say) $1,8trn held by China, $170bn held by tiny Singapore, $583bn held by Russia, and so on. Trade deficits, combined with puny foreign reserves, leave a country with little choice but to perform somersaults, and other awkward things, to attract foreign cash inflows.

To this end, South African interest rates are among the highest in the world. This attracts so-called carry trades, where some foreign investors borrow in jurisdictions with low interest rates, and look to turn a quick buck here. This flow process is also known as hot money, given high mobility and its owner's ruthless dedication to heartless profits.

The Rooster said...

What a bunch of crap.

I'm sorry but when talking about an African country you have to take into consideration the past factors. While i admire your efforts to quantify your argument..let's put your stats into perspective.

S.A has about a 25% unemployment rate (4% for white people). It's decreased consistantly.

Growth wise we've recored 32 cycles of consecutive growth. A record for the country at an average of 5% a year (in real terms some suggest as high as 7%). Compared to our low population growth this means we're one of the few countries in the world that are actually getting richer. Caompated to our high base rate of gdp (we're 29th I believe in the world) 5% for 10 years is extremely good growth and if you're in South Africa you've definately notice how much more money there is to go around these days. You see it in the packed stores..the masses of new housing developments , the cars on the road , the people packing out the resuarants...everywhere.

I really don't know where you got the increasingly wide trade defecit idea from. We're exporting more than ever...and yes..importung more then ever. We're a richer country now who has double it's middle class in 10 years ....of course the demand for luxury foriegn goods has increased.

wiht china or russians population being as high as they are , i think a honest man would concede that we are not expected to hold as much foriegn reserves.

The rand has devalued, but we've seen it all before. the Australian stock market is aching too (with most of the world) with the so called "credit crisis" and that's all that is keeping S.A.s and the likes from making more of it. The rand will slip to as low as 10-11 to the dollar ...and then profiteering will begin and all the paranoid idiots will lose bunches of money while those who know the sound economics on which the country is based will earn big. There is a reason you can see the rand on as one of the top 8 currencies...and that's the neurotic nature with which it is traded. Sure it will recover....personally I like it where it is...encourages export and tourism and stumulates the local manufacturing sector.

Despite that all troubled i really found your post stimulating and challenging. refreshing to be posed something written with more than blind ignorant hate to back it up. Drop me an email as I have a proposal for you which could be fun for the readers here...a format whereby i pose you 3 questions and you pose me three and we debate the S.a economy.

The Rooster said... sound a decent bloke. I really find your situation to be far removed from anything I or anyone I know has experienced. 7 dogs poisened ? 4 people in your street killed ? That;s fucking awful . If South Africa were anything like that even 5 5 of the time i would be writing for S.A.s as we speak. But let's be's not is it ?

The Rooster said...

i meant to write 5% of the time..

varkots said...

I had a mate at my school in Braamfontein, he lived in Ponte tower you should have heard the shit that he had to deal with daily.

Ever been locked out of your own building because the Army had surrounded it and gansters were shooting at them from the windows?

Where do you live?

In Jozie this is not abnormal.

If you live in Cape Town or Bloem and go on about low crime rates, I can understand that maybe.

But us fucks in Jo'burg are very close to the worst of South Africa.

Maybe you should go visit, maybe you will understand why some of us take offence at your aerie faerie "Stat slap down(syndrome)".

Call out the clowns, the negative fucks, and the racist windbags, any day. They are too dumb to even know they are the products of apartheid themselves. But, don't fool yourself about the situations some people live in.

"you sound a decent bloke."

I hate to disappoint, I will argue with some of your pulled out of your ass stats soon enough and then you can call me names again....

The Rooster said...

Varkots. I do admit that joburg is a differet story. It does not represent the whole of south Africa , but also my family has lived there for many years (albeit in wealthy suburbs) with no issues.

I welcome you to always call me out when you feel I'm being wrong or misguided. That is after all what I'm doing in response to the S.A.S types. You've distanced yourself from them and for me that goes a long way towards making me think perhaps you're a person worth listening too. So don't be dispondant ...everyone opinion is valid so long as they can demonstrate it's not one based on blind hate and ignorance.

Peace brother.

troubled said...


going surfing over the weekend but sees like a plan.

post your 3 questions via my website fullview.c(o).z(a)since i will then get the message via my mobile e-mail and i will post my replies by monday.

please note that as long as it is not to bait me into backing up your notions but rather a honest debate based in documented facts i am game.

life is to short to have a pissing contest on a blog :)


troubled said...

quick answer to your trade deficit question

The South African trade deficit remains high. This trade deficit has to be paid for with foreign inflows of capital. In the past, these inflows of capital were in the form of short-term capital inflows into equities and bonds from foreign investors and speculators. These inflows are referred to as ‘port-folio’ investment flows.

However, the impact of the global financial crisis has reduced these short-term, foreign, speculative investments into emerging economies.

In fact, we have seen an outflow of ‘portfolio’ investments from South Africa. As a result, we require another source of foreign capital inflows to finance the trade deficit. The sources of capital other than portfolio flows are categorised as ‘other’ short-term capital inflows (most of which are in the form of short-term bank loans) and foreign direct investment (FDI).

South Africa has not attracted much FDI during the last few months. The main capital inflows have been short-term bank lending in the ‘other’ category of capital flows. The reason for these flows is that foreigners are now ‘parking’ their cash in South Africa to benefit from the interest rate differentials between South Africa and the US and Europe. These speculators are involved in ‘carry trade’.

They borrow in countries with low interest rates and lend this money in countries with high interest rates. Lenders involved in the carry trade have a very short-term perspective and are at great risk from changes in exchange rates. To have our trade deficit financing rely on inflows due to the carry trade is extremely risky and makes our economy more vulnerable to balance of payments problems.

Therefore, one has to question the motives of the SARB. It seems that the job losses and other damage it is inflicting on the country by keeping interest rates high is due to its concern about the rand, not inflation.

The SARB may be choosing to keep interest rates high as a way to keep attracting the carry trade to offset the impact of negative ‘portfolio’ flows on the value of the rand. Unfortunately, the money flowing into the country as a result of the carry trade may be prolonging debt-driven consumption and a higher trade deficit.

In the long run, the central bank’s policies leave our economy more indebted and more vulnerable to financial problems.

your blogg froze so not sure if i am double posting

troubled said...

another opinion

Johannesburg - If the financial turbulence were to constrain global growth below levels currently expected, this would affect Africa through still-lower demand for its exports and likely lower commodity prices, according to the IMF's latest regional economic update for sub-Saharan Africa.

"In such a scenario, foreign direct investment, portfolio aid, and remittances inflows could fall as well," it cautions.

South Africa's current account deficit is one of the highest in the world at 7.3% of GDP - but off an all-time high of 8.9% in the first quarter.

The deficit on the trade account of the balance of payments narrowed substantially from R61.4bn in the first quarter to R31.3bn in the second.

This was as a result of improved export performance by local suppliers in the primary and secondary sectors coinciding with more subdued domestic demand.

Any slowdown globally that affects local exports and which ties in with less portfolio flows and direct investment will place unhelpful strain on the rand and current account and equity market.

troubled said...

but on a more positive note this article is pretty interesting

Johannesburg - South Africa's markets could bottom out another 1 500 points down, Sasfin market commentator David Shapiro predicted on Friday.

"We're very, very close to the bottom. I reckon we've got another few points to go then we'll start to bounce up," he said amid reports that the Johannesburg Securities Exchange had joined the world bloodbath.

"That would be in line with long term valuations," Shapiro pointed out.

"We get very emotional over these things.

"I don't think we'll get there. I think we'll start forming the bottom now," he said.

He nonetheless added: "The bottom is the bottom. The bottom is zero... "

Already people were describing the "giveaway" prices as "crazy", but he said they could benefit if they were prepared to wait a bit and buy good companies with assets.

"You've got to have courage."

He said the South African markets were tracking what was happening on world funds on Friday.

That's what the problem was and had been for the past week.

"World markets are falling in a heap

"It has just been an horrific week in global markets in terms of destruction of wealth and falls in prices."

The concern was that more banks would go insolvent and that the world economy was going to go into recession.

"We're seeing people abandoning stocks, getting cash".

No-one knew who was selling. "It's difficult to get to grips with who's triggering this."

In the past week, a number of countries had cut rates on top of other packages designed to alleviate the credit crisis. These were going to take time to take effect. "Selling could continue until it exhausts itself," said Shapiro.

There had been a massive withdrawal of foreign funds from the South African markets as investors took flight to the safe territory of the United States Dollar.

The JSE was down four percent by mid-afternoon on Friday.

Shapiro said the JSE reached an all time peak in May, driven by high commodity prices.

With the oil price up and the dollar weak, people went into commodities for protection against inflation and the falling dollar.

The All Share index was at 33 233 on May 22. On Friday, it was 39% lower. "That's massive," he said. However, for the year it was down 30% and on a year-to-year basis it was "not that bad".

Years of excess

Put into perspective, someone who came into the market five years ago would still be up 17% per annum.

Even the depreciation of the rand would come into the economy, stimulating exports and local manufacture by making imports more expensive, said Shapiro, adding that the monetary policy committee had been right to leave rates unchanged.

What was interesting was that the market was still in overbought territory over ten years.

"So we are correcting. So the markets are correcting aggressive gains since 1998... We're seeing the wind down of 10 years of growth. The market is just realigning the trend."

People in the market since about this time in 1998 would be up 16 percent per annum, excluding dividends, which would increase the figure to about 18 percent.

"It seems to be ending years and years or excess and over-optimism."

Anonymous said...

read it and weep douche bag!

Your country is bankrupt and basically fucked!

The Rooster said...

Thanks "troubled". Indeed only people with no knowledge of how economics works would be slitting their wrists. The markets are correcting themselves.

And the current financial crisis is a global trend and certainly not unique to South Africa. I'd love to know which countries the wrist slitters are posting from and how they've managed to avoid the news.

And anytime people start panicking about the rand my eyes start rolling. I've just seen it so often before....we're a neurotic country and it's never better balled up and wrapped in a neat quantifiable package than the volatility of the rand. The way in which the rand is traded is so irrational it's absurd. Somwhere behind the curtain some big global players are waiting for the rand to bottom out and then they'll buy in like grannies at a Christmas sock sale.

troubled said...

the surf sucked to much wind so post your questions rooster and lets get it on!! ;)

Foreign investors are selling their South African shares and moving to currency - so you can think of it as a greater demand for dollars, etc. As the demand increases so does the cost of the dollar.

On top of that, there is a greater demand for liquidity, so those dollars are in short supply in their own domestic environment.

Our cash isn't being drained away - nobody wants rands, so the value of the rand drops.

it is a pity that this meltdown didnt occur shortly before we host the world cup, since a weaker rand will allow for more visitors.

bottom line is until all this balances out do not buy big ticket items on credit ( car/house) etc. since the repay rates will put you in serious debt, this is not just a south african problem but a global one.

in fact you could probably pick up Iceland on e-bay on the cheap soon.

On the other hand if you have got liquid cash now would be the time to buy/upgrade, since you could pick up real bargains and even buy shares on the cheap, remember the world cannot afford to have a global depression so they will sort this out.

We must just weather the storm and not get to emotional, don't use that credit card and try pay off your debt as quickly as possible even if that means drinking/smoking/partying less for awhile :)

and remember everything works on supply and demand, so if nobody buys stuff, the manufacturers have to drop prices otherwise they go out of business for example

a iphone costs say R 3 000, now it probably costs them R200 to manufacture, but thanks to our human obsession with status and that if something is expensive it must be good people will buy them and drive up demand with the end result that the price of said iphone will not drop and will probably increase.

now if nobody buys them price drop is eminent.

troubled said...

For those who love conspiracy theories:

Oil prices are significantly down from the summer high of $147 per barrel. Wednesday October 1, New York's main contract, light sweet crude for November delivery, lost $2.11 to close at 98.53 dollars a barrel.

Now Merrill Lynch (NYSE: MER) is slashing its outlook for oil prices. Not only do their analysts believe that oil will drop below $90 a barrel next year, but they add that there is a possibility it may drop below $50. Demand is shrinking and it's hard to call a bottom.

Given all the turmoil in the financial markets this year and with a looming "consumer credit bubble" being discussed in most business publications, it would be very advisable to use any savings from lower oil prices to pay down credit card debt.

There were those that forewarned us of the technology stock bubble, and we had ample warning of the housing bubble that has lead to the collapse of Wall Street as we know it. As early as 2006, we were seeing stories that the credit bubble would soon be upon us.

Indeed, this fear is in part why the major financial institutions wanted to pass new laws limiting individuals bankruptcy protections. First they loan you more money than they should by any practical reasoning, and then they want to make sure you're trapped if you do not pay the very high interest rates and fees they are charging.

If we are lucky enough to see oil prices drop as Merrill Lynch forecasts, then you should be reducing debt fast and start saving.

the only way to drop the oil price is through a global recession and the larger countries mmmm... USA maybe who have got drilling bans in their country can only benefit from a reduced oil price/barrel.

And now that the G7 have promised to bail out major banks they are now "the good guys" and the plot thickens.

We live in interesting times I tell you.

troubled said...

conspiracy continued...

If the stock market is a reflection of the broader economy, then only half of that equation makes sense. Oil inflicts heavy and immediate economic pain on the way up, but provides slower and smaller benefit on the way down.

U.S. airlines that ratcheted up fares when fuel prices spiked earlier this year are in no hurry to lower them now that oil has fallen more than $30 per barrel in the past month.

The auto industry cannot simply reopen darkened factories overnight now that gasoline costs less than $4 per gallon again. Indeed, products ranging from toys to breakfast cereal that got pricier as raw materials rose are not likely to track commodities prices on the way back down.

“Price increases are sometimes associated with economic recessions, but oil price declines have never been followed by an economic boom,” said James Hamilton, an economist at the University of California, San Diego, who studies oil price shocks.

If oil prices keep falling, that could boost spending and encourage companies to resume hiring after seven months of job cuts. However, consumers and companies must first be confident that the oil price drop will prove lasting, and that could take quite a while.

Unless you can artificially manipulate the worlds monetary spending to keep the oil prices down by say having a global recession hanging over the oil producers head and then buy oil futures at a reduced rate to keep the price low.

It will be interesting to see what happens with the oil price in the coming months and if the world economy starts to stabilises soon after.

troubled said...

mmmmmm... the oil theory is not so far fetched after all... lol sorry if i am hijacking this thread but since i cannot surf, and there is no football on the idiot box lets post here.

Stock markets across the Arab world experienced unprecedently sharp losses when trading began following the Id al-Fitr holiday earlier this week. The seven stock markets in the oil rich Gulf states shed around $150 billion of their capitalization in the course of the week.
A Saudi trader reacts as he...

A Saudi trader reacts as he looks at the stock market monitor in Riyadh, Saudi Arabia, this week.
Photo: AP
Slideshow: Pictures of the week

The market in Saudi Arabia sank by 7 percent. In Egypt, the key index fell by around 16%. One Saudi economist quoted by Agence France Presse described the latest developments as a "catastrophe." For a number of reasons, the Arab world may well prove particularly vulnerable to the world economic downturn. This fact has political implications for the region, which are already being glimpsed and acted upon by various regional forces.

The first and most obvious reason why the Arab world is particularly vulnerable to the financial crisis is that a disproportionately large amount of Arab wealth is invested in global stock markets. Since the 1970s, the Arab world (or parts of it) has enjoyed a long windfall of oil wealth.

Oil wealth is the main source for Arab sovereign wealth funds. Arab sovereign wealth funds, with a combined value of more than $1 trillion, are important investors in what are now being exposed as some of the most vulnerable sectors of global finance.

he Kuwait Investment Authority, for example, placed a $2b. investment in Merrill Lynch last year. At the time, this must have seemed like a secure move. Merrill Lynch, of course, no longer exists.

But the extensive Arab involvement in global stock markets is itself a symptom of a larger malaise. The oil-rich Gulf countries have preferred to use their wealth to build luxurious lives for the lucky few.

Instead of investing in education, especially in cutting-edge fields such as information technology, and in industry, money has been gambled on the stock markets, or invested in glittering real-estate projects, built by foreign labor and using foreign know-how.

The result has been islands of luxury and conspicuous consumption, based on no solid national capital of knowledge and skills. This vulnerability is now being exacerbated by the recent decline in the price of oil - which has fallen nearly 40% in recent months.

This reality has implications not only for the thinly populated, oil-rich Gulf states. The population centers of the Arabic-speaking world, above all Egypt, are also unlikely to remain immune. Development in the Gulf has provided otherwise sparse job opportunities for some of the vast population of under-employed university graduates produced by Egypt.

Large numbers of unskilled and semi-skilled laborers have also found work in the Gulf. But if Gulf economies now draw in, this picture is likely to change. Furthermore, the open tap of foreign aid on which the Egyptian economy has been so reliant may begin to run dry - as the US and other Western economies enter hard times.

One should not over-labor historical comparisons, of course, but there are some that are instructive. The Wall Street Crash of 1929 is an imperfect but useful historical example for understanding what is happening now. In 1928, in a central European country, a small, very radical party was humiliated in parliamentary elections, winning only 2.6% of the vote. The same party, in the transformed circumstances following the crash, won 18.3% of the vote in 1930.

The country was Germany, the name of the party was the National Socialist German Workers Party, and the rest of the story is known. Who benefits, indeed.

troubled said...

my own personal conspiracy theory ;)

the previous posts i posted are all very likely but the main cause of all this is simple... personal greed on a large scale IMO

business lesson 1
buy low and sell high, stock market is actually easy to manipulate if you have enough funding and patience to make stupendous profits over a relatively short time frame.

average man on the street invests pension fund in stock market, all of a sudden he sees his share price dropping since large stock portfolios are pushed back on the market, he panics and sells this causes a ripple effect, and somebody buys all the shares at a low price.

the market stabilises and everybody buy's again share price goes up and the dude who bought low now slowly resells those shares at a healthy profit.

Therefore the financial outlook will have to improve so that a profit can be made - so hold off freaking out and killing yourself, settle your debt and prepare for the good times in the next cycle.

I think this will be my last post until i get some replies...

troubled said...

Fact now global recession will have the oil rich countries by the balls. USA troops will now not withdraw from arab countries IMO

Paris - Approaching recession and a banking cash crisis are cutting deeply into global demand for oil, the International Energy Agency (IEA) said on Friday.

Falling demand "in the face of higher prices is now being perpetuated by weakening economic prospects," the IEA said.

This, together with "a spiralling liquidity crisis", could tip leading industrialised economies "into outright recession," the agency forecast in its monthly report on global oil trends.

It cut its forecast for world demand this year by about 360 000 barrels per day from its previous monthly, steadily falling, forecasts.

This put total demand this year at 48.1 million barrels per day or 1.1 million barrels, equivalent to 2.2%, less than the 2007 level.

And it cut its forecast for demand next year also by about 360 000 barrels per day to 47.5 million barrels per day. This implied a fall of 600 000 barrels per day or 1.3%, from demand in 2008.

But the agency raised slightly its previous forecast for demand outside the 30 countries covered by the Organisation for Economic Cooperation and Development, because of "stronger-than-expected demand in almost all regions."

It said that this section of demand would be 80 000 barrels per day higher than forecast last month. It would now total 38.4 million barrels per day this year, an increase of 1.5 million barrels per day or 4.2% from the 2007 level.

Next year, this demand would amount to 39.7 million barrels per day, an increase of 1.3 million barrels per day or 3.4% from the 2008 figure, and an upward revision of 40 000 barrels per day.

The IEA said, under the headline "When storms collide", that the sharply weaker oil price was gyrating wildly because of uncertainty over the impact of two storms - hurricanes in the Mexican Gulf and the firestorm on financial markets.

The oil price fell $4.08 dollars to $82.51 in Singapore on Friday.

The Organisation of Petroleum Exporting Countries said on Thursday it would meet on November 18 to discuss the impact of the financial crisis on the oil market, and some analysts say that the price fall might push OPEC to reduce its output.

The IEA said that uncertainty over the depth of the economic slowdown and the repercussions on emerging economies, a severe shortage of cash in the financial system, and damage done to some finance companies previously active in oil trading were driving high volatility in the much-weakened price of oil.

These factors, including the liquidity crisis, could put some oilfield development projects at risk, the International Energy Agency warned

The Rooster said...

Nice posts set me off on a bit of a tangent. I'll respond when i get time.

The Rooster said...

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