It's madness defending currency because it will never grow the economy, you float currency to boost economy, let water find it's level

skj1377:
The 11billion spent to defend Naira went to private pockets .it was pure round tripping. Well let's see how it goes but I know the masses will suffer

All goods are already priced at 750 or so. I therefore don't see any suffering

Those that will suffer are those who bought at 461 and sold at 750.

grandstar:
All goods are already priced at 750 or so. I therefore don't see any suffering

^^^

Interesting thread. Some posts were remarkably prescient.

We'll see what the next 7 to 8 months hold...

mrvitalis:
He would most likely build worthless infrastructure with near zero economic potential like the rail system

^^^
Seven to eight months down the line and quite a few of your predictions were remarkably spot on. Textbook stuff. The only question I have is the bit up here about infrastructure (like rail) having 'near zero economic potential'. Care to explain further?

Fujiyama:


^^^
Seven to eight months down the line and quite a few of your predictions were remarkably spot on. Textbook stuff. The only question I have is the bit up here about infrastructure (like rail) having 'near zero economic potential'. Care to explain further?

Rail is good, just like building a stadium they are good project, building airports they are good project but all have one thing in common

They make life good but have zero economic viability in the sense that they can't net you money except in a few cases... So to borrow money to build them is foolishness... If they were built by revenue It won't be bad

Imagine a man who earns 500k , but his expenses for the month is 850k so he has to borrow 350k monthly to stay afloat,

He either needs to earn more or reduce his expenses, but he can't do either

Now his professional association hears this and loans him 50 million to pay back gradually 150k a month

Yes he has 50 million but his monthly expanses is now 1 million

The man used the money to build house in his village a house he can't sale or rent

Use balance to go on family trip and upgrades his car


What would you say to such a man

Fujiyama:


^^^

Then the parallel market rate was $1-750

mrvitalis:

Floating through naira is the best long-term policy

But can you withstand the effects? Especially when you are an unpopular candidate

If fuel goes to 850 diesel 1000 , car import duty 50% increase would tinubu with stand the pressure?

Trust me subsidy n fixed naira was a policy of bribe to the middle class to allow government steal

If you remove it, then you must work, perform, your fiscal policy must be spot on, economy must grow, job must be made available

But tinubu ideas can't guarantee this stuff... He would most likely build worthless infrastructure with near zero economic potential like the rail system

Rail system is worthless and has no economic potential?

The crazy things we read on this platform

Train services is subsidized everywhere. Government all around the globe make loss on train. DeutschBahn (Germany rail service), for instance has been posting a loss consistently for 10 years.

idealogical:



Rail system is worthless and has no economic potential?

The crazy things we read on this platform

Defending naira means spending billions we do not have to keep the naira value low and delay the inevitable.

marenkurz:
Train services is subsidized everywhere. Government all around the globe make loss on train. DeutschBahn (Germany rail service), for instance has been posting a loss consistently for 10 years.

Which Deutsche Bahn are you talking about? Must be the one you fabricated with your lies and poor knowledge of railway systems.

Deutsche Bahn is not only experiencing a major boom in railway service but also making major profits year after year and their revenue increased by a whopping 19.1% to €56.3bn.

And the railroads are the most profitable industry in the USA.

I just hate the fact that people like you post rubbish, and lies, and insult people's intelligence all over the place.

idealogical:



Rail system is worthless and has no economic potential?

The crazy things we read on this platform

They are mere social projects, they are soly sustained by government grant, can't be profitable ... It's impossible to even breakeven

Nigerians are not rich enough to want train

The train we should be building is the narrow gauge locomotive train to move goods around

Lagos port to North, East and South... Lagos to Abuja

For mainly goods transport

marenkurz:
Train services is subsidized everywhere. Government all around the globe make loss on train. DeutschBahn (Germany rail service), for instance has been posting a loss consistently for 10 years.

Exactly which is why it makes no sense to borrow to build them

It's crazy economics

mrvitalis:

They are mere social projects, they are soly sustained by government grant, can't be profitable ... It's impossible to even breakeven

Nigerians are not rich enough to want train

The train we should be building is the narrow gauge locomotive train to move goods around

Lagos port to North, East and South... Lagos to Abuja

For mainly goods transport

Governments only support and subsidize unprofitable businesses, not massively profitable rail systems like Deutsche Bahn which rakes in €56.3bn in profits.

The company's profit grew by 19% and made €56.3bn and you still want us to believe that it's not profitable and it's still being subsidized.

You are not making any sense, stick to lying.

lol @ rail service are social projects. Are you a comedian or faking one?

idealogical:


Governments only support and subsidize unprofitable businesses, not massively profitable rail systems like Deutsche Bahn which rakes in €56.3bn in profits.

The company's profit grew by 19% and made €56.3bn and you still want us to believe that it's not profitable and it's still being subsidized.

You are not making any sense, stick to lying.

lol @ rail service are social projects. Are you a comedian or faking one?

How much do Germans pay for the train

If train services charge the price they should they would be empty

Comparing Nigeria to Germany Lmaooo

mrvitalis:
Rail is good, just like building a stadium they are good project, building airports they are good project but all have one thing in common

They make life good but have zero economic viability in the sense that they can't net you money except in a few cases... So to borrow money to build them is foolishness... If they were built by revenue It won't be bad

^^^
This is incorrect. And when you say 'net you money' does 'you' mean the government alone or the economy as a whole?

If you look at infrastructure spending purely from a revenue generation standpoint - it usually takes years to recoup investment. It is far more important to focus on the effects of infrastructure spending because these effects are actually what 'net you money' as you say.

There is a multiplier effect of infrastructure spending. For example, governments pay civil engineering contractors, contractors buy equipment, pay their workers, workers pay school fees, workers pay house rents, workers buy food and clothing etc. Government charges VAT (and other taxes) on these activities and if the tax system is working properly, then government revenue rises. There is a revenue generation opportunity at every point on the entire value chain.

There is also a productivity effect in infrastructure spending - once the project is completed. To use a personal example - when travelling by road from Lagos to Abuja, it always took me 2 hours plus to get to Ogun state via Epe because of the poor roads. The Ambode administration fixed those roads and my travel time was halved. I could get to Abuja (or wherever) on time and get things done quickly. Imagine if the entire Lagos-Abuja route were to be of top notch quality? And...if I get stuff done quickly and produce more, I get taxed more and government earns more revenue (again, we assume the tax system is what it should be). That's the way it works. Again, there is a revenue generation component at every point on the value chain.

If a government borrows long term to fund infrastructure...and the loan is properly structured...and the projects are properly completed...and the tax system is what it should be...it does makes sense for a country (particularly a developing country with funding constraints) to borrow to fund infrastructure.

mrvitalis:
Imagine a man who earns 500k , but his expenses for the month is 850k so he has to borrow 350k monthly to stay afloat,

He either needs to earn more or reduce his expenses, but he can't do either

Now his professional association hears this and loans him 50 million to pay back gradually 150k a month

Yes he has 50 million but his monthly expanses is now 1 million

The man used the money to build house in his village a house he can't sale or rent

Use balance to go on family trip and upgrades his car

What would you say to such a man

^^^


You've already shown us why the loan will go bad.

1st red flag: He can't sell or rent out the house he bought.

2nd red flag: He took the family on a leisure trip (on borrowed funds)

3rd red flag: He installed a N2 million Bang & Olufsen sound system in the car and bought N2 million (BMW designed) run flat tyres ( I made this bit up but you get the general idea).

Granted - some governments do behave in a manner similar to what this man did. But that's just poor choices at work. The evidence that infrastrcture is a major economic stimulus is undeniable - as long as a government stays away from the Nigerian government's way of doing things. Governments can (and do) toll roads and earn revenue. Governments can (and do) collect property and real estate taxes in areas with newly created public infrastructure (water, sewage, waste disposal etc). These revenue streams are sustainable and can be used to repay funds borrowed (provided the other key details like exchange rate risk) are mitigated.

Whichever policy puts food in Nigerians bellies and roofs over their heads in the long run without plunging the Nation into debt or selling the Country is the better Policy

idealogical:
Governments only support and subsidize unprofitable businesses, not massively profitable rail systems like Deutsche Bahn which rakes in €56.3bn in profits.

The company's profit grew by 19% and made €56.3bn and you still want us to believe that it's not profitable and it's still being subsidized.

You are not making any sense, stick to lying.

lol @ rail service are social projects. Are you a comedian or faking one?

^^^
It seems he does have a point. Apparently, the German federal and state governments do give grants and subsidies (in Germany at least) to Deutsche Bann in order to keep the national train pass at 49 Euros (as at October 2023)

https://nationalcenterformobilitymanagement.org/blog/germanys-national-train-pass-a-great-deal-or-still-too-expensive/#:~:text=Currently%2C%20both%20the%20German%20federal,subsidized%20the%20pass%20even%20more.

mrvitalis:

Exactly which is why it makes no sense to borrow to build them

It's crazy economics

^^^
Not necessarily.

It depends to some extent on public policy goals.

Apparently, German government is seriously looking at cutting CO2 emissions over time and getting people to switch from cars to rail transport is a central part of that policy. In the calculus of the German government, the benefits of reduced CO2 emissions outweighs the cost of subsidizing rail tickets for German residents.

As you can see, sometimes it isn't all about the money. Or...maybe it is. Maybe the German government believes the costs of fossil fuel energy dependence over the long term far outweigh whatever subsidies it is paying now to get people to move to rail transport. In other words it may be cheaper for Germany in the long term to get people to move to rail now...rather than continue to rely on road transport - and that's why the government is supporting the move by subsidizing rail passes now.

marenkurz:
Train services is subsidized everywhere. Government all around the globe make loss on train. DeutschBahn (Germany rail service), for instance has been posting a loss consistently for 10 years.

Would you have preferred if there was no rail services or infrastructure at all? And what is the best way out of this quagmire

Fujiyama:


^^^
This is incorrect. And when you say 'net you money' does 'you' mean the government alone or the economy as a whole?

If you look at infrastructure spending purely from a revenue generation standpoint - it usually takes years to recoup investment. It is far more important to focus on the effects of infrastructure spending because these effects are actually what 'net you money' as you say.

There is a multiplier effect of infrastructure spending. For example, governments pay civil engineering contractors, contractors buy equipment, pay their workers, workers pay school fees, workers pay house rents, workers buy food and clothing etc. Government charges VAT (and other taxes) on these activities and if the tax system is working properly, then government revenue rises. There is a revenue generation opportunity at every point on the entire value chain.

There is also a productivity effect in infrastructure spending - once the project is completed. To use a personal example - when travelling by road from Lagos to Abuja, it always took me 2 hours plus to get to Ogun state via Epe because of the poor roads. The Ambode administration fixed those roads and my travel time was halved. I could get to Abuja (or wherever) on time and get things done quickly. Imagine if the entire Lagos-Abuja route were to be of top notch quality? And...if I get stuff done quickly and produce more, I get taxed more and government earns more revenue (again, we assume the tax system is what it should be). That's the way it works. Again, there is a revenue generation component at every point on the value chain.

If a government borrows long term to fund infrastructure...and the loan is properly structured...and the projects are properly completed...and the tax system is what it should be...it does makes sense for a country (particularly a developing country with funding constraints) to borrow to fund infrastructure.



^^^


You've already shown us why the loan will go bad.

1st red flag: He can't sell or rent out the house he bought.

2nd red flag: He took the family on a leisure trip (on borrowed funds)

3rd red flag: He installed a N2 million Bang & Olufsen sound system in the car and bought N2 million (BMW designed) run flat tyres ( I made this bit up but you get the general idea).

Granted - some governments do behave in a manner similar to what this man did. But that's just poor choices at work. The evidence that infrastrcture is a major economic stimulus is undeniable - as long as a government stays away from the Nigerian government's way of doing things. Governments can (and do) toll roads and earn revenue. Governments can (and do) collect property and real estate taxes in areas with newly created public infrastructure (water, sewage, waste disposal etc). These revenue streams are sustainable and can be used to repay funds borrowed (provided the other key details like exchange rate risk) are mitigated.

Infrastructure is important but makes no sense to borrow and do them

Borrow invest in your people allow them grow richer tax then build infrastructure

mrvitalis:

Infrastructure is important but makes no sense to borrow and do them

Borrow invest in your people allow them grow richer tax then build infrastructure

^^^
You need to be more specific what you mean when you say 'invest in your people'.

Fujiyama:


^^^
You need to be more specific what you mean when you say 'invest in your people'.

Access to credit through banks

Identify areas you have comparative advantage in the international market

Provide cash available for banks to come and loan at say 3% and 5 years before interest starts to count

Banks provide loans for suitable people in this sectors at say 7% interest with 3 years before interest starts to count

This would grow the said sectors, creating jobs, improve revenue grow GDP and most importantly can repay back the loans in less than 10 years ( mind you international loans intrest starts after 10 years)

Defending is best. Unecessary demand for dollar by companies and individuals that have no benefit to the economy is causing Naira to crash on the daily.

Fujiyama:


^^^
It seems he does have a point. Apparently, the German federal and state governments do give grants and subsidies (in Germany at least) to Deutsche Bann in order to keep the national train pass at 49 Euros (as at October 2023)

https://nationalcenterformobilitymanagement.org/blog/germanys-national-train-pass-a-great-deal-or-still-too-expensive/#:~:text=Currently%2C%20both%20the%20German%20federal,subsidized%20the%20pass%20even%20more.

No, you are wrong, his point is still flawed and pointless and the link you posted is also flawed and deceptive.

Your link is about the government giving out passes to ease economic pressures and inflation-induced hardship which has nothing to do with profitability.

We did the same thing here in Nigeria when we issued transportation discounts to ease the pains of subsidy removal, it has nothing to do with profitability and as we speak the German rail system remains profitable and growing regardless of passes.

The keyword here is profitability.


In America, the train system is the most profitable industry in America, even ahead of real estate.

Is it the same DB that I have been using for years? You seat in your house and be yarning nonsense.
Here is an article from Reuter.

https://www.reuters.com/business/autos-transportation/deutsche-bahn-sees-2023-operating-loss-just-below-1-bln-eur-2023-07-27/#:~:text=BERLIN%2C%20July%2027%20(Reuters),interest%20rates%20weigh%20on%20results.

Pressenger train in the USA cannot make profit because it almost non-existent. Since you've never traveled out of Nigeria, ask your relatives in the USA why they drive 16 hours? Why they don't just travel by train.

idealogical:



Which Deutsche Bahn are you talking about? Must be the one you fabricated with your lies and poor knowledge of railway systems.

Deutsche Bahn is not only experiencing a major boom in railway service but also making major profits year after year and their revenue increased by a whopping 19.1% to €56.3bn.

And the railroads are the most profitable industry in the USA.

I just hate the fact that people like you post rubbish, and lies, and insult people's intelligence all over the place.

The argument was about generating income. Train services doesn't make profit for the government.

babyfaceafrica:


Would you have preferred if there was no rail services or infrastructure at all? And what is the best way out of this quagmire

German government own bulk of the shares in DeutscheBahn (DB). Therefore, the government is the major investor. And DB has been under-funded in almost 30 years. DB is not making profit. Increase in revenue doesn't translate to profit.

In the USA, freight train is what is profitable, not passenger train. Among world power, USA is a joke when it comes to pressenger train. You think car makers and their lobbiest would let pressenger train succeed in the USA? No one would buy car in the if pressenger trains are even half decent.

idealogical:



No, you are wrong, his point is still flawed and pointless and the link you posted is also flawed and deceptive.

Your link is about the government giving out passes to ease economic pressures and inflation-induced hardship which has nothing to do with profitability.

We did the same thing here in Nigeria when we issued transportation discounts to ease the pains of subsidy removal, it has nothing to do with profitability and as we speak the German rail system remains profitable and growing regardless of passes.

The keyword here is profitability.


In America, the train system is the most profitable industry in America, even ahead of real estate.

marenkurz:
German government own bulk of the shares in DeutscheBahn (DB). Therefore, the government is the major investor. And DB has been under-funded in almost 30 years. DB is not making profit. Increase in revenue doesn't translate to profit.

In the USA, freight train is what is profitable, not passenger train. Among world power, USA is a joke when it comes to pressenger train. You think car makers and their lobbiest would let pressenger train succeed in the USA? No one would buy car in the if pressenger trains are even half decent.

Hogwash, save your puerile rants.

Rail service is still the most profitable industry in America, passenger or rail, it doesn't matter.

idealogical:
No, you are wrong, his point is still flawed and pointless and the link you posted is also flawed and deceptive.

^^^
No its not. Read it again.

idealogical:
Your link is about the government giving out passes to ease economic pressures and inflation-induced hardship which has nothing to do with profitability.

We did the same thing here in Nigeria when we issued transportation discounts to ease the pains of subsidy removal, it has nothing to do with profitability and as we speak the German rail system remains profitable and growing regardless of passes.

The keyword here is profitability.

^^^
You are conflating several different issues.

Your first error is assuming that governments only subsidize and support unprofitable businesses. That simply isn't true.

Your second error arises from your first: a lack of recognition of the various forms a subsidy may take.

Do a web search on German government subsidy to railways/Deutsche Bann and you will get numerous credible hits that should set you straight. There really isn't anything to argue about here.

mrvitalis:

Access to credit through banks

Identify areas you have comparative advantage in the international market

Provide cash available for banks to come and loan at say 3% and 5 years before interest starts to count

Banks provide loans for suitable people in this sectors at say 7% interest with 3 years before interest starts to count

This would grow the said sectors, creating jobs, improve revenue grow GDP and most importantly can repay back the loans in less than 10 years ( mind you international loans intrest starts after 10 years)

^^^
No.

Your argument is flawed. You claim that it makes more sense to borrow to invest in human capital than it is to invest in infrastructure. That simply isn't always true.

A government may borrow and invest in people (by the way, this is definitely a good thing) but how do these people grow business sectors, create jobs, improve revenues etc. with broken public infrastructure?

Small (and big!) businesses in this country complain bitterly about the power problem every single day. You want the government to borrow money and then on lend to these SMEs to do what with, buy bigger Tiger generators?

Small (and big!) businesses in this country complain bitterly about bad roads and other transport constraints in this country every single day. You want the government to borrow and then on-lend to these businesses for them to build their own personal trunk A, B and C roads?

The businesses themselves say broken infrastructure is a major threat. Are you saying that if government borrows to build power projects or to build road or rail projects (through PPP or whatever) - it cannot impose commercially viable user charges, then cover its investment costs down the line and pay lenders?

It does make sense for governments to borrow to build infrastructure - and it is very possible to do this and repay the loans. It happens all the time. Some countries succeed at it while others fail. The important thing is to look at the reasons why any given country had the results it ended up with.

Fujiyama:


^^^
No.

Your argument is flawed. You claim that it makes more sense to borrow to invest in human capital than it is to invest in infrastructure. That simply isn't always true.

A government may borrow and invest in people (by the way, this is definitely a good thing) but how do these people grow business sectors, create jobs, improve revenues etc. with broken public infrastructure?

Small (and big!) businesses in this country complain bitterly about the power problem every single day. You want the government to borrow money and then on lend to these SMEs to do what with, buy bigger Tiger generators?

Small (and big!) businesses in this country complain bitterly about bad roads and other transport constraints in this country every single day. You want the government to borrow and then on-lend to these businesses for them to build their own personal trunk A, B and C roads?

The businesses themselves say broken infrastructure is a major threat. Are you saying that if government borrows to build power projects or to build road or rail projects (through PPP or whatever) - it cannot impose commercially viable user charges, then cover its investment costs down the line and pay lenders?

It does make sense for governments to borrow to build infrastructure - and it is very possible to do this and repay the loans. It happens all the time. Some countries succeed at it while others fail. The important thing is to look at the reasons why any given country had the results it ended up with.

The importers what infrastructure do they use now?