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Nairaland Forum / Nairaland / General / Politics / Buhari was defending naira, Tinubu floats naira which is the best policy? (4153 Views)
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Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by sholay4star: 11:07pm On Jun 14, 2023 |
It's madness defending currency because it will never grow the economy, you float currency to boost economy, let water find it's level 3 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by grandstar(m): 11:43pm On Jun 14, 2023 |
skj1377: 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 6:57am On Feb 01 |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 6:59am On Feb 01 |
Interesting thread. Some posts were remarkably prescient. We'll see what the next 7 to 8 months hold... |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 7:03am On Feb 01 |
mrvitalis: ^^^ 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? |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 7:30am On Feb 01 |
Fujiyama: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 4 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by grandstar(m): 8:13am On Feb 01 |
Fujiyama: Then the parallel market rate was $1-750 |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by idealogical: 8:29am On Feb 01 |
mrvitalis: Rail system is worthless and has no economic potential? The crazy things we read on this platform ![]() 2 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by marenkurz: 8:45am On Feb 01 |
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: 1 Like |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by 2mch(m): 9:12am On Feb 01 |
Defending naira means spending billions we do not have to keep the naira value low and delay the inevitable. 3 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by idealogical: 9:13am On Feb 01 |
marenkurz: 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. 2 Likes
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Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 9:32am On Feb 01 |
idealogical: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 |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 9:33am On Feb 01 |
marenkurz:Exactly which is why it makes no sense to borrow to build them It's crazy economics |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by idealogical: 9:46am On Feb 01 |
mrvitalis: 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? 2 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 10:24am On Feb 01 |
idealogical: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 |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 10:24am On Feb 01 |
mrvitalis: ^^^ 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: ^^^ ![]() 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 ( ![]() 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. 2 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Christistruth00: 10:24am On Feb 01 |
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 1 Like |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 10:42am On Feb 01 |
idealogical: ^^^ 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 10:55am On Feb 01 |
mrvitalis: ^^^ 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by babyfaceafrica: 10:56am On Feb 01 |
marenkurz: Would you have preferred if there was no rail services or infrastructure at all? And what is the best way out of this quagmire 2 Likes |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 12:20pm On Feb 01 |
Fujiyama: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 1 Like |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 12:30pm On Feb 01 |
mrvitalis: ^^^ You need to be more specific what you mean when you say 'invest in your people'. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 1:09pm On Feb 01 |
Fujiyama: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) 1 Like |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by skj1377(m): 1:19pm On Feb 01 |
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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by idealogical: 8:56pm On Feb 01 |
Fujiyama: 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by marenkurz: 8:54am On Feb 02 |
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:
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Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by marenkurz: 9:08am On Feb 02 |
The argument was about generating income. Train services doesn't make profit for the government. babyfaceafrica: |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by marenkurz: 9:24am On Feb 02 |
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:
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Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by idealogical: 9:41am On Feb 02 |
marenkurz: Hogwash, save your puerile rants. Rail service is still the most profitable industry in America, passenger or rail, it doesn't matter.
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Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 3:52pm On Feb 02 |
idealogical: ^^^ No its not. Read it again. idealogical: ^^^ 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by Fujiyama: 4:44pm On Feb 02 |
mrvitalis: ^^^ 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. |
Re: Buhari was defending naira, Tinubu floats naira which is the best policy? by mrvitalis(m): 8:05pm On Feb 02 |
Fujiyama:The importers what infrastructure do they use now? |
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