Electricity Up Platinum Down

There appears to be a Platinum shortage going on. Naturally prices have been rising over the past few years.

Platinum prices have dropped by almost 20% in daily trading over the past three weeks (to $1,565/troy ounce on Tuesday). But, for the year, the price of platinum, which is used in catalytic converters for motor vehicles, they will average $1,970, or 51% more than it did in 2007, according to the latest forecast by Natixis Commodity Markets of London. The outlook for 2009 is an even higher $2,250/oz.

Some other analysts have suggested that platinum this year and next could fall closer to the $1,303 average price of 2007 because of the sharp fall in motor vehicle sales in North America and Western Europe. The Natixis analysis isn’t so bearish because its analysts expect supply shortages from the biggest platinum producers due to the South African national power crisis. “We do not believe that the power-related production problems in South Africa have been resolved,” says the report. If that’s true, then production problems will continue to plague Angloplat and Impala Platinum, the second-largest producer.

In fact, Bloomberg today is reporting that tens of thousands of workers went on a national strike over rising energy bills. The Congress of South African Trade Unions, or Cosatu, called the one-day walkout after the electricity regulator allowed state-owned Eskom Holdings to increase power prices 27.5% to fund a badly needed $44 billion expansion.

Well we have seen a dip in prices in the middle of a secular rise. And who is the blame for this mess? The usual suspects. The geniuses in the South African government. Funny thing is they admit it.

JOHANNESBURG, Feb. 8 -- President Thabo Mbeki apologized Friday for his government's failure to prevent crippling power outages across South Africa and warned that restoring a reliable supply of electricity would require new projects and major cuts in usage.

"We face an emergency, but we can overcome the problems in a relatively short period," Mbeki said in his televised state of the nation address, delivered in Cape Town at the annual opening session of Parliament. "This situation has precipitated the inevitable realization that the era of very cheap and abundant electricity has come to an end."

We had better get the NIMBYs and the Just Say No enviros out of the way or the USA could be facing similar problems. Electrical shortages take a long time to develop and a long time to resolve.

What will happen if we don't get a move on? The same thing that has happened in South Africa. A shortages and sharp increases in prices. Which is not only bad for consumers. It is bad for business.

Up The Theft Rate

Governments can only steal. If they want job creation they could do a little less stealing. That generally works better.

But given the Communist origins of your current South African and Zimbabwe politicians what else can you expect? The answer by these Communists is always the same: "Stealing by the government has caused a crisis. The answer is to raise the theft rate."

A comment on the "troubles" in South Africa with a H/T to Instapundit.

South Africa

The New York Times says South Africa is growing up.

Mr. Zuma found common cause with those on the party’s left flank, who felt shut out by the president’s policies of fiscal conservatism and his aloof style.

The leaders of the Congress of South African Trade Unions and the South African Communist Party are now the primary architects of Mr. Zuma’s campaign. They believe that as a canny but uneducated son of the soil, he is more in touch with the aspirations of South Africa’s masses, whose lives have barely changed since apartheid. Mr. Mbeki’s supporters, for their part, worry that a Zuma presidency might undo the meticulous stitching of the country into the global economy undertaken over the past 15 years.

That a majority of A.N.C. members have put their faith in Mr. Zuma is an indictment of Mr. Mbeki’s abilities to bridge the widening class divide. There is no guarantee that Mr. Zuma could do any better, but he is renowned as a consensus-building politician, and at least he would be required to try.

Ah, yes. Communism to the rescue. Led by an uneducated populist. All the hall marks of future success.

Had mister Zuma been educated he might have heard the following:

"Concentration of wealth is a natural result of concentration of ability, and recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the law... democracy, allowing the most liberty, accelerates it." -- Will and Ariel Durant

Concentrated wealth of course furthers investment and builds up capital for further advances. Now if Zuma was a real Marxist he would know what Marx said about building capital. It is best done by capitalists.

I fear South Africa is headed the way of Zimbabwe with its economy destroyed and a politically induced famine. Of course Zimbabwe's leader Robert Mugabe was well educated. Maybe education is no inoculation from stupidity. Or else it made Mr. Mugabe too clever by half.