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Alec Hogg
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Johannesburg South Africa
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Businessman,Economy,Finance,TV & Radio,Writer
Alec Hogg is a media entrepreneur who owns and runs He also serves as a non executive director on the board of Arena Holdings, the 100% owner of SA's second biggest media group (previously Tiso Blackstar). Throughout his career he has sought out and produced new and often disruptive opportunities in his sector, always retaining an independent approach to content. Taking a cue from his hero Warren Buffett, Hogg writes and edits with a committed team of experienced journalists and associates, writes a daily newsletter (200 000 subscribers), and is active on social media (Twitter - 41 000 followers; Facebook 30 000 fans; LinkedIn 11 000 connections). His popular Rational Radio show is broadcast live at noon on Wednesdays on while his Rational Perspective podcast is on all major podcasting platforms, including Spotify and iTunes.

He is a popular keynote presenter who travels widely, including annual visits, since 2005, to the World Economic Forum in Davos and Warren Buffett's Berkshire Hathaway AGM in Omaha.

After a decade and a half in newspapers and broadcasting, Hogg founded Moneyweb in 1997 above his garage at home. It IPO'd on the Johannesburg Stock Exchange during the Internet Bubble (July 1999) and is the only survivor of over a dozen JSE Internet listings due to the creation and presentation of a specialist business news show on SAFM Radio in 1997, an innovation that has been widely imitated.

After 13 years of building Moneyweb, in 2010 Hogg took a semi-sabbatical farming thoroughbreds in the KZN Midlands. He returned to Moneyweb as CEO in April 2012 achieving his initial target of returning it to profitability, leaving the company in October 2012 and selling his shareholding.

In August 2013 he started, a fiercely independent, self-funded news website, obsessed with serving its readers and with a mission of helping to promote a peaceful and prosperous South Africa. The site serves over 500 000 monthly unique visitors.

Hogg spent three years in London from May 2016 globalising the Biznews revenue streams. He returned home to Johannesburg in May 2019. Arena Holdings, to whose owners Hogg is a consultant and advisor,  acquired a strategic shareholding in Biznews in late 2019.
Alec Hogg is a media entrepreneur who owns and runs He also serves as a non executive director on the board of Arena Holdings, the 100% owner of SA's second biggest media group (previously Tiso Blackstar). Throughout his career he has sought out and produced new and often disruptive opportunities in his sector, always retaining an independent approach to content. Taking a cue from his hero Warren Buffett, Hogg writes and edits with a committed team of experienced jou

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Boardroom Talk: FOLLOW THE MONEY

Alec Hogg taps the experts on big questions for investors emerging from Davos.

DAVOS - The world’s financial elite have come, listened and are now acting. Today’s renewed selling of equities around the world sends a message to those prepared to hear it. The people controlling the big bucks aren’t buying an Emerging Market decoupling story. They have left Davos more anxious than when they arrived. And probably for good reason.
Despite publicity afforded “do-good” causes, when you boil down what emerged from the high powered information sharing that is the World Economic Forum (WEF) annual meetings of the past five days the conclusion is clear. The US financial crisis is very real, extremely dangerous and highly contagious.
Global bankers, top economists and leading businessmen who listened to their sessions believe there’s some way to go before we understand the extent of the credit crisis, much less start emerging from it. They are convinced that the already well documented disasters in the US will spread elsewhere, contaminating the global economy much as the Asian Crisis and 9/11 did in 1998 and 2001.

On the other side is a group led by developing country politicians and the rare optimistic analyst who continue arguing the anxiety is overdone; that Emerging Economies have too much built-in momentum and sufficient internal demand to carry them through; and that as a result they will help the rest of the world shrug off the impact of any US recession which, even if it does hit, will be short and shallow.

Using history as a yardstick, the end result is likely to be something in between these two views. But there is enough factual information beyond dispute that signals a very clear warning. The American consumer is maxed out. We should expect contracting rather than expanding demand from this quarter. This has implications for asset price bubbles ranging from commodities to house prices.

Let’s assess feedback from Davos by posing and answering today’s key questions:

Definitely not. News to have emerged thus far might suggest the crisis is isolated to the Land of the Free. But this flows from superior management information systems at US banks rather than containment. The Wall Street institutions, which report quarterly, have disclosed massive write-offs stemming directly from the sub-prime debacle. Increasingly, though, the indirect knock-on effects from elsewhere are starting to appear.

Not much news from other parts of the world – yet. But it will come. At the WEF, the message from insiders was clear: this crisis is definitely not just with US institutions. The globalised nature of the financial system, together with the way bad loans were packaged and re-sold to investors internationally, means losses from the crisis will be felt all over the world.
Because of the opaque manner in which these bad loans were packaged, US banks are aware how far down the bottom will be. They expect more losses and bankruptcies. Much of the current anxiety comes not knowing how big a hole there is in the banking bucket outside of a guesstimate that it could be anywhere between $200bn and $650bn. This uncertainty is almost worse than knowing there will be losses.

Warnings that the crisis is global and will deepen, came from during the WEF from those best positioned to know. Among them were the CEO of the International Monetary Fund Dominique Strauss-Kahn: “we can’t get rid of the crisis using monetary tools”; and CEO of the Bank for International Settlements Malcolm Knight: “nobody yet knows where we are in this process .”

French Finance Minister Christine Lagarde also got into the act, agreeing there would need to be a global solution to a problem that’s “a major hangover from massive debt absorption”. Summing up a session which went deeply into the issue, the moderator, Martin Wolf of the Financial Times of London, said his panellists were “delivering a call to arms – the problems are serious...... this is a global issue which requires global action.”

Harvard Professor and former US Treasury Secretary Larry Summers burst this hopefully bubble. In one of the last Plenary sessions in Davos 2008 he explained that facts don’t support a belief that growing Chinese internal demand could be an antidote to an American slump. He urged participants to pick up the recent IMF document which shows China’s domestic consumption has fallen in the past five years from 50% of its economy to 39% today: “and that is centrally related to (understanding) the issue”.

Also, while China has massive reserves that can be used to stimulate demand in its economy, its authorities are wary of doing so. For one thing, the lack of a social security system in China incentivises workers to save rather than spend, so Keynesian measures have little credence in the country. For another, the inflationary impact of further stimulating an already hot economy is well understood by the Chinese inner circle.

In the opening session on the global economy, Beijing-based director of China’s Academy of Social Sciences, Yu Yongding, kept emphasising the national concern about inflation. Knowing this problem looms ever larger has led to a re-assessment of China’s approach to its exchange rate. A more rapid appreciation of the RMB is one way, for instance, China intends attacking inflationary pressures. Against this, he said China needs to create 24m new jobs annually to keep its development programme on track. At 10m last year, it undershot by some distance. Despite the shortfall, there was reluctance to stimulate demand through desterilising China’s massive national reserves. Besides, there is the political consequences of once again breathing air into a finally deflating equity bubble that has attracted over 150m small Chinese investors.

Although he started off by admitting to being a politician rather than an economist, India’s commerce minister Kamal Nath claimed his country has never really been “coupled” to the US so saw no reason to be worried about a “de-coupling” now. Also, he reckons there is enough south-south trade to offset the infection from American flu – proudly proclaiming that “as of this morning, China is a bigger trading partner for India than is the US.” More worrying to him was what was happening to food prices through a combination of higher demand from developing countries and reduced demand from the US breadbasket where, increasingly, grain is being converted into ethanol rather than exported as food.
But what he didn’t address was the way India needs to suck in foreign capital to fund a massive infrastructure programme and its current account deficit. And if that capital were to be diverted elsewhere (like into cash deposits with safe haven banks) the impact on the sub continent’s economic growth targets would be obvious.

Morgan Stanley’s Stephen Roach was one half of last year’s odd couple in Davos alongside fellow economist Nouriel Roubini. Both were out of step with the consensus when warning that excessive lending would come at a price. Now that their scenario is unfolding, the due were among the most popular pundits at Davos 2008. Roach reckons the cost he spoke about has not yet been absorbed. He used the facts to explain why China and India would not be much of an offset against the impact of the projected US slump. Last year, he said, Americans consumed goods and services worth $9,5-trillion,much of it from abroad. By contrast, China is still far behind at $1-trillion with India’s $650-billion further back. Roach’s view: “So when the US consumer is in trouble there are great consequences for the global economy.” And the US consumer is in deep trouble right now.

Only late in Davos 2008 did trade hit the public agenda, this time to explain that despite further gatherings of the players in the Swiss village, the world is still no closer to securing a conclusion to the six year Doha Round of talks on global trade liberalisation. European Union Trade Tzar Peter Mandelson complained that now all progress made since 2001 is at risk. He urged trade ministers to get cracking, claiming time was running out – George W Bush has less than a year left in office and, says Mandelson, a new incumbent in the Oval Office would probably want to start the process from scratch. Add in a looming global economic recession that raises political incentives for protectionist measures, and there is now a real risk that not cementing gains from the Doha Round see them being entirely lost.

There was even a more chilling warning from a very senior (Republican) politician who spoke freely on to me condition that nothing was attributed to him. For purposes of credibility, he has spent a lot of time in the White House and is probably closer to the Washington inner circle than anyone else in Davos this year. His reading of the forthcoming Presidential election was that Hillary Clinton was the likely winner, with the Republicans’ best chance of causing an upset in the hands of Mitt Romney. He explained that Mrs Clinton, a North-Easterner, would be a very different proposition to her husband, a Southerner. He fears that under her watch, the US is likely to follow a protectionist route towards global trade, throwing up barriers for political expediency. The result? He frets that the rest of the world may then start ignoring the US and trade more with each other, compounding an already serious problem. Free trade promotes economic growth. Protectionism can turn recessions into depressions.

The news is not good. Roach maintains commodity prices have been in a bubble in the same way as housing prices, which were already down 7% in the US last year with worse predicted. He is convinced the meltdown for base metals and other commodity prices has begun, but as with housing valuations in the UK, Ireland, Spain and Italy, there’s a long way to fall. Certainly, the frenzied emergence of junior mining businesses all looking for cash (a couple hundred manned stands at a Vancouver “investor” conference I visited earlier this month) has all the signs of the last days of an overheated boom.

In a short-term economic sense, not much unless you want to put your trust in the Emerging Market politicians. Not the smartest move considering a WEF survey that covered 61 000 interviews worldwide and was released on the eve of the meetings found 60% of the world’s citizens believe politicians are dishonest.

One of the few sensible arguments for a brighter picture came from economics PhD Jacob Frenkel, who was Israel’s central bank governor from 1991 to 2000 and is currently vice chairman of financial services giant, the American International Group (AIG). Last year Frenkel was on the prestigious opening panel of economists and argued that global capital markets are wide and deep enough to absorb most shocks, enabling adjustments to be smoother. This , he believes, creates built-in stability for the world economic system.

Despite the reverses of the past few months – and the fact that he was “dropped” from the panel – Frenkel is sticking to his guns. He believes the US Federal Reserve has acted appropriately (most other economists think it was too late by far) and reckons the recent injection of liquidity will do the trick. Frenkel maintains: “When you’re in a stormy sea, the critical question is to ask how strong is my vessel .” He believes the global economic vessel is strong enough to get through the current storm and to recover quickly. As soon as the second half of 2008 when he forecasts economic growth will be higher than during the first six months.

On the domestic front, South Africa has a major committed capital expenditure programme which cannot and won’t be switched off – despite the power shortages. Although the country’s trade account is sure to be hit by the fall in commodity prices, this may well be offset by buoyancy in the value of its precious metal exports (gold and platinum) whose prices are fed by all the uncertainty. So from a domestic demand side, the country’s economy is better positioned than most to ride out the storm.

To think it will be immune, though, is naive. The international de-rating of equity prices is an obvious example. Prices of SA’s leading shares are set on the London Stock Exchange rather than in Johannesburg. So SA stocks will follow internationally listed ones. And the direction there is down. On the broader front, SA has an open economy with half its gross domestic product dependent on international trade. So a global recession will obviously bite here.
There is not getting away from the facts that emerged in Davos. The world is in for a tough time. South Africa along with it. Hopefully Frenkel’s thesis on the global economy holds true; and that the vessel quickly shakes off the current storm. Even so, best be prepared. Batten down those hatches. Repay debt and cut out unnecessary spending. It could get a lot rougher before the sun shines again.

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Tap Dancing in a Warp Speed World - How
Alec brings his own laptop.
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Lapel Microphone.
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