If you live in Europe or Japan, it is highly likely that the cut flowers you buy at your local market or in the supermarket are from Kenya. So when the Icelandic volcano disrupted air travel into Europe, the impact was keenly felt here in Africa.
The Kenyan Flower Council chief executive, Jane Ngige, told my colleague Zain Verjee, that the Kenyan flower industry lost about two million dollars a day during the crisis. What made the fall-out even worse for Kenyans was that it is now peak export season because Europeans celebrate Mother’s Day in May. The timing, it seems, couldn’t have been worse.
The Kenyan flower growers harvest everyday at this time of the year so they couldn’t store all their unsent blooms in cold rooms. So there are reports of many farmers just dumping tons of roses and other flowers into compost pits or leaving their excess flowers to rot in cargo areas of airports.
Geared for export, the Kenyan flower industry is a large employer, of mostly women, who cut, grade and package flowers for foreign markets. Across the horticultural industry in Kenya, there are reports of at least five thousand laborers who have already lost their jobs as a direct consequence of the volcanic ash cloud financial fall-out. The Kenyan horticultural industry is estimated to be a billion-dollar business.
After this unprecedented grounding of aircraft, there are similar stories here in South Africa. Cargo carriers of perishable foods such as meat, fish, fresh fruit and vegetables are already starting to count the costs of not being able to send their goods into Europe. Industry analysts say cargo volumes from South Africa have halved.
The impact has been felt along the supply chain – fruit suppliers have been told to stop production and fisherman have been put on shore leave until there was a better sense of when flights would resume and schedules would return to normal. The backlog could take weeks to sort out though.
One cargo company told a local newspaper that they had 90 tons of fish and 25 tons of ostrich meat that had to be shipped to Europe immediately or resold to the local market.
So I am expecting to see an increase in ostrich meat specials on the menus of many South African restaurants.
America's biggest banks are rolling in dough again. The U.S. President is going straight to Wall Street to pitch tough financial reforms to avoid future financial meltdowns. The regulatory body, the S.E.C., is pursuing civil fraud charges against Goldman Sachs. And some people are crying conspiracy. In a rare statement, the head of the S.E.C. said the watchdog does not "coordinate" its "enforcement actions with the White House, Congress or political committees," re-asserting its independence in the face of criticism."
Extraordinary times continue in the financial world. But what on earth is going on? If you believe one analyst we featured on World Business Today, this moment in the global financial crisis may be an important one. Richard Bove, Financial Analyst for Rochdale Securities, fears this could be the start of a pursuit of major financial institutions that could erode confidence in the U.S. financial system.
Bove calls the reaction to the banking crisis in 2008 "hysteria" and says the Goldman transactions may be complex, possibly unsavory, but they are not fraudulent.
"On one side you have a sophisticated investor who wants to short a bunch of mortgages. On the other side, you have two sophisticated investors who've gone through all these mortgages and decided which ones they want to keep, and which ones they don't want to keep. And they made the decision to buy them. The government is not suing the guy who wants to short, or the guy who bought the mortgages. The government is going after the middleman. What's the logic in that?"
Media reports are questioning the strength of the SEC's case. The agency says it has appropriate evidence that will be presented in court, at the appropriate time.
We should not be pre-trying this case in the media. But the questions the case raises are important ones and the voices on it, divergent.
Did somebody hear Richard Bove defend Goldman Sachs as good for society? Yes, you did. And that derivatives, the exotic instruments everyone is so upset about here, are good for the economy because they help drive down risk? Yes, you did.
It's a tough case to make in this climate, but Bove says Goldman should be defending itself as a business that does "societal good," because it "lowers taxes, and adds jobs and business opportunities." However, because of the financial crisis and these charges it is viewed simply as a bunch of greedy bankers who do fraudulent things.
"The U.S. has to raise 1.3 trillion dollars this year to cover the deficit. It has to roll over 3 trillion dollars in existing debt. Who is going to do that? Are we going to have a bunch of small community banks to set up desks in front of their branches and sell savings bonds at 25 dollars a pop? Or do we need a very sophisticated company that can access capital markets all over the globe to raise that money? And if it doesn't raise that money what happens to taxes in the U.S. Somebody has to make that money."
Of course, the courts will decide whether Goldman did anything fraudulent.
Bove is firmly in the camp of those who believe the government's case is weak, but he's quick to add: "I would never defend Goldman Sachs. I would not defend their ethics. I just think in this particular instance they were not guilty of any crime."
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