If it wasn’t JZ, then what was it?

2013-06-23 14:00

President Jacob Zuma did not say an economic word this week, yet the rand continued to plummet.

A fortnight ago, pundits blamed the president for the currency’s meltdown, but the continued rand rout this week showed the futility of seeking national answers to global and systemic fissures in the way the world goes round.

It’s the global economy and there is very little we can do about it beyond putting in place a few safeguards. More about these later.

America’s decision to ease its policy of quantitative easing by buying up bonds wreaked havoc across emerging markets. The only comfort this week was that we were not alone.

If pundits and local markets were wrong to blame the president for the fall of the rand, Finance Minister Pravin Gordhan’s mantra that we can talk up the country is also wrong.

Gordhan has repeatedly said if we change the narrative about South Africa, we can buffer ourselves from the global financial crisis.

This week proved this not to be true either. Where Gordhan was right was in warning us about the need to urgently stabilise labour negotiations on the mines.

If there is another big strike or another Marikana, the bottom will fall out of the economy.

Wise leaders of the unions, the sector and the state need to bring their finest negotiating skills to inculcate labour peace.

Either that, or we will ultimately suffer higher inflation and interest rates with consequent lay-offs. We cannot afford higher rates of unemployment than we suffer now.

The removal of hot money from international markets imperils the only fiscal stimulus at South Africa’s disposal: the infrastructure drive.

It is going to get that much more expensive for the Treasury, Eskom, Transnet and the other big spenders to borrow.

All South Africa can do is buckle down, find labour peace and spend what we have wisely for the highest impact.

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