Someone stop Tito please!: News24: Columnists: MaxduPreez

Brandon 6/4/2008 8:59:12 AM

Max, I couldn't agree more. Anyone that has done a bit of economics would understand that raising the interest rates more won't work. Remember the difference between "cost-push" and "demand-pull" inflation? Rising fuel prices, food prices = cost-push surely? Plus, raising the interest rates just pushes up the cost of capital for organizations. Like you said, there are more variables to factor in other than just consumer spending. I'm really surprised that 'ol Tito hasn't grasped this concept yet!

eric 6/4/2008 9:04:01 AM

Cut the interest rates 3% and watch how consumer spending starts all over again my friend driving prices up and up. More disposable income means people will spend more and prices will rise. Tito is doing a good job. Its Joe Public that needs to wake up. Instead of buying plasma TV's, fancy 4x4's and property property property we should have been saving and investing! Instead SA was spending. Now its all come home to roost!

Pieter 6/4/2008 9:04:22 AM

Max, your clear lack of understanding of basic economics is the reason you're a has-been reporter/writer/whatever, and someone like Tito is the Reserve Bank Governor. You shouldn't have bought that expensive car in the first place. Your house was overvalued when you bought it a few years ago. So now suffer the consequences. I'm sick and tired of people hailing everyone as heroes in good times, and flagging them to death when things get tough. Don't blame other for your misfortune.

CdJ 6/4/2008 9:04:53 AM

Max, you're asking the government to reduce two of their income streams, and to create a new expense stream. And the king and his cronies will never do that, as they will not benefit. According to them, we are there to serve them, not they us, as, of course, it should be.

Tuffy 6/4/2008 9:13:47 AM

Tito and Thabo can learn to read (so they can read this article) and then find someone to assist them in comprehending what Max wrote here..... Maybe we'll see some action that means something from those two clowns.

Dave Robbins 6/4/2008 9:15:11 AM

I think it would also be necessary to increase VAT to 30% on luxury goods (most of which is imported) to stop people buying willy-nilly and getting themselves into a debt trap.

GERRIT JANSE VAN RENSBURG 6/4/2008 9:15:42 AM

Food for thought... I believe that you are spot on with credit control on the banks although I would like to qualify by saying that people should be given credit fot buying, for example a house, but that credit should be controlled on luxury items. As far as the food grants is concerned I would be happy if the grant is utilised for the intended purpose. Unfortunately there is a strong correlation between the payment of grants and a rise in liquor sales.How about feeding schemes at schools?

Wernardt Toerien 6/4/2008 9:17:33 AM

I tried to illustrate the essence of this letter (granted, i did so using sarcasm which seems to have been beyond the comprehension of the average person reading my letter) in a letter to News24. Be prepared for the attack of the econo-drones Max! They will berate you for being an idiot an knowing nothing of economics because they have been so dogmatised to believe the thesis of inflation targeting through the isolated mechanism of rate hikes that they refuse to investigate other options.

zeus 6/4/2008 9:17:45 AM

Max for President!!!

Guy 6/4/2008 9:18:24 AM

There's some good thinking. Give people more money to spend, and inflation will come down? How do you think that works? With more money to spend, people take out more credit, the stores raise their prices, and the result is... guess what?... higher inflation. The whole point of raising interest rates is to curb that spiral. Yes, inflation is now affected by external forces out of the SARBs control, but saying that government must give people more money is simply pandering to popular opinion.

Long term thinker 6/4/2008 9:20:29 AM

Sounds like this column came straight out of Das Kapital by Karl Marx. In case you have not noticed, Max, communism has failed everywhere in the world. It has been proven time and again that fixing prices have negative effects on the long term. Fixing the petrol and/or food prices will obviously bring short term relief but in the long term it will cause the same SERIOUS SHORTAGES like we have recently witnessed in Zimbabwe. I think Max should leave economics to those who understand it

MJ 6/4/2008 9:20:58 AM

Your comment: "Surely inflation would go down if people spent less and saved more" answers it. As soon as you look beyond peoples' houses and cars you'll see they are spending less on everything else, and those few with spare cash save more because of better returns from higher interest rates. Thus, people spend less and save more. But I agree, there are other things that should be done for a holistic solution.

clement 6/4/2008 9:22:20 AM

Max, i dont understand why Tito keeps on hiking interest rates. we are already suffering and infact this country has dropped from the dogs and to a pigs country. very sad.Tito and thabo and thier friend trevor are responsible for all this misery.food at my work canteen is up by 20% from last friday.cry the beloved country of pigs.

Anon 6/4/2008 9:22:39 AM

No Max, my suggestion is to learn how financial markets work before making sweeping statements. Interest rates are all the government has to control money going in and out of the country.

Walt 6/4/2008 9:22:52 AM

Does Tito's salary warrant his doing the same, predictable, thing over and over? Perhaps Tito should tighten HIS belt, if he can!How DOES he get like that, when the rest of Africa is starving? Oh yes,I remember, no politician goes hungry.

Maximelian 6/4/2008 9:22:57 AM

Max, I really think you should keep doing what you are good at, (keeping the memory of apartheid alive)and leave the important stuff to the big boys.

Guy 6/4/2008 9:22:59 AM

There's some good thinking. Give people more money to spend, and inflation will come down? How do you think that works? With more money to spend, people take out more credit, the stores raise their prices, and the result is... guess what?... higher inflation. The whole point of raising interest rates is to curb that spiral. Yes, inflation is now affected by external forces out of the SARBs control, but saying that government must give people more money is simply pandering to popular opinion.

Jairz 6/4/2008 9:23:05 AM

because Tito won't change his mind about hiking interest rates. Best we revisit our lifestyles and make changes where we can. It could be moonlighting for extra cash or a small business on the side or simply moving to a place where the cost of living is reasonable. It's hard, but it's time to be innovative in approaching these tough times. I know what it feels like to lose a home, been there yet I still live and moved on.

Michael 6/4/2008 9:24:41 AM

MAx, this is certainly a view worth thinking about. I think the FICA rules and other laws came in a tad bit late. The banks need to stop giving credit to uncreditworthy people, so that people like us who are managing our house payments etc just fine are not collectively punished.

shane 6/4/2008 9:26:20 AM

Another thing they can do is to stop lending money to their marxist friends like Cuba and then writing it off and start paying their international debt.I read in the paper that SA's outstanding debt is 1.1 trilion rand.If they pay that at least we will have a stronger rand and have more buying power at the oil cartels that will have a significant impact on our inflation rates at the end.

Mike N 6/4/2008 9:26:50 AM

Is there a true economics expert that can give us the right answer, because I have never been more confused about what the hell is going on in SA. Both sides seem to have experts for or against interst rate hikes. The pro hikes say look at Zim and the against say look at the USA. Can the so called experts not agree on anything, I don't want my country to go up in flames because of this, where are our leaders now??

Mikey 6/4/2008 9:31:37 AM

but the three T's are not going to listen they have proved time and time again they do not give a sh*t about anyone except themselves.

Wayne 6/4/2008 9:32:04 AM

Yes, external factors. e.g. the food price. Since we're a developing country food inflation is a much bigger percentage of our inflation figure than developed countries. BUT South Africans have demonstrated that when money is cheap they will NOT spend less and save more, rather they will over-extend themselves and cause inflation in housing, cars etc. In the 70's rich countries loosened monetary policy to help the masses. Result: The Great Inflation. Tito is right, though it hurts.

Sean Scorer 6/4/2008 9:32:28 AM

Hi Max. I must agree with your comments. The main driving forces behind inflation are Food Prices and Fuel, neither of which are anything but necessities. Raising interest rates will just hurt the consumer while leaving inflation untouched.

Leez 6/4/2008 9:33:23 AM

Bravo, you have hit the nail on head. Let's hope the prowers that be actually take note.' Yet again they can take note BUT the million dollar question what do they do actually do about it.

Doug 6/4/2008 9:33:41 AM

Good article. The Reserve Bank's actions defy logic. People have already been hammered through massive petrol and food price increases. But now The RB must add to the load with ever-increasing rates? You are right when you point a finger at the banks: ABSA just tried to persuade me to increase my credit limit and also take a Platinum Card (of course, at extra cost). Sorry, am happy with my personal status - don't need artificial cr*p like that with the extra incentive to borrow still more!

Andre 6/4/2008 9:36:12 AM

I am a bit ignorant but where does the money go when we pay higher interest rates. I know banks borrow money from the reserve bank at a higher rate. Where does that money go? What does the Reserve Bank do with the money earned on the higher rates? Who benefits the most from higher interest rates? Conspiracy theory: The Reserve Bank increases the rates to make money for purposes that only they know and understand. It has got nothing to do with high inflation.

Gary 6/4/2008 9:37:02 AM

This is a load of bull bud. The poor will suffer if inflation increases and not interest rates. They dont have home loans and cars to pay. The reason why people pay more for the same thing is because of prices inflating (due to lack off supply)more commonly known as(Inflation) Tito cant force people to save he battles to prevent them from spending.Badly researched. I agree on the cut in petrol taxes.But that would just mean there is less for the gov to steal at the RAF

Andre 6/4/2008 9:38:34 AM

Mark my words - just before the election next year, the interest rates will suddenly drop and the ANC will "give back" to the man in the street. Go back in history, just before the election inflation will spiral and interest rates will hike until just befor elections. Is this a planned strategy for political gain?

Ed 6/4/2008 9:39:02 AM

"I've never understood the logic of making people pay more for the same things in order to combat inflation." Then maybe you should not be judging a man who does. Higher interest rate = less spending and debt + more saving to take advantage of high interest return = lower inflation.

Andre 6/4/2008 9:39:54 AM

How would hiking interest rates influence the inlfation rate caused by higher fuel prices and food shorages? I wonder?

Paul 6/4/2008 9:41:05 AM

Ten out of Ten....now we need to get Tito the GREAT to look down from his VERY HIGH throne and read what you have written...somehow I doubt he will...

Tshepi van Die dwesh 6/4/2008 9:42:06 AM

I think maybe tito gets so lost in the macroeconomic world that he doesnt stop to think what this would do to most individuals in SA, and as a result to the whole country. If a person already has too much debt, how is making the debt he has more expensive going to help? People are getting pushed over the edge. And dont get me started on fuel prices

Jim 6/4/2008 9:43:02 AM

Isn't it strange that an ex-trade unionist is quite happy destroying the lives of hundreds of thousands of people by making their stretched incomes snap. Max, I agree, there are other ways to fight inflation. If credit extension is he major contributor institute fiscal policy to stop reckless lending. Place high deposits for HP on "luxury" goods. We can debate the term "Luxury". The downside is lower demand and possible higher unemployment.

Rockman 6/4/2008 9:43:57 AM

I agree Max, someone has to stop Tito and the greatest Cartel of all,the banking institutions. For years South Africans have taken it on the chin. Sadly I see our people one day saying, "enough" and then things will get much worse than the Zenaphobia we are experiencing now. Watch out Tito, you and your boys are pushing us to the point of no return.

TaurusaurusRex 6/4/2008 9:44:46 AM

Bullseye on every point! Tito, get your head read.

ramone 6/4/2008 9:44:56 AM

I agree completely. I have no bond currently, so am waiting to get a bargain soon (unfortunately at someone elses expense), but nonetheless I still feel violated by these moronic and ignorant policies being forced on the people. If inflation is a measure of the cost of living, then raising interest rates, raises inflation. I am losing my last bit of faith in black people, absolutely no savvy. Shock us with an original thought, Tito.

Econo Warrior 6/4/2008 9:46:44 AM

Drop interest rates and people will spend less and saved more? No Max the opposite occurs unfortunately. Low interest rates are no incentive to save. Also the real burden of inflation lies with the lower class (majority) who don't own cars and houses - the 10% inflation on food is killing them. Cut tax on fuel and give each poor family a grant of R150 - and who do you propose pays for this? It will end up on your rates Max, which will have the exact same effect as raising the interest rates.

SPIKE 6/4/2008 9:54:37 AM

Max I salute you!! NOU PRA' JY!!

SM 6/4/2008 9:56:46 AM

Max this is great but unfortunately it is also a pipedream. We all wish that this could happen, maybe we can then keep our meagre possession (those we have left) and stop using the little savings we might have left for our retirement (which is approaching faster than what we can save for it). Maybe this should be a open letter to the 3 T's

Coen 6/4/2008 10:02:02 AM

the issue can't be THAT simple. But yes, I worked in a handsome margin for my bond repayments but the interest rate is growing much faster than my salary is growing with inflation, so I guess inflation for the middle class is growing much more than the official interest rate based on everything BUT mortgage and car debt. But also I think the banks are going to sit with properties they are losing money so I don't exactly agree that only the banks benefit. Look at financial stocks at the moment. Lost money there as well, oi vey!

Sandhir 6/4/2008 10:04:45 AM

Inflation is felt worst when it affects food prices. Food inflation is a global phenomenon and we are not going to fix it by raising interest rates. What we need to do is fix the underlying problem - get rid of Agricultural subsidies, Import duties, trade restrictions and all other policies that interfere with the free market and trade of food products. That will mean substantial concessions by leaders around the world, especially Europe and UK. Let's see if the Forum in Rome is going to work.

SM 6/4/2008 10:07:31 AM

Max this is great but unfortunately it is also a pipedream. We all wish that this could happen, maybe we can then keep our meagre possession (those we have left) and stop using the little savings we might have left for our retirement (which is approaching faster than what we can save for it). Maybe this should be a open letter to the 3 T's

Bongani 6/4/2008 10:07:36 AM

I totaly agree with you max on this one, Tito must have clearly seen the effects of the last intrest hikes (just made the situation worse)! There has to be a good economist out there who can expalin to Tito that these rate hikes are not working, it's time to use something else to control the current economic situation

JP 6/4/2008 10:07:45 AM

I can understand what everyone is doing and why, increasing interest rates and all, but a economist im not. Can someone please explain to me... why cant the interest rates on houses at least not stay the same? Yes, increase everything else that you can, but keep houses at least affordable enough so people dont lose the only roof over their heads that they have been trying to pay for a long time! Why cant this be done? Can someone explain this to me?

Tebzano 6/4/2008 10:09:27 AM

Tito is an inflation nutter, no matter what he says. Arguing with him is a waste of time and energy.

Robert Kay 6/4/2008 10:15:36 AM

Jawellnofine Max - dream on if you think this government worries about the moans of the people, even if they are qualified enough to know more. You really should stop moaning and complaining about your buddies. You wanted them -you got them. Live with it!

KUMALO 6/4/2008 10:17:50 AM

Economics is not an exact science, Its about social issues. The economics that we learnt at varsity was written a long time ago when most of the new world dynamics did not exist. its time for people like you Max to start writting the new economics books. Tito must stop making policy decisions based on economics textbooks, the reality is that its not working. Increase reserve requirements for banks etc and bring down interest rates.

Alicia 6/4/2008 10:18:48 AM

For answering in plain English the questions I have been asking these past weeks. I cannot, for the life of me "see" how putting up the rates is going to "help", whom? Millions are going to loose their jobs, as buss's close down, millions will loose their houses with the vultures waiting in glee. The middleman has not been instrumental in this massive calamity.They need help, not a final push into the abyss of poverty and degredation.I pay off a rapidly growing small bond and a small car, yet??

ashk 6/4/2008 10:22:12 AM

The problem is not the interest rates it's the crazy property prices that have led to people rushing out to get too much credit to buy properties whose prices are too high. High interest rates are necessary to bring down property prices to more realistic levels that people can afford.

Ernst 6/4/2008 10:22:42 AM

I fully support Tito's move to raise rates by 2% NOW! Raising the interest rate only affects the middle class and those riddled with debt negatively but will bring much positive relief to the poor who cannot keep up with inflation. In addition if Trevor Manual would revise the fuel tax significantly, it would go a long way to bring down inflation to an acceptable level.

Leo 6/4/2008 10:29:00 AM

We?ve all been suckered. My advice to anyone is to have as little to do with borrowing money as you can - or learn the hard way. The sooner you learn this lesson the easier and less stressful your life will become, and none sooner too. The global financial situation is about to get a whole lot worse for the ?middle class? and the ?poor? before it gets any better - commodity inflation is engulfing emerging countries. Don?t be fooled by the false goodwill of banks - they absolutely love the current situation. They ride these so-called waves in economic cycles at our expense. Has anyone noticed that the central bank decreases interest rates for a relatively short period ? the banks sucker everyone in until it cannot suck in anyone more, and then goes ?ka CHING! ka CHING!? through successive phases of interest rate hikes. Inflation has accelerated throughout the ?interest-hike? phase so far, and what evidence is there to suggest that the next hike will make any difference? Why should we believe that it would? Don?t buy into the logic that less money in your pocket means less inflation. Look at Zimbabwe. It makes the mind boggle to think how much money the central bank makes out of this. And yes one can only wonder ? the where does all this extra money go that is made? Who benefits from this cycle? Poor people? Indebted, so-called middle class people? Ha. Banks need people to stay poor so they have someone to lend money to. That?s how it is. Truth be told - the banks actually have no idea what they are doing, as we are entering an unprecedented phase in the history of finance. Make that an unprecedented phase in the history of humanity. Things are changing faster than we can understand. Simplify.

Johan 6/4/2008 10:31:08 AM

I don't understand - everybody is kicking and screaming because the interest rake hikes will mean less money in their pockets. THAT IS THE POINT. Tito was screaming that people should spend less, and they did not listen. So the solution is to take money out of their pockets. Simple. Everybody wants a solution that will mean they can continue business as usual. Whatever. Tito should raise the interest rate until the mortgage muppets have some sense knocked into them.

Barry 6/4/2008 10:34:46 AM

Credit granting needs to be cut dramatically again, aside from bonds for homes, it is time for business to feel the pinch rather than profiteer off the suffering of individuals. Us S'Africans need discipline, unfortunately imposed on us, as we stubbornly prioritise keeping up with the Jones' above true wealth creation.

Leo 6/4/2008 10:35:39 AM

Don?t be fooled by the false goodwill of banks. They ride these waves in economic cycles at our expense. Has anyone noticed that the central bank decreases interest rates for a relatively short period ? the banks sucker everyone in until it cannot suck in anyone more, and then goes ?ka CHING!?. Inflation has accelerated throughout the ?interest-hikes', and what evidence is ther to suggest that the next one will work? Where does all this extra money go the central banks make? To poor people?. Ha.

cassuis 6/4/2008 10:36:20 AM

How typical, all these learned economists between us ( who has time reading news24, obviously not a practicing economist then) Max stated that the credit act needs to be tightened up, people spending money they have has no influence on inflation, only spending credit! bizarrely these " economists" want us to save money.... what money? with Tito pushing up the rates nonstop, the US cut there interest rates to 0% when the resestion started, wisdom of:Tito vs US treasury ...... mmmmmm......

SM 6/4/2008 10:38:32 AM

The 4x4's, plasma tv's and large bonds does not exist in the poor to middle class households (read shacks). These are the people paying for those rate increases through the increases that is passed onto them by the rich. The rich by the way is getting richer because they can now 'save' more of the money the poor pay them. Forget the text books look at the real life reality show of hungry, cold and wet people. With lower interest rates maybe, just maybe, the lower level can get to the breadline.

Test Tube Baby 6/4/2008 10:39:25 AM

All you wannabe-economists that are complaining about Max not knowing what he is talking about - first go fix your reading comprehension skills. For example I quote: "it would be through controlling the credit banks can give." That is what this article is all about. Stop banks from creating the situation where people can over extend themselves and stop government from adding levies and taxes that cause food and other materials to go up and not just always increase interest rates. Simple.

MajorPain 6/4/2008 10:40:31 AM

Similarly, my wife was asked whether she would mind having her credit limit extended on one of her cards. Thank god she?s smart. She said NO. However, the banks are perpetuating the situation by simply offering credit. I?m sure that with the lack of cash these days many of us are pressed to buy food on credit, thereby worsening the situation. Start by stopping the banks from dispensing credit like sweeties. Even if you can pay it back at the current rate next month might not be the same.

Matrix 6/4/2008 10:57:46 AM

JP, it is called speculative economy, i.e. buy cheaper to sell more expensive to make a profit. Finance houses buy book or debt or forward buying of product not yet manufactured. Tezano, Strange!!! I presume you voted for ANC? If so, then accept what you voted for. Alicia, Agree if items we have no control over are left out of equasion, but not if items we can control are included in your argument.

rogi 6/4/2008 11:00:42 AM

Higher interest rates in the country attract investment - foreign investment.this strengthens/stabilises the rand via increased/stable demand for it.Oil is denominated in $, which means stronger/ stable rand buys more/ the same $.If rand depreciates, imagine the prices then.Because we cannot control oil price it will still go up, now imagine rand slides,how much the prices will go up (as everything pretty much has some oil in it along the way.Hope this helps and explains these justified actions

De Villiers 6/4/2008 11:01:25 AM

Finally, someone out there has said something sensible about the interest rate, thanks Max! Where is all this money they're taking going by the way???

Stan 6/4/2008 11:02:58 AM

You know there was obviously a time when we could afford to have interest rates at a all time low, that hasn?t really changed -we still could (or at least kept at what it is now)! But what has changed, is the fact that inflation is at all time high. Now one can argue that the very inflation rate tables we use as a guide line is serverely flawed ? can you believe we still tracking to targets of between 3% - 6% in a growing economy. But, I know what they will say ? we can?t chose to use these tables in the best of times and not in the worst of times. Okay lets say we accept that. Does this mean we are to agree that this - is the only way to fight inflation? So we have increased rates up by serveral basis points in the last couple of months, and its done little to drop inflation. Why don?t we consider trying something different? Why not put in stricter lending and credit policies? Why not look more stringently at regulating certain food pricing? Why not, because it will be the road less travelled ? and will of course mean we would have to work harder (we wouldn?t want to do that now would we?) Instead we chose the easier route, increase those interest rates. Nevermind the knock on effect it will have on the economy and general public.

KAC 6/4/2008 11:15:42 AM

I fully agree with you Max. My question is that if a few people fold it will be controllable but what happens when 50% folds. All these smart economist do not realize that the 50% will take their investments down and bring the house of cards down. There needs to be stability and order in SA, we do not have both. Job loses increase crime which increases insurances which increases inflation. Not economics 101 but logic 101.

CTheB 6/4/2008 11:21:13 AM

There's a lot of confusion, possibly caused by not reading what was written, as pointed out by TestTubeBaby. If banks can't give easy credit people can't easily live beyond their means. I'm told by a lawyer that, unfortunately, the NCA is riddled with loopholes, which is probably why I still receive monthly spam encouraging me to borrow more money. I'm not encouraged to save since interest rates on savings don't go up as the repo goes up. Also, anyone who thinks people aren't spending less, look at the number of reports about rapidly dropping sales in various sectors.

Langbaba 6/4/2008 11:25:33 AM

Some of the article makes sense. I agree they should stop raising interest rates. Maybe keep it as it is for a while but upping it again? Are they crazy? Upping the rates will NOT do anyting to external issues like food and fuel prises (which is a GLOBAL problem) - rather do something about these things. Maybe give goverment help to farmers etc. While I'm on the subject, why does petrol from Sasol cost the ame as petrol from imported oil??? Why the high tax on petrol / diesel ??

pietpapwiele 6/4/2008 11:30:40 AM

Ain't gonna happen Max. Would love a bit of social experimentation though. Good luck.

Lotto 6/4/2008 11:33:41 AM

I ask again where does my money go? Where in the world by doing nothing, can the banks with the help of Tito, earn billions more next month as a result of a intrest hike?

mallencolly 6/4/2008 11:35:02 AM

Im sitting with Blanchard's Macroeconomics 4th Ed in front of me right now (2nd year macroeconomics textbook). The book discusses the theories of economists like Keynes, Samuelson, Friedman, etc. Harldy "a long time ago". What "new world dynamics" are you talking about? The idea of inflation targeting (discussed in Blanchard)was first formally adopted by NZ in 1990. Is that "new world" enough. Was Economics 1 all of your exposure to Economics? Have you kept up with developments?

Jason 6/4/2008 11:47:05 AM

Imagine what inflation would be if interest rates hadn't gone up. Just when I thought it couldn't get any worse, you come along with that basic income grant. Basic income grant is how you end up with a huge millstone around the neck of your economy. it's the dumbest, stupidest idea i've ever heard. That money could be far better spent on projects to improve infrastructure and create jobs. Far-sighted benefits instead of short term lotto-ticket money.

Will 6/4/2008 11:49:07 AM

I saved my whole life and get the fruits in my lap now ! Very nice to see your savings going up each month, thanks to people who were spending, spending and more spending, thus creating inflation. If you like to continue making the banks richer and richer, then that is your decision, don't come and moan on this blog about it. Learn your lesson, and further keep quiet ! A Saver !

Bring on the hike! 6/4/2008 11:53:30 AM

Are the repayments on the new Discovery hurting now Max? How on earth can interest rate hikes affect poor people at all? And where were you when the rates were being slashed three years ago and causing all this reckless lending? Yeah I thought so. Cheap columnist points you're after I think.

Bring on the hike! 6/4/2008 11:53:36 AM

Are the repayments on the new Discovery hurting now Max? How on earth can interest rate hikes affect poor people at all? And where were you when the rates were being slashed three years ago and causing all this reckless lending? Yeah I thought so. Cheap columnist points you're after I think.

GW 6/4/2008 11:53:52 AM

You are right - Max should stop complaining about the policies made by the people whom he so loves, and go study some economics so that he can make valid point.

InAgreement 6/4/2008 11:57:49 AM

It is the petrol price that is sending the prices of a large amount of goods and services ever increasingly higher. Thus to tackle rising prices, i.e. inflation, with higher interest rates is fighting fire with petrol. Tackle the cause of the inflation. The higher prices are already taking money out of everyone's pockets, which is effectively working as an interest rate increase anyway.

Mpho R 6/4/2008 12:01:56 PM

The gov has already put steps to control credit extensions by bank. Read the NCA if you were not aware. As for lowering tax on fuel, gov would have to find another revenue stream. This again will come from you and me. Don't expect Tito not to adjust rates to fight inflation. Do you think banks will give out credit at less than inflation. This is also how it is done all over the world.

IC 6/4/2008 12:03:54 PM

The middle class and poor will suffer if rates are increased, but the rich will still be able to buy new cars, houses ect. So the increase will not affect them? Put up tax on luxury items!!

SK 6/4/2008 12:06:17 PM

Raising interest rates will probably get you to spend less but, old debts is money spent before the inflation problem and interest theron should thus not be increased. Old debt should not be punished because of new debts.

Len van Heerden 6/4/2008 12:06:55 PM

but this time I am with him. Basic analysis shows that the relationship between interest rates and inflation rates are producing the unwanted effected. 2 years of interest rate increases from 10.5% to 15% have managed to take inflation rate from 4.2% to 10.4%. Surely, the bumbling economists should by now have recognised the relationship and told Tito, but they are too simply afraid

Test Tube Baby 6/4/2008 12:08:48 PM

Does NZ have the crime rate we have - read no investment? So take your Economics book and shove it - because your learned author of those books did not factor in our unique South African problems when they wrote their books to make money. Show me all their test studies where they looked at the South African history and tested all their formulas on our everyday lives. So get your nose out of the books for a second and think for yourself.

Louis v Rensurg 6/4/2008 12:09:54 PM

Agree only partially. As per my letter - Retroactive punishment of a few weeks ago, the way to reduce future spend is to a) make it more expensive to get credit for new debt and b) to make it more difficult to get credit at all. Have also been pusued by banks recently to take out astronomical amounts. The banks are smiling and Tito's paid for Merc or 4x4 is not threatened

Louis van Rensurg 6/4/2008 12:13:57 PM

Agree only partially. As per my letter - Retroactive punishment - of a few weeks ago, the way to reduce future spend is to a) make it more expensive to get credit for new debt and b) to make it more difficult to get credit at all. Have also been pursued by banks recently to take out astronomical amounts. The banks are smiling and Tito's paid for Merc or 4x4 is not threatened. Disagree that a blanket cut of interest rates will reduce spending ? concentrate on curbing future spending

Spider Spike 6/4/2008 12:15:18 PM

You people can keep mourning and saying all kind of words. I like it when people give example of Zimbabwe. Yes, things have gone terribly wrong up-north, but there is one big lesson South Africans can learn...that people are not losing their homes and cars!!! Why, simply because in Zimbabwe people pay cash for cars and homes, and the clever ones build their own mansions with building materials from South Africa. I will repeat it, I am a legal expatriate from Zim working for an international organisation, with a net salary of R17000 and am not mourning. If I were to ask people in this forum how much a thousand bricks cost, a bag of cement, a box of tiles etc, few might have the information on their tips. But I know and follow the prices, am building a mansion in Harare?s Borrowdale that is way past window level (ask me what is that???) and I have been here for less than two and half years. I am driving an Audi A4 2006 model that I paid off in twelve months with two cash installments from my savings. The morality and lesson of the story here is that as long as you people want realtors to build homes and sell them to you, you will have to pay through the nose?but simple things like building your own home work wonders, and yes, I shall repeat, you can learn from Zimbabwe on this one?but pliz do not learn the kind of democracy there. Wake-up you people and forget these pseudo-economics you are talking about. When you are building your own home, you learn to forgo some luxuries and comforts because you will be your own Tito, the reserve bank. Your kids might hate you for it, but stand to be grateful for the rest of their lives. Food for thought!!!

Rob 6/4/2008 12:16:25 PM

I believe the reserve bank can also increase the reserve requirement banks are obliged to hold with the reserve bank. This would reduce the amount of money available to lend to consumers without increasing the rates. RESULT: Less consumer spending on credit without hurting the consumer. Surely this can be considered???

Sad Sack 6/4/2008 12:17:00 PM

I receive substantial interest on savings, BUT need to pay taxes on this...... penalised for saving? Give me a break!

Excalibur 6/4/2008 12:17:20 PM

Max - if spending on cars, houses and TVs that people cannot afford got us into this mess, how is giving the sheeple more money going to get us out of it. You article does not offer anything of a solution. Seriously, stick to politics and hen-house homilies, you are out of your depth. Interest rate increases are a short term pain to people who are out of financial control. Ugly, but necessary. Rememeber, higher rates are good for those that SAVE!!!

Test Tube Baby 6/4/2008 12:18:34 PM

Does NZ have the crime rate we have - read no investment? So take your Economics book and shove it - because your learned author of those books did not factor in our unique South African problems when they wrote their books to make money. Show me all their test studies where they looked at the South African history and tested all their formulas on our everyday lives. So get your nose out of the books for a second and think for yourself.

Robert Brand 6/4/2008 12:19:57 PM

You don't really get it, Max. The poor don't have mortgages, car finance and Edgars accounts. High interest rates don't hurt them. High food prices do, as you rightly point out - but you can hardly blame Mboweni for high food prices. Higher interest rates will help to bring inflation - including food inflation - down in the medium term. So by raising interest rates Mboweni is helping the poor (and all of us in the long run).

TITOTHIERTOE 6/4/2008 12:21:23 PM

TITO is one dimensional, in a poor country like SA we need more innovation and creativity. Just upping the interest rate is easy to do, my hat i'll do it anyday for TITO's salary!! Come on TITO do some work for your money and work with goverment to come up with a more innovative strategy.

kristoe strauss 6/4/2008 12:30:28 PM

How about removing all income tax, but increasing VAT - making everyone - drug dealers, hijackers and pole-dancers pay tax. Then you don't punish peolple for working, but for spending. Especialy if you have the VAT on a sliding scale to increase for luxery items.

greggo 6/4/2008 12:31:45 PM

The affect of increasing rates on the individual is that you will have less money to spend on other goods. The affect of this is a decrease in demand for goods. A decrease in demand will lead to lower prices, which will bring down inflation. The whole idea behind the rate hikes are to get people to buy less goods and to use the excelent savings rates to save money. its not meant to be easy for you. that is the whole idea.