When will the financial crisis hit home?

2008-09-28 00:00

There is a general acceptance that happenings elsewhere in the world take a while to hit South Africa.

In this respect, the ongoing travails in the United States and, increasingly, Europe don’t bode well for us in good ol’ R of SA as we anxiously scour the horizon for trouble.

While the macro-economists are quick to point out the differences between our emerging economy and those of the world’s developed nations, we are constantly reminded of the fact that we are living in a global village.

And yet, it is with a degree of morbid fascination that we watch what is happening in America, specifically the rescue plan being hatched by lawmakers to bail out failing banks.

The amount to boost liquidity — U.S.$700 billion or R5,7 trillion — is enough to give one the shivers and caps a remarkably tumultuous September that saw no fewer than 10 interventionist actions to save big-name financial institutions.

The process has yet to run its full course and blamestorming sessions are in full force to find ways out of the crisis.

While there is agreement that rising defaults in the American housing market generated the downward spiral that sucked in banks, insurers, mortgage lenders and investors, there is no unanimity on redemptive measures.

Key to the conundrum is how to deal with sentiment that undeniably adds fire to an already volatile market. Some regulators in the UK argue that this is fertile territory for hedge funds that specialise in short selling — in effect, borrowing stock and selling it in anticipation that the price would drop and so buy it back at the lower price, returning the stock and keeping the difference.

Citing the demise of HBOS, the UK’s largest mortgage lender that lost more than 70% of its share value in down trading this year, proponents campaign for the four-month ban to be extended beyond 34 financial institutions.

A ban of this sort may well slow the speculation built on a spiral of negativity, but it is unlikely to dull the pain of the blood-letting.

Share shock

News of the collapse of Dealstream Securities came as a nasty shock to the stockbroking industry.

Among those affected are Control Instruments, the holding company of Pietermaritzburg-based Shurlok, that reportedly suffered a R3,4 million loss.

Control Instruments is taking legal advice, but alleged that the missing money was misappropriated by Dealstream management or staff.

The setback will not affect the operations at any of its subsidiaries, Control Instruments said.

Time to watch Aids

Educational entrepreneur Oupa Jackson has come up a with a funky idea to promote HIV/Aids awareness — by promoting trendy watches bearing three different slogans.

Fashionable, battery-powered, waterproof and durable, the watches certainly represent an unconventional awareness method. The messages are: “Get tested, get treated”; “I know my HIV status” and “I can stop TB”. The watches cost R60. For information on how to get hold of one, call Jackson on 082 6785654.

Budding trouble?

The changes have been rung at Ithala, a turn-around strategy has been adopted, consultants have been appointed to implement the strategy, and a new Mahogany Row of posts are being filled.

One appointment is intriguing, though — that of an Ombudsman. We’re not always sure of these things, but what is an Ombud doing in the province’s development finance institution? Surely the recently cleansed organisation is not anticipating complaints that need ombudding?

Farming plaudits

Contrary to what some organisations want us to believe about farmers, the sector is more progressive than some others.

The latest edition of the SA Labour Bulletin, for instance, shows that while dispute trends across all economic sectors over the past four years declined by three percent, the number of disputes referred to the CCMA (Commission for Conciliation, Mediation and Arbitration) in the agricultural sector declined by 18%. The article follows in the wake of a department of Labour report that 237, or 82%, of 290 farms inspected fully comply with labour laws, while only 53 (18%) were still contravening sections of the law.

Making a difference

We don’t know to what extent the ANC rupture has impacted on the undertaking by national Minerals and Energy Minister Buyelwa Sonjica to investigate the consultation process into the controversial multi-billion rand project to mine the Pondoland dunes, but assume she will stick to her guns.

It must be said that without an indefatigable determination to block the bid to mine the dunes of Pondoland, chances are that the landscape already would have suffered the ravages of diesel-belching bulldozers.

Marshalled principally by the Amadiba Crisis Committee and an entity known as Sustaining the Wild Coast, a broad alliance of individuals, organisations and communities stood up to the bullying tactics of the mining proponents, who, for reasons not entirely clear, evidently thought the opposition to be a push-over.

They clearly were wrong.

Last word

A person who has committed a mistake and doesn’t correct it is committing another mistake. — Confucius.

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