What effect does the international credit crisis have on us?

[Pap_sak]

I have started to trickle some money in the stock market for the long term - seems like a good bet. Might have a small sale in the shop at the begining of January - having sales before Christmas is just madness in my book - unfortunatly if one shop chain starts the others seem to jump on the bandwagon, bye-bye profit margins. Will be on the look out for auctions - I understand that a few sports shops might be closing soon - and i love my bargains..

[Dave A]

One prediction has come true.

Ah - glad you asked ......I am quite confident we are going to have a plan and that action steps have been taken to ensure that a plan is produced.

And it only took another 2 months

Government, business and labour finalised a blueprint on Thursday for minimising the effect of the global financial crisis on the South African economy.

The economic response plan was put together over four weeks by a panel of senior figures from business, labour and the state who were first convened by Motlanthe in December.

Former top mining executive Bobby Godsell said the plan was aimed at "saving jobs, saving people's houses and saving as many businesses as we can" while keeping the economy as healthy as possible.
full story from M&G here

The government's strategy for weathering the crisis would include:

A national jobs initiative,
I assume this is something new, over and above the existing jobs-for-pals initiative.

Sustained infrastructure spending,
Evidence that the arms deal was too much money didn't stop it from happening. Why hold back on the big infrastructure spend now?
BTW - How are things going enforcing the local investment parts of the arms deals contracts? A good time to call that IOU in!

Finding bridging finance for troubled sectors
I vaguely recall we used to have some funds that did that sort of thing. For example the Land Bank was supposed to help farmers. Does this mean the Land Bank won't be financing private golf estate development deals anymore?

Giving retrenched workers speedy access to unemployment payments and further skills training.
Well, that was the theory right from the beginning, surely. Glad to hear we're finally going to get this nailed down right.

Now what chances of moving this to delivery any time soon?

[I Robot]

Government response to international economic crisis

Following the final meeting of the Presidential Economic Joint Working Group today, the committee has released a framework for South Africa's response to the international economic crisis. The full report is available on the following websites: [1]http://www.gcis.gov.za, [2]http://www.info.gov.za.

More...

[The direct link to the report can be found here]

[duncan drennan]

So what exactly about this "blueprint" is different to any other speech? It is always the same, more jobs, infrastructure spend, bla bla....

How about this:

• Relax labour legislation which will have a two fold effect. Struggling companies will be able to survive instead of being pulled down by dead weight. Smaller growing companies will be able to hire people without the fear that if things don't quite go as planned they have options to decrease their expenditure. Creating a greater flow of employees also allows the cream to float to the top, and places a focus on productivity.
• Spend more on education. Education is the key to our country's success and creates opportunities for people. There will never be total equality, but there can be equality of opportunity.
• Stimulate small business. When people lose their jobs they are often left with little choice but to try and make it on their own. Help them, rather than stifling them. Work with small business (get involved with this forum!) and figure out which legislation is the most onerous. We want the country to succeed - it is good for our businesses!

I am sure that we can all think of more.

[wynn]

So reducing the interest rate on 'primary residence' bonds is a no go? probably because there is no way you can misspend or misappropriate an interest reduction.

[Dave A]

How about this:

• Relax labour legislation which will have a two fold effect. Struggling companies will be able to survive instead of being pulled down by dead weight. Smaller growing companies will be able to hire people without the fear that if things don't quite go as planned they have options to decrease their expenditure. Creating a greater flow of employees also allows the cream to float to the top, and places a focus on productivity.

Unfortunately very little chance of that as the current thinking in government seems to be the exact opposite. Consider this by Trevor Manuel yesterday:

Replying to the first reading debate on the Appropriations Bill which he tabled in the house a week ago and which sets out his annual budget spending proposals, Manuel added that the recommendations proposed by the opposition Democratic Alliance's Dion George were like the economic prescriptions which were offered in the US from January 2001 to January 2009 -- the period of the administration of George Bush.

“It's a period during which you have the complete attrition of the state. The unfettered control of markets and the excesses that the world has lived through,” the minister said

He stressed that there has to be a moral dimension to economic policy. “Consider the fact that there are 43 million people there who do not have access to healthcare because they are uninsured,” he said.

“Consider the myriads of people who are just disgorged without much protection beyond a short period of unemployment insurance. Just disgorged, because the labour markets are as free and unregulated as they obtain there. Consider the vast differences between the schools for the rich and schools for the poor.”
from M&G article here

Hmm. Well except for the labour hiring and firing, is the situation on the other points that much different here? BTW - Where are the government ministers sending their kids to school?

Anyway, back to main topic -

There was no understanding that labour legislation was hurting employment when times were good. What prospect of them seeing that it's still hurting employment in an "employment recession"?

Maybe if we remind gov that staff are paid out of company profits (before shareholders get their slice come to think of it), the concept might sink in that profit is key to the whole economic engine and people will get off their "profit is sinful" hobbyhorse.

More profits = more jobs.
Less profits = ....
Kinda obvious, really.

[Graeme]

The Bank Yuppies strike again!

According to a report in Fin week (23rd April), Standard Bank will find out as early as next month whether it will face any official sanction for contravening the Bank Credit Act. The bank has publicly acknowledged it flouted the law when it automatically increased the limits on the credit card accounts of 60 000 clients (without their approval) in March this year.

A senior executive of the bank acknowledges bad judgement calls were made within the bank. Staff eager to grow Standard’s lending books failed to follow proper procedures when they automatically increased the limits of a select group of the bank’s best card customers. “We have taken people to task for allowing things to slip through the cracks“ he said.

Standard Bank could very well avoid official sanction because of its immediate recognition of the problem and the remedial action it took, quickly reversing the account limits that had been increased, and alerting the NCR about the issue.

Well good, but it seems that certain bank employees world-wide are far too damn eager to make a quick bonus for themselves and to hell with the consequences. Something wrong here; either they are poorly supervised, wrongly incentivised, or are lacking in “moral compass”, or all three. It is this state of mind that has precipitated a world financial crisis that will take years to recover from and has nearly or totally destroyed so many companies, dragged so many innocent people into unemployment, and has nearly or totally ruined the retirement provisions of millions of people.

[Dave A]

... they automatically increased the limits of a select group of the bank’s best card customers.

That's quite flattering

I'll also point out that they whipped those limit increases away without any warning too. I was quite relieved I hadn't tapped into the extra limit, but did spare a thought for those who might have. I suppose if they really were selective there weren't too many blushes on that point.

The whole thing was quite a wierd experience. It really seemed against the grain given all the reports of banks tightening up on credit extension. And if my experience is anything to go by, those limit increases were not small.

[garthu]

Some more perspective on this - One of our clients didn't get a bond this week due to credit limit. There was 3900 on the credit card with an allowable limit of 100k. Banks reason, over exposed! The bank takes into account you allowable limit...

[insulin]

One thing that is being overlooked is not the state of our banks but rather industry. Most if not all our mines are owned and operated by UK profiteers and American industries.

The same also go for our steel industry. The sad truth is we are being exploited and our recourses raped. When money is in scarcity large firms start to cut corners on health and safety, environmental health and safety, worker relations and even morality falls out of the bus.

The truth is that the credit crunch is a good excuse to increase cheap labour thus poverty is once again exploited. This is an age old ritual... Fact is our economic stability was an illusion so that investment and wealth could be generated based on phantom stability. Once the wealth was generated they pulled out.

Bankruptcy is a well executed system for wealth to be stripped from any individual thus facilitating corporate takeovers, property seizure and above all it devaluates policies, life cover and retirement funds. Basically every single aspect that has connection too wealth is devaluated.