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Economy
Friday, February 1, 2002
Wet behind the ears

Blaming the rand’s weakness on speculators selling the currency short is missing the point.

True, the rand is facing fierce negative trading through dealers selling rands that they do not possess for delivery at some future date. The further forward they strike the deal the more confident they are that the rand will continue to depreciate. This places more rands on the market than is needed, which pushes the price down further.
When the deal matures, the speculator merely buys the rands he needs in the spot market at current cheaper prices to match the rands he needs to deliver in terms of his forward sale at a higher price. He pockets the difference; and we pay the price.
But the real point of what’s going on here is why is the rand weak in the first place? Why, and how has South Africa opened its doors to such destructive vulnerability?
The answer is very simple, crime.
Oh, no, not that word again, I hear you cry. Everyone has belaboured this point ad nauseum. Surely you can’t blame our currency crisis on that too?
When someone urinates in the street (I see this at least once a week, and I don’t travel that much) it says a lot about our society. Crime starts with the little things in life, the petty pilfering, the cheating in exams, using your cell phone while negotiating a corner and changing gear at the same time, chucking litter onto the road, lying to the boss about being on sick leave, or breaking the speed limit. These and many petty malfeasances, of which we see hundreds every day, including urinating in the streets, are a sign of the breakdown of law and order.
No one has respect for the law: many South Africans do not have respect for one another, and the government certainly does not respect its people — so why should speculators respect our currency?
Corruption, fraud and misappropriation of resources are common in central and provincial government, and rife in local government. Politicians dither over the AIDS pandemic, fail to take any initiative regarding Zimbabwe, and spend most of the time bickering about trivialities, and justifying how and when they can take their next overseas trip.
All government can do about crime is release prisoners when our prisons are too full. Even the police chief says he is not prepared to arrest people for using cell phones while driving, despite it being against the law. His force has ‘more important’ things to deal with.
So where is the resolve? Where is the authority? And where is the respect?
Meanwhile, thousands of small businesses are closing down. Citing labour problems, a restrictive tax regime, unstable markets and affirmative action, entrepreneurs either enter new business ventures that do not need staff, or they emigrate. Unemployment rises; productivity goes down while skills continue to pour out of the country. The number of ‘qualified’ people with false certificates continues to escalate, while government sees ways to lower the standard of education so that everyone can achieve a matric.
Nurses, teachers and the police are both under qualified and underpaid: skilled people won’t sign up because the pay is bad; poorly qualified people will because there’s nothing else they can do, which means many of them are not really right for the job. Nurses charge patients for food, steal from the hospitals and think nothing of abandoning patients under critical care and going on strike. The police are involved in hijack syndicates, fail to respond to petty crime, collude with escaping prisoners, abuse others with various forms of torture, lead their dogs into vicious attacks, and take part in burglaries. Teachers claim salaries for ghost workers, sexually abuse children, acquire work with false certificates, and indulge in absenteeism at the drop of a hat.
Meanwhile, the estate agents’ board is facing a huge escalation in payments from its fidelity fund. The law society is opening its hallowed chambers to the eye of the public, acknowledging its need to deal vigorously with corrupt lawyers if it is to save the shrinking integrity of the profession. It may be too little too late: few associate the word ‘profession’ with its original meaning.
Urinating in the streets symbolises the crime, corruption and immorality of our society; things that are going on; but one can’t quite put a finger on it. The occasional revelation, in this case in the form of a collapsing rand, only serves to remind us that there is much hidden under the carpet. There’s too much dithering, too little resolve, too much prevarication over investigations into corruption, and too many immoral stances being taken on the basis of ‘righting the wrongs of the past’.
I heard a very disturbing story the other day. A white family had had their home repossessed by a bank, and this property should have been offered for sale through certain estate agents in terms of a standard agreement, but it wasn’t. By chance one estate agent found out about this repossession and was able to present the bank with a firm offer to purchase of R265 000. However, the bank adopted delaying tactics and later said the property had already been sold, evidently to an Indian for just R135 000.
With keys in hand the buyer entered the property and all but physically ejected the previous owners, lambasting them with racial abuse. Thus he attempts to legitimise his corruption and fraud by asserting rights to equality. It is, of course, a fallacious argument and one that has been applied far too often.
Meanwhile, they carry on urinating in the streets and the rand remains vulnerable to speculation. By Nigel Benetton
 

Copyright © Insurance Times and Investments® Vol:15.1 1st February, 2002
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