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Global crisis continues
Many of the effects that the global economy is having on us are manifested via the value of our currency in relation to other major currencies.
We import way more than we should and this leads to us being very susceptible to currency fluctuations.
There have been a number of stories regarding the Rand. Fin24 reports that the Rand was much firmer in early trade this morning (Friday 14th November 2008) but that we were still to a large extent bound by movements in the Dollar.
They also cautioned that the Russian Ruble was under pressure and if it collapsed that could trigger a reactionary 50c drop in the price of the Rand to the Dollar.
The Times reports that the Rand has been hit by international volatility, and that we should be prepared for this volatility to continue. As prices rise with a depreciating Rand, our imports become more expensive and this can place inflationary pressure on the local economy. Also when international investors get burnt at home they pull their internationally invested money back to offset their domestic losses. This can lead to runs on local bourses. Bloomberg reported that the Rand had firmed against the Dollar in early trade today.
The global economic slump is in full force now with Germany officially entering a recession according to The Dispatch.
Business Day reported that world leaders were to meet in Washington tomorrow to try and turn around the troubles. Business Day also brought us a report that the Organisation for Economic Co-operation and Development (OECD) cut its growth forecasts for the second time this year and encouraged governments to take more stimulus measures to stave off the slowdown before it becomes a full blown recession.
The Economist wrote a feature article looking at the recent economic events and asking if this was a downturn or a full on 1930's style depression. The 1930's depression was in many ways caused by inappropriate responses to the crashes of 1929. Policymakers went too far and caused the entire system to collapse. There is a possibility of this happening again, although many market watchers are aware of the historical similarities and are cautioning policy makers against taking extremist measures.
In an informative article today iAfrica compares the various ways that you can get a bit of cash to tide you over until you get paid again. The article looks at overdrafts and credit cards and compares the most savings efficient ways of using them. The Times reports that the SA Savings Institute has released figures showing that we have a 'negative' savings rate, which means that we are actually now spending some of our savings, and not actually saving as a whole at all. At the end of the day it means that we should take it easy this festive season and neither overspend or take too much credit. The best thing might be to get a savings account now and just wait it out until the January sales.