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South Africa and the crisis

By Staff Writer
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South Africa and the crisis

The global financial crisis is now a fact of life. Its effects are widespread and getting larger everyday.

People are being retrenched all over the world and this is even starting to happen here.

The South African government, according to BUA News, has pledged R 10 billion over the next three years in order to save South African jobs during the financial crisis.

The details of this initiative were released last Thursday.

Apparently support will be given to sectors like clothing, textiles, footwear, mining, auto and capital equipment, which are already showing signs of a decline.

There will also be money available to other sectors that are under pressure including engineering, electronics and building materials.

Companies that get the bail out will have to sign reciprocity agreements committing to what they will do in order to restructure and survive. These programmes are also designed to tie in with the Expanded Public Works programme.

The goals of this initiative are to 'minimize job losses and economic shock, ensure that all activities are aimed at strengthening the capacity of the economy, and that there [are] high levels of investment in public sector infrastructure'.

This emphasis on lessening economic shock is an interesting one although possibly not related to Naomi Klein's 'The Shock Doctrine'.

The Shock Doctrine explains the concept of disaster capitalism where through the use of economic shock therapy, during the ensuing economic chaos (aka during a financial meltdown), key public industries are bought up and privatised, releasing profits for the new owners that were built up by taxpayers, who of course, see none of it.

It seems that the government has become wise to this, or possibly not. There is a very interesting chapter on South Africa after the fall of Apartheid (that was our last major shock). Very interesting stuff as reviewed in the New York Times by Joseph Stiglitz.

The Mail and Guardian reported that South Africans had formulated their own response and were frantically buying up gold.

Gold tends to retain its value rather well over time, and while it will not bring speculative returns it will hold value in the face of crashing markets, which right now is what you want, your assets to hold their value.

In Europe there are calls for much stricter regulation of the financial markets to prevent these sorts of excesses taking place again according to a Business Day article.

Fin24 came in with a look at the effects of the crisis on real people and the finding that due to fear of losing our jobs, we South Africans are losing our work/life balance as we graft harder fearing retrenchment.

If you are feeling the stress why not work your budget out frequently, then you will know exactly how you are doing financially and what the stakes really are.

 

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