Relax South Africa (but don’t drop your guard)

A classic half-full, half-empty glass story

For the worry warts, these are exciting times in which fear sells. Surprising in a way, because I often get the impression many of us are beyond scare stories, thank you. With nowhere to run, what are scare stories going to help you?

This isn’t an invitation to let your guard down. Those who have done so have in any case been wiped out long ago.

But are there constructive stories which don’t (as the Governor of the Bank of Japan now seemingly is doing) only rely on Peter Pan willingness to believe?

Is there balanced reasoning to be had, according to which we will not shortly be scuppered like just another Concordia or Yangtze pleasure boat?

There is such evidence, only it is in the eye of the beholder. So you can only blame yourself for what you end up believing & discarding.

The global situation is not close to dire for us.

relax-south-africa-but-dont-drop-your-guard-2We aren’t another hapless Greece, about to launch ourselves into the wilderness, or a strutting Russia devoured by insecurities shaping its poor neighbourliness.

Unlike Malaysia, Vietnam, Philippines, Taiwan, Brunei or Japan, we aren’t having an argument with China about territorial rights.

We aren’t an oil producer whose national budget is based on $120 oil where only half now prevails (there are a few too many of those).

We aren’t having a vicious civil war like Syria, Iraq, Yemen, Libya & a few others.

We aren’t in recession like Brazil & Russia.

We don’t have a daily boat people invasion as they are having in Europe & parts of South East Asia (our Zimbabweans arrived years ago), though there is an exodus from elsewhere in Africa favouring us, enriching our social culture and labour market and adding to our economic GDP well-being.

relax-south-africa-but-dont-drop-your-guard-3If these geopolitical anxieties are a touch too exotic for someone safely wine curtain ensconced in Cape Town, are the global financial concerns still central?

A normalising Fed steamrollering us, a failing Europe sideswiping us, a speculative China collapse sinking us?

To all these I am inclined to say “yes, who knows, but not now, please”. Not because it doesn’t suit, but because in each case something is missing.

In the case of the US economy & the Fed it is vigour. Don’t let that 280 000 jobs number last week mislead you. The US is advancing but at less than full design speed, taking up slack resource, but less fast that would suggest a scramble yet.

This isn’t just hopeful, it is a miracle that the world is granted a slow recovery as anything fast could easily have led to new dislocations.

This doesn’t mean we are going to be completely untouched by what’s playing. The Dollar is being rerated higher on higher US interest rate expectations and this is causing adjustments worldwide. These, however, are relatively orderly compared to what could have been in a scramble.

We also face more adjustment on the Rand and fine tuning of our interest rates (higher), but it likely won’t be the 25% shock experience of a 1998 or 1984.

Europe failing? Her regional challenges have only started, as much from Russia as Britain, Spain or Poland. And beyond them their loom endless more questions about what

Europe really likes to be, a dangerous question to ask in a marriage of convenience among 28 very diverse partners.

relax-south-africa-but-dont-drop-your-guard-4But imploding is something else than load shedding, as our Eskom well knows. Just keep tripping those switches at dire moments and the situation overall will remain fine, though patsy in places. Not unlike Cape winter weather.

Too much is at stake in Europe, and the resistance not yet overwhelming enough. And thus they soldier on. Like America in recovery, but slower still, and likely remaining for longer on the ECB drip (just like Japan).

China is in many fine pickles simultaneously. In argument with close neighbours and the US, financially somewhat unstable because of too much speculation, slowing down as its growth engines have become exhausted and in search of new ones.

There is enough here to suddenly surprise us with its downside, yet China is so far succeeding in containing fallout. Will that continue? The betting is that it will but don’t take anyone’s word for it. Very much your own call.

Commodity prices? Possibly still some downside but of late finding resistance levels – iron ore, oil. But is it real or just bounce? World demand adjustment is far advanced, supply sides are adjusting too. Our terms of trade may have absorbed most of its cyclical hit by now.

relax-south-africa-but-dont-drop-your-guard-5Our fate, Brutus, isn’t in our stars but within ourselves.

This is where the focus shift to our domestic demolition derbies. Politically perhaps exciting stuff, but also leaving you wondering. Our democracy is a robust version, allowing much venting without much being achieved, except targeted enrichment and impoverishment. And on we sail.

According to some reckoning, this can’t go on indefinitely. Yet we may be surprised how long the vandals can keep up their plundering even as the citizenry & peasantry as of old carry on regardless with their lives.

There may be more decay, even as we multiply the new globally-sourced gadgets and keep on transforming our lives, with new technology, new fads, new mores, new thinking doing the driving, even while getting used to load shedding of electricity & water as our public service gradually evaporates, privatizing the truly indispensable bits as we go.

There are fates far worse than this, watching Ukraine, Nepalese, Syrian, Greek footage or Mediterranean boat rescues.

But we too have our protests, which can get out of hand. Large parts of the SA population are living lives not all that different from those hapless foreign ones, and its hopelessness is demanding to be addressed.

The longer this is allowed to fester, the greater the groundswell of political discontent. Change is coming. Can it be channeled constructively? That remains to be seen as coming years play out.

But it is likely a long play, not a short one, as the past 100 years should have taught by now?

Source: Cees Bruggemans