I have followed the South African economy for some time. I am also an Apartheid birthling who grew up in the 80’s when I believe our current economy was planned.
Apartheid South Africa was an unacknowledged socialist state. While the whites were fighting against Communism, it was obviously not something that could have been said openly. Apartheid media had to be extensively censored to keep it secret.
Although I was a few months short of legal age to voted in the 1994 election, I was well aware of what we were voting for… or so I naively believed.
We were voting for other races in our country have what we had – free education, free health care, almost 0% unemployment rate, et cetera.
That Utopia never happened. I am of the view that it never materialised because the ANC exchanged the socialist system with the capitalist system we have now.
The past two years, we have experienced a lot of market fluctuations since President Jacob Zuma dared to replace the sacked Minister of Finance, Mr. Pravin Gordhan (the first time). The Rand depreciated overnight but slightly recovered when Gordhan was reinstated two days thereafter.
I immediately asked myself: If the Rand reacted so strongly to Gordhan losing his position, why didn’t it react strongly when Gordhan was accused of corruption and fraud a few months earlier? I continued to watch this strange occurrence repeating itself in our politics and markets.
Regularly thereafter, the stock and currency markets reacted aggressively into the negative every time Gordhan was “mistreated” to such extent that the Moody’s international investment status of South Africa became “junk”.
It’s not the first time South Africa was rated as “junk” to investors. During the rule of both our forgotten fallen hero, late Mr. Nelson Mandela, and the economics master, Mr. Thabo Mbeki, it happened, but nothing was said about that… or it really didn’t matter because business, strangely, seemed to continue without the expected hiccups.
Now that everyone hates the Zuptas, it has evolved into an economic crisis, A few months ago, South Africa officially entered a period of recession after three quarters experienced negative growth.
What does all this have to do with the normal man in the street who is trying to make a living? To be honest, only the rich people should lose on their investments they had been speculating on, or should I rather say gambling on. The media blew up the story out of proportion, creating the impression that the majority were immediately suffering.
Technically, the media frenzy propagated that prices on essential foods and other household needs must increase. Farmers and other industries joined the craze, increasing the prices of their produce in order to curb the expected price hike which was caused by President Zuma and the Guptas. Because that’s what the media told them. Told us.
The masses mostly don’t understand how the markets operate. If they did, they’d realise that the media was making them poorer.
Let me explain in easy to understand economic jargon…
When a company wants to get money to extend its business, it can get the funds in a couple of ways. For starters they can raise capital from their own investors or borrow money from a bank or other credit provider. In many cases, companies list on the Johannesburg Stock Exchange (JSE) or other stock exchanges, and publish a Prospectus which is basically a formal business plan to potential investors to buy shares in the company in order to raise the required funds in the form of shareholders capital.
Investors buy the allotted shares of these companies and become shareholders. The money is then received by the company which it in turn uses to fund the extension projects. The company receives and spends the money obtained in this way.
When these shares are sold on the JSE by these shareholders, the money for those shares are exchanged between investors and not the company, unless the company owns some of its shares under certain conditions which is not happening a lot. The company does not feel the krunch as such, because it already received those monies for the shares.
The impression the media gives to us, is that when the markets fall due to the Zuptas it is blaming, that all these companies are losing money which is not true. The ones who are most losing money are the investors who bought the shares of those listed companies instead.
Frankly, these investors are actually economic “gamblers”. They merely read market trends and make a decision whether certain stocks (which are grouped shares) or value of a currency will fall or rise within a certain fixed period which period could be minutes or months.
If one investor loses, another one gains. The money or value does not disapear somewhere down the line, and therefore it is wrong to make us believe that a “recession” is bad. If the majority of investors lost, it simply means that the minority of investors have gained what the majority have lost. Simple. Does that make any sense to you?
That is why the double inscription method of accountancy learns us this easy to understand principle. What happens on the one side, must balance out on the other side.
The media only tells us about the losses or increases of our markets whichever one is relevant to influence our politics. This other side is something that one does not talk about. It’s treated like the “dark side” of the moon. We only see the front page, but the back page is always kept quiet.
Mr. George Soros is a well-known billionaire investor. He made his money doing business on the “dark side of the moon”. When a market tumbles, he is usually on the receiving or redistribution part of the collapse. He is part of a small elite I think of as Darth Vaders.
These Darth Vaders are openly and secretly influencing world politics. They are likely the cause of the economic fluctuations we are currently experiencing here and elsewhere in the world. They literally shift billions in currency around in places where they believe new government is needed. They have become our rulers, not those we voted into government.
With a communist or true socialist system, this would not have happened and that is why the media had been chasing communism as the so called “bad” and “oppressive” system since Russia showed us its benefits after the First World War.
Christians can consider this a reason why Jesus Christ was hunted. He was an activist against Capitalism (even though the term was not known then). Even our churches refuse to tell us this truth. The meaning of “the love of money is the root of all evil” is conveniently evangelised away by rich pastors, getting rich by taking from the rich and poor.
Capitalism, just like the media, is the worst enemy of the people. The economy of South Africa is currently being influenced by nothing more than the mega rich gambling on whether a good or a bad political move is going to happen.
Insider trading has moved out of board rooms into the offices of those who hold an important political position. For example, when Adv. Busisiwe Mkhwebane the Public Protector announced her report regarding the Reserve Bank on 21 June 2017, the markets tumbled. Just imagine if someone in her office who knew the outcome of the report would tell an investor about it before it was made public, how the sudden sale of multi-million Rand stocks or Rands would have reached the markets by the time such an announcement was made.
A few months ago, USA President Donald Trump made a public remark against his country’s judiciary which sparked a drop in markets all over the world. Imagine if Trump had informed his own investors about his potential public ‘outburst’ before it happened. How much money could they have made. Just “dreaming” loudly.
You should get my drift by now. The purpose of the politics we see may not be real.
I doubt whether Jacob Zuma (JZ) is really as bad as we think he is. Or maybe, like others, he is merely an actor used by the Darth Vaders to shift more wealth to them. Maybe JZ is playing the game he is playing to let us one day realise how we are being manipulated… I am not defending the man. In the smaller picture, he has things to answer for. But in the bigger picture, anything is possible in a system that isn’t honest with us, a system built on greed rather than public service.
There are too many unrealistic things happening with out markets. After I became a Forex participant, I realised that the markets are nothing more and nothing less than a game of Roulette. Just like casinos earn most of their money from those who come to play a quick R100 on a Sunday evening, the Darth Vader Group earns most of its income from the small Forex traders who plays $1 at a time… aka us.
Until capitalism is replaced with something better, true liberty will remain a dream for most of us.