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Authorised Financial Services Provider – FSP No: 859

Authorised Financial Services Provider – FSP No: 859. The South African Economy – Are We Making Progress?. Presented by: Dawie Roodt 29 September 2008. 2008: Subprime & Inflation. International Economic Growth. Source: International Monetary Fund, 2008. Subprime, Say Wha’ ??.

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Authorised Financial Services Provider – FSP No: 859

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  1. Authorised Financial Services Provider – FSP No: 859

  2. The South African Economy – Are We Making Progress? Presented by: Dawie Roodt 29 September 2008

  3. 2008: Subprime & Inflation

  4. International Economic Growth Source: International Monetary Fund, 2008

  5. Subprime, Say Wha’ ?? Subprime definition: A loan that is offered at a rate above prime (0.1% - 0.6% higher) to individuals who do not qualify for prime rate loans. A.k.a “NINJA” loans Low interest rate environment Large-scale lending and borrowing

  6. Fed Funds Rate – A matter of Interest Nasdaq Bubble Credit Crises Inflation Subprime Lending Source: I-Net, Efficient Research, 2008

  7. It’s All In The Packaging Subprime Loan RISK Sell Sell Sell Sell CAPITAL Resell Resell Sell

  8. Excellence in Banking Sector? Global Credit Crisis Bear Sterns, Lehman Brothers, Merril Lynchbankrupt or taken over AIG, Fannie Mae, Freddie Macbailed out SA Banks Locally: No Direct Exposure International: Limited Exposure Thorough Assessment by Registrar of Banks in July 08 : “financial system is sound”

  9. International Monetary Policy Source: Efficient Research, Aug 2008

  10. Super Cheap Money! Source: Efficient Research, Aug 2008

  11. Is SA the next Zim?Institutional Approach

  12. Institutional Approach to Answer Independent Judiciary Private Property Rights Freedom of Press Independence Central Bank Democratic Process

  13. Destruction of Institutions Democracy:New Leader Appointed Ecstatic! Change Economic Policy: More ‘democratic’ Take from the “Haves” (non-supporters) Give to the “Have-Nots”(supporters) IGNORES Private Property Rights Negative ImpactonInvestmentSavingsConfidence UNDERMINES Economy

  14. Destruction of Institutions Democracy:New Leader Appointed Ecstatic! Change Economic Policy: More ‘democratic’Take from the “Haves” (non-supporters) Give to the “Have-Nots”(supporters) Inflation: 200,000,000% ?? IGNORES Private Property Rights Negative ImpactonInvestmentSavingsConfidence UNDERMINES Economy CapitalDwindles…. Start to Print Money DESTROYS Independence Central Bank Media & Press: Report on Disapproval and Objections by Public Court & Legal System:Public tries to find Justice through legal system DESTROYS Independent Judiciary BANS Freedom of Press

  15. Destruction of Institutions Democracy:New Leader Appointed Ecstatic! Change Economic Policy: More ‘democratic’Take from the “Haves” (non-supporters) Give to the “Have-Nots”(supporters) DESTROYS Democratic Process Democracy: Mugabe-Style1 Man, 1 Vote, 1 Candidate! IGNORES Private Property Rights Voting System:Public tries to vote dictator out Negative ImpactonInvestmentSavingsConfidence UNDERMINES Economy CapitalDwindles…. Start to Print Money DESTROYS Independence Central Bank Media & Press: Report on Disapproval and Objections by Public Court & Legal System:Public tries to find Justice through legal system DESTROYS Independent Judiciary BANS Freedom of Press

  16. Destruction of Institutions Democracy:New Leader Appointed Ecstatic! Change Economic Policy: More ‘democratic’Take from the “Haves” (non-supporters) Give to the “Have-Nots”(supporters) DESTROYS Democratic Process IGNORES Private Property Rights Voting System:Public tries to vote dictator out Negative ImpactonInvestmentSavingsConfidence UNDERMINES Economy CapitalDwindles…. Start to Print Money DESTROYS Independence Central Bank Media & Press: Report on Disapproval and Objections by Public Court & Legal System:Public tries to find Justice through legal system DESTROYS Independent Judiciary BANS Freedom of Press

  17. Institutions in SA

  18. Destruction of Institutions in SA? Private Property Rights 2008: Land Expropriation Bill

  19. Destruction of Institutions in SA? Freedom of Press “Mbeki received R30m”

  20. Independent Judiciary Destruction of Institutions in SA? Zuma’s Mauritius Papers

  21. Independence Central Bank Destruction of Institutions in SA? SARB Hikes 10Times! interest rate

  22. Destruction of Institutions in SA? Democratic Process POLOKWANE

  23. Is SA the Next Zim?Economic Approach

  24. ZimBOBwean Economy: Breakdown

  25. South African Economy: Breakdown Source: StatsSA, Q108

  26. South Africa:

  27. Economic Overview

  28. Household debt to disposable income Q208:76.7% 59.4% 56.9% 50.2% 44.5% Source: SARB and own calculations

  29. Savings to disposable income of households 9.2% 5.4% 2.6% 0.5% Q208:-0.5% Source: SARB and own calculations

  30. Economic Overview

  31. Inflation: Old Basket CPI Average: 2008 8.5% Source: StatsSA and own calculations

  32. Inflation: New Basket(?) CPI Average: 2008 9.4% Source: StatsSA and own calculations

  33. Economic Overview

  34. Economic Overview

  35. Economic Overview

  36. Fixed Capital Investment Source: SARB, 2008

  37. Eskom: R343bn (5 yrs) Transnet: R78bn (3 yrs) 80 New Capital Projects – R336.1bn (2008 to June)50% higher than 2007’s total R224bn Government’s Infrastructure Spend Source: Budget Review 2008/09; Nedbank, 2008

  38. Economic Overview

  39. Background Deficit Gold Surplus

  40. Theory versus Practice expansionary FISCAL SURPLUS

  41. Spending Priorities Social Spending

  42. Social Grants Beneficiary Numbers Source: 2008 Budget 2007: 11,9m recipients 26.0% of SA population

  43. Authourised Financial Services Provider – FSP No: 859 www.efgroup.co.za

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