Economic bloodletting

In relatively recent times it was considered standard policy in the [then] emerging modern medical profession to bleed their patients, by opening the veins in order to drain out the disease that was slowly killing them.

That was when we discovered that there is a point at which further bloodletting will cause the veins to collapse and resuscitation would become perilous.

With Mr Mboweni’s shock suggestion that we stop the flow of money through the financial system by advancing rapidly to a 2% hike in the rates, rather than suffer the death of a thousand cuts through inadequate small ‘bleedings’, or in this case, applications of pressure; he could bring us perilously close to the point where the veins either rupture or collapse.

In reality monetary policy is an inadequate tool for managing the financial affairs of a country… in particular controlling inflationary trends. It is rather like using a tourniquet on the ankle, to deal with bleeding from the femoral artery [in the thigh], by slowing down the blood flow returning to the heart and hence onward back to the damaged artery. It is slow and uncertain.

To start with monetary policy can have minimal effect on negative externalities like imported petrol prices and imported food inflation. It can also have only a minimal impact on negative internalities like, supply concentration issues in the overall consumer distribution chain; and the increasingly dominant role of rampant administrative price factors, like electricity tariffs, property assessment rates, stealth petrol taxes and fixed line telephone calls that are also external to the control of the commercial financial system.

It can at best slow down, or rather skew, the rate of consumer spending and cripple those who purchased on credit in the past, in blissful ignorance of the scourging effect of rising variable interest rate patterns.

Mr Mboweni’s previous bout of gung ho interest rate management early in the decade brought the country to a grinding halt in about six months. [My contribibution: Citizen 30/9/2002 refers]. By this time therefore the actions taken by the esteemed reserve bank governor should be manifesting in a dramatic slowdown in the rate of credit extension. The fact that it isn’t, and that he wants to whack us with another two percent jolt, indicates that the real problem is not being dealt with, and is perhaps not even being regarded.

Reviewing the battery of reasons for our alarming inflation spiral, put forward over many months by reams of economic specialists, one possible source of rising inflation is consistently missing from the analysis. Yet this missing ingredient is, potentially, a malignant brain tumour, and on the rare occasion its contribution is raised it is either “treated with the contempt it deserves”, or is resolutely ignored, as though someone had impolitely farted.

So I apologise in advance to my racially sensitive readers for introducing such an inherently uncongenial set of images into what some may choose to regard as a racially charged observation: offence is not intended. I believe that we need to raise this question.

Is it not time that we seriously interrogate the contribution to our economic decline made by the present [apparent] tidal wave of so-called “empowerment deals” that proliferate the pages of the business press?
Presumably these “deals”, that often seem, to this reader, to be the ‘only game in town’, to the extent that they are now viewed as “value propositions”, rather than as “redress and equity” elements of socially responsive behaviour, are all financed through credit related instruments. That much of the finance needed is ‘dodgy’ is evidenced by the alleged decision, by those framing the new companies act, to jettison [for better or worse] the former regulation that precluded companies from extending credit to their prospective shareholders; in order to finance the purchase of their own shares. This idea was always [previously] regarded in much the same way we regard holding oneself up by one’s own shoelaces: impractical at best and larcenous at worst.

Presumably too, for a range of vested interest associated reasons, we are choosing not to notice a funnel of money pouring out of an opened wound and sloshing its way about: money that has nothing to do with the credit act, the motor or furniture industries or any of the normal pressures that prevail in an ordinary western model economy of the type for which monetary policy is designed. One could argue that monetary policy is rendered nugatory by socially motivated State interventions that fly in the face of conventional market related practices.

In effect we are witness to an open funnel of new ongoing credit formation in the form of an unprecedented surge of unlocked corporate capital being realeased into the econ omy. In a practical sense State policy and applied pressure is driving us at an escalating speed to the advanced, albeit early stages, of the eventual complete takeover of the existing, highly concentrated economy, by what increasingly appears to be an emerging rentier class.

It is hard to see just where the ‘People’, who are increasing in numbers and spilling into and over the margins of extreme poverty, are really benefiting from all these empowerment deals that make some ‘chosen’ people rich beyond the wildest dreams of avarice. We do know that the ‘People’ are restless.

In this empowerment game of ours we seem to be replicating the infamous Bumaputris of Malaysia. The very existence of this supposedly “empowered” class has become an indirect tax on Malaysia’s competitiveness, and has done little to dent the poverty problem in that country. It is an unspoken source of rising social discontent in that country, as recently revealed in a shift in the electoral pattern in that country for the first time in decades. I won’t refer to the rising tide of social discontent in our country, which has recently disgraced us with its extremities, but which has been simmering for years.

Our inflation rate is dramatically higher than that of nearly all our trading partners and where it isn’t, as with China for instance, then we are effectively importing deflation from those quarters: thus indicating that the true gap between our rate and that of the Euro zone or the USA is even greater than we imagine. We are effectively a shrinking economy: 2.1% growth versus 12% inflation equals backwards sliding faster than going forward: equals shrinkage on an alarming scale. And the inflation trend is up while the growth prognosis is constrained.

There is only one classic reason for such a disparity… we produce far less than we consume… in other words we seem to have stopped working hard in the interests of hard “dealing”.

Now if Mr Mboweni decides that the only way to impact on that flow of “deals” is through the inadequate medium of dramatically tightening the tourniquet to the ankle, then I would have to agree with him that such drastic action may well be necessary, given the fiscal constraints under which he has to manage the financial affairs of the private sector, the moral imperatives of the ‘redress and equity’ programme: and the denial with which it is all associated.

However we should all realise before it is too late that we are proposing to induce a brain haemorrhage and a possible rupturing of the jugular vein, in an increasingly desperate effort to improve the overall health of our patient. Like those bloodletters of old we are in all probability using the wrong instruments to deal with a [possibly?] misdiagnosed cause.

Happy blogging
The Blogospherian.

What happened to the monks?

Do we assume that the five week delay in producing results Zimbabwe’s [Rumbabwe’s] Presidential election was motivated by the need to rig the outcome, or incompetence? Do we actually believe that the ten day silence on the part of the fascist leadershipm of Myan Mar is motivated by anything other than malice... have state enemies perhaps been disappearing into the mud and prying eyes are not welcome?

The sense one gets from the general wave of comment emanating from all sides of the debate on a future Zimbabwe is that the eventual outcome in Zimbabwe is not credible. Notwithstanding this, we have just watched SADeC [the Southern African Development Community], and the AU, effectively condone an unconstitutional form of administrative Coup d’etat. The key to this lies in accepting that the lie put out by the ruling authority is the truth.

Even Mr Tsvangirai seems to have given up all hope of taking control of Zimbabwe; because for all his bluster about running the parliament, he is not really in control since Mr Mugabe, as now non-elected-President-for-life long ago gave himself a bonus 30 MP’s that he [the president] appoints; and that will effectively trump Mr Tsvangirai’s so-called Majority.

Mr Tsvangirai is somewhat in the position of a man hanging from the fifteenth story window of a forty-story building attempting to catch a 40 kilogram lump of concrete tossed off the roof. If he actually manages to catch the thing as it flies past it is more than probable that he’ll lose his arm, at worst it’ll drag him down after it. Zimbabwe in this case is the plummeting lump of concrete.

Another year of Mugabe will see him presumably remove the last of the so-called "white" farmers from the lands he confiscated by racist national decree a few years ago, and proceed with his racist indigenisation programme for business. Life for all those who oppose him will become so bleak that most will leave and he will eventually get his majority back since all those who are not part of the descendants of the ancient Changamire State will have been forced out to become despised refugees in foreign lands, in much the same way that Israeli hegemony has forced most of the indigenous population of that blighted region, into life long despair.

We can see certain outcomes of this already. The neighbourhood next to mine has been the scene of some of the worst xenophobic violence we have witnessed in our no longer so new South Africa. We have turned our refugees into refugees. The philosophy of entitlement fostered by our own current, increasingly isolated president, through his black empowerment white dispossession policies are wreaking havoc in unanticipated or even unintended quarters.

The lesson not learned from the previous despised apartheid regime is that behaviour is indivisible. If it is ok to despise white people for their apparent evil misdeeds referred to, increasingly, by catch-all hate phrases; then one can expect to see so-called foreigners, of all classes, equally reviled. As the old saw has it: be careful what you ask for you may not like what you get.

While we are at it, in all this global media frenzy over Myan Mar [or Burma, if you are of the classical school], dented tantalisingly this week this week by the earthquake disaster in China, soon to be host to the world’s Olympic showcase, no one has re asked the question that popped up momentarily a few months ago when Myan Mar once again caught our idling attention.

What happened to the Monks?

Do you remember that a while back the monks of Myan Mar engaged in an uncharacteristic show of wonderfully colourful opposition to the evil Generals who rule the benighted place? They made a gloriously evocative and bizarrely exotic contribution to that particular week’s media feeding frenzy… Then as suddenly as they had erupted they vanished. The monasteries became silent. At that time some commentator asked "where are the monks?" That question has never been answered and as usual our attention ever on a short leash soon shifted to some other topic of instant gratification.

According to news reports ‘Banky*’ Moon [the UN secretary general whose name seems evocative of his relative impotence] has spent weeks now trying to get General Fluffbum, whoever he is, who is nominally in charge of Burma, to answer the phone. I think we all know that when someone persistently refuses to answer the phone it is because they don’t want to speak to one. [* In my neighbourhood banky is slang for the small plastic packet used by local dope dealers in which is contained a small stock of dagga aka marijuana].
I have a vision of a stoned un sec gen desperately fumbling endlessly with a cordless phone on which the dialling code for Myan Mar is missing.

Maybe the anonymous general in charge doesn’t answer the phone because he is too busy drowning all the missing monks and losing them into this bountiful natural disaster.

I imagine a different telephone conversation:

O Nameless Warrior: General we have an opportunity. Our Irrawaddy [sic] region has been devastated by a storm surge and most of the place is under water. All I can see is drowning people.
O Nameless General-in-charge: Ah yes and did any monks drown.
O Nameless Warrior: I see a sea of saffron.
ONG-I-c: Yes, thank goodness nameless-general-in-charge-of-something-else-in-the-disposal-business decided to move all the detainees to the Irrawaddy region when we got news of the pending storm, for safety regions you understand.
ONW:. God is truly on our side. You have done well to remind me of the importance of seizing the Karma and seeking destiny through the eye of a needle.

Is that why the generals are not answering the phone; are they are too busy disposing of the regrettable evidence. Is that too, why it is so useful to allow the situation to fester and corrupt until a hundred and plenty thousand die and suddenly a local disaster becomes a global plague as the generals demonstrate how easy it is to commit murder in plain view. Is the situation in Myan Mar any different to the murders being perpetrated in Sudan with relative impunity?

There are rumours that hands are being removed from those who had the temerity to vote against Robert Mugabe. Our media don’t report this. There is a broad brush used here. The most wide ranging media radio barely report Zimbabwe. But the refugee flow is disrupting us daily with increased levels of violence and almost routine xenophobic outbursts.

I think it is time we asked the generals to show us the detainees.
It is also time for the African Union to tell Mr Mugabe that we don’t recognise illegitimate governments. If Simon Ward can be condemned to a slow lingering death because he dared to participate in an alleged coup in the festering hellhole rthat is Equatorial Guinea can we be so sanguine about a man who is currently ruling by Fiat, murdering his opponents. and has driven half his population into a scary exile.

It is time for the good citizens of the world to stop allowing thugs and bullies to hide behind veils of legal sanction. Where there is no transparency and no free access to information on the part of any ruling clique then they may be presumed guilty until proven innocent.

There is sufficient precedential evidence of misdoing on the part of both the ruling cliques in Zimbabwe and Burma to make the principle palatable. If the generals can’t produce the monks… then they cannot demonstrate their innocence in which case would it not be correct to suggest that they are most certainly guilty… surely that would be beyond reasonable doubt.

Ah of course I forgot we in an age of relative values… We will go to the Olympics… all right maybe we’ll boycott the opening as a gesture of solidarity with the murdered and otherwuise oppressed citizens citizens of Tibet… and then we will engage with the Chinese. And as for the generals well who really cares about some Burmese rice paddy residents and a handful of deluded monks. And how dare those Darfurians live in a gridlock free part of the planet on top of what everybody wants and is entitled to. And what then.

Now that George Bush has failed so miserably with his own intervention strategy and demonstrated the futility of interfering in the internal matters of sovereign nations; and been vilified by the slings and arrows of outraged violators; could we be witness to the next logical phase. The election of a new president in the USA this year with a more protectionist bent determined to woo the sovereign voter in that hellish country with promises of protection from the storms that cheat in the night.

Logic suggest that Mr Obama’s most fertile route to get the alienated so-called White working man’s vote in the USA is to protect his job from unfair competition from gangsters waving authoritarian capitalist badges; and evil generals dragging rice fields for the flesh of their enemies.

At what point does sovereignty end and human rights begin?
At what point will the call go out “a plague on all their houses” ?

Have a wonderful bloggish day.