Still, 12.5% pa is an unacceptably large inflation rate, especially for an economy which grows at less than 3% pa and whose principal exports are derived from mining, agriculture and tourism and therefore have to be highly competitive. You may be unaware that the long-term SA Government treasury bond interest rate is 12% so it's clear that this represents a negative return on cash so invested. Foreigners who can take advantage of the appreciating currency, however, get the best of both worlds --- high interest plus a gain on the currency transaction, but only for as long as this windfall lasts. As you see, the situation is extraordinary --- an appreciating currency in the face of considerable inflation and minimal national growth. That's why I say the money must be coming in for a "non-investment" reason, in other words, to avoid confiscation, or whatever, somewhere else. What I find amazing is that the SA government is so complacent, in fact apparently happy, about a situation which is, in effect, destroying the main sources of income of the country.
>Very negative for gold as well as SA, I am so sorry.
>That's for sure. In fact, I can only envisage belt-tightening, chest pains and white knuckles from hanging-on grimly, in all countries, and for many years into the future. Meanwhile, the young people in most places, certainly in SA, have expectations of living in the lap of luxury and doing little work --- because that's how it was in the 1990s.
Here competition is so vast in the private field of manual labor that wage inflation is almost non existent. The exclusion would be in large scale operations that mandate wage increases.
There are far less hopes here of easy street. Here it is not uncommon to have twelve hour days as the non written part of the contract. I believe there is as lack of higher paying jobs for grads which ends up as an increase in applicants for post doctorate positions.
Tough times where the key to success is starting to look more like a measure of guts. |
