The Great Recession?

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Jack Welles
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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 2:11 pm

Maybe there were too many shortcuts in my previous posts and my motives for posting as I did, being not clarified, may thus appear suspect to some who don't agree with my views.

So let me say this, the thread is, effectively, about economic forecasting. The problem with economic forecasting is that it is, effectively, largely dependent on political outcomes. Political outcomes, over the longer term, are virtually never a clear extrapolation from what happened previously to what happens next. In the short term that isn't too much of a problem because the pertinent variables don't have the time to affect the outcomes, so because the economy was in the toilet yesterday there's a strong chance it will be in the toilet tomorrow (much like the affect of compound interest rates which really only departs from the affect of simple interest rates over a longer period of time).

Another major problem is that fundamentally people are pessimists or optimists, so their choice of data points will reflect their basic characters.

There are, of course, other personal characteristics and experiences that will affect how people will forecast future political outcomes, but the above two are, to my mind, probably the most significant.

So here's the thing, my economic forecasting views are basically politically-driven opinions. And, of course, other people will differ in their opinions for any number of reasons. Given my timeframes, only time will tell as to which forecast proves the more accurate. In the meantime, I suspect that people who think as I do are probably happier than the people who are less positive about SA's future economic prospects (if they're stuck in SA for any reason, of course).

As an aside: history has shown that where there is chaos (even in World Wars) there are economic opportunities (for example, a certain manufacturer of uniforms in the UK became very wealthy during World War 2 and I know personally of someone whose family wealth was founded on the supplying of helicopters to the embattled Rhodesian govt), so even on that basis I am fairly sanguine about the (longer term?) future in SA.
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Re: The Great Recession?

Unread post by Iceberg » Fri Jun 28, 2019 2:28 pm

That's better Eddie. Economics can only be discussed in a calm rational manner by looking at the facts.

The facts, as presented in the SARB's report however don't make inspiring reading.
If as you say, the reasons are political, we are still stuck with basically the same politicians we had before.
So as Einstein supposedly asked, why would the outcomes be different in the following 6 years than the last.

We, who are privileged to own/fly aircraft might try to shield ourselves from what is happening around us by being in denial and looking through rose tinted glasses. I visit the Cape often - my daughter lives there nowadays. It is easy to think you are in paradise if you are sipping wine on one of the lovely wine farms. But just join my daughter for an evening in ER at Mitchell's Plain hospital, and you will wake up to what is really going on right under your nose. She recently had to wipe spots of blood off her car in the parking lot where the gangsters took someone out right there. For the vast majority of our compatriots, SA is a hellhole of poverty and unemployment.
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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 2:48 pm

It's educational to see all of this in context of, for example, the last 40 years, ie, there was the:
Savings and loans crisis – 1980s
Latin America sovereign debt crisis – 1982
Stock market crash – 1987
Junk bond crash – 1989
Tequila crisis – 1994
Asia crisis – 1997 to 1998
Dotcom bubble – 1999 to 2000
Global financial crisis – 2007 to 2008

For those who may be interested in the detail behind those listings:

http://www.ifre.com/a-history-of-the-pa ... ullarticle
Jack Welles (thriller_author pen name)
https://www.amazon.com/Jack-Welles/e/B073VJQTTX
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http://www.loreofnegotiation.com
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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 3:15 pm

Iceberg wrote:
Fri Jun 28, 2019 2:28 pm
That's better Eddie. Economics can only be discussed in a calm rational manner by looking at the facts.
But aren't we back to the original problem being that the "facts" any particular person chooses to focus on are driven by his or her character and underlying agenda (which we all have, I hasten to add, not necessarily meant in a negative sense but could also be in a positive direction).

So I could cherry-pick tastings at wine farms, surfing at Muizies, fantastic business opportunities, money to be made, exciting multiculturalism, wonderful weather, the thrum of Africa, very much longer timelines (carefully chosen to reflect the "reality" I want reflected) etc etc and then draw my conclusions from that.

Someone else will focus on tomorrow's possible recession, a gunfight in a carpark, Shaik playing golf ( :evil:), a tug of war between Ace and Cyril, political interference in sport, corruption, hijackings etc etc and then draw his or her conclusions from that.

Virtually nobody on this forum has ever really set down, in a neutral way, both the pros and the cons and then drawn a conclusion from that. Everyone (#metoo :lol: ) is punting for a particular outcome that they "think" is most probable in order to justify any decisions they may have made (go or stay etc etc)

And all of that is relevant when trying to forecast the economy going forward ...
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Re: The Great Recession?

Unread post by Iceberg » Fri Jun 28, 2019 3:36 pm

Jack Welles wrote:
Fri Jun 28, 2019 2:48 pm
It's educational to see all of this in context of, for example, the last 40 years, ie, there was the:
Savings and loans crisis – 1980s
Latin America sovereign debt crisis – 1982
Stock market crash – 1987
Junk bond crash – 1989
Tequila crisis – 1994
Asia crisis – 1997 to 1998
Dotcom bubble – 1999 to 2000
Global financial crisis – 2007 to 2008

For those who may be interested in the detail behind those listings:

http://www.ifre.com/a-history-of-the-pa ... ullarticle
We were affected in some way or another by the above crises and were usually in sync with the rest of the world.
However now look at the current situation. Somewhat of a major variance.
Since the last crisis in 2008, the world economy has expanded, stock markets are near all time highs, unemployment is down etc.
Yet in SA we were in a continuous decline - obviously of our own making. Another worldwide crisis could hit us soon - it's about time for one. Trade wars, Iran conflict, who knows what could trigger it?
The pooh could then really hit the fan locally....
Jack Welles wrote:
Fri Jun 28, 2019 2:48 pm

But aren't we back to the original problem being that the "facts" any particular person chooses to focus on are driven by his or her character and underlying agenda (which we all have, I hasten to add, not necessarily meant in a negative sense but could also be in a positive direction).

So I could cherry-pick tastings at wine farms, surfing at Muizies, fantastic business opportunities, money to be made, exciting multiculturalism, wonderful weather, the thrum of Africa, very much longer timelines (carefully chosen to reflect the "reality" I want reflected) etc etc and then draw my conclusions from that.

Someone else will focus on tomorrow's possible recession, a gunfight in a carpark, Shaik playing golf ( ), a tug of war between Ace and Cyril, political interference in sport, corruption, hijackings etc etc and then draw his or her conclusions from that.

Virtually nobody on this forum has ever really set down, in a neutral way, both the pros and the cons and then drawn a conclusion from that. Everyone( #metoo ) is punting for a particular outcome that they "think" is most probable in order to justify any decisions they may have made (go or stay etc etc)

And all of that is relevant when trying to forecast the economy going forward ...
In an economic discussion like this, let's look at the measurable facts then:

The economic downward phase as described in the SARB report.
The unemployment figures over the last 6 years.
The ZAR exchange rate vs other currencies.
The crime and murder rates, GINI coefficient etc.

Now all the above and many other indicators are going in a direction opposite to what one would consider to be pointing to a good future in SA.
The rating agencies do exactly that and you know what their outlooks are on SA.
Draw your own conclusions.
Last edited by Iceberg on Fri Jun 28, 2019 3:38 pm, edited 1 time in total.
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Re: The Great Recession?

Unread post by bosvark » Fri Jun 28, 2019 3:37 pm

There are enough facts and detail available pointing towards the fact that we are in a downward spiral as a country. Politically, socially, judicially, and due to that, economically. "Skilled debate" and playing words will not change that.

Anyone who cannot see that this country is in deep $h!t and getting in deeper is either a fool, very naive or is living on a pink cloud.

Twenty/twenty five years ago few people believed that what has happened, could happen. And it has. There are NO indications of a turn around. To the contrary...
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Re: The Great Recession?

Unread post by Whirly » Fri Jun 28, 2019 3:43 pm

The local population is growing faster than the economy, people who can afford it are leaving and so the tax base is decreasing. Not really a formula for success now, is it? :?

Then add all the other cr@p we are faced with and it paints a horrible picture. 8-[

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Re: The Great Recession?

Unread post by chunky » Fri Jun 28, 2019 3:44 pm

bosvark wrote:
Fri Jun 28, 2019 3:37 pm

Twenty/twenty five years ago few people believed that what has happened, could happen. And it has. There are NO indications of a turn around. To the contrary...
Scary, but 100 percent true. The downward spiral is noticeable daily.
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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 3:53 pm

bosvark wrote:
Fri Jun 28, 2019 3:37 pm
Anyone who cannot see that this country is in deep $h!t and getting in deeper is either a fool, very naive or is living on a pink cloud.
Like to think I'm not a fool (but am open to debate on the issue :lol: ) and the world is filled with grey clouds and drizzing rain (not a pink cloud in sight) at the moment so I guess according to the above I must be naive - hmmm! not often attorneys are accorded such an accolade, so thank you for that :lol:
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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 3:56 pm

Whirly wrote:
Fri Jun 28, 2019 3:43 pm
The local population is growing faster than the economy, people who can afford it are leaving and so the tax base is decreasing. Not really a formula for success now, is it? :? Then add all the other cr@p we are faced with and it paints a horrible picture. 8-[ Whirly.
I think you give those folk far more importance than they deserve. Their contribution to the economic future of SA (or lack thereof) pales into insignificance when balanced against FDI.
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Re: The Great Recession?

Unread post by Whirly » Fri Jun 28, 2019 3:57 pm

Jack Welles wrote:
Fri Jun 28, 2019 3:53 pm
bosvark wrote:
Fri Jun 28, 2019 3:37 pm
Anyone who cannot see that this country is in deep $h!t and getting in deeper is either a fool, very naive or is living on a pink cloud.
Like to think I'm not a fool (but am open to debate on the issue :lol: ) and the world is filled with grey clouds and drizzing rain (not a pink cloud in sight) at the moment so I guess according to the above I must be naive - hmmm! not often attorneys are accorded such an accolade, so thank you for that :lol:
Jack,

The predictions are that the population will grow to 72 million by 2030 but will drop again to 58 million by 2050. So if you are prepared to stick around till after that, who knows? :P

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Re: The Great Recession?

Unread post by Whirly » Fri Jun 28, 2019 4:00 pm

Jack Welles wrote:
Fri Jun 28, 2019 3:56 pm
Whirly wrote:
Fri Jun 28, 2019 3:43 pm
The local population is growing faster than the economy, people who can afford it are leaving and so the tax base is decreasing. Not really a formula for success now, is it? :? Then add all the other cr@p we are faced with and it paints a horrible picture. 8-[ Whirly.
I think you give those folk far more importance than they deserve. Their contribution to the economic future of SA (or lack thereof) pales into insignificance when balanced against FDI.
Not really. If 500 leave, it is close to 10% of the total tax payers, quite significant I would think? :?

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Re: The Great Recession?

Unread post by Jack Welles » Fri Jun 28, 2019 4:06 pm

Whirly wrote:
Fri Jun 28, 2019 4:00 pm
Jack Welles wrote:
Fri Jun 28, 2019 3:56 pm
Whirly wrote:
Fri Jun 28, 2019 3:43 pm
The local population is growing faster than the economy, people who can afford it are leaving and so the tax base is decreasing. Not really a formula for success now, is it? :? Then add all the other cr@p we are faced with and it paints a horrible picture. 8-[ Whirly.
I think you give those folk far more importance than they deserve. Their contribution to the economic future of SA (or lack thereof) pales into insignificance when balanced against FDI.
Not really. If 500 leave, it is close to 10% of the total tax payers, quite significant I would think? :? Whirly.
Nope, Whirly, I know you're working really hard to justify a negative approach but we really can't accomodate you (as much as I would like to, being a friendly, naive soul) by accepting that 500 is 10% of 7 600 000 registered (but might not reach the threshhold) or even 2 100 000 who are more likely to be contributors. Seriously, every bit helps but it's not a train smash that some folk are leaving. Many of them have retired anyway so are no longer that active economically.

FDI is very very important. That generates jobs and that's a million times more important than some tax Rands flowing (or not flowing) to the fiscus. In any event the economic activity generated by FDI generates far more money for the fiscus by creating new taxpayers and, even more importantly, the indirect taxes that flow to the fiscus as a result of the additional economic activity.
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Re: The Great Recession?

Unread post by Whirly » Fri Jun 28, 2019 4:20 pm

Jack Welles wrote:
Fri Jun 28, 2019 4:06 pm
Whirly wrote:
Fri Jun 28, 2019 4:00 pm
Jack Welles wrote:
Fri Jun 28, 2019 3:56 pm

I think you give those folk far more importance than they deserve. Their contribution to the economic future of SA (or lack thereof) pales into insignificance when balanced against FDI.
Not really. If 500 leave, it is close to 10% of the total tax payers, quite significant I would think? :? Whirly.
Nope, Whirly, I know you're working really hard to justify a negative approach but we really can't accomodate you (as much as I would like to, being a friendly, naive soul) by accepting that 500 is 10% of 7 600 000 registered (but might not reach the threshhold) or even 2 100 000 who are more likely to be contributors. Seriously, every bit helps but it's not a train smash that some folk are leaving. Many of them have retired anyway so are no longer that active economically.

FDI is very very important. That generates jobs and that's a million times more important than some tax Rands flowing (or not flowing) to the fiscus. In any event the economic activity generated by FDI generates far more money for the fiscus by creating new taxpayers and, even more importantly, the indirect taxes that flow to the fiscus as a result of the additional economic activity.
Jack,

My figure of 500 taxpayers is per month,21 000 people emigrated last year. If the brain drain continues at this pace, FDI would cease in years to come. But what do I know? :?

I also think you are mistaken by thinking that many of the people leaving have retired, I think they are in the minority.

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Re: The Great Recession?

Unread post by V5 - LEO » Fri Jun 28, 2019 4:59 pm

.....FDI slowed down with 11% in the past 14 years alone - Alex Forbes survey - thus meaning the creators of jobs (other than government / parastatals) shrinked by 11% . In my view, right or wrong, jobs by government and parastatals only contribute to Vat and minimalistic to PAYE.
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