It's the Saturday Open Thread: Anything Goes Edition
8 comments:
Anonymous
said...
Any recommendations for estate agents who do a decent job in the Sea Point and Green Point areas? Does anyone know how negotiable they are about rates at the moment?
Economic data released by Stats SA and the Reserve Bank has pinpointed the cause of the recent surge in inflation in the SA economy.
The data suggests that inflation is being fanned by external factors rather than developments in the local economy. This should prompt the Reserve Bank to exercise caution before it hikes interest rates. The inflation rate for the country accelerated to 4.1% (annualised) in March from a figure of 3.7% the prior month.
Stats SA announced on Thursday that higher commodity prices continued to push producer inflation higher in March. The producer price index grew by 7.3% year on year in March from 6.7% year on year in February. This was marginally above the median forecast of 7.2% by economists polled by Bloomberg.
According to a statement posted on Stats SA's website, the key increases occurred in the price of goods in mining and quarrying, petroleum and coal, basic metals, chemicals and chemical products, and metal products.
Surprisingly, prices for agricultural goods declined. Other sectors that experienced declining prices were the manufacturing and electrical machinery and apparatus sectors.
Data from the Reserve Bank on Friday shows that credit growth in the economy decelerated in March.
Borrowings by households and businesses rose an annual 5.1% in March compared to a figure of 5.4% in February. The median forecast by eight economists surveyed by Bloomberg was 5.9%. This indicates that SA consumers are still reluctant to take on more debt.
Paul Hansen, portfolio manager at Stanlib's currency fund of funds, agreed that inflation is being driven by international factors such as rising international oil prices.
"The Reserve Bank would be absolutely crazy to raise interest rates at this point. First, there is still a lot of slack in the SA economy, as indicated primarily by massive unemployment.
"Second, the money supply and credit growth are still going down. This suggests that the economy might be going for a period of some softness," Hansen said
Now do I understand this correctly? That means that inflation adjusted credit growth is still positive? How on earth can that be? I thought people are already deep in the red, and banks are more reluctant to lend, and house sales are week. Something does not add up here or I just don't get it.
There was a time a year or 2 ago when the repo rate was dropping and prime sat at about 11%. Everyone asked the Gov whether it would drop further or rise again. The Gov said that inflation was stable leaving room to drop, however it made sense not to, because dropping it further meant that they would raise it again later when inflation rises. Thus, resulting in the inability for consumers to perform longer term financial planning (as the rates were up and down). Well, a few months later they ignored that statement and dropped it again to prime = 9%, as quite simply people stopped being credit hungry. While the current inflation is indeed derived from external factors such as petrol hikes rather than consumer spending, the SARB is a business, and like any business they need to make money. If the milk machine produces less milk, you have 2 options: (1) Get more cows, or (2) Increase the suction power just enough to really hurt, but not kill the cow. The SARB lowered the rates but still the cows hide, so what other option do they have?
The SARB can create money out of thin air, its not a business. If the government wants some cash it can, together with the SARB, monetize some debt. Its balance sheet has increased tenfold over the last 2 decades hence much of our weaker rand and high inflation pre 2008.
I'd just like to comment on the article I posted. Paul Hansen is half right like most economists. Credit and money supply is actually increasing as well as velocity. Sure it aint back to the levels of 2005 but it is increasing. Much of the money supply growth is the gov stimulus feeding through the economy.
Residential mortgages have jumped quite a bit, commercial is still tanking and now 80% down from the high, farms up, new buildings still tanking, renovations up. Principal payments keep dropping too. Bit of a wild ride out there.
Weak Rand? I don't know what you are talking about. The ZAR/EUR exchange rate is about the same level as 10 years ago. Now think about the inflation in the Euro Zone and in ZA over the last 10 years. If we would take this into consideration the Rand should be @ about 20 Rand per Euro.
8 comments:
Any recommendations for estate agents who do a decent job in the Sea Point and Green Point areas? Does anyone know how negotiable they are about rates at the moment?
'External factors fanning inflation'
Economic data released by Stats SA and the Reserve Bank has pinpointed the cause of the recent surge in inflation in the SA economy.
The data suggests that inflation is being fanned by external factors rather than developments in the local economy. This should prompt the Reserve Bank to exercise caution before it hikes interest rates. The inflation rate for the country accelerated to 4.1% (annualised) in March from a figure of 3.7% the prior month.
Stats SA announced on Thursday that higher commodity prices continued to push producer inflation higher in March. The producer price index grew by 7.3% year on year in March from 6.7% year on year in February. This was marginally above the median forecast of 7.2% by economists polled by Bloomberg.
According to a statement posted on Stats SA's website, the key increases occurred in the price of goods in mining and quarrying, petroleum and coal, basic metals, chemicals and chemical products, and metal products.
Surprisingly, prices for agricultural goods declined. Other sectors that experienced declining prices were the manufacturing and electrical machinery and apparatus sectors.
Data from the Reserve Bank on Friday shows that credit growth in the economy decelerated in March.
Borrowings by households and businesses rose an annual 5.1% in March compared to a figure of 5.4% in February. The median forecast by eight economists surveyed by Bloomberg was 5.9%. This indicates that SA consumers are still reluctant to take on more debt.
Paul Hansen, portfolio manager at Stanlib's currency fund of funds, agreed that inflation is being driven by international factors such as rising international oil prices.
"The Reserve Bank would be absolutely crazy to raise interest rates at this point. First, there is still a lot of slack in the SA economy, as indicated primarily by massive unemployment.
"Second, the money supply and credit growth are still going down. This suggests that the economy might be going for a period of some softness," Hansen said
There you go.
Now do I understand this correctly? That means that inflation adjusted credit growth is still positive?
How on earth can that be? I thought people are already deep in the red, and banks are more reluctant to lend, and house sales are week.
Something does not add up here or I just don't get it.
Had good experience with that Anne Porter branch
There was a time a year or 2 ago when the repo rate was dropping and prime sat at about 11%. Everyone asked the Gov whether it would drop further or rise again. The Gov said that inflation was stable leaving room to drop, however it made sense not to, because dropping it further meant that they would raise it again later when inflation rises. Thus, resulting in the inability for consumers to perform longer term financial planning (as the rates were up and down). Well, a few months later they ignored that statement and dropped it again to prime = 9%, as quite simply people stopped being credit hungry. While the current inflation is indeed derived from external factors such as petrol hikes rather than consumer spending, the SARB is a business, and like any business they need to make money. If the milk machine produces less milk, you have 2 options: (1) Get more cows, or (2) Increase the suction power just enough to really hurt, but not kill the cow. The SARB lowered the rates but still the cows hide, so what other option do they have?
Anon,
The SARB can create money out of thin air, its not a business. If the government wants some cash it can, together with the SARB, monetize some debt. Its balance sheet has increased tenfold over the last 2 decades hence much of our weaker rand and high inflation pre 2008.
I'd just like to comment on the article I posted. Paul Hansen is half right like most economists. Credit and money supply is actually increasing as well as velocity. Sure it aint back to the levels of 2005 but it is increasing. Much of the money supply growth is the gov stimulus feeding through the economy.
Residential mortgages have jumped quite a bit, commercial is still tanking and now 80% down from the high, farms up, new buildings still tanking, renovations up. Principal payments keep dropping too. Bit of a wild ride out there.
Weak Rand?
I don't know what you are talking about. The ZAR/EUR exchange rate is about the same level as 10 years ago.
Now think about the inflation in the Euro Zone and in ZA over the last 10 years. If we would take this into consideration the Rand should be @ about 20 Rand per Euro.
First Anon:
Debbie Koping and her partner Craig from Seeff are pretty good - I've heard good reports and bad.
I've also only heard very good things about Anne Porter.
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