My fears about the economy have been confirmed

Posted by Supaman
Supaman
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on Tuesday, 03 June 2008
in Digital Blogs

I have been taken aback by the recent happenings in South Africa, from our forever-out-of the-country-and-silent-diplomacy President, to the recent xenophobic attacks on legal and illegal foreighners. All of this has caused me to question our economic standing, now or in the future. That thought alone just sent shivers up my spine.

It was only today after I read a mail from a friend, that I confirmed my fears. He did give some sound advise afterwards though. So I thought I should share.


Hi Guys,
 
It has come to my attention that I must really warn you as my friends and family of the current economic conditions we are facing in South Africa and the rest of the world.
 
Yesterday I attended an Absa conference whereby Tito Mboweni was our guest speaker.Tito Mboweni has made it clear to us that the worse is yet to come so we must tighten our belts in terms of getting into debt. Before I start with real figures, Tito made an example to us that if a person goes to KFC to buy chicken using his Credit Card for an amount of R40 it implies that in 6months period you have bought the chicken for R72. Most of us did not know this but this is true. He gave us advice to STOP USING CREDIT CARD AS A REASON THAT YOU DON'T HAVE CASH.Only use credit cards for luxury things and use it for things that you really need.
 
The real situation now we have this report is that we have to do certain things for the reserve bank whereby we forecast the future using certain drivers and getting the economist analysis which is called Medium Term Plan for 2009-2011, it’s basically three a year plan.
 
1. it show that the interest rate will go up to 19% ( currently we are at +-14.5%)from now up until 2010 just before the world cup. Good news after the world cup it will decrease.
 
2. the inflation( unemployment) will go up to 12% (currently sitting at +-6% )
 
3.The GDP( Basically your food staff) will increase by 15% I'm not sure what it sitting at now.
 
4. The petrol will also increase up to R13.78 per litre and diesel to R15.05
 
What courses this. if you want to know.
 
1. The political instability of the country (investor’s perception of the new President of the country)
2  The scarcity of resources i.e. low output on gold,farming of rice etc
3  Lack of skills labour in the country
4  Unemployment
 
To add to this on our March financial statement, Absa’s profit has drop by 10% and as of the month of March Absa will repossess 700 house in the country.
Absa will employ about 1500 staff to work at collections department as our impairment of assets( bad debt ) is increasing very fast.This has been approved by Exco, so we are waiting for the appointment of the employee agent to recruit those staff. Private numbers will ring non-stop on peoples phones. 
  
I say for now and next year Do Not engage in instalment sale transaction for no reason you must really ask yourself do you really need that.
 
So, guys that’s it from me, hope you will take these changes into your budget for this year and next year. 

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Comments

Guest
Dissol Tuesday, 03 June 2008

I think we shall all have to tighten our belts a bit over the coming months. Certainly for several years I have worked on the premise that borrowing money is too expensive, and if I do not have the cash myself, then I do not buy. I also set myself a target of paying off my bond & car payments as soon as possible (this did mean a rather spartan lifestyle for a few years - no holidays, no new clothing, no luxuries, several different jobs to include weekends and evenings). But I was a very happy person when I paid off my last bond payment and became completely debt free. Of course, that now means that high interest rates should be better for me...but in reality, given the various charges, and the rising inflation it is almost meaningless.

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