Cde Lebogang Thank you so much for having responded in a very helpful way for some of us who did not have the opportunity for Economics 101 in those institutions of higher learning. It is very exciting to see that we have such wealth of a pool of capable Cdes who have the ability to deal with the challenges before us even as some decide to quit their deployements to ensure a collapse of our country under a new leadership.
Cde Mzukisi thanks for asking the right questions too on our behalf. I appreciate this platform of debates of such well informed great minds. Keep it up Cdes. Vusi Manzini Mpumalanga Province On 10/2/08, Lebogang HavoK Hoveka <[EMAIL PROTECTED]> wrote: > > > Cde Mzukisi, there are many components to this but a brief and not so > comprehensive analysis is: > > > > The bank borrows money at the Repo Rate and it in turn sets its interest at > what is called "Prime". Now because of 'rational expectation' bank borrowed > people who could not afford housing loan, money to buy houses at sub-prime > (below prime). This was based on the assumption that these people (e.g > graduates) will earn more money in the future, be able to afford deferred > payments and also that property prices will go up and in the event of them > defaulting on their loans the increase in the value of the proper will then > cover the outstanding debt. But as the global markets began to slump, oil > prices rising and inflation going up- interest rates started to increase. > This means that buying a house on loan becomes more expensive, less people > can afford house and demand for houses goes down. When demand for anything > goes down the Price also goes down. Now the people who took loans at > sub-prime could not longer afford the increases in the interest rates and > started to default on payments. When bank auctioned the houses, because of > the reduced price, they actually realized a loss and could cover their debts > to central banks too. You will remember when Saambou closed that the worst > thing that can happen to a bank is for people to hear that the bank is > running out of money. Many will run to withdraw their funds. But remember > also that you deposit money into a bank and the bank inturn borrows that > money to other people, when these people cannot pay the bank back, the bank > cannot pay you and goes into liquidation, this is -in roughshod- what caused > the crisis. So to recover the Banks are being nationalized in Britain (who > ever thought that Westminster would nationalize a bank) and in the US the > state is pumping 700 billion (if approved) into the banks to rescue them > from what is essentially reckless lending. > > > > Other factors that may have increase this is that it is rational to sell to > the "bigger idiot" i.e you can sell your bad debts to a debt collector > provided he can recover what he can and sell it to the "Biggest idiot" who > will realize it has not value. This is what is called a 'speculative bubble' > in economics, we call it pure capitalism. I hope I have given you a brief > idea. > > > Lebogang Hoveka > ANC Caucus Researcher > Economic Transformation Cluster > Office V243 Old Assembly Building > Parliament of South Africa > Cape Town > 8000 > Office Tel: (021) 403 2231 > Work Cell: 082 309 8183 > Personal: 083 570 2251 > > "Those who feast on the fields of other are often forced into gesture of > friendships they do not desire" > > > > 2008/10/1 Mzukisi Ronyuza <[EMAIL PROTECTED]> > >> >> *ASSIST ME COMRADES I DO NOT PROPERLY GRASP ECONOMIC AND FINANCIAL >> MATTERS TO CAN FULLY FATHOM WHAT TOOK PLACE IN THE USA RECENTLY.* >> ** >> *THE ECONOMIC MAYHEM THAT RECENTLY TOOK PLACE IN THE USA AFFECTED THE US >> DOLLAR, STOCK EXCHANGES & FINANCIAL MARKETS. EVEN OUR OWN ECONOMY WAS >> SERIOUSLY AFFECTED.* >> >> *THE KENYAN ECONOMY, THE BIGGEST IN EAST AFRICA, AND MOST OF THE EAST >> AFRICAN COUNTRIES WERE NOT AFFECTED BY THIS. ONLY TOURISM WAS AFFECTED IN >> KENYA.* >> >> *HOW SO COMRADES? WERE WE AFFECTED BY THIS BECAUSE OF SOUTH AFRICA'S >> LACK OF ECONOMIC ANALYSIS? WHAT LESSONS CAN WE LEARN FROM THIS? HOW >> DANGEROUS IS OUR PROXIMITY TO THE CAPITALIST INTERNATIONAL MARKET? HOW DO WE >> BENEFIT FROM THE CURRENT US SENATE BAIL-OUT? * >> ** >> ** >> *IT IS TRUE THAT CAPITALISM IS UNDER SIEGE BUT MY CONCERN IS THE WAY WE >> HAVE FORGED RELATIONS WITH THESE GLOBAL CAPITALIST MARKETS AND THE EFFECTS >> THESE MIGHT HAVE TO OUR ECONOMONY. IS IT NOT ABOUT TIME THAT THIS >> COUNTRY CHANGES FROM THIS SPIDER WEB ECONOMY THAT HAS AN ELECTRICITY EFFECT >> TO ALL AND SUNDRY, WHEN USA SNEEZED EVERBODY GOT COLD EXCEPT KENYA AND THE >> EAST AFRICAN ECONOMIC BLOCK.* >> ** >> ** >> *PLEASE ASSIST ME COMRADES? * >> ** >> *AMANDLA !!!!!!!!!!!!* >> ** >> *MZUKISI* >> ** >> >> Parliament of South Africa >> Cape Town >> 8000 >> Office Tel: (021) 403 2231 >> Work Cell: 082 309 8183 >> Personal: 083 570 2251 >> >> "Those who feast on the fields of other are often forced into gesture of >> friendships they do not desire" >> >> > > > --~--~---------~--~----~------------~-------~--~----~ You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [EMAIL PROTECTED] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [EMAIL PROTECTED] . -~----------~----~----~----~------~----~------~--~---
