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SOUTH AFRICA - FINANCIAL PATHFINDERS?

By       Message Tom Dennen     Permalink
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South African Finance minister Trevor Manuel and Central Bank chief Tito Mboweni - leading the new lending way.

 

Tom Dennen

 

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"The South African banking system has effectively been insulated from the global financial crisis mainly as a result of the prevailing exchange control regulations," said First National Bank spokesperson Xolisa Vapi recently.

But that is definitely not the whole story.

The separation of church and state has been an only partially successful bun fight for centuries – politicians are as hard to nail down as deities and all deliver in inverse proportion to their promises.

In this light I came up with a new rule: The separation of state and finance, but I fear this rule has been largely pre-empted by the South African National Credit Act.

Which may be why the world is looking at South Africa today as an innovator in financial thinking.

As we enter the worst recession since the 30’s, which is in fact a real depression generally agreed to have been caused by the reckless and avaricious lending practices of American financial giants, global lawmakers are focusing on a recent piece of South African legislation, the SA National Credit Act (NCA) which, while not necessarily separating finance from state, at least intelligently regulates private lending.

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Greed may have put an end to the global financial system as we know it.

Until now, we would have thought it impossible for major US banks and financial institutions to ‘lose’ as much as $435 billion by investing in ‘leveraged’ sub prime mortgage instruments.

 Translation: American banks knowingly sold worthless debt, sold debt ‘books’ they knew beforehand would, nay, never could be paid back and sold them anyway – mostly to European central banks who are now with due cause ‘reportedly furious’ with Wall Street.

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Tom is a contributor to public debate on issues affecting our survival; works with a London and a South African think tank, is a working journalist and author.

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