Is credit extension in SA out of control?

Unsecured credit explosion? Sure. Concerns about abuses and sustainability in this sector? Absolutely. But is overall domestic credit extension out of control? Are real interest rates negative? Is the global economy strong and steaming ahead? The answer to all these questions is “no”. Here is a graph produced from public reservebank data.

Bacon flavoured Bitcoins

Bitcoins are an awful idea as a currency. The 21m fixed limitation on bitcoins in a hopefully growing economy requires deflationary prices. Deflationary prices in turn discourage consumption and encourage hoarding. Low consumption and hoarding lead to low economic growth, a decreased velocity of money and more deflation. But what about Bitcoins as an interesting […]

Banking failures in South Africa

South Africa has a pretty rich history of banking failures.  This paper, part of a masters, by Sipho Makhubela, provides an interesting over of banking failures since 1994. I haven’t read the entire paper yet, but Section 4 (starting on page 72) outlines  the background behind banking failures in South Africa and is fascinating reading […]

Summary of Cypriot capital controls

From a number of sources (CNN, USAToday, FT) No Eurozone country, since the creation of the Euro, has ever instituted capital controls. It’s not really allowed, except in exceptional circumstances. Which goes to show the value of rules with exceptions for “exceptional circumstances”. Which is to say, not much. The cost to large depositors Deposits […]

Worrying signs of renewed credit crunch

The last month hasn’t been pretty for economic performance, credit or retail sales. Everyone from Richemont to Mr Price has taken a beating.  Woolies is down about 13% in the last month. And now both Capitec and African Bank are reporting worse default experience (respectively through temporary strike-blips or through a cyclical downwards trend) and […]