While most observers are willing the US economy to gain momentum, Nobel economics laureate Robert Shiller is warning against property bubbles forming around the world. A bubble in the low-income US housing market burst in 2006, caused a financial crisis in 2007, which spread around the world, triggering a global recession.
Reuters reported this week that Shiller, who shared the 8 million Swedish kronor (R12m) Nobel prize with fellow laureates Eugene Fama and Lars Peter Hansen, said the US Federal Reserve’s economic stimulus and market speculation were creating a “bubbly” property boom.
The website Motley Fool noted that Shiller had predicted both the dot-com of the late 1990s and the housing bubbles that preceded the 2007 bust. However, writing in The Guardian earlier this year, Shiller said not all speculative bubbles popped – they might deflate and reflate, postponing the moment the bottom fell out of the market.
The US Fed’s easy money policy is partly to blame for the latest bubble bout. With interest rates at record lows, it makes sense to borrow cheap money and place it in higher-yielding assets, like shares and property. But this is not the only motivation.
In his book Irrational Exuberance, Shiller describes a speculative bubble as “a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increase”. This attracts “a larger and larger class of investors who, despite doubts about the real value of the investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement”.
Another label for this behaviour is the bandwagon – or “me too, me too” – effect. It is visible among South African politicians where luxury cars, entourages, costly trips and designer clothes are a “must have”.
It seems like a petty crime but figures revealed at the Consumer Goods Council of SA (CGCSA) summit yesterday showed shoplifting is happening on a big scale in South Africa, and has a notable effect on the economy.
Losses resulting from shoplifting in only five retailers estimated at up to R3 billion makes one question whether this is really a crime whose perpetrators deserve only a slap on the wrist.
In the case of a Pretoria mom who wheeled a full trolley out of a Pick n Pay store with groceries worth R1 831 last year, she did time for only 30 days. Her argument, like many others, was that she forgot to pay whereas her actions, as detailed by the security personnel, showed intent.
The Global Retail Theft Barometer statistics put up by the CGCSA Anti-Shoplifting Forum on the council’s website showed that shoplifting cost global retailers $51.5 billion (R511.05bn) in 2011 and that South Africa was one of the top five countries on the list.
After the shoplifting statistics shot up in 2003 – which security companies attributed to the replacement of the old plastic shopping bags with the thicker, environmentally friendly ones – it was reported that gangs of up to 40 shoplifters, stealing for syndicates, used to invade a shop.
Workgroups consisting of the SAPS, the National Prosecuting Authority and risk managers from major retailers have been formed, but clearly they are on a losing wicket.
Apart from losses, retailers have to foot the bill for prosecuting the shoplifters and upgrading their security. Shoplifting does have a notable effect on the economy.
Appropriately for today, which in case you didn’t know, is World Trauma Day – another day, another cause – the Trauma Society of SA “has made a clarion call for South Africans to drastically change their behaviour to stem the carnage on our country’s roads”.
Well, that’s a good thing and the concerned folks at TraumaSA are absolutely right, the road death toll is atrocious, absolutely appalling, and any other extreme adjective applies. It is the highest on the planet; maybe it is a measure of madness in the country.
Certainly something should be done, but don’t hold your breath.
Just like the gobsmacking (when you bother to think about it) 25 percent “official” unemployment rate, the entirely shameful and disgraceful annual murder tally of around 15 000, the road death toll comes in at around 14 000 year after year.
People wring their hands and whinge and whine when the figures come out, say that something should be done and then move on to other more pressing issues.
Apart from Easter and Christmas when the authorities posture and dutifully count the casualties, no one really cares or does much. (By the way the holiday horror death tolls rarely vary from the South African annual daily average of around 40 deaths, or in accessible terms a Marikana massacre or some Middle Eastern terrorist atrocity every day of the year.)
Trauma SA says road crashes cost the economy R206bn a year. It also points out that reckless and negligent behaviour, the general lawlessness of society, drunken driving and walking, failing to indicate, failing to wear seat belts, speeding and dangerous aggressive driving are the main causes of the problem, with 90 percent of crashes starting with a traffic violation.
Sounds like the daily drives to and from the Johannesburg CBD where determinedly and deliberately lawless taxi drivers threaten and hoot at motorists who don’t run the red lights in front of them.
It could all be turned around if police actually enforced the traffic laws assiduously rather than raising revenue with static radar traps.
In this case respect for other road users has to be taught. It has happened elsewhere and it could happen here too.
Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Londiwe Buthelezi and Peter DeIonno.