In Part 1 of our blog, we took a look at Sub-prime and unpacked its cause, the effect, and some learnings.
I proceed in Part 2 with covid, in similar vein. In the final analysis, I make a few comparisons between the two global events and suggest some learnings. I dare not say, for future events, because for many people, we are still reeling from this pandemic. Closing the beaches has done nothing but heighten the tension we all feel; though we may not object, we all know that Wash-Wear-Distance could have prevented this and that’s so annoying for those of us who have followed the rules as diligently as possible.
So, not so long ago, only about 15 months we are told, but could it have been longer, and we weren’t told as President Trump told us, in Woo-haan [which literally means: being affectionate towards – a chicken] a guy stepped up to the counter in one of those Animal Markets and asked: Hey, what you got today? The owner, an importer of delicacies from all over the world said: Whatever you want for those lovely dishes you make with Sriracha and Spices. I’ll take some of that and some of that and a little of that, said the guy. Great man! Making a meal full of surprises by the looks of it? said the owner. Ja [or whatever Yes is in Chinese], big surprise tonight!
Of course, some say it could have been a Lab Rat. Conspiracies and Donald have all said it was a Lab Rat that made the surprise. But those lovely people from the WHO did go and do an investigation. They asked the Lab Rat, Did you make a surprise or accidently, let it lose? No, said the Lab Rat and with that the WHO decided it definitely came from the Animal Market. Finished and klaar, said the WHO.
That surprise turned out to be the covid-19 virus. Not the first the world had seen but once the WHO declared the pandemic, it seemed like the only one that ever existed. We talked through Spanish Flu, Asian Flu and Bird Flu and Swine Flu and all flew into a frenzyFlu. But we never knu what to do with this new Flu. We locked down to stop infections and spare the hospitals. Apart from Sweden, every country and every plane and every border in every corner of the world locked down. It was reported that even Beit Bridge and Musina were quieter for two months at least. Only ciggies managed to swim across the Zambezi, defying lions on the land and crocodiles in the river. Clever little ciggies those, some probably dried out on the rocks after the long swim. What a boon for the pirates and their benefactors. Close down BAT and keep the people stocked but remind them, these may be expensive, but you know how hard they were to get here!
And in the course of the pandemic, real stories began to emerge. Stories of frontline bravery. Stories of food lines being fed by the Kind. Stories of neighbours losing loved ones. Stories from the likes of Italy and Brazil of balconies in song, celebrating Life. We lived for months in practical isolation whilst the sick amongst us found nurture, alone with their nurses.
And then stories of corruption began to blot the national adherence and pain; obscene greed, blatant, ugly and sucking from the Poor. Eventually, even the UIF, one of the better managed SOE’s in my humble opinion, was having its funds siphoned off by thieves. The proportion of tainted tenders to total tenders, I believe, is over 80%. I cannot tell you how angry that makes me feel! Indeed, every cashflow has a criminal. But to steel from the Poor, to put those caring for the sick at risk with sub-standard PPE, is despicable. Even the President, in what became known as Family Meetings, displayed some anger as he announced a Special Task Force to investigate corruption beginning with his own spokesperson.
I could go on and on right up to the beach closures, but you know the way 20Plenty morphed into 20Pandemic. Heaven knows we want this year to be over and our much-loved freedoms to be restored in the next! Roll on the vaccine that was produced in record time.
We have learned so much in so many aspects, so I’ll just try to share some of my highlights:
- We got the chance to practice that we should not catastrophise – you all know, one of my deep personal learnings from Sub-prime. Our language, a direct reflection of our heart, should guard against the worst all the time. We are allowed a “meltdown” and who didn’t at some stage? But for those of us in business, especially the property business, the exit from covid has been an unexpected, pleasant surprise. I never saw one person who “called it”. And as we always say, Make hay while the sun shines.
- Social Media was rampant. Conspiracies, fake news, instant news, news overload, repetition – you name it – social media has dominated our lockdown lives. To be honest, I feel sorry for the granny who never had at least WhatsApp with her children, a little bit of facetime. But for the rest, the overload was ridiculous. I have never been so informed and so confused at the same time. Who do you believe and why, became the question I asked myself and when I was told “They” said so, I want to know who “They” are? Lying with statistics for vested interest has become the blight of social media. The barrage of messaging taught me a lot about how people spend their time, what they view as funny, how they cope with stress and what they believe enough to pass on. No wonder too that Netflix shares increased 365%. I really understand that now. And by the way, for all those hilarious Tik Toks I received, thank you. Many broke the gloom of the 265th day J
- We are tactile and love company. Of course, we want quiet days and me-time. But so much of it with so much bad news abounding can make us morose. The best antidote for me was movement – jogging, gardening, etc – all helped to lift my spirits. Lungs full of air are good. Not being able to touch and everybody avoiding closeness as though you “have something” or they “have something”, I found really hard. I’ve no doubt some of those psychoses that interviewees on Kyknet and CNN commented on were in some way felt by many of us.
- From an economic point of view, Sub-prime set the scene. Reserve Banks globally knew to throw money at the covid problem as early as possible. When $2000,000,000,000 [$2trn, and open to correction on the noughts] was announced as relief in America I never knew so much money existed. And it got used up in about 4 months before another round was called for. This weekend, the US will probably settle on another $900bn package to see people through until a vaccine begins to bring economic relief. Across the globe, trillions made available in various shapes and sizes. Where did it all come from? Borrowings, from our childrens’ children. QE of the highest order to bail out every employee and their employers to survive economic destruction. Thank goodness for it but at what cost? Even in Hermanus I had a restaurateur tell me his business survived on financial assistance from the UIF. Thank goodness, our SARB did not succumb to QE according to JP Landman in his latest newsletter. They did contribute massively by slashing the interest rate and being on liquidity standby for the banks. As I said, Sub-prime crippled liquidity suddenly and this was avoided 12 years later.
- Corruption seems to be eventually at centre stage. Once again, according to JP Landman:
2020 will be remembered for the powerful public backlash against corruption, particularly relating to Covid-19.
The backlash was reinforced by ongoing revelations at the Zondo Commission, the arrest and charging of nine VBS Mutual Bank accused in June and the arrest of seven Free State asbestos project accused in September (including Ace Magashule).
In total, 402 people were arrested and charged for corruption this year. R3,3 billion was recovered by the Special Investigating Unit (SIU) and the Asset Forfeiture Unit from various perpetrators (largely for Eskom’s and Transnet’s benefit). Another R10 billion is in the process of being reclaimed. Nearly R5 billion has been frozen by the authorities. The VBS accused were also sequestrated in their personal capacities and the proceeds paid over to the executor of the failed bank.
The year also underscored the involvement of private sector companies and employees in corruption. Luminaries that had to pay up included McKinsey, Deloitte and ABB. Markus Jooste was fined R121 million for Steinhoff shenanigans. Apparently, a group of Stellenbosch citizens have voluntarily teamed up and prepared a case on Steinhoff for use by the National Prosecuting Authority (NPA), complete with affidavits. It will be interesting to see what happens with that.
The ANC is still struggling to catch up with the changing public mood, manifested by the refusal of some accused to stand down. This issue is far from over. Political parties cannot ignore public opinion indefinitely, even when the opposition is weak. In the Namibian election in November there was a strong swing away from SWAPO to a plethora of smaller parties and independents. An observer there noted ‘people are tired of corruption’. In South Africa the state is proceeding with actions against various perpetrators and the state’s actions will only increase, not decrease. Evidence at the Zondo Commission both shame and anger citizens. The general mood in the country is not helping those in the ANC that want to hold out on corruption.
Interestingly, in Gauteng, the ANC structures demanded that the former health MEC be fired after the premier only suspended him on corruption allegations. And he was duly fired. Gauteng is going in a different direction than other ANC provinces and that could be a harbinger of what is to come.
- Apart from the smell of corruption in Sub-prime, we certainly never experienced anything like this in that disgrace. However, in socio-economic terms, Sub-prime though harsh cannot be compared with the gravity of covid. The best I’ve commented on is the factor of 5 that I saw on TV one evening. But even looking at latest GDP and Growth statistics, covid has been dire in comparison. According to Landman:
Economists are projecting -8% for 2020 – a very serious contraction. Both the Reuters and Netwerk24/BER polls of economists (38 economists participate in the latter) forecast on average growth for 2021 of 3,5% to 4,0%. They clearly expect a V-shaped recovery or a dead-cat bounce.
Beyond 2021 growth will fully depend on how much structural reform we undertake, a topic we touch on below and will certainly return to next year
- Sub-prime never caused deaths en masse. Probably as high as 2m so far globally. Nothing like that happened back then. Whether covid should have been declared a pandemic or not, the human tragedy has been on a non-comparable scale.
- And a final thought…..covid has had its good moments and aspects. Much spring cleaning took place and many families had precious time together. My son summed it up one day saying that nothing but lockdown could have given him so much time with his baby [now 1 on 11/11/2020]. For some corporates, they have been able to make significantly lower cost investments in these trying times and some have brought forward restructures with great effect financially. Just learning not to use ventilators too soon and drug advances have saved many lives and it is not by accident that our recovery rate stands at over 90%. I think many of us have grown personally – trappings are seen as just that, and just being alive is much more appreciated.
In short, these two blogs have drawn some comparisons and learnings together. If we can get through the almost new normal of 100 %-plus national Debt:GDP ratios, Sub-prime taught Reserve Banks how to respond this time. Covid has been crippling but if I look at things returning to some form of normality, we could get through the 2nd wave and on to the vaccine without too much more damage humanly or economically. I believe we have become more sensitive of those around us and caring for those less fortunate, and those who endured loss. We need to embrace what is good and let go of the rest.
In closing, if you’re reading this and feeling okay, YOU HAVE GOT THROUGH! A few more months, maybe one year of caution and we trust we can put this horrible experience behind us. If you agree with anything in my last paragraph, you will come out stronger from the experience. More in touch with yourself, your vulnerabilities, and your strengths. Those you love you will love more, and the chance for an embrace will never be missed again. Like those of us who experienced and survived Sub-prime, you will know you can, and that knowledge will give you perspective and hope grounded in all the learning that got you to that point. Truth is we all bear some scars of that time and no doubt will of this, but to have made it is a cause for celebration, and a deep sense of gratitude.
We are aware that some have not had it so easy. Illness is seldom anyone’s best friend and to have longed for loved ones or lost someone dear to you during this time as we have, is sometimes a bitter pill to swallow. How we long for grace for you and strength to see it through. Whilst these blogs have been as factual as I experienced the global events and as humorous and upbeat as I can make them, I’m truly aware of the impact of both national emergencies. “Lives and livelihoods” take on new and different meanings when it’s your life or my livelihood that’s been or is being impacted. We honour you sincerely.
But now it remains to say: “Merry Christmas!” to all our readers who enjoy this season of the year. We are so grateful to have walked the road with you and feel a bond closer than this time last year. From HLJ to each of you: THANK YOU for all you have meant to us, and for the exceptional support you have given us.
May you be uplifted and strengthened as you enjoy Christmas and the New Year responsibly with your loved ones.
Yours in Property.