Monday, November 7, 2011

Ultimately the Brown Stuff Will Hit the Fan

RW Johnson says govt is spending itself into dependency on foreign lenders and investors

“In Pravin Gordhan's Medium Term Financial Statement (MTFS) the key message was that South Africa's savings ratio, at 16.1%, is far too low, and that meanwhile government expenditure has been favouring consumption. The result is a dramatically reduced rate of capital formation. The reasons for this are various. First, the ANC has invented an enormous new form of consumption expenditure in social grants, currently costing R89 billion a year. Given the poor shape of the economy in 2009 many thought that the government could not possibly honour the Polokwane promise of child support grants being increased both in amounts and in coverage, yet this is exactly what happened in 2010 with 15-16 year olds included and by 2012 17-18 year olds will be added too.”
“But there are two other points of great significance. First, between 2006 and 2009 the number of income and corporate tax payers fell by 422,000 - undoubtedly due to continuing white emigration and, one fears, a general reluctance on the part of the new elite to become taxpayers at all. Whatever the reasons, this 10% shrinkage of the tax base is deeply serious.”
Let’s look at what’s happened in Greece. They are up to their noses in brown stuff. Their leaders realize that “austerity measures” are required and there’s a move to introduce such austerity measures. What happens? Revolt. The people got used to spending more than they earned and now they don’t want to go back to what it was before.
I ask myself the question, how long does the ANC government intend keeping up the social grants, forever? What will happen when they stop, or when they fail to increase the monthly grant?
I tell you what will happen; they started it, kids are having babies in order to get a social grant because there is no work, it is a problem for the future. One day the ANC will drown in its own excreta and the next government will deal with the problems created by this one.

1 comment:

Carnic said...

South Africa is not the only country following this path to future unrest. It is all about getting re-elected.