Wednesday, February 20, 2008

Manuel: "Time for neither gloom nor panic - but it will be tough"

Manuel does a great job of being reassuring, firm, clear and charming - even an intact sense of humor - in his budget speech. Just his tone and body language ought to give local markets a 'hupstoot'.

I like his sensible approach. He referred to 'Economics' as being something like weather reporting; and the weather report for the future is described as "Stormy." Storm clouds are gathering. He says we are well positioned to weather the storm. I didn't know that. It's good to hear.

The caveat must be that South Africa - whatever it does - remains vulnerable to what is happening in global markets, and America is taking big and heavy blows. Our resource stand us in good stead, but money is money. And energy is energy. The same underestimation of US credit woes in the housing sectors, I believe, extend to the source problem - higher energy inputs across the board.

I once attended a conference Manuel gave in Bloem (for school students). I suggested to one my students (I was an Economics teacher then) that he could ask the following question: "Mr Manuel; aren't you worried about $100 oil."

My student wasn't obliged to ask this, but he did. Mr Manuel reponded saying that oil is something we import from other countries. As such we have no control or influence over the resource. "All we can do," he said, "is look at what is in our backyard." It made sne, a practical answer. But I remember this worried me: "If the Minister of Finance isn't worried about oil prices, owning this issue, is anyone? Is anyone primarily occupied with finding alternatives - alternative technologies, alternative renewable energies...?

This question remains in my mind.

No comments: