Thursday, May 22, 2008
Media: How to hurt the poor even more
I guess the pictures say the thousand words. Make that 500.
The other 500 then: There has been some debate, even a poll, where 70% of readers approved publishing a picture of a burning man. Every newspaper I saw in South Africa had the same set of images. There was a lot of ethical and moral grandstanding around this, but virtually no consideration of just the economic fallout that this brings about. Here are a few relevant quotes:
Traders said stark images of violence on the front pages of the Financial Times, Guardian and New York Times, prompted a kneejerk retreat in the rand yesterday.
“The photographs had a marked effect,” said Paul Kamp, a senior dealer with Standard Chartered in London. “The violence has been going on for a while, but when investors see these pictures on the front pages they wonder what’s going on — it’s not nice to see.” - Mariam Isa
Attard Montalto said a raft of key economic data due next week, combined with risk aversion and continued xenophobia, could conspire to drive the rand back above the R8/$ level in the near term. That level was last breached in late March, when the rand weakened to a five-year low of R8,25/$.
I don't know if I am stating the obvious saying this, but with oil at $130 and our currency at R8/$, petrol prices in the months ahead will go up by 10-30% and you can basically start writing off lower- middle class South Africa who will have to start getting rid of their houses and begin the nasty process of defaulting on cars, TV's and their furniture, because they simply can't afford to operate under these conditions. I'm guessing 25% of our economically relevant population, or 1/4th of our economy, at least. And it's not just us who are going to burn off a whole new set of economic losers; the scary thing is it is happening everywhere at the same time, creating a cascading effect.
I've raised the concern here that South Africa's currency took a battering as a result of the images appearing in overseas newspapers, and important economic players then changing their positions. In the months ahead we will learn that we need to find ways to really slow down local economic degradation (and it might mean keeping your job for a while longer too, so pay attention). We need to look at making investments into farming, managing the impact of higher costs as much as possible, and remain cognisant of ways to prop up and support our currency. Having said that, I predict stock markets around the world to start wobbling from this point forwards, so there isn't a terrible amount we can do.
The simple act of publishing photographs, while one might have one's own reasons, also has wider consequences, and when the Rand weakens, it makes the price of petrol in Dollars even worse, which means South Africans pay doubly for their troubles. Worth thinking about isn't it.