long-bridge

The Financial Crisis of 2008, 2009 and Beyond – A Fantasy Tale Revisited

OF CABBAGES AND KINGS

"The time has come," the Walrus said,                                                                          

"To talk of many things:

Of shoes and ships and sealing-wax

Of cabbages and kings

And why the sea is boiling hot

And whether pigs have wings."

 

Lewis Carroll—Through the Looking-Glass

 

The Financial Crisis of 2008, 2009 and Beyond – A Fantasy Tale Revisited

 

Abstract:

The last global financial crisis, enduring stubbornly since 2008 has been blamed for many things and many have analysed the causes.  As told by the Walrus, there are a number of seemingly unrelated concepts at work here.  This article argues that there is no single cause, but a number of interrelated and co-dependent causes that essentially pre-ordained the near collapse of the financial system.  This is primarily due to the entropy of an artificial, complex system due to the occurrence of circumstances outside the system’s boundary conditions and an inability of the system or its operators to manage appropriate damage control mechanisms.  The complexity of the system is a result of the supplanting of judgement and responsibility, and the replacement of these by a rigid rule driven approach to the financial markets main mechanisms of operation, control and correction.  The catalyst for the collapse and the bankruptcy of Lehmann Bros the sub-prime mortgage crisis, which was  accelerated by  a realisation across the globe that too much energy and complexity had gone into the financial system (“bubble”) to sustain it.  Trading rules, valuation rules, financial rules, accounting rules and disclosure rules all play a role.  Little of which required or allowed any judgement or the application of old fashioned common sense, just the application of system rules. These operated so as to allow responsibility for investments and loan approvals to defacto pass to 3rd parties, who in more cases than is comfortable, were not themselves making either any investments or advancing any loans. Once the rout had started the rules based system very swiftly ensured that the entire financial system would fail and that several very large banks and companies would only be saved from bankruptcy by government bailouts. The depth of the crisis is still felt today with many governments to this day being left with very few tools with which to further stimulate growth.   This article seeks to show that markets, market makers and regulators are victims of their own universally applied, too clever and complex, over-regulation.  Further that unless we bring back judgement, responsibility and accountability to the persons and institutions that make investment and lending decisions, the system is being set up again on the same path towards a bubble and a subsequent collapse. If this happens before the global economy recovers properly, there will likely be insufficient ammunition in Government arsenals to defeat or deflect the next market correction which could well be deeper and longer.

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Mozambique Rising – is South Africa capitalizing on the opportunity?


I have been fortunate enough to know the splendor of the Mozambican soil, Mother land to my parents and ancestors. My first memories were of its pristine beaches, and the then Maputo, when we visited from South Africa on family holidays. When my parents moved to Beira in 1992, Mozambique became my second home. The Mozambique of today is significantly different to the Mozambique I remember back then, in fact it is hardly recognizable. After a devastating 16 years of civil war brought its economy, the country and its people to its knees, it is slowly but proudly rising out of the ashes to stake its claim as an African powerhouse. Yes – the African sun is once again shining its warm and powerful rays on this East African country. Though South Africa and Mozambique have had a long history of being regional economic partners, each time I return from Mozambique I am less and less convinced that South Africa is [optimally] capitalizing on both it's historic relationship with Mozambique and its neighbour's boom as an export destination for its domestic goods, services, capital and labour.

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Africa – the Continent of Great Opportunity

Africa – the Continent of Great Opportunity brilliantly disguised as Unsolvable Problems.

The African continent remains an economic enigma to many foreign investors, and a social enigma to many philanthropists and anthropologists. Africa - the vast and beautiful 'virgin land' riddled with a history of poverty, corruption, exploitation, and other ailments. In part from its previous colonial regimes, and in part from post independence civil wars.

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Spitting Image

For those of you old enough to remember, the 1980’s heralded the television satirical puppet show called “Spitting Image”. It parodied and teased, making fun of society at large. One of the songs it produced is: “I’ve never met a nice South African” which was a vicious denunciation of Apartheid. On a personal level, I despised it, because at the time I really didn’t understand what all the fuss was about and somehow the attack felt personal. Yet as young ‘varsity students, we loved it and would play it at every opportunity especially when members of the state security apparatus were about. I think it may even have been banned (along with Bob Marley’s “Gimme Hope Joanna”).

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The importance of cross-cultural communication and integration in business negotiations

- Being a young white female in not only a ‘man’s world’, but in a ‘man’s world in Africa’, has had its challenges.
 
Prior to researching the topic of “cross-cultural communication and integration” I was totally unaware, though not surprised, that this subject was a discipline in its own right. As I sifted through the extensive reading material available online, it was intriguing to see how I have been unwittingly applying the principles of cross-cultural communication and integration for as long as I have been involved in African Business Development.

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