News from Britannia Bay Developers
CAPE DEVELOPER SAYS DO NOT BLAME CAPITALISM OR PROPERTY FOR WORLDS ECONOMIC CRISIS.
An aspect of the current global downtown that annoys him greatly, says Cape property developer Gert Joubert, is that those with left wing leanings are using the situation to discredit capitalism.
This, he says, is a complete misreading of the real causes of the current problems and shows only how yet again people will adopt and adapt any facts to support their theories. The plain truth is that it is not capitalism that has failed but the government watchdogs and regulatory bodies, particularly those in the US, that were supposed to be monitoring the banks and the quasi-government bond issuers. It is they who have let the side down, allowing these institutions to indulge in utterly reckless lending.
In any normal business, said Joubert, shareholders watch the financial performance of the company and, as soon as they see it becoming unsatisfactory, put pressure on the management to improve it or resign.
In the US, UK, European and Far Eastern banking and financial institutions, however, both the management and the shareholders had over the last 30 or 40 years come to rely on the fact that their governments would bail them out rather than see small investors lose their lifelong savings. In most democracies, said Joubert, a failure to provide this protection would automatically lead to the downfall of the government.
As a result of this, he said, a cosy relationship grew up between the governments and the financial institutions in which the usual rules applying to other businesses, i.e. show a profit or go under, simply no longer existed. US financial institutions, encouraged by the huge bonuses for high turnover, were for four or five years able to lend money on expectations of continued growth, even though this, to many observers, was becoming increasingly unlikely.
The preferred instrument for this type of speculation, says Joubert, had over the last two decades become property and it had, therefore, been among the hardest hit of all sectors, with crippling debts reverting to the banks and bond issuers.
The danger now, he said, is that with the whole system under suspicion and demands for more responsible management in future the government will try to restrict the free market system and will probably succeed in doing it so effectively that it becomes far less capable of delivering. In these circumstances we are likely to see growth continuing to be slow.
It has to be accepted, added Joubert, that in the whole long history of mankind no system has ever created wealth as efficiently as capitalism. Let us agree, by all means, to reform it but let us not shackle it so severely that it loses its power to create wealth and improve peoples lives.
Article by: www.britbay.co.za