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International & Local Economies - Where are we Sailing?

Exploring the impact of the subprime housing market crisis on global and South African economies, with a focus on financial markets and future trends.

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International & Local Economies - Where are we Sailing?

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  1. Authorised Financial Services Provider – FSP No: 859

  2. International & Local Economies - Whereto are we Sailing? Presented by: Dawie Roodt 6 November 2008

  3. Where Did it All Begin?

  4. U.S. Interest Rate Subprime MarketEmerges…. Nasdaq Bubble Source: I-Net, Efficient Research, 2008

  5. Subprime Housing Market ‘Subprime’ = A loan that is offered at a rate above prime (0.1% - 0.6% higher) to individuals who do not qualify for prime rate loans. …… “NINJA” loans

  6. It’s All In The Packaging Subprime Loan RISK Sell Sell Sell Sell CAPITAL Re-sell Re-sell Sell

  7. U.S. Interest Rate Subprime BubbleBursts Nasdaq Bubble Inflation Credit Crises Source: I-Net, Efficient Research, 2008

  8. Consequences….. U.S. Institutions Bear Sterns, Lehman Brothers, Merrill Lynchbankrupt or taken over AIG, Fannie Mae, Freddie Macbailed out U.K. & Europe Northern Rock Iceland = Bankrupt! Credit Market Freeze……

  9. Emergency Rescue Plans U.S. $700bn bailout package Additional Interest rate cuts (100bp) Fed buys commercial paper Fed doubles its auctions to banks ($900bn) Etc. U.K. & Europe U.K. £50bn purchase of preference shares BOE & ECB Interest rate cut (50bp)& more to follow.. Guarantees private & retail deposits IMF China Cuts i% G7 Meeting Germany €400bn $$$

  10. Will It Work…..? Financial Markets Real Economy

  11. What About Us?

  12. Excellence in SA Banking Sector SA Banks Locally: No Direct Exposure International: Limited Exposure Thorough Assessment by Registrar of Banks in July 08 : “financial system is sound” International Comparison on Safety of Banks : SA is 15th out of 134

  13. Where Will It Impact?

  14. Dollar Strength Source: I-Net, 2008

  15. Commodity Prices Source: I-Net, 2008

  16. Rand Weakness Source: I-Net, 2008

  17. Interest Rate Advantage Source: Efficient Research, 2008

  18. Slowing International Demand Slower Growth?? Other8.0% Recession?? Source: SARS, 2008

  19. What Do We Export? Mining Manufacturing Source: SARS, 2008

  20. Balance of Payments Source: SARS and own calculations

  21. C/A Deficit Funding “Hot Money”-DANGER- Source: SARB, 2008

  22. Still Positive on SA Growth Average:3.0% Source: StatsSA and own calculations

  23. To The Future Stricter Regulation & Control More Protectionism, Political Tension Slowdown in Western Demand, Increase in Eastern Consumption Looming Inflation Pressures.. Monetary Policy Changes – Monetary Aggregates - Higher Interest Rates Weaker Western Currencies Stronger European Integration

  24. A Changing World West becomes more Socialist East becomes less Socialist

  25. Authourised Financial Services Provider – FSP No: 859 www.efgroup.co.za

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