It was a long safari – too long. But looking back on it, I realise the concentrated exposure to all the main economic drummers who are beating out the rhythm of the investment world was necessary, even if it was arduous.
There are two trains running in parallel at present: one led by the more familiar, older Western locomotive and the other by the more precocious, newer Eastern one. The carriages of the world are divided between them – Asia, South America, most of Africa clearly behind the fast one; North America (including Mexico but less convincingly resource-rich Canada), Western Europe, Eastern Europe, South Africa and Japan dawdling behind the slow one. Oil-rich countries are still more oriented towards the oil-hungry West; coal-rich countries towards the coal-hungry East.
Australia – notwithstanding the out-of-date perception of most Aussies living in its South Eastern corner – has actually decoupled from the West and is now firmly hitched to the East, as evidenced by its “no recession/rising consumer spending/G20 candidate most likely to tighten rates first” status. Even so, most Australians are closet Europeans who are dismissive of their Western-most state because of its less than 10% of the country’s population spread thinly across 35% of its mainly deserted land area. Yet Western Australia produces 60%+ (and rising) of Australia’s exports. It is WA that is the link that firmly ties the rest of the Australian continent to the economy of Asia.
The result is those living in Bloomberg and CNBC-land (e.g most South African investors and economic commentators) are very likely to have a very distorted view of the world, naturally overestimating their ‘world’s’ economic standing in the grand scheme of things. But the reality is that there has not been a global financial crisis – GFC in Aussie slang – that began post-Lehmans; it has just been a Western one.
Getting back to South Africa – always a pleasant experience – nevertheless reminded me how out of touch this country is with the true global picture, a forgivable oversight because our ruling classes (of all races!) still tend to see our country as an English-speaking Tuscany South and, a thought which is much more worrying, believe this to be “a good thing”. South Africa surely has the beauty to match the land of Florence, leaning towers and olive groves but the fact that Italy is fast becoming little more than a living museum (and a heavily indebted one at that) is not, not, not a reason why South Africa should seek to emulate it. Psychologically at least, South Africa still likes to see itself as a passenger car attached to the West rather than – despite our truly spectacular mineral endowment – a coal truck attached to the East.
South Africa’s stuck-in-the-mud economic status shows up in the data – it is currently Africa’s leading economic laggard in the growth stakes. Not that this appears to illicit much of a sense of urgency in government circles and not that this brings forth any sense of outrage amongst our cheerleading fraternity of ostriches (also loosely known as “economists”).
If nothing else this trip taught me that the world is divided between two groups – those that GET IT and those that DO NOT GET IT. And most South Africans are firmly in the latter category – though corporately not Standard Bank, Naspers and the formerly South African and now-London based club of SABMiller plus the miners.
Oh yes; there is a third category: most Australians – they do not get it even though they have already got it. Geddit?!