Watch Live: EFF’s motion to nationalise banks is debated in parliament #NationalisationOfBanks


Debate in National Assembly: The motion of the EFF to nationalise banks without compensation, will be debated in the National Assembly.

 

3 thoughts on “Watch Live: EFF’s motion to nationalise banks is debated in parliament #NationalisationOfBanks

  1. Why are the banks the MOST SUCCESSFUL PART of the South African economy? Because they are PRIVATE! Because they are run for PROFIT! Because there’s NO GOVERNMENT AND POLITICAL INTERFERENCE! Because they are LISTED ON INTERNATIONAL STOCK EXCHANGES and have INTERNATIONAL INVESTORS and INTERNATIONAL SAVERS and CUSTOMERS, FINANCIAL LINKS AND TRADE.

    If South Africa nationalizes the banks, then international investment is automatically cut off – will politicians allow the banks to expand into Africa and internationally? Did Eskom expand into Africa, build power stations across the entire Africa like MTN did or did politicians say Eskom should focus only on the poor and South Africa? That’s precisely what happens when politicians take over banks: they restrict all investment decisions and the banks are not run for profit. Guess what the size of historical bailout of state banks have been? 10 times the size of company bailouts! Yes, you have read correctly! Historical bailouts by taxpayers of state owned banks have cost countries 10 times more money than bailouts of businesses. So the disaster that a failed state owned bank can cause to the financial system and economy is 10 times the size what the damage can be than if a single business fails.

    Furthermore, if the banks are not adequately financed, if they have problems with profitability, then it means there’s LESS money available to loan out to borrowers: so think higher interest rates for everyone. Are Zimbabwean banks well financed – or can’t people get money out of ATMs? The EFF doesn’t even realize that we enjoy the current level of interest rates because of the JSE investors that keep the South African banks well financed with new funds, that keeps them profitable, in order to expand their yearly businesses activities: to open new branches, place new ATMs and to give loans to people.

    Our finance system is only a success because of the high level of private investment that the banks receive a year. Their success is the only reason they can compete aggressively throughout Africa with other international banks. If they are forced to focus on South Africa – like Eskom did, the same results will follow. It is profitability that determines the speed of their expansions, of new job creation, of investment – that flows to the entire economy. Cut the speed of investment to the banking sector, their profitability and there’s less money to loan out to the entire private sector businesses and to government which also borrows from the banks. So if you want to see high interest rates, nationalize banks.

    Everything South African banks have gained inside Africa, their expansions and investments will be lost and international banks will take over Africa and dominate those markets if South African banks don’t or can’t invest there. Tanzania tried it? How’s Tanzania doing? Zambia tried it? How’s Zambia doing? How about Zimbabwe? Mozambique? They all tried it, their banking system is today one of the worst in the world. Governments are the most inefficient, laziest people on earth. The government is open till 3pm, they invent nothing, doesn’t care about customer satisfaction and unhappiness. Our banking sector is ranked 2nd best in the world, think about it. Now imagine everything was run by the private sector – think Hong Kong skyscrapers, Singapore skyscrapers. That was built by private businesses, low taxes an environment where everyone wants to invest. It’s freedom and low taxes that creates wealth.

  2. The state banks fail. Imagine one business fails and the bank fails, then there won’t be money for the rest of the businesses that depend upon that state bank for finance every year. The governments are forced to save these banks, forced, just to keep the financial system going. If everyone runs to the bank to withdraw their savings, because they are afraid the banks will collapse, then the banks will be unprofitable, because the banks loan out 10 to 100 times what they have in their savings accounts. Everything is loans to someone else who has to repay it to the banks. So it’s a financial risk that is beyond the government’s ability raise taxes, to refinance the banks. China might be able to do it – but China exports $trillions of dollars of products. We export commodities – gold is at $1,200, our best exports are almost unprofitable. The government is almost bankrupt, can we refinance a state bank that has failed?

    Can we save banks? Banks that can lose TENS of BILLIONS within 3 months. This is not SAA or ESKOM or SABC, this is BANKS, that manages TRILLIONS of Rands within a few months. They can lose a lot of money very quickly. If we want to fall like Zimbabwe, then just make ONE mistake with banking. It is not worth the risk, like DOMINOES, the banks ALL fail together, ALL fall together and savers, investors lose their money. Everyone runs to the bank to withdraw their money before the government makes it impossible to withdraw their money, the bank fails and shareholders in the banks get nothing for their investment in the banks and the government has to create tens of billions of Rands to refinance and save the banks, so new money is created, driving the exchange rate of the Rand to the dollar down. That means EVERYONE will have to pay more Rands to buy imported goods. Interest rates would skyrocket in such an environment, think 30% interest rates. It’s like the US financial crisis of 2008.

    You can imagine for yourself how these state banks will be run: the BEE guys and girls will want the first loans. Do you understand? The friends of the politicians will want loans when they shouldn’t get loans, shouldn’t qualify for loans. So the banks will take on financial risks far exceeding their usual. Within years and decades of that happening, the profitability of the banks will fall and the banks will need to be bailed out by taxpayers, like in the case of SAA, Eskom etc. but the bailouts will be enormous to taxpayers, their taxes could skyrocket to prevent a collapse of everything – a collapse of the entire economy – because the banks manage the MOST MONEY circulating in the entire economy. The financial risks are very high, the Rand can fall to R100 per dollar if a bank collapses. The value of the exchange rate is in part determined by the strength of the financial system. Is the financial system sound? Is everyone’s money secure? Will everyone repay their loans so that others can take out new loans from that money that has to be repaid to the banks?

    Government can try to start its own bank, but try one. Just make a success of just one bank before trying to run everything.

  3. The EFF should do the opposite: force the banks to expand as quickly as possible into the rest of Africa and gain those customers so that they can have more money to loan to South Africans. The more African customers they have, the more money they have and the more they can loan out and cheaper to South Africans.

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