Wednesday, January 27, 2016

ANC Youth League Condemns Barclays Bank and Goldman Sachs for Weakening the Rand
12 January 2016

The ANC Youth League notes with great concern the drop in the value of the Rand to an all-time of just below R 18.00 to the US Dollar. This is a very crucial issue in our country especially for the poor. The drop in the Rand makes it more expensive for South Africa to buy imported products. The current market system of the country dictates that the increased costs of buying imported products must be passed to the consumer who uses these products. Therefore, those most affected are the end users of imported products - that is us, the general public.

South Africa`s export statistics show that 24% of our imports is fuel. Fuel is a product that affects the price of food and other essential consumer goods. In fact, almost all commodities in South Africa are affected by the rise of fuel. The drop in the value of the Rand from R 11.25 to US Dollar in January 2015 to R 16.84 in January 2016 has serious implications for the country. The drop in the value of the Rand has been consistent in the past year and cannot not in any way be attributed to a single event. The decrease in the value of the Rand has eroded any benefits consumers could have derived from the fall in the oil price.

The market trading systems of the world dictate that the price in any product or commodity is driven by the demand for that particular product. In the neo- economic trading of commodities, currency has been a great source of income for major financial institutions. These institutions trade the Rand by selling it amongst themselves which greatly impacts on its price. This reason is that when more institutions buy the rand as a commodity, its price and value goes up and when they sell more volumes of it, its price goes down.

In order to maximize profits many financial institutions would sell more and more of a commodity when it is valued at a higher price, and when it is sold in great volumes, its price and value deteriorates. The same financial institutions then buy back the commodity on world trading platforms at a cheaper price. When they buy it back, demand then increases and the value of that commodity then appreciates. In other words, they make profits from buying back a product they initially sold at a high price, for a cheap price.

In the name of a free market system governments have a limited and almost no role at all in controlling how the markets buy or sell the currency of their countries. Adam Smith, in his book The Wealth of Nations, argues that for any country to develop their own economy they must conquer the other country and then sell their products to them and take the wealth of that nation.

In the new world economic order and globalization there is no longer a need to conquer through military war but through economic warfare.

This is largely because you can establish an international company in another country and that company remains owned by you.

These companies then loot resources of the country they have been established in, with marginal benefits to that country. The establishment of these international companies in our countries is seen as desirable through Foreign Direct Investment (FDI).

These companies are not patriotic to the country of their operation but only to the countries they come from and their role is to maximize profit which they then repatriate to their country of origin.

Barclays Bank which was largely welcomed in South Africa has been for the past months excessively and aggressively selling our currency. This has created a panic in international commodity trading platforms like forex. The excessive selling by Barclays has in turn reduced the demand for the South African Rand. They have not been doing it alone. They have been doing this with the assistance of their American counterparts, Goldman Sachs. The plan is to sell so much of the Rand currency in order to drive down its price and then to later re-purchase it, which will push up its value as demand for it increases. This is how that they profiteer and play with our country, through their actions.

A company like Barclays has no interest in growing our economy, but the economy of their country of origin. Owners of Barclays couldn`t care less about South Africans because they have no human ties with our country. Their children and families live in Europe. They do not care about the rise of food prices. In fact to them it is even better, because it will force us South Africans to borrow more money from them just to maintain the increased cost of living and then they make more money charging us interest.

Companies like Barclays intend to undermine economies of BRICS countries because they pose a threat to their country`s growth initiatives. South Africa has become a target of the anti -BRICS countries, who see it as a threat to their appetite for the African economy. Barclays has been very shrewd in diverting attention from itself. The demagogue EFF which intended to march to their buildings changed their tune because of underhand currency exchanges received by Julius Malema who always sells out at the first sight of money.

This is why Malema was welcomed in England because he is identified as a tool of the West. His silence has been bought and used to divert attention to issues that have dire consequences for our country. In order to protect the sovereignty of our country the EFF must be investigated on the deals they have made to destabilize the country, in respect of foreign donor funds.

The sinister strategy which is being implemented by Barclays and Goldman Sachs poses a serious threat to our economy. It will cause an increase in the standard of living for the majority of South Africans. It will increase the cost of education which will escalate the problem of unequal access to education in our country. It will lead to the increased cost of food which will affect all South Africans, but which will mainly be felt by the poor.

Barclays should not be praised for their investment, because it did not lead to job creation, but instead allowed them excessive access to our currency, which they can now carelessly trade in order to make profits and fulfill their country`s political agenda.

The most disturbing concern is that economic analysts tend to defend institutions like Barclays. The blame is largely placed on government whilst the structure of these markets does not allow for government influence. They claim to offer a professional opinion whilst some of them do not even hold the necessary qualifications to comment on economic issues.

The fact is that it is not for the first time Barclays has done this. As recently as May 2015, Barclays was hit with a $ 2.4 Billion fine because they rigged the foreign exchange market. This was also not the first time this happened. Barclays Bank has over a period of time paid a total of $638 Million for misconduct related to Foreign Exchange at the New York Department of Financial Services.

The ANCYL calls on patriotic South Africans to withdraw their savings from Barclays controlled financial institutions like ABSA.

Barclays should pay the price for their actions and the ANC Youth League will lead the onslaught. The ANC Youth League will organize serious boycotts against ABSA. South Africans must unite and defend the sovereignty of our country against this capitalist agenda.

Issued by ANCYL

Mlondi Mkhize
ANCYL National Spokesperson 073 011 4676

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