The Woolpit Wiff

Diary entry on 02 July 2007.

The day had started off pretty un-eventfully. I had spent my first night in my new accommodation and I still had that hotel room feeling. That visitor feeling you get after waking up in strange surroundings on your first day in a hotel room. So it was that at 4am in the morning I awoke to sunlight beaming into the room from under the black blinds that I had, earlier the previous night, tried furiously to roll down as far as possible. It felt rather odd that the pedantic landlord had got such a basic design detail so wrong. The blinds did not cover the height of the windows. These were not blinds, they were giant mini-skirts that were clearly not fitted to cover all the details. I felt my privacy whittle away. I would be exposed! Ah well, I concluded, it was a small detail and one I would deal with later the next morning.

Indeed, 4am and the "blinds" were the first thing I was dealing with. Yes, the small detail of allowing light from the rising sun dead onto my face woke me up at least a whole hour earlier than I had planned.

I had a business trip to Suffolk County later in the morning so I set my alarm clock to first go off at 5am. As I am a notorious addict of the "snooze" button, I placed the alarm clock no less than 4 feet from the bed. This was self devised failsafe design to make sure I would at least have to move more than a couple of muscles to hit snooze. The obvious idea being that significant body movement would wake me up. From past self-observation and experience, even the act of heaving about my entire frame - all 12 stones and 206 bones of it - to get the alarm would still not be enough to wake me up, I elected a second failsafe - set 3 alarms at 15 minute intervals on two different phones, both placed 4 feet away on either side of the bed. "Genius", I had thought to myself, happy in my designs. It was that a little before midnight that I had gone to sleep frustrated with the "failing blinds" but satisfied that my "state of the art" wake up mechanism would see me wide awake by no later than 5:30am Monday morning.

So there I was, 4am - awake! And not by my elaborate network of well placed mobile phone alarms set to go off in an hour, no, but by the failing blinds barely covering the windows. Feeling I needed the extra hours rest, I garnered as much ingenuity as I could master half asleep, to cover my face from the light with two pillows and angle myself back into sleep.

“Gosh!” I exclaimed as I jolted out of bed confused by the bright sunlight and momentarily delusional from these unfamiliar surroundings. The sun now brightly light the room and my African senses suggested I was experiencing mid-morning sun rays! I raced the entire length of 4 feet to my phone to check the time. 6:41. Yes, “Gosh!”

At the very minimum, I should have been on the Jubilee line well on my way towards London Bridge station for a connection onto the Northern line. The Northern line would take me to King's Cross - St. Pancras station. It was here that I would board the train to Bury St. Edmunds via Cambridge at 7:45am. Had I woken up at 5:30am as planned, I would have covered the 1 hour 50 minutes trip to Bury St. Edmunds and followed that by an approximately 15 minute taxi ride to Woolpit, Suffolk County by 10:00am in time to settle and prepare for a series of meetings with the first scheduled for 11:00am.

As it had turned out, covering my head with the pillow to shield from the sunlight had effectively sealed off my ears to the multiple alarm mechanisms designed to wake me up! Classic scenario of perfect safety design made irrelevant by operator behaviour. In this case I had been both designer and operator - the failure was a huge blow!

Realising that missing the train would set-off a series of highly undesirable events; I rushed to the shower to perform a high school ritual purposefully called "The Portrait". This involved washing the face, neck and armpits only. Perhaps the name was suggestive of getting clean only those parts of the body that would be visible if you had a portrait taken - face, neck and shoulders? This was not a time to fuss about missing my ritual of the full body morning shower. This emergency called for drastic measures and "The Portrait" seemed a perfect tool in my arsenal of unsavoury options horned in at boarding school all those years ago.

7:15am, The Portrait taken hurriedly and spotting a Pierre Cardin - super 140 - grey/brown micro pin-stripped suite over a white combed cotton Viyella double cuffed shirt, morning paper under my arm, laptop and travel bag beside me, I stood by Canning Town station waiting for the Jubilee line to take me to London Bridge. This was a classic Londoners look. Finally, I had arrived - I was a Londoner!

With a Jubilee line train every three minutes, I didn't have to wait long.

8:03am, nearly 20 minutes after my scheduled time of departure, I had arrived at King's Cross - St. Pancras station alighting from an over crowded Northern line train. I still had to make my way to the actual train platform, collect my e-ticket from an ATM style vending machine and then pray that there was another train whose locomotives were trained towards the direction of Suffolk County.

8:11am, the answer to my pray was flashing on the huge psychedelic information board ahead of me. There was an 8:45 train to Cambridge from where I could connect onto a train to Bury St. Edmunds - my destination. It wasn't until 7 minutes prior to departure that "9A" flashed under the column headed "Platform".

The journey had begun!

Ntheye Lungu.

Relative perceptions of crime in South Africa

Aside from the issue of AIDS, arguably one of the most controversial topics in South Africa, and by anyone remotely interested in South Africa, is crime. It seems impossible to discuss the country without the topic of crime, amongst other perhaps equally controversial topics, cropping up? Having lived in South Africa for 7 years and recently relocated to England, I am still baffled by the exceptional and convoluted emotions that crime in South Africa seems to conjure up! Some views of South Africa are so bewildering that sometimes I wonder whether it is the same South Africa that was home for so many of my blissful years.

The obvious and inescapable verdict from the court of public opinion both within and without South Africa seems to be that it is a country awash with utterly unfettered criminal activity. A country where criminals roam free, turning ordinary hard-working folks into victims with impunity and authorities labelled passively complicit to the crime wave. Of course there is no defence to this view. All one need do is pick up any newspaper, listen or watch to any news bulletin. Such brazen crimes as blowing up ATM machines with commercial explosives or executing cash heists with Hollywood style car chase choreography in Johannesburg rush hour traffic and it strikes you - crime is rife in South Africa.

Well, that’s a story you have heard, and that is the story you hear from some self proclaimed "crime refugees" from South Africans now living in England? Hearing an impassionate damnation of South Africa from one that left in 1998 seems rather decrepit an excuse, especially because it always seems to be the case that the victim was some close relative, or friend, rather than the protagonist directly.

Having freshly come from South Africa, with the horrid stories of crime still fresh on my mind, I wondered if in fact most of the "crime refugees" were now living in crime-free paradise. Of course it had been a lot easier to follow the crime headlines in South Africa, not only because I am, was, an avid listener of SAfm radio, but also because the bulletins of alarming, albeit flamboyant, newspaper headlines designed to instil fear posted along streets poles. Perhaps more effective at maintaining that reality is smiling newspaper vendor standing near "Robots" flashing the headlines directly into your windshield?

That was Johannesburg. Now, with half my life in London being spent in the tube commuting to and from work, the only real access to news has been through freely available, slapstick editorial quality, morning and evening papers. Alas, not long into my stay here I discovered that there was something oddly familiar about the headlines in the papers in London, at least the ones I was reading. Day after day, horrific crime headline after horrific crime headline. In fact, in one particular week in early July, it seemed like entire crime articles from South African papers had been plagiarised, verbatim, and posted into the London papers.

My interest in understanding crime in the UK was further spurred on by an article in the August 19, 2007, Sunday Times issue where it was reported that 64,000 muggings in the UK involved a knife in 2007 alone. That's a daily rate of 175 robberies at knife point? Armed with this shocking revelation, I decided to investigate further the crime rate in a country many South African "crime refugees" chose to escape the crime in South Africa.

My discovery could not have been more astounding, here's why;

Population:
UK - 60,776,238 South Africa - 43,997,828
Murder:
UK - 850 South Africa - 21,995
Sexual Offences:
UK - 47,163 South Africa - 53,008
Vehicle theft:
UK - 792,800 South Africa - 99,963
Assaults:
UK - 541,300 South Africa - 535,461
Burglaries:
UK - 622.044 South Africa - 394,557
Fraud:
UK - 232,800 South Africa - 67,076
Other:
Excluded from this analysis
Total:
UK - 5,170,830 South Africa - 3,422,740

*the figures are incidents of reported crime in the respective countries.

A slight glance at the data and the most disconcerting reality is that one is roughly 34 times as likely to get murdered in South Africa as in the UK. However, one is a little over 6 times more likely to suffer vehicle related crime (including theft) in the UK than in South Africa. The UK is also worse off than South Africa in burglary and fraud at equally just a little over 1.5 worse than South Africa.

Overall, and rather interestingly, one is equally as like to be a victim of crime in one form or the other in either South Africa or the UK. Without diminishing the grave reality of murder, on all other crime activities, the numbers seem to suggest that South Africa does not deserve this ill perception of a country adrift with all manner of crime than does say, the UK. So if in fact, South Africa is not that much worse off than the UK on almost all crime indicators, why is there such a stark difference in perceptions?

What immediately comes to mind is the analogy depicted by Steven D. Levitt in his book - Freakonomics, where he contends that perceptions of crime or violence may be driven, not by reality, but perhaps by a collective psyche of fear arising from other factors.

This may be the case here too. Something other than the factual realities maybe driving the adverse perceptions of crime in South Africa, compared to other countries like the UK. What is particularly striking to me is that even though there is a real need to fear being murdered in South Africa, there should be an equal fear of other forms of violent death in the UK, such as falling victim to a terrorism attack. In this case one would naturally expect the many South African "crime refugees" to flee London as it has been perceived to be a target for terrorists. For some reason, this is not the case. In conversations about crime in South Africa where the UK is portrayed as a safe haven for raising children, the threat of terrorism is hardly mentioned. Is this perhaps because South Africa's murder rate alone (at 0.5 per 1,000 people) dwarfs the likelihood of violent death as compared to the UK? Perhaps.

Still I ponder why no one in the UK seems to worry, at least outwardly, on the possibility of voilent death by terrorism. Even recently after the failed attempted attacks, the city population seemed to carry on as normal. As if the threat only existed in some distant land, South Africa perhaps. Clearly the irony for me is why it is more acceptible to face such danger without as much flinch in the UK. Needless to say, I am yet to stumble upon a South African "crime refugee" ready to emigrate from the UK out of fear?

Whether or not the numbers would suggest a grossly exaggerated view of crime, it is time for South Africa to embark on a whole-hearted fight against violent crime! With that should be a public relations aspect akin to “We will not succumb to violent elements in our society. Our lifestyles and our resolve to go out and improve our economy will not falter.” This has been the spirit in the UK since World War 2, it is the spirit now, and it is a spirit that exudes a positive perception in a society!

Ntheye Lungu.

Zimbabwe crises should be addressed by SADC!

Leaders of the Southern African Development Community (SADC) have been a huge disappointment in addressing the Zimbabwean crises. There is a lot of denial, dragging of feet and plain dismissal of the plight of Zimbabweans. What has not been understood, or perhaps accepted, is that Zimbabwe is under siege from within. The State has laid siege on the people of Zimbabwe and the results have been devastating - destitution, intimidation of ordinary citizens through arbitrary arrests and lynching by state police, interference in the markets through price fixing. Press freedoms and more generally, freedoms to self expression, have long since disappeared in Zimbabwe.

Its not an exaggeration to point out the Zimbabweans are worse off now than they were 5 years ago? What’s there to exaggerate about quadruple digit inflation, hitherto unheard of unemployment levels, shortages of almost all major commodities especially food, rising levels of corruption. Name any negative economic indicator or outcome and it is currently playing itself out in Zimbabwe. Perhaps the SADC leaders use a different barometer to determine adverse circumstances in a country. Surely if SADC leaders believe that the problems in Zimbabwe are exaggerated (i.e. "not that bad") it could only mean, by deduction of their reasoning, that they believe economic circumstances in their own countries are understated (i.e. "excellent"). Could this possibly explain why most SADC leaders are dismal performers on the economic front? Are they convinced that as long as their own countries are relatively better off than, say, Zimbabwe, which according to them is "not as bad as it seems", then they themselves are surely performing well?

It is impossible to comprehend this denial of the realities in Zimbabwe by our SADC leaders or lack of resolve to confront President Mugabe about how he is managing the affairs of Zimbabwe. The cowardly position taken by SADC leaders has been to drift between two flawed positions: I). Let Zimbabweans resolve their own problems. It is a sovereign country and we need not interfere. II). we resolve issues the African way - Quiet Diplomacy?

None of these positions is actually tenable. In the case of the former, to suggest that the people of Zimbabwe should resolve their own problems on their own is akin to the police sending a physically abused wife back to her abusive husband with the advice, "we can't really help you. It's your house, you have to help yourself." The message the SADC leaders are sending is that as long as the atrocities are being perpetrated by an African leader upon his own citizens, in an "independent" country, then no one need interfere. This position may point to a deeper problem, that of a lack of real leadership in Southern Africa.

The latter position, which argues for quiet diplomacy, would have been a little more plausible had it not been for the fact that the leaders have been "quietly diplomatic" with President Mugabe for 5 years, without results. It’s pretty obvious to anybody with at least peripheral intelligence that President Mugabe, individually, is a significant factor in the Zimbabwe crises. There is, therefore, a real need for SADC to confront him directly and impose specific sanctions against him and his leadership in his neighbourhood - SADC. Instead he is being courted as a hero making his attitude towards his own people even more callous.

What bothers the discerning observer is that ALL SADC leaders, in their own countries at least, seem to be proponents of the very freedoms being denied the Zimbabwean people. How can they allow such a contradiction where on one hand they proclaim to be champions of democracy, whilst on the other, condone and perhaps applaud dictatorship right next door?

It does not instil confidence in our region, SADC, whose leaders seem to merely cheer on as Zimbabwe implodes. It may be Zimbabwe today, South Africa, Zambia or Mozambique tomorrow. What is certain, with the lessons we are learning from the cowardly attitude of SADC leaders, is that we would be sure to know that there would be no one in our neighbourhood - SADC - courageous enough to help us fight a rogue leader terrorising us from within! How encouraging?

Ntheye Lungu.

Subprime market crisis as explained to my 3 year-old niece

Other than what I am sure you have all heard, read and figured out already, here's my take on the matter. Basically, the recent crisis on the global financial markets has been in the making for a while now. Investor confidence created by the longest sustained period of global economic growth may ultimately have lead to the market shocks as has been experienced lately. What Allan Greenspan once termed "consumer exuberance" resulting from "irrational" confidence in the markets seems to have affected large scale investors?

With a good market performance forecast, from all manner of experts, investors "bought" into the credit market of major global lenders - both wholesale and retail banks (Credit Derivatives come to mind). These large scale investments, usually by Hedge and Mutual Funds, created a substantial amount of liquidity in the global economy (particularly the more advanced economies) affording banks to grow their loan books by offering more credit to the consumer. Naturally, with “excess” liquidity available to lend out, banks became all too willing to extend credit to less than stellar borrowers, albeit at a premium. Banks would thus "ease" their traditional prerequisites of a good credit history and stable financial circumstances for borrowers before credit could be extended. To mitigate the inherent risks of lending to these markets, banks would assign a premium rate that is higher than the prime lending rate (prime is the rate at which retail banks lend to the consumers “normally”) This practice, of adding a premium on prime to poorly credit-rate scoring borrowers, is what we have now come to know, rather infamously, as subprime lending? Of course, it is worth mentioning that this measure was in addition to the loans being secured by investors, as aforementioned.

There is a strong argument supporting the idea of making money available to a wider base through sub-prime lending. Some of the arguments for include consumer driven economic growth and an avenue for individuals to recover from short term financial crises. However, the opponents argue that the substantial amounts of liquidity available in the market as a result of sub-prime lending leads to inflation. The latter seem to have won over Central Banks around the world, particularly in the past 20 months. Central Banks have responded as naturally as a Central Bank would to the risk of inflation - raise the REPO rates. Simply put, REPO is the interest rate at which central banks lend money to retail banks. In South Africa, for example, The Governor of The Reserve Bank (SARB), Tito Mboweni, has argued that the double digit growth in property prices, record boom in sale of motor vehicles amongst others, is a result of "reckless lending practices" (in other words, subprime lending) that banks in South Africa have been exercising. The fear of the resulting inflationary pressures on the economy has led to a successive series of REPO rate increases and the enactment of specific laws to reduce "reckless lending practices" (i.e. subprime lending). The trend has been mirrored in both the US and UK where Central Banks have raised interest rates over, at least, 5 quarters.

The push for higher interest rates by Central Banks is designed to discourage excessive borrowing by consumers. However, and more significantly, the result has been that the people, who had obtained credit easily on a subprime market, cannot now afford to pay back their debts. In lay terms, more people are defaulting on credit card repayments, vehicle loan financing and mortgages (home loans), which in most economies constitutes the largest segment of consumer debt. The very risk that subprime lending was meant to mitigate is now materializing.

Remember, and as mentioned, the main reason that banks were offering these subprime credit facilities to consumers was because their loan books were "secured" by large scale investors (Mutual Funds, Hedge Funds et al). So when, since mid 2006 for that matter, the largest credit market (USA) began to show significant signs (in %) of defaults on mortgages, it became clear that the investors would lose money on the loan books they had secured from the banks. Put differently, the investors would have to cover the defaults in the market because the risk of the banks' loan books is on their books (an understanding of Credit Derivatives helps explain this)?

With the imminent losses in the credit market now clear and present, the obvious question that begs to be asked is, if the investors (Mutual Funds, Hedge Funds et al) are securing the banks loan books, who, in turn, is securing the investors investment on these loan books? In other words, who insures the insurer? Who holds the ultimate risk? So even though the signs of a “credit crunch” have been clear since mid 2006, what has not been clear is who, ultimately, is exposed to this risk. Basically, banks and investors alike have been caught up in a deadly embrace in determining the risk exposure in their books.

The panty dropper was when, last week, BNP Paribas announced it was suspending its hedge funds as it would not definitively ascertain who had ultimate custody of exposure on the securitised debts. Major players on the markets such as Goldman Sachs and other large hedge funds in the USA took similar actions.

This series of reactions necessarily means that large scale investors were no longer willing and/or able to "secure" the banks' loan books. As a consequence, banks become less “able” to extend new credit to the consumer. This has seriously restricted the availability of liquidity in the markets. To address these liquidity problems, The European Central Bank (ECB) and the Securities and Exchange Commission (SEC) have each injected hundreds of Billions of Dollars to provide this much needed liquidity in their respective markets.

So why is this affecting the market, you may ask? Well, a number of reasons really. One of them is that the complex world of large scale investment funds, Hedge Funds for example, means that some investors in these funds can pull out their investments with a short term notice. This necessarily means that the Hedge Fund has to have liquidity for when the investor calls on her investment. In order to obtain this liquidity, they have had to sell off other investments, including equity on the large stock exchanges like New York Stock Exchange (NYSE), London Stock Exchange (LSE), Johannesburg Stock Exchange (JSE) etc. This sell off has resulted in a depressed market. The two days, 14th and 15th August, particularly experienced heavy selling on the NYSE and LSE because the tenure of 45 days before an investor can call on their investment in an investment fund (these deals are way too complex to explain here, perhaps after I leave the Isle of Man and downed a few single malts?). So the selling in the last few days is to settle for September 30 / October 1. This is just one of the reasons, there are many more.

What about currencies? Well, some of the most leveraged investors in the US and emerging markets are Asian investors. Asian investors had borrowed the low yielding Yen to invest in higher yielding currencies like the British Pound Sterling, US Dollar, Aussie Dollar and even Rand. The selling off of Sterling, Dollar, Rand assets on the LSE, NYSE and JSE respectively has triggered a sell off of their investments in these currencies. It only makes sense because the value of their investments in these high yielding currencies was decreasing and thus their Yen borrowings would become more expensive. In the currency sell off, major currencies and currencies in some emerging markets have weakened as the yen has strengthened?

The ultimate fear is that all this may cause a global recession arising from a diminished confidence in the markets coupled with high interest rates. When this happens, investors resort to commodities such as Gold. Who knows, this could ultimately help shore up some African economies where commodities are mined? This again is not clearly understood and is influenced by exogenous factors beyond the understanding of this blog.

I hope this has been helpful! It's as much as I can provide on a lull mind! Ask me after about half a dozen Johnnie Walker doubles.

Ntheye Lungu.