The worst is still to come.

In the investment newsletter a few days ago my rand down-counts - pound to R17,60, euro to R13,92 and dollar to R10,73 - are scary, but in present climate, by no means impossible.

Until recently South Africa has had others to blame for our woes but from where I sit, it seems that we have brought the current set down upon ourselves. Looking ahead, if mines and other employers give in, strikes will end, but to pay the higher wages, they’ll have no alternative but to close their businesses or drastically reduce their work forces. Many more people will be unemployed resulting in bad debts piling up, and many unsecured loans will default.

We weren’t to blame when greedy US institutions bundled hoards of unsecured property loans into derivatives and sold them off to people in institutions who hoped they’d fatten their bonuses even more. Without bothering to investigate the underlying value these conjured-up financial instruments banks around the world piled into them. South Africa was an exception. While damned by some, our tough Exchange Control regulations prevented these near worthless bits of paper sinking our banking system. Nevertheless, as a major exporter to the countries which had been duped, South Africa suffered badly from the backlash. Empty-pocketed, our traditional overseas customers slashed orders for our goods. As their industries slowed, they no longer needed our metals and minerals.

The countries which, for years, had pampered their populations with welfare states, suddenly found that they could no longer afford birth to death featherbeds for their nationals and others who’d come to those counties for just such hand-outs. Much to the horror of welfare receivers, their benefits for this, that and the other were no longer as bulky. Like two-year-olds deprived of even more ice-cream, as the free gifts dried up, some took to the streets complaining of the unfairness of it all.

Of course not all foreigners are penniless. Those with piles of money, used to earning buckets of money on their investments, found that interest rates in their countries were cut to the bone, and then cut again. With inflation higher than interest received, their rates had become negative. They looked around the world and found that in South Africa, where almost all people must pay for everything they get what they get, rates of interest rates were still positive. So they shifted their money into South African investments so boosting the value of the rand, and pushing up the prices of our exported goods. With fierce competition in a fast dwindling market, exporting companies were forced to trim work forces and then trim again. With more and more people thrown out of work, South African rates also had to be trimmed, but still remained positive.

While many of our trading partners hopped in and out of official recession, apart from one dip, South Africa’s growth has remained positive; but for how much longer?

Although they sometimes regarded goings- on within the government with jaundiced eyes, up until March this year, many foreign investors stayed put. But as the ANC’s infighting grew nastier, more and more investors pulled their money out of South African investments.

Marikana was, of course, the blow that inflicted the major damage, but it was London-based Lonrho’s wage settlement that caused the contagion to other mines and businesses. As strikes spread and our reputation dwindles rating agencies had no alternative other than downgrade us.

Jean Temkin