IN the US, the Clinton administration, trying desperately to maintain consumer confidence, is telling Americans that the market is "past the worst." Snake oil. The world generally faces a bitter New Year: nowhere more so than SA. The international financial system remains under immense strain. The entire global monetary system could finally explode next year, with the introduction in January of Western Europe’s single currency, the euro, threatening to break the power of the high-flying US dollar as the world’s principal reserve currency.

Beijing announced some weeks ago that the Chinese government wished to offload 40% of its US dollar holdings from its $140 billion foreign currencies, to buy the euro so it could build euro holdings up to the same level as the $. The dollar has till now been sustained by massive inflows of capital, much of it from Japan. But let the greenback suffer a severe correction and any resultant devaluation would precipitate economic recession in the US, still further increasing economic and political tremors in the rest of the world.

The Russian crisis deepens all the time, to the point where there is now a very real danger that the country could splinter into 89 separate, independent states. The American Chamber of Commerce in Moscow has announced that more than –50 major US companies operating there have lost more than $500 million since the Russian crisis began a few months ago. Some are cutting back on their involvement in Russia, some are leaving the country altogether.

In Japan, despite tax cuts, the Bank of Japan says consumer spending is weakening and warns of a further deterioration in the national economy: more bad news for the US. One third of the world market is in Asia. At the US port of Long Beach, it is reported that 30% of containers on Asian-bound ships depart empty.

In 1997, when the US economy was going full steam, 1,5 million Americans filed for bankruptcy. That trend is now accelerating. And the pesky millennium computer bug, Y2K, is approaching fast. The Wall Street Journal says world markets are in a "wave of fear," that the potential for a global crash of historic proportions remains very high.

SA obviously is not impervious to world economic trends. But here a whole string of other catastrophes threaten a manufacturing and commercial meltdown. From one of the world’s 12 top economies not so many years ago, we are now listed as an "emerging" nation. But emerging to what? A submerging nation? An impoverished hellhole?

Unfortunately, few ANC leaders have much understanding of day-to-day industry, commerce or even agriculture. They are too inexperienced to have developed a financial or ethical business background. Their primitive social engineering did not work in the old USSR. It is most certainly not working here. Result? A huge collapse in business confidence: and an economy that is now dead in the water.

Biggest vote of no confidence in the Mandela regime came with Anglo-American’s October decision to transfer its headquarters and primary stock exchange listing to London. Anglo was by no means the first SA company to seek a more congenial financial climate overseas, but it was by far and away the biggest. Nor will it be the last. Sappi has already gone to New York. Others reportedly ready to depart include Liberty Life, Old Mutual, SA Breweries and Gold Fields.

Nor does it end there. Billions of share capital have fled the country since 1994. Scores of thousands of our best and brightest, skilled and professional people, fed up with murder, armed robbery, rape, carjacking, punitive taxation and anti-White racism, have left the country, further weakening business, the civil service and the tax base. Foreign investment has slowed to a tickle. A further devaluation in the rand is on the cards. Corporate earnings have taken such a beating that many companies will not be paying the customary 13th cheque or Christmas bonus.

There can be scarcely a financial adviser in the country who is not telling clients to invest at least part of their assets offshore. The slide into full-scale recession could be sudden and savage. All the warning signals are there. Though the media played this right down, SA’s growth rate in the third quarter ending September reflected a 2,3% minus. The fourth quarter will be worse.

The classic definition of a recession is when you get two quarters of negative growth, back to back. Georg Kollenda, MD Mannesman SA, part of the huge German conglomerate, was dead on target when he told investors recently that SA is "virtually the last place on earth where anyone would want to put up a manufacturing plant." As far as manufacturing investment is concerned, SA has fallen off the map … "if there is one place that is blank on the map, it is South Africa. It is not seen as a place for manufacturing production."