MMM is an internet-based scheme allegedly founded by Russian fraudster Sergey Mavrodi, and known locally as MMM South Africa. The scheme enticed investors by promising them 30 percent profits every month.
The pyramid/Ponzi scheme is currently under investigation by the hawks.
Reader Letter
In February 2002, Donald Rumsfeld, the then US Secretary of State once stated ‘’There are known knowns. There are things we know that we know. There are known unknowns. That is to say, these are things that we know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know’’.
South Africa is experiencing tough economic conditions, with job losses from left to right. The decline of commodity prices, has had detrimental impacts of the mining industry, leading to job losses in mining and in related industry. The ability of the economy to absorb the unemployed is challenged by the low skills levels amongst the unemployed, which creates a perfect storm in an economy with a skill deficiency in critical sectors.
JSE listed companies are sitting on billions in their bank accounts, instead of investing in the economy to create jobs. They claim policy uncertainty, whereas the National Development Plan is adopted, and the macroeconomic posture is defined by the Growth, Employment, and Redistribution Strategy (GEAR).
South Africa is experiencing a currency crisis as the Rand has depreciated against major currencies, which has led to inflationary pressures. The loss of value of the Rand is tragic considering that South Africa imports more goods than it exports, leading to a large current account deficit.
The increasing cost of living in South Africa leads to inflationary pressures that lead the Reserve Bank to raise interest rates to manage the depreciation of the currency. This means that many households in South Africa are facing major challenges in putting food on the table.
Times are tough, and despair is the order of the day in South Africa. It is times like this that we should arm ourselves with the counsel provided by Mohammed Bin Rashid Al Maktoum in a book titled Flashes of Thought that’’ an easy life does not make men, nor does it build nations.
Challenges make men, and it is these men that build nations’’. The bad times will not last forever; we sometimes need the hard times to help us to prepare well for the good times. In a report by the Reserve Bank titled Quarterly Bulletin September 2015, it noted that the gross savings ratio of households was 0.2 per cent of GDP.
In another report by the SARB titled Financial Stability Review September 2015 it noted that ‘’household debt has remains above 45 per cent of GDP since 2006…This could pose a risk to financial stability as such high debt levels could make it even more difficult for households to withstand economic contraction’’.
In 2016 South Africa is experiencing an economic contraction and the economic contraction is ravaging households and communities in South Africa, and has led to a paucity of financial stability in line with the counsel of the Financial Stability Review September 2015.
These grim realities are then exploited by pyramid schemes such as MMM. In South Africa a deposit taking institution must have a banking license under the Banks Act, or have a concession such as in the case of stovkels. In the case of MMM it is not a stokvel even if its army of supporters wants us to believe this untruth.
Thabo Mbeki also counsels us that ‘’lies have short legs’’, the lies of MMM will be shown to be short and they will easily suffer from fatigue. MMM is supported across the racial, and class spectrum, from the highly educated to the low skilled and unemployed. I know of people that have put in money in MMM and been handsomely rewarded, good for them. I also know of an increasing number of people that have recently invested money and their sleepless nights are growing as they have delays in their pay-out.
It’s impossible to give 30% return on investment consistently, which is the magic of the pyramid scheme; they play on the greed for easy money. The crash of MMM is soon, and this is a known known, it is only a matter of time. For those that received their pay outs, congratulations. And for those that are still waiting, a payout remains an unknown unknown. Liberty to choose is a principle of democratic societies, those that invest in MMM must do so with the liberty to accept the consequence of either a payout or a crash of the pyramid scheme. And please don’t blame President Zuma!
Mr. Unathi Sonwabile Henama teaches tourism at the Tshwane University of Technology, and writes in his personal capacity.
READER LETTER - The crash of MMM is soon, it is only a matter of time
MMM is an internet-based scheme allegedly founded by Russian fraudster Sergey Mavrodi, and known locally as MMM South Africa. The scheme enticed investors by promising them 30 percent profits every month.
The pyramid/Ponzi scheme is currently under investigation by the hawks.
Read more about that here: 'Internet-based nature of MMM scheme ‘makes it tricky to investigate’
Reader Letter
In February 2002, Donald Rumsfeld, the then US Secretary of State once stated ‘’There are known knowns. There are things we know that we know. There are known unknowns. That is to say, these are things that we know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know’’.
South Africa is experiencing tough economic conditions, with job losses from left to right. The decline of commodity prices, has had detrimental impacts of the mining industry, leading to job losses in mining and in related industry. The ability of the economy to absorb the unemployed is challenged by the low skills levels amongst the unemployed, which creates a perfect storm in an economy with a skill deficiency in critical sectors.
JSE listed companies are sitting on billions in their bank accounts, instead of investing in the economy to create jobs. They claim policy uncertainty, whereas the National Development Plan is adopted, and the macroeconomic posture is defined by the Growth, Employment, and Redistribution Strategy (GEAR).
South Africa is experiencing a currency crisis as the Rand has depreciated against major currencies, which has led to inflationary pressures. The loss of value of the Rand is tragic considering that South Africa imports more goods than it exports, leading to a large current account deficit.
The increasing cost of living in South Africa leads to inflationary pressures that lead the Reserve Bank to raise interest rates to manage the depreciation of the currency. This means that many households in South Africa are facing major challenges in putting food on the table.
Times are tough, and despair is the order of the day in South Africa. It is times like this that we should arm ourselves with the counsel provided by Mohammed Bin Rashid Al Maktoum in a book titled Flashes of Thought that’’ an easy life does not make men, nor does it build nations.
Challenges make men, and it is these men that build nations’’. The bad times will not last forever; we sometimes need the hard times to help us to prepare well for the good times. In a report by the Reserve Bank titled Quarterly Bulletin September 2015, it noted that the gross savings ratio of households was 0.2 per cent of GDP.
In another report by the SARB titled Financial Stability Review September 2015 it noted that ‘’household debt has remains above 45 per cent of GDP since 2006…This could pose a risk to financial stability as such high debt levels could make it even more difficult for households to withstand economic contraction’’.
In 2016 South Africa is experiencing an economic contraction and the economic contraction is ravaging households and communities in South Africa, and has led to a paucity of financial stability in line with the counsel of the Financial Stability Review September 2015.
These grim realities are then exploited by pyramid schemes such as MMM. In South Africa a deposit taking institution must have a banking license under the Banks Act, or have a concession such as in the case of stovkels. In the case of MMM it is not a stokvel even if its army of supporters wants us to believe this untruth.
Thabo Mbeki also counsels us that ‘’lies have short legs’’, the lies of MMM will be shown to be short and they will easily suffer from fatigue. MMM is supported across the racial, and class spectrum, from the highly educated to the low skilled and unemployed. I know of people that have put in money in MMM and been handsomely rewarded, good for them. I also know of an increasing number of people that have recently invested money and their sleepless nights are growing as they have delays in their pay-out.
It’s impossible to give 30% return on investment consistently, which is the magic of the pyramid scheme; they play on the greed for easy money. The crash of MMM is soon, and this is a known known, it is only a matter of time. For those that received their pay outs, congratulations. And for those that are still waiting, a payout remains an unknown unknown. Liberty to choose is a principle of democratic societies, those that invest in MMM must do so with the liberty to accept the consequence of either a payout or a crash of the pyramid scheme. And please don’t blame President Zuma!
Mr. Unathi Sonwabile Henama teaches tourism at the Tshwane University of Technology, and writes in his personal capacity.
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