What a wonderful week for illustrating the arrogance and futility of trying to predict economic variables. At the very moment that I was perusing an article where some poor sap had gone all bullish on the gold price, over on the screen, the darn stuff was plummeting like a falling piano. The only certain reason for this impressive decline by the yellow metal is that all the buyers had gone out to lunch just as all the sellers decided to take profits. The result was a pretty impressive swan dive, but us long-term (unrepentant?) gold bulls are grasping at the straws of today’s modest recovery. Let’s hope it not just one of those “dead-cat bounces”.
That’s the essence of it all, isn’t it? Using cute, smart and faintly ridiculous phrases, terms and jargon to describe the market’s behaviour, we disguise our fallibility. And this is necessitated by the cruel fact that human behaviour as distilled and concentrated into buyers and sellers, consumers and producers is inherently impossible to model. The present situation is always described as “particularly difficult” but we are sure that “once things settle down” then a trend will emerge.
Actually, I think that a trend has emerged. I think that the world is showing strong signs that its long admiration for and trust in things American, is waning. There is a rather useful so-called “dollar index” which is designed to track the strength of greenback versus a basket of other currencies. From a peak level in 2001, this index has been falling and today is 25% below that high point. Whether or not this weakness was triggered by the terrible events of 9/11 is for historians to argue about, but many contemporary commentators are now writing about the decline of the American Empire. The parallels with the Roman, Ottoman and British ones are instructive.
It’s all fascinating stuff and of course, I have few ideas about where one should be placing one’s money to benefit from this trend – I just wouldn’t want to own too many US dollars right now. But that makes the whole “rand hedge” idea quite difficult to fathom. Does anyone know which local companies earn in Yen or Rupees?
According to the newspaper this morning the SABC has decided to review this whole matter of actually earning money by selling a service – namely flighting advertisements — that currently provides 85% of their income. I am tickled by the notion that they wish to “wean (themselves) off revenue from adverts”. With their sole other sources of revenue being tax of one kind or another, their plans for a new “funding mix” will have most of us sitting firmly on our wallets.
Joburg ratepayers will also be alarmed by the call for tenders to “suppl(y) … package support for Corporate gifts…”. Now what on earth is going on here? Is the successful bidder going to provide sticky tape, shiny paper, satiny bows and stylish bags so the city worthies can adequately disguise the presents that they hand out to nonentities like passing politicians and dodgy diplomats? I must have missed the call for tenders to supply the gifts themselves. I wonder what they are. Mayoral busts? Framed illuminated scrolls listing the councillors? Hand drawn maps showing the locations of the last 100 power failures?
Please keep safe this weekend.
James Greener
21st April 2006
