I was too young and lucky to be balloted to spend nine months in the army. Those of my friends who were selected to don the khaki, told of the endless hours of boredom standing guard in places like Kimberley or Oodtshoorn or Heidelburg. But now we have an all-volunteer army whose employees apparently feel no need to list guard duty as one of their skills. It is far preferable to get the tax-payer to fork out for a private security company to send along their finest to make sure that our troops are safe in their beds at night. One wonders if these fellows will also outsource the other unpleasant and inconvenient bits of the job like handling noisy and dangerous guns or defending the country from an enemy.
The Gauteng Department of Agriculture, Conservation and Environment (GDACE to its friends) appears to have already outsourced all of its proper work. Why else would they have taken space in the paper to tell us that they are awaiting proposals for the “Development of Agriculture Plan” also known by the nifty nickname “The A-Plan”? I assume that the GDACE staff is already fully stretched with the C-Plan. That’s the one where they decide on the catering contracts for the canteen and conferences.
Back here in the markets, rumours have again emerged about the existence in the US of a Plunge Protection Team. These fellows are alleged to hide out in some underground dealing room and use government money to buy up a market whenever it shows signs of tottering. Believers in this P-Plan can cite the experience of the last few days when certainly the Dow turned back from what could have been a precipice. I am very sceptical that any such buyer-of-last resort could remain clandestine before the market sniffed out that there really was someone who was prepared to buy anything on offer. And once discovered, this mysterious super-bull would very quickly get submerged in a blizzard of paper that would overwhelm even the cash that Governor Bernanke once threatened to drop from helicopters.
The JSE action this week was influenced by another of those close-out events. Yes, can you believe it? It is already three months since the last one. Now, a day after the event, it seems as if close-out activity prevented prices from falling. Things are feeling a bit weak today.
Governor Mboweni has scared people a little and bank shares a lot with a speech that threatened that even though he did not push the up-button last time, he did know where it was and could easily give it a tap in April when the Monetary Policy Committee next meet. This is not the only reason that I remain a reluctant buyer of shares. I remain certain that the rapidly deteriorating situations in the housing and credit markets in the US are having a growing negative impact on market conditions and sentiment. The USD has resumed its slide against the euro and the yen, and the “recession” word is being used by people other than retired Fed governors.
I am sure that share markets have not yet reached their 2007 lows. The All Share Index could collapse by 25% (a remote possibility) and still not breach the 2006 low!
Time to go and watch the Proteas open their World Cup campaign. And it is GP season again. Scant SA presence there though. It’s time we sent Mr Ecclestone a taxi driver or two. Just imagine an F1 car with white wall tyres.
Keep happy and safe.
James Greener
16th March 2006
