Earlier this week a train in France set a new speed record of 575 km/hr. It was powered by a 31 000 volt overhead line which stayed live for the whole trip. Most of us admired the first achievement but were more envious of the second. This morning’s news is that “big business and government” have issued a warning to us mere consumers that we need to limit our power consumption and that they thought the forthcoming massive price increase for electricity were both inevitable and a good idea. So too will be power cuts this winter. I foresee little chance that the Gautrain will be setting any records when it gets started. Sitting stationary at Halfway House waiting for the power to come back on will slow things down a tad.
The headline on the news service claims that the experts believe that there is not sufficient evidence to hike rates. There is therefore little point in reading the actual article as it is already clear that it has nothing to say. I would not be surprised if the experts quoted in the piece include a few of the earnest-looking folk we will see when the cameras scan the audience during the press conference next Thursday. Most of them are there in the hope of claiming a few seconds of fame by asking the governor a long and inane question and looking grave and nodding when listening to the equally information-free reply. They forget that us viewers jab the button on the remote and return to the cricket the moment the decision is announced.
I also don’t know what Governor Mboweni and his mates will decide. My ultra short term forecast will rely as usual on the colour of his tie when he ambles up the podium. To see if I am correct I shall need to wait only the ten minutes or so while he regurgitates several pages of meaningless statistics before getting to the last page with the nitty-gritty number. My success rate is about 50%, the same as the experts.
Around the world, market commentators, but notably not the markets themselves, have been working themselves into a panic over interest rates. The focus is of course the USA, where there is a rapidly cooling property market and a soaring number of defaulters in the low quality credit market. It has been amazing to watch people discover that the business model of lending money to someone who has little hope or intention of repaying it, is rather flawed. In order to reduce the impact that these events are having on consumer confidence and spending power, the pundits are sure that the Federal Reserve will need to reduce interest rates this year. But the problem there is that such a move could easily hurt the already sagging US dollar. Just why did Dr Bernanke want Sir Alan’s job? I am sure that all of us will have a much happier long weekend than he will, fretting about this problem.
Have you seen the new beer to be launched in this country to replace the Amstel brand that was removed so suddenly? No doubt in the interests of economy the new brew (branded as Hansa) will appear in the green bottles and gold foil tops that SAB would otherwise have had to discard. I guess the chaps down the at pub will now simply call for a Hamstel. Those European brewers who left in such a huff will find it difficult to regain market share when they finally manage to get back here. They are smart fellows at SAB.
This week the record market high occurred on a Tuesday.
Please have a safe and enjoyable Easter weekend.
James Greener
4th April 2007
