A new reader of Tidemarks has suggested that I should devote more space to good news. Well, I suppose so, but it is difficult when I have to start by noting that the All Share index did not set a new record high this week. The market was very patchy with no particular trend or sector yelling for attention. However, the rand did manage to strengthen quite considerably against the US dollar. Some commentators suggested that this might be because of the strong rumour that the suits from Standard Chartered in London were down the Rivonia Road measuring Nedbank headquarters for curtains. If this were true, would not the rand improve versus sterling as well? This it certainly has not done. This is the time of year when there is a dearth of company reporting and it leaves the stage clear for any number of one-act wonders to tread the market boards. At least we have been able to tune the dealing room TVs to the cycling (how about the good news there?) and of course the golf (where we are ever hopeful of good news )
Did you note the Guateng MEC who explained that “only 2% of municipalities managed a clean bill of (financial) health” and that this hinders their access to commercial credit? By this, he presumably means the banks won’t lend them any money. However, he cheered himself up with the observation that Joburg had managed to place several bonds with the private sector recently and that this seemed an excellent source of funds for the cash-strapped local authorities. By this, he presumably means that fund managers are a soft touch and are quite inclined to consign their client’s money to never-never land. He may be surprised.
I wonder why the main news media are not devoting more time and space to the quite amazing amount of value that appears to be vanishing from the US housing and credit markets. Even Governor Bernanke’s brow is said to bead up when he is asked to comment about this area of the financial landscape. Maybe they don’t want to frighten their readers. Or perhaps it is that they don’t grasp the nature and the implication of it all. I think it must be a bit of both. For a start, there are these confusing units of millions and billions and now even trillions. Without even fretting about the now very boring issue of whether they are the trivial English billions or the other proper kind, these are all impossibly big numbers. Most folk, and especially journalists, get mightily confused with any sum that they haven’t themselves actually handled. One can see breathless stories of outrage when someone spends their own money on a suspiciously extravagant indulgence while on the opposite page the disappearance of tens of billions is passed over with scarcely a mention. Maybe the nonchalant way that the official who announces the event, will airily dismiss the loss as “unlikely to impact earnings/the budget/our policy” is successful and puts people off the scent of the real scandal. Sadly, despite my reader’s request, I must reiterate that I think that the situation unfolding in the US will be extremely serious for financial markets. You just can’t ignore the elephant in the room forever. Especially when his tummy starts to rumble.
I suggest that the department of Home Affairs should immediately set up desks at all the holes in the fence along the Limpopo and in return for a set of fingerprints and a photograph, issue everyone with an ID Book and a tax number. Lets face it, these fellows aren’t going back home anytime soon so, let’s catch them up in the system as soon as possible. Oh, yes, and give them each a R200 note, so they don’t immediately have to come and take mine.
James Greener
20th July 2007
