I was not terribly reassured by the news that the banks’ own industry association had paid a quarterly subscription to the wrong organisation. Apparently it took four months before the R360 000 error was discovered. In the meantime, the rightful beneficiary had not noticed the shortfall and the lucky recipient had spent the unexpected loot. Requests from The Banking Association for the cash to be returned have been ignored. It comes as no surprise that the free-spending outfit is run by politicians, and it is gloriously ironic that it is an organisation which, amongst other things, lobbies against high banking charges. I guess that charges will soon go up again chaps. There’s a loss to cover.
But the theme of carelessness with other people’s money is very strong and widespread at the moment. One fund after another all over the world has been telling their customers that they really should not call up and ask for their money back. It is only when the fund needs to sell their “investments’ in order to pay out those whining customers that everyone learns the awful truth that many of the bits of paper they hold are worth very very much less than they were being valued at. Oh dear.
That “pain index” measure that I have told you about before has recently been dropping back from the record highs it reached at the end of last month. However, this afternoon the USA released some data that has caused panic to break out and the bulls to flee. That number has the unromantic name of “non-farm payrolls” and today’s statistic suggests that Americans are losing their jobs. Now an unemployed American is undoubtedly less able to go shopping or pay off the mortgage and this is bad news for a world that has become dependant on the American population doing both those things with enthusiasm. Markets have swooned, the dollar has tanked and the gold price has broken above both $700 and R5000 per ounce. The pain index is definitely on the way up again. Traders on the wrong side of this move will be thronging the bars tonight seeking comfort in the bottle.
Investors now have a full weekend to absorb and digest this news and I would guess that the market weakness will continue on Monday when they do make that call they have been told not to make! Even conservative good quality portfolios here in SA will fall in value as speculators race for the exits. However, there is still no evidence that good companies are cutting or skipping dividends and so cash flows should remain healthy and can be accumulated for the excellent buying opportunities that I am sure will turn up, but probably next year only.
Why did it take so long to confirm that the otherwise unprepossessing one and a half kilogram piece of stone was in fact a diamond? As I recall, the country’s first diamond find was confirmed when some clever chap in Grahamstown scratched his name on a windowpane with the gem. Nowadays one probably doesn’t have to travel to Lower Albany to find a suitable window, but the principle remains the same. Now we can look forward to so-called celebrities fighting over who is going to be able to afford to hang this particular bauble around whose neck.
At last, tonight the rugby world cup gets underway. It is a long haul from here and hopefully we will have interest in it right up to and beyond the final whistle. The warm weather has at last returned and the fridge is stocked. What more can we hope for? That the ‘bokke survive the Samoan encounter undamaged?
James Greener
7th September 2007
