So by Monday, the world will be back on track. Lenders will be lending, borrowers will be borrowing, consumers will be consuming and politicians and bureaucrats will be rewarding themselves for having done a good job. The most powerful people on the planet are going to Washington this weekend to sort things out. We mere mortals may relax and leave it to them. Why at any of their many previous meetings the great and good failed to spot or do something about this economic slowdown will not be explained. Presumably they missed some vital factors or needed to break for lunch early or someone had to catch a plane and so nothing effective happened. To be fair I don’t believe that these guys and girls can do very much and what they ought to do, they won’t. This weekend will see gales of hot air, jostling for air time at the podium and a last group photo with the old guy in the White House. There will of course have to be a similar gathering in the New Year so that everyone gets an opportunity to meet the new guy. It will important for the political memoirs to have a picture of oneself shaking hands with him.
What isn’t on track however, is the way that these incompetent and wicked rating agencies are daring to suggest that South Africa might just possibly becoming a less desirable place to send ones money. Now I do have a great deal of sympathy with the fellows at National Treasury who claim to be affronted by these downgrades. I have no faith in the skill of these agencies to forecast the financial future of any entity. Their records contain some delightfully spectacular failures; for example it seems that much of the toxic waste that recently destroyed the investment banks had been accorded top quality status by these agencies. That they are often paid to carry out the rating by the one being rated makes me suspicious, and since they are really trying to signal a simple can pay / wont pay scenario why do they need all those letters from triple A to double D that remind one of a lingerie department? Nevertheless I don’t remember anyone carping about these agencies when they were doling out upgrades. For all our sakes I really do hope that there is no local borrower about to renege on their foreign debt. It does us all great harm if that were to happen.
The JSE has been causing great harm to most people trying to make a quick profit. The short term gyrations have been huge and as always unpredictable. On average the All Share index remains about 40% off its highs and about 5% off the most recent lows. Resources have been the biggest losers.
Also amazingly unpredictable has been the oil price. Few folk thought it would ever be this low again. I too suggested that the producers had become so pleased with all the extra loot that the high prices were bringing in that they would do everything they could to stop it falling. But now at $60 a barrel I think we might begin to hear sad stories from those people who thought it would be fun to live on an island that looked like a palm tree from space. And us recession-bound westerners hoping for some bale-out cash from their sovereign funds – forget it!
Someone should introduce the founders of our newest political party to that anagram computer program. Just feed in the letters of all the words that they would like to use like congress and Africa and people and South and national and see what pops out. It must be very discouraging when your thrusting new group can come up with nothing better than COPE. That’s a rather weak idea for dealing with the country’s problems.
I am returning to my roots this weekend with a quick trip to Grahamstown. A beer at the Rat watching the Scotland match sounds good.
James Greener
14th November 2008.
