Central bankers are busy fellows these days. Most of their energy however is going into combing through dictionaries looking for words that will disguise what they are up to. Their objective is to make money sufficiently plentiful and cheap to entice people to resume their earlier profligate ways and to borrow and to spend. As well as actually handing it over to anyone with a pulse and a suitably bad record of decision making, they are keenly pursuing a new plan of buying pretty much everything that anyone offers to them. This stunt has also been labelled “growing the balance sheet”. The phrase suggests to me that they hope to convince everyone including themselves that much of the rubbish that they are buying actually has a value and that someone, sometime will want it back. I don’t think so. In most cases the cash that they are doling out is freshly minted. Little wonder then that the US dollar has started to go softer again. The helicopters promised by Governor Bernanke are now airborne.
I am amused at the outrage expressed by the politicians who are watching what capitalists do with money they have begged from the government. They use it to keep themselves in the style to which they have become accustomed. After all, their own businesses had failed to do just that, so what else is one supposed to do with the bail-out booty? Socialists are shocked. This was not their plan. They failed to spot that with labour already in oversupply, there was no need for the bosses to allocate any of the state’s handout to the workers (aka voters)
There will be some satisfaction among the bureaucrats, however. They will be noting the worldwide stock market recoveries and congratulating themselves on turning the investors’ mood around. Here on the southern tip our own central bank has declared that the Monetary Policy Committee will meet soon and often and presumably they will wield a big chopper on interest rates. Some enthusiastic younger analysts are talking about local rates being halved by year end. The excitement has seen the All Share index soar effortlessly above 20 000. I am content to wait and watch for pullbacks to resume the nibbling that I have suggested before. I am certain that the bear is not through with our markets yet.
Also never far away are those who are pleased to aid government in any of its efforts to give away public money. Local Government Minister Baloyi is reported this week to be worried that charlatans are claiming benefits in the names of the deceased and issued the following request. "We really call upon citizens to confirm your alive status". Does this mean that 50 odd million of us need to troop off to a dingy office somewhere and breathe on a mirror? If the government can’t keep track of who is alive and who is dead, it just deepens my suspicion about the accuracy and usefulness of most other statistics compiled by them. This week, even the despicably efficient revenue service (what a misuse of the word) gave an encouraging hint that it too might be losing the plot. It emailed warning notices about taxes due without specifying the taxpayer to whom the notice referred.
Anglo American plc gave up on gold mining this week and was lucky enough to find someone eager to take their last shares in AngloGold Ashanti off them. AngloGold have reported a loss in 10 out of the last 13 quarters so despite the emotion of this separation it does seem like a smart idea. Maybe they will resume paying dividends again soon.
It is far too early to get optimistic about the cricket at Newlands and the only reason the Lions are not at the bottom of the Super 14 log is that they have played 2 fewer games than the Cheetahs. At least the sun is out again here in the kingdom.
James Greener
20th March 2009.
