The market has celebrated its first full length working week in ages by dragging itself back to levels that were ruling at the beginning of the year. There is a growing belief that the first quarter plunge was just a nasty moment and that the bear has been sent packing. The JSE is now about 20% above the low point that was attained at that time. In fact, our excursion to what seemed like the depths of misery was one of the shallowest among the world’s markets. The Russian index has nearly doubled in the past three months and even the London Footsie is up a third. We got off quite lightly.
Nevertheless I can’t ignore the news of economic woe, hardship and slowdown that deluge the screens unceasingly. There is definitely a decline in the level of achievement and expectation appearing in company reports and locally even one of the big banks muttered a bit about how hard it is to run their business these days. Investing bulls claim that the impact of this undeniable downturn is already well known and completely accounted for in the market and that one ought to be looking for the recovery situations. I think I’ll wait a bit thanks.
In the US, the authorities are congratulating themselves that they have now arrived at the number of dollars that the banking system requires in order to be declared wholesome again. It is a very large number and the banks have been sent off to find it. Apparently this is not a difficult task because hordes of shareholders are alleged to be delighted with the opportunity to hand yet more loot over to institutions with atrocious track records in looking after the stuff. “Trust us, we are bankers”, goes the cry.
The European Central Bank set another lethal example for our own team by slicing interest rates again and the cost of cash in most places is now virtually zero. Bureaucrats and politicians with steady incomes and fat pension plans remain puzzled however, at how ungrateful their citizens are for this bounty. They make threatening noises at the banks who they suspect are not trying hard enough to foist more loans onto people who have decided that they already have sufficient debt and, even better, that they will stop paying any of it back now that they no longer have a job. I note with interest the complaint from one mortgage lender that business is being hampered by the requirement that home buyers come up with a sizable deposit before borrowing the rest.
I think that spending R75m on tomorrow’s party to install the country’s first Zulu president is a good and quick way of distributing state money to people in the catering business. Outraged suggestions that it should be spent on the poor fail to grasp that by the time a relatively small sum like that has passed down the long corridors of government, the poor would still receive nothing. The shorter and swifter the chain linking taxpayer to beneficiary, the better; in fact, why not omit the government altogether and let us all spend our own money? Cut my tax and I’ll have an extra Castle and another foot of wors on my own celebration braai tomorrow.
It will be fun to see if Formula 1’s return to the European tracks will revive the reputations of the big names. Ross Brawn is a fly fisherman and deserves his triumphs. May I quietly point out that the Lions have the same number of Super 14 points and have lost just as many games as the Stormers? Fewer wisecracks from the shadow of The Mountain would be in order.
James Greener
8th May 2009.
