Governor Marcus and her team of whiz kids have come to the conclusion that 5.5% is the correct price for money. Two years ago her predecessor and his bunch selected 12% as the ideal price You sort of wonder why it has taken them two years to get here because there is no evidence that the step by step progress from there to here has had any impact on the old enemy of inflation, which in fact has led rates down by quite a distance. Neither growth, employment or the currency has behaved according to plan so what is the point? Faithful readers will know that I am deeply suspicious of committee decisions and this repo rate is a good example of how they usually don’t work. You have to be almost as old as I am to remember a brief period when the nation flirted with letting market forces set the repo rate. It was exciting and volatile in the beginning as everyone learned how to game the system. Fortunes were made and lost but in the end I think it was settling down nicely. The Reserve Bank, however, suspected that the quiescence reflected collusion between the major players. So instead of trying to cure that, they quickly returned to the system of letting a committee set the price of what is used to price everything else. Unsatisfactory.
From what I can make out, the Irish nation is being urged to borrow money they don’t really need right now so that other countries that really have to borrow now will be able to do so cheaply. What’s happening here apparently is that bureaucrats are trying to influence the price of a type of money that undoubtedly is determined by market forces. That is the money that investors lend to national governments for lengthy periods like 5 to 10 years – usually called the bond market. This is just one of the shenanigans taking place in the global financial scene each of which may be having its own influence on what happens here.
The G-20 meeting ended with a communiqué that was as meaningless as the delegates hoped to get away with. The worthies of the G-20 invited those countries who felt their currencies were over valued to respond with “macroprudential” measures. In the predictable brouhaha that broke out among the talking heads of the rent-a-response industry and the media scrum about what on earth this might mean, the suits slipped away. I am sure that word in not in any real dictionary. Perfect.
A local shenanigan receiving too little attention is the news that in August the managing director of the company that prints the bank notes for us and other nearby countries was found to be rather remiss about keeping records and counting the stock. He was suspended but not charged. That must have been fun while it lasted.
Ms Middleton and Prince William were responsible for several terabytes of digital picture stock this week when they announced their engagement. Presumably her expectations of her future husband’s income once he is crowned king are well above the level recently announced by President Zuma for our local royalty. On not even R71 000 a month, kings lag both premiers (R135 000) and even executive mayors (R75 000) in the income tables. You wouldn’t cover even the Palace’s Corgi food bill with that. Perhaps we have a lot of kings?
You can be sure that there will be hordes of executive mayors, premiers and perhaps even kings turning up in Durban in 12 months time when unhappily we host an international climate change conference. Once again throngs of carbon-based life forms with zero knowledge about science will gather to demand in voices filled with carbon dioxide that the rather vital 6th member of the periodic table be banned from the globe. It will be a mess and another bill for ratepayers.
So what exactly is it that the ‘bokke have been eating with their cornflakes? If it is all that potent it barely worked against the Welsh.
James Greener
18th November 2010
