Only a few brave and agile traders will remember the amazing volatility in August with fondness. Problems were triggered when a ratings agency suggested that the US was not quite as good at servicing its debt as it used to be and dropped it from the AAA club. Opponents of this view rightly pointed out that since the USA actually printed the dollar bills, there was no chance that lenders would not get their money back. The ten year bond yields fell to the ludicrously low level of nearly 2%. What received less publicity, however, was the undeniable fact that the very act of printing those dollars was simultaneously eroding their value and so lenders would definitely be repaid with less value. That seems a fair enough reason for the rating downgrade.
Even before the month is over another potentially market-moving event is taking place in Jackson Hole in Wyoming. This sounds like the venue for a shoot out between the bad guys and the sheriff, and in a way it is. US Federal Reserve Chairman Bernanke has been attending a meeting there and is scheduled to report on its deliberations later today. It is unlikely that the talking heads will have been able to resist the temptation to “fix” things, and indubitably their interventions will provoke the bull and then later the bear.
Mr Warren Buffett, possibly the world’s richest man, has infected his peers and competitors with a very dangerous disease. Its symptom is the demand that they be allowed to pay more tax. This reveals their entirely mistaken assumption that governments will distribute their money to the poor more effectively than they could. Tellingly, the disease has yet to surface in SA. In the meantime, Mr Buffett has arranged for the Bank of America to take a $5bn deposit on which it will pay the astonishing yield of 6%pa. Which of that bank’s other clients are going to be paying for that generosity? Probably it will be the poor ones with overspent credit cards.
It is rumoured that the missing despot from that troubled North African country has been spotted at a traffic light in Pretoria selling flags, naartjies and coat hangers. After all we have been the only country to complain that the manner of his removal from power was undemocratic and it is possible we have offered him tea, sympathy and a job. Noble sentiments, but unlikely to impress the young men wielding those terrifying automatic cannons fitted on the back of a bakkie careering through the streets of Tripoli. With so much weaponry on the loose it may be a while before the ballot box is seen as a practical alternative.
Allegedly the SA Rugby Board is considering a plan where a side in the Currie Cup will lose points merely on the basis of the names on its team list. Just think where this could lead. No longer will it be necessary for coaches to pick the 15 players who they hope will have the best chance of beating the opposition in 90 minutes of physical encounter on a rough or muddy field. Instead each week they will merely submit a team list of individuals they think will meet the Board’s criteria and await news of how many points they lose. The best actual and aspirant rugby players in the country will drift off to play somewhere where they are required to don a jersey and boots to prove their worth. This of course is a concept and technique becoming all too familiar elsewhere in the nation. Potential ability and skill to fill a post, counts for less than name, gender and ancestry. Sadly the one or two cabinet ministers who have expressed concern about this deeply unfair and hugely inefficient labour policy, have been reprimanded for straying outside their ambits.
James Greener
26th August 2011
