Pretty much out of the blue – although some smarty pants folk did
guess right – the Monetary Policy Committee sent Governor Gill out to the
microphones and cameras in the front room to announce that money in South Africa
was too expensive. And so therefore they had decided to make it cheaper by 50
basis points. Apparently this rate cut will shield SA from a global economic
downturn. A dubious contention.
Ironically, the longer the official rate remained unchanged the more
transactions were arranged at levels which more reflected the actual supply and
demand situation for cash. Hence it might take a while before any discernable
or attributable reactions to the announcement become visible. It is reported
that “business” is sitting on a cash pile of several hundred billion rands
already and have no need to borrow much anyway. What they are waiting for is
not finance but an opportunity or venture that will not immediately attract
hordes of interfering bureaucrats, politicians and trade unionists all eager to
find reasons to derail the project. This week we heard that the state blocked
the Telkom deal with the potential Korean partners because the company did not
need the money. That is quite simply, nuts.
The fellows over at the South African Savings Institute must be
wondering if their message that July was National Savings Month ever reached
the Reserve Bank. Our government taxes interest, dividends, rents and capital
gains and now reduces interest rates. Who has any appetite for saving in the face
of those barriers? All those grave speeches about the need and desirability of saving delivered by the suits and frocks three
weeks ago were just hot air.
It took the efficient and knowledgeable teller more than 15 minutes
to follow the newly imposed government protocols required to replace an
expiring credit card. Despite having held this card issued by this bank for
dozens of years I was obliged to listen to a explanation about the mechanism of
compound interest as it applied to the
specific credit limit and interest rates pertaining to my card. The
chain-tethered pen ran dry after the tenth signature on the phone book-sized
contract I was offered to read and sign. All I hope is that I don’t have to go
back for another lecture now that the interest rates have been changed. No
wonder the banks are being overwhelmed by costs. It’s a dreadful business to be
in at the moment.
It’s a pity that the air force VIP transportation unit don’t award
air miles to loyal and frequent fliers. Our pres JZ would have bucket loads of them
by now and might be able to take all the wives along on his jaunts instead of
having to chose just one each time. This week he went off to China to bow
very low to their President Hu Jintao before renewing the invitation for them
to attend our forthcoming R3.2 trillion infrastructure program. BYOC (bring your own cash). Apparently the
official view is that the presence of a Chinese supermarket in every country
village selling plastic bowls and t-shirts is a “good sort” of foreign presence,
compared to the previous invaders during the past 400 years who merely brought
development.
The sporting scene is getting ridiculous. Four or five channels all
carrying good live stuff. Mind you, the first day of the test match from The
Oval was just as dire as the SA Olympic team send off ceremony. All the boys
and girls needed were a firm handshake and a good umbrella before despatching
them to London.
The excited speeches should perhaps wait until they return.
There will be no Tidemarks next Friday.
James Greener
20th July 2012
