Once again that strange architectural
structure called the debt ceiling has appeared in the corridors of power in the
USA.
Supposedly it sets an upper limit to how much money the government can borrow
in order to cover the shortfall between its prodigious spending activity and
the less than expected tax receipts. Inevitably of course there is scant
political will to cut spending or raise
taxes and so the debt increases and the ceiling gets closer and requires
remodelling. This performance of “raising of the debt ceiling” has taken on a
near ritualistic nature. Opposing politicians debate and haggle and blame and
skirmish right down to the last moments before they take the inevitable
decision to borrow “just a wee bit more to tide us over ‘til pay day”. The
nation heaves a sigh of relief and nothing changes. The ceiling is way up there
out of sight. Until it isn’t.
Those of us who were brought up on the
saying “neither a borrower nor a lender be” might wonder why anyone still feels
inclined to lend to this nation which is the greatest debtor on the planet. The
simple answer is that so far absolutely no nation has the courage or actually
the need to call America’s
bluff just as long as the US dollar is worth something. Despite being created and
distributed by the Federal Reserve through its quaintly named “Quantitative
Easing” program at a blistering pace the dollar remains most the world’s
preferred currency for international trading and benchmarking.
The pe ratio of the JSE’s Financial and Industrial
index (that is, it leaves out those pesky hard-to-understand mining shares) has
been loitering around the 18 level for the last six months and it is starting
to feel “normal”. However valuations as rich as this are infrequent and
historically are not times to buy. A plausible suggestion is that equity
markets in general have been the destination of some of the money created by
that QE program in the US
and that is why panic ensues whenever there is any suggestion that it might be
terminated or tapered. The puzzling part of that theory for the JSE is that for
any of those dollars to come here they would need first to be converted to
rands. But the ZAR has been one of the globe’s weakest currencies this year.
That tax-payer funded outfit, the National
Empowerment Fund, that lends money to folk with a good business idea and even
better family contacts, seems surprised with having to announce that it will
have to write off R290m in non-performing loans. And over at the National Youth
Development Agency they cheerfully admit that they have lent R212m to youths
who also are not likely to repay any of it. Here are some ideas. Leave the
lending of money to the commercial banks who, after all, are quite good at it.
Close down all these tax-payer funded entities who give away cash, thereby
saving huge sums of money which can be left in the community by reducing the
VAT rate or something.
The collective noun for nuclear power
stations is a fleet. This emerges from the report of the announcement of this
nation’s most expensive investment program. Some bright spark at the department
of energy must have had to search a bit to find that word when preparing the
minister’s speech announcing that SA is going to build a bunch of these things.
Rather clever really.
Sadly South
Africa was not one of the 170 countries able to watch the
Americas Cup yacht racing live from Los
Angeles on TV. The spectacle of sailing boats (?)
going at 80 kph in winds of less than half that speed is awe inspiring, No
wonder the crews wear crash helmets. Do the Kiwi team do the haka before each
race? It will, I suppose, be some time before SA again finds the time and money
to mount a challenge for this trophy.
James Greener
Golden Lions vs Sharks at Ellis Park Day
