Our poor little currency is really
getting clobbered. Fortunately no one in charge has suggested that the Reserve
Bank ought to be in there defending it. If they tried the speculators would whistle
through the nation’s foreign currency reserves in a heart beat. Equally no one
has yet dared to admit that perhaps foreigners and locals alike are
disappointed with latest examples of a clueless leadership and the seemingly
officially sanctioned waves of corruption and theft of public money. Every
South African can tell a story of crime, corruption or incompetence more
horrifying and disgusting than their neighbour. Attempts by the few straight
law enforcement people to bring cases to court invariably collapse when it
turns out that the evidence has disappeared or some other equally shocking
excuse. Our democracy is moving inexorably towards the historically inevitable
next stage which is dictatorship.
The files and dockets of evidence on the
Libor fixing scandal in London
have, however, not mysteriously gone astray. The people who are suspected of
playing a part in this scheme are being meticulously hunted down. One website
even offers a nifty dynamic graphic that displays the links between the various
participants. Most non-market people will have little appreciation for just
what a big deal it was that this nearly sacred benchmark interest rate was
being manipulated on a regular basis. This was a very significant fraud being
perpetrated against just about everyone who had money in a bank account. The
size of the penalties issued so far and the alacrity with which payment has
been made makes many of us very suspicious that the full story has not yet
emerged. On second thoughts, perhaps there is a great deal of information which
has somehow got lost.
The incident has also highlighted the
quality and integrity of the data produced by and for the financial and
economics industries. From such all-important block busters like a nation’s GDP
and inflation rate and government deficit down to small but specific reports
like the outcome of a mineral exploration or a due diligence test of a
corporate, the degree of uncertainty is itself very uncertain. With that
voracious maw of the internet demanding to be fed immediately and unceasingly
the incidence of genuine mistakes is also increased and that helps to disguise
the fakes and the deliberately misleading numbers
Oddly enough however, the rand dollar foreign
exchange market is probably sufficiently liquid and transparent for the rates
at the time of a deal to be real and representative. This indicates that the
sustained selling of the rand is also real and not a consequence of some short-
term badly handled orders. The message is that people really don’t like our
money.
Yet again my invitation to attend the
annual talking shop in snowy Davos has failed to arrive. The great and good in
the worlds of governance and economics will just have to manage without being
asked difficult questions like where is the global recovery. And anyway I have
a much better invitation to go and look at birds in St Lucia.
Skipping through the sports channels the
sight of international soccer being played in a nearly empty stadium caught my
eye. It turns out that this is a part of Chan, a tournament with a silly name
being held right here in SA. Non-existent publicity coupled with a very poor
choice of season has prevented Bafana from attracting home ground support. Some
one will win but I doubt it will be us.
James Greener
Friday 17th January 2014
