The biscuits in the meeting room at SARB
must have totally run out. Governor Marcus was in no hurry to blurt out the
news that the repo rate would be going up 25 basis points and dash back for
another lemon cream. All over the world central banks and similar authorities
control the price of the most artificial commodity of all – money. They deliver
grave speeches citing reams of history and forecasts that were used to arrive
at their conclusions. Unquestionably, however, the price at which the
commercial banks can obtain emergency funding from the central bank should be
set by market forces and not at the whim of wise men and women. This, however,
is unlikely to happen since central bankers as a breed seem to get ever more
certain of their own infallibility. The US Fed. Governor has been offering
investment advice!
Conveniently, the Sixth BRICS summit was
held just two days after the Soccer World Cup final in Rio.
The venue was a city which is about 3 hours flying time north of Rio. Our president would therefore have enjoyed ample
opportunity to read the more than 8000 words of the Fortaleza Declaration. This
is the document that he signed on behalf of our nation at that summit. Amongst
the many obsequious, bizarre, meaningless and terrifying notions contained in
this perfect example of bureaucratic claptrap are the clauses that ratify the
founding of the New Development Bank (NDB) This bank will have a Board of
Governors chaired by a Russian, a Board of Directors chaired by a Brazilian, an
Indian President and will occupy headquarters in China. Our share of the spoils is
that we may open a branch to service Africa. And,
oh yes, as a founding member, South
Africa will be expected to make an equal one
fifth contribution to the initial capital of $50bn. On second thoughts, perhaps
JZ did not read the Declaration. This was not a good trade! And it also cost us
taxpayers a flight to Brazil
and a ticket for the final for Number 1
Apparently a reason why it has been
decided to found the NDB is that the International Monetary Fund is failing to pay
enough attention to the needs and aspirations of the BRICS and their friends. Now
the IMF itself exists because it was felt many years ago that “private
international capital markets function imperfectly”. This phrase is really a complaint
that people with money prefer to lend it only to others who can be relied upon
to pay it back, and with interest. The IMF
therefore diligently smoothes out this perceived imperfection using public (i.e.
taxpayer’s) money. As an entity designed to accommodate those whom even the IMF
consider dodgy, it suggests that the NDB may soon be a champion at pouring money
into bottomless pits. Or does JZ believe that SA will get back more than it
puts in?
Once again government is getting worried
about the private security industry. They could shrink that problem in an
instant if they were to get the police to do the job we already all pay for. Everyone
would be delighted to cancel their pricey armed response and street patrol
services if they could rely on the state to catch and lock up the bad guys.
Sadly the state prefers to meddle in
things for which they have no competency. Some buffoon has proposed that our
government needs to declare something called “a developmental price” for most
extracted commodities. Without even reading the whole bizarre report one can
guess that this is a price which undervalues the true cost of a real economic
activity and transfers the difference to parties who choose to look to the
state for a handout. Presumably the BRICS Sherpas and
Sous-Sherpas[1] are
available if large piles of cash need to be transported.
The Brazilians are
looking about in a daze wondering what became of that FIFA fellow who they now suspect
mugged them comprehensively. Welcome to the club chaps, and I can tell you the
market in used soccer stadia is well offered. With no buyers.
James Greener
18th July 2014
[1] The Forteleza
Declaration proudly reports that people with these titles have been meeting
successfully. Who they are and what they do is left unexplained. Presumably
lavish catering and travel is involved.
